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In re ResCap Liquidating Trust Litigation

United States District Court, D. Minnesota

December 20, 2019

In Re ResCap Liquidating Trust Litigation
v.
Primary Residential Mortgage, Inc., No. 16-cv-4070 This document relates to ResCap Liquidating Trust

         TABLE OF CONTENTS

         I. INTRODUCTION ................................................................................................................. 1

         II. BACKGROUND .................................................................................................................... 1

         A. Contractual Relationships ............................................................................................. 1

         1. General Rules of Interpretation ................................................................................ 4

         2. Knowledge, Reliance and Waiver ............................................................................ 5

         3. Specific Representations & Warranties .................................................................... 7

         4. Events of Default & Remedies ................................................................................. 8

         5. Repurchase ............................................................................................................... 9

         6. Indemnification ...................................................................................................... 10

         B. Mortgage Market & Bankruptcy Proceedings .......................................................... 11

         1. Housing Market Trends .......................................................................................... 11

         2. Proposed, Pre-Bankr. Original RMBS Settlement & Subsequent Bankr. Filing ... 12

         3. Global Bankr. Settlement Approved by Bankruptcy Court ................................... 14

         4. Plaintiff's Requested Relief ................................................................................... 20

         C. Procedural History ....................................................................................................... 20

         1. First-Wave Actions ................................................................................................ 20

         a. Consolidated Action Common-Issue Summary Judgment Ruling ................... 21

         b. Trial & Trial Rulings ........................................................................................ 22

         c. Non-Consolidated RMBS Proceedings in this District ..................................... 23

         III. DISCUSSION ...................................................................................................................... 24

         A. Principles of Law of Contractual Indemnity ............................................................. 24

         B. Principles of Contract Interpretation ......................................................................... 28

         C. Summary Judgment ..................................................................................................... 30

         D. Threshold Inquiry of Plaintiff's Contractual Indemnity Claim .............................. 34

         1. Reasonableness of RFC's Bankruptcy Settlements ............................................... 34

         a. PRMI's New Evidence Regarding the Reasonableness of the Settlements ..... 39

         b. First-Wave Evidence Regarding the Reasonableness of the Settlements ........ 44

         2. Whether RFC's Bankruptcy Extinguished RFC's Liabilities ................................ 48

         3. The Application of the Client Guide ...................................................................... 49

         a. Effect of Assetwise & Countrywide Documents on the Guides ...................... 49

         4. Rights in the Guides ............................................................................................... 55

         a. Sole Discretion ................................................................................................. 55

         b. Indemnity for Liabilities and Losses ............................................................... 60

         c. Effect of RFC's Alleged Wrongdoing on Recovery ........................................ 68

         d. Expired Loans .................................................................................................. 73

         E. Causation ....................................................................................................................... 77

         1. Appropriate Causation Standard ............................................................................ 77

         2. ResCap's Reliance on Proxy MLS Provided by Mr. Dudney ................................ 80

         3. Trust Representations ............................................................................................. 83

         a. MLS Representation to Trusts ......................................................................... 84

         b. Default Representations to the Trusts .............................................................. 89

         F. PRMI's Defenses .......................................................................................................... 92

         1. PRMI's “Bad Faith” Defense ................................................................................. 92

         2. PRMI's “Sole Cause” Defense ............................................................................. 107

         3. PRMI's Knowledge and Reliance Defenses ........................................................ 112

         4. PRMI's Statute-of-Limitations Defense ............................................................... 117

         5. PRMI's Assetwise & Countrywide Estoppel & Waiver Defenses ...................... 118

         a. Anecdotal Evidence ....................................................................................... 120

         b. Assetwise-Approved Loans ........................................................................... 124

         c. Countrywide-Approved Loans ...................................................................... 133

         6. PRMI's Mitigation Defense ................................................................................. 135

         G. Damages ...................................................................................................................... 137

         1. Use of Statistical Sampling .................................................................................. 137

         2. Value Attributable to Servicing Claims ............................................................... 140

         3. Allocated Breaching Loss Methodology .............................................................. 140

         a. General Methodology .................................................................................... 140

         b. Application of the Allocated Breaching Loss Methodology ......................... 143

         (1) Additional Settling Trusts/Single, Unallocated Claim ........................... 144

         (a) Supplemental Term Sheet ............................................................... 149

         (b) Judge Glenn's Findings of Fact ...................................................... 151

         (c) Recovery Analysis .......................................................................... 156

         (d) Trustee Declarations ....................................................................... 158

         (e) Contemporaneous Evidence ........................................................... 158

         (2) Relative Strength of Claims and Defenses ............................................. 159

         (a) Strength of Representations ............................................................ 162

         (b) Strength of Defenses ....................................................................... 164

         (3) Non-Indemnifiable Claims ..................................................................... 167

         (a) Ally Claims ..................................................................................... 169

         (b) Allowed Fee Claim ......................................................................... 170

         H. Liability Overall ......................................................................................................... 172

         IV. CONCLUSION .................................................................................................................. 173

          MEMORANDUM OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court is the Motion for Summary Judgment [Doc. No. 5221] filed by Defendant Primary Residential Mortgage, Inc. (“PRMI”), and the Motion for Partial Summary Judgment [Doc. No. 5274] filed by Plaintiff ResCap Liquidating Trust (“ResCap”).[1] For the reasons set forth below, Defendant's motion is deferred in part, denied in part, and denied in part as moot, and Plaintiff's motion is granted in part and denied in part.

         II. BACKGROUND

         In December 2016, ResCap commenced this lawsuit against PRMI, asserting claims of breach of contract and indemnification. This case is part of a second wave of lawsuits brought by ResCap against numerous originating mortgage lenders. ResCap filed its initial wave of such lawsuits in this District beginning in 2013.

         A. Contractual Relationships

         As in all of these cases, this lawsuit stems from the bankruptcy of the Minnesota company formerly known as the Residential Funding Corporation (“RFC”).[2] For several years prior to RFC's 2012 bankruptcy filing, RFC and PRMI participated in the residential mortgage backed securities (“RMBS”) market. RFC functioned as a middleman. In its role as a buyer, it purchased mortgages from banks and originating lenders such as PRMI. See In re ResCap Liquidating Tr. Litig., 332 F.Supp.3d 1101, 1117-18 (D. Minn. 2018) (“Common SJ Order”); (Smallwood Decl. [Doc. No. 5225], Ex. 1 (Hawthorne Rpt. ¶¶ 17-18).)[3] Then, as a seller, RFC pooled together its RMBS, i.e., bundles of hundreds of home mortgage loans, and sold them to securitization trusts (“the Trusts”). Common SJ Order, 332 F.Supp. at 1117-18, 1122-23; (Smallwood Decl. [Doc. No. 5225], Ex. 1 (Hawthorne Rpt. ¶¶ 17-18).) The Trusts paid for the loans by issuing securities to investors, for which the mortgage loans served as collateral. Common SJ Order, 332 F.Supp. at 1117. Some of these purchasers required that the securities be insured by monoline insurers (the “Monoline Insurers”)[4] as a hedge against investment risk. See Id. RFC additionally functioned as a “master servicer” for many of the securitizations, overseeing the work of the primary servicers. (Smallwood Decl. [Doc. No. 5225], Ex. 1 (Hawthorne Rpt. ¶ 18).)

         As a seller, RFC entered into contracts with the Trusts in which it made representations and warranties (“R&Ws”) concerning the underwriting quality and credit characteristics of the mortgage loans. Common SJ Order, 332 F.Supp. at 1118; (Smallwood Decl., Ex. 1 (Hawthorne Rpt. ¶ 18.)

         In its role as a buyer of loans from originating lenders, or “Clients, ” RFC and the lenders, including PRMI, entered into agreements called “Client Contracts.” Common SJ Order at 1118. The Client Contracts also incorporated the terms of longer, more detailed agreements called “Guides.” (See, e.g., Nesser Decl., Ex. 1 (Mar. 30, 2000 Client Contract) at 1.) RFC and PRMI entered into a Client Contract in March 2000, and a subsequent Client Contract in June 2001. (Id., Exs. 1 (Mar. 30, 2000 Client Contract) & 2 (June 25, 2001 Client Contract).) The Guide that the March 2000 Client Contract references is the AlterNet Guide, (Nesser Decl., Ex. 1 (Mar. 30, 2000 Client Contract) at 1), while the Guide that the June 2001 Client Contract references is the Client Guide. (Id., Ex. 2 (June 25, 2001 Client Contract) at 1.) The March 2000 Client Contract stated that it could not be amended or modified orally, and no provision could be waived or amended “except in writing signed by the party against whom enforcement is sought.” (Id., Ex. 1 (Mar. 30, 2000 Client Contract) ¶ 2.) The June 2001 Client Contract stated that it could “only be amended in writing signed by both parties.” (Id., Exs. 1 (Mar. 30, 2000 Client Contract) at & 2 (June 25, 2001 Client Contract).)

         As relevant to the parties' arguments, the Court also notes one additional type of agreement between RFC and corresponding lenders. At various times, originating lenders used RFC's automated electronic loan underwriting program, Assetwise, when submitting loans to RFC. Common SJ Order, 332 F.Supp. at 1136, 1175. The originating lenders who used Assetwise, such as PRMI, signed the Assetwise Direct Criteria Agreement (“Assetwise Agreement”). (Nesser Decl., Ex. 6 (Jan. 19, 2001 Assetwise Agmt.); Smallwood Decl., DX-40 (June 3, 2002 Assetwise Agmt.).)

         1. General Rules of Interpretation: Client Guide §§ 141 and 113

         While many of the provisions in the AlterNet Guide and Client Guide are materially identical, (see Pl.'s App'x 1 [Doc. No. 5277-1] (Spreadsheet Comparing Client & AlterNet Guide Provisions)), there are some differences. Section 141 of the January 1, 2003 Client Guide-Section 113 in later versions from January 1, 2005 forward-provides “General Rules of Interpretation” applicable to all provisions of the Client Guide. Some provisions in the Client Guide's “General Rules of Interpretation” are not present in the AlterNet Guide. (See Id. § 113(A)-(C).) In particular, Client Guide Section 141(A)/Section 113(A) addresses the term “knowledge, ” as that term is used in the Client Guide. (Id. § 113(A); Nesser Decl., Ex. 4 (Client Guide, Version 1-03-G01) § 141(A).) Section 141(B)/Section 113(B) addresses RFC's “sole discretion.” (Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § 113(B); Nesser Decl., Ex. 4 (Client Guide, Version 1-03-G01) § 141(B).) These provisions are not present in the AlterNet Guide.

         The Client Guide's “knowledge” standard holds an originating lender/Client to a strict standard of both actual and constructive knowledge:

(A) “Knowledge” Standard
Whenever any representation, warranty, or other statement contained in this Client Guide is qualified by reference to a Client's “knowledge” or “to the best of” a party's “knowledge”, such “knowledge” shall be deemed to include knowledge of facts or conditions of which Client, including (without limitation) any of its directors, officers, agents, or employees, either is actually aware or should have been aware under the circumstances with the exercise of reasonable care, due diligence, and competence in discharging its duties under this Client Guide and the Program Documents. All matters of public record shall be deemed to be known by the Client. Any representation or warranty that is inaccurate or incomplete in any material respect is presumed to be made with the knowledge of Client, unless Client demonstrates otherwise. “Due diligence” means that care which Client would exercise in obtaining and verifying information for a Loan in which Client would be entirely dependent on the Mortgaged Property or Mortgagor's credit as security to protect its investment.

(Nesser Decl., Ex. 4 (Client Guide, Version 1-03-G01) § 141(A); Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § 113(A).)

         Section 141(B)/Section 113(b) of the Client Guide vests RFC with broad authority to make determinations of fact and decisions to act, stating:

(B) GMAC-RFC's Sole Discretion
Whenever any provision of this Client Guide contract requires []RFC to make a determination of fact or a decision to act, or to permit, approve or deny another party's action such determination or decision shall be made in []RFC's sole discretion.

(Nesser Decl., Ex. 4 (Client Guide, Version 1-03-G01) § 141(B); Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § 113(B).)

         2. Knowledge, Reliance and Waiver: AlterNet Guide § 250 & Client Guide § A200

         In both the AlterNet Guide, Section 250, and the Client Guide, Section A200, the originating lenders made substantively identical general R&Ws to RFC. They acknowledged that RFC purchased loans in reliance on the originating lenders' R&Ws, and the originating lenders agreed to assume liability for any misrepresentations for breaches, regardless of their knowledge or RFC's knowledge. (Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A200; Nesser Decl., Ex. 3 (AlterNet Guide) § 250.) Moreover, the originating lenders agreed that RFC could not waive any provisions of the AlterNet Guide or the Client Guide unless it made such a waiver in writing:

[AlterNet/Client] Representations and Warranties and Covenants[5]
The [AlterNet Seller] Client acknowledges that [RFC] GMAC-RFC purchases Loans in reliance upon the accuracy and truth of the [AlterNet Seller's] Client's warranties and representations and upon the [AlterNet Seller's] Client's compliance with the agreements, requirements, terms and conditions set forth in the [AlterNet Seller] Client Contract and this [AlterNet] Client Guide.
All such representations and warranties are absolute, and the [AlterNet Seller] Client is fully liable for any misrepresentation or breach of warranty regardless of whether it or [RFC] GMAC-RFC actually had, or reasonably could have been expected to obtain, knowledge of the facts giving rise to such misrepresentation or breach of warranty.
The representations and warranties pertaining to each Loan purchased by [RFC] GMAC-RFC survive the Funding Date, any simultaneous or post-purchase sale of servicing with respect to the Loan and any termination of the [AlterNet Seller] Client Contract, and are not affected by any investigation or review made by, or on behalf of, [RFC] GMAC-RFC except when expressly waived in writing by [RFC] GMAC-RFC.

(Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A200; Nesser Decl., Ex. 3 (AlterNet Guide) § 250; Id., Ex. 4 (Client Guide, Version 1-03-G01) § A200.)

         3. Specific Representations and Warranties: AlterNet Guide § 251-1 and Client Guide § A202

         AlterNet Guide Section 251-1 and Client Guide Section A202 both require originating lenders to make specific R&Ws to RFC regarding “individual loans, ” including information about the loans' eligibility and accuracy. (Nesser Decl., Ex. 3 (AlterNet Guide) § 251-1; id., Ex. 4 (Client Guide, Version 1-03-G01) § A202.) Among other things, the originating lenders represent that they have: verified the accuracy of information used by borrowers to obtain the loans, (id., Ex. 3 (AlterNet Guide) § 251-1(A); id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(A)); ensured the proper completion and execution of loan forms, (id., Ex. 3 (AlterNet Guide) § 251-1(D); id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(D)); complied with applicable laws, (id., Ex. 3 (AlterNet Guide) § 251-1(D); id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(D)); ensured that no default or other breach of loan terms existed in any loan, (id., Ex. 3 (AlterNet Guide) § 251-1(G); id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(G)); confirmed the market value of the mortgaged property, (id., Ex. 3 (AlterNet Guide) § 251-1(T); id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(T)); and, in the Client Guide, not sold any “high risk” loans to RFC. (Id., Ex. 4 (Client Guide, Version 1-03-G01) § A202(J)(1)(d).)

         4. Events of Default and Non-Exclusive, Cumulative Remedies: AlterNet Guide §§ 260-270 and Client Guide §§ A208-A210[6]

         If originating lenders breach these R&Ws by committing an “Event of Default, ” both the AlterNet Guide and the Client Guide grant RFC wide-ranging recourse. Under AlterNet Guide Section 270 and Client Guide Section A209, “Non-Exclusive, Cumulative Remedies, ” the Guides broadly provide that “RFC may exercise any remedy outlined in this [] Guide, ” as well as “[a]ny other rights which it may have at law or in equity deemed appropriate to protect its interest.” (Nesser Decl., Ex. 3 (AlterNet Guide) § 270(A); Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A209(A); see also (Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A209(A)) (stating, in versions of the Client Guide dating from January 1, 2001, “[]RFC may exercise any remedy outlined in this Client Guide or as allowed by law or in equity.”). Moreover, the Guides state that RFC's exercise of its remedies resulting from an originating lender's default will not prevent it from exercising one or more “other remedies in connection with the same Event of Default ” and/or any other rights which it may have at law or in equity.” (Nesser Decl., Ex. 3 (AlterNet Guide) § A270(A); id., Ex. 4 (Client Guide Version 1-03-G01) § A220(A); Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A209(A); Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A209(A).)

         5. Repurchase: AlterNet Guide § 271 and Client Guide § A210 [7]

         The Guides provide RFC with several remedies, including repurchase and indemnity. Under the repurchase provision of both the AlterNet Guide and Client Guide, if RFC determines that an Event of Default has occurred with respect to a particular loan, it can require the originating lender to repurchase the loan within 30 days of receiving notification from RFC. (Nesser Decl., Ex. 3 (AlterNet Guide) § 271(C); id., Ex. 4 (Client Guide, Version 1-03-G01) § A221(A); Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A210(A).) The repurchase provision sets forth a specific procedure and formula for determining the repurchase price of a loan. (See Nesser Decl., Ex. 3 (AlterNet Guide) § 271(A)-(H); id., Ex. 4 (Client Guide, Version 1-03-G01) § A221(A)-(H); Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A210(A)-(H).) In addition, it states, “[]RFC is not required to demand repurchase within any particular period of time, and may elect not to require immediate repurchase. However, any delay in making this demand does not constitute a waiver by []RFC of any of its rights or remedies.” (Nesser Decl., Ex. 3 (AlterNet Guide) § 271(C); id., Ex. 4 (Client Guide, Version 1-03-G01) § A221(A); Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A210).) Even if RFC determines that repurchase is not the appropriate remedy, under both the AlterNet Guide and Client Guide, the originating lender is nevertheless obliged to pay RFC “all losses, costs and expenses incurred by []RFC and/or the Loan's Servicer as a result of an Event of Default, ” including reasonable attorneys' fees and related costs incurred in connection with any enforcement efforts. (Nesser Decl., Ex. 3 (AlterNet Guide) § 271(C); id., Ex. 4 (Client Guide, Version 1-03-G01) § A221(A); Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A210(A).)

         6. Indemnification: AlterNet Guide § 274 and Client Guide § A212[8]

         The Guides also provide RFC with wide-ranging indemnification in the event of an originating lender's default. The indemnification provision requires the originating lender to indemnify RFC from “all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments, and any other costs, fees, and expenses resulting from any Event of Default.” (Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A212); Nesser Decl., Ex. 3 (AlterNet Guide) § 274; Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A212.)

         Versions of the Client Guide from December 1, 2005 forward provide examples of the type of Client conduct requiring indemnification:

This includes, without limitation, liabilities arising from (i) any act or failure to act, (ii) any breach of warranty, obligation or representation contained in the Client Contract, (iii) any claim, demand, defense or assertion against or involving []RFC based on or resulting from such breach, (iv) any breach of any representation, warranty or obligation made by []RFC in reliance upon any warranty, obligation or representation made by the Client contained in the Client Contract and (v) any untrue statement of a material fact, omission to state a material fact, or false or misleading information provided by the Client in information required under Regulation AB or any successor regulation.

(Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A212.)

         Versions of the Client Guide from July 1, 2002 forward contain additional language regarding the loan originators' broad indemnification obligations to RFC:

In addition, Client shall indemnify []RFC against any and all losses, damages, penalties, fines, forfeitures, judgments, and any other costs, fees and expenses (including court costs and reasonable attorneys' fees) incurred by []RFC in connection with any litigation or governmental proceeding that alleges any violation of local, State or federal law by Client, or any of its agents, or any originator or broker in connection with the origination or servicing of a Loan. With regard to legal fees or other expenses incurred by or on behalf of []RFC in connection with any such litigation or governmental proceeding, Client shall reimburse []RFC for such fees and expenses. . . . Except for notices for reimbursement, []RFC is not required to give Client notice of any litigation or governmental proceeding that may trigger indemnification obligations. Client shall instruct its officers, directors and agents (including legal counsel) to cooperate with []RFC in connection with the defense of any litigation or governmental proceeding involving a Loan. []RFC has the right to control any litigation or governmental proceeding related to a Loan, including but not limited to choosing defense counsel and making settlement decisions.

(Pl.'s App'x 1 (Spreadsheet Comparing Client & AlterNet Guide Provisions) § A212; Smallwood Decl., Ex. 34 (Client Guide, Version 1-05-G04) § A212.) This particular language is not present in the AlterNet Guide or in earlier versions of the Client Guide.

         B. Mortgage Market & Bankruptcy Proceedings

         1. Housing Market Trends

         Nationwide, the mortgage industry experienced a boom from approximately 2001 to 2003. Common SJ Order, 332 F.Supp.3d at 1117. Immediately after that period, however, the volume of originating loans began to decline due to rising long-term interest rates. Id. Not long afterward, a second mortgage boom ensued. Id. But because the prime borrowing pool had been significantly depleted, “[l]enders provided mortgage loans to many high-risk borrowers with questionable ability to repay, fueled in large part by the opportunity to package and sell those mortgages into the growing market for [residential] mortgage-backed securities (“[R]MBSs”).” Id. (quoting In re Barclays Bank PLC Securities Litig., No. 09 Civ. 1989 (PAC), 2017 WL 4082305, at *4 (S.D.N.Y. Sept. 13, 2017), aff'd, 756 Fed. App'x 41 (2d Cir. 2018)). Starting in 2007, the loans in RFC-sponsored and -serviced securitizations experienced a high rate of default. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 20.) In 2008, the housing market collapsed, and the Trusts suffered substantial losses. (Id.)

         Shortly thereafter, various Trusts and Monoline Insurers sued RFC for breaching the R&Ws that RFC had made when selling those entities (or their insureds) its RMBS, i.e., bundles of home mortgages. Common SJ Order, 332 F.Supp.3d at 1122-24. In addition to claims for breaches of the R&Ws, the Trusts and Monoline Insurers asserted claims of fraud against RFC, as well as servicing-related claims arising from RFC's sale of the allegedly defective mortgage loans. Id. at 1123; (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 22.)

         2. Proposed, Pre-Bankruptcy Original RMBS Settlement and Subsequent Bankruptcy Filing

         On May 13, 2012, RFC entered into a proposed $8.7 billion settlement (“Original RMBS Settlement”) of claims brought by two groups of RMBS Trust investors that had holdings in approximately 392 securitization trusts. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 26.) Absent settlement, RFC's then-expert Frank Sillman estimated that lifetime losses for these trusts could have ranged between $45.6 billion to $49.8 billion. (Id., Ex. 14 (Bankr. Findings of Fact) ¶ 101.)

         The following day, and as contemplated by the proposed Original RMBS Settlement, RFC filed for Chapter 11 relief in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). Common SJ Order, 332 F.Supp.3d 1123. Shortly thereafter, the Bankruptcy Court appointed an examiner to investigate RFC's pre-petition activities. (Smallwood Decl., Ex. 14 (Bankr. Findings of Fact) ¶ 3.)

         Multiple entities filed RMBS-related proofs of claim with the Bankruptcy Court in order to obtain damages. Common SJ Order, 332 F.Supp.3d at 1124. This included six RMBS Trustees with proofs of claim covering 1, 000 trusts with a combined original principal balance of over $226 billion. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 100.) Their most significant claims concerned alleged breaches of the R&Ws that RFC had made in the Governing Agreements for the securitizations. (Id. ¶ 101.) Among their other claims, RMBS Trustees also asserted common-law fraud or negligent misrepresentation claims against RFC to the extent that it had actual or imputed knowledge that the mortgage loans failed to comply with RFC's R&Ws. (Id. ¶ 104.)

         Additionally, several Monolines filed 32 proofs of claim with the Bankruptcy Court, asserting claims for tens of billions of dollars in actual and potential losses. (Id. ¶ 107.) Like the RMBS Trustees' claims, the Monolines' claims generally alleged breaches of R&Ws. (See Id. ¶¶ 108-17.)

         After filing for bankruptcy, the debtors sought the approval of the proposed, pre-bankruptcy Original RMBS Settlement pursuant to Federal Rule of Bankruptcy Procedure 9019. Common SJ Order, 332 F.Supp.3d at 1124. However, some stakeholders opposed the proposed Original RMBS Settlement, including the Official Committee of Unsecured Creditors, (“the Creditors' Committee”), a committee appointed to represent all general unsecured creditors. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 27; id., Ex. 14 (Bankr. Findings of Fact) ¶ 102.) Some objectors found the proposed settlement amount unreasonably high, (id., Ex. 1 (Hawthorne Rpt.) ¶ 127), while others found it too low. (Id. ¶ 128.) The parties engaged in substantial discovery and extensively litigated issues concerning the approval of the proposed Original RMBS Settlement. (Id. ¶¶ 118-30.)

         3. Global Bankruptcy Settlement Approved by Bankruptcy Court

         In light of the objections, the Bankruptcy Court encouraged a new round of global settlement negotiations. (Smallwood Decl., Ex. 14 (Bankr. Findings of Fact) ¶ 102.) United States Bankruptcy Judge Martin Glenn, who oversaw the bankruptcy proceedings, appointed another sitting federal bankruptcy judge to serve as a mediator, and additionally authorized Lewis Kruger as the Chief Restructuring Officer to negotiate a settlement of the claims against Plaintiffs. Common SJ Order, 332 F.Supp.3d at 1124.

         On May 13, 2013, RFC, the RMBS Trustees, the Monolines MBIA and FGIC, and others, agreed to the terms of a bankruptcy plan support agreement[9] (the “Plan Support Agreement”) and the accompanying Plan Term Sheet. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 142.) After further negotiations, the parties filed an agreed-upon Supplemental Term Sheet on May 23, 2013. (Id.) The RMBS Trustee portion of the Global Settlement included the claims of the 392 ResCap-sponsored trusts that originated between 2004 and 2007 and participated in the proposed Original RMBS Settlement, as well as hundreds of additional trusts (the “Additional Settling Trusts”) that were not part of the proposed Original RMBS Settlement. (Id. ¶ 149.) The Supplemental Term Sheet provides that “all RMBS Trust Claims of the Original Settling Trusts and the Additional Settling Trusts shall be fully and finally allowed as non-subordinated unsecured claims in the aggregate amount of $7.051 billion for the Original Settling Trusts and in the aggregate amount of $250 million for the Additional Settling Trusts (collectively, the ‘Allowed RMBS Trust Claims') and allocated . . . [$7.091 billion] to the RFC Debtors.” (Id.; Smallwood Decl., Ex. 12 (PSA); Smallwood Daubert Decl., DX-B (Suppl. Term Sheet) at 5.)

         Pursuant to the Plan Support Agreement and Term Sheets, RFC and the Creditors' Committee filed a proposed Chapter 11 Bankruptcy Plan (as amended, “the Chapter 11 Plan”), and a disclosure statement. (Smallwood Decl., Ex. 1 (Hawthorne Rpt.) ¶ 145.) Almost all of the creditors that voted on the Chapter 11 Plan (95.7%) voted to accept it. (Id., Ex. 14 (Bankr. Findings of Fact ¶¶ 1, 265).)

         Among the Chapter 11 Plan's defined terms, “‘RMBS Settlement' means, as part of the Global Settlement, the settlement that provides for the allowance, priority, and allocation of the RMBS Trust Claims, through approval of the Original RMBS Settlement Agreements as expanded, modified and superseded as set forth in Article IV.C of the Plan.” (Nesser Decl., Ex. 25 (Second Am. Ch. 11 Plan) at 30.) It also states that “‘RMBS Trust Claims means all claims . . . of the RMBS Trusts[.]” (Id.) Similarly, “RMBS Trusts” is defined as “all residential mortgage backed securitization trusts, net interest margin trusts and similar residential mortgage backed trusts for which the Debtors serve as sponsor, depositor, servicer, master servicer or in similar capacities, or as Loan Group in such RMBS Trust, as applicable.” (Id.)

         With respect to the RMBS Trustees' claims, the Chapter 11 Plan states that upon the Bankruptcy Court's entry of a confirmation order, that order “shall constitute approval of the RMBS Settlement, on the terms set forth herein.” (Nesser Decl., Ex. 25 (Second Am. Ch. 11 Plan) § IV.C.2 at 58.) It further states that “[t]he Original RMBS Settlement Agreements are hereby expanded to include all RMBS Trusts holding RMBS Trust Claims and are otherwise modified as set forth herein.” (Id. at 59.) As to the settlement amount, the Bankruptcy Plan provides that “[e]ntry of the Confirmation Order shall constitute approval of the Allowed amount of the RMBS Trust Claims . . . in the aggregate amount[]” of approximately $7.1 billion against the RFC Debtors.[10] (Id.)

         In December 2013, Judge Glenn issued both his 133-page Findings of Fact regarding the confirmation of the proposed Chapter 11 Plan and the Confirmation Order itself. (See Smallwood Decl., Ex. 14 (Bankr. Findings of Fact) at 1, ¶¶ 18-50) (approving Second Am. Ch. 11 Plan); Nesser Decl., Ex. 26 (Bankr. Confirm. Order).) In his Findings of Fact, Judge Glenn noted the parties' respective risks and their time-consuming efforts to reach an informed resolution:

The settlement reflects a reasonable balance between the litigation's possibility of success and the settlement's future benefits. Each party to the negotiations that led to the settlement had access to a wealth of information gathered over the course of months-long investigations conducted by the Committee and the voluminous materials made available from the Examiner's investigation. To facilitate settlement negotiations, the parties reviewed extensive document discovery, briefed the merits of the claims, and exchanged written and oral presentations regarding their legal positions.

(Smallwood Decl., Ex. 14 (Bankr. Findings of Fact) ¶ 239) (citations omitted).

         He further noted that the parties found the Settlements reasonable, stating, “With the knowledge accumulated in this process, each party independently determined that the settlement of the Estates' claims against the Ally Released Parties reflected a reasonable resolution of the claims.” (Id.) Moreover, Judge Glenn found that “each [individual] settlement was reasonable, (id. ¶ 178), that the Chapter 11 Plan proponents had exercised reasonable business judgment in entering into the Plan Documents, which he also deemed “fair and reasonable.” (Id. ¶ 51 & n.11.)

         As to the individual components comprising the Global Settlement, he found that the new RMBS Settlement resolved: “(1) alleged and potential claims for breaches of R&Ws held by all RMBS Trusts; (2) all alleged and potential claims for damages arising from servicing; and (3) any cure claims . . . .” (Id. ¶ 103).) Absent settlement, Judge Glenn recognized the significant financial risks in litigating the parties' claims:

The potential losses for RMBS Trusts asserting breaches of representations and warranties range from $42.4 billion to $43.2 billion, excluding losses that are insured by a Monoline. Of that amount, $32.9 billion are historical losses to Debtor-sponsored trusts, and $1.45 billion represent historical losses in non-Debtor sponsored trusts that correspond to the percentage of loans in those trusts sold by the Debtors. The additional forecasted losses range from $7.76 billion to $8.4 billion for the Debtor-sponsored RMBS Trusts, and $300 to $400 million for the portion of non-Debtor-sponsored RMBS Trusts corresponding to the portion of loans sold by the Debtors. Absent settlement, the likely amount of recoverable damages for the RMBS Trusts' representation and warranty claims, after consideration of legal defenses and litigation costs, ranges from $7.38 billion to $8.6 billion. This range does not account for servicing claims and cure claims.

(Id. ¶ 106) (internal citations omitted). Judge Glenn further stated that but for the approval of the RMBS Settlement, the R&W claims “would have to be asserted, litigated and liquidated on an individual basis.” (Id. ¶ 118.) And if these claims were litigated individually, Judge Glenn found that they “would be subject to significant litigation risks and factual and legal defenses.” (Id.) Additionally, because litigating these claims would be an expensive and time-consuming undertaking, he concluded that doing so “would deplete the Debtors' estates, and might result in diminished recoveries to all creditor constituencies, including the RMBS Trusts.” (Id.)

         In addition to the RMBS Trusts' R&W claims, the mediation also included the RMBS Trusts' Servicing Claims. (Id. ¶ 119.) Certain RMBS Trustees retained the financial advisory firm of Duff & Phelps, LLC (“Duff & Phelps”) to identify and quantify their claims. (Id. ¶¶ 113-14).) Duff & Phelps sought to quantify Plaintiffs' liability as a servicer with respect to: (1) misapplied and miscalculated payments; (2) wrongful foreclosure and improper loss mitigation practices; and (3) extended foreclosure timing issues caused by improper or inefficient servicing conduct such as falsified affidavits, improper documentation, and improper collection practices. (Id. ¶ 119.) Judge Glenn noted Duff & Phelps' finding that the debtors' potential liability as a servicer under these three bases could be as high as $1.1 billion, but that asserting such claims would involve “significant risk and uncertainty.” (Id.) Under the Plan, the servicing-related claims, settled as “RMBS Cure Claims, ” were allowed in an aggregate amount of $96 million. (Id.) Judge Glenn noted that of the total RMBS component of the Global Settlement, the servicing related claims, “RMBS Cure Claims, ” were settled and allowed in an aggregate amount of $96 million. (Id.)

         Judge Glenn made similar findings regarding Plaintiffs' financial exposure for the Monolines' claims. (Id. ¶¶ 126-37, 143-54, 213-15.) He stated that absent a settlement, Plaintiffs were “almost certain to become embroiled in additional, complex litigation with the Monolines over the validity, amount and possible subordination of their asserted claims.” (Id. ¶ 213.)

         Judge Glenn found that the Settlements resulted from good faith, arms-length negotiations, were in the best interests of the parties and claimholders, (id. ¶¶ 51), were proposed in good faith and in conformity with the Bankruptcy Code, (id. ¶¶ 18-26, 27, 51, 121-22), and, as noted, were reasonable. (Id. ¶¶ 51, 178, 201, 239.) The Bankruptcy Settlements also contemplated further recovery for the investors who acquired RFC's rights against the correspondent lenders. (See Nesser Decl., Ex. 26 (Bankr. Confirm. Order) ¶ 48) (authorizing the creation of a “Liquidating Trust, ” into which RFC was to transfer and assign its assets, and preserving the Liquidating Trust's (and Estates') causes of action); id., Ex. 25 (Second Am. Ch. 11 Plan) at 75.)

         In light of his findings, in December 2013, Judge Glenn approved the Chapter 11 Plan. (Smallwood Decl., Ex. 14 (Bankr. Findings of Fact) at 1.) He likewise approved the Global Settlement, set forth in Article IV of the Chapter 11 Plan, and each component of the Global Settlement, including the RMBS Settlement. (Nesser Decl., Ex. 26 (Bankr. Confirm. Order) ¶¶ 7, 9.)

         4. Plaintiff's Requested Relief

         ResCap seeks relief here based on 539 loans that PRMI sold to RFC, which were included in the Global Settlement, and had actual or expected losses. (Id., Ex. 5 (At-Issue Loan Spreadsheet).) ResCap's reunderwriting expert, Dr. Butler, opines that over 60% of these loans in a 150-loan sample contained at least one material underwriting breach of PRMI's R&Ws that materially and adversely affected the loan's credit risk. (Id., Ex. 9 (Butler Rpt.) at Ex. 2; Pl.'s Mem. [Doc. No. 5276] at 3.) ResCap further contends that at least 45% of the sampled loans materially breach the R&Ws that RFC made to an RMBS Trustee or Monoline. (Nesser Decl., Ex. 9 (Butler Rpt.) at Ex. 2; Pl.'s Mem. at 3.) Plaintiff's damages expert, Dr. Snow, calculates a damages claim of approximately $5.5 million. (Nesser Decl., Ex. 8 (Snow Suppl. Rpt.) at App'x A.2, Figure 7.)

         C. Procedural History

         1. First-Wave Actions

         RFC's creditors formed the ResCap Liquidating Trust to sue the dozens of banks and mortgage lenders that had sold RFC the loans bundled into RFC's securities, on grounds that those lenders breached their (corresponding) R&Ws to RFC, and thus caused RFC to breach its R&Ws to the Trusts and Monoline Insurers, which, in turn, contributed to RFC incurring $9 billion in liabilities. Common SJ Order, 332 F.Supp.3d at 1144. As noted, beginning in 2013, ResCap began filing cases in the First Wave of litigation in this District.

         In January 2015, the judges of the District agreed to consolidate the then-59 active ResCap cases before the undersigned judge, Magistrate Judge Keyes, and Magistrate Judge Bowbeer. (Jan. 27, 2015 Consolidation Order [Doc. No. 100] at 3); In re RFC & Rescap Liquidating Tr. Action, 399 F.Supp.3d 827, 833 (D. Minn. 2019). The First Wave of cases in the Consolidated Action then proceeded through joint discovery for the next three years, with this Court holding frequent case management conferences with all participating counsel.

         a. Consolidated Action Common-Issue Summary Judgment Ruling

         In April 2018, ResCap and the remaining nine defendants in the Consolidated Action (the other 50 defendants had settled), filed dueling summary judgment motions on “common issues, ” as well as Daubert motions. (See [Doc. Nos. 3194, 3243, 3251, 3253, 3264, 3421, 3518, 3602, 3713, 3720, 3884, 3889, 3894, 3909].) Many of the parties' arguments in the First-Wave, common-issue summary judgment motions are also raised by the parties here.

         On August 15, 2018, the Court issued its summary judgment opinion on common issues in the First Wave of cases in the Consolidated Action. Common SJ Order, 332 F.Supp.3d 1101. The decision resolved some issues in favor of ResCap, other issues in favor of the remaining defendants, and left yet other issues for jury determination. For instance, the Court ruled that ResCap had sole discretion under the Client Guide to determine R&W breaches, that ResCap could prove its case with statistical sampling, and that ResCap could seek indemnification for the liabilities it incurred during the bankruptcy, rather than just out-of-pocket losses. See Id. at 1151, 1154, 1158. The Court also ruled in the defendants' favor on certain issues, including the exclusion of two of the three damages models that ResCap proffered (both of which provided for substantially higher damages than the model the Court found acceptable), and a ruling that much of ResCap's breach of contract claim was time-barred. See id. at 1189, 1198, 1205.[11]

         b. Trial & Trial Rulings

         Of the First-Wave cases in the Consolidated Action, the first and only case to proceed to trial was ResCap's case against Home Loan Center, Inc. (“HLC”), ResCap Liquidating Tr. v. Home Loan Center, Inc., 14-cv-1716 (SRN/HB). The HLC trial took place from October 15 to November 7, 2018. At the conclusion of the defendant's case, following substantial briefing and oral argument, the Court granted JMOL to ResCap on several issues, including the reasonableness of the settlements and HLC's equitable estoppel defense. (See generally In re ResCap Liquidating Tr. Litig. (“HLC JMOL Order”), 399 F.Supp.3d 804 (D. Minn. 2019). However, the Court allowed the question of the Client Guide's applicability to go to the jury, along with the determination of what amount of damages, if any, HLC owed ResCap. Id.

         The jury returned a $28.7 million verdict in favor of ResCap, representing approximately 70% of the damages that Plaintiff's expert, Dr. Snow, testified was a conservative estimate of the damages to be allocated to HLC.[12] (See HLC Trial Tr. [Doc. No. 4719] at 2098 (Snow) (stating that, under his Allocated Breaching Loss damages model, nearly $41.3 million was the most likely, conservative and reliable estimate of damages to be allocated to HLC).)

         c. Non-Consolidated RMBS Proceedings in this District

         Also relevant here are two proceedings that were not part of the Consolidated Action, but arose from the same general underlying facts: Residential Funding Co., LLC v. Universal American Mortgage Co., LLC, 13-cv-3519 (PAM/HB), and Residential Funding Company, LLC v. First Mortgage Corporation, 13-cv-3490 (SRN/HB). In UAMC, Judge Magnuson issued a ruling on the parties' cross motions for summary judgment and motions to exclude expert opinions. Residential Funding Co. v. Univ. Am. Mortg. Co. (“UAMC”), No. 13-cv-3519 (PAM/HB), 2018 WL 4955237 (D. Minn. Oct. 12, 2018). Judge Magnuson's ruling was generally consistent with the Common SJ Order, differing only in that his ruling was more favorable to ResCap. He found, on summary judgment, that the Bankruptcy Settlement was reasonable as a matter of law, id. at *5, and that provisions in the Client Guide precluded the affirmative defense of waiver and estoppel. Id. at *7-8. The parties to the UAMC matter settled their disputes prior to trial.

         In First Mortgage, a case that was formerly part of the Consolidated Action until June 2018, the Court ruled on the parties' cross motions for summary judgment in December 2018. Residential Funding Co. v. First Mortgage (“First Mortg.”), No. 13-cv-3490 (SRN/HB), 2018 WL 6727065 (D. Minn. Dec. 21, 2018). As to ResCap's motion for summary judgment on the reasonableness of the Bankruptcy Settlement, the Court cited to overwhelming evidence in the HLC record. Id. at *5. Finding the same facts equally applicable, and no new evidence from First Mortgage raising a disputed fact question, the Court granted ResCap's motion. Id. at *6. In addition, the Court found that ResCap's Allocated Breaching Loss damages methodology “provides a reasonable, non-speculative basis to allocate the Settlements.” Id. at *9. Ultimately, the parties settled the case prior to trial.

         III. DISCUSSION

         Prior to addressing the parties' arguments, the Court reviews general principles of the law of contractual indemnity, and foundational rules of contract interpretation, as they are helpful to the analysis of many of the parties' arguments.

         A. Principles of Law of Contractual Indemnity

         Under the common law indemnity doctrine, “[a] right of indemnity arises when a party seeking indemnity has incurred liability due to a breach of a duty owed to it by the one sought to be charged, and such a duty may arise by reason of a contractual obligation.” Rice Lake Contracting Corp. v. Rust Env't & Infrastructure, Inc., 616 N.W.2d 288, 291 (Minn.Ct.App. 2000).[13] As such, common law indemnity is considered an equitable remedy. See Zontelli & Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744');">373 N.W.2d 744, 755 (Minn. 1985) (“Indemnity is, however, an equitable doctrine that does not lend itself to hard-and-fast rules, and its application depends upon the particular facts of each case.”); see also Lambertson v. Cincinnati Welding Corp., 257 N.W.2d 679, 685 (Minn. 1977) (“Contribution and indemnity are variant common-law remedies used to secure restitution and fair apportionment of loss among those whose activities combine to produce injury.”); Hendrickson v. Minn. Power & Light Co., 104 N.W.2d 843, 846-47 (Minn. 1960), (“Indemnity is the remedy securing the right of a person to recover reimbursement from another for the discharge of a liability which, as between himself and the other, should have been discharged by the other. . . . In the modern view, principles of equity furnish a more satisfactory basis for indemnity.”), overruled in part on other grounds by Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362 (Minn. 1977); Shore v. Minneapolis Auto Auction, Inc., 410 N.W.2d 862, 866 (Minn.Ct.App. 1987) (“Indemnification is a flexible, equitable remedy designed to accomplish a fair allocation of loss among parties. Such a remedy should be used to achieve fairness as applied to a particular set of facts.”).

         “In the contractual context, ” however, “a claim based on an express indemnification provision is a legal, rather than equitable, claim.” Johnson v. Johnson, 902 N.W.2d 79, 85 (Minn.Ct.App. 2017); see also Hendrickson, 104 N.W.2d at 848 (expressly recognizing that a duty to indemnify can arise “[w]here there is an express contract between the parties containing an explicit undertaking to reimburse for liability of the character involved”). “Indeed, when the duty to indemnify arises from contractual language, it generally is not subject to equitable considerations; rather, it is enforced in accordance with the terms of the contracting parties' agreement.” 41 Am. Jur. 2d Indemnity § 13 (2019).

         Under Minnesota law, and as more specifically described throughout this Order, “[a]n indemnity agreement is a contract, which is to be construed according to the principles generally applied in the construction or interpretation of other contracts.” Buchwald v. Univ. of Minn., 573 N.W.2d 723, 726 (Minn.Ct.App. 1998); see also Grand Trunk W. R.R., Inc. v. Auto Warehousing Co., 686 N.W.2d 756, 761 (Mich. Ct. App. 2004) (“Contractual indemnity is an area of law guided by well-settled general principles. Nonetheless, each case must ultimately be determined by the contract terms to which the parties have agreed.”). An indemnity contract is “to be given ‘a fair construction that will accomplish its stated purpose.'” Sorenson v. Safety Flate, Inc., 235 N.W.2d 848, 852 (Minn. 1975) (quoting N.P. Ry. Co. v. Thornton Bros. Co., 288 N.W. 226, 227 (Minn. 1939)).

         In these claims of contractual indemnity, the threshold question is whether that for which the indemnitee seeks indemnification-whether it be losses, damages, or liabilities-falls within the language of the contract. This initial inquiry involves not only interpreting the indemnity contract to determine its scope, but also evaluating whether the facts of the case fit within that scope. See Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997) (holding that unambiguous contract language required three conditions to be met before one party would indemnify another, that one of those conditions was not met, and hence that there was no duty to indemnify); see also 41 Am. Jur. 2d Indemnity § 13 (describing the “threshold question [of] whether the fact situation is covered by the indemnity contract” as requiring “only a straightforward analysis of the facts and the contract terms”).

         Assuming that the facts fall within the indemnity contract, particular issues arise when a party seeks indemnity for a settlement, as is the case here.[14] Although “the right to recover indemnity is not lost by reason of any settlement with the claimant, ” Altermatt v. Arlan's Dep't Stores, 169 N.W.2d 231, 232 (Minn. 1969) (per curiam), where one party seeks to recover from another “for a settlement ‘entered into before trial . . ., the party seeking indemnification must show the settlement was reasonable and prudent.'” Jackson Nat'l Life Ins. Co. v. Workman Sec. Corp., 803 F.Supp.2d 1006, 1012 (D. Minn. 2011) (emphasis added) (quoting Osgood v. Med., Inc., 415 N.W.2d 896, 903 (Minn.Ct.App. 1987)). “The test as to whether the settlement is reasonable and prudent is what a reasonably prudent person in the position of the defendant would have settled for on the merits of plaintiff's claim.” Miller v. Shugart, 316 N.W.2d 729, 735 (Minn. 1982). As more thoroughly explained below, what is reasonable and prudent “involves a consideration of the facts bearing on the liability and damage aspects of plaintiff's claim, as well as the risks of going to trial.” Id. With respect to the considerations of the underlying liability, “[t]he party seeking indemnification need only show it could have been liable under the facts shown at trial not whether they would have been liable.” Jackson, 803 F.Supp.2d at 1012 (citing Glass v. IDS Fin. Servs., Inc., 778 F.Supp. 1029, 1083 (D. Minn. 1991)). Indeed, “[r]easonableness . . . is not determined by conducting the very trial obviated by the settlement.” Alton M. Johnson Co. v. M.A.I. Co., 463 N.W.2d 277, 279 (Minn. 1990).

         B. Principles of Contract Interpretation

         There is no dispute that Minnesota law applies to the interpretation of the Client Contracts, the AlterNet Guide and the Client Guide, as well as to RFC's breach of contract and indemnity claims. (See Nesser Decl., Ex. 1 (Mar. 30, 2000 Client Contract) ¶ 10) (“This Contract shall be governed by, and construed and enforced in accordance with, applicable federal laws and the laws of the State of Minnesota”); id., Ex. 2 (June 25, 2001 Client Contract) ¶ 13) (same). When construing a contract under Minnesota law, a court's “primary goal . . . is to determine and enforce the intent of the parties.” Loftness Specialized Farm Equip., Inc. v. Twiestmeyer, 818 F.3d 356, 361 (8th Cir. 2016) (quoting Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003)). Where the contracting parties' intention is ascertainable from the language of a written contract, the construction of the contract is for the court. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 526 (Minn. 1990). If the parties' intent is unambiguously expressed, “[t]he language found in a contract is to be given its plain and ordinary meaning.” Turner v. Alpha Phi Sorority House, 276 N.W.2d at 63, 67 (Minn. 1979); Bass v. Ring, 9 N.W.2d 234, 236 (1943)). While courts apply the plain and ordinary meaning of contractual terms to the interpretation of a contract, those terms are construed in the context of the entire contract. Quade v. Secura Ins., 814 N.W.2d 703, 705 (Minn. 2012) (citing Emp'rs Mut. Liab. Ins. Co. of Wis. v. Eagles Lodge of Hallock, Minn., 165 N.W.2d 554, 556 (1969)).

         In construing a contract, courts attempt to harmonize all of the contract's provisions. Chergosky, 463 N.W.2d at 525. Also, “[b]ecause of the presumption that the parties intended the language used to have effect, ” courts “attempt to avoid an interpretation of the contract that would render a provision meaningless.” Id. at 526.

         “A contract is ambiguous if, based on the language alone, it is reasonably susceptible of more than one interpretation.” Art Goebel, 567 N.W.2d at 515. “If there is ambiguity, extrinsic evidence may be used, and construction of the contract is a question of fact for the jury unless such evidence is conclusive.” Hickman v. SAFECO Ins. Co. of Am., 695 N.W.2d 365, 369 (Minn. 2005) (citing Donnay v. Boulware, 144 N.W.2d 711, 716 (1966)). While ambiguity in a contract can be construed against the drafter, see, e.g., Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., 913 N.W.2d 687, 693 (Minn. 2018)), courts should do so only after attempting to “determine the parties' intent behind an ambiguous term, using extrinsic evidence if available.” Id. at 694. Moreover, “this rule has less application as between parties of equal bargaining power or sophistication, ” Re-Sols. Intermediaries, LLC v. Heartland Fin. Grp., Inc., No. A09-1440, 2010 WL 1192030, at *3 (Minn.Ct.App. Mar. 30, 2010), and where both parties are represented by sophisticated legal counsel during the formation of the contract. Porous Media Corp. v. Midland Brake, Inc., 220 F.3d 954, 960 (8th Cir. 2000).

         As a general matter, Minnesota upholds principles of freedom of contract, in which “parties are generally free to allocate rights, duties, and risks, ” Lyon Fin. Servs. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 545 (Minn. 2014), and “[c]ourts are not warranted in interfering with the contract rights of parties as evidenced by their writings which purport to express their full agreement, ” Cady v. Bush, 166 N.W.2d 358, 362 (Minn. 1969). Indeed, “[w]here the parties have contracted to create duties that differ or extend beyond those established by general principles of law, and the terms of the contract are not otherwise unenforceable, the parties must abide by the contractual duties created.” Grand Trunk W. R.R., 686 N.W.2d at 761. Terms of those contract provisions must “be given their ordinary meaning, as well as the interpretations adopted in prior cases.” Ritrama, Inc. v. HDI-Gerling Am. Ins. Co., 796 F.3d 962, 969 (8th Cir. 2015) (quoting Boedigheimer v. Taylor, 178 N.W.2d 610, 613 (Minn. 1970)).

         C. Summary Judgment

         Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is ‘material' ” if it may affect the outcome of the lawsuit. TCF Nat'l Bank v. Mkt. Intelligence, Inc., 812 F.3d 701, 707 (8th Cir. 2016). Likewise, an issue of material fact is “genuine” only if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of establishing a lack of genuine issue of fact, Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), and the Court must view the evidence and any reasonable inferences in the light most favorable to the nonmoving party.[15] Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In responding to a motion for summary judgment, however, the nonmoving party may not “‘rest on mere allegations or denials,' but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.” Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).

         Plaintiff seeks summary judgment on the following: (1) issues decided in Wave One; (2) issues decided in HLC, UAMC, or First Mortgage; (3) that the Guides' R&Ws and remedies govern PRMI's at-issue loans; (4) that certain trust rep breaches contributed to RFC's liability; (5) that the RMBS Trust Settlement allowed a single unallocated claim; and (6) that PRMI is liable to ResCap not ...


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