On February 9, the Court of Appeals of Ohio issued an order affirming a 2017 bench trial defense verdict for The Bank of New Mellon ("BNYM") in a lawsuit filed by certain RMBS investors alleging that BNYM had breached its duties as trustee under certain pooling and service agreements.
The appellate court, in a lengthy opinion, affirmed findings by the trial court that (i) the pooling and service agreements imposed only limited pre-default obligations on BNYM as Trustee; and (ii) that those duties remained limited in this case, and were never heightened by law because plaintiffs failed to prove that BNYM had actual knowledge of specific breaches of representations and warranties on any particular loans and/or had received a notice of an event of default. The Court also affirmed the trial court's finding that under the law, plaintiffs had to prove the existence and materiality of loan breaches on a case-by-case basis, rendering loan sampling an inappropriate method to calculate damages.
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