DEFENDANT NATIONAL BANK OF KANSAS CITYS MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT OR TO DISMISS THE FIRST AMENDED COMPLAINT
Defendant National Bank of Kansas City (NBKC) submits its memorandum of law in support of its motion for summary judgment pursuant to Fed. R. Civ. P. 56, or in the alternative, its motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). NBKC is entitled to judgment as a matter of law because Plaintiff Residential Funding Corporations (RFC) First Amended Complaint is untimely. Alternatively, RFCs Complaint should be dismissed with prejudice for failing to state a claim for relief. BACKGROUND NBKC last sold residential mortgage loans to RFC in April, 2005 pursuant to a written contract between the parties. RFC no longer exists as a functioning entity; plaintiffs counsel admits that pursuant to RFCs CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 1 of 35 Page 2 of 35
bankruptcy plan a trust has acquired RFCs assets and is the proper plaintiff in this action. (RFC Memo. in support of Mot. to Transfer at fn. 1, Dkt. No. 18). 1 RFC filed this suit on December 16, 2013, alleging claims for breach of contract and indemnification. Notably, RFC filed suit against NBKC on the same day it filed suit against 66 other defendants, using nearly identical generic and conclusory complaints that fail to state plausible breach of contract claims and fail to put any of the defendants on proper notice. After many of the defendants, including NBKC, filed motions to dismiss, RFC responded by filing motions to transfer the dozens of cases it filed in Minnesota to the Southern District of New York, to be referred to a bankruptcy judge. NBKC opposes transfer because, inter alia the Bankruptcy Court does not have jurisdiction over RFCs untimely claims against NBKC, and RFCs Minnesota forum selection clause precludes transfer. In response to NBKCs motion for summary judgment or to dismiss, RFC filed a one count First Amended Complaint alleging a claim for indemnification only. RFC commenced suit more than eight years after NBKC allegedly breached a contract purportedly between RFC and NBKCs predecessor. NBKC is entitled to judgment as a matter of law because RFCs indemnification claim is merely a dressed-up breach of contract claim that is
1 NBKC seeks judgment against the proper plaintiff, but continues to refer to plaintiff as RFC for consistency, and until RFC moves to substitute plaintiffs. CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 2 of 35 Page 3 of 35
time-barred under Minnesota law, which applies to this contract. Alternatively, NBKC seeks dismissal of RFCs Complaint for failure to state a plausible claim for relief under Federal Rule of Civil Procedure 8 and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The Complaint is untimely on its face and fails to apprise NBKC of the specific alleged breaches or how any resulting damages were caused by any alleged breaches. FACTS NBKC is a nationally chartered full service bank that provides personal and business banking products to its customers. (Declaration of NBKC CFO Eric Garretson at 6, attached as Exhibit A). NBKC last sold a residential mortgage loan to RFC on April 27, 2005, pursuant to a contract between NBKCs predecessor, Horizon National Bank, and Residential Funding Corporation (RFC). 2 (Id. at 7, 10, 39). The Client Contract (Contract), dated February 13, 2001, governed NBKCs sale of residential mortgage loans to RFC. (Id. at 7; Contract attached to Am. Compl., Dkt. No. 28-1). 3 The Contract purports to incorporate certain representations and warranties (R&Ws) contained in RFCs Client Guide (Contract at 1, 4), and the
2 For purposes of this dispositive motion NBKC presumes Plaintiff has standing to pursue these claims on behalf of Residential Funding Corporation, and uses RFC to refer to both. 3 For purposes of this dispositive motion NBKC presumes it is the successor to the Contract between RFC and Horizon Bank, but NBKC reserves the right to dispute this point. CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 3 of 35 Page 4 of 35
Client Guide purports to define what constitutes a breach of the Contract by NBKC (Client Guide at A208, attached to Am. Compl., Dkt. No. 28-2). RFCs Client Guide explained that RFC intended to re-sell the residential mortgage loans NBKC sold RFC: (II) Loan Securitization The Client recognizes that it is GMAC-RFCs intent to securitize some or all of the Loans sold to GMAC-RFC by the Client. The Client agrees to provide GMAC-RFC with all such information concerning the Client generally and, if applicable, the Clients servicing experience, as may be reasonably requested by GMAC- RFC for inclusion in a prospectus or private placement memorandum published in connect ion with such securitization. In addition, the Client will cooperate in a similar manner with GMAC-RFC in connect ion with any whole Loan sale or other disposition of any Loan sold to GMAC-RFC by the Client.
Client Guide A202(II). RFC pled NBKC was well aware that after NBKC sold it a loan RFC would either pool loans into a special-purpose securitization Trust or sell pools of loans to whole loan investors. (Am. Compl. 21-22). RFC pled that it made its own R&Ws regarding the loans it sold to the trusts and whole loan investors. (Id. at 25, 36). RFC admitted that it would breach the R&Ws it gave to trusts and investors if it re-sold a loan that breached the Client Guide R&Ws when NBKC sold the loan to RFC. (Am. Compl. 25, 36). RFC filed for bankruptcy on May 14, 2012, blaming a host of other entities for causing its downfall. (Am. Compl. 1-2, 7-8). The bankruptcy CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 4 of 35 Page 5 of 35
plan approved by the court on December 13, 2013 directed RFCs assets and causes of action to be transferred to the RESCAP Liquidating Trust (RFC Trust), effective December 17, 2013. (Order Confirming Plan, Doc. No. 6065- 1 in BR 12-12019 (S.D.N.Y. Dec. 13, 2013)). RFC filed this suit on December 15, 2013. (Doc. No. 1 in No. 13-cv-3528). RFC contends that NBKC breached the Contract when it sold RFC unspecified residential mortgage loans that allegedly violated unspecified R&Ws in the Contract. (Am. Compl. at 68-69). RFCs Amended Complaint lists some of the R&Ws (Am. Compl. 24), and 5 of the purported 4,000 loans (Am. Compl. 42), but RFC does not expressly allege which R&Ws each loan breached. RFCs one count Amended Complaint for indemnification is premised upon the indemnification provision in the Client Guide: A212 Indemnification The Client shall indemnify GMAC-RFC from all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys fees, judgments, and any other costs, fees and expenses resulting from any Event of Default. This includes, without limitation, liabilities arising from (i) any act or failure to act, (ii) any breach of warranty, obligation or representation contained in the Client Contract, (iii) any claim, demand, defense or assertion against or involving GMAC-RFC based on or resulting from such breach, (iv) any breach of any representation, warranty or obligation made by GMAC-RFC in reliance upon any warranty, obligation or representation made by the Client contained in the Client Contract and (v) any untrue statement of a material fact, omission to state a material fact, or false or misleading information provided by the Client in information required under CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 5 of 35 Page 6 of 35
Regulation AB or any successor regulation. . . . Client Guide at A212 (emphasis added). The Contract and Client Guide call for NBKC to indemnify RFC for losses caused by NBKC committing an Event of Default. (Client Guide at A208). Quoting from the Client Guide, an Event of Default is defined in part as: A208 Events of Default Any one or more of the following events constitute an Event of Default: (1) The Client has not complied with one or more of the requirements (including any requirement outlined in Chapter 21 Client Eligibility) terms or conditions outlined in this Client Guide or one of the disqualification, suspension or Inactivation events set forth in the Disqualification Suspension or Inactivation Section has occurred or occurs. (2) The Client has breached any agreement outlined or incorporated by reference in the Client Contract or any other agreement between the Client and GMAC-RFC. (3) The Client breaches any of the representations, warranties or covenants set forth in this Client Guide, fails to perform its obligations under this Client Guide or the Program Documents, makes one or more misleading representations, warranties or covenants to GMAC-RFC, or has failed to provide GMAC-RFC with Information in a timely manner, including information required under Regulation AB or any successor regulation, that is true, complete and accurate. . . . Client Guide at A208.
Section A200 of the Client Guide, titled Client Representations Warranties and Covenants, provides that: [t]he representations and warranties contained herein are made as of each Funding Date. (Client CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 6 of 35 Page 7 of 35
Guide at A200) (emphasis in original). Section A202 of the Client Guide, titled Specific Representations, Warranties and Covenants Concerning Individual Loans, provides 39 paragraphs (numbered A-MM) of purported warranties NBKC made as to each loan it sold RFC. The first specific warranty, for example, provides that: (A) Loans Are Eligible; Accuracy of information Each of the Loans delivered and sold to GMAC-RFC meets the applicable program terms and criteria set forth in this Client Guide. All information relating to each Loan delivered and sold to GMACRFC is true, complete and accurate and there are no omissions or material facts. All data provided by the Client to GMAC-RFC relating to any Loan, whether in electronic format, or otherwise, is true and complete and accurately reflects the information in the related loan file.
Client Guide at A202(A). The 37th warranty states:
(KK) No Fraud or Misrepresentation No fraud or misrepresentation by the Borrower or by the Client, broker, correspondent, appraiser or any independent contractor retained by the Client, broker, correspondent, appraiser or any employee of any of the foregoing occurred with respect to or in connection with the origination or underwriting of any Loan and all Information and documents provided to GMAC-RFC in connection with the Loan are complete and accurate.
Client Guide at A202(KK). RFCs original complaint did not identify any specific loans that allegedly breached any specific R&W. While RFC does purport to identify five loans in its Amended Complaint, it only includes RFCs loan number, and CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 7 of 35 Page 8 of 35
does not include the information needed for NBKC to identify whether it sold these loans to RFC. For example, RFC does not include any identifying facts concerning these loans, such as the borrowers name, the location of the loans and their collateral, the amounts of the loans, the amounts remaining on the loans, or the current status of the loans. RFC attaches to its Amended Complaint a preliminary list of purported loans NBKC sold to RFC, from February, 2003 to April, 2005. (Am. Compl. at 19 and Ex. C to Am. Compl.). While this list of loans includes columns for date of acquisition and original balance, there is still only RFCs loan number, and no borrower name. Notably, two of the five loan numbers identified in the Amended Complaint are not included in the list of loans attached as exhibit C. Moreover, RFC admits that NBKC has already indemnified it on three of the five loans identified. (Am. Compl. 42). In 2003, Horizon National Bank became the National Bank of Kansas City. (Garretson Dec. at 11). NBKC primarily sold residential mortgage loans to RFC pursuant to the Contract through NBKCs eSmartLoan.com division (Id. at 12-13). The eSmartLoan.com division primarily offered residential mortgage loans to consumers through the internet. (Id. at 13). NBKC did not service the loans it sold to RFC (Id. at 14), or have any involvement with a loan after selling it to RFC. (Id. at 15). To track its loan sales and other financial matters prior to 2006, NBKC CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 8 of 35 Page 9 of 35
used the Jack Henry Core Director financial accounting software system for banks. (Garretson Dec. at 20). In July, 2007, NBKC transitioned from the Jack Henry Core Director to the Harland PhoenixEFE Core financial accounting system for banks. (Id. at 21). NBKC has maintained all of its general ledgers; it merely transitioned from one accounting system to another in 2007. (Id. at 22). During the conversion, entries in the old general ledger through July, 2007 were converted to the new general ledger. (Id. at 23). Entries in the old general ledger from 2006 were also converted to the new general ledger. (Id. at 24). NBKCs general ledgers from before 2006, however, were not converted to the new system. (Id. at 25). NBKC maintains text file downloads of NBKCs general ledger from the old Jack Henry system, for dates prior to 2007 (Text File). (Id. at 26). Text Files from NBKCs old general ledger system contain records of loans sold to RFC prior to 2007. (Id. at 26, 29; Ex.1 to this Dec. is an example of a Text File). NBKC maintains a Microsoft Excel electronic spreadsheet document that logs NBKCs daily wire transfers (Wire Log) by year. (Id. at 32, 40; Exs. 2 and 3 to the Dec. are examples of Wire Logs). NBKCs Wire Log consists of a workbook for each year from 2001 to the present. (Id. at 34). If any wires in 2006 were not entered into the new accounting system, they would still have been entered into the 2006 Wire Log. (Id. at 35). In NBKCs Wire Log, a wire transfer of funds from RFC to NBKC CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 9 of 35 Page 10 of 35
evidences money RFC paid to NBKC to purchase a residential mortgage loan. (Garretson Dec. at 37). Entries relating to NBKCs eSmartLoan.com division were coded in the Wire Log as Division 9. (Id. at 28). NBKC used the acronym RFC or GMAC-RFC for wire transfers with Plaintiff RFC. (Id. at 38). Eric Garretson, NBKCs CFO, reviewed NBKCs Text Files, Wire Log and general ledger for evidence of payments from RFC to NBKC. (Id. at 9, 27, 31, 36). By reviewing the Text Files, Garretson determined that the last loan NBKC sold to RFC that was recorded in the old general ledger system was April 27, 2005. (Id. at 27, 30; Ex. 1 to Dec.). Garretson reviewed NBKCs Wire Log and confirmed the last RFC payment to NBKC for the purchase of a residential mortgage loan was April 27, 2005. (Id. at 41-43). The Wire Log corroborates the Text Log because NBKCs Wire Log contains an entry on April 27, 2005 identified as Code 9, wire in RFC in the amount of $33,278.24. (Id. at 41-42; Ex. 2 to Dec.). Neither the Wire Log nor the general ledger evidences any wire transfers from RFC to NBKC after April 27, 2005 for sales of residential mortgage loans. (Id. at 43). ARGUMENT I. RFC Lacks Standing to Bring This Claim.
RFC admits it securitized many of the loans NBKC sold it by pooling them into trusts; RRC identified a number of such trusts, including 2004- CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 10 of 35 Page 11 of 35
HS1 (Am. Compl. Ex. C). RFC filed public documents with the SEC, including a Pooling and Servicing Agreement (PSA), admitting that it has assigned its rights in these loans to the upstream trusts to which it sold the loans: Section 2.01. Conveyance of Mortgage Loans. (a) The Company, concurrently with the execution and delivery hereof, does hereby assign to the Trustee for the benefit of the Certificateholders without recourse all the right, title and interest of the Company in and to the Mortgage Loans, including all interest and principal received on or with respect to the Mortgage Loans after the Cut-off Date (other than payments of principal and interest due on the Mortgage Loans in the month of the Cut-off Date).
Series Supplement, Dated as of June 1, 2005, to Standard Terms of Pooling and Servicing Agreement, Dated as of August 1, 2004, Mortgage Asset- Backed Pass-Through Certificates SERIES 2005-QS8 at 2.01(a), at p. 259, attached as Ex. B, available at: https://www.sec.gov/Archives/edgar/data/1331579/000133157905000002/qs8ss final.txt.
RFC lacks standing to maintain its contractual indemnification claim because it assigned to the various trusts its rights to the loans it sold. See Dunn v. Natl Beverage Corp., 729 N.W.2d 637, 648 (Minn. Ct. App. 2007) aff'd, 745 N.W.2d 549 (Minn. 2008) ([a] breach-of-contract claim cannot be maintained when the rights vested in the contract have been assigned to another party); see also Pine Valley Meats, Inc. v. Canal Capital Corp., 566 N.W.2d 357, 365 (Minn. Ct. App. 1997) (stating that trial court determined that party had no standing to assert claim when it had assigned its rights CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 11 of 35 Page 12 of 35
under contract to another), abrogated on other grounds by Myers v. Hearth Tech., Inc., 621 N.W.2d 787 (Minn. Ct. App. 2001), review denied (Minn. Mar. 13, 2001). This Court may take judicial notice of publicly available information when considering a Rule 12 motion to dismiss. See Alexander v. Hedback, 718 F.3d 762, 764, fn 2 (8th Cir. 2013) (explaining that district court may properly consider items subject to judicial notice, matters of public record). The PSA establishes RFC assigned away the rights it seeks to assert here. II. RFCs Indemnification Claim is Time-Barred.
The undisputed facts establish that RFCs claim is untimely as a matter of law. 4 Summary judgment should be granted if the pleadings . . . together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011). Applicable substantive law determines which facts are material, and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Once the moving party has met its initial burden of informing the court of the basis for its motion, the non-movant must set forth specific facts demonstrating that there is a dispute as to a genuine issue of
4 RFCs Bankruptcy Petition did not toll or revive untimely claims. (NBKCs Memo. Opposing RFCs Mot. to Transfer at 10-11, Dkt. No. 30). CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 12 of 35 Page 13 of 35
material fact, as opposed to mere allegations or denials. Anderson, 477 U.S. at 248, 258. NBKC submits a Declaration in support of its summary judgment motion (Fed. R. Civ. P. 56(c)); NBKC does not rely upon the Declaration for its Rule 12(b)(6) motion to dismiss. (Fed. R. Civ. P. 12(d)). RFCs authority for its assertion summary judgment now is improper does not involve the statute of limitations question presented here. See Northland Ins. Co. v. Blavlock, 115 F. Supp. 2d 1108, 1115 at n. 2 (D. Minn. 2000) (declining to convert a Rule 12(b)(6) motion that included an affidavit into a Rule 56 motion in a trademark infringement suit); Whitfield v. Public Housing Agency Of The City Of St. Paul, 2004 WL 1212082, at *2 (D. Minn. May 19, 2004) (declining to rule on a Rule 56 motion and finding two claims survived a Rule 12(b)(6) motion to dismiss a Fair Housing Act suit). NBKCs motion is not premature because the material facts are undisputed and the legal question of whether the limitations period has expired is properly before this Court. A. RFC Chose Minnesota Law. Minnesota state law applies to this diversity action because federal courts apply the forum states law in diversity actions (Hallstrom By and Through Hallstrom v. Ammerman, 113 F.3d 872, 874 (8th Cir. 1997)), and because the Contract between the parties contains a Minnesota choice of law provision. (Contract at 13); see Union Elec. Co. v. Energy Ins. Mut. Ltd., CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 13 of 35 Page 14 of 35
689 F.3d 968, 973-74 (8th Cir. 2012) (forum selection clauses resulting from arms-length negotiations are prima facie valid and enforced unless unjust or unreasonable). In Minnesota, a party has six years to bring a breach of contract claim. Minn. Stat. 541.05; Jacobson v. Bd. Of Trustees of the Teachers Ret. Assn., 627 N.W.2d 106, 110 (Minn. Ct. App. 2001). As the Minnesota Supreme Court stated, statutes of limitations are: [B]ased to a great extent on the proposition that if one person has a claim against another . . . it would be inequitable for him to assert such claim after an unreasonable lapse of time, during which such other has been permitted to rest in the belief that no such claim existed.
Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 832 (Minn. 2011).
This time period begins to run after the cause of action accrues. Minn. Stat. 541.05. A cause of action for breach of contract generally accrues at the time of the alleged breach. Jacobson, 627 N.W.2d at 110. This is true even when actual damages resulting from the breach do not occur until some time [sic] afterwards or when the aggrieved party was ignorant of the facts constituting the breach. Id.; see also Enervations, Inc. v. Minnesota Mining and Mfg. Co., 380 F.3d 1066, 1069 at fn. 2 (8th Cir. 2004) (applying the well- settled Minnesota rule that a cause of action for breach of contract accrues immediately on a breach, though actual damages resulting therefrom do not occur until afterwards). Minnesota courts hold that a statute of limitations CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 14 of 35 Page 15 of 35
begins to run when the plaintiff can allege sufficient facts to survive a motion to dismiss for failure to state a claim upon which relief can be granted. Antone v. Mirviss, 720 N.W.2d 331, 335 (Minn. 2006). Moreover, RFC drafted the Contract and chose the Minnesota choice of law provision, so it cannot be heard to complain about the operation of Minnesota law in this instance. See Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979) (noting that [w]here there are ambiguous terms or the intent is doubtful, it is axiomatic that the contract will be construed against the drafter); and Stark v. Sandberg, Phoenix & von Gontard, P.C., 381 F.3d 793, 802 (8th Cir. 2004) (explaining the purpose of the common-law rule of contract interpretation that a court should construe ambiguous language against the drafter is to protect the party who did not choose the language from an unintended or unfair result). B. Minnesota Claims for Contractual Indemnification Accrue When the Parties Intend them to Accrue as Reflected in their Contract.
RFCs claim for indemnification arises out of provisions in its Client Guide. (Am. Compl. at 32). NBKCs purported duty to indemnify RFC is therefore contractual. Northwestern Nat. Ins. Co. ex rel. Swanberg v. Carlson, 711 N.W.2d 821, 824 (Minn. Ct. App. 2006); E.S.P. Inc. v. Midway Nat Bank of St Paul, 447 N.W.2d 882, 885 (Minn. 1989). It is important to distinguish contractual indemnity from other forms, such as a Minnesota CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 15 of 35 Page 16 of 35
common law cause of action for indemnity. An independent cause of action for indemnity is an equitable remedy based on restitution, and is commonly seen in joint tortfeasor cases. Blomgren v Marshall Management Services Inc., 483 N.W.2d 504, 506-07 (Minn. Ct. App. 1992). A defining feature of joint tortfeasor indemnity is the underlying policy that one joint tortfeasor should not be forced to bear more than their fair share of the shared liability. Id. In that context, it makes sense to mark the accrual of an indemnity claim as the time when one joint tortfeasor has been made to pay more than their fair share, such as when a judgment has been entered. Id. In fact, if a claim could accrue and expire before a judgment occurred, the public policy of fairly allocating liability could be undermined. Contractual indemnification, on the other hand, is a creature of contract, and ordinary contract principles apply. While the general rule for the accrual of contractual indemnification claims is derived from the common law claims accrue when damages or liability has been established courts are to interpret contracts according to the plain meaning of the terms used, and with the goal of ascertaining and respecting the intent of the parties. See Harleysville Ins. Co. v. Physical Distribution Services Inc., 716 F.3d 451, 457- 58 (8th Cir. 2013) (applying Minnesota law and discerning the plain meaning of the contractual indemnity provision). CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 16 of 35 Page 17 of 35
To that affect, this Court should not apply joint tortfeasor indemnity principles as RFC advocates. Rather, this Court should examine the Contract and all of the surrounding circumstances to determine the proper accrual date for RFCs indemnification claim. See E.S.P. Inc., 447 N.W.2d at 885 (although the duty to indemnify may arise out of a contract, [b]ecause indemnity is equitable in nature, its application hinges upon particular facts of the controversy). RFC responded to NBKCs first motion for summary judgment, and apart from arguing its amended complaint mooted that motion, went on to argue its claim for indemnification does not accrue under Minnesota law until its liability has been fixed or ascertained through a settlement or judgment. (RFCs Memo. Opposing NBKCs Mot. for Summary Judgment at 8, Dkt. No. 29). RFC cites three cases as authority for its assertion regarding the accrual of indemnity claims, but none of the cases concern contractual indemnity. See Hernick v. Verhasselt Construction, Inc., No. CX-02-1424, 2003 WL 1814876, at *5 (Minn. Ct. App. April 8, 2003) 5 (third-party common law claim for indemnity between contractors); Mason v. Spiegel, Inc., 610 F. Supp. 401, 404 n.3 (D. Minn. 1985) (third-party common law claim for indemnity between seller and manufacturer in products liability dispute); Metropolitan Property
5 Hernick is an unpublished opinion of the Minnesota Appellate Court and cannot be cited as precedential. MINN. ST. 480A.08(3)(c). CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 17 of 35 Page 18 of 35
& Casualty Ins. Co. v. Metropolitan Transit Commn, 538 N.W.2d 692, 695 (Minn. 1995) (statutory claim for indemnity in insurance dispute). The foregoing cases do not involve contractual indemnity or the sale of mortgage loans, and are inapplicable to RFCs indemnification claim at issue. Mason also shows that courts are not always precise when examining Minnesota indemnification law. Mason involves a claim for common law indemnity, but the court cites a case involving common law contribution for the accrual rule. See Mason, 610 F. Supp. at 404 n.3 (citing Grothe v. Shaffer, 232 N.W.2d 227, 232 (Minn. 1975)) (stating that under Minnesota law, the statute of limitations does not begin to run on a right to claim contribution or indemnity until liability by the party claiming such right actually occurs, but the cited authority is only about contribution). Other Circuits and State courts look to the parties intent as expressed in their contract, rather than common law rules, when interpreting contractual indemnification claims. See Bainville v. Hess Oil V.I. Corp., 837 F.2d 128, 130 (3d Cir. 1988) (determining scope of duty to indemnify by the parties mutual intent, expressed in the contract, rather than by general principles of equity); Huffy Corp. v. Arai Indus. Co., Ltd., 187 F.3d 635 (6th Cir. 1999) (explaining that in contract indemnity cases, as distinguished from cases where liability arises as a matter of law, the question of whether actual liability is a prerequisite to the duty to indemnify is answered by CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 18 of 35 Page 19 of 35
reference to what the parties, by virtue of their contractual capacity, intended as reflected in the language of the indemnity clause);Winnemucca Farms, Inc. v. Eckersell, 3:05-CV-0385-RAM, 2008 WL 8943375, at * (D. Nev. May 14, 2008) (When parties expressly deal with the question of indemnity in a written contract, the Ninth Circuit concludes that they intended what was expressed in their agreement, not that some common law rule should govern their rights and liabilities.). C. RFCs Indemnification Claim Accrued on the Loan Sale Date.
The Contract and attendant circumstances evidence the parties intent to establish the loan sale date as the claim accrual date. In fact, the loan sale date is the critical date to RFC because the extensive list of R&Ws in the Client Guide are imposed on NBKC as of the sale date of each loan. The indemnification provision in the Client Guide calls for NBKC to indemnify RFC for losses caused by NBKC committing an Event of Default. ( A212). But the Event of Default provision defines default, in pertinent part, as NBKC breaching the R&Ws section of the Client Guide. ( A208). The R&Ws in the Client Guide RFC generally fall into 2 categories. First, RFC seeks warranties regarding the condition of its client (NBKC), including inter alia its corporate status, authority to act, and lack of conflicts. (Client Guide at A200). Second, RFC seeks warranties regarding the condition of each residential mortgage loan NBKC is offering to sell to RFC, CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 19 of 35 Page 20 of 35
including inter alia that the loan meets RFCs terms and is eligible for sale, that there is no fraud, and that the information in the loan documents is accurate. (Client Guide at A202(A-MM). The Client Guide announces that the foregoing warranties imposed on NBKC are effective each time NBKC sells a loan to RFC. (Client Guide at A200). NBKC last sold loans to RFC in 2005. Any NBKC act or omission that RFC alleges to have breached the Contract occurred on or before the last loan was sold to RFC in 2005. RFC does not allege, nor can it, that NBKC breached any provisions of the Contract after RFC purchased a loan from NBKC, because NBKC did not service these loans for RFC and NBKC had no involvement with a particular loan after RFC purchased it. (Dec. at 14- 15). Any alleged breach of the Contract, including the R&Ws in the Client Guide that are purportedly incorporated into the Contract, occurred at or before the time RFC purchased the loan from NBKC. In other words, if a particular loan breached the Contract, the breach was complete at the time NBKC sold a loan that allegedly did not meet the requirements of the Contract or Client Guide. RFC was vested with a cause of action for contractual indemnification it could proceed on in court the moment it purchased a loan that did not meet the requirements of the Contract or Client Guide. Minnesota law is clear that any breach occurred when NBKC sold the loan to RFC, not when RFC CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 20 of 35 Page 21 of 35
realized any alleged damages from loans it purchased from NBKC. See Jacobson, 627 N.W.2d at 110 (explaining that cause of action accrues when the breach occurred, even where the resulting damages do not occur until later). A recent case applying New York law to a similar dispute held that claims for breach of contract, including failure to indemnify for breaching R&Ws, accrued when a loan was sold. See Lehman Bros. Holdings, Inc. v. Evergreen Moneysource Mortg. Co., 793 F. Supp. 2d 1189, 1193-94 (W.D. Wash. 2011) (the loan sale date is when breaches of R&Ws occurred and when a buyer could demand payment for such a breach). Mortgage loan litigation applying New York law should be persuasive because Minnesota and New York law regarding contracts and accrual of claims are substantially identical. Compare Jacobson, 627 N.W.2d at 110 with Lehman XS Trust Series 2006-4N ex rel. US Bank Nat Assn. v. Greenpoint Mortg. Funding, Inc., No. 13 Civ. 4707, 2104 WL 108523, ay *3-4 (S.D.N.Y. Jan. 10, 2014) (explaining that contract claims accrue at the time of the breach, starting the six year limitations period even where damages do not occur until later). Although RFC did not cite the specific R&Ws it alleges NBKC breached in its Complaint or attach the complete Client Guide as an exhibit to the Complaint, it did include the purported warranties NBKC made as to CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 21 of 35 Page 22 of 35
each loan. (Client Guide at A202). The Client Guide contains provisions purportedly calling on NBKC to warrant that the loans it sold to RFC were eligible for sale because they met all of the terms in the Client Guide (A202(A)), and that all of the information related to each loan was accurate. (Id. at A202(KK)). As the Client Guide further explained, any warranty made by NBKC was made as of the Funding Date of a loan. (A200). RFCs own documents evidences its intent to define a breach of a warranty by NBKC as occurring when NBKC sold RFC a loan that did not meet the terms in the Client Guide. If a particular loan did not meet all of the terms in Section A202, and was ineligible for sale to RFC, any breach of the pertinent warranties occurred when NBKC sold the loan to RFC. If there were inaccuracies in the information supporting a particular loan, those inaccuracies constituted a breach of the warranties in A202(A) and (KK) at the time NBKC sold the loan to RFC. There was no subsequent conduct by NBKC, nor was there any change in the features of the residential mortgage loans, that created a cause of action for RFC after the date the loan was sold. Put another way, the Contract and incorporated Client Guide express the parties intent to impose these material warranties on NBKC at the time of sale of each loan. By analogy, claims for breach of warranty accrue when the product is tendered. See ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE3 v. DB Structured Products, Inc., Nos. 13 Civ. 1869, 2014 WL CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 22 of 35 Page 23 of 35
1116758, at * (S.D.N.Y Mar. 20, 2014) (breach of contract claim accrued under New York law when the loans were sold in breach of R&Ws in the parties agreement); see also Appletree Square 1 Ltd. P'ship v. W.R. Grace & Co., 815 F. Supp. 1266, 1280-81 (D. Minn. 1993) affd sub nom. Appletree Square I, Ltd. Pship v. W.R. Grace & Co., 29 F.3d 1283 (8th Cir. 1994); City of Willmar v. Short-Elliott-Hendrickson, Inc., 475 N.W.2d 73, 80 (Minn. 1991) (both UCC cases). Because RFC imposed an extensive list of warranties upon NBKC, effective on the loan sale date, it is appropriate to analogize its indemnification claim to a breach of warranty claim and define the accrual date to be the sale/tender date. Determining as a matter of Minnesota law that claims for contractual indemnity over the sale of residential mortgage loans accrue when the loans are sold is fair to both parties and respects their intentions as expressed in the Contract. Accrual of claims on the loan sale date affords RFC six years to determine if a loan breached any of its R&Ws and pursue a remedy from NBKC, while also providing NBKC the peace of mind of knowing that stale claims wont arise many years later. D. Alternatively, RFCs Indemnification Claim Accrued on the Loan Securitization Date.
Alternatively, this Court should determine as a matter of law that RFCs contractual indemnity claims accrued when RFC securitized the loans, CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 23 of 35 Page 24 of 35
publicly exposing itself to liability. RFC admits it pooled the residential mortgage loans purchased from NBKC into trusts, securitizing them in order to sell interests in the trusts as investment securities. 6 (Am. Compl. at 2- 3, 21, 23, 25, 35-36). RFC admits it provided its own R&Ws to investors, covering the loans it sold. (Am. Compl. at 25, 36). By inference, every loan NBKC sold RFC, allegedly in violation of NBKCs R&Ws to RFC, constitutes a loan RFC sold in violation of RFCs R&Ws to the upstream investor. RFCs pleading and publicly available information establish that RFC securitized or otherwise sold all of the loans NBKC sold to it before the end of 2005. The last loan NBKC sold RFC was securitized into trust 2005-QS8. See (Ex. C to Am. Compl. at p. 89, RFC loan no. 9869005) (RFC list of securitized loans identify the trusts loans were sold to by year and establish 2005 trusts were the last). Public records establish the last loan NBKC sold RFC was securitized into trust 2005-QS8 by June 1, 2005. See Ex. B, PSA at p. 86 (RFC loan no. 9869005 listed on loan schedule), available at: https://www.sec.gov/Archives/edgar/data/1331579/000133157905000002/qs8ss final.txt. Upon securitizing these loans, RFC made its own R&Ws to potential
6 The court in Ace Securities concisely explains how loans are securitized. ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE3 v. DB Structured Products, Inc., Nos. 13 Civ. 1869, 2014 WL 1116758, at *2 (S.D.N.Y Mar. 20, 2014). CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 24 of 35 Page 25 of 35
investors, and exposed itself to liability for breaching them. As RFC admitted, the R&Ws it required from NBKC as to each loan were in turn R&Ws RFC made to its investors as to those same loans. Once RFC has exposed itself to liability by re-selling a loan, it is proper to deem that its cause of action for contractual indemnification has accrued. This scenario highlights the danger of relying on joint tortfeasor indemnification case law to interpret the parties contractual indemnity agreement. The cases interpreting common law joint tortfeasor contribution/indemnity claims explain the policy goal behind the common law rule is to prevent an unfair allocation of shared liability. Blomgren, 483 N.W.2d at 506-07. With that public policy goal in mind, it would be illogical to allow this type of indemnity to accrue before judgment, say the date of the accident for example, because there is as of yet no unfair allocation of shared liability. In contrast, RFC and NBKC are not tortfeasors, joint or otherwise. The parties are litigating RFCs claim that NBKC breached the indemnification provision in the parties Contract. RFC does not want to share liability, and it is not alleging that it has paid an unfair share of some joint liability. In fact, RFC treats the indemnification clause in the Contract as if it afforded RFC the right to impose strict liability on NBKC, in order to transfer all liability on these loans to NBKC. CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 25 of 35 Page 26 of 35
Where the party benefiting from a contractual indemnification provision is permitted to shift all liability, and accrual of its claims are tolled until some later judgment is imposed, it encourages the beneficiary of the blanket protection to neglect the servicing of the loan, and otherwise disregard its duties, knowing that it can push any later damages downstream. Conversely, establishing that claims accrue when the last loan is sold and a trust is closed encourages diligence, but still affords RFC six years after a trust closes to bring a claim. See Lehman XS Trust, Series 2006- GP2 v. GreenPoint Mortg. Funding, Inc., No. 12 Civ. 7935, 2014 WL 1301944, at * (S.D.N.Y Mar. 31, 2014) (claims that loans sold to trust breached R&Ws of pooling agreement accrued when the last loan was sold and the trust closed); ACE Securities Corp. v. DB Structured Products, Inc., 977 N.Y.S.2d 229, 230-31 (NY Sup. Ct. App. Div. 2013) (trustees claim that sponsor breached R&Ws in agreement to securitize loans accrued on the closing date of the trust, when any breach occurred). III. RFCs Unreasonable Attempt to Toll the Statute of Limitations Before Claims Accrue is Unenforceable.
Not only will RFC argue that its claims dont accrue until it decides, at its discretion, to pay back its investors on their claims, but it also will assert that its claims survive for the life of the loans. In the event the Court determines that RFCs claims do not accrue until it actually has judgments CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 26 of 35 Page 27 of 35
entered against it, this Court should find the Contract contains an unreasonable and therefore unenforceable tolling of the statute of limitations. RFCs Contract should be deemed unenforceable to the extent it purports to toll the statute of limitations on claims for breach of contractual indemnification, before such claims have accrued. See, e.g., Lehman XS Trust, Series 2006-GP2 v. GreenPoint Mortg. Funding, Inc., No. 12 Civ. 7935, 2014 WL 1301944, at * (S.D.N.Y Mar. 31, 2014) (New York law does not permit tolling the limitations period before a claim has accrued). In any event, to be enforceable under Minnesota law, a contractual indemnity provisions must clearly and unequivocally apprise the indemnitee of the scope of its duty to indemnify. See Harleysville Ins Co v Physical Distribution Services Inc., 716 F.3d 451, 457-58 (8th Cir. 2013); Yang v Voyagaire Houseboats Inc., 701 N.W.2d 783, 791 at fn 5 (Minn. 2005) (requirement that indemnity provision be clear and unequivocal applies to all contractual indemnity claims, not just construction cases). RFCs indemnity provision does not clearly and unequivocally give NBKC notice of RFCs assertion that the indemnity clause acts to toll the statute of limitations. RFCs Client Guide purports to force the R&Ws imposed on NBKC to survive and remain in effect for the life of the loans. (Client Guide at A209(c)). Because many of the loans NBKC sold RFC were 30-year residential mortgage loans, RFCs Contract impermissibly seeks to toll the CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 27 of 35 Page 28 of 35
Minnesota statute of limitations for breach of contractual indemnity provisions by up to thirty years. If so permitted, RFC could wait 36 years after NBKC sold it a loan to bring suit for indemnification. This is not what the parties bargained for in the Contract, and in any event, this tolling provision is unreasonable under Minnesota law. Contracting parties may alter the statutory limitations period so long as the new period is reasonable. Peggy Rose Revocable Trust v. Eppich, 640 N.W.2d 601, 606 (Minn. 2002). While Minnesota law allows contracting parties to limit the time in which a cause of action may be brought, such provisions are disfavored and are construed strictly against the party invoking them. Hartford Fire Ins. Co. v. Clark, 562 F.3d 943, 946 (8th Cir. 2009). Although most Minnesota cases deal with shortened limitation periods, the logic applies equally to RFCs effort to substantially extend the limitations period for its benefit, because whether a contractual limitations period is reasonable depends upon the particular facts presented; what is acceptable in one case may be objectionable in another. Id. Here, the parties expressly agreed that NBKC would sell loans to RFC, and in the event those loans violated any of the R&Ws NBKC made, the Contract provided a variety of remedies to RFC, including repurchase or indemnification. (Client Guide at A208, A209, and A212). RFC chose Minnesota law and its six year statute of limitation for contract actions, CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 28 of 35 Page 29 of 35
meaning the parties agreed that RFC would have six years from the time NBKC sold it a loan to seek a remedy from NBKC on that loan. To determine otherwise would permit RFC to unreasonably extend the limitation period by up to thirty years without expressly and conspicuously announcing its intent to do so in the Contract. IV. RFCS Amended Complaint Fails to State a Plausible Claim. A. RFC Has Pled Itself Out of Court by Admitting NBKC Last Sold RFC a Loan in April, 2005.
Alternatively, if the Court denies or declines to rule on NBKCs motion for summary judgment, NBKC moves for dismissal with prejudice pursuant to Rule 12(b)(6) because RFCs Amended Complaint admits that NBKC sold the last loan to RFC in April, 2005, rendering RFCs Amended Complaint untimely on its face. (Am. Compl. Ex. C). This Court may grant a Rule 12 dismissal on limitations grounds if the plaintiff pleads itself out of court. Varner v. Peterson Farms, 371 F.3d 1011, 1016 (8th Cir. 2004); Strandberg v. Country Mut. Ins. Co., No. 11-cv-1545, 2011 WL 6382873, at *2 (D. Minn. Dec. 20, 2011). B. RFCs Amended Complaint Fails to Give NBKC Proper Notice. A Rule 12(b)(6) motion to dismiss should be granted when the allegations in the complaint fail to state a claim for relief that rises above mere speculation. Fed. R. Civ. P. 12(b)(6); Bell Atlantic Corp. v. Twombly, 550 CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 29 of 35 Page 30 of 35
U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). On a Rule 12(b)(6) motion, the court construes the factual allegations in the complaint, and reasonable inferences drawn from the facts, in favor of the non-movant, but will grant the motion to dismiss if the complaint fails to include enough facts to state a claim for relief that is plausible on its face. MASTR Asset Backed Sec. Trust 2006-HE3 ex rel. U.S. Bank Nat. Assn v. WMC Mortgage Corp., 843 F. Supp. 2d 996, 998 (D. Minn. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim for breach of contract must allege the following elements: (1) formation of a contract; (2) performance by plaintiff of any conditions precedent; (3) a material breach of the contract by defendant; and (4) damages. General Mills Operations, LLC v. Five Star Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir. 2013) (applying Minnesota law). The mere assertion that a defendant breached a contractual obligation is not enough; the complaint must contain specific factual allegations supporting the legal conclusion that a breach has occurred. See Motley v. Homecomings Financial, LLC, 557 F. Supp. 2d 1005, 1013 (D. Minn. 2008) (granting Rule 12(b)(6) motion to dismiss breach of contract action). In Motley, the plaintiffs failed to plead the factual detail required to establish that the defendants actions constituted breaches, merely alleging that mortgage fees were unnecessary. Id. The Motley plaintiffs did not cite CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 30 of 35 Page 31 of 35
to any specific contract terms that were allegedly breached. Id. Plaintiffs must plead sufficient facts to demonstrate why and how [the defendant] allegedly breached its contracts with Plaintiffs. Id. Facts supporting each element of the claim are required, and granting dismissal is proper where the plaintiff fails to comply. See also Johnson v. Evangelical Lutheran Church of America, Civ. No. 11-23, 2012 WL 2370286 at *4 (D. Minn. Mar. 9, 2012) and Johnson v. Homeownership Preservation Foundation, Civ. No. 09-600, 2009 WL 6067018 at *6 (D. Minn. Dec. 18, 2009) (granting Rule 12(b)(6) motions to dismiss breach of contract claims for failure to allege adequate supporting facts). RFCs Complaint fails to plead the most basic facts about NBKCs alleged contractual breaches, including the specific loans and the specific representations and warranties that were breached. RFCs failure to plead adequate facts warrants dismissal on Twombly/Iqbal grounds. See T.B. Allen and Associates, Inc. v. Euro-Pro Operating LLC, Civ. No. 11-34792012 WL 2508021, at *2 (Dist. Minn. June 28, 2012) (dismissing breach of contract claim for failure to plead facts sufficient to state a plausible claim for relief). While RFC will assert that it need not identify specific loans or breaches, cases it may rely upon are distinguishable. See Bank Hapoalim B.M. v. Bank of America Corp., Nos. 12CV4316MRP (MANx), 2012 WL 6814194, at *7 (C.D. Cal., Dec. 21, 2012) (deciding plaintiff did not need to CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 31 of 35 Page 32 of 35
plead each loan where complaint alleged all of the loans deviated from underwriting guidelines); Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, 920 F. Supp. 2d 475, 512-13 (S.D.N.Y. 2013) (findings of fact after bench trial concluded that the parties contract did not require notice as to each loan). Here, RFC has pled less than the bare minimum, merely pleading the existence of a contract and generic breaches that caused unspecified damages. (Compl. 1-4, 63-65). Rule 8(a) requires that pleadings must contain a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a); ACIST Medical Systems, Inc. v. OPSENS, Inc., No. 11-539, 2011 WL 4640884, at * (D. Minn. Oct. 4, 2011). RFC has failed to adequately plead how NBKC breached the Contract, as NBKC cannot determine from the Complaint which provisions of the Contract it allegedly breached. Nor can NBKC determine from the Complaint which loan or loans RFC now claims breached the Contract and how any such loan breached the Contract. RFCs Complaint does not plead enough facts to state a plausible claim for relief, where all of the information on each loan is in their possession. If facts exist sufficient to state a plausible claim, RFC would have pled them. In an analogous context, courts have held that a plaintiff does not satisfy Rule 8 notice standards by alleging generally that even loans CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 32 of 35 Page 33 of 35
identified by name were unsafe and unsound transactions. In RTC v. Blasdell, 154 F.R.D. 675, 690 (D. Ariz. 1993), the name of the transaction and the alleged loss amount failed to provide fair notice of how any such loan allegedly was unsafe and unsound. In Blasdell, the court ordered the plaintiff to identify (1) the date or dates of each transaction, (2) the identity of the person or entities involved in each transaction, (3) a brief statement regarding the unsafe or unsound nature of the transaction, and (4) the identity of the defendant alleged to be involved in each transaction. Id. Other courts have directed plaintiffs to identify each loan that allegedly is at issue in a complaint and have held that a plaintiff cannot allege generally that other unidentified loans might be at issue. See FDIC v. Wise, 758 F. Supp. 1414, 1420-21 (D. Colo. 1991) (striking allegations purporting to reserve right to prove additional unsound practices not in the complaint and allegations that identified transactions were only examples of other unsound practices). In contrast to RFCs pleading that does not identify a single loan, other recent mortgage repurchase suits have survived Rule 12(b)(6) motions because the plaintiffs satisfied Rule 8 and stated plausible claims by specifically identifying the loans and alleged breaches as issue. See Aurora Commercial Corp. v. PMAC Lending Services, Inc., No. 13cv00497LTB, 2014 WL 859253, at * 4 (D. Colo., Mar. 5, 2014) (surviving motion because plaintiff identified specific loans and the alleged misrepresentations CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 33 of 35 Page 34 of 35
defendant made as to each loan sold); JPMorgan Chase Bank, N.A. v. Sierra Pacific Mortg. Co., Inc., No. 2:13cv01397JAMKJM, 2013 WL 6491526, at *3-4 (E.D. Cal. Dec. 10, 2013) (surviving motion because plaintiff specifically identified the loans at issue, their alleged defects, breaches and/or ground for repurchase or make whole demand, the date the plaintiff repurchased the loans from investors, and the date the plaintiff made a final demand on the defendant). Unlike the foregoing authority, RFCs Complaint fails to provide adequate notice to NBKC because RFC does not identify specific loans or Contract provisions, preventing NBKC from investigating the allegations. RFC attaches a list of purported loans to its Amended Compliant, but the list does not provide enough information to identify the loans or alleged breaches. NBKC is unable to identify the alleged loans without more information. As the Motley court explained: it is not enough for [plaintiff] to simply recite the magic words breach in order to avoid dismissal. Motley, 557 F. Supp. 2d at 1013. CONCLUSION Defendant NBKC respectfully requests the Court grant its motion and enter judgment against RFC because the material facts are undisputed and NBKC is entitled to judgment as a matter of law that RFCs claim is time- barred under Minnesota law. CASE 0:13-cv-03528-ADM-TNL Document 38 Filed 04/16/14 Page 34 of 35 Page 35 of 35
Alternatively, NBKC respectfully requests the Court grant its motion to dismiss because RFC fails to state a claim for relief where its own pleadings establish that the claim is time-barred. Further, the Amended Complaint fails to state a plausible claim for relief because RFC did not provide enough information to determine whether NBKC sold the loans to RFC, and is inadequate to give NBKC proper notice as to its alleged breaches of the Contract and RFCs alleged resulting damages. Dated: April 16, 2014.
Respectfully submitted, NATIONAL BANK OF KANSAS CITY /s/ Scott N. Gilbert One of its attorneys
Admitted Pro Hac Vice:
Nancy A. Temple Scott N. Gilbert KATTEN & TEMPLE LLP 542 South Dearborn Street, 14th FL Chicago, Illinois 60605 P: (312) 663-0800 F: (312) 663-0900 ntemple@kattentemple.com sgilbert@kattentemple.com Local Counsel:
/Debtors Motion for Entry of Interim and Final Orders Pursuant to 11 U.S.C. Sections 105, 361, 362, 363 and 507, Rules 2002, 4001, 9014 of the Federal Rules of Bankruptcy Procedure for an Order (1) Authorizing Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the Automatic Stay, and (IV) Scheduling a Final Hearing filed by Albert Togut on behalf of Dewey & LeBoeuf LLP. (Attachments: # (1) Pleading Declaration of Jonathan A. Mitchell In Support of Debtors Motion# (2) Exhibit 1: Proposed Interim Order# (3) Exhibit A: Budget)
The Flintkote Company v. Dravo Corporation, Diamond Manufacturing Company, Inc. and B. F. Diamond Construction Company, Inc., 678 F.2d 942, 11th Cir. (1982)