On April 3, 2015, Judge Laura Swain of the U.S. District Court for the Southern District of New York granted in part and denied in part Morgan Stanley Mortgage Capital Holdings LLC's ("MSMC") motion to dismiss breach of contract and breach of the covenant of good faith and fair dealing claims brought by Deutsche Bank National Trust Company ("Deutsche Bank"), in its capacity as Trustee for the Morgan Stanley Structured Trust I 2007-1. Deutsche Bank alleged that MSMC, as the sponsor of the RMBS securitization, breached the representations and warranties in the Mortgage Loan Purchase Agreement, and was therefore obligated to cure or repurchase breaching loans. Judge Swain granted MSMC's motion to dismiss Deutsche Bank's claims that MSMC breached an implied covenant of good faith and fair dealing, holding that this was based on the same facts as, and therefore impermissibly duplicative of, the breach of contract claim. However, Judge Swain denied MSMC's arguments that the breach of contract claims should be dismissed. Judge Swain found that Deutsche Bank had provided adequate notice of breaches beyond the 1,620 loans specifically addressed in Deutsche Bank's breach notice letter because the letter gave MSMC notice of pervasive breaches. She also declined to dismiss Deutsche Bank's claims for compensatory, rescissory, and consequential damages at the pleadings phase. Order.
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