United States District Court, W.D. Texas, Austin Division
FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for GUARANTY BANK, Plaintiff,
DEUTSCHE BANK SECURITIES, INC., Defendant.
RODRIGUEZ UNITED STATES DISTRICT JUDGE
day came on to be considered Defendant's motion for
reconsideration (Docket No. 227).
alleges that Defendant Deutsche Bank Securities, Inc. (and
others) sold securities, known as “certificates,
” which were backed by collateral pools of residential
mortgage loans. In 2004 and 2005, Guaranty Bank paid some
$2.1 billion for twenty residential mortgage backed
securities certificates, including at least four certificates
from various Defendants in this case. Guaranty Bank
subsequently failed, and the FDIC was appointed as receiver
on August 21, 2009. The FDIC filed this lawsuit in a Texas
state court on August 17, 2012, alleging the Defendant and
several others violated the Securities Act of 1933 and the
Texas Securities Act (TSA) by making material misstatements
and omissions concerning the mortgages underlying the
that time the only remaining defendant in this case is
Deutsche Bank Securities Inc. The only remaining claim is an
alleged violation of the Texas Securities Act, Tex. Rev. Civ.
Stat. Ann. Art. 581-33(D)(3). On February 7, 2014, Deutsche
Bank removed the case to this Court pursuant to 12 U.S.C.
§ 1819, and the case was assigned to the Honorable Sam
September 14, 2017, Judge Sparks entered an order in this
case deciding the applicable interest rate for calculating
damages under the TSA. See Docket No. 127. Deutsche Bank now
moves for reconsideration of that order, arguing that Judge
Sparks erred in reaching his decision. See Docket No. 227.
Defendant argues the appropriate interest rate is the Coupon
Rate specified in the certificates at issue in this case. The
“legal rate” for prejudgment interest, Defendant
asserts, is the same as the post-judgment interest rate set
in Chapter 304 of the Texas Finance Code: the lesser of
“(1) the rate specified in the contract ... or (2) 18
percent a year.” Tex. Fin. Code Ann. § 304.002.
Because the certificates in this case are “contracts
that provide[ ] for interest, ” Defendants contend the
prejudgment interest is the Coupon Rate the parties
contractually agreed to. The FDIC counters the “legal
rate, ” is six percent per year as set forth in Chapter
302 of the Texas Finance Code.
Rev. Civ. Stat. Ann. art. 581-33(D) states in relevant part:
(3) In damages, a buyer shall recover (a) the consideration
the buyer paid for the security plus interest thereon at the
legal rate from the date of payment by the buyer, less (b)
the greater of:
(i) the value of the security at the time the buyer disposed
of it plus the amount of any income the buyer received on the
(ii) the actual consideration received for the security at
the time the buyer disposed of it plus the amount of any
income the buyer received on the security.
statute does not further define how interest at the
“legal rate” is calculated.
Bank argues that in the absence of a definition in article
581-33, the Court should apply Tex. Finance Code section
304.002 and the coupon rates stated in the certificates
should govern the calculation of “prejudgment
interest.” Tex. Finance Code section 304.002 states, in
relevant part, as follows:
A money judgment of a court of this state on a contract that
provides for interest or time price differential earns