Deutsche Bank has won a $330m mortgage securities lawsuit dismissal because plaintiffs didn't file their legal complaints in time.
The bank's victory stems from a New York appeals court which time barred plaintiffs for seeking hundreds of millions of dollars in compensation, following the sale of toxic mortgage products, because the state's six-year statute of limitations applied to when the contract was executed in 2006.
This decision reversed a 13 May ruling that found that the statute of limitations did not begin until the bank refused investor demands that it repurchase the defective loans. If that decision still applied, investors would have been able to sue for damages.
US lawyers have remarked that the appeals court ruling could impact dozens of other potential lawsuits.
"[The ruling] will have an impact on numerous existing cases as well as limiting new cases because most of the securitizations at issue occurred more than six years ago," said Scott Musoff, a lawyer who is involved in similar cases but not the case in question.
The New York appeals court said that the plaintiffs' attempts at a lawsuit were not timely for a variety of reasons and therefor the unanimous four-judge appeals panel ruled that the lower court "erred in finding that plaintiff's claims did not accrue until defendant either failed to timely cure or repurchase a defective mortgage loan."
It said that the bondholders didn't give the bank the 60 and 90-day periods to cure or repurchase the underlying mortgages before filing their summons in March 2012, as the agreement required.
The court also ruled that the investors whose bonds were held in a trust lacked standing to commence the action on behalf of the trust.
The case is ACE Securities Corp v DB Structured Products Inc., New York state Supreme Court, Appellate Division, No. 11384 and M-5893, M-6111 and M-6133.