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Lehman Brothers Holdings Inc. v. SecurityNational Mortgage Co.

United States District Court, D. Utah, Central Division

November 22, 2016

LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation Plaintiff,


          TED STEWART United States District Judge

         This matter is before the Court on Defendant SecurityNational Mortgage Co.'s (“Security National”) Pretrial Motions Nos. 1-3. For the reasons discussed below, the Court will deny the Motions.

         I. DISCUSSION

         Under the current scheduling order, all dispositive motions were required to be filed by September 4, 2012.[1] Security National filed its “Pretrial Motions” on October 20, 2016, more than four years after the dispositive motion deadline. With the exception of the motion regarding Article III standing, which may be challenged at any time, Security National's Motions are nothing more than untimely motions for summary judgment. Security National's arguments could have, and should have, been raised previously.

         Federal Rule of Civil Procedure 16(b)(4) provides that “[a] schedule may be modified only for good cause and with the judge's consent.” “Demonstrating good cause under the rule ‘requires the moving party to show that it has been diligent in attempting to meet the deadlines, which means it must provide an adequate explanation for any delay.'”[2] Security National does not attempt to show good cause for its tardy motions, nor could it. Additionally, Security National has not bothered to seek the Court's consent to either file the Motion or amend the scheduling order.

         Security National's dilatory conduct would be ample justification for the Court's denial of Defendant's Pretrial Motions Nos. 1 and 2. However, because the arguments relate to the ability of LBHI to bring claims, the Court will address them.

         1. Defendant's Pretrial Motion No. 1

         Security National argues that Lehman Brothers Holdings Inc. (“LBHI”) has no direct standing under Section 711 of the Seller's Guide because LBHI is not a “Purchaser” as defined in Section 8 of the Seller's Guide. Section 8 defines Purchaser as “the entity set forth on the related Purchase Advice as the Purchaser, its successors and/or assigns, for a particular Mortgage Loan.” LBB is the entity shown on the Purchase Advice. LBB sold the mortgage loans to LBHI and assigned to LBHI all its rights and remedies under the Purchase Agreement and the Seller's Guide for the mortgage loans at issue.

         The Court need not decide whether LBHI is the Purchaser under the Seller's Guide. Even if LBHI is not considered a Purchaser at the time of the alleged breaches, LBHI may still bring claims as an assignee, whether it is now the Purchaser.[3]

         LBHI argues that LBB and LBHI intended to assign the remedies against Security National at the time the loans were sold, and that the subsequent Assignment Agreement merely memorialized that earlier agreement. Under New York law, “[n]o particular words are necessary to effect an assignment; it is only required that there be a perfected transaction between the assignor and assignee, intended by those parties to vest in the assignee a present right in the things assigned.”[4] While no special phraseology or form is required, “the assignor must be divested of all control over the thing assigned.”[5]

         LBHI argues that the fact that LBHI purchased the loans without recourse shows that LBHI “plainly relied on LBB's intended assignment of rights . . . to pursue the sellers for any breaches of the loan representations and warranties.”[6] While it is possible that LBB and LBHI intended from the outset that LBHI would seek remedies instead of LBB, there is simply not enough evidence that LBHI's purchase of the loans divested LBB of its rights and remedies under the LPA and Seller's Guide. Therefore, the Court finds that LBHI did not acquire LBB's rights and remedies until the Assignment Agreement was executed, and LBHI could sue only as an assignee of LBB whether or not it is now a Purchaser.

         2. Defendant's Pretrial Motion No. 2

         Both parties agree that an assignee acquires only the remedies the assignor possessed. Security National argues that because LBHI compensated LBB for the loans, LBB was made whole and therefore had no remedy against Security National. Security National raised this same argument in its Motion for Summary Judgment and this Court rejected it, [7] noting that LBB's loss “is irrelevant to the LPA, the Seller's Guide, and the Assignment Agreement.”[8]

         Security National's argument that LBHI eliminated LBB's remedies against Security National by paying LBB for the loans or LBB's remedies is contrary to New York law. “The assignee of a cause of action is entitled to recover the same amount of damages as his assignor would have been entitled to recover, without ...

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