The Tenth Circuit Court of Appeals issued its opinion in National Credit Union Administration Board v. Barclays Capital, Inc. on Tuesday, March 3, 2015.
The National Credit Union Administration Board (NCUA), acting in its role as conservator for failing credit unions, investigated the failure of two major credit unions and found they had failed because they had relied upon misrepresentations in offering documents about residential mortgage-backed securities (RMBS) that were essentially junk loans. The NCUA began pursuing remedies against the issuers and underwriters of the RMBS and began settlement negotiations with Barclays and other defendants (collectively, Barclays). During the pendency of the settlement negotiations, the NCUA entered into contracts with Barclays that averred the statute of limitations would be tolled during the settlement negotiations and also that Barclays would not assert untimeliness as a defense in any ensuing litigation.
When the settlement negotiations failed, the NCUA initiated these actions, asserting violations of Sections 11 and 12(a)(2) of the Securities Act, as well as state securities claims under the blue sky laws of Kansas and California. Barclays moved to dismiss for failure to state a claim on several grounds, including untimeliness. Barclays initially honored the tolling agreement but argued the claims were time-barred by the Securities Act’s three-year statute of repose. The NCUA responded that the statute of repose was inapplicable to these cases and instead the Federal Credit Union Act’s “Extender Statute” applied, providing a three-year statute of limitations.
While the actions were pending, the district court issued an opinion in a different case, ruling that contractual tolling was not authorized under the extender statute. Barclays then amended its motion to dismiss based on the different ruling. The district court granted the motion to dismiss, holding the claims were covered by the Extender Statute and not the statute of repose, and that tolling could not be contractually waived. The NCUA appealed.
The Tenth Circuit first determined that the district court correctly applied the Extender Statute and not the statute of repose. The Tenth Circuit recently ruled that the Extender Statute supplants all other time limits. Explaining the difference between statutes of limitations and repose, the Tenth Circuit noted that statutes of repose cannot be equitably tolled and act as an absolute time-bar, whereas statutes of limitations are frequently tolled and are affirmative defenses rather than absolute bars. After analyzing the specific language of the Extender Statute, however, the Tenth Circuit found it explicitly and unambiguously stated it could not be tolled by contract. Nevertheless, the Tenth Circuit reversed the district court’s dismissal, finding that Barclays promised not to assert the affirmative defense of the statute of limitations and it should be held to its promise.
The Tenth Circuit reversed and remanded for further proceedings consistent with its opinion.