log in
Print | Back

Lowenstein Sandler LLP

Zachary D. Rosenbaum

Zachary D. Rosenbaum

Partner
Chair, Capital Markets Litigation Group

Lowenstein Sandler LLP
New York, U.S.A.

tel: 212.204.8690
Send an Email

Local Time: Sat. 12:40

Profile

Zach is Chair of Lowenstein Sandler's Capital Markets Litigation Group. He was spotlighted by Chambers USA in 2019 as one of just 11 leading trial lawyers in New York for his representation of institutional “buy-side” plaintiffs. Zach’s clients include foreign and domestic asset managers, as well as hedge funds, private equity funds and other investors. His trial practice focuses predominantly on securities and structured finance litigation, M&A disputes, secured and unsecured financing litigation, real estate investment disputes, intellectual property litigation, and bankruptcy-related litigation. He also routinely conducts arbitration proceedings in domestic and cross-border disputes. 

Chambers USA describes Zach as “a phenomenal lawyer who has a very strong following with hedge funds.” He has also been recognized in New York Super Lawyers each year from 2011 to 2019, and he was listed by Super Lawyers as a Rising Star before that. Additionally, Zach was an original member of the New York County Bar Association Subcommittee on Capital Markets and Hedge Fund Litigation. 

Zach has tried cases involving a wide array of capital markets transactions and he has been adverse to virtually all of the major Wall Street banks. In the wake of the global financial crisis, Zach represented a European institution that managed one of the world's largest portfolios of subprime, synthetic CDOs, which were the "long" side of The Big Short. He also works closely with the SEC and other government authorities in their investigations and prosecutions of misconduct victimizing institutional investors.

Bar Admissions

    New York
    New Jersey
    U.S. Supreme Court
    U.S. District Court for the District of Columbia

Education

New York Law School (J.D. 1994), magna cum laude; Editor, New York Law School Law Review,  1993-1994
University of Maryland (B.S. 1990)
Areas of Practice
Professional Career

Significant Accomplishments

Won a $475 million arbitration award on behalf of a Chinese insurer following an eight-day plenary trial, in an international arbitration venued in Hong Kong relating to a $5 billion cross-border M&A transaction.

Prosecuted claims on behalf of The Prudential Insurance Company of America against Morgan Stanley for fraudulent misrepresentation and civil RICO involving the creation and sale of over $1 billion of RMBS.

Obtained a successful jury verdict in the Southern District of New York in defense of action concerning the provision of health care services to employees of the state of Tennessee.

Won preliminary injunction after two-day plenary trial, in connection with a $40 million debt financing.

Won summary judgment, defeating trade secret infringement claims brought in the Southern District of Florida against broker-dealer regarding the creation of a public exchange for transacting repurchase “repo” agreements.

Won dismissal of a $1.875 billion claim brought in New York by financial guarantor FGIC against client IKB Deutsche Industriebank involving a complex array of credit default swaps and underlying CDO assets.

Representing multiple RMBS trustees in trial and appellate courts, both state and federal, concerning several billion dollars in mortgage repurchase claims.

Defended claims of ratings fraud in connection with the launch of a $2 billion structured investment vehicle (SIV).

Defeated an arbitration claim brought against institutional investors by an international investment bank stemming from three contemplated CDO transactions, totaling $1.5 billion, clearing the way for a substantial damage claim prosecuted in the New York Supreme Court.

Representation of CDO noteholders regarding the collateral manager's and trustee's interpretation of the indenture's waterfall provision.

Defeated claims brought against an investment fund, which arose from a $60 million loan transaction.

Successfully prosecuted a jury trial on behalf of a minority shareholder in a large privately held company.

Speaking Engagements

Join Lowenstein partners Zachary D. Rosenbaum and Jennifer Fiorica Delgado in Washington, D.C., for the ABA Business Law Section Annual Meeting as they speak on the panel entitled, "How the Global Financial Crisis Shaped New York Law." Attend the Annual Meeting to:

  • Expand your knowledge with over 90 CLE programs prepared and presented by thought leaders in all areas of business law
  • Connect and learn at substantive sessions, including hundreds of committee and subcommittee meetings, keeping you informed on emerging trends in your practice area
  • Experience Washington, D.C., at premier social events where you can network with over 1,600 business law professionals from over 20 countries

Panelists:

  • Zachary D. Rosenbaum, Partner, Lowenstein Sandler LLP
  • Sandeep Savla, Partner, Latham & Watkins, LLP
  • Susanna Gray, VP and Corporate Counsel, The Prudential Insurance Company of America
  • Katherine C. Milgram, Chief Regulatory Counsel, Vice President, Guardian Life
  • James Finkel, Managing Director, Duff & Phelps

Moderator: 

Time: 8:30-10 a.m. on Thursday, September 12th. 

Location: Marriott Marquis, Washington, D.C.

See related article: How the Global Financial Crisis Shaped New York Law



Professional Associations

Board Member, R Baby FoundationFormer Board Member, PAX, Real Solutions to Gun Violence


Professional Activities and Experience

Accolades
  • Chambers USA: America's Leading Lawyers for Business (2019) - Zach Rosenbaum
  • New York Super Lawyers (2011-2018) - Zach Rosenbaum

Articles

The global financial crisis that began over a decade ago has shaped how market participants, the government, and the public at large conceptualize and respond to risk. The crisis has also shaped the law in the most prominent financial center in the country, if not the world–New York.


Historically, in the days before securitization–i.e., the bundling of debt instruments such as residential mortgage loans–the primary risk accompanying a mortgage loan inured to the lending bank. The lending bank therefore had a vested interest in the borrower’s creditworthiness and the value of her collateral. If the borrower defaulted, then the bank suffered the loss. Structured products coupled with derivatives exponentially multiplied and expanded the risk accompanying residential mortgage loans.  In the modern financial system, individual borrowers’ defaults crippled not only banks, but pension funds and their investors, insurance companies and their stakeholders, sovereign wealth funds and their citizens, down the line. 


Now, more than a decade after the crisis began, the litigation brought in its wake has ambled its way through the courts, resulting in binding precedent–stare decisis–that will resonate for decades. A number of legal issues that reached the highest courts in New York have wide-ranging impact beyond the structured products space, including issues of contract interpretation, statutes of limitations, and privilege. 


This article addresses several issues decided in the wake of the crisis, all of which arose from cases involving securitized mortgage loans, and all of which have applications that extend well beyond those particular financial products and the crisis.


Defenses–Statute of Limitations


Perhaps the most impactful decisions in New York emanating from the crisis are those involving New York’s statute of limitations. 


In 2015, the New York Court of Appeals harmonized two cases with different outcomes that it decided in the late nineteenth century, over a hundred years earlier, by holding that even where a demand with a cure period is contractually required to invoke a remedy for breach of representations and warranties, the cause of action accrues not when the demand is made and refused, but when the initial representations and warranties were made. This is so, the Court added, irrespective of whether, when, and how the claimant became aware that the representations and warranties were false. Emphasizing the importance of certainty and predictability, the Court concluded that the defendant’s breach of contract occurred, if at all, on the closing date and not when it subsequently refused to repurchase breaching mortgages and New York’s six-year statute of limitations for breach of contract ran from that date. The case is ACE Securities Corp. v. DB Structured Products, Inc., 25 N.Y.3d 581 (2015). 


Then in late 2018, the New York Court of Appeals in a split decision went a step further when it addressed whether parties can contractually define when a cause of action for breach of representations and warranties accrues. The Court affirmed the lower courts’ rulings dismissing the case as time-barred, even though the parties had an “Accrual Clause” in their agreement conditioning the accrual of a cause of action on demand for compliance with the parties’ agreement. Although the case would have been timely had that provision been enforced, the Court of Appeals held that to the extent the parties intended to delay the commencement of the statute of limitations by agreeing when a cause of action “shall accrue,” their attempt to do so was prohibited by New York law and its public policy. In a biting dissent, Judge Rowan D. Wilson wrote:


Both here and in our prior decision in ACE we have fundamentally misinterpreted the structure of RMBS agreements and, as a result, have created bad law: bad because it neither hews to the intent of the contracting parties nor of the investors in securities issued thereby; bad because it serves no public policy; bad because it disserves a very important public policy–the preservation of New York’s role as the commercial center of the nation.


Judge Wilson concluded, “were I advising a party to a prospective RMBS agreement today, I would tell my client that the law of Delaware is clear ..., and the law of New York is not.”  The case is Deutsche Bank National Trust Co. v. Flagstar Capital Markets Corp., 32 N.Y.3d 139 (2018).  


Separately, in 2018, the New York Court of Appeals decided that the statute of limitations for non-scienter based enforcement actions brought by the New York Attorney General pursuant to the Martin Act (N.Y. GBL § 23-A) is three years, not six as argued by the government. The Court thus dismissed as time-barred the government’s non-scienter based claims. The case is People v. Credit Suisse Sec., 31 N.Y.3d 622 (2018). On August 26, 2019 Governor Cuomo signed into law a bill passed by the New York legislature in June amending the C.P.L.R. to codify that the statute of limitations for Martin Act claims is six years.  In effect, this law reverses the Court of Appeals’ decision in People v. Credit Suisse.


Finally, the New York Court of Appeals is presently considering a case that will define the bounds of New York’s borrowing statute, N.Y. C.P.L.R. 202. The borrowing statute requires, in the case of a non-resident plaintiff suing in New York, that the court apply the shorter of New York’s statute of limitations or that of the place where the claim arose. And generally, under New York law, a claim arises where the plaintiff is injured, which is typically the plaintiff’s place of residence. Here, the trial court applied an exception to that general rule, finding that in the case of a securitization trustee suing for the benefit of investors concerning a New York common law trust that was created in New York, the place of injury if not New York is fact intensive and could not be decided on a pleadings motion. The Appellate Division, First Department disagreed and found that the claim arose in California where the trustee maintained its principal place of business and where a number of the securitized mortgage loans were issued. The Court of Appeals granted certification of the issue and is expected to hear the case in the fall of 2019. The case is entitled Deutsche Bank National Trust Company, solely in its capacity as Trustee of Securitized Asset Backed Receivables LLC Trust 2007-BR1 v. Barclays Bank PLC, Index No. 651338/2013 (N.Y. Sup Ct.)).


Contractual Interpretation–Reimbursement of Attorneys’ Fees


Three recent New York appellate decisions have upheld trustees’ rights to recover their attorneys’ fees and litigation expenses from the defendants, who are securitization sponsors and mortgage originators. These decisions add clarity to New York’s application of the “American Rule” under which, absent a statutory or contractual mandate, parties bear their own attorneys’ fees. In these cases, the Appellate Division, First Department concluded that the operative contractual language was sufficiently clear to evidence intent that defendants reimburse plaintiff trustees for their litigation fees and expenses. The cases are U.S. Bank National Association v. DLJ Mortgage Capital, Inc., 34 N.Y.S.3d 428, 429 (1st Dep’t 2016) (“HEAT”), Wilmington Trust Co. v. Morgan Stanley Mortgage Capital Holdings LLC, 152 A.D.3d 421 (1st Dep’t 2017) (“MSM”), and Deutsche Bank National Trust Co. v. EquiFirst Corp., 154 A.D.3d 605 (1st Dep’t 2017) (“EQLS”), and have not been appealed to New York’s Court of Appeals. As such, they are binding law in New York County–i.e., in Manhattan.


The Common Interest Privilege


In 2016, the New York Court of Appeals was called upon to consider whether the common interest privilege extended to protect communications between parties with a common business interest, even if there were no litigation pending or anticipated. This trend has evolved in the recent developments in the Second, Third, Seventh and Federal Circuits, where litigation is not required to establish the application of common interest. The Court declined to expand the privilege, holding that litigation must be reasonably anticipated in order to invoke the privilege. The case is Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 N.Y.3d 616 (2016).


WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters.

HOME | SITE MAP | GLANCE | PRIVACY POLICY | DISCLAIMER |  © World Services Group, 2019