Extender Statute Supplants Both Statutes of Repose and Statutes of Limitations: Ninth Circuit | Practical Law

Extender Statute Supplants Both Statutes of Repose and Statutes of Limitations: Ninth Circuit | Practical Law

In Nat'l Credit Union Admin. Bd. v. RBS Secs., Inc., the US Court of Appeals for the Ninth Circuit held that the Extender Statute replaces all preexisting time limitations, whether a statute of limitation or a statute of repose, in any action by the National Credit Union Administration Board as conservator or liquidating agent.

Extender Statute Supplants Both Statutes of Repose and Statutes of Limitations: Ninth Circuit

by Practical Law Litigation
Law stated as of 16 Aug 2016 • USA (National/Federal)
In Nat'l Credit Union Admin. Bd. v. RBS Secs., Inc., the US Court of Appeals for the Ninth Circuit held that the Extender Statute replaces all preexisting time limitations, whether a statute of limitation or a statute of repose, in any action by the National Credit Union Administration Board as conservator or liquidating agent.
On August 15, 2016, the US Court of Appeals for the Ninth Circuit, in Nat'l Credit Union Admin. Bd. v. RBS Secs., Inc., joined other circuits and held that the Extender Statute replaces all preexisting time limitations in any action by the National Credit Union Administration Board (NCUA) as conservator or liquidating agent ( (9th Cir. Aug. 15, 2016)).
The NCUA is an independent federal agency responsible for chartering and regulating federal credit unions, regulating federally insured state-chartered credit unions, and administering the Shared Insurance Fund. It has the authority to step in as a conservator to preserve a credit union's assets and to protect the Shared Insurance Fund when an insured credit union is in danger of failing. When the Western Corporate Federal Credit Union (Wescorp), the second largest credit union in the US, suffered heavy losses on its residential mortgage-backed securities (RMBS) investments, the NCUA placed it into a conservatorship and then liquidation.
After taking control of Wescorp, the NCUA found that certain offering documents for RMBS purchased by Wescorp contained material misrepresentations about the quality of the loans underlying the RMBS. These RMBS were issued by Wachovia Mortgage Loan Trust (Wachovia) and Nomura Home Equity Loan, Inc. (Nomura). As a result, the NCUA filed a lawsuit against Wachovia and Nomura under the Securities Act of 1933 (Securities Act). Section 13 of the Securities Act provides that a private investor pursuing a claim under sections 11 or 12(a)(2) must bring suit both:
  • Within one year after discovering a violation (the statute of limitations).
  • Within three years after the security was offered or sold (the statute of repose).
(15 U.S.C. § 77m.)
A statute of repose is not subject to equitable tolling and bars a plaintiff from bringing suit after a specified time, even if the period ends before the plaintiff suffers injury. However, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which contains special provisions concerning the failure of financial institutions, including the Extender Statute (12 U.S.C. § 1787(b)(14)). The Extender Statute establishes "the applicable statute of limitations" regarding any action the NCUA brings as conservator or liquidating agent. Specifically for NCUA's relevant claims, a claim accrues on the later of:
  • The date of appointment of the NCUA as conservator or liquidating agent.
  • The date on which the cause of action accrues.
The NCUA placed Wescorp into conservatorship on March 20, 2009. It filed its complaint on July 18, 2011, less than three years later. However, the district court found that the NCUA did not timely file its claims because the NCUA did not file suit within three years after the securities at issue were offered or sold. In so holding, the district court narrowly interpreted the Extender Statute to apply to the Securities Act's one-year statute of limitations but not the three-year statute of repose.
The Ninth Circuit disagreed and held that the Extender Statute replaced all preexisting time limitations, whether styled as a statute of limitations or a statute of repose, in any action by the NCUA as conservator or liquidating agent. In it analysis, the Ninth Circuit found that:
  • The FIRREA applies to statutes of repose, as other appellate courts have also held. In reaching this conclusion, the court took into consideration both:
    • the plain meaning of the Extender Statute; and
    • the legislative history of the Extender Statute.
  • The Extender Statute's scope applies to statutory claims and not merely to common law claims.
Because the Ninth Circuit concluded that the NCUA timely filed its claims, it vacated the district court decision and remanded.