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Policemen s Annuity Vb of A

Policemen s Annuity Vb of A

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Published by: DinSFLA on Dec 11, 2012
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12/20/2012

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------------POLICEMEN’S ANNUITY AND BENEFITFUND OF THE CITY OF CHICAGO,Plaintiff,-v-BANK OF AMERICA, NA (as TrusteeUnder Various Pooling and Servicing Agreements), and U.S. BANK NATIONAL ASSOCIATION (as Trustee Under VariousPooling and Servicing Agreements),Defendants.---------------------------------------------------------------------X::::::::::::::::X12 Civ. 2865 (KBF)OPINION & ORDERKATHERINE B. FORREST, District Judge:Plaintiff Policemen’s Annuity and Benefit Fund of the City of Chicago(“plaintiff” or “PABF”) brings this putative class action against defendants Bank of  America, N.A. (“BofA”) and U.S. Bank National Association (“U.S. Bank” and, withBofA, “defendants”) in their capacity as trustees for forty-one trusts of residentialmortgage-backed securities (“MBS”). Plaintiff alleges that defendants breachedtheir contractual duties under the trusts’ respective Pooling and Servicing Agreements (“PSAs”), as well as the implied covenant of good faith and fair dealing,and violated the Trustee Indenture Act of 1939 (“TIA”), 15 U.S.C. § 77aaa et seq.
 
USDC SDNYDOCUMENTELECTRONICALLY FILEDDOC #: _________________DATE FILED: December 7, 2012
 
Case 1:12-cv-02865-KBF Document 46 Filed 12/07/12 Page 1 of 44
 
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The gravamen of the corrected class action complaint (the “Complaint”) isthat defendants failed to take certain actions required by the PSAs, which caused adecline in the value of plaintiff’s MBS
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Defendants have moved to dismiss the Complaint. The motion was fullysubmitted as of July 20, 2012. The Court heard oral argument on the motion on August 6, 2012.and thus damaged plaintiff.For the reasons that follow, defendants’ motion to dismiss is GRANTED INPART and DENIED IN PART.I.
 
BACKGROUND
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 A.
 
The PartiesPlaintiff PABF, a state governmental pension fund organized under Illinoislaw, provides retirement benefits to its members and their beneficiaries and, in thatcapacity, “relies heavily upon the performance of its investments.” (Compl. ¶ 13,ECF No. 24.) PABF purchased certificates in five of the 41 trusts at issue in thisaction (the five purchased trusts, the “Trusts”) (id. ¶ 1, Ex. B), but no longer holdsan interest in any of the Trusts (Oral Arg. Tr. (“Tr.) 69:22-70:1, Aug. 6, 2012, ECFNo. 40).
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The Court uses the terms “MBS,” “certificates,” and “securities” interchangeably throughout thisOpinion.
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The facts are taken from the Complaint and the documents attached thereto or incorporated byreference therein, and are construed in the light most favorable to plaintiff. See Bell Atl. Corp. v.Twombly
 
, 550 U.S. 544, 555 (2007); Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002); In re Citigroup ERISA Litig., 662 F.3d 128, 135 (2d Cir. 2011) (on a motion to dismiss, a courtmay consider “documents incorporated by reference in the complaint and documents upon which thecomplaint ‘relies heavily’”).
Case 1:12-cv-02865-KBF Document 46 Filed 12/07/12 Page 2 of 44
 
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Defendant BofA is a U.S. national banking association with its principalplace of business in Charlotte, North Carolina. (Compl. ¶ 15.) In early October2007, BofA acquired LaSalle Bank National Association (“LaSalle”)--the Trusts’original Trustee. (Id. ¶¶ 1, 15.) Through that acquisition, BofA succeeded LaSalleas Trustee. (Id. 15.)Defendant U.S. Bank is a U.S. national banking association with a principalplace of business in Minnesota. (Compl. ¶ 16.) In or about July 2008, U.S. Banksucceeded BofA as Trustee for certain of the Trusts. (Id.)
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B.
 
MBS Securitization Although “[t]he features of residential mortgage-securitization trusts are wellknown in the recent annals of litigation,” BlackRock Fin. Mgmt. Inc. v. Segregated Account of Ambac Assur. Corp., 673 F.3d 169, 173 (2d Cir. 2012), reviewing theprocess here is helpful to resolution of the instant motion.MBS are securities entitling the holder to income payments from pools of residential mortgage loans held by a trust. Those mortgage loans are “securitized”when they are converted into “bond-like instruments, the MBS, that trade over thecounter in capital markets.” (Compl. ¶ 17.) There are four major players involvedin an MBS securitization: the mortgage originator/underwriter, the seller, thedepositor, and the securitization underwriter. (See id. ¶¶ 19-22.)
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Upon its acquisition of Countrywide Financial (“Countrywide”), BofA resigned as Trustee for theTrusts that contained loans originated by Countrywide, thereby necessitating a new trustee for thosetrusts. (Compl. ¶ 16.)
Case 1:12-cv-02865-KBF Document 46 Filed 12/07/12 Page 3 of 44

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Tim Bryant added this note
Should show this one to the Chicago policemen....

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