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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 1 of 11



UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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ALLSTATE BANK, ALLSTATE INSURANCE
COMPANY, ALLSTATE LIFE INSURANCE
COMPANY, ALLSTATE NEW JERSEY
INSURANCE COMPANY, ALLSTATE LIFE
INSURANCE COMPANY OF NEW YORK,
AGENTS PENSION PLAN, and ALLSTATE
RETIREMENT PLAN,








Plaintiffs,

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Case No. 11 Civ. 1869 (DAB)

Removed from:

Supreme Court of the State of New York,
County of New York, No. 650398/2011









JPMORGAN CHASE BANK, N.A.; J.P.
MORGAN ACQUISITION CORPORATION;
J.P. MORGAN SECURITIES INC.; J.P.
MORGAN ACCEPTANCE CORPORATION I;
W.M. ASSET HOLDINGS CORPORATION;
WAMU ASSET ACCEPTANCE
CORPORATION; WAMU CAPITAL
CORPORATION; WASHINGTON MUTUAL
MORTGAGE SECURITIES CORPORATION;
LONG BEACH SECURITIES CORPORATION;
DAVID BECK; DIANE NOVAK; THOMAS
LEHMANN; EMC MORTGAGE
CORPORATION; STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.; BEAR
STEARNS ASSET BACKED SECURITIES I
LLC; and SACO I INC.,

Defendants.

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NOTICE OF REMOVAL

Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 2 of 11




PLEASE TAKE NOTICE that JPMorgan Chase Bank, N.A., J.P. Morgan

Mortgage Acquisition Corporation,1 J.P. Morgan Securities LLC,2 J.P. Morgan Acceptance

Corporation I, WM Asset Holdings Corporation, WaMu Asset Acceptance Corporation, WaMu

Capital Corporation, Washington Mutual Mortgage Securities Corporation, Long Beach

Securities Corporation, EMC Mortgage Corporation, Structured Asset Mortgage Investments II

Inc., Bear Stearns Asset Backed Securities I LLC, and SACO I Inc. (collectively, the “Removing

Defendants”) hereby remove the above-captioned action from the Supreme Court of the State of

New York, County of New York, to the United States District Court for the Southern District of

New York.3 Because this action is “related to” bankruptcy proceedings arising under Title 11 of

the United States Code, this action is removable pursuant to 28 U.S.C. §§ 1452 and 1334.

Moreover, because Plaintiffs’ claims against JPMorgan Chase Bank, N.A. arise under federal

law, this action is removable pursuant to 28 U.S.C. §§ 1331, 1441(b), and 1367(a).

I.

PROCEDURAL HISTORY AND BACKGROUND

1.

On or about February 15, 2011, Plaintiffs Allstate Bank, Allstate Insurance

Company, Allstate Life Insurance Company, Allstate New Jersey Insurance Company, Allstate


1

J.P. Morgan Mortgage Acquisition Corporation has been incorrectly named as “J.P.
Morgan Acquisition Corporation” in the Complaint.

Although “J.P. Morgan Securities, Inc.” is named in the Complaint, the current entity is
known as J.P. Morgan Securities LLC.

In removing this action, the Removing Defendants preserve any and all defenses. See,
e.g., Cantor Fitzgerald, L.P. v. Peaslee, 88 F.3d 152, 157 n.4 (2d Cir. 1996) (“[r]emoval
does not waive any Rule 12(b) defenses,” including “defense of lack of personal
jurisdiction”); Gay v. Carlson, No. 89 Civ. 4757 (KMW), 1991 WL 190584, at *5
(S.D.N.Y. Sept. 17, 1991) (“[M]erely by removing a case from state to federal court a
party does not waive any of its defenses under Rule 12(b), including a motion to dismiss
for improper service.”).





2

3




Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 3 of 11

Life Insurance Company of New York, Agents Pension Plan, and Allstate Retirement Plan

commenced this action by filing a Summons and Complaint in the Supreme Court for the State

of New York, County of New York, captioned Allstate Bank, et al. v. JPMorgan Chase Bank,

N.A., et al. (the “State Court Action”).

2.

Plaintiffs allege that they purchased 40 certificates in 26 securitization

transactions (the “Certificates”), and that various Defendants were either seller/sponsor,

underwriter, and/or depositor, or are currently successor to or in control of the entities that served

in these roles in the relevant transactions.

3.

Plaintiffs also allege that Defendants made intentional and/or negligent

misrepresentations about the riskiness and credit quality of the Certificates in registration

statements, prospectuses, prospectus supplements, and other written materials (collectively, the

“Offering Materials”). Plaintiffs further allege that the Offering Materials contained

misrepresentations about, inter alia, underwriting guidelines, the percentage of non-conforming

loans, owner occupancy statistics, loan-to-value ratios, purpose and use of exceptions, credit

ratings, and credit enhancement features.

4.

The Removing Defendants’ time to respond to the Complaint has not expired, and

they have not pled, answered, or otherwise appeared in the State Court Action.

5.

No motion or other proceedings in this action are pending in the State Court

Action.

II.

PROCEDURAL REQUIREMENTS FOR REMOVAL

6.

The Removing Defendants received the Summons and Complaint on or about

February 17, 2011.4 Copies of the Summons and Complaint, as well as all process, pleadings,



4 WaMu Capital Corporation did not receive a copy of the Summons.




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 4 of 11

and orders served in this action, along with a stipulation between Plaintiffs and Defendants and

the Consent to Removal of Defendants David Beck, Diane Novak, and Thomas Lehmann, are

attached hereto as Exhibits 1 - 5.

7.

This Notice of Removal is filed within 30 days of the Removing Defendants’

receipt of the Complaint, and is therefore timely under 28 U.S.C. § 1446(b).

8.

The Supreme Court of the State of New York, County of New York is located

within the geographical boundaries of the United States District Court for the Southern District

of New York. See 28 U.S.C. § 112(b).

9.

In accordance with 28 U.S.C. § 1446(d), the Removing Defendants will promptly

file a copy of this Notice of Removal with the Clerk of the Supreme Court of the State of New

York, County of New York. The Removing Defendants have served all parties with a copy of

this Notice of Removal.

10.

All Defendants who have been duly served consent to and join in this Notice of

Removal.

11.

This Notice of Removal is signed pursuant to Fed. R. Civ. P. 11.





III.

BASIS FOR “RELATED TO” BANKRUPTCY JURISDICTION

12.

This Court has original jurisdiction over this action as one “related to” bankruptcy

proceedings pursuant to 28 U.S.C. § 1334(b), and this action may be removed to this Court

pursuant to 28 U.S.C. § 1452(a).

13.

The Certificates are backed by loans originated by entities that have filed

bankruptcy petitions, or whose parent corporations have filed bankruptcy petitions, including but

not limited to Aames Capital Corp. (“Aames”), Aegis Mortgage Corporation (“Aegis”), Alliance

Bancorp, Inc. (“Alliance”), AME Financial Corporation (“AME Financial”), American Home




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 5 of 11

Mortgage Corporation (“AHM”), Bear Stearns Residential Mortgage (“BSRM”),5 Cal Coast

Mortgage Corporation (“Cal Coast”), Cameron Financial Group, Inc. (“Cameron”), Choice

Capital Funding, Inc. (“Choice Capital”), ComUnity Lending, Inc. (“ComUnity”), Fieldstone

Mortgage Company (“Fieldstone”), First Magnus Financial Corporation (“First Magnus”), First

NLC Financial Services, LLC (“First NLC”), Franklin Bank SSB (“Franklin”), Fremont

Investment & Loan (“Fremont”), HomeBanc Mortgage Corporation (“HomeBanc”), Home

Capital Funding, Inc. (“Home Capital”), Lancaster Mortgage Bankers, LLC (“Lancaster”),

Maverick Residential Mortgage, Inc. (“Maverick”), Mountain View Mortgage Company

(“Mountain View”), NetBank, Inc. (“NetBank”), New Century Mortgage Corporation (“New

Century”), Oak Street Mortgage, LLC (“Oak Street”), SouthStar Funding, LLC (“SouthStar”),

Suburban Mortgage (“Suburban”), Summit Mortgage (“Summit”), Taylor, Bean & Whitaker

(“Taylor”), The Lending Company, and Town and Country (collectively, the “Bankrupt

Originators”).

14.

The following chart lists the courts in which bankruptcy proceedings are pending

for the Bankrupt Originators or their parent corporations.













Bankrupt Originator

Accredited Home Lenders Holding Co. (parent holding
company of Aames Investment Corp. (which itself owns
Aames Capital Corp.) and BSRM)
Aegis
Alliance
AME Financial
AHM
Cal Coast

U.S. Bankruptcy Court

District of Delaware, No. 09-11516

District of Delaware, No. 07-11119
District of Delaware, No. 07-10943
Northern District of Georgia,
No. 10-20191
District of Delaware, No. 07-11047
Southern District of California,
No. 06-02981


5

BSRM was sold to Accredited Home Lenders Holding Co., an entity that is now
bankrupt.




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 6 of 11

Cameron

Choice Capital

ComUnity
Fieldstone
First Magnus
First NLC
Franklin Bank Corporation (parent corporation of Franklin
Bank SSB)
Fremont General Corp., (parent corporation of Fremont
Investment & Loan)
HomeBanc
Home Capital

Lancaster

Maverick, a.k.a. Suburban
Mountain View
NetBank
New Century (jointly administered with New Century
TRS Holdings)
Oak Street

SouthStar

Summit

Taylor

The Lending Company

Town and Country


Central District of California,
No. 08-10322
Northern District of Georgia,
No. 07-70717
Northern District of California,
No. 08-50030
District of Maryland, No. 07-21814
District of Arizona, No. 07-01578
Southern District of Florida,
No. 08-10632
District of Delaware, No. 08-12924
Central District of California,
No. 08-13421
District of Delaware, No. 07-11079
Southern District of California,
No. 10-19896
District of New Jersey,
No. 07-22479
Eastern District of Texas,
No. 08-40352
District of Nevada, No. 10-21356
Middle District of Florida,
No. 07-04295
District of Delaware,
Nos. 07-10419 and 07-10416
Southern District of Indiana,
No. 07-05279
Northern District of Georgia,
No. 07-65842
Northern District of California,
No. 10-12653
Middle District of Florida,
No. 09-07047
Central District of California,
No. 10-20926
Northern District of Ohio,
No. 09-33264

15.

The following chart lists securitization transactions about which Plaintiffs

complain that are backed by loans originated by one or more of the Bankrupt Originators.






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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 7 of 11

Securitization

BSABS 206-HE4
BALTA 2005-4
BALTA 2006-5

BSMF 2006-SL1

JPALT 2006-A2
JPMAC 2006-FRE2

SACO 2006-3

SACO 2006-6

WMALT 2005-4




Bankrupt Originator(s)

Aames, AHM, BSRM, Fremont, Home Capital, Mountain
View, Oak Street
First Magnus, HomeBanc, Oak Street, SouthStar, Taylor
AHM, BSRM, HomeBanc, Lancaster, SouthStar
AME Financial, AHM, BSRM, Choice Capital, ComUnity,
Fieldstone, First Magnus, First NLC, Franklin, HomeBanc,
Home Capital, Maverick, Mountain View, New Century,
SouthStar, Suburban, The Lending Company
NetBank
Fremont
Aegis, AHM, Cal Coast, Choice Capital, Fieldstone, First
Magnus, First NLC, Franklin, HomeBanc, Lancaster,
Maverick, Mountain View, New Century, Oak Street,
SouthStar, Suburban, Summit, The Lending Company
Aames, Aegis, AME Financial, AHM, BSRM, Cal Coast,
Cameron, ComUnity, Fieldstone, First Magnus, First NLC,
Franklin, HomeBanc, Lancaster, Maverick, Mountain View,
New Century, SouthStar, Suburban, Summit, The Lending
Company, Town and Country
Alliance, AHM, First Magnus, Taylor

16.

Pursuant to agreements containing certain indemnification provisions for the

benefit of various Removing Defendants as well as statutory and common law, the Bankrupt

Originators owe certain of the Removing Defendants indemnification and/or contribution for any

claims arising out of actual or alleged material misstatements or omissions by the Bankrupt

Originators regarding the mortgage loans underlying the Certificates.

17.

This action relates to the Bankrupt Originators’ bankruptcy proceedings, because

the Bankrupt Originators owe certain of the Removing Defendants indemnity and/or contribution

obligations that could affect the debtor’s property in the event a judgment is entered against the

Removing Defendants in this action with respect to the Certificates, and/or as a result of any

costs and expenses incurred by the Removing Defendants to defend against this action.

18.

Such indemnification obligations of bankrupt loan originators give the district

courts original jurisdiction over the action as one “related to” bankruptcy proceedings. See, e.g.,




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 8 of 11

Abbatiello v. Monsanto Co., No. 06 Civ. 266 (KMW), 2007 U.S. Dist. LEXIS 19790, at *12-14

(S.D.N.Y. Mar. 5, 2007); City of Ann Arbor Employees’ Ret. Sys. v. Citigroup Mortgage Loan

Trust Inc., 572 F. Supp. 2d 314, 315, 318-19 (E.D.N.Y. 2008); Mass. Bricklayers & Masons

Trust Funds v. Deutsche Alt-A Sec., Inc., 399 B.R. 119, 121-23 (E.D.N.Y. 2009).

19.

This is not a core proceeding under 28 U.S.C. § 157(b) or Federal Rule of

Bankruptcy Procedure 9027(a)(1). The Removing Defendants do not consent to entry of final

orders or judgment by any bankruptcy judge.

20.

Plaintiffs’ claims under the Securities Act of 1933 do not render this action non-

removable, because claims that are considered non-removable under the Securities Act of 1933

may nonetheless be removed pursuant to “related to” bankruptcy jurisdiction. See Cal. Pub.

Employees’ Ret. Sys. v. Worldcom, Inc., 368 F.3d 86, 108 (2d Cir. 2004).

IV.



PLAINTIFFS’ CLAIMS AGAINST JPMORGAN CHASE BANK, N.A. ARISE
UNDER FEDERAL LAW

21.

The Defendants also remove this case because Plaintiffs’ claims against

JPMorgan Chase Bank, N.A. (“JPMC Bank”) arise under federal law.

22.

Plaintiffs do not allege that JPMC Bank committed any wrongful act. Instead,

Plaintiffs allege that JPMC Bank “is a defendant in this action solely as the successor in interest

to Washington Mutual Bank, and no claims are brought against JPMC Bank in its own right.”

(Compl. ¶ 16.)

23.

Under 28 U.S.C. § 1331, “The district courts shall have original jurisdiction of all

civil actions arising under the Constitution, laws, or treaties of the United States.” Under 28

U.S.C. § 1441(b), a defendant may remove “[a]ny civil action of which the district courts have

original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of

the United States.” A “cause of action necessarily arises under federal law” and removal is




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 9 of 11

appropriate if a federal law has “pre-emptive force.” Beneficial Nat’l Bank v. Anderson, 539

U.S. 1, 9, 11 (2003). “When the federal statute completely pre-empts the state-law cause of

action, a claim which comes within the scope of that cause of action, even if pleaded in terms of

state law, is in reality based on federal law.” Id. at 8. A federal law completely preempts state

law if it “provide[s] the exclusive cause of action” for the plaintiff’s claims. Id. at 9. “If so, then

the cause of action necessarily arises under federal law and the case is removable.” Id.

24.

Pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of

1989 (“FIRREA”), all claims “relating to any act or omission” of a bank placed in receivership

must be filed with the Federal Deposit Insurance Corporation (“FDIC”) in accordance with Title

12 of the U.S. Code. See 12 U.S.C. §§ 1821(d)(3)-(11), 1821(d)(3)(13). FIRREA further

provides that if a claimant fails to meet the requirements of Title 12 for a claim “relating to any

act or omission of [a failed bank] or the [FDIC] as receiver,” then “no court shall have

jurisdiction over” the claim. Id. § 1821(d)(13)(D). Even when a claimant complies with Title

12, if it disagrees with the FDIC’s decision, it may seek review of its claim only in federal court.

Id. § 1821(d)(6)(A). Thus, FIRREA’s federal claims procedure “provide[s] the exclusive cause

of action,” Beneficial Nat’l Bank, 539 U.S. at 9, for “any claim relating to any act or omission of

[a failed bank] or the [FDIC] as receiver,” 12 U.S.C. § 1821(d)(13)(D)(ii).

25.

Here, Plaintiffs’ claims against JPMC Bank relate to the acts and omissions of

Washington Mutual Bank (“WMB”), a bank that failed and was seized by the federal banking

regulators. Plaintiffs must proceed with such claims, if they could proceed at all, only pursuant

to the exclusive processes established by Congress in FIRREA, or such claims are extinguished.

Thus, FIRREA has “pre-emptive force,” Beneficial Nat’l Bank, 539 U.S. at 11, and completely

occupies the field of claims relating to bank failures and FDIC receivership of failed banks,




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Case 1:11-cv-01869-DAB Document 1 Filed 03/17/11 Page 10 of 11

leaving no room for any claim under state law. See Carlyle Towers Condo. Ass’n v. FDIC, 170

F.3d 301, 307 (2d Cir. 1999) (stating that “FIRREA makes exhaustion a jurisdictional

requirement”); Aber-Shukofsky v. JPMorgan Chase & Co., No. 10-CV-226 (JFB), 2010 WL

5128575 at *3-4, *9 (E.D.N.Y. Dec. 15, 2010) (dismissing claims against JPMC Bank as

WMB’s successor in interest for failure to comply with FIRREA’s claims process).

26.

Absent adherence to FIRREA, there is no cause of action against JPMC Bank

available to Plaintiffs. Accordingly, all of Plaintiffs’ claims against JPMC Bank arise under

federal law and thus may be removed to federal court. 28 U.S.C. §§ 1331, 1441(b).

27.

In the event that this Court finds that this case arises under federal law but does

not find that this action is “related to” bankruptcy proceedings, this Court should nonetheless

assert supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) over Plaintiffs’ claims against

Defendants other than JPMC Bank because such claims are “so related to claims in th[is] action

within [the Court’s] original jurisdiction that they form part of the same case or controversy

under Article III of the United States Constitution.” The claims against Defendants other than

JPMC Bank are part of the same case or controversy because they allege substantially identical

conduct by numerous Defendants who are all affiliates, subsidiaries, and/or former executives of

affiliates or subsidiaries of JPMC Bank.




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