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Lehman Brothers Holdings, Inc. v. First California Mortgage Corporation

United States District Court, D. Colorado

April 30, 2014

LEHMAN BROTHERS HOLDINGS, INC., a Delaware corporation, Plaintiff,
v.
FIRST CALIFORNIA MORTGAGE CORPORATION, a California corporation, Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

CHRISTINE M. ARGUELLO, District Judge.

This matter is before the Court on Defendant First California Mortgage Company's[1] Motion and Brief for Summary Judgment. (Doc. # 21.) For the reasons discussed below, the motion is granted.

I. BACKGROUND

Plaintiff Lehman Brothers Holdings, Inc. ("LBHI") is a Delaware corporation with its principal place of business in New York. (Doc. # 1-1, ¶ 1.) Defendant is a California corporation with its principal place of business in California. ( Id., ¶ 2.) On July 7, 2005, Defendant made a mortgage loan, identified as Loan No. ****0521, in the amount of $348, 800, to Borrower Ismael Septimo, in connection with the real property known by address 9943 Prairie Dunes Way, Sacramento, California 95829. ( Id., ¶ 8; Doc. # 21 at 1.) On October 2, 2005, Defendant sold this Loan to Lehman Brothers Bank, FSB ("LBB") pursuant to a written Loan Purchase Agreement (the "Agreement") and the Seller's Guide, which is incorporated by reference. ( Id., ¶ 9; Doc. # 21 at 3.) Subsequently, LBB sold the loan to the Federal National Mortgage Association ("FNMA"). ( Id. at 3.)

At some point thereafter, FNMA discovered what it believed to be material defects and breaches in the loan, including occupancy misrepresentations by the Borrower and cash back to the Borrower that should have reduced the sale price of the loan. (Doc. # 21-2.) In accordance with FNMA's demands, LBB repurchased the loan on July 14, 2008. (Doc. # 21 at 3; Doc. # 21-3.) On July 28, 2008, LBB issued a repurchase demand to Defendant. (Doc. # 21-4.) On or about May 9, 2013, LBB assigned its interest in the loan to LBHI, effective as of February 12, 2012. (Doc. # 21 at 3.)

On July 8, 2013, Plaintiff filed suit in Douglas County, Colorado, alleging breach of contract and breach of express warranty. (Doc. # 12, ¶¶ 25-34.) Defendant removed the case to this Court on August 7, 2013. (Doc. # 1.) Defendant now moves for summary judgment on all claims, arguing that the action is barred by the Colorado statute of limitations. (Doc. # 21 at 9-10.) On February 21, 2014, Plaintiff filed a Response (Doc. # 25), to which Defendant replied (Doc. # 31).

II. LEGAL STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. To overcome a motion for summary judgment, the nonmoving party must present enough evidence to allow a reasonable jury to find in its favor. Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993). In analyzing the evidence on a motion for summary judgment, this Court must view the factual record and draw reasonable inferences in favor of the nonmoving party. Kidd v. Taos Ski Valley, Inc., 88 F.3d 848, 851 (10th Cir. 1996).

III. LAW AND ANALYSIS

To determine whether this action is timely, the Court must first determine which state's statute of limitations applies to the instant case. The parties focus on whether the plain language of the Agreement mandates that this Court apply New York's six-year limitations period.[2] The Agreement states, in relevant part:

This Agreement and the Seller's Guide shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with the laws of the State of New York, except to the extent preempted by Federal law.

(Doc. # 21-1 at 5.) The Seller's Guide further states:

The Loan Purchase Agreement shall be construed in accordance with the substantive law of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such law without regard for the principles of conflict of laws.

Plaintiff argues that, because the parties' contract applies "without regard for the principles of conflict of laws, " it excludes application of the New York Borrowing Statute. (Doc. # ...


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