On August 19, in an oral ruling from the bench, Vice Chancellor J. Travis Laster of the Delaware Chancery Court dismissed as time-barred loan repurchase claims brought by U.S. Bank as trustee of an RMBS trust against JPMorgan and EMC Mortgage. U.S. Bank alleged that EMC misrepresented the quality of more than US$500 million worth of mortgages that were sold to the trust in 2006 and that both EMC and JPMorgan, which took over as the servicers of the trust in 2011, failed to notify the trustee of the faulty loans. Vice Chancellor Laster, following the Delaware Chancery Court's 2012 decision in Central Mortgage Co. v. Mortgage Stanley Capital Holdings LLC., held that Delaware's three-year statute of limitations for breach of contract claims began to run on the day the allegedly false representations were made. He held that the contract's accrual provision could not extend the statute of limitations and that no other tolling doctrines applied to render plaintiff's claims timely. He also held that the alleged failure to notify claim was derivative of the underlying claim for breach of representation and subject to the same limitations period. Vice Chancellor Laster did not dismiss U.S. Bank's claims for unjust enrichment and failure to provide documents, finding them well pled and not time barred. Hearing Transcript.
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