RMBS Plaintiff Lacks Standing Due to Failure to Allege Assignment of Tort Claims

On July 14, 2015, Justice Friedman of the New York County Commercial Division issued a decision in HSH Nordbank AG v. Morgan Stanley, 2015 NY Slip Op. 31272(U), analyzing the rules governing the assignment of common law claims.

In HSH Nordbank, the plaintiff brought claims relating to the sale of residential mortgage backed securities, including claims based on its status as a successor purchaser of two securities. The court dismissed the claims relating to those securities for lack of standing, explaining:

In Commonwealth of Pennsylvania Public School Employees' Retirement System v. Morgan Stanley & Co., Inc., the Court of Appeals clarified the standards for asserting standing to sue on a fraud claim in connection with an assignment - there, a note. Determining a question certified by the Second Circuit, the Court held that where an assignment of fraud or other tort claims is intended in conjunction with the conveyance of a contract or note, there must be some language - although no specific words are required - that evinces that intent and effectuates the transfer of such rights.

(Internal quotations and citations omitted). The court explained that the mere allegation that the plaintiff was the "assignee of all 'rights and interests' in the" bond "certificates" was insufficient to establish that the assignment had included language transferring common law claims. And because the original purchaser's right to bring common law claims had not been assigned to the plaintiff, it had no standing to assert them.