W. & S. Life Ins. Co. v. Bank of New York Mellon

Citations

• 2019 Ohio 388
• 129 N.E.3d 1085

Syllabus

CONTRACTS – POOLING SERVICES AGREEMENT – DUTIES OF TRUSTEE – DAMAGES – STANDING: Under New York law, where a pooling services agreement states that, prior to an event of default, the duties and obligations of the trustee shall be determined solely by the express provisions of the agreement, the trustee has no implied duties. Prior to an event of default, the trustee's duties were limited to those specifically set out by the pooling services agreement and the trustee had no implied duty to supervise or enforce the duties of other parties to the agreement. General allegations of a breach of a representation or warranty are insufficient to provide notice to a trustee: a trustee only discovers the breach of a representation or warranty upon actual knowledge of a violation of a specific breach as to a specific loan. Sampling is an inappropriate way to establish breaches of representations and warranties, because breaches must be loan-specific and sampling does not show loans with material breaches. Where the pooling services agreement required notice to be provided to the master servicer to trigger an event of default, and no notice was provided, there was no event of default. Where the pooling services agreement required notice to the trustee for the trustee's duties to be elevated to those of a prudent person under the circumstances, and no notice was given, the trustee's duties were not elevated. Plaintiffs were not entitled to damages where no breach of contract was established. Under New York or Ohio law, once a holder of certificates transfers them, it loses standing to bring claims arising out of the certificates.