Greenwich Financial Svcs. v. Countrywide Financial, 654 F.Supp.2d 192 (S.D.N.Y., 2009)- 1 -
Page 192654 F.Supp.2d 192GREENWICH FINANCIAL SERVICES DISTRESSED MORTGAGE Fund 3, LLC, and QEDLLC, on behalf of themselves and all other persons similarly situated, Plaintiffs,v.COUNTRYWIDE FINANCIAL CORPORATION et al., Defendants.No. 08 Civ. 11343(RJH).United States District Court, S.D. New York.August 14, 2009.Page 193
David J. Grais, Grais & Ellsworth, LLP,New York, NY, for Plaintiffs.John H. Beisner, Kathryn E. Tarbert,Matthew M. Shors, Michael E. Stamp, StephenHeschel Weil, Brian David Boyle, O'Melveny &Myers LLP, Washington, DC, William JosephSushon, O'Melveny & Myers, LLP, New York,NY, for Defendants.
MEMORANDUM OPINION AND ORDER
RICHARD J. HOLWELL, District Judge.Plaintiffs Greenwich Financial ServicesDistressed Mortgage Fund 3, LLC and QEDLLC move to remand this case to state court forlack of subject matter jurisdiction. DefendantsCountrywide Financial Corporation("Countrywide Financial"), Countrywide HomeLoans, Inc. ("Countrywide Home Loans"), andCountrywide Home Loans Servicing LP("Countrywide Servicing") (collectively,"Countrywide") respond that this Court has jurisdiction under the Class Action Fairness Actof 2005, 28 U.S.C. §§ 1332(d), 1453, 1711-15("CAFA"), because the parties are minimallydiverse and the amount sought is over $5million, and under 28 U.S.C. § 1331 becauseplaintiffs' claims raise substantial, disputedfederal questions under the Truth-in-LendingAct, 15 U.S.C. § 1601 et seq. ("TILA"). For thereasons set forth below, the Court holds thatneither CAFA nor TILA provides a basis forsubject matter jurisdiction over this case, andtherefore that the case must be remanded to statecourt.
Plaintiffs bring this putative class action asholders of the now-infamous mortgage-backedsecurities whose decline in value has hobbledthe financial markets. Specifically, plaintiffsallege that they hold certificatesPage 194issued by various trusts, which own hundreds of thousands of mortgage loans. (Notice of Removal, Ex. A. (the "Complaint" or "Compl.") ¶¶ 1, 12-14.) The trusts' ownership of the loansentitles them to the borrowers' periodic interestand principal payments, and the certificatesentitle plaintiffs to a share of those payments.(Id. ¶ 25.) The trusts, of course, did not issue theloans, nor did they possess any assets prior topurchasing the loans. (Id. ¶¶ 23-24.) Thepurchases were all made pursuant to certainagreements that comprised the "securitization",and the money with which the purchases weremade was raised by selling the certificates
thesecurities in question. (Id.)Defendants were both the issuers andsellers of the mortgage loans currently owned bythe trusts. (Id. ¶¶ 1, 23.) Because the truststhemselves had no expertise with lending andloan administration, defendant CountrywideServicing remained as the "master servicer" forthe loans under terms described in contractsknown as Pooling and Servicing Agreements("PSAs"). (Id. ¶¶ 26-27.) As master servicer,Countrywide Servicing administers the loans onbehalf of plaintiffs with authority delineated bythe PSAs. (See, e.g., Murata Decl. Ex. A, Series2005-36 PSA.)