SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION, FIRST DEPARTMENT BLACKROCK BALANCED CAPITAL : Index No. 652204/2015 PORTFOLIO (FI), et al., : Plaintiffs, : v. PRE-ARGUMENT : U.S. BANK NATIONAL ASSOCIATION, ~ STATEMENT Defendant. Pursuant to Rule 600.17 of the Rules of the Supreme Court, Appellate Division, First Department, Defendant U.S. Bank National Association respectfully submits the following preargument statement. 1. Title of the Action. BlackRock Balanced Capital Portfolio (FI); BlackRock Core Active Bond Fund B; BlackRock Core Active LIBOR Fund B; BlackRock Core Bond Portfolio; BlackRock Core Bond Trust; BlackRock CoreAlpha Bond Fund E; BlackRock CoreAlpha Bond Master Portfolio; BlackRock CorePlus Bond Fund B; BlackRock Dynamic High Income - Structured Credit Portfolio; BlackRock Enhanced Government Fund, Inc.; BlackRock Fixed Income GlobalAlpha Master Fund Ltd.; BlackRock Funds II, Inflation Protected Bond Portfolio; BlackRock Income Trust, Inc.; BlackRock Limited Duration Income Trust; BlackRock Long Duration AlphaPlus Bond Fund; BlackRock Low Duration Bond Portfolio; BlackRock Managed Volatility V.I. Fund (FI); BlackRock Master Total Return Portfolio of Master Bond LLC; BlackRock Multi-Asset Income - Non-Agency MBS Portfolio; BlackRock Multi-Manager Alternative Strategies Fund - Libremax; BlackRock Multi-Sector Income Trust; BlackRock Strategic Income Opportunities Portfolio; BlackRock Total Return Portfolio (Ins - Series); BlackRock Total Return V.I. Portfolio (Ins - Var Ser); BlackRock US Mortgage; Fixed Income SHares: (Series R); Fixed Income SHares: Series C; Fixed Income SHares: Series Ld; Fixed Income SHares: Series M; LVS I LLC; LVS II LLC; Pacific Bay CDO, Ltd.; PCM Fund, Inc.; PIMCO Absolute Return Strategy 3D Offshore Fund Ltd.; PIMCO Absolute Return Strategy II Master Fund LDC; PIMCO Absolute Return Strategy III Master Fund LDC; PIMCO Absolute Return Strategy III Overlay Master Fund Ltd.; PIMCO Absolute Return Strategy IV IDF LLC; PIMCO Absolute Return Strategy IV Master Fund LDC; PIMCO Absolute Return Strategy V Master Fund LDC; PIMCO Bermuda Trust II: PIMCO Bermuda Emerging Markets Bond Fund (M); PIMCO Bermuda Trust II: PIMCO Bermuda Emerging Markets Bond Fund II; PIMCO Bermuda Trust II: PIMCO Bermuda Income Fund (M); PIMCO Bermuda Trust II: PIMCO Bermuda JGB Floater Foreign Strategy Fund; PIMCO Bermuda Trust IV: PIMCO Bermuda Global Bond Ex-Japan Fund; PIMCO Bermuda Trust: PIMCO Bermuda Foreign Low Duration 1 of 12
Fund; PIMCO Bermuda Trust: PIMCO Bermuda U.S. Low Duration Fund; PIMCO Bermuda Trust: PIMCO Emerging Markets Bond Fund (M); PIMCO Cayman SPC Limited: PIMCO Cayman Global Aggregate Bond Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan CorePLUS Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan CorePLUS Strategy Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan Low Duration Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Unconstrained Bond Segregated Portfolio; PIMCO Cayman Trust: PIMCO Cayman Foreign Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Advantage Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Ex-Japan (Yen-Hedged) Income Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Ex-Japan Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Ex-Japan (Yen-Hedged) Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Total Return Strategy Fund; PIMCO Cayman Trust: PIMCO Cayman U.S. Bond Fund; PIMCO Combined Alpha Strategies Master Fund LDC; PIMCO Corporate & Income Opportunity Fund; PIMCO Corporate & Income Strategy Fund; PIMCO Distressed Senior Credit Opportunities Fund II, L.P.; PIMCO Dynamic Credit and Mortgage Income Fund; PIMCO Dynamic Income Fund; PIMCO Equity Series: PIMCO Balanced Income Fund; PIMCO ETF Trust: PIMCO Diversified Income Active Exchange-Traded Fund; PIMCO ETF Trust: PIMCO Low Duration Active Exchange-Traded Fund; PIMCO ETF Trust: PIMCO Total Return Active Exchange- Traded Fund; PIMCO Funds: Global Investors Series pic, Diversified Income Duration Hedged Fund; PIMCO Funds: Global Investors Series pic, Diversified Income Fund; PIMCO Funds: Global Investors Series pic, EM Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, Emerging Local Bond Fund; PIMCO Funds: Global Investors Series Emerging Markets Bond Fund; PIMCO Funds: Global Investors Series pic, Euro Bond Fund; PIMCO Funds: Global Investors Series pic, Euro Income Bond Fund; PIMCO Funds: Global Investors Series pic, Global Advantage Real Return Fund; PIMCO Funds: Global Investors Series pic, Global Bond Fund; PIMCO Funds: Global Investors Series pic, Global Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, Global Investment Grade Credit Fund; PIMCO Funds: Global Investors Series pic, High Yield Bond Fund; PIMCO Funds: Global Investors Series pic, Income Fund; PIMCO Funds: Global Investors Series pic, Inflation Strategy Fund; PIMCO Funds: Global Investors Series pic, PIMCO Credit Absolute Return Fund; PIMCO Funds: Global Investors Series pic, PIMCO Dividend and Income Builder Fund; PIMCO Funds: Global Investors Series pic, StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, Strategic Income Fund; PIMCO Funds: Global Investors Series pic, Total Return Bond Fund; PIMCO Funds: Global Investors Series Unconstrained Bond Fund; PIMCO Funds: Global Investors Series pic, US Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, US Short-Term Fund; PIMCO Funds: PIMCO CommoditiesPLUS Strategy Fund; PIMCO Funds: PIMCO Commodity Real Return Strategy Fund ; PIMCO Funds: PIMCO Credit Absolute Return Fund; PIMCO Funds: PIMCO Diversified Income Fund; PIMCO Funds: PIMCO EM Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO Emerging Local Bond Fund; PIMCO Funds: PIMCO Emerging Markets Bond Fund; PIMCO Funds: PIMCO Emerging Markets Currency Fund; PIMCO Funds: PIMCO EMG Intl Low Volatility RAFI -PLUS AR Fund; PIMCO Funds: PIMCO Extended Duration Fund; PIMCO Funds: PIMCO Floating Income Fund; PIMCO Funds: PIMCO Foreign Bond Fund (U.S. Dollar-Hedged); PIMCO Funds: PIMCO Foreign Bond Fund (Unhedged); PIMCO Funds: PIMCO Fundamental Advantage 2 of 12
Absolute Return Strategy Fund; PIMCO Funds: PIMCO Global Advantage Strategy Bond Fund; PIMCO Funds: PIMCO Global Bond Fund (U.S. Dollar-Hedged); PIMCO Funds: PIMCO Global Bond Fund (Unhedged); PIMCO Funds: PIMCO Global Multi-Asset Fund; PIMCO Funds: PIMCO High Yield Fund; PIMCO Funds: PIMCO Income Fund; PIMCO Funds: PIMCO Inflation Response Multi-Asset Fund; PIMCO Funds: PIMCO International Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO International StocksPLUS AR Strategy Fund (U.S. Dollar-Hedged); PIMCO Funds: PIMCO International StocksPLUS AR Strategy Fund (Unhedged); PIMCO Funds: PIMCO Intl Low Volatility RAFI -PLUS AR Fund; PIMCO Funds: PIMCO Investment Grade Corporate Bond Fund; PIMCO Funds: PIMCO Long Duration Total Return Fund; PIMCO Funds: PIMCO Long-Term Credit Fund; PIMCO Funds: PIMCO Long-Term U.S. Government Fund; PIMCO Funds: PIMCO Low Duration Fund; PIMCO Funds: PIMCO Low Duration Fund II; PIMCO Funds: PIMCO Low Duration Fund III; PIMCO Funds: PIMCO Low Volatility RAFI -PLUS AR Fund; PIMCO Funds: PIMCO Moderate Duration Fund; PIMCO Funds: PIMCO Mortgage Opportunities Fund; PIMCO Funds: PIMCO Mortgage-Backed Securities Fund; PIMCO Funds: PIMCO Real Estate Real Return Strategy Fund; PIMCO Funds: PIMCO Real Return Asset Fund; PIMCO Funds: PIMCO Real Return Fund; PIMCO Funds: PIMCO Short-Term Fund; PIMCO Funds: PIMCO Small Cap StocksPLUS AR Strategy Fund; PIMCO Funds: PIMCO Small Company Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO StocksPLUS Absolute Return Fund; PIMCO Funds: PIMCO StocksPLUS AR Short Strategy Fund; PIMCO Funds: PIMCO StocksPLUS Fund; PIMCO Funds: PIMCO StocksPLUS Long Duration Fund; PIMCO Funds: PIMCO Total Return Fund; PIMCO Funds: PIMCO Total Return Fund II; PIMCO Funds: PIMCO Total Return Fund III; PIMCO Funds: PIMCO Total Return Fund IV; PIMCO Funds: PIMCO Unconstrained Bond Fund; PIMCO Funds: PIMCO Unconstrained Tax Managed Bond Fund; PIMCO Funds: PIMCO Worldwide Fundamental Advantage AR Strategy Fund; PIMCO Funds: Private Account Portfolio Series Asset-Backed Securities Portfolio; PIMCO Funds: Private Account Portfolio Series Developing Local Markets Portfolio; PIMCO Funds: Private Account Portfolio Series Emerging Markets Portfolio; PIMCO Funds: Private Account Portfolio Series High Yield Portfolio; PIMCO Funds: Private Account Portfolio Series International Portfolio; PIMCO Funds: Private Account Portfolio Series Long Duration Corporate Bond Portfolio; PIMCO Funds: Private Account Portfolio Series Mortgage Portfolio; PIMCO Funds: Private Account Portfolio Series Real Return Portfolio; PIMCO Funds: Private Account Portfolio Series Short-Term Portfolio; PIMCO Funds: Private Account Portfolio Series U.S. Government Sector Portfolio; PIMCO Global Credit Opportunity Master Fund LDC; PIMCO Global StocksPLUS & Income Fund; PIMCO High Income Fund; PIMCO Income Opportunity Fund; PIMCO Income Strategy Fund; PIMCO Income Strategy Fund II; PIMCO Large Cap StocksPLUS Absolute Return Fund; PIMCO Multi-Sector Strategy Fund Ltd.; PIMCO Offshore Funds - PIMCO Absolute Return Strategy IV efund; PIMCO Offshore Funds: PIMCO Offshore Funds - PIMCO Absolute Return Strategy V Alpha Fund; PIMCO Strategic Income Fund, Inc.; PIMCO Tactical Opportunities Master Fund Ltd.; PIMCO Variable Insurance Trust: PIMCO Commodity Real Return Strategy Portfolio; PIMCO Variable Insurance Trust: PIMCO Emerging Markets Bond Portfolio; PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (U.S. Dollar Hedged); PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (Unhedged); PIMCO Variable Insurance Trust: PIMCO Global Advantage Strategy Bond Portfolio; PIMCO Variable Insurance Trust: PIMCO Global Bond Portfolio (Unhedged); PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed Allocation Portfolio; 3 of 12
PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed Volatility Portfolio; PIMCO Variable Insurance Trust: PIMCO High Yield Portfolio; PIMCO Variable Insurance Trust: PIMCO Long Term U.S. Government Portfolio; PIMCO Variable Insurance Trust: PIMCO Low Duration Portfolio; PIMCO Variable Insurance Trust: PIMCO Real Return Portfolio; PIMCO Variable Insurance Trust: PIMCO Short-Term Portfolio; PIMCO Variable Insurance Trust: PIMCO Total Return Portfolio; PIMCO Variable Insurance Trust: PIMCO Unconstrained Bond Portfolio; Terlingua Fund 2, LP; CREF Bond Market Account; CREF Social Choice Account; TIAA Global Public Investments, MBS LLC; TIAA-CREF Bond Fund; TIAA-CREF Bond Plus Fund; TIAA-CREF Life Bond Fund; TIAA-CREF Life Insurance Company; TIAA-CREF Short-Term Bond Fund; Prudential Bank & Trust, FSB; Prudential Retirement Insurance and Annuity Company; Prudential Trust Company; The Gibraltar Life Insurance Company, Ltd.; The Prudential Insurance Company of America; The Prudential Investment Portfolios 2; The Prudential Investment Portfolios 9; The Prudential Investment Portfolios Inc.; The Prudential Investment Portfolios, Inc. 17; The Prudential Series Fund; Brookfield Mortgage Opportunity Income Fund Inc.; Brookfield Securitized Credit QIF Fund; Brookfield Total Return Fund Inc.; Crystal River Capital Inc.; Millerton ABS CDO Ltd.; Firebird Re Corp.; LIICA Holdings, LLC; LIICA Re II, Inc.; Monumental Life Insurance Company - Modified Separate Account; Stonebridge Life Insurance Company; Stonebridge Re Company; Transamerica Life Insurance Company; Transamerica Premier Life Insurance Company; Kore Advisors LP; Sealink Funding Limited; and DZ Bank AG v. U.S. Bank National Association. 2. Full Name of Original Parties and Any Changes in the Parties (a) Plaintiffs: BlackRock Balanced Capital Portfolio (FI); BlackRock Core Active Bond Fund B; BlackRock Core Active LIBOR Fund B; BlackRock Core Bond Portfolio; BlackRock Core Bond Trust; BlackRock CoreAlpha Bond Fund E; BlackRock CoreAlpha Bond Master Portfolio; BlackRock CorePlus Bond Fund B; BlackRock Dynamic High Income - Structured Credit Portfolio; BlackRock Enhanced Government Fund, Inc.; BlackRock Fixed Income GlobalAlpha Master Fund Ltd.; BlackRock Funds II, Inflation Protected Bond Portfolio; BlackRock Income Trust, Inc.; BlackRock Limited Duration Income Trust; BlackRock Long Duration Alphaplus Bond Fund; BlackRock Low Duration Bond Portfolio; BlackRock Managed Volatility V.I. Fund (FI); BlackRock Master Total Return Portfolio of Master Bond LLC; BlackRock Multi-Asset Income - Non-Agency MBS Portfolio; BlackRock Multi-Manager Alternative Strategies Fund - Libremax; BlackRock Multi-Sector Income Trust; BlackRock Strategic Income Opportunities Portfolio; BlackRock Total Return Portfolio (Ins - Series); BlackRock Total Return V.I. Portfolio (Ins - Var Ser); BlackRock US Mortgage; Fixed Income SHares: (Series R); Fixed Income SHares: Series C; Fixed Income SHares: Series LD; Fixed Income SHares: Series M; LVS I LLC; LVS II LLC; Pacific Bay CDO, Ltd.; PCM Fund, Inc.; PIMCO Absolute Return Strategy 3D Offshore Fund Ltd.; PIMCO Absolute Return Strategy II Master Fund LDC; PIMCO Absolute Return Strategy III Master Fund LDC; PIMCO Absolute Return Strategy III Overlay Master Fund Ltd.; PIMCO Absolute Return Strategy IV IDF LLC; PIMCO Absolute Return 4 of 12
Strategy IV Master Fund LDC; PIMCO Absolute Return Strategy V Master Fund LDC; PIMCO Bermuda Trust II: PIMCO Bermuda Emerging Markets Bond Fund (M); PIMCO Bermuda Trust II: PIMCO Bermuda Emerging Markets Bond Fund II; PIMCO Bermuda Trust II: PIMCO Bermuda Income Fund (M); PIMCO Bermuda Trust II: PIMCO Bermuda JGB Floater Foreign Strategy Fund; PIMCO Bermuda Trust IV: PIMCO Bermuda Global Bond Ex-Japan Fund; PIMCO Bermuda Trust: PIMCO Bermuda Foreign Low Duration Fund; PIMCO Bermuda Trust: PIMCO Bermuda U.S. Low Duration Fund; PIMCO Bermuda Trust: PIMCO Emerging Markets Bond Fund (M); PIMCO Cayman SPC Limited: PIMCO Cayman Global Aggregate Bond Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan CorePlus Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan CorePlus Strategy Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Japan Low Duration Segregated Portfolio; PIMCO Cayman SPC Limited: PIMCO Cayman Unconstrained Bond Segregated Portfolio; PIMCO Cayman Trust: PIMCO Cayman Foreign Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Advantage Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Ex-Japan (Yen-Hedged) Income Fund; PIMCO Cayman Trust: PIMCO Cayman Global Aggregate Ex-Japan Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Global Ex-Japan (Yen-Hedged) Bond Fund; PIMCO Cayman Trust: PIMCO Cayman Total Return Strategy Fund; PIMCO Cayman Trust: PIMCO Cayman U.S. Bond Fund; PIMCO Combined Alpha Strategies Master Fund LDC; PIMCO Corporate & Income Opportunity Fund; PIMCO Corporate & Income Strategy Fund; PIMCO Distressed Senior Credit Opportunities Fund II, L.P.; PIMCO Dynamic Credit Income Fund; PIMCO Dynamic Income Fund; PIMCO Equity Series: PIMCO Balanced Income Fund; PIMCO ETF Trust: PIMCO Diversified Income Active Exchange-Traded Fund; PIMCO ETF Trust: PIMCO Low Duration Active Exchange-Traded Fund; PIMCO ETF Trust: PIMCO Total Return Active Exchange-Traded Fund; PIMCO Funds: Global Investors Series pic, Diversified Income Duration Hedged Fund; PIMCO Funds: Global Investors Series pic, Diversified Income Fund; PIMCO Funds: Global Investors Series pic, EM Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, Emerging Local Bond Fund; PIMCO Funds: Global Investors Series pic, Emerging Markets Bond Fund; PIMCO Funds: Global Investors Series pic, Euro Bond Fund; PIMCO Funds: Global Investors Series pic, Euro Income Bond Fund; PIMCO Funds: Global Investors Series pic, Global Advantage Real Return Fund; PIMCO Funds: Global Investors Series pic, Global Bond Fund; PIMCO Funds: Global Investors Series pic, Global Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, Global Investment Grade Credit Fund; PIMCO Funds: Global Investors Series pic, High Yield Bond Fund; PIMCO Funds: Global Investors Series pic, Income Fund; PIMCO Funds: Global Investors Series pic, Inflation Strategy Fund; PIMCO Funds: Global 5 of 12
Investors Series pic, PIMCO Credit Absolute Return Fund; PIMCO Funds: Global Investors Series pic, PIMCO Dividend and Income Builder Fund; PIMCO Funds: Global Investors Series StocksPLUS pic, Fund; PIMCO Funds: Global Investors Series pic, Strategic Income Fund; PIMCO Funds: Global Investors Series pic, Total Return Bond Fund; PIMCO Funds: Global Investors Series pic, Unconstrained Bond Fund; PIMCO Funds: Global Investors Series pic, US Fundamental Index StocksPLUS Fund; PIMCO Funds: Global Investors Series pic, US Short-Term Fund; PIMCO Funds: PIMCO CommoditiesPLUS Strategy Fund; PIMCO Funds: PIMCO Commodity Real Return Strategy Fund ; PIMCO Funds: PIMCO Credit Absolute Return Fund; PIMCO Funds: PIMCO Diversified Income Fund; PIMCO Funds: PIMCO EM Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO Emerging Local Bond Fund; PIMCO Funds: PIMCO Emerging Markets Bond Fund; PIMCO Funds: PIMCO Emerging Markets Currency Fund; PIMCO Funds: PIMCO EMG Intl Low Volatility RAFI - PLUS AR Fund; PIMCO Funds: PIMCO Extended Duration Fund; PIMCO Funds: PIMCO Floating Income Fund; PIMCO Funds: PIMCO Foreign Bond Fund (U.S. Dollar-Hedged); PIMCO Funds: PIMCO Foreign Bond Fund (Unhedged); PIMCO Funds: PIMCO Fundamental Advantage Absolute Return Strategy Fund; PIMCO Funds: PIMCO Global Advantage Strategy Bond Fund; PIMCO Funds: PIMCO Global Bond Fund (U.S. Dollar- Hedged); PIMCO Funds: PIMCO Global Bond Fund (Unhedged); PIMCO Funds: PIMCO Global Multi-Asset Fund; PIMCO Funds: PIMCO High Yield Fund; PIMCO Funds: PIMCO Income Fund; PIMCO Funds: PIMCO Inflation Response Multi-Asset Fund; PIMCO Funds: PIMCO International Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO International StocksPLUS AR Strategy Fund (U.S. Dollar-Hedged); PIMCO Funds: PIMCO International StocksPLUS AR Strategy Fund (Unhedged); PIMCO Funds: PIMCO Intl Low Volatility RAFI -PLUS AR Fund; PIMCO Funds: PIMCO Investment Grade Corporate Bond Fund; PIMCO Funds: PIMCO Long Duration Total Return Fund; PIMCO Funds: PIMCO Long-Term Credit Fund; PIMCO Funds: PIMCO Long-Term U.S. Government Fund; PIMCO Funds: PIMCO Low Duration Fund; PIMCO Funds: PIMCO Low Duration Fund II; PIMCO Funds: PIMCO Low Duration Fund III; PIMCO Funds: PIMCO Low Volatility RAFI -PLUS AR Fund; PIMCO Funds: PIMCO Moderate Duration Fund; PIMCO Funds: PIMCO Mortgage Opportunities Fund; PIMCO Funds: PIMCO Mortgage- Backed Securities Fund; PIMCO Funds: PIMCO Real Estate Real Return Strategy Fund; PIMCO Funds: PIMCO Real Return Asset Fund; PIMCO Funds: PIMCO Real Return Fund; PIMCO Funds: PIMCO Short-Term Fund; PIMCO Funds: PIMCO Small Cap StocksPLUS AR Strategy Fund; PIMCO Funds: PIMCO Small Company Fundamental IndexPLUS AR Strategy Fund; PIMCO Funds: PIMCO StocksPLUS Absolute Return Fund; PIMCO Funds: PIMCO StocksPLUS AR Short Strategy Fund; PIMCO Funds: PIMCO StocksPLUS Fund; PIMCO Funds: PIMCO StocksPLUS Long Duration Fund; PIMCO Funds: PIMCO Total Return 6 of 12
Fund; PIMCO Funds: PIMCO Total Return Fund II; PIMCO Funds: PIMCO Total Return Fund III; PIMCO Funds: PIMCO Total Return Fund IV; PIMCO Funds: PIMCO Unconstrained Bond Fund; PIMCO Funds: PIMCO Unconstrained Tax Managed Bond Fund; PIMCO Funds: PIMCO Worldwide Fundamental Advantage AR Strategy Fund; PIMCO Funds: Private Account Portfolio Series Asset-Backed Securities Portfolio; PIMCO Funds: Private Account Portfolio Series Developing Local Markets Portfolio; PIMCO Funds: Private Account Portfolio Series Emerging Markets Portfolio; PIMCO Funds: Private Account Portfolio Series High Yield Portfolio; PIMCO Funds: Private Account Portfolio Series International Portfolio; PIMCO Funds: Private Account Portfolio Series Long Duration Corporate Bond Portfolio; PIMCO Funds: Private Account Portfolio Series Mortgage Portfolio; PIMCO Funds: Private Account Portfolio Series Real Return Portfolio; PIMCO Funds: Private Account Portfolio Series Short- Term Portfolio; PIMCO Funds: Private Account Portfolio Series U.S. Government Sector Portfolio; PIMCO Global Credit Opportunity Master Fund LDC; PIMCO Global StocksPLUS & Income Fund; PIMCO High Income Fund; PIMCO Income Opportunity Fund; PIMCO Income Strategy Fund; PIMCO Income Strategy Fund II; PIMCO Large Cap StocksPLUS Absolute Return Fund; PIMCO Multi-Sector Strategy Fund Ltd.; PIMCO Offshore Funds - PIMCO Absolute Return Strategy IV efund; PIMCO Offshore Funds: PIMCO Offshore Funds - PIMCO Absolute Return Strategy V Alpha Fund; PIMCO Strategic Income Fund, Inc.; PIMCO Tactical Opportunities Master Fund Ltd.; PIMCO Variable Insurance Trust: PIMCO Commodity Real Return Strategy Portfolio; PIMCO Variable Insurance Trust: PIMCO Emerging Markets Bond Portfolio; PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (U.S. Dollar Hedged); PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (Unhedged); PIMCO Variable Insurance Trust: PIMCO Global Advantage Strategy Bond Portfolio; PIMCO Variable Insurance Trust: PIMCO Global Bond Portfolio (Unhedged); PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed Allocation Portfolio; PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed Volatility Portfolio; PIMCO Variable Insurance Trust: PIMCO High Yield Portfolio; PIMCO Variable Insurance Trust: PIMCO Long Term U.S. Government Portfolio; PIMCO Variable Insurance Trust: PIMCO Low Duration Portfolio; PIMCO Variable Insurance Trust: PIMCO Real Return Portfolio; PIMCO Variable Insurance Trust: PIMCO Short-Term Portfolio; PIMCO Variable Insurance Trust: PIMCO Total Return Portfolio; PIMCO Variable Insurance Trust: PIMCO Unconstrained Bond Portfolio; Terlingua Fund 2, LP; CREF Bond Market Account; CREF Social Choice Account; TIAA Global Public Investments, MBS LLC; TIAA-CREF Bond Fund; TIAA-CREF Bond Plus Fund; TIAA-CREF Life Bond Fund; TIAA-CREF Life Insurance Company; TIAA-CREF Short-Term Bond Fund; Prudential Bank & Trust, FSB; Prudential Retirement Insurance and Annuity Company; Prudential Trust Company; The Gibraltar Life Insurance Company, Ltd.; The Prudential 7 of 12
Insurance Company of America; The Prudential Investment Portfolios 2; The Prudential Investment Portfolios 9; The Prudential Investment Portfolios Inc.; The Prudential Investment Portfolios, Inc. 17; The Prudential Series Fund; Brookfield Mortgage Opportunity Income Fund Inc.; Brookfield Securitized Credit QIF Fund; Brookfield Total Return Fund Inc.; Crystal River Capital Inc.; Millerton ABS CDO Ltd.; Firebird Re Corp.; LIICA Holdings, LLC; LIICA Re II, Inc.; Monumental Life Insurance Company Modified Separate Account; Stonebridge Life Insurance Company; - Stonebridge Re Company; Transamerica Life Insurance Company; Transamerica Premier Life Insurance Company; Kore Advisors LP; Sealink Funding Limited; and DZ Bank AG. (b) Defendant: U.S. Bank National Association. (c) Changes in the parties: On September 9, 2016, Plaintiffs filed an amended complaint. (NYSCEF Doc. No. 124.) The amended complaint dropped the following Plaintiffs named in the original complaint (NYSCEF Doc. No. 2): (1) PIMCO Dynamic Credit Income Fund; (2) BlackRock Long Duration AlphaPlus Bond Fund; (3) BlackRock Total Return Portfolio (Ins - (4) PIMCO Equity Series: PIMCO Balanced Income Fund; (5) PIMCO Series); Offshore Funds: PIMCO Offshore Funds - PIMCO Absolute Return Strategy V Alpha Fund; (6) TIAA Global Public Investments, MBS LLC; (7) TIAA- CREF Life Insurance Company; (8) Brookfield Mortgage Opportunity Income Fund Inc.; (9) Brookfield Securitized Credit QIF Fund; (10) Brookfield Total Return Fund Inc.; (11) Crystal River Capital Inc.; and (12) Millerton ABS CDO Ltd. The amended complaint added the following Plaintiffs: (1) PIMCO Dynamic Credit and Mortgage Income Fund; (2) TIAA Global Public Investments, LLC - Series MBS; (3) PIMCO Funds: PIMCO International Company Fundamental IndexPLUS AR Strategy Fund, n/k/a PIMCO Funds: PIMCO RAE Fundamental PLUS International Fund; and (4) Teachers Insurance and Annuity Association of America. 3. Name, Address, and Telephone Number of Counsel for Appellant. The names, addresses, and telephone numbers of counsel for Appellant are as follows: David F. Adler Louis A. Chaiten (pro hac vice) JONES DAY North Point 901 Lakeside Avenue Cleveland, OH 44114-1190 (216) 586-3939 Michael T. Marcucci JONES DAY 100 High Street, 21st Floor 8 of 12
Boston, MA 02110-1781 (617) 960-3939 Andrew S. Kleinfeld JONES DAY 250 Vesey Street New York, NY 10281-6702 (212) 326-3939 4. Name, Address, and Telephone Number of Counsel for Respondents. The names, address, and telephone number of counsel for Respondents are as follows: Blair A. Nicholas (pro hac vice) Timothy A. DeLange (pro hac vice) Benjamin Galdston (pro hac vice) Richard D. Gluck (pro hac vice) Brett M. Middleton (pro hac vice) Lucas E. Gilmore (pro hac vice) Robert S. Trisotto BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP 12481 High Bluff Drive, Suite 300 San Diego, CA 92130 (858) 793-0070 5. Court and County from Which the Appeal Is Taken. This appeal is taken from the Decision and Order of the Supreme Court of the State of New York, County of New York (Saliann Scarpulla, J., IAS Part 39), dated January 12, 2018, and filed and entered in the "Order" office of the Clerk of New York County on January 17, 2018 (the "Order"). Plaintiffs served Notice of Entry on January 30, 2018. 6. Nature and Object of the Cause of Action. In an Amended Class Action "Complaint" Complaint dated September 12, 2016, NYSCEF No. 124 (the "Complaint"), Plaintiffs assert causes of action for breach of contract, breach of fiduciary duty (for post-event-of-default duties and the duty to avoid conflicts of interest), breach of the implied covenant of good faith and fair dealing, and negligence (for breach of the duty to perform ministerial duties with due care), against U.S. Bank in its role as trustee for 770 residential mortgage-backed securitization trusts. 9 of 12
The Complaint alleges that U.S. Bank failed to ensure delivery of complete mortgage loan files; failed to provide written notice to certain deal parties of breaches of mortgage loan representations and warranties following U.S. Bank's alleged discovery of those breaches; failed to enforce the trusts' repurchase, substitution, and cure rights for loans with breaches of representations and warranties; failed to provide notice to servicers of their alleged breaches in order to trigger Events of Default; failed to remedy servicer breaches; failed to act prudently following uncured Events of Default; failed to provide notice to certificateholders of uncured Events of Default and other breaches; and failed to take action against sellers and servicers due to purported conflicts of interest. 7. Result Reached in the Court Below. In its Order, the court below granted in part and denied in part U.S. Bank's motion to dismiss the Complaint. The court below dismissed Plaintiffs causes of action for breach of fiduciary duty, negligence, breach of the implied covenant of good faith and fair dealing, and breach of contract insofar as it was premised on (i) pre-event-of-default issues concerning loan documentation (except with respect to one trust, SASCO 2007-BC4), and (ii) post-event-of-default claims as to all but 77 trusts, as described below. The court below sustained (i) Plaintiffs post-event-of-default breach-of-contract claims as to the 77 trusts referenced in two September 2012 letters from the law firm Gibbs & Bruns; (ii) Plaintiffs pre-event-of-default breach-of-contract claims concerning alleged breaches of representations and warranties; and (iii) Plaintiffs pre-event-of-default breach-of-contract claims concerning loan documentation issues with respect to one trust, SASCO 2007-BC4. 8. Grounds for Seeking Reversal. The trial court's Order should be reversed insofar as it did not grant U.S. Bank's motion to dismiss in its entirety. Specifically, the portion of the trial court's Order sustaining post-event-of-default breach-of-contract claims as 1 10 of 12
to the 77 trusts referenced in two September 2012 letters from the law firm Gibbs & Bruns is inconsistent with this Court's subsequent decision in Fixed Income Shares: Series M. v. Citibank, N.A., Index No. 653891/15, 2018 WL 412889, at *1 (1st Dep't Jan. 16, 2018). U.S. Bank was not required to give the notice to trigger an Event of Default and the "prevention doctrine" does not apply. Additionally, the court below erred in sustaining Plaintiffs post-event-of-default breach-of-contract claims as to those same 77 trusts and pre-event-of-default claims as to all but three of the trusts, because Plaintiffs do not allege that they complied with the "noaction" clauses in the trusts' governing agreements, which impose prerequisites to Plaintiffs filing suit here. The court below further erred in sustaining Plaintiffs pre-event-of-default breach-of-contract claims concerning alleged breaches of representations and warranties. Under the governing agreements and settled New York law, U.S. Bank had no duty to investigate or nose to the source of suspected breaches of representations and warranties. And the Complaint fails to allege facts to support an inference that U.S. Bank either received written notice of, or had information from which it discovered (without having to investigate or nose to the source), seller and originator breaches of representations and warranties. Separately, the court below erred in sustaining Plaintiffs pre-event-of-default breach-of-contract claims with respect to the 371 trusts for which U.S. Bank had no duty under the governing agreements to enforce repurchase rights for breaches of representations and warranties. Finally, the court below erred in sustaining Plaintiffs pre-event-of-default breach-of-contract claims in connection with 15 trusts for which U.S. Bank's duty to give notice of a breach of representations and warranties arises only upon U.S. Bank's receipt of written notice of the breach, and Plaintiffs fail to allege that U.S. Bank received such notice. 9. Related Actions and Proceedings. There are no actions related to this case. 11 11 of 12
10. Additional Appeals. There are no additional appeals in this case. Dated: February 13, 2018 Respectfully submitted, New York, New York /s/ David F. Adler JONES DAY David F. Adler Louis A. Chaiten (admitted pro hac vice) North Point 901 Lakeside Avenue Cleveland, Ohio 44114-1190 (216) 586-3939 dfadler@jonesday.com lachaiten@jonesday.com Michael T. Marcucci 100 High Street, 21st Floor Boston, Massachusetts 02110-1781 (617) 960-3939 mmarcucci@jonesday.com Andrew S. Kleinfeld 250 Vesey Street New York, NY 10281-6702 (212) 326-3939 askleinfeld@jonesday.com Attorneys for Defendant U.S. Bank National Association 1 12 of 12