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In
a 68-page decision, U.S. District Judge Katherine Polk Failla in
Manhattan dismissed a lawsuit by investors led by Ireland's
Phoenix Light SF Ltd, saying legal issues that they raised had
been resolved in earlier litigation.
The judge also said Commerzbank AG was barred from pursuing many
claims against San Francisco-based Wells Fargo because the
German lender lacked standing or sued too late.
Commerzbank was allowed to sue over Wells Fargo's alleged
failure to act upon learning that servicers for 17 trusts had
liquidated 3,377 loans with defective documentation instead of
having sellers repurchase them. Some other claims also survived.
Lawyers for the plaintiffs did not immediately respond to
requests for comment. Wells Fargo did not immediately respond to
similar requests.
The lawsuits sought hundreds of millions of dollars in damages
over Wells Fargo's role as a loan trustee.
They are part of a slew of litigation over the last
decade-and-a-half seeking to hold lenders and trustees liable
for the plunging value of residential mortgage-backed securities
once considered safe.
Litigation against trustees typically accused them of failing to
require sellers to buy back soured loans, notify investors of
defaults, and use appropriate standards of care.
Wells Fargo previously settled two investor class actions and a
lawsuit by the National Credit Union Administration over
defective mortgages.
In August 2018 it agreed to pay a $2.09 billion civil fine to
settle U.S. Department of Justice claims it knowingly made and
sold residential mortgage loans that misstated income
information and were lower quality than it had represented.
The cases are Phoenix Light SF Ltd et al v Wells Fargo Bank NA,
U.S. District Court, Southern District of New York, No.
14-10102; and Commerzbank AG v Wells Fargo Bank NA in the same
court, No. 15-10033.
(Reporting by Jonathan Stempel in New York; Editing by Matthew
Lewis)
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