BlackRock Allocation Target Shares v. Wells Fargo Bank (247 F. Supp. 3d 377, 2017)

United States District Court for the Southern District of New York 2017-03-30

Banks and Banking

Citations

Full opinion text

OPINION AND ORDER

KATHERINE POLK FAILLA United States District Judge

In the near-decade since the collapse of the United States real-estate market, this District has been inundated with lawsuits brought by putative victims of that collapse against those they blame for it. As time has lapsed, and with it various statutes of limitation,. the targets of these lawsuits—as- well as the proffered bases of liability—have evolved. The instant cases represent the latest wave: They are brought by and on behalf of certifi-cateholders (“Plaintiffs”) of 53 residential-mortgage-backed securities (“RMBS”) trusts (the “Trusts”) against the Trusts’ common Trustee, Wells Fargo Bank, National Association (“Wells Fargo” or “Defendant”). Plaintiffs allege that Defendant failed to discharge its duties as Trustee. More specifically, Plaintiffs claim that Defendant discovered pervasive documentation errors, breaches of seller representations and warranties (“R&Ws”), and systemic loan-servicing violations, but disregarded its contractual obligations to protect Plaintiffs therefrom because, among other consequences, doing so would have exposed Defendant to liability for its own RMBS-related misconduct.

Defendant has moved to dismiss each of the above-captioned related actions for failure to state a claim. For the reasons set forth below, Defendant’s motion is granted in part and denied in part. In brief, Defendant’s motion to dismiss Plaintiffs’ breach of contract claims is denied; its motion to dismiss Plaintiffs’ tort claims is granted in part and denied in part; its motion to dismiss Plaintiffs’ claims under the Trust Indenture Act is granted in part and denied in part; its motion to dismiss Plaintiffs’ claims under the Streit Act is granted; its motion to dismiss Plaintiff NCUAB’s derivative claims is granted without prejudice to NCUAB’s ability to move for leave to replead; its motion to dismiss NCUAB’s direct claims is denied; and its motion to dismiss Commerzbank’s claims on timeliness grounds is denied.

BACKGROUND

A. Factual Background

Explanations of the typical formation process and structure of RMBS trusts abound in this District, and this Court will not here reinvent the wheel. Only a brief description is provided for context. See also BlackRock Allocation Target Shares v. Wells Fargo Bank, Nat’l Ass’n, No. 14 Civ. 9371 (KPF) (SN), 2017 WL 953550, at *1-3 (S.D.N.Y. Mar. 10, 2017) (describing the background of this consolidated action).

1. RMBS Trusts Generally

The Trusts in the instant action were originally -securitized by residential mortgage loans, and created to facilitate the sale of those loans to investors. (BR Compl. ¶¶ 3-4). Such- RMBS Trusts are formed according to the following process;First, institutions known as “sponsors” or “sellers” acquire and pool residential mortgage loans. (Id. at ¶¶ 5, 43). Each sponsor also selects the loans’ “servicer,” “often an affiliate of the seller or originator, to collect payments on the loans.” (Id. at ¶ 5). “Once the loans are originated, acquired and selected for securitization, the seller, through an affiliate called the depositor, creates a trust where the loans are deposited for the benefit of the Noteholders.” (Id.). Then the depositor “segments the cash flows and risks in the loan pool among different levels of investmént or ‘tranches.’” (Id. at ¶ 44). Typically, “cash flows from the loan pool are applied in order of seniority, going first to the most senior tranches[,] [and] ... any losses to the loan pool due to defaults, delinquencies, foreclosure or otherwise, are applied in reverse order of seniority.” (Id.). Next, “the depositor conveys the mortgage pool to the trust in exchange for the transfer of the RMBS to the depositor.” (Id. at ¶ 45). “Finally, the depositor sells the RMBS to an underwriter, and provides the revenue from the sale to the seller. The underwriter markets and sells the RMBS to investors.” (Id. at ¶ 46),

It is the sponsor-selected servicer’s responsibility to collect loan principal and interest (“P&I”) payments from the underlying borrowers. (BR Compl. ¶ 47). “After collection, the servicer sends the funds to the trust, which then makes payments to the noteholders. Mortgage delinquencies and defaults reduce the available P&I payments to be paid to the trust and passed through to investors,” (Id.). Therefore, “proper loan origination and underwriting of the mortgages underlying the RMBS, and proper and timely loan servicing and oversight” are of critical importance to investors, directly dictating their timely receipt of passed-through payments. (Id. at ¶ 48).

2. The Trusts, the Governing Agreements, and Defendant’s Duties Thereunder

The 53 Trusts at issue here are of two kinds: Pooling and Service Agreement (“PSA”) Trusts and Indenture Trusts. 41 of the 53 Trusts at issue in this case are. PSA Trusts. (Def. Br. 5). PSA Trusts “are organized under New York [common] law.” Ret. Bd. of Policemen’s Annuity & Benefit Fund of City of Chi. v. Bank of N.Y. Mellon (hereinafter, “PABF III”), 775 F.3d 154, 156 (2d Cir. 2014). In a PSA trust, “[t]he right to receive trust income is parceled into certificates and sold to investors,” who are called “certificatehold-ers.” Id. (quoting BlackRock Fin. Mgmt. Inc. v. Segregated Account of Ambac Assurance Corp. (hereinafter, “Ambac”), 673 F.3d 169, 173 (2d Cir. 2012)). “The terms of the securitization trusts as well as the rights, duties, and obligations of the trustee, seller, and servicer are set forth in [governing agreements, frequently styled as PSAs].” Id. (alteration in original) (quotation mark omitted) (quoting Ambac, 673 F.3d at 173).

12 of the 53 Trusts at issue in this case are Indenture Trusts. (Def. Br. 5). Indenture Trusts are governed by their Trust Agreements, Mortgage Loan Purchase and Sale Agreements (“MPLAs”), and Sale and Service Agreements (“SSAs”). (See BR Compl. ¶ 49). See generally BlackRock Allocation Target Shares, 2017 WL 953550, at *1-3. As Defendant explains,

Indenture Trusts differ from . PSA Trusts in that the Depositor conveys ownership of the pooled loans to the Issuer, which in turn issues its own notes pursuant to the indenture. Under the indenture, the Issuer collateralizes the notes by pledging the mortgage loans to the indenture trustee, which holds the pledge on behalf of the note-holders.

(Def. Br. 5).

The PSAs, Trust Agreements, MPLAs, and SSAs (together, the “Governing Agreements”) are of critical importance to Defendant’s motion; they dictate the scope of Defendant’s duties to Plaintiffs. The duties of an RMBS trustee are “distinct from those of an ‘ordinary trustee,’ which might have duties extending well beyond the agreement.” Phoenix Light SF Ltd. v. Bank of N.Y. Mellon (hereinafter, “PL/BNYM”), No. 14 Civ. 10104 (VEC), 2015 WL 5710645, at *2 (S.D.N.Y. Sept. 29, 2015) (citing AG Capital Funding Partners, L.P. v. State St. Bank & Tr. Co., 11 N.Y.3d 146, 156, 866 N.Y.S.2d 578, 896 N.E.2d 61 (2008)); see also Fixed Income Shares: Series M v. Citibank N.A. (hereinafter, “Fixed Income Shares”), 130 F.Supp.3d 842, 857-58 (S.D.N.Y. 2015). In contrast, “the duties of an indenture trustee ... [are] governed solely by the terms of the indenture!.]” Millennium Partners, L.P. v. U.S. Bank Nat’l Ass’n, No. 12 Civ. 7581 (HB), 2013 WL 1655990, at *3 (S.D.N.Y. Apr. 17, 2013) (quotation mark omitted), aff'd sub nom. Millennium Partners, L.P. v. Wells Fargo Bank, N.A., 654 Fed.Appx. 507 (2d Cir. 2016) (summary order), and aff'd sub nom. Millennium Partners, L.P. v. Wells Fargo Bank, N.A., 654 Fed.Appx. 507 (2d Cir. 2016) (summary order). “This is true regardless of whether the trust is an indenture trust or a PSA [trust].” Royal Park Invs. SA/NV v. HSBC Bank USA Nat’l Ass’n (hereinafter, “RP/HSBC”), 109 F.Supp.3d 587, 597 (S.D.N.Y. 2015) (citing Greenwich Fin. Servs. Distressed Mortg. Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23, 29 (2d Cir. 2010); Bank of N.Y. Mellon v. Walnut Place LLC, 819 F.Supp.2d 354, 364-65 & n.6 (S.D.N.Y. 2011)).

Though the Governing Agreements at issue here are not identical, Plaintiffs argue that they all impose four fundamental duties on Defendant:

• First, Defendant “must ensure that the Trusts take perfected, enforceable title to the mortgage loans and must certify receipt of complete mortgage loan files from the Seller.” (Pl. Opp. 3 (citing BR Compl. ¶¶ 60, 62, 98, 159, Ex. 5; NCUAB Compl. ¶¶ 65-68, Ex. J; PL Compl. ¶¶ 58-67; CB Compl. ¶¶ 34-43)). In the event that Defendant “discovers a material defect (e.g., a missing document),” Defendant is obligated to “promptly identify the loan in its certifications, and require the Seller to cure or repurchase the loan.” (Pl. Opp. 3-4 (citing BR Compl. ¶¶ 6, 54, 98; NCUAB Compl. ¶¶ 70-71, 74-75; PL Compl. ¶¶ 65-66, 68; CB Compl. ¶¶ 41-42, 44)).

• Second, Defendant “must give notice to the Seller and other parties upon ‘discovery of any breach of the R&Ws which materially and adversely affects the interests of the Holders or the Trust, and thereafter enforce the obligations of the Seller to cure or repurchase the breaching loan.” (Pl. Opp. 4 (citing BR Compl. ¶¶ 63, 164; RP Compl. ¶¶ 7-10; NCUAB Compl. ¶¶ 75, 377; PL Compl. ¶ 68; CB Compl. ¶ 44)).

• Third, Defendant “must promptly notify a responsible Sfervicer upon learning of the Servicer’s failure to perform in any material respect, and demand that such servicing failure be timely remedied.” (Pl. Opp. 4 (citing BR Comp. ¶¶ 1, 63-64; RP Compl. ¶ 10; NCUAB Compl. ¶¶ 75, 90; PL Compl. ¶ 80; CB Compl. ¶ 55)).

• And fourth, in the event of a “servicing ‘Event of Default’ ” (“EOD”) as defined in the Governing Agreements, Defendant acquires heightened obligations “to exercise the same degree of care and skill as a prudent person would in the conduct of his or her own affairs.” (Pl. Opp. 4 (citing BR Compl. ¶¶ 27, 207; RP Compl. ¶¶ 17, 61; NCUAB Compl. ¶¶ 92, 414; PL Compl. ¶¶ 73-75; CB Compl. ¶¶ 49-51)).

The PSA Trusts define an EOD to “include a Servicer’s failure to: (i) act in accordance with the normal and usual standards of practice of prudent mortgage servicers; (ii) ensure the loans are serviced legally; and (iii) promptly notify [Defendant] and other parties upon discovery of Sellers’ R&W breaches.” (Pl. Opp. 4 (citing BR Compl. ¶¶ 25-26; RP Compl. ¶¶ 57, 59; NCUAB Compl. ¶¶ 85-87, 285-89, 337; PL Compl. ¶¶ 68, 79-80; CB Compl. ¶¶ 44, 54-55)). Defendant’s heightened obligations under the PSAs in the event of an EOD include “notifying the Servicer to require cure and notifying Cer-tificateholders of any uncured [EODs].” (Id. at 4-5 (citing BR Compl. ¶26; RP Compl. ¶¶ 60; NCUAB Compl. ¶¶ 90-91, 290; PL Compl. ¶¶ 69, 73-77; CB Compl. ¶¶ 45, 49-52)).

The Indenture Trusts’ Governing Agreements “contain similar provisions.” (Pl. Opp. 5 (citing BR Compl. ¶¶ 68-70; NCUAB Compl. ¶ 97 n.12; PL Compl. ¶¶ 131-32)). EODs with regard to Indenture Trusts, however, are “triggered by conduct of the Issuer (i.e,, the Trust itself) rather than the Servicer.” (Id. (citing BR Compl. ¶¶ 68-70; NCUAB Compl. ¶ 87 n.12; PL Compl. ¶¶ 131-32)). Plaintiffs maintain that this is a distinction without a difference, because here “each Indenture Trust contracted separately with Sellers and Servicers .,. [to] make certain R&Ws and agree to cure or repurchase defective loans,” .such that “known and unremedied Seller and. Servicer defaults [would still] constitute ... a violation of the issuer’s duties under the Indenture.” (Id. (quotation marks omitted) (quoting Royal Park/HSBC, 109 F.Supp.3d at 604) (citing BR Compl. ¶¶ 6, 59, 68; NCUAB Compl. ¶¶ 64-69, 74, 92; PL Compl. ¶ 131 & Ex. C)).

3. Defendant’s Alleged Breaches

Plaintiffs contend that while serving as Trustee, .Defendant realized that the Trusts contained numerous loans and loan files that materially breached the sellers’ R&Ws. (Pl. Opp. 5 (citing BR Compl. ¶¶ 73-120; RP Compl. ¶¶ 70-103; NCUAB Compl. ¶¶ 104-282; PL Compl. ¶¶ 107-15, Ex. F; CB Compl. ¶¶ 80-89, Ex. F)). Plaintiffs infer Defendant’s realization from a host of facts. For,example, Defendant “received ‘Document Exception Reports’ prepared by the custodians identifying -massive numbers of loan files that contained missing or incomplete documentation that were not cured within the specified time period.” (Id. (citing BR Compl. ¶¶ 98-99; NCUAB Compl. ¶ 352; PL Compl. ¶¶ 63, 119-20; CB Compl. ¶¶ 39, 93-94)), And Defendant itself “tracked and reported the Trusts’ performance in remittance reports, including unprecedented levels of delinquencies, early payment defaults, loss severity, credit downgrades and mortgage insurance rescissions,” and “admitted” in its “internal documents” that its findings constituted “clear indications of Seller breaches of R&Ws.” (Id. at 5-6 (citing BR Compl. ¶¶ 110, 112; NCUAB Compl. ¶ 336; .PL Compl. ¶¶ 53, 104; CB Compl. ¶¶ 29, 78)). Additionally, & certain cases where “historical delinquencies and collateral losses were so severe that [they] caused ‘Triggering Events’ under the Trusts’ [Governing Agreements],” Defendant had to “change the distribution of Trust proceeds, evaluate the performance of the Trusts’ Servicers, make increased disclosures to the credit rating agencies, and in some instances declare [EODs].” (Id. at 6 (citing BR Compl. ¶ 111)).

Plaintiffs conclude that, given the many different sources of information, Defendant’s responsible officers

knew of and received written notice of Servicer breaches of - duties with respect to specific loans in the Trusts, based on data from Servicers that it used to prepare monthly remittance reports and that identified and tracked when certain defaulted loans within the Trusts became distressed, when the loans were processed and eliminated, and the recurring annual and monthly servicing costs incurred by the Trusts for these defaulted loans.

(Pl. Opp. 7 (citing BR Compl. ¶¶ 146-53; RP Compl. ¶ 118; PL Compl. ¶¶ 128, 138-41; CB Compl. ¶¶ 103, 111-14)). Indeed, Defendant “uniquely” had

knowledge of the Servicers’ systemically abusive servicing practices, including © [Defendant’s] involvement in government investigations, prosecutions, and settlements targeting both itself and many of the Servicers for the same alleged improper servicing practices; and (ii) [Defendant’s] responsible officers’ receipt of written notice from Holders, monoline insurers and other stakeholders to other RMBS trusts regarding the same servicing violations by the same servicers to the Trusts here.

(Id. (citing BR Compl. ¶¶ 154-56; RP Compl. ¶¶ 121-27; NCUAB Compl. ¶¶ 258-60, 277-82; PL Compl. ¶¶ 142-48, Ex. H; CB Compl. ¶¶ 115-21, Ex. H)). And Plaintiffs contend that Defendant’s knowledge is evinced by its 'own internal records, which “further confirm that [Defendant] repeatedly received notice from investors and monoline insurers regarding systemic R&W violations.” (Id. at 6 (citing BR Compl. ¶¶ 100, 116; PL Compl. ¶¶ 99-102; CB Compl. ¶¶ 73-77)).

Even if Defendant lacked such direct notice and knowledge, they could not feign ignorance of the fact that “the Trusts were filled with loans originated by some of the most notorious financial-crisis-era lenders ... and were sponsored by banks with known securitization abuses.” (Pl. Opp. 6 (citing BR Compl. ¶¶ 80, 86, 94-95, Ex, 9; RP Compl. ¶ 71; NCUAB Compl; ¶¶ 47-48, 120-244; PL Compl. ¶¶ 109-10, Ex. F; CB Compl.” ¶¶ 82-83, Ex. F)). Plaintiffs argue that at a minimum, Defendant had to be aware of the “[h]ighly publicized news reports, lawsuits, and investigations concerning” its sellers, as well as the fact that “several of the Trusts [had] been the subject of RMBS investor lawsuits alleging pervasive loan underwriting abuses.” (Id. (citing BR Compl. ¶¶ 96-120, Ex. 10-11; RP Compl. ¶¶ 72-103; NCUAB Compl. ¶¶ 261-82; PL Compl. ¶¶ 107-15; CB Compl. ¶¶ 80-89)).

All of Plaintiffs’ claims build on the foundation of Defendant’s, alleged discovery and knowledge of these breaches. Plaintiffs allege .that despite this awareness, Defendant took “virtually no action to enforce Seller obligations to repurchase defective loans and Servicer obligations to cure defaults and reimburse the Trusts for damages.” (Pl. Opp. 7 (citing BR Compl. ¶¶ 163-87; RP Compl. ¶ 129; NCUAB Compl. ¶¶ 361-96; PL Compl. ¶¶ 115-18, 160-61; CB Compl. ¶¶ 89-92, 129-30)). This “inaction” has caused “billions of dollars in losses to the Trusts,” (Id.).

B. Procedural Background

The Blackrock plaintiffs brought the first of these related cases against Defendant on November 24, 2014. (2014 Civ. 9371, Dkt. # 1). Royal Park brought its action on December 11, 2014 (2014 Civ. 9764, Dkt # 1); the NCUAB brought its action on December 22, 2014 (2014 Civ. 10067, Dkt. # 1); and Phoenix Light and others brought their action on December 23, 2014 (2014 Civ. 10102, Dkt. # 1). Royal Park, the NCUAB, and the Phoenix Light plaintiffs all filed amended complaints on March 13, 2015. (2014 Civ. 9764, Dkt # 24; 2014 Civ. 10067, Dkt. #27; 2014 Civ. 10102, Dkt. # 25).

Defendant filed its Motion to Dismiss the Complaints in each of these four cases on April 30, 2015. (2014 Civ. 9371, Dkt. # 46-56). The motion was fully briefed as of June 29, 2015. (.Id. at Dkt. # 60-61). While the motion was pending, on December 24, 2015, Commerzbank brought the fifth of the related cases at issue in this Opinion. (2015 Civ. 10033, Dkt. # 1). The case was accepted as related to the four earlier-filed cases on December 28, 2015. (2015 Civ. 10033, Docket Entries dated December 28, 2015).

Soon thereafter, on January 19, 2016, Judge Richard M. Berman, to whom these related cases were originally assigned, issued a Decision and Order resolving Defendant’s motion to dismiss. (2014 Civ. 9371, Dkt. #95). Judge Berman declined to exercise supplemental-jurisdiction over Blackrock’s PSA-Trust-related claims, granted Defendant’s motion in part, and declined to reach the merits of the parties’ claims. (Id. at Dkt. # 95). Judge Berman also extended to Plaintiffs the opportunity to amend their pleadings. (Id.; see also Dkt. # 101). The Blackrock Plaintiffs accordingly filed their amended complaint on February 23, 2016. (Id. at Dkt. # 105-06).

Defendant requested a pre-motion conference, which was scheduled for May 24, 2016. (2014 Civ. 9371, Dkt. #138, 158). During that conference, a briefing schedule was set for Defendant’s contemplated motion to dismiss the operative complaints. (Id. at Dkt. # 158).

Before any motion was filed, however, the five related cases at issue here were reassigned to the undersigned on June 17, 2016. (Docket Entries dated June 17, 2016). Defendant then fíléd its motion to dismiss each operative complaint on July 8, 2016. (2014 Civ. 9371, Dkt. #168-71). Plaintiffs filed their joint opposition on August 22, 2016 (id. at Dkt. # 201-02), and Defendant its reply on September 6, 2016 (id. at Dkt. # 208-09).

DISCUSSION

A. Applicable Law

. When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court should “draw all reasonable inferences in [the ‘plaintiffs’] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief.” Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (quotation marks and citation omitted) (quoting Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir. 2009)). Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). In this regard, a complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference. See, e.g., Hart v. FCI Lender Servs., Inc., 797 F.3d 219, 221 (2d Cir. 2015) (citing Fed. R. Civ. P. 10(c) (“A statement in a pleading may be adopted by reference elsewhere in the same pleading or in any other pleading or motion. A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”)).

“While Twombly does not require heightened fact pleading of specifics, it does require enough facts to ‘[nudge a plaintiffs] claims across the line from conceivable to plausible.’ ” In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007) (per curiam) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Moreover, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

B. Analysis

Defendant launches numerous attacks on Plaintiffs’ pleadings, claiming that wholesale dismissal is warranted because: (i) Plaintiffs have failed to plead that Defendant discovered any of the alleged breaches of the Governing Agreements; (ii) Plaintiffs’ breach-of-contract and fiduciary-duty claims are premised on an EOD that occurred, if at all, without Defendant’s knowledge; (iii) Plaintiffs’ tort claims are duplicative of their contract claims, viola-tive of the economic-loss rule, and insufficiently pleaded; (iv) Plaintiffs do not, and cannot, have a cause of action under the Trust Indenture Act (the “TIA”); (v) the Streit Act, New York’s analogue to the TIA, either does not apply to Plaintiffs’ claims or was not violated; (vi) the NCUAB lacks standing to bring its derivative claims, which are actually improper direct claims; (vii) the NCUAB lacks standing to bring direct claims premised on Trusts unwound after it first brought its action; and (viii) Commerzbank’s claims are time-barred. The Court will consider each of these arguments in turn.

1. Defendant’s Motion to Dismiss Plaintiffs’ Breach-of-Contract Claims Is Denied

a. Plaintiffs’ Allegations Are Sufficient at the Pleading Stage

Defendant’s arguments on this first front focus on Defendant’s alleged knowledge, or perhaps more properly, its lack thereof, (Def. Br. 8). That is, Defendant contends Plaintiffs have pleaded only generalized allegations that, at most, Defendant may have been alerted “to a possibility of a breach, not that it discovered any actual breaches in the loans in the Trusts.” (Id.). Such allegations are insufficient as a matter of law, Defendant argues, because a viable breach-of-contract claim requires proof of a Trustee’s actual notice of a breach. Id. (quoting Policemen’s Annuity & Benefit Fund v. Bank of Am., NA (hereinafter, “PABF II”), 943 F.Supp.2d 428, 442 (S.D.N.Y. 2013), abrogated on other grounds by PABF III, 775 F.3d 154).

These arguments do not succeed. To the contrary, courts in this District have repeatedly rejected similar arguments by reminding litigants of the difference between sufficient pleading and successful claims. So too will this Court.

It is true that “[t]o prevail ultimately on the breach of contract claim, a plaintiff does have to demonstrate breach on a ‘loan-by-loan and trust-by-trust basis.’ ” Phoenix Light SF Ltd. v. Deutsche Bank Nat’l Tr. Co. (hereinafter, “PL/DB”), 172 F.Supp.3d 700, 713 (quoting Royal Park Invs. SA/NV v. Deutsche Bank Nat’l Tr. Co. (hereinafter, “RP/DB”), No. 14 Civ. 4394 (AJN), 2016 WL 439020, at *6 (S.D.N.Y. Feb. 3, 2016)); see also PABF III, 775 F.3d at 162. “But this is not a pleading requirement,” because at the pleading stage such information “is uniquely in the possession of defendants.” PL/DB, 172 F.Supp.3d at 713 (quotation marks omitted) (quoting PABF II, 943 F.Supp.2d at 442). “Rather, plaintiffs satisfy their [pleading] burden where their allegations raise a reasonable expectation that discovery will reveal evidence proving their claim.” Id.’, accord, e.g., Royal Park Invs. SA/NV v. Bank of N.Y. Mellon (hereinafter, “RP/BNYM”), No. 14 Civ. 6502 (GHW), 2016 WL 899320, at *4-5 (S.D.N.Y. March 2, 2016); Blackrock Core Bond Portfolio v. U.S. Bank Nat’l Ass’n, 165 F.Supp.3d 80, 99-100 (S.D.N.Y. 2016); RP/DB, 2016 WL 439020, at *6; PL/BNYM, 2015 WL 5710645, at *4; RP/HSBC, 109 F.Supp.3d at 602-03. (See also Pl. Opp. 9 & n.5).

Here, Plaintiffs have more than met this standard. Plaintiffs have alleged Defendant’s knowledge of R&W breaches on the basis of Defendant’s internal documents: Defendant received “exception reports identifying incomplete or improperly documented loan files that were not corrected or addressed.” (Pl. Compl. ¶¶ 63, 118-20; CB Compl. ¶¶ 39, 93-94)). Defendant also “received mortgage insurance coverage denials, and policy rescissions as a result of the improper loan underwriting,” and Defendant’s internal documents both reflect that Defendant tracked “the Trusts’ abject performance,” and “contain admissions that certain adverse metrics were indicative of Seller R&W breaches.” (Id. at 11-12; see also BR Compl. ¶ 110; NCUAB Compl. ¶ 336; PL Compl. ¶¶ 53, 104; CB Compl. ¶¶ 28, 78). It is Plaintiffs’ contention that such allegations “go far-beyond many other RMBS trustee complaints, which themselves- have been found sufficient to state a claim.” (Id. at 12). The Court agrees.

For good measure, Plaintiffs also amass the R&W breach allegations with which courts in this Circuit have become so familiar: Plaintiffs 'allege, inter' alia, that Defendant had discovered and knew of the alleged breaches on the basis of (i) “the abysmal performance of the Trust collateral” (BR Compl. ¶ 10); (ii) “a steady stream of'public disclosures [linking] the abject performance of the Trusts to systemic abandonment of underwriting guidelines” (id. at ¶ 12); (iii) various investor “putback initiatives” (id. at ¶¶ 14-17); (iv) investigations targeting Defendant’s own deficient servicing operations (id. at ¶¶ 19-20); (v) notice Defendant received in its capacity as Trustee to other RMBS trusts “from investors of pervasive and systemic violations of representations and warranties by the loan sellers” (id. at ¶ 100); (vi) lawsuits brought by monoline insurers against sellers “for breach of their representations and warranties in connection with other RMBS trusts” to which Defendant has ties (id. at ¶ 116); and (vii) Defendant’s analysis undertaken in connection with its provision of “collateral risk management services” (id. at ¶ 118). (See also RP Compl. ¶¶ 70-136; NCUAB Compl. ¶¶ 104-282; PL Compl. ¶¶ 107-15; CB Compl. ¶¶ 807 89). And with regard to several of the Trusts, “the historical delinquencies and collateral losses within the Trusts’ loan pools [were] so severe that [they] ... caused ‘Triggering Events’ under the Trusts’ Governing Agreements,” some of which amounted to EODs. (BR Compl. ¶ 111). This Court finds, as, have many others, that these allegations are sufficient to “raise a reasonable expectation that discovery will reveal evidence proving [Plaintiffs’] claim[s].” PL/DB, 172 F.Supp.3d at 713 (quoting PABF II, 943 F.Supp.2d at 442).

Additionally, Plaintiffs allege that EODs occurred when Servicers failed to “(i) act in accordance with the normal and usual standards of practice of prudent mortgage servicers; (ii) ensure the loans were serviced legally; and (iii) promptly notify [Defendant] and other parties upon discovery [of Sellers’] R&W breaches.” (Pl. Opp. 4 (citing BR Compl. ¶¶ 25-26; RP Compl. ¶¶ 57, 59; NCUAB Compl. ¶¶ 85-87, 285-89, 337; PL Compl. ¶¶ 68, 79-80; CB Compl. ¶¶ 44, 54-55)), These allegations also support Plaintiffs’ claims that Defendant breached its post-EOD contractual duty to act as would a prudent person by failing to (i) notify Servicers of the R&W breaches of which it was aware, (ii) require those Servicers to cure' those breaches, or to repurchase defective loans; (iii) notify Certificateholders of any uncured EODs; and (iv) reimburse the Trusts for damages. (PL Opp. 3-5, 7 (citing BR Compl. ¶¶ 163-87; RP Compl. ¶ 129; NCUAB Compl. ¶¶ 361-96; PL Compl. ¶¶ 115-18, 160-61; CB Compl. ¶¶ 89-92, 129-30)).

In sum, Plaintiffs have pleaded adequately that Defendant discovered and knew of the alleged breaches of the Trusts’ Governing Agreements. Plaintiffs likewise adequately have pleaded that when Defendant failed to act despite its discovery and knowledge, it breached the Governing Agreements. Defendant’s motion to dismiss Plaintiffs’ breach-of-contract claims is denied.

b. Commerce Bank Does Not Change This Court’s Analysis

To its credit, Defendant acknowledges at the outset that its arguments regarding the adequacy of the Complaints’ discovery and knowledge allegations implicate “issues that have been resolved repeatedly against RMBS trustees.” (Def. Br. 8). Undaunted, Defendant contends that recent legal developments so “seriously undermine the federal court decisions to date rejecting the RMBS trustees’ contract-based arguments” that this Court must chart ¿'new course. (Id.). In support, Defendant relies upon the First Department’s “rejection” in Commerce Bank v. Bank of N.Y. Mellon, 141 A.D.3d 413, 35 N.Y.S.3d 63 (1st Dep’t 2016), of the theory that ah RMBS Trustee has a duty to “nose to the source” upon learning facts suggestive of breach.

This Court does not dispute Commerce Bank’s relevance to its analysis. Indeed the case addresses the very question now before the Court—the sufficiency of pleaded facts regarding an RMBS-trustee defendant’s knowledge of breach. Commerce Bank, 35 N.Y.S.3d at 64. And there, the First Department found the facts alleged by the Commerce Bank plaintiffs insufficient to state a claim. Id. Reviewing the PSAs at issue, the court recited their common requirement that the Trustee discover an R&W breach with regard to a “loan-to-loan ratio, whether there are other liens on a property, whether a loan was underwritten pursuant to [a nonparty’s] underwriting guidelines,” and so on. Id. The First Department concluded the plaintiffs “[did] not allege that defendant discovered breaches of such representations and warranties.” Id. (emphasis added).

But the First Department did not elaborate on the bases for this conclusion. And without more, this Court will not read Commerce Bank to conflict with the very case law from this District that the First Department cited therein as “persuasive” in its analysis of pleading sufficiency. See Commerce Bank, 35 N.Y.S.3d at 64 (citing RP/BNYM, 2016 WL 899320, at *4 (collecting cases); PL/DB, 172 F.Supp.3d at 712-13). Significantly, Defendant assumes that the Commerce Bank plaintiffs and Plaintiffs here suffer from the same pleading deficiency, viz., a failure to plead Defendant’s actual discovery of R&W breaches. (Def. Br. 8-10), But the First Department’s analysis is not so clear. That court said only that the Commerce Bank plaintiffs “do not allege that defendant discovered breaches of such representations and warranties.” Commerce Bank, 35 N.Y.S.3d at 64 (emphasis added). The court did not explain what precisely it found lacking. This Court cannot therefore determine precisely where the Commerce Bank court would draw a line; the insufficiency of the allegations in that case do not preclude the Court from finding the far more robust allegations in this case to be sufficient.

Moreover, the Court notes that the Commerce Bank court was considering pleading sufficiency under a different standard. Defendant has challenged Plaintiffs’ pleading under Federal Rule of Civil Procedure 12(b)(6), the analytical requirements of which are outlined above. The Commerce Bank court analyzed pleading sufficiency under New York Civil Practice Law and Rules § 3211(a)(1) and (7). Even allowing for a similarity between Section 3211(a)(7) and Rule 12(b)(6), see Util. Metal Research, Inc. v. Generac Power Sys., Inc., No. 02 Civ. 6205 (FB) (RML), 2004 WL 2613993, at *3 n.1 (E.D.N.Y. Nov. 18, 2004) (“This is ... a distinction without a difference.”), aff'd in part, vacated in part, and remanded on other grounds, 179 Fed.Appx. 795 (2d Cir. 2006) (summary order), the different standard required by § 3211(a)(1) casts Commerce Bank’s relevance into doubt. See, e.g., DDR Constr. Servs., Inc. v. Siemens Indus., Inc., 770 F.Supp.2d 627, 647-48 (S.D.N.Y. 2011) (“Rule 3211(a)(1) allows dismissal on the ground that ‘a defense is founded upon documentary evidence.’ ” (quoting NY. C.P.L.R. 3211(a)(1))). It is possible, for example, that the Commerce Bank court considered defenses not available to this Court at this stage. Stated simply, Commerce Bank is not sufficiently specific for this Court to determine the precise manner in which the First Department concluded that the plaintiffs therein had not alleged the defendant’s discovery.

Defendant also contends that the First Department relieved RMBS Trustees of a duty to “nose to the source.” (Def. Br. 10). But that contention overstates the First Department’s holding. In considering a trustee’s duties prior to an EOD, the First Department recited the well-settled proposition “that prior to default, indenture trustees owe note holders [only] an extra-contractual duty to perform basic, nondis-cretionary, ministerial functions.” Commerce Bank, 35 N.Y.S.3d at 65 (quotation mark omitted) (quoting AG Capital Funding Partners, 11 N.Y.3d at 157, 866 N.Y.S.2d 578, 896 N.E.2d 61). This limited pre-default duty, the Court concluded, did not encompass a duty to monitor or a duty to “nose to the source” of improper servicing. Id.

This holding is not inconsistent with the District decisions cited by the First Department, Prior to considering a trustee’s pre-default duties, the Commerce Bank court had found that the plaintiffs there had not alleged the requisite discovery by the defendant. Commerce Bank, 35 N.Y.S.3d at 64-65. That is, the plaintiffs had alleged no discovery of R&W breaches, and no provision of written notice of any EOD. Id. Thus, the court reasoned, the defendant could not have violated any duty to afford plaintiffs notice. Id. at 65. Pre-default, and without default discovery or written notice, the Commerce Bank defendant had no such duty. Id.

Courts in this Circuit have agreed. They have held that while “learning of facts merely suggestive of a breach would not require the Trustee to immediately raise a claim,” “upon receipt of such notice, it becomes incumbent upon the [Trustee] to pick up the scent and nose to the source.” Policemen’s Annuity & Benefit Fund of City of Chi. v. Bank of Am., NA (hereinafter, “PABF I”), 907 F.Supp.2d 536, 553 (S.D.N.Y. 2012) (alterations in original) (emphasis added) (quotation marks omitted) (quoting MASTR Asset Backed Sec. Tr. 2006-HE3 ex rel. U.S. Bank Nat’l Ass’n v. WMC Mortg. Corp., Civil Nos. 11-2542 (JRT/TNL), 12-1372 (JRT/TNL), 12-1831 (JRT/TNL), 12-2149 (JRT/TNL), 2012 WL 4511065, at *6 (D. Minn. Oct. 1, 2012)). In Commerce Bank, there was no notice, no discovery, and therefore no duty to “nose to the source.” This is consistent with the law in this Circuit; it does not undermine it.

Finally, even if Defendant’s proffered interpretation of Commerce Bank were correct, this Court would be skeptical of its authority. As noted above, the case was decided under New York law that differs significantly from Rule 12(b)(6). And a district court only is “bound to apply the law as interpreted by New York’s intermediate appellate courts,” absent “persuasive evidence that the New York Court of Appeals ... would reach a different conclusion.” Cornejo v. Bell, 592 F.3d 121, 130 (2d Cir. 2010) (omissions in original) (emphasis added) (quotation marks omitted) (quoting Pahuta v. Massey-Ferguson, Inc., 170 F.3d 125, 134 (2d Cir. 1999)). Here, there is such persuasive evidence; it is the abundant case law from this District that the First Department itself cited as persuasive and made no attempt to distinguish.

2. Defendant’s Motion to Dismiss Specific R&W Claims Is Denied

In a catch-all section in its opening brief, Defendant takes issue with various subsets of Plaintiffs’ claims. First, Defendant argues that Plaintiffs have improperly alleged violations of duties to enforce repurchase obligations with regard to certain Trusts that created no such obligations. (Def. Br. 16). Second, Defendant identifies three Trusts for which “Plaintiffs failed to allege that [Defendant] knew of R&W breaches prior to the expiration of the Warrantors’ obligations to repurchase loans that breached R&Ws.” (Id.). Third, Defendant argues that for “four additional Trusts, Plaintiffs fail to include any allegation regarding the relevant Warrantors, let alone allegations supporting a plausible inference that [Defendant] had knowledge of R&W breaches within the applicable limitations period.” (Id. at 17). And fourth, Plaintiffs argue that Defendant cannot be held liable for any failure to enforce its obligations to cure, substitute, or repurchase faulty loans against Warrantor American Home Mortgage Acceptance, Inc. (“AHM”), .because AHM filed for bankruptcy in 2007. (Id. at 17-18).

Plaintiffs rebut each allegation. First, Plaintiffs dispute Defendant’s argument that certain Trusts do not impose repurchase obligations on Defendant; they claim that the relevant governing agreements, read as a whole, require that Defendant “notify specified parties upon its discovery of a material R&Ws breach,” which notice “triggers [the] Seller repurchase obligations” that Defendant “has power to enforce.” (Pl. Opp. 13 (citing BR Compl. ¶¶ 63 & n.7, 193; RP Compl. ¶¶ 52-55; NCUAB Compl. ¶¶ 73-75; PL Compl. ¶¶ 44, 68; CB Compl. ¶ 44)). Second, Plaintiffs disclaim a duty to “allege the precise time of [Defendant’s] discovery of R&W breaches or knowledge of Servi-eer events of default, which will be fleshed out in discovery.”- (Id. at 14). In a similar vein, Plaintiffs argue to Defendant’s third point that any “statute of limitations defense cannot be resolved at this stage because it involves factual questions as to when and against whom the claims accrued, whether violations were continuing, and whether tolling applies.” (Id.). And fourth, Plaintiffs reject Defendant’s arguments regarding AHM’s 2007 bankruptcy because “this argument also involves questions of fact that cannot be resolved at the pleading stage, such as what enforcement efforts [Defendant] made or failed to make before AHM declared bankruptcy, whether it should have submitted a bankruptcy claim, and what other responsible parties or claims remain available, including for ongoing Servicer violations.” (Id. at 14-15),

Ultimately, the Court agrees with Plaintiffs. Each of Defendant’s arguments implicating the statute of limitations is premature; the Court cannot resolve these issues from the face of the Complaints. See Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008) (noting that a statute of limitations defense may be “raise[d] ... in a pre-answer Rule 12(b)(6) motion if the defense appears .on the face of the complaint”). Working backwards from Defendant’s last argument, the Court cannot determine at this stage the implications of AHM’s 2007 bankruptcy filing for Defendant’s duties with regard to the AHM-2004 Trust. As Plaintiffs argue, the possible existence 'of other responsible parties or claims, including claims for ongoing Servicer violations, precludes resolution of this issue at present. Because, as the Court found above, Plaintiffs need not allege loan-specific breaches at this stage, and because Plaintiffs have raised the specter of tolling agreements and ongoing breaches, the Court is also unable to determine as a matter of law that Plaintiffs have insufficiently alleged discovery of R&W breaches before expiration of applicable statutes of limitations. (Pl. Opp. 14 & n.8). And'finally, the Court finds-that Plaintiffs have alleged that Defendant breached its obligations even with regard to Trusts the Governing Agreements of which “are silent as to which entity is responsible for enforcing the sellers’ compliance with their repurchase obligations, prior to an [EOD].” (BR Compl. ¶ 63 & n.7 (citing as an example FMIC 2007-1, SSA § 3.02)). At this stage, Plaintiffs are not required to specify precisely when, and precisely on what basis, Defendant breached each of its contractual obligations.

3. Defendant’s Motion . to Dismiss Plaintiffs? Tort and Fiduciary-i Duty Claims Is Granted in Part and Denied in Part

a. Defendant’s Motion to Dismiss Plaintiffs’ General Negligence Claim Is Granted

The Court next turns to Defendant’s challenges to Plaintiffs’ tort claims, beginning with their claim for negligence. By way of background, “[t]o establish a negligence claim under New York law, a plaintiff must demonstrate that: [i] the defendant owed the plaintiff a cognizable duty of care as a matter of law; [ii] the defendant breached that duty; and [iii] plaintiff suffered damage as a proximate, result of that breach.” Millennium Partners, 2013 WL 1655990, at *4 (citing McCarthy v. Olin Corp., 119 F.3d 148, 156 (2d Cir. 1997)). However, “[a] tort claim cannot be sustained if it ‘do[es] no more than assert violations of a duty which is identical to and indivisible from the contract obligations which have allegedly been breached.’ ” Id. (second alteration in original) (quoting Metro. W. Asset Mgmt., LLC v. Magnus Funding, Ltd., No. 03 Civ. 5539 (NRB), 2004 WL 1444868, at *9 (S.D.N.Y. June 25, 2004)); see also Luxonomy Cars, Inc. v. Citibank, N.A., 65 A.D.2d 549, 408 N.Y.S.2d 951, 954 (2d Dep’t 1978). In other words, “a breach of contract will not give rise to a tort claim unless a legal duty independent of the contract itself -has been violated.” RP/BNYM, 2016 WL 899320, at *7 (quotation mark omitted) (quoting Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 58 (2d Cir. 2012) (citing Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 516 N.E.2d 190 (1987))).

Here, the sole basis of Plaintiffs’ general negligence claim is Defendant’s alleged breach of its contractual obligations. (See, e.g., BR Compl. ¶ 163 (asserting that Defendant was negligent “by failing to (i) provide notice to the parties to the Governing Agreements and/or the responsible sellers upon its discovery of these breaches, and (ii) take any action to enforce the sellers’ repurchase of the defective mortgage loans”)). As such, “the claim is precluded as duplicative.” RP/DB, 2016 WL 439020, at *9 (quotation mark omitted) (quoting Bayerische Landesbank, 692 F.3d at 58).

To be clear, Plaintiffs at times plead more specific tort claims under the rubric of negligence, and those claims are neither addressed nor dismissed here. The Court grants Defendant’s motion only insofar as it applies to Plaintiffs’ claims that Defendant was. negligent in performing its contractual duties. The Court will consider the viability of Plaintiffs additional tort claims in greater depth in the sections that follow,

b. Defendant’s Motion to Dismiss Plaintiffs Pre-Default Fiduciary-Duty Claims Is Granted

Plaintiffs’ fiduciary duty claims divide temporally into pre- and post-default claims. This Court will consider them chronologically.

“Prior to an Event of Default, an indenture trustee’s duty is governed solely by the terms of the indenture, with two exceptions: a trustee must still ‘[i] avoid conflicts of interest, and [ii] perform all basic, non-discretionary, ministerial tasks with due care.’ ” RP/HSBC, 109 F.Supp.3d at 597 (quoting Ellington Credit Fund, Ltd. v. Select Portfolio Servicing Inc., 837 F.Supp.2d 162, 192 (S.D.N.Y. 2011)). However, “[t]hese two pre-default obligations are not construed as fiduciary duties, but as obligations whose breach may subject the trustee to tort liability.” Id. (quotation marks omitted) (quoting Ellington Credit Fund, Ltd., 837 F.Supp.2d at 192); see also PL/DB, 172 F.Supp.3d at 719 (“[Conflict of interest claims and the claims that [Defendant] did not perform ministerial acts with due care are not proper breach of fiduciary claims under New York law, and can only be pleaded in the complaint as negligence claims.”); PL/BNYM, 2015 WL 5710645, at *7; AG Capital Funding Partners, 11 N.Y.3d at 157, 866 N.Y.S.2d 578, 896 N.E.2d 61. Therefore, insofar as Plaintiffs’ conflict-of-interest and ministerial-task claims are pleaded as violations of Defendant’s fiduciary duties, Plaintiffs fail to state a claim and Defendant’s motion to dismiss is granted.

c. Defendant’s Motion to Dismiss Plaintiffs Post-EOD Fiduciary-Duty Claims Is Denied

With regard to an indenture trustee’s fiduciary duties, however, an EOD is transformative: After an EOD, “an indenture trustee’s fiduciary duties expand under the New York common law such that ‘fidelity to the terms of an indenture does not immunize an indenture trustee against claims that the trustee has acted in a manner inconsistent with his or her fiduciary duty of undivided loyalty to trust beneficiaries.’ ” PL/DB, 172 F.Supp.3d at 717-18 (quoting BNP Paribas Mortg. Corp. v. Bank of Am., N.A., 778 F.Supp.2d 375, 401 (S.D.N.Y 2011)); see also Beck v. Mfrs. Hanover Tr. Co., 218 A.D.2d 1, 632 N.Y.S.2d 520, 527-28 (1995). A trustee’s obligations “come more closely to resemble those of an ordinary fiduciary, regardless of any limitations or exculpatory provisions contained in the indenture.” RP/HSBC, 109 F.Supp.3d at 597 (quotation marks omitted) (quoting BNP Paribas Mortg. Corp., 778 F.Supp.2d at 401); see also Beck, 632 N.Y.S.2d at 527. A trustee is not required to act beyond the powers conferred by the governing agreements, but it “must, as prudence dictates, exercise those singularly conferred prerogatives in order to secure the basic purpose of any trust indenture, the repayment of the underlying obligation.” Id. (quotation marks omitted) (quoting Philip v. L.F. Rothschild & Co., No. 90 Civ. 0708 (WHP), 2000 WL 1263554, at *5 (S.D.N.Y. Sept. 5, 2000) (quoting Beck, 632 N.Y.S.2d at 528)); see also RP/DB, 2016 WL 439020, at *2.

As described above, Plaintiffs have alleged that EODs occurred when Servicers failed to “(i) act in accordance with the normal and usual standards of practice of prudent mortgage servicers; (ii) ensure the loans are serviced legally; and (iii) promptly notify [Defendant] and other parties upon discovery [‘of Sellers’] R&W breaches.” (Pl. Opp. 4 (citing BR Compl. ¶¶ 25-26; RP Compl. ¶¶ 57, 59; NCUAB Compl. ¶¶ 85-87, 285-89, 337; PL Compl. ¶¶ 68, 79-80; CB Compl. ¶¶ 44, 54-55)). And Defendant breached its posh-EOD duty to act as would a prudent person by failing to (i) notify Servicers of the R&W breaches of which it was aware, (ii) require those Servicers to cure those breaches, or to repurchase defective loans; (iii) notify Certificateholders of any uncured EODs; and (iv) reimburse . the Trusts for damages. (Pl. Opp. 7 (citing BR Compl. ¶¶ 163-87; RP Compl. ¶ 129; NCUAB Compl. ¶¶ 361-96; PL Compl. ¶¶ 115-18, 160-61; CB Compl. ¶¶ 89-92, 129-30)). As were these allegations sufficient to support a post-EOD breach-of-contract claim, so too are they sufficient to support Plaintiffs’ post-EOD, breach-of-fiduciary-duty claim. However, for the reasons explained more fully below, the portion of this claim that is duplicative in its remedy with Plaintiffs’ breach-of-contract claims is ultimately barred by the economic-loss doctrine, and Defendant’s motion tp dismiss that portion of the claim is granted.

d. Defendant’s Motion to Dismiss Plaintiffs’ Breach-of-Due Care-Claim Is Granted in Part and Denied in Part

“Under New York law, ‘an indenture trustee owes a duty to perform its ministerial functions with due care, and if this duty is breached the trustee will be subjected to tort liability.’ ” PL/DB, 172 F.Supp.3d at 717 (quoting AG Capital Funding Partners, 11 N.Y.3d at 157, 866 N.Y.S.2d 578, 896 N.E.2d 61). In other RMBS cases, courts in this District have recognized that this duty of due care id extra-contractual and, as such, not duplica-tive of a plaintiff’s contract claims. See, e.g., id. at 718 (citing Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n (hereinafter, “NCUAB/U.S. Bank II”), No. 14 Civ. 9928 (KBF), 2016 WL 796850, at *11 (S.D.N.Y. Feb. 25, 2016)); PL/BNYM, 2015 WL 5710645, at *7; RP/HSBC, 109 F.Supp.3d at 609 n.127. The Court finds as much here. Again, the Court clarifies that Defendant’s motion to dismiss these claims is granted to the extent that Plaintiffs have pleaded that Defendant breached its duty to perform ministerial functions with due care in breaching Defendant’s contractual obligations. It is denied with regard to Plaintiffs’ claims that Defendant breached a duty to act with due care other than by “systematically disregarding] its contractual ... duties.” (NCUAB Compl. ¶ 343). See also PL/DB, 172 F.Supp.3d at 718 n.7 (citing AG Capital, 866 N.Y.S.2d at 584-85, 896 N.E.2d 61) (“[T]he plaintiffs appear to conflate the duty to perform ministerial acts with due care with their allegations that [the defendant] negligently performed or failed to perform certain duties under the contract. Only tort claims premised on the former survive because New York recognizes a duty to perform ministerial acts as an extra contractual duty.”).

e. Defendant’s Motion to Dismiss Plaintiffs’ Conflict-of-interest Claims Is Denied

To plead properly a conflict-of-interest claim, a plaintiff must allege more than the existence of a “relationship between an issuer and an indenture trustee that is mutually beneficial and increasingly lucrative.” RP/HSBC, 109 F.Supp.3d at 598 (quotation mark omitted) (quoting CFIP Master Fund, Ltd. v. Citibank, N.A., 738 F.Supp.2d 450, 475 (S.D.N.Y. 2010) (quoting Page Mill Asset Mgmt. v. Credit Suisse First Boston Corp., No. 84152 (MBM), 2000 WL 877004, at *2 (S.D.N.Y. June 30, 2000))); accord, e.g., RP/BNYM, 2016 WL 899320, at *7. Nor does “[t]he mere fact that an indenture trustee does repeat business with an entity ... create a conflict of interest.” RP/HSBC, 109 F.Supp.3d at 610. Such “bald assertions of conflict” are not sufficient; a plaintiff must show that a trustee “personally benefitted” from the alleged misconduct. Id. at 598 (quoting Elliott Assocs. v. J. Henry Schroder Bank & Tr. Co., 838 F.2d 66, 70 (2d Cir. 1988)).

Courts in this District have found this requirement satisfied where a plaintiff alleges a defendant’s complicity in a “quid pro quo system.” RP/BNYM, 2016 WL 899320, at *7; RP/DB, 2016 WL 439020, at *9 (quoting Ellington Credit Fund, 837 F.Supp.2d at 193); RP/HSBC, 109 F.Supp.3d at 610. If a defendant is alleged to have “turn[ed] a blind eye to breaches of R&Ws in the hopes that counterparties would later ‘return a favor,’” courts will find that the defendant personally benefited from its decision not to act with regard to the known breaches, which “constitutes] a conflict of interest.” RP/BNYM, 2016 WL 899320, at *7; see also, e.g., Fixed Income Shares, 130 F.Supp.3d at 858 (finding plaintiffs had alleged defendant was “economically beholden” to sellers and servicers because defendant “faced repurchase liability for the sale and securi-tization of its own loans if [defendant] took action against them”).

Here, Plaintiffs have alleged that Defendant refused to act against sellers and servicers “because doing so would have exposed [Defendant’s] own misconduct as a Seller or Servicer for other RMBS trusts in which these same entities served as either trustee or servicer.” (Pl. Opp. 21 (citing BR Compl. ¶¶ 173-77; RP Compl. ¶¶ 151-52; NCUAB Compl. ¶¶ 355-59; PL Compl. ¶¶ 149-58; CB Compl. ¶¶ 122-27)). And this conflict, Plaintiffs allege, was “exacerbated” by Defendant’s “ongoing business relationships with the Sellers, Servicers and related companies,” the servicers’ payment of Defendant’s trustee fees, and Defendant’s economic disincentive to declare EODs. (Id. (citing BR Compl. ¶¶ 21, 178-85; RP Compl. ¶¶ 21-24, 63, 137-43; NCUAB Compl. ¶ 360; PL Compl. ¶¶ 149-58; CB Compl. ¶¶ 122-27)). While these exacerbating allegations alone might not be sufficient to support Plaintiffs’ conflict-of-interest claims, they are ■ certainly sufficient when coupled with Plaintiffs’ quid pro quo contention. Defendant’s motion to dismiss Plaintiffs’ conflict-of-interest claims is accordingly denied.

f. Defendant’s Motion to Dismiss Plaintiffs’ Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing Is Granted

“New York law ... does not recognize a separate cause of action for breach of the implied covenant of good faith and fair dealing when a breach of contract claim, based upon the same facts, is also pled.” PL/DB, 172 F.Supp.3d at 721 (omission in original) (quoting Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 81 (2d Cir. 2002)). “A plaintiff can maintain a claim for breach of the implied covenant of good faith and fair dealing simultaneously with a breach of contract claim ‘only if the damages sought by the plaintiff for breach of the implied covenant are not intrinsically tied to the damages allegedly resulting from breach of contract.’” Id. (quoting Page Mill Asset Mgmt. v. Credit Suisse First Bos. Corp., No. 98 Civ. 6907 (MBM), 2000 WL 335557, at *8 (S.D.N.Y. Mar. 30, 2000)).

Again, the viability of this claim must be considered at two stages—before and after an alleged EOD. Before a trustee discovers an EOD, a trustee has “no duties other than its contractual duties,” and “any cause of action for breach of implied duties cannot stand.” PL/BNYM, 2015 WL 5710645, at *9. Accordingly, Plaintiffs’ claims that Defendant breached an implied covenant of good faith and fair dealing before it discovered any EOD must be dismissed.

After an EOD,- a trustee’s obligations are not so circumscribed by the Governing Agreements, as éxplained above.’ At this stage, the Court must determine.whether the “damages sought by [Plaintiffs] for breach of the implied covenant are not intrinsically tied to the damages allegedly resulting from breach of contract.” PL/DB, 172 F.Supp.3d at 721 (quoting Page Mill Asset Mgmt., 2000 WL 335557, at *8 (quotation marks omitted)).

Despite Defendant’s argument in its opening brief that this tort claim must be dismissed, Plaintiffs do not defend it. Instead, Plaintiffs’ tort arguments focus on the conflict-of-interest claim. Accordingly, the Court could find Plaintiffs’ implied covenant claim to be abandoned.

But even were it not abandoned, this claim would fail. Plaintiffs argue only that Defendant breached this covenant in failing to fulfill its contractual obligations. (See, e.g., PL Compl. ¶ 201 (“[Defendant] owed Plaintiffs, as express, intended third party beneficiaries under the PSAs, a duty of good faith and fair dealing pursuant to the PSAs that required [Defendant] to ensure that it did not, by act or omission, injure the rights of the Plaintiffs to receive the benefits and protections provided for under the PSAs.” (emphases added))). Plaintiffs’ breach-of-contract and breach-of-implied-covenant claims are based on the same alleged facts, and therefore the latter must fail. Defendant’s motion to dismiss Plaintiffs’ claims regarding a breach of an implied covenant of good faith and fair dealing is granted. See, e.g., PL/DB, 172 F.Supp.3d at 721; Commerzbank AG v. HSBC Bank USA (hereinafter, “CB/HSBC"), No. 15 Civ. 10032 (LGS), 2016 WL 3211978, at *3-4 (S.D.N.Y. June 8, 2016) (collecting cases).

4. The Economic-Loss Doctrine Bars Plaintiffs’ Claims Insofar as They Seek Only the Benefit of Plaintiffs’ Contract

Plaintiffs’ allegations that Defendant breached duties independent of its contracts do not, themselves, “allow evasion of the economic loss rule, which presents a second, distinct barrier” .to tort claims stemming from contractual relationships. RP/HSBC, 109 F.Supp.3d at 599. The economic-loss rule provides that “a contracting party seeking only a benefit of the bargain recovery may not sue in tort notwithstanding the use of 'familiar tort language in its pleadings.” Phoenix Light SF Ltd. v. U.S. Bank Nat’l Ass’n (hereinafter, “PL/U.S. Bank”), No. 14 Civ. 10116 (KBF), 2016 WL 1169515, at *9 (S.D.N.Y. Mar. 22, 2016) (quotation marks omitted) (quoting 17 Vista Fee Assocs. v. Teachers Ins. & Annuity Ass’n of Am., 259 A.D.2d 75, 693 N.Y.S.2d 554, 559 (1st Dep’t 1999)); accord NCUAB/U.S. Bank II, 2016 WL 796850, at *11. However, “the rule allows such recovery in the limited class of cases involving liability for the violation of a professional duty.” Hydro Inv’rs, Inc. v. Trafalgar Power Inc., 227 F.3d 8, 18 (2d Cir. 2000) (citing 17 Vista Fee Assocs., 693 N.Y.S.2d at 560; Robinson Redev. Co. v. Anderson, 155 A.D.2d 755, 547 N.Y.S.2d 458, 460 (3d Dep’t 1989)). A court considering the application of this doctrine therefore must scrutinize with care a plaintiff’s proffered extra-contractual claims.

Courts in this District have split with regard to the application of the economic-loss doctrine to tort claims brought against an RMBS trustee. Compare RP/HSBC, 109 F.Supp.3d at 608-10, with PL/U.S. Bank, 2016 WL 1169515, at *9. Dispositive in each case has been the nature of the plaintiff’s claims: Does plaintiff allege damages that flow from the violation of a professional duty, or merely from the violation of the governing agreements? Courts have denied motions to dismiss where plaintiffs have pleaded tort claims grounded in extra-contractual duties. See, e.g., PL/DB, 172 F.Supp.3d at 719 (holding that, with regard to the economic-loss doctrine, “[t]he dispositive issue is whether [defendant] owed duties to the plaintiffs that were separate from the duties set forth in the PSAs and the Indenture Agreements” and reasoning that because “[s]everal of the plaintiffs’ arguments supporting the negligence, gross negligence, and breach of fiduciary duty claims are not duplicative of the breach of contract claim[,] ... the motion to dismiss the tort claims cannot be granted on this basis”); RP/HSBC, 109 F.Supp.3d at 608-10 (denying motion to dismiss with regard to breaches of extra-contract duty to avoid conflicts of interest and post-EOD fiduciary duties, but granting motion to dismiss negligent misrepresentation claim absent a “special duty for [defendant] to refrain from negligently making misrepresentations to Certificateholders”). Conversely, motions to dismiss have been granted where plaintiffs pled only damages arising from a defendant’s contract obligations. See, e.g., PL/U.S. Bank, 2016 WL 1169515, at *9 (“While the cause of action for breach of fiduciary duty may arise from common law duties and not from the PSA, ‘the injury’ and ‘the manner in which the injury occurred and the damages sought persuade us that plaintiffs’ remedy lies in the enforcement of contract obligations,’ and is barred by the economic loss doctrine.” (quoting Bellevue S. Assocs. v. HRH Constr. Corp., 78 N.Y.2d 282, 293, 574 N.Y.S.2d 165, 579 N.E.2d 195 (1991))); NCUAB/U.S. Bank II, 2016 WL 796850, at *11 (same).

This Court draws the same line. The economic-loss doctrine does not foreclose Plaintiffs’ claims that Defendant breached its duty to perform ministerial acts with due care and its duty to avoid conflicts of interest. At least at this stage, Plaintiffs have pleaded that Defendant breached extracontractual duties, for which Plaintiffs are owed damages that do not lie simply in the enforcement of Defendant’s contractual obligations. However, insofar as Plaintiffs have pleaded that Defendant breached, for example, its post-EOD fiduciary duty in failing to act as it was contractually required to, the economic-loss doctrine does bar Plaintiffs’ claims. Defendant’s motion to dismiss that subset of Plaintiffs’ tort claims is granted.

5. Defendant’s Motion to Dismiss Plaintiffs’ TIA Claims Is Granted in Part and Denied in Part

i. Plaintiffs’ TIA Claims Regarding PSA-Governed Trusts Are Dismissed

Plaintiffs assert claims under Sections 315(a), (b), and (c) of th