DENVER (8/9/13)--The National Credit Union Administration has filed a motion requesting that the Tenth Circuit U.S. Court of Appeals expedite its review of a Kansas federal court's ruling dismissing $550 million in claims against Barclays Capital for losses stemming from residential mortgage-backed securities (RMBS) sold to corporate credit unions.
The motion was filed July 31. It concerns a July ruling by U.S. District Judge John W. Lungstrum in Wichita, Kan., who dismissed the agency's claims on the grounds they were time-barred and NCUA hadn't filed the case in time.
"The district court's judgment rests on its legal conclusion that...Barclays...could argue that NCUA's actions were untimely despite having entered into a tolling agreement in which they promised not to do so--an agreement into which Barclays freely entered during settlement negotiations in which it was assisted by sophisticated counsel," said NCUA's motion, noting that the conclusion resulted in the dismissal of NCUA's entire case against Barclays.
A tolling agreement allows more time in which to file a lawsuit after the statute of limitations time expires.
"The district court's ruling also dramatically affects four related actions pending before the same district judge," NCUA said in the motion. "Just as Barclays has done, those defendants had negotiated and signed tolling agreements with NCUA during settlement talks, but have now disavowed those agreements."
The four cases, including the Barclays suit, involve more than $l7.8 billion in RMBS purchased by U.S. Central FCU and Western Corporate FCU, which no longer exist, said the document. "The district court's rulings as to the tolling agreements will likely lead to the dismissal of more than $5.2 billion of those total purchases," NCUA said. "Because the district court's ruling affects such a large proportion of NCUA's claims, it will disrupt and delay discovery in the remaining four cases." An expedited review will permit the entire litigation to proceed more efficiently, NCUA said.
NCUA filed the lawsuit against Barclays, as well as several other lawsuits against other brokerage firms, as the liquidating agent for the corporates. Its lawsuits claim that the brokers' offering documents for the RMBS had material misrepresentations about the underlying loans that backed the securities.
On Aug. 1, the appellate court issued an order for Barclays to file its response to NCUA's motion on or before Aug. 15.