On January 3, 2014, Justice Bransten of the New York County Commercial Division issued a decision in Home Equity Asset Trust 2006-5 (Heat 2006-5) v. DLJ Mortgage Capital, Inc., 2014 NY Slip Op. 50001(U), granting a motion to dismiss under the statute of limitations.
The court rejected the defendant’s first argument–that the summonses with notice were filed more than 6 years after the as-of dates of the contracts–because claims for breaches of representations and warranties do not accrue until the closing dates of the transactions.
However, defendants also claimed that plaintiffs’ failure to submit mandatory pre-suit cure notices 90 days before the summons with notices were filed rendered the summonses a nullity. The court agreed, holding that plaintiffs’ “failure to comply with a condition precedent to commencing suit rendered its summonses with notice a nullity.” (Emphasis added). And because the statute of limitations had since expired, the action was therefore barred by the statute of limitations.
Home Equity Asset Trust serves as yet another reminder to practitioners to read carefully the contracts under which they seek to bring an action and to ensure that all of the conditions precedent to the creation of a claim and bringing suit have been met.