On January 12, 2015, Vice Chancellor Laster of the Delaware Chancery Court granted the plaintiff's motion for reargument and revived the breach of contract claims that the court had previously held to be untimely in Bear Stearns Mortgage Funding Trust 2006-SL1 v. EMC Mortgage Corp. and JPMorgan Chase Bank, N.A.. First, the court concluded that a controlling Delaware Supreme Court decision the parties had not previously identified required application of New York's six year statute of limitations, rather than Delaware's three-year limitation period. The lawsuit was commenced within six years of the alleged breach, rendering it timely under New York law. Second, the court alternatively reasoned (in dicta) that even assuming Delaware law applied, the action would be timely due to the contract's accrual provision, which stated that the repurchase claims would not accrue until the plaintiff's demands were refused. This constituted a "condition precedent" to the action that tolled accrual under Delaware law, a position New York courts have to date rejected. The Court further concluded that the accrual provision validly extended the statute of limitations as permitted by a recent Delaware statute, which permits parties to extend the period up to 20 years (under New York law, parties are not permitted to extend the limitations period by agreement). Order.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.