Woori v. Merrill Lynch, et al. Decision and Order SDNY 2013

8/13/2019 Woori v. Merrill Lynch, et al. Decision and Order SDNY 2013

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:: : ECTRO;\ICALLY n L f ~UNITED STATES DISTRICT COURT ... )OC #: _ - - - - = - + . , . . . . , . . . , - - : : ; : ~ . . . , . . . .SOUTHERN DISTRICT OF NEW YORK 1 D:'\TE tILED:-----------------------------------XWOORI BANK,

Pla in t i f f , 12 Civ. 3993(VM)- agains t

.L. .

DE ISION AND ORDERMERRILL LYNCH, e t a l . ,

Defendants.-----------------------------------xVICTOR MARRERO United States i s tr ic t JudgePla in t i f f Woori Bank ( Woori ) f i l ed the compla.int in

th i s ac t ion on May 18, 2012 asser t ing common law claims forfraud, resc iss ion, negl igent misrepresenta t ion, and unjustenrichment (the Complaint ) a r i s i ng out of i t s $143mil l ion investment in seven col la te ra l ized debt -obl iga t ions( CDOs ) . By l e t t e r dated September 20, 2012, Merr i l lLynch & Co., Inc. , Merri l l Lynch Internat ional , Inc . ,Merri l l Lynch, Pierce, Fenner Smith, Inc. , and Bank ofAmerica Corporat ion (col lect ively Merr i l l Lynch ) asser tedtha t P la in t i f f ' s ac t ion should be dismissed based on theappl icable s t a tu t e of l imi ta t ions. Woori responded onOctober 3 2012 and Merr i l l Lynch submitted i t s rep ly onOctober 18, 2012. 1 The Court deems Merr i l l Lynch'ssubmission as cons t i tu t ing a motion to dismiss theComplaint. For the reasons discussed below, Merr i l l

By l e t t e r dated October 18, 2012, defendants Taberna Prefer redFunding I I , Inc. and Taberna Prefer red Funding VI, Inc. ( the TabernaEnti t ies ) jo ined in Merr i l l Lynch's October 18, 2012 reply submission.

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Lynch's motion to dismiss i s GRANTED and Woori 's Complainti s DISMISSED.

I . B CKGROUNDWoori brings t h i s act ion against Merr i l l Lynch; Centre

Square CDO LLCi lMAC CDO 2006-1, LLCi Is tana High GradeABS CDO I , LLCi Libertas Preferred Funding I ,Mantoloking CDO 2006-1, LLCi Taberna Prefer red Funding I I ,Inc . ; and Taberna Preferred Funding VI, Inc. 2 col lect ively ,

Defendants ) al leging tha t Defendants made fa l se andmisleading misrepresentat ions and omissions tha t inducedWoori to inves t $143 mil l ion in a number of CDOs.Specif ica l ly , Woori claims tha t Defendants misrepresentedthe r i sk iness of these investments by conceal ing ins ideinformation re la t ing to the qual i ty of the underlyingmortgages and the cred i t ra t ings assigned to these CDOs.

From 2005 to 2006, Woori purchased i n t e res t s fromMerr i l l Lynch in the following seven CDOs: (1) TabernaPreferred Funding I I i (2) Liber tas (3) Taberna PreferredFunding VI; 4) lMAC 5) Is tana; 6) Cent r e Square and7 Mantoloking. According to Woori, Merr i l l Lynchacquired and suppl ied the asse ts underlying the CDOs,

On August 8, 2012, the Court gran ted Woori s motion to d i smisswithou t p re j ud i c e the fo l lowing pa r t i e s : Cent re Square CDO, Ltd . ;I s t ana High Grade ABS CDO I , Ltd . ; lMAC CDO 2006-1, Ltd . ; Libe r t a sP re fe r red Funding I , Ltd . ; Mantoloking CDO 2006 1, Ltd . ; TabernaPre fe r red Funding I I , Ltd . ; and Taberna P re f e r r e d Funding VI, Ltd.(Docket No. 35) .

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es tabl ished the i ssuers arranged for Moody/s and/orstandard and Poor to supply ra t ings for the OOs and thenmarketed and sold the DOs to Woori and other inves tors .Compl. 6. On January 3 2009 Woori sold i t s in te res tin a l l of the OOs except Taberna Preferred Funding I I andTaberna Preferred Funding VI which t continues to hold.

During 2006 and 2007 the United s ta tes res iden t ia lrea l es ta te market suf fered a massive decl ine tha tparalyzed cred i t markets and sent shockwaves through theent i re f inancial system. Much has been wri t ten deta i l ingthe causes of the resu l t ing financial c r i s i s i the Courtwil l not at tempt to rep l i ca te those e f fo r t s here. However suff ice t to say tha t two major fac tors widely a t t r ibu tedas being respons ible for the c r i s i s were the fa i lu re ofmany f inancia l ins t i tu t ions to adhere to mortgage-lendingstandards a problem tha t was exacerbated by the packagingand secur i t i za t ion of res iden t ia l mortgages and thefa i lu re of the c red i t r a t ing agencies to repor t theunderlying r i sks posed by secur i t i es st ructured with thesemortgages as underlying asse t s .

Merr i l l Lynch s ro le a t the center of the f inancia lc r i s i s has a lso been widely repor ted in the media as wellas i t s being the subject of mult iple lawsuits andregula tory inves t iga t ions . According to some of these

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repor ts and cour t f i l ings ser ious problems exis ted withMerr i l l Lynch's secur i t i za t ion prac t i ces . Between l a t e2007 and May 18, 2009, Merri l l Lynch was the t a rge t ofmult iple lawsui ts a l leg ing tha t the firm misrepresentedmortgage underwri t ing standards, s ign i f ican t ly unders ta t ingthe r i sk of various investments.

II DIS USSIONMerr i l l Lynch argues tha t Woori 's claims are t ime-

barred because Woori was on notice and had the prac t ica lab i l i t y to br ing the current ac t ion pr ior to ay 18, 2009.Spec i f ica l ly Merr i l l Lynch c i t e s a mult i tude of pre-May18, 2009 press repor ts government inves t iga t ions andprivate lawsui ts tha t contain subs tan t ia l ly simi laral legat ions as the current Complaint. Woori disagrees,claiming tha t despi te the many reams dedicated to exposingMerr i l l Lynch's ro le in the f inancial c r i s i s includingsources c i ted in Woori's Complaint and lega l act ionsa l leging subs tan t i a l ly s imi la r claims to those detai led inthe Complaint t did not have the prac t ica l ab i l i t y tobr ing i t s current claims, and therefore the s ta tu te ofl imi ta t ions did not begin to run, un t i l January 27, 2011when the Financial Cris i s Inquiry Commission ( FCIC )provided i t s of f i c i a l censure of Merr i l l Lynch's mortgagere la ted ac t iv i t i e s through the publ ica t ion of i t s repor t

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de ta i l i ng the causes of the f inanc ia l c r i s i s . SeeFinanc ia l C r i s i s Inqui ry Commission, Final Report of theN a t ' l Commln on the Causes of the F inanc ia l and EconomicCri s i s in the United Sta tes (2011 ) ( FCIC Report ' /) ,avai lab le a t h t tp : / / f c i c . l a w . s t a n fo rd . e du / r e por t . For thereasons s t a t e d below, the Court f inds t ha t Woori ' s cla imsare t ime-barred .A. LEG L ST ND RD

Defenses based on s t a t u t e s of l imi ta t ions a re p rope r lybrought under Federa l Rule of Civ i l Procedure 12 (b) (6) asmotions to dismiss for f a i l u r e to s t a t e a cla im. SeeGhartey v. St . John 's Queens Hosp. , 869 F.2d 160, 162 (2dCir . 1989). In cons ider ing a motion to dismiss pursuant toRule 12 (b) (6) , a cour t cons t rues the complain t broadly

accept ing a l l fac tua l a l l ega t ions in the complain t ast rue , and drawing a l l reasonable infe rences in thep l a i n t i f f ' s favor . Chambers v . Time Warner, Inc . , 282F.3d 47 152 (2d Cir . 2002). However, mere conc lus ionsof law o r unwarranted deduc t ions o f fac t need not beaccepted as t rue . F i r s t Nationwide Bank v. Gel t FundingCorp., 27 F.3d 763, 771 (2d Cir . 1994) (quotat ion marks andc i t a t i o n omit ted) . A cour t should not dismiss a complain tfo r l u re to s t a t e a cla im i f the fac tua l a l l ega t ionssu f f i c i en t l y r a i s e a r i gh t to r e l i e f above the specu la t ive

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level . Bell Atl . Corp. v. Twombly, 550 U. S. 544, 555(2007) .B. CHOICE OF LAW

Where a cause of ac t ion accrues outs ide of New York toa non-New York res ident , New York s choice of law borrowings ta tu te appl ies to determine the appropriate s ta tu te ofl imi ta t ions. N.Y. C.P.L.R. 202 (McKinney 2011); see,

~ In re Coudert Bros. LLP, 673 F.3d 180, 190 (2d Cir.2012 i Stuar t v. Am Cyanamid Co. 158 F.3d 622, 627 (2dCir. 1998). Under the borrowing s t a tu t e , a p l a i n t i f f ' sclaim i s not barred i f t i s t imely under both the s ta tu teof l imi ta t ions of New York and of the j u r i sd i c t ion in whichthe cause of ac t ion accrued. See Antone v. Gen. MotorsCorp., 473 N.E.2d 742 N. Y 1984). Here, in order todetermine the loca t ion where Woori s cause of ac t ionaccrued, the Court must f i r s t determine 1) the res idencyof Woori and 2) the loca t ion of the in jury. Because Woorii s both a res ident of and suffered injury in Korea, theCourt concludes t ha t Woori s cause of ac t ion accrued inKorea.

1. Woori Is a Resident of KoreaCourts within the Second Circui t have cons i s ten t ly

held that a business en t i t y s res idence i s determined byGuzman v.t s pr inc ipa l place of business . See,

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Macy's Reta i l Holdings, Inc . , No. 09 Civ. 4472, 2010 W1222044, a t *10 (S.D.N.Y. Mar. 29, 2010) ( A corpora t ion ' spr inc ipa l place of business determines i t sres idence. ) ( interna l c i ta t ions omitted) Pere i ra v.Cogan, No. 00 Civ. 619, 2001 W 243537, a t *18 (S.D.N.Y.Mar. 8, 2001) ( Dis t r i c t cour ts in th i s c i rcu i t applyingNew York law have held that the residence of a corporat ionfor purposes of New York's borrowing s t a tu t e i s thecorpora t ion ' s pr inc ipa l place of business. ) (c i t ingNational Union Fire Ins . Co. of Pit tsburgh, PA v. Forman635 Jo in t Venture, No. 94 Civ. 1312, 1996 WL 507317, a t *4(S.D.N.Y. Sept. 6, 1996) McMahan & Co. v. Donaldson,Lufkin & Jenre t te Sec. Corp., 727 F. Supp. 833, 834(S.D.N.Y. 1989) ( [A] par tnersh ip ' s so le lega l residenceunder [the New York borrowing s ta tu te ] i s where tmaintains i t s pr inc ipa l place of business. ) ( interna lquota t ion marks omitted) see a lso Proforma Partners, LP v.Skadden Arps Sla te Meagher & Flom, LLP, 720 N.Y.S.2d 139(1st Dep' t 2001).

Under the New York borrowing s ta tu te , a bus iness ' spr inc ipa l place of business cons t i tu te s the so le residencyof tha t business ent i ty . Robb Evans Assocs. L.L.C. v.Sun Am Life Ins . , No. 10 Civ. 5999, 2012 W 488257, a t *3(S.D.N.Y. Feb. 14, 2012). Therefore, regard less of whether

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Woori has a s i g n i f i c a n t connect ion to New York which thas openly s t a t e d t does not in o ther proceed ings , seeDefs . ' Reply Ex. 5 a t 12; i d . Ex. 6 a t 7 Woori i s st ll ar es iden t of Korea, where t main ta ins i t s pr inc ipa l placeof bus iness , no t New York. Id .

2. Woori ' s Cause of Action Accrued in KoreaAccording to the New York borrowing s t a t u t e , a cause

of ac t i o n accrues where the i n ju r y i s sus t a ined r a t h e r thanwhere the de f endant commi t t ed the wrongful a c t s . f GordonCo. v. Ross, 63 F. Supp. 2d 405, 408 (S.D.N.Y. 1999)( c i t i n g Global Fin. 715 N.E.2d 482(N.Y. 1999)) . When an a l l eged i n ju r y i s p u re l y economic,the p lace o f in ju ry usua l ly i s where the p l a i n t i f f re s ide sand sus ta ins the economic impact of the loss . Global Fin .Corp. 715 N.E.2d a t 485. Because Woori i s a r es iden t ofKorea and any i n ju r y i s whol ly economic, the Cour t f indst h a t Woori ' s cause of ac t i o n accrued in Korea.C. STATUTE OF LIMITATIONS

Because Woori i s a non- re s iden t under the New Yorkborrowing s t a tu t e , the s h o r t e r of the Korean and New Yorks t a tu t e s of l im i t a t i o n s per iod app l i e s t o Woori ' s c la ims .ee C.P.L.R. 202. The New York s t a t u t e of l imi t a t ions

prov ides t ha t an ac t i o n based upon f raud must be commencede i t h e r s i x years from acc ru a l o r two years from when a

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reasonably di l igent pla in t i f f could have discovered thefraud whichever i s grea ter . rd . 213 (8) . The par t i e sdo not dispute tha t the re levant Korean s t a tu t e ofl imi ta t ions i s th ree years . See Minbeom [Civil Act], ActNO.471, Feb. 22, 1958, ar t . 766(1) (S. Kor.) ; Defs . ' Mot.2; PI . ' s Resp. 3 . Because the Korean s t a tu t e ofl imi ta t ions i s shor ter , t h i s Court wil l apply t to Woori 'sclaims.

Under Korean law, the th ree-year s t a tu t e ofl imi ta t ions begins to run from the date on which thein jured par ty or his agent by law becomes aware of suchdamage and of the iden t i ty of the person who caused i t .Minbeom [Civi l Act] , Act No.471, Feb. 22, 1958, ar t . 766(1)(S. Kor.) ; PI . ' s Resp. 3. Merri l l Lynch claims tha t t h i sanalys is i s iden t i ca l to ew York's inquiry not icestandard. Defs. ' Mot. 4-5. Woori disagrees, claiming thes ta tu te of l imi ta t ions begins to run when a p l a i n t i f f couldprac t ica l ly f i l e a claim, taking in to account thet o t a l i t y of the objec t ive evidence. PI. ' s Resp. 3. TheCourt concludes that , under e i the r s tandard, Woori 's claimsare t ime-barred.

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1. Woori Was on Notice and Had the Prac t ica l Abi l i ty toBring a Claim Pr ior to May 18, 2009

Woori s imultaneously claims tha t the genera l izedevidence c i ted as the bas is of i t s complaint the vas tmajori ty of which involves fac tua l a l l ega t ions publishedpr i o r to ay 18, 2009 i s suf f ic ien t ly deta i l ed to s ta te acognizable claim for r e l i e f and tha t , never the less , thesefac ts were somehow i n su f f i c i en t l y pa r t i cu l a r to cause thes t a tu t e of l imi ta t ions to run. Spec i f ica l ly , Woori claimstha t t was not on not ice of Merr i l l Lynch's al legedimpropriety un t i l the publ ica t ion of the FCIC Report onJanuary 27, 2011 because pr io r to tha t poin t t was unableto prac t ica l ly f i l e a claim. Pl. ' s Resp. S. The Courtdisagrees .

a . The Majori ty of EvidenceAvailable Pr ior to May 2009

Cited by Woori Was

Woori 's complaint c lear ly disp lays tha t the vastmajor i ty of the substant ive a l lega t ions and support ingevidence t re l i e s upon were avai lable long before ay 18,2009. Sta r t ing in ea r ly 2007, repor t s began to emergeregarding the a l lega t ions in Woori ' s complaint tha t cer t a inmortgages packaged by Merri l l Lynch did not meetunderwri t ing standards and tha t the cred i t ra t ings of

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ce r t a i n CDOs sold by Merr i l l Lynch were unre l iable . 3 Infac t , Woori i t s e l f acknowledges tha t the October 2007"wide spread wri te down of CDO ra t ings ' l inc I uding thewrite down of spec i f ic CDO i n t e r e s t s a t i ssue here - beganto expose the al legedly "corrupt system of CDO ra t ings toPla in t i f f . Compl. 94-95; cf . Federal Hous. Fin. Agencyv. U S Ams., Inc. , 858 F. Supp. 2d 306, 321 (S.D.N.Y. 2012)(highl ight ing the importance of a ra t ings downgrade to thea b i l i t y to br ing an ac t ion in the Secur i t i e s Act context) .Between ea r ly 2007 and May 2009, problems with mortgagestandards and CDO ra t ings were reported extensive ly by themedia and served as the bas is for mul t iple governmentinves t iga t ions and individual lawsuits . Not only did thesesources publ ic ize general problems with mortgages i ssued bysubprime lenders , they a lso exposed spec i f ic fac tsregarding Merri l l Lynch tha t Woori cur ren t ly employs tosubs tan t ia te i t s fraud claims.

Woori claims tha t every document c i t ed by the Defendants as evidencetha t Woori should have been on not ice ~ w s wri t ten in English and therei s no indica t ion tha t any of these documents was publ ished in Korean,or even widely-dis t r ibuted in Korea." P l . ' s Resp. 5 n. 6. The Courtwil l not presume tha t Woori, a subsid iary of the l a rges t f inancia lholdings group in Korea with over $284 b i l l ion in asse t s , monitors suchesoter i c English-language publ ica t ions as The Wall St ree t Journal ,Bloomberg, The Economist, The New York Times, or the Financia l Times.Nevertheless, t is curious tha t a t ransnat ional f inancia l in s t i tu t ionas la rge and sophis t ica ted as Woori managed to diges t the FCIC Report a more than 500-page one-time masterwork of the Engl ish languageproduced by the ever-eloquent United Sta tes Government, probably bylawyers - in such a comprehensive manner, while overlooking years ofbusiness publ ica t ions regular ly and exp l i c i t l y covering mattersdi rec t ly per t inent to Woori's investments.

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Following these r epor t s of impropriety by Merr i l lLynch and o ther f inanc ia l i n s t i t u t i ons , o ther p la in t i f f sbegan f i l i ng numerous l awsui t s incorporat ing these fac t sin to t h e i r complaints . As e a r l y as October 18, 2007, anac t ion was f i l e d aga ins t Mer r i l l Lynch r e l a t i ng to apar t i cu l a r s e c ur i t i z a t i on a t i s sue in t h i s caseMantoloking - a l leg ing , among o ther th ings , t ha t Merr i l lLynch f a i l e d to fu l l y d isc lose the exposure of c e r t a in DOsto the sub-prime mortgage market. See Complaint a t 42,MetroPCS Commc' ns v. Merr i l l Lynch Co., Inc . , No. 0712430 Tex. Dis t . Ct. Oct. 8 2007); Defs. I Mot. Ex. 31.Since l a t e 2008, many more l awsui t s have been f i l ed aga ins tMer r i l l Lynch s pe c i f i c a l l y a l l eg ing t ha t Merr i l l Lynch mademisrepresenta t ions regarding mortgage underwri t ings tandards thereby s ign i f i c a n t ly unders ta t ing the r i sk ofvar ious investments . See, , Complaint a t 4, 8, I ronWorkers Local No. 25 Pension Fund v. Credit-Based AssetServo Sec. L . L . C . , No. 08 Civ. 10841 S.D.N.Y. Dec. 12,2008) ( fa l se s ta tements r e l a t i ng to underwri t ing s tandardsresu l t ed in dramat ica l ly grea te r r i sk p ro f i l e fo r asse tbacked ce r t i f i ca t e s ) i Complaint a t 11 12, Publ ic Emp.Ret. Sys. of Miss. v. Merr i l l Lynch Co., Inc . , No. 09Civ. 1392 S.D.N.Y. Feb. 17, 2009) ( fa l se sta tements aboutasse t -backed c e r t i f i c a t e s ) ; Complaint a t 10-15, Wyoming

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Sta te Treasurer v. Merr i l l Lynch Co., Inc. , No. 09 Civ.3030 (S.O.N.Y. Mar. 27, 2009) fa lse s tatements aboutmortgage pass- through cer t i f ica tes ) Complaint a t 9-10,43, Connecticut Carpenters Pension Fund v. Merr i l l Lynch &Co. No. BC403282 (Cal. Super. Ct. Dec. 5, 2008) fa lses tatements about mortgage cer t i f i ca t es ) .

Moreover, inves tors a lso f i led shareholder lawsui tsagains t Merr i l l Lynch claiming the in s t i tu t ion had a lsomisrepresented i t s own exposure to OOs and other subprimeasse t s . See In re Merr i l l Lynch & Co. Sec. , Derivat ive andERISA Li t ig . , No. 07 Civ. 9633 (S.D.N.Y. Sept. 23, 2008).

While these lawsui ts re la ted to a var ie ty of mortgagere la ted investment products, many of which were not COOs,they nevertheless c i t e to subs tan t i a l ly s imi la r indeed a tt imes iden t i ca l facts as Woori s Complaint to supporta l lega t ions of systemic def ic ienc ies in both Merr i l lLynch s underwrit ing disc losures and the ra t ings of theseinvestment products provided by the ra t ing agencies .Regardless of the speci f ic type of f inancial instrument a ti ssue, ju s t as in the present act ion, a l l these cases makethe same core al legat ion: that Merr i l l Lynch fa i l ed todisclose or misrepresented the dis junc t between the al legedunderwri t ing s tandards and the ac tua l qual i ty of theunder lying mortgages. As a resu l t , t i s not surpr is ing

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tha t Woori c i t e s many of the same fac tua l a l lega t ions madein these pre-May 2009 lawsui ts as evidence di rec t lysupport ing i t s claims agains t Merr i l l Lynch in the presentac t ion .

For example, Woori poin ts to Merri l l Lynch'sre la t ionship with the subprime lender Ownit MortgageSolutions , Inc. ( Ownit ) as an example of Merri l l Lynchencouraging subprime lenders to generate defec t ive andtoxic loans in order to increase loan volume. Compl.60. However, t was widely repor ted as ea r ly as ay 2007tha t Merri l l Lynch had pressured Ownit to lower i t sunderwri t ing standards in order to increase the volume ofloans. See, ~ P I . ' s Resp. Exs. 12, 39; Compl. 5758, 60, 63.

Merri l l Lynch's re la t ionship with Ownit has a lso beenc i t ed by numerous complaints f i l ed s ince then, inc luding ac lass act ion lawsuit f i l ed in December 2008 claiming that ,in the context of mortgage reg is t ra t ion s tatements , Merri l lLynch had misstated, in te r a l i a , the process used toor ig ina te loans and the qua l i ty of mortgages andspec i f i ca l l y pointed to ownit as an example of Merri l lLynch pressur ing lenders to lower underwri t ing s tandards .Complaint a t 9-10, 43, Connecticut Carpenters PensionFund, No. BC403282; see also In re Merr i l l Lynch Co. Inc.

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Sec. , Derivative and ERISA Li t ig . , No 07 Civ. 9633(S.D.N.Y. Sept. 23, 2008).

I f Woori claims tha t th i s extensive publ ic ly ava i lableinformation c i ted in i t s complaint supports i t s claims,then these public mater ia ls would a lso have cont r ibuted tothe t o t a l i t y of the circumstances put t ing the bank onnot ice of poss ible claims. See Market Neutral MasterL td. v. Veras Capi ta l Pa r tne rs Offshore Fund, Ltd. , 580 F. Supp. 2d 321, 329 (S.D.N.Y. 2008) ( di smi ss ing c la im ast ime-barred where "numerous news ar t i c l es , press re leasesand lawsuits appeared conta in ing the exact a l lega t ions ofwrongdoing by [defendant] that [pla int i f f ] now includes ini t s Amended Complaint .") . Whether the Court looks toi nqu iry no ti ce or to the time a t which Woori could have prac t ica l ly brought a claim, the t o t a l i t y of theobject ive evidence demonstrates tha t Woori possessed a l lthe requi s i t e pieces of re levant information to bring anac t ion pr ior to ay 18, 2009.

b. The FCIC Report Is Not the Benchmark for Woori'sAbi l i ty tg Bring th is Action

woori disputes tha t t could have prac t i ca l ly broughtthe current ac t ion pr ior to ay 18, 2009. Specif ica l ly ,woori claims tha t the f i r s t reasonable date from which tcould prac t ica l ly f i l e a claim was January 27, 2011, when

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the FCIC publ i shed a comprehensive report deta i l ing theovera l l causes of the f inancia l cr i s i s , including, in par t ,Merri l l Lynch's DO ac t iv i t i e s . woori cla ims thepubl ica t ion date of the FCIC Report i s the appropr ia te datebecause l i t i g a t i on in Korea f requent ly requi res a delay .

un t i l regula tory author i t i es have publ i shed theo f f i c i a l r e su l t s of t he i r inves t iga t ions . Plo ' s Resp. 34. Therefore , Woori cla ims t could not have pract ica l lybrought a cla im un t i l the FCIC published i t s over SOO-pagereport t ha t ca r r i ed the imprimatur of c red ib i l i t y from theU.S. government. PI . ' s Resp. 2. Neither the law c i t ed byWoori nor the fac ts of the present case supports t h i spropos i t ion .

Notwithstanding Woori 's asse r t ions to the contrary,there i s nothing in the Korean law c i t ed by the par t i es ,the law of t h i s Court, o r common sense t ha t would requirean o f f i c i a l government determinat ion of wrongdoing before ac iv i l lawsui t re l a t ing to tha t conduct may be brought .Instead, th i s Court ' s review reveals t ha t Korean lawrequi res an analys is of the t o t a l i t y of the obj ec t iveevidence including press reports , governmentinves t iga t ions , and other lawsui ts to determine when ap la in t i f f can be deemed to have prac t ica l and spec i f icawareness of a cla im. Plo ' s Resp. Ex. A 10; Defs . '

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Response Ex. 2 12; see [Seoul Dis t r i c t court] ,95Gadan95739, Feb. 13, 1996; [Seoul High Court] ,2002B32686, Jan. 26, 2006 (dismissing claim under s ta tu teof l imi ta t ions because the s t a tu t e of l imi ta t ionsgenera l ly s t a r t s running from the point of t ime when anobject ive r igh t does exis t and the r igh t can be exercised .

. Even i f the vict ims of th i s case were not aware ofthe existence of the i r r igh t diseases due tode fo l ian t s did occur to the vict ims of th is case in r ea l i tyand there exis t s no lega l bar r ie r tha t may hinder thevic t ims from exerc is ing the i r r igh t in th i s case. /I) .

While a government invest igat ion into wrongdoing maybe suf f ic ien t to provide inqui ry not ice , t i s not anecessary requirement. See Hinds Cty. , Miss. v. WachoviaBank N.A., 790 F. Supp. 2d 121, 123 24 (S.D.N.Y. 2011)(holding tha t indictment was not a prerequi s i t e to not iceand dismissing claims); e la Fuente v. DCI Telecommcn's. ,Inc. , 206 F.R.D. 369, 383 (S.D.N.Y. 2002) (col lec t ing casesfor propos i t ion tha t SEC lawsui ts are by no means anecessary t r igger for inquiry not ice ) . Unsurprisingly,Woori has fa i led to point to any Korean law to support theproposi t ion tha t some governmental authori ty must make aformal f inding of impropriety before the s ta tu te ofl imi ta t ions for a private lawsuit wil l begin to run.

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Moreover, an analys is of the t o t a l i ty of theobject ive evidence makes t c lear tha t the FCIC Report wasnot the tal ismanic open sesame command to unlock thecourthouse doors for Woori 's ac t ion. The formalpubl ica t ion of an extensive his tor ica l accounting of theovera l l causes of the recent f inancia l c r i s i s i s not themarker for the f i r s t prac t icable moment a pr iva te p l a i n t i f fmay exercise the ab i l i t y to bring a c iv i l ac t ion. FCICReport a t xi . The FCIC Report did not i n f i l t r a t e the deepdepths of Mordor - or the deeper hard dr ives of Wall St ree t- to unear th any age old c landest ine ac t iv i t i e s . Instead,the FCIC began with the large body of publ ic ly ava i lablepre exis t ing l i t e ra tu re developed by congressionalcommittees, government agencies, academics, journa l i s t s ,lega l invest igators , and many others tha t had a l readyexposed ser ious ind isc re t ions re la t ing to the c r i s i s . Fromth i s vas t publ ic ly avai lable l ib ra ry , t began to assemblea comprehensive analysis of the causes of the collapse ofcer ta in f inancia l markets. FCIC Report a t x i i . In fact ,many of the FCIC sources c i ted by Woori in i t s complaintmerely rehash information published years ear l i e r inar t i c l es or other publ ical ly avai lable mater ia ls . See,~ Compl. 66 (c i t ing to FCIC Report a t 204 andomit t ing footnote to October 2007 ar t ic le ) .

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Moreover, while the FCIC Report provides fur therelabora t ions on Merr i l l Lynch's general pract ices regardingDOs something tha t was already extensively reported long

before publ icat ion of the FCIC Report t provides l i t t l eaddi t ional information spec i f ica l ly appl icable to Woori 'sclaims and therefore f a i l s to support the not ion tha t onlya t th i s point of reve la t ion could woori have prac t ica l lybrought the present act ion. In fac t , unlike the MetroPCSlawsuit f i l ed more than a year-and-a-hal f pr ior to May2009, the FCIC Report f a i l s to exp l ic i t ly mentionspec ic DO or securi ty a t issue in th i s case. Instead,the FCIC Report de ta i l s Merr i l l Lynch's general izedprac t ices re la t ing to mortgage-based asse t s and CDOs.Thus, Woori' s re l iance on the general al legat ions in theFCIC Report d i r ec t ly contradic ts i t s argument. Woori 'stheory contends tha t Woori i s not claiming tha t Merr i l lLynch fa i led to scrut inize loan appl ica t ions adequately ingeneral ," but ra ther tha t Merr i l l Lynch's representat ionsre la t ing to "the par t icu la r secur i t i za t ions sold to[pla int i f f ] were flawed. See P l . ' s Resp. App. Ex. 45(quoting Fed. Hous. Fin. Agency, 858 F. Supp. 2d a t 321(emphasis in or ig ina l ) ) . On th i s bas is , Woori maintains

to note tha t Judge Cote 's decis ion in Federal Hous.dea l t with the more exact ing accrua l s tandard

appl icable under the Secur i t i e s Act, the accrual s tandard t h a t4 Woori a l so f a i l s

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tha t the extensive publ ic i ty of Merr i l l Lynch s general DOprac t ices fa i l ed to put Woori on not ice of possib le claims.See id . r f anything, the FCrC Report provides l e s sspec i f ic i ty regarding Merr i l l Lynch s prac t ices as re la testo Woori s par t icu la r investments than the extensivepubl ica t ions government inves t iga t ions and individuallawsui ts such as MetroPCS tha t predated and l ike ly formedpar t of the impetus for the publ ica t ion of theoverarching Fcrc Report on the f inancia l c r i s i s .

Undoubtedly, every p l a i n t i f f would welcome anequiva len t good for tune: the ab i l i t y to mine hundreds ofpages of mater ia l produced over a year and a ha l f ofinves t iga t ions by a federal ly-appointed bipar t i sancommission o f f i c i a l l y condemning the ta rge ted defendant forhelping produce one of the l a rges t f inanc ia l f iascos in thehis tory of the United Sta tes . However, as a review of t h i sCourt s docket confirms, such a once- in-a- l i fe t ime bountyi s not a pre requis i t e to f i l ing a c i v i l act ion . Althoughlacking the l u s t e r of an of f i c i a l government sea l ofcondemnation, the extensive inqui ry conducted by thep la in t i f f s inves t iga tors academics, and j ou rna l i s t s tha tpreceded the publ ica t ion of the FCrC Report conta in a muchmore luc ra t ive t reasure chest of information about Woori swould be app l icab le to the presen t case under e i t he r New York or Koreanlaw.

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spec i f i c a l lega t ions agains t Merr i l l Lynch than the FCICReport i t s e l f .

2. The Breadth of Permissible Discovery in KoreanCourts Did Not Affect Woori 's Prac t i ca l Abi l i ty toBring I t s Case in th i s Court

Woori a lso claims tha t the FCIC Report was apre requis i t e to bringing an ac t ion because Korean l i t igan t sdo not possess the equivalent r igh t to discovery asl i t i gan t s in the United Sta tes . P I . ' s Resp. 3-4. To beginwith, t i s not c lear tha t the r igh t to discovery underKorean procedures as l imi ted as Woori claims. In fact ,Woori has argued in other proceedings tha t Korean cour tshave a pr e - t r i a l discovery mechanism s imi la r to tha tpossessed by I igants in the United Sta tes , which en t i t l e spar t ies to re la t ive ly broad pr e - t r i a l discovery. t Defs.Reply Ex. 8 18.

Regardless of the permissible breadth of discovery inKorean cour t s - the exact contours of which the par t iesdispute - Woori confuses the scope of a procedural r igh t todiscovery tha t ord inar i ly comes to f ru i t i on a f t e r thef i l ing of a complaint , with the ac tua l i ssue before theCourt: whether the amount of information about Merr i l lLynch's prac t ices in the OO market tha t was already in thepubl ic record tha t i s , information tha t preceded thef i l ing of an ac t ion by Woori tha t might give r i s e to

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discovery - was suf f ic ien t to give Woori inqui ry not ice orthe prac t i ca l ab i l i t y to f i l e an ac t ion grounded on tha tconduct in the f i r s t place. For tha t purpose, discoveryprocedures , which are se t in motion only a f t e r the f i l ingof a complaint , are i r re levant . Indeed, even under thebroad discovery rules prevai l ing in the United Sta tes , tomaintain a lawsui t a pla in t i f f must be able to s ta te aplaus ible claim based on information gathered before formaldiscovery procedures take e f f ec t . The ava i lab i l i ty ofbroad discovery therefore has no bearing on a p l a i n t i f f ' sa b i l i t y to draf t a suf f ic ien t complaint in the f i r s tinstance, contrary to what Woori s argument would suggest,nor i s discovery permissible to enable a p l a i n t i f f to f indthe fac ts necessary to prepare claims for a prospect ivelawsui t .

In sum the breadth of permissible discovery in Koreahas no prac t ica l e f fec t on when Woori could have f i l ed acase in th i s Court and therefore does not af fec t anys ta tu te of l imi ta t ions determinat ions. Moreover, asdiscussed above, the FCIC Report i s no s i lver bul le t - a tl eas t as t per ta ins to subs tan t ia t ing Woori s speci f ica l lega t ions agains t Merr i l l Lynch and sheds l ttaddi t ional l igh t on Merr i l l Lynch s t reatment of Woori s

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investments tha t was not publ ic ly known or could not havebeen f lushed out during discovery.

Therefore, under both the inqui ry notice advocatedby Defendants and the prac t ica l abi l i ty s tandardadvocated by Woori, the overa l l controversy surroundingMerri l l Lynch s CDO investments and re la t ionship with thera t ings agencies numerous government inves t iga t ions intoMerri l l Lynch and pr iva te lawsui ts agains t Merr i l l Lynchre la t ing to the spec i f ic CDOs a t i ssue in Woori 's claims int h i s case, were su f f i c i en t to put Woori on not ice of aputa t ive cla im r e l a t i ng to i t s CDO investments with Merri l lLynch.

I I I OR ER

Accordingly, t i s herebyOR ERE tha t the motion (Docket No. 49) of defendants

Merri l l Lynch Co Inc. Merri l l Lynch In te rna t iona lInc l Merri l l Lynch, Pierce, Fenner Smith Inc l and Bankof America Corporation to dismiss the complaint ofpla in t i f f Woori Bank i s GRANTED

The Clerk of Court i s di rec ted to terminate anypending motions and to c lose t h i s case.

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SO ORDERED

Dated: New York, New York5 February 2013

VICTOR M RREROU.S.D.J .

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Documents

Woori v. Merrill Lynch, et al. Decision and Order SDNY 2013