The plaintiff was a trustee of a trust “containing a pool of mortgage loans used to back residential mortgage-backed securities” (RMBS). After the plaintiff learned that “many of the loans were ‘junk’ loans that failed to meet applicable underwriting standards, it brought suit against the seller of the loans (“A”) and an affiliated company (“B”) created to deposit the loans in the trust.” The defendants moved to dismiss. They essentially argued that the agreement “through which it transferred loans to the trust forbids the trustee from suing to enforce the agreement without (“B’s”) consent” and that the agreements “exclusive remedy provision bars (plaintiff’s) claims for damages.” The court denied the motion to dismiss, except with respect to “failure-to-notify claims” that the plaintiff had abandoned.

In 2007, the defendants entered into a Pooling and Servicing Agreement (PSA) with the plaintiff and other banking entities to “securitize a pool of mortgages for sale as residential mortgage-backed securities.” The typical process for issuance of the RMBS involves a sponsor who originates or acquires mortgage loans, “creates a trust and a special-purpose business entity to deposit the loans into that trust, and then transfers the mortgage loans to the trust via the depositor.”