LOS ANGELES (3/21/12)--The National Credit Union Administration (NCUA) has told a federal court in Los Angeles that Goldman, Sachs & Co.--which the agency has sued for losses related to the sale of residential mortgage backed securities involved in the collapse of several corporate credit unions--is refusing to honor a tolling agreement it made with NCUA.
The tolling agreement was to forestall litigation and prevent the statute of limitations or statute of repose from running out while the parties in the lawsuit negotiated, said NCUA in a supplemental memorandum filed Wednesday in the U.S. District Court for the Central District of California, Western Division.
"It is undisputed that Goldman willingly entered the agreement in order to forestall ligitation," said NCUA's memorandum . "In doing so, Goldman expressly promised not to assert any statutes of repose or limitation in defense. This court should reject Goldman's refusal to honor its express contractual promise. Even looking past Goldman's misconduct, the law plainly permits tolling agreements to apply to statutes of repose," the document said.
NCUA said the agreement was made on Aug. 30, 2010 and broadly covered "[a]ny statute of limitations, statute of repose, or other time-related defense." The agency noted in the court document that Kansas law provides a statute of limitations of two years and a statute of repose of five years and that NCUA and Goldman entered the tolling agreement before the statute of repose expired. (Kansas is where U.S. Central FCU, one of the corporates that collapsed, was domiciled).
Goldman Sachs and NCUA met on March 20 to confer. They filed a stipulation that would have extended the time for NCUA to file until this past Friday and would have provided for Goldman to file simultaneously. The tolling agreement, plus three extensions of that agreement provided a tolling period of more than nine months--beginning Aug. 19, 2010, and ending May 31, 2011, the memorandum said.
NCUA filed its MBS complaint on Aug. 9, 2011, about five years and five months after its March 3, 2006 purchase of one of the certificates at issue, a First Franklin certificate, making that claim timely after excluding the nine months tolled under the tolling agreement, the memorandum said.
"Almost immediately after this litigation commenced, Goldman reneged on its express, voluntary agreement by asserting that '[s]tatutes of repose cannot be tolled by a private tolling agreement.'"
Goldman and other banks are seeking dismissal of NCUA's claims by arguing that the statute of limitations and statute of repose have expired for many of the certificates at issue.