

Deutsche Zentral-Genossenschaftsbank AG v Stanley (2017 NY Slip Op 05037)





Deutsche Zentral-Genossenschaftsbank AG v Stanley


2017 NY Slip Op 05037


Decided on June 20, 2017


Appellate Division, First Department


Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.


This opinion is uncorrected and subject to revision before publication in the Official Reports.



Decided on June 20, 2017

Richter, J.P., Andrias, Moskowitz, Feinman, Kapnick, JJ.


654035/12 3910 3909

[*1]Deutsche Zentral-Genossenschaftsbank AG, et al., Plaintiffs-Respondents,
vMorgan Stanley, et al., Defendants-Appellants.


Davis Polk & Wardwell LLP, New York (James P. Rouhandeh of counsel), for Morgan Stanley, Morgan Stanley & Co., LLC, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Capital I Inc., Morgan Stanley ABS Capital I Inc., Saxon Funding Management LLC, Saxon Mortgage Inc., and Saxon Asset Securities Company, appellants.
Davis & Gilbert LLP, New York (H. Seiji Newman of counsel), for Natixis Real Estate Holdings LLC, appellant.
Labaton Sucharow LLP, New York (Mark S. Arisohn of counsel), for respondents.

Order, Supreme Court, New York County (Marcy S. Friedman, J.), entered August 13, 2014, which, to the extent appealed from as limited by the briefs, denied defendants' motions to dismiss with regard to certain fraud claims, unanimously affirmed, without costs.
In connection with their purchase of about $694 million in residential mortgage-backed certificates, plaintiffs allege that defendants provided them offering materials containing false and misleading statements regarding the underlying mortgage loans. Specifically, plaintiffs claim that the offering materials understated the loan-to-value ratios and overstated owner- occupancy rates, and misrepresented that exceptions to the originators' underwriting guidelines would be permitted only on a case-by-case basis, when, in fact, there were widespread deviations from the guidelines. Plaintiffs allege that defendants' misrepresentations caused them to make a far riskier investment than they intended, and that they suffered considerable investment losses as a direct result.
The motion court properly declined to dismiss the fraud claims as barred by the German statute of limitations, given the incomplete record as to the applicable German legal standards
(see HSH Nordbank AG v Barclays Bank PLC, 42 Misc 3d 1231[A], 2014 NY Slip Op 50290[U], *9 [Sup Ct, NY County 2015]; see generally Benn v Benn, 82 AD3d 548, 548 [1st Dept 2011]).
Plaintiffs have sufficiently alleged each element of fraud
(IKB Intl. S.A. v Morgan Stanley , 142 AD3d 447 [1st Dept 2016];
Basis Yield Alpha Fund Master v Morgan Stanley, 136 AD3d 136 [1st Dept 2015]).
We considered defendants' remaining contentions and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JUNE 20, 2017
CLERK


