Manhattan Supreme Court Justice Eileen Bransten dismissed with prejudice a breach of contract suit involving a securitization comprised of $1.45 billion in residential mortgage loans, stating the case was “materially similar” to one decided by the Appellate Division, First Department.

In a March 17 decision made public Wednesday, Bransten tossed out claims brought derivatively by Federal Housing Finance Agency, as conservator of the Federal Home Loan Mortgage Corporation, known as Freddie Mac, against Deutsche Bank Structured Products. The complaint alleged breaches of representations and warranties of mortgage loans sold to investors in an Aug. 25, 2006 transaction.

The judge’s five-page decision in Ace Securities Home Equity Loan Trust, Series 2006-FM1 v. Deutsche Bank Structured Products, 652978/2012, cited controlling law from Ace Securities v. DBSP, 112 A.D.3d 522 (1st Dept. 2013), or Ace II, to support dismissal based on three threshold issues: FHFA’s standing, the statute of limitations and relation-back of the trustee’s later-filed complaint.

FHFA first filed suit on August 24, 2012, a day shy of the six-year expiration date for breach of contract actions in New York. HSBC, as the trustee, joined the action on Jan. 28, 2013.

Bransten held that under the Appellate Division’s Ace II decision, FHFA lacked standing to sue under the pooling and servicing agreement’s “no-action” clause; that the six-year statute of limitations period began on the transaction’s closing date; and that HSBC’s complaint could not “relate back” to FHFA’s summons with notice to make it timely.

David Woll, a partner at Simpson Thacher & Bartlett, represents Deutsche Bank. Michael Shuster, partner at Holwell Shuster & Goldberg, represents the trustee.

The parties submitted their motion papers a year ago, roughly when the Commercial Division saw a split in the interpretation of when RMBS breach claims accrue—at the time of closing, or upon the bank’s refusal to cure or repurchase a defective loan.

In court papers, attorneys proposed that Bransten reserve ruling until the First Department decided the issue. In December, the appellate court held that the claims accrue on the closing date, when the representations and warranties were first made, reversing Commercial Division Justice Shirley Kornreich.

Recently, the First Department denied the trustee’s motion for reargument or leave to appeal to the Court of Appeals in Ace II, setting the stage for an expected direct appeal to the state’s top court.

There are still two cases pending in the Commercial Division involving these same parties and issues, but different transactions: FHFA 2006-HE3 v. DB Structured Products, 652231/2012, and FHFA 2006-HE2 v. DBSP, 651414/2012, both assigned to Kornreich.