In re RFC & Rescap Liquidating Trust Action

SUSAN RICHARD NELSON, United States District Judge

Table of Contents

I. Introduction...1116

II. Background...1117

A. Securitization...1117

B. Historical Background...1117

C. The Client Contract and the Client Guide...1118

1. Section 113: General Rules of Interpretation...1119

2. Section A200: Knowledge, Reliance and Waiver...1120

3. Section A202: Representations and Warranties...1120

4. Sections A208 and A209: Events of Default and Non-Exclusive, Cumulative Remedies...1120

5. Section A210: Repurchase...1121

6. Section A212: Indemnification...1121

D. Bankruptcy...1122

E. Procedural History...1126

III. Discussion...1127

A. Standard of Review...1127

B. Summary Judgment Motions...1127

C. Principles of the Law of Contractual Indemnity...1128

D. Principles of Contract Interpretation...1130

E. Cross Motions for Summary Judgment...1132

1. Misconduct Defense against Indemnification...1132

2. Whether Plaintiffs Can Recover Losses and Liabilities Incurred from "Expired" Loans...1137

3. Recovery for Claims Released in Bankruptcy...1141

4. Sampling...1145

F. Plaintiffs' Motions for Summary Judgment...1151

1. The Scope of Plaintiffs' Sole Discretion under the Client Guide...1151

a. The Scope of Plaintiffs' Sole Discretion to Determine Breaches...1151 *1116 b. The Scope of Plaintiffs' Sole Discretion to Make All Settlement Decisions...1154

2. The Scope of Plaintiffs' Potential Recovery in Indemnity...1157

a. Recovery in Indemnity for RFC's Losses and Liabilities (the Allowed Claims), Not Just Actual Losses Incurred...1158

b. Recovery for All Losses...1162

3. Causation...1162

a. Applicable Legal Standard...1163

b. Genuine Issues of Material Fact Preclude a Finding of Causation as a Matter of Law...1166

c. Causation Defenses...1169

4. Affirmative Defenses...1172

a. Estoppel...1172

i. HLC...1172

ii. Standard Pacific and CTX...1173

iii. Analysis...1174

b. Waiver Defense Based on "Assetwise"...1175

c. Knowledge- and Reliance-Based Defenses...1178

i. Breach of Contract Claim...1180

ii. Indemnity Claim...1180

d. Good Faith and Fair Dealing...1184

G. Defendants' Motions for Summary Judgment...1186

1. Statute of Limitations for Loans Sold Before May 14, 2006...1186

2. Whether RFC's Expert Opinions Foreclose Relief...1191

3. Plaintiffs' Damages Models...1191

a. Breaching Loss Approach...1192

i. Whether RFC May Recover Repurchase Damages under Section A210...1192

ii. Whether RFC May Recover Repurchase Damages under the Indemnification Provisions in Section A212...1195

iii. Analysis...1197

b. Allocated Breaching Loss Approach...1198

i. Whether the Allocated Breaching Loss Approach Offers Non-Speculative Bases to Allocate the Trust Settlement...1199

(1) Allocation under UnitedHealth ...1199

(2) Defendants' Criticisms of the Methodology of the Allocated Breaching Loss Approach...1200

ii. Analysis...1203

c. Allocated Loss Approach...1204

i. Whether the Allocated Loss Approach Offers Non-Speculative Bases to Allocate the Settlements...1204

ii. Analysis...1205

IV. Conclusion...1205

I. INTRODUCTION

Before the Court are the parties' cross motions for summary judgment on common issues in the first-wave actions. 1 On June 19 and 20, 2018, the Court heard oral argument on the parties' motions. For the reasons set forth below, Plaintiffs' Motion for Summary Judgment on Common Issues [Doc. No. 3241] is granted in part, denied in part, and denied without prejudice in part, and Defendants' Motion for Summary Judgment on Common Issues *1117 [Doc. No. 3247] is granted in part and denied in part.

II. BACKGROUND

A. Securitization

The majority of U.S. mortgages are financed through the securitization process. Adam J. Levitin & Susan M. Wachter, Explaining the Housing Bubble , 100 GEO. L.J. 1177, 1182, 1187 (2012). "Securitization" involves pooling large numbers of housing loans, then selling them to a trust. Baker v. CitiMortgage, Inc. , No. 17-cv-2271 (SRN/KMM), 2017 WL 6886712 , at *4 (D. Minn. Dec. 21, 2017) (citing Fla. State Bd. of Admin. v. Green Tree Fin. Corp. , 270 F.3d 645 , 648 (8th Cir. 2001) ). A mortgage lender raises funds for new mortgages through this process. Id. (citing BlackRock Fin. Mgmt. Inc. v. Segregated Account of Ambac Assur. Corp., 673 F.3d 169 , 173 (2d Cir. 2012) ). The trust pays for the loans by issuing securities for which the loans serve as collateral. Id. "The right to receive trust income is parceled into certificates and sold to investors, called certificateholders." Id. Purchasers of the securities often require that they be insured by monoline insurers as a hedge against investment risk. In re Barclays Bank PLC Securities Litig. , No. 09 Civ. 1989 (PAC), 2017 WL 4082305 , at *4 (S.D.N.Y. Sept. 13, 2017), appeal docketed , No. 17-3293 (2d Cir. Oct. 16, 2017).

B. Historical Background

In the early- to mid-2000s, a rise in home prices in the U.S. was "driven by increased demand, low interest rates, and easy credit access." Id. While an initial mortgage refinancing boom from 2001 to 2003 led to increased earnings for mortgage originators and securitizers, when long-term interest rates began to rise, the mortgage industry sought other ways to maintain origination volumes. Levitin & Wachter, supra, at 1193-94). The solution required industry players "to find more product to move in order to maintain origination volumes and, hence, earnings." Id. at 1194.

A second mortgage boom ensued after 2003, but "[b]ecause the prime borrowing pool was exhausted, it was necessary to lower underwriting standards and look more to marginal borrowers to support origination volume levels." Id. During this time period, "[l]enders provided mortgage loans to many high-risk borrowers with questionable ability to repay, fueled in large part by the opportunity to package and sell those mortgages into the growing market for [residential] mortgage-backed securities ("[R]MBSs")." In re Barclays Bank, 2017 WL 4082305 , at *4.

In the mid-2000s, the "explosion in the market for [RMBS]" resulted in a securitization market frenzy. Fed. Hous. Fin. Agency for Fed. Nat'l Mortgage Ass'n v. Nomura Holding Am., Inc. , 873 F.3d 85 , 96 (2d Cir. 2017) (citing Levitin & Wachter, supra , at 1192-202). It was not to last. Among other things, housing prices fell and

[l]ate 2006 and 2007 saw a dramatic rise in mortgage loan defaults, causing the value of the related securities, whose income depended on borrower payments, to deteriorate. Banks and other investors began to experience substantial losses; and many monoline insurers could not accommodate such loss, given its quick pace and dramatic size.

In re Barclays Bank, 2017 WL 4082305 , at *4. The global economy experienced an unprecedented downturn in 2008 "that had a profoundly negative effect on the real estate and credit markets." S.E.C. v. True North Fin. Corp. , 909 F.Supp.2d 1073 , 1083 (D. Minn. 2012) (citations omitted).

*1118 C. The Client Contract and the Client Guide

Plaintiffs 2 and Defendants here were all participants in the RMBS market frenzy and its ultimate collapse. Prior to RFC's May 2012 bankruptcy, it served as a middleman in the RMBS industry, both acquiring and securitizing residential mortgage loans. First, RFC purchased residential mortgage loans from numerous originating financial lenders, 3 including Defendants Home Loan Center, Inc., CTX Mortgage Co., LLC, Standard Pacific Mortgage, Inc., Impac Funding Corp., iServe Residential Lending, LLC, and Freedom Mortgage Corporation (collectively, "Defendants"), and bundled them into securitization pools of thousands of loans. ( See Decl. of Matthew R. Scheck ("Scheck Decl.") [Doc. No. 3258], Ex. 10 (Horst Dep. at 620-23); id. , Ex. 36 (Ruckdaschel Dep. at 40-41); id. , Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).) 4 RFC did not underwrite the loans; rather, it understood that the originating lenders "[were] responsible for ... underwriting prudently [and] ensuring that the loan met all of [RFC's contractual and underwriting] requirements ...." ( Id. , Ex. 10 (Horst Dep. at 620-21).)

Second, in its middleman role, RFC then sold the pooled loans into residential mortgage-backed securitization ("RMBS") trusts ("the Trusts"). ( See id. , Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).) In the contracts that governed the relationships between RFC and the Trusts, RFC made representations and warranties ("R & Ws") concerning the underwriting quality and credit characteristics of the mortgage loans. ( Id. ) The Trusts issued notes or certificates, supported by the loans' performance, which investors purchased. ( Id. ) RFC additionally functioned as a "master servicer" for many of the securitizations, overseeing the work of the primary servicers. ( Id. ¶ 18.)

While both parts of RFC's business model are factually relevant in this consolidated action, the legal focus of this litigation concerns Defendants' potential liability at the first step of selling residential mortgage loans to RFC. To sell their loans, Defendants each separately entered into a "Client Contract" with RFC. (Decl. of Deanna Horst ("Horst Decl.") [Doc. No. 3244], Exs. 2-9 (Defs.' Client Contracts).) Along with the Client Contract, a longer, more detailed document called "the Client Guide" governed the business relationship *1119 between RFC and Defendants. 5 (Id., Ex. 1 (Client Guide § 100, Version 1-06-G01, Effective Mar. 13, 2006).) 6 The Client Guide "set[ ] forth the terms and conditions for selling Loans to [ ]RFC." ( Id. ) Specifically, it provided that the originating lender, or "Client," was "bound by all provisions" of the Client Guide, "including but not limited to the [R & Ws] of Client and Remedies of [ ]RFC Sections of this Client Guide [ sic ]." ( Id. § 101.)

The contractual language most relevant to the parties' summary judgment motions-and discussed in further detail throughout this opinion-is found in Sections 113(A) & (B), A200, A202, A208, A209, A210, and A212 of the Client Guide.

1. Section 113: General Rules of Interpretation

Section 113 provides "General Rules of Interpretation" applicable to all provisions of the Client Guide. Two subsections are most pertinent here-the first, Section 113(A) addresses the word "knowledge," as used in the Client Guide, and the second, Section 113(B) addresses RFC's "sole discretion." ( Id. § 113(A) & (B).) In Section 113(A), "knowledge," as used throughout the Client Guide, holds an originating lender/Client to a strict standard of both actual and constructive knowledge:

(A) "Knowledge" Standard

Whenever any representation, warranty, or other statement contained in this Client Guide is qualified by reference to a Client's "knowledge" or "to the best of" a party's "knowledge", such "knowledge" shall be deemed to include knowledge of facts or conditions of which Client, including (without limitation) any of its directors, officers, agents, or employees, either is actually aware or should have been aware under the circumstances with the exercise of reasonable care, due diligence, and competence in discharging its duties under this Client Guide and the Program Documents. All matters of public record shall be deemed to be known by the Client. Any representation or warranty that is inaccurate or incomplete in any material respect is presumed to be made with the knowledge of Client, unless Client demonstrates otherwise. "Due diligence" means that care which Client would exercise in obtaining and verifying information for a Loan in which Client would be entirely dependent on the Mortgaged Property or Mortgagor's credit as security to protect its investment.

( Id. § 113(A).)

The other relevant interpretative language in Section 113(B) vests RFC with broad authority to make determinations of fact and decisions to act, stating:

Whenever any provision of this Client Guide contract requires [ ]RFC to make *1120 a determination of fact or a decision to act, or to permit, approve or deny another party's action such determination or decision shall be made in [ ]RFC's sole discretion.

( Id. § 113(B).)

2. Section A200: Knowledge, Reliance and Waiver

The originating lenders' general R & Ws and covenants are set forth in Section A200. In that provision, the originating lenders acknowledge that RFC purchases the loans in reliance on the originating lenders' R & Ws, and the originating lenders agree to assume liability for any misrepresentations for breaches, regardless of their knowledge or RFC's knowledge. ( Id. § A200).) Moreover, it explicitly provides that there can be no waiver of the provisions of the Client Guide unless RFC expressly makes such a waiver in writing:

The Client acknowledges that [ ]RFC purchases Loans in reliance upon the accuracy and truth of the Client's warranties and representations and upon the Client's compliance with the agreements, requirements, terms and conditions set forth in the Client Contract and this Client Guide.

All such representations and warranties are absolute, and the Client is fully liable for any misrepresentation or breach of warranty regardless of whether it or [ ]RFC actually had, or reasonably could have been expected to obtain, knowledge of the facts giving rise to such misrepresentation or breach of warranty.

The representations and warranties pertaining to each Loan purchased by [ ]RFC survive the Funding Date, any simultaneous or post-purchase sale of servicing with respect to the Loan and any termination of the Client Contract, and are not affected by any investigation or review made by, or on behalf of, [ ]RFC except when expressly waived in writing by [ ]RFC.

( Id. )

3. Section A202: Representations and Warranties

Section A202 requires originating lenders to make certain R & Ws to RFC regarding "individual loans," including information about the loans' eligibility and accuracy. (Decl. of Jesse T. Smallwood ("Smallwood Decl.") [Doc. No. 3257], Ex. 4 (Client Guide § A202, Version 1-06-G01, Effective Mar. 13, 2006) [Doc. No. 3260].) 7 Among other things, the originating lenders represent that they have: verified the accuracy of information used by borrowers to obtain the loans, ( id. § A202(A) ); ensured the proper completion and execution of loan forms, ( id. § A202(D) ); complied with applicable laws, ( id. ); ensured that no default or other breach of loan terms existed in any loan, ( id . § A202(G) ); confirmed the market value of the mortgaged property, ( id. § A202(T) ); and not sold any "high risk" loans to RFC. ( Id. § A202(J)(1)(d).)

4. Sections A208 and A209: Events of Default and Non-Exclusive, Cumulative Remedies

Should any of the originating lenders breach these R & Ws by committing an "Event of Default," the Client Guide grants RFC wide-ranging discretion and recourse. ( See id. § A208) (listing the types of "Events of Default"). Under Section A209, "Non-Exclusive, Cumulative *1121 Remedies," the Client Guide broadly provides that "RFC may exercise any remedy outlined in the Client Guide or as allowed by law or in equity." ( Id. § A209.) Moreover, it states that RFC's exercise of its remedies resulting from an originating lender's default "will not prevent [ ]RFC from exercising: [o]ne or more other remedies in connection with the same Event of Default" or "[a]ny other rights which it may have at law or in equity." ( Id. )

5. Section A210: Repurchase

The Client Guide remedies most relevant here are "Repurchase," in Section A210, and "Indemnification," in Section A212. Under the repurchase provision, if RFC determines that an Event of Default has occurred with respect to a particular loan, the originating lender can be required to repurchase a loan within 30 days of receiving notification from RFC. 8 ( Id. § A210(A).) The repurchase provision sets forth a specific procedure and formula for determining the repurchase price of a loan. ( See id. § A210 (A)-(H).) In addition, it states, "[ ]RFC is not required to demand repurchase within any particular period of time, and may elect not to require immediate repurchase. However, any delay in making this demand does not constitute a waiver by [ ]RFC of any of its rights or remedies." ( Id. § A210 (A).) Even if RFC determines that repurchase is not the appropriate remedy, the originating lender is nevertheless obliged to pay RFC "all losses, costs and expenses incurred by [ ]RFC and/or the Loan's Servicer as a result of an Event of Default," including reasonable attorneys' fees and related costs incurred in connection with any enforcement efforts. ( Id. )

6. Section A212: Indemnification

The Client Guide's provision for the remedy of indemnification, Section A212, also provides RFC with wide-ranging indemnification in the event of an originating lender's default. The indemnification provision *1122 requires the originating lender to indemnify RFC from

all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments, and any other coasts, fees, and expenses resulting from any Event of Default. This includes, without limitation, liabilities arising from (i) any act or failure to act, (ii) any breach of warranty, obligation or representation contained in the Client Contract, (iii) any claim, demand, defense or assertion against or involving [ ]RFC based on or resulting from such breach, (iv) any breach of any representation, warranty or obligation made by [ ]RFC in reliance upon any warranty, obligation or representation made by the Client contained in the Client Contract and (v) any untrue statement of a material fact, omission to state a material fact, or false or misleading information provided by the Client in information required under Regulation AB or any successor regulation.

( Id. § A212.) 9

Versions of the Client Guide from July 1, 2002 forward contain additional language regarding the loan originators' broad indemnification obligations to RFC:

In addition, Client shall indemnify [ ]RFC against any and all losses, damages, penalties, fines, forfeitures, judgments, and any other costs, fees and expenses (including court costs and reasonable attorneys' fees) incurred by [ ]RFC in connection with any litigation or governmental proceeding that alleges any violation of local, State or federal law by Client, or any of its agents, or any originator or broker in connection with the origination or servicing of a Loan. With regard to legal fees or other expenses incurred by or on behalf of [ ]RFC in connection with any such litigation or governmental proceeding, Client shall reimburse [ ]RFC for such fees and expenses.... Except for notices for reimbursement, [ ]RFC is not required to give Client notice of any litigation or governmental proceeding that may trigger indemnification obligations. Client shall instruct its officers, directors and agents (including legal counsel) to cooperate with [ ]RFC in connection with the defense of any litigation or governmental proceeding involving a Loan. [ ]RFC has the right to control any litigation or governmental proceeding related to a Loan, including but not limited to choosing defense counsel and making settlement decisions.

(Scheck Decl., App. 1 (Evolution of Client Guide § A212).)

D. Bankruptcy

As this Court previously noted, Plaintiffs and the originating-lender Defendants were active participants in the RMBS market frenzy. During its heyday, they undoubtedly reaped considerable financial benefits from their relationships with each other. But beginning in 2007, and consistent with events throughout the RMBS industry, the loans in the RFC-sponsored and serviced securitizations experienced a high rate of default. ( Id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 19).) The Trusts consequently sustained significant financial losses. ( Id. ) Multiple entities, including the RMBS Trustees, demanded repurchase and/or filed lawsuits against RFC, alleging that their losses were caused by the poor quality of the loans in RFC's securitizations. ( Id. ¶ 20.)

*1123 Each RMBS securitization that RFC sponsored or serviced was administered by a Trustee. ( Id. ) The Trustee was authorized to seek remedies against RFC to recover losses experienced by the securitization due to contractual breaches by RFC. ( Id. ) Any recoveries that the Trustees obtained would be paid to the Trusts, and ultimately benefit the investors. ( Id. ) The following Trustees sought relief against Plaintiffs and participated in a settlement with them ("the RMBS Trustee Settlement"): Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas ("Deutsche Bank"), Bank of New York Mellon ("BNYM"), U.S. Bank N.A. ("US Bank"), HSBC Bank USA, N.A. ("HSBC"), and Wells Fargo Bank, N.A. ("Wells Fargo") (collectively, the "RMBS Trustees"). ( Id. )

Other securitizations that RFC sponsored or serviced, or securitizations into which it sold loans, carried financial guaranty insurance furnished by monoline insurers. 10 ( Id. ) The monoline insurers included MBIA Insurance Corporation ("MBIA"), Financial Guaranty Insurance Company ("FGIC"), Assured Guaranty Municipal Corporation (formerly known as Financial Security Assurance, Inc.) ("Assured"), Ambac Assurance Corporation ("Ambac"), and Syncora Guarantee Inc. ("Syncora") (collectively, the "Monolines"). ( Id. ¶ 21.) Under the insurance policies, the Monolines generally guaranteed that investors would receive timely payments of principal and interest on their notes or certificates. ( Id. ¶ 20.) If a defaulted loan caused a trust to be unable to timely pay its investors, the Monolines were to compensate the trust for the shortfall. ( Id. ) Due to the high rate of default in the RFC-sponsored and serviced securitizations in 2007, the Monolines made "substantial payments" to their insureds under their policies, and were likely to incur future payments as well. ( Id. )

Beginning in approximately 2008, the RMBS Trustees and Monolines filed lawsuits against Plaintiffs alleging claims for breach of representation and warranty, fraud, and servicing-related claims arising from Plaintiffs' sale of the allegedly defective mortgage loans. ( Id. ¶¶ 21-22; Scheck Decl., Ex. 28 (Bankr. Findings of Fact ¶¶ 98-108, 124-25).)

On May 13, 2012, Plaintiffs entered into a proposed $8.7 billion settlement ("Original RMBS Settlement") with two groups of RMBS Trust investors that had holdings in approximately 392 securitization trusts. (Scheck Decl., Ex. 19 (Corr. Hawthorne Rpt. ¶ 23); id. , Ex. 20 (Debtors' 9019 Mot. ¶¶ 17-20).) Absent settlement, Plaintiffs' then-expert Frank Sillman estimated that lifetime losses for these trusts could have ranged between $45.6 billion to $49.8 billion. ( Id. , Ex. 28 (Bankr. Findings of Fact ¶ 101).)

The following day, and as contemplated by the Original RMBS Settlement, Plaintiffs filed for Chapter 11 relief in the United States Bankruptcy Court for the Southern District of New York ("Bankruptcy Court"). 11 ( Id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 20); id. , Ex. 21 (Debtor's Voluntary Pet.).) Shortly thereafter, the Bankruptcy *1124 Court appointed an examiner to investigate the Plaintiffs' pre-petition activities. ( Id. , Ex. 28 (Bankr. Findings of Fact ¶ 3).)

Multiple entities filed RMBS-related proofs of claim with the Bankruptcy Court in order to obtain damages. ( See id. , Exs. 22 to 26 (Proofs of Claim 6767, 6605, 6656, 6451, 5130).) This included six RMBS Trustees with proofs of claim covering 1,000 trusts with a combined original principal balance of over $226 billion. ( Id. , Ex. 19 (Corr. Hawthorne Rpt. ¶ 97).) Their most significant claims concerned alleged breaches of the R & Ws that Plaintiffs had made in the Governing Agreements for the securitizations. ( Id. ¶ 98.) Among their other claims, RMBS Trustees also asserted common-law fraud or negligent misrepresentation claims against Plaintiffs to the extent that they had actual or imputed knowledge that the mortgage loans failed to comply with Plaintiffs' R & Ws. ( Id. ¶ 101.)

Additionally, several Monolines filed 32 proofs of claim with the Bankruptcy Court, asserting claims for tens of billions of dollars in actual and potential losses. ( Id. ¶ 104.) Like the RMBS Trustees' claims, the Monolines' claims generally alleged breaches of R & Ws. ( See id. ¶¶ 105-13.)

Upon filing for bankruptcy, Plaintiffs sought the approval of the Original RMBS Settlement pursuant to Federal Rule of Bankruptcy Procedure 9019. (Scheck Decl., Ex. 20 (Debtors' 9019 Mot. ¶ 57).) However, some stakeholders opposed the Original RMBS Settlement, including the Official Committee of Unsecured Creditors, a committee appointed to represent all general unsecured creditors. ( Id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 24); id. , Ex. 28 (Bankr. Findings of Fact ¶ 102); id. , Ex. 29 (Comm. Obj. at 10-11).) Some objectors found the proposed settlement amount unreasonably high, ( id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 124), while others found it too low. ( Id. ¶ 125.) The parties engaged in substantial discovery and extensively litigated issues concerning the approval of the Original RMBS Settlement. ( Id. ¶¶ 115-30.)

In light of the objections, the Bankruptcy Court encouraged a new round of comprehensive settlement negotiations. (Scheck Decl., Ex. 28 (Bankr. Findings of Fact ¶ 102).) Bankruptcy Judge Martin Glenn, who oversaw the bankruptcy proceedings, appointed another sitting federal bankruptcy judge, Judge James Peck, as mediator, and additionally authorized Lewis Kruger as the Chief Restructuring Officer to negotiate a settlement of the claims against Plaintiffs. ( Id., Ex. 30 (Mediator Order); id. , Ex. 31 (Kruger Direct Testimony ¶¶ 11-12).)

On May 13, 2013, Plaintiffs entered into settlement agreements with the RMBS Trustees and Monolines MBIA, FGIC, Ambac, and Syncora, which were incorporated into the parties' proposed Chapter 11 Bankruptcy Plan ("the Plan"). 12 ( Id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 139).) Almost all of the creditors that voted on the Plan (95.7%) voted to accept it. ( Id., Ex. 28 (Bankr. Findings of Fact ¶¶ 1, 265).) The Plan reflected that the parties had resolved the RMBS Trustees' claims against RFC for $7.091 billion (the "RMBS Settlement"), and the Monolines' claims against RFC as follows: MBIA ($1.45 billion), FGIC ($415 million), Ambac ($22.8 million), and Syncora ($7 million) (collectively, the "Monoline Settlements," and collectively with the RMBS Settlement, the "Settlements"). ( Id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 26.); id. , Ex. 32, App. 1 (Bankr. Plan, Art. IV(C), (D) ); id. , Ex. 33 (Order Granting § 365 Mot. at 12 ¶ 6).)

*1125 In December 2013, Judge Glenn issued his 134-page Findings of Fact regarding the confirmation of the proposed Chapter 11 Plan. ( See id., Ex. 28 (Bankr. Findings of Fact at 1, ¶¶ 18-50).) Among the Plan's release-related provisions negotiated as part of the Settlements, Judge Glenn noted the parties' respective risks and their time-consuming efforts to reach an informed resolution:

The settlement reflects a reasonable balance between the litigation's possibility of success and the settlement's future benefits. Each party to the negotiations that led to the settlement had access to a wealth of information gathered over the course of months-long investigations conducted by the Committee and the voluminous materials made available from the Examiner's investigation. To facilitate settlement negotiations, the parties reviewed extensive document discovery, briefed the merits of the claims, and exchanged written and oral presentations regarding their legal positions.

( Id. ¶ 239) (citations omitted).

He further noted that the parties found the Settlements reasonable, stating, "With the knowledge accumulated in this process, each party independently determined that the settlement of the Estates' claims against the Ally Released Parties reflected a reasonable resolution of the claims." ( Id. ) Moreover, Judge Glenn found that "each [individual] settlement was reasonable, ( id. ¶ 178), that the Plan proponents had exercised reasonable business judgment in entering into the Plan Documents, which he also deemed "fair and reasonable," ( id. ¶ 51 & n.11), and that the agreed-upon allocations embodied in the Plan were likewise "reasonable and appropriate." ( Id. ¶ 201.)

As to the individual settlements comprising the global Settlements, he found that the new RMBS Settlement resolved: "(1) alleged and potential claims for breaches of R & Ws held by all RMBS Trusts; (2) all alleged and potential claims for damages arising from servicing; and (3) any cure claims ...." ( Id. ¶ 103).) Absent settlement, Judge Glenn recognized the significant financial risks in litigating the parties' claims:

The potential losses for RMBS Trusts asserting breaches of representations and warranties range from $42.4 billion to $43.2 billion, excluding losses that are insured by a Monoline. Of that amount, $32.9 billion are historical losses to Debtor-sponsored trusts, and $1.45 billion represent historical losses in non-Debtor sponsored trusts that correspond to the percentage of loans in those trusts sold by the Debtors. The additional forecasted losses range from $7.76 billion to $8.4 billion for the Debtor-sponsored RMBS Trusts, and $300 to $400 million for the portion of non-Debtor-sponsored RMBS Trusts corresponding to the portion of loans sold by the Debtors. Absent settlement, the likely amount of recoverable damages for the RMBS Trusts' representation and warranty claims, after consideration of legal defenses and litigation costs, ranges from $7.38 billion to $8.6 billion. This range does not account for servicing claims and cure claims.

( Id. ¶ 106) (internal citations omitted). Judge Glenn further stated that but for the approval of the RMBS Settlement, the R & W claims "would have to be asserted, litigated and liquidated on an individual basis." ( Id. ¶ 118.) And if these claims were litigated individually, Judge Glenn found that they "would be subject to significant litigation risks and factual and legal defenses." ( Id. ) Additionally, because litigating these claims would be an expensive and time-consuming undertaking, he concluded *1126 that doing so "would deplete the Debtors' estates, and might result in diminished recoveries to all creditor constituencies, including the RMBS Trusts." ( Id. )

In addition to the RMBS Trusts' R & W claims, the mediation also included the RMBS Trusts' Servicing Claims. ( Id. ¶ 119.) Certain RMBS Trustees retained the financial advisory firm of Duff & Phelps, LLC ("Duff & Phelps") to identify and quantify their claims. ( Id. ¶¶ 113-14).) Duff & Phelps sought to quantify Plaintiffs' liability as a servicer with respect to: (1) misapplied and miscalculated payments; (2) wrongful foreclosure and improper loss mitigation practices; and (3) extended foreclosure timing issues caused by improper or inefficient servicing conduct such as falsified affidavits, improper documentation, and improper collection practices. ( Id. ¶ 119.) Judge Glenn noted Duff & Phelps' finding that Plaintiffs' potential liability as a servicer under these three bases could be as high as $1.1 billion, but that asserting such claims would involve "significant risk and uncertainty." ( Id. ) Under the Plan, the servicing-related claims, settled as "RMBS Cure Claims," were allowed in an aggregate amount of $96 million. ( Id. )

Judge Glenn made similar findings regarding Plaintiffs' financial exposure for the Monolines' claims. ( Id. ¶¶ 126-37, 143-54, 213-15.) He stated that absent a settlement, Plaintiffs were "almost certain to become embroiled in additional, complex litigation with the Monolines over the validity, amount and possible subordination of their asserted claims." ( Id. ¶ 213.)

Judge Glenn found that the Settlements resulted from good faith, arms-length negotiations, were in the best interests of the parties and claimholders, ( id. ¶¶ 51), were proposed in good faith and in conformity with the Bankruptcy Code, ( id. ¶¶ 18-26, 27, 51, 121-22), and, as noted, were reasonable. ( Id. ¶¶ 51, 178, 201, 239.) The Bankruptcy Settlements also contemplated further recovery for the investors who acquired RFC's rights against the correspondent lenders. ( See Scheck Decl., Ex. 32 (Bankr. Confirm. Order ¶ 48) (authorizing the creation of a "Liquidating Trust," into which RFC was to transfer and assign its assets, and preserving the Liquidating Trust's (and Estates') causes of action); id. , App. 1 (Bankr. Plan at 75).)

In light of his findings, in December 2013, Judge Glenn approved the Plan. ( Id., Ex. 28 (Bankr. Findings of Fact at 1).)

E. Procedural History

Beginning in December 2013, Plaintiffs commenced this litigation, filing numerous individual lawsuits against Defendants, asserting claims of breach of contract and indemnification. ( See, e.g., Residential Funding Co., LLC v. Home Loan Center, Inc. , 14-cv-1716 (SRN/HB), First Am. Compl. ¶¶ 78-85; 86-89; Rescap Liquidating Trust v. Freedom Mortg. Corp. , 14-cv-5101 (SRN/HB), Compl. ¶¶ 87-95; 96-100 [Doc. No. 1]; Residential Funding Co., LLC v. CTX Mortg. Co., LLC , 14-cv-1710 (SRN/HB) Am. Compl. ¶¶ 84-91; 92-95 [Doc. No. 30]; Residential Funding Co., LLC v. iServe Residential Lending, LLC , 13-cv-3531 (SRN/HB), First Am. Compl. ¶¶ 71-78; 79-82 [Doc. No. 39]; Residential Funding Co., LLC v. Standard Pacific Mortg., Inc. , 13-cv-3526 (SRN/HB), Am. Compl. ¶¶ 78-85; 86-89 [Doc. No. 35]; Residential Funding Co., LLC v. Impac Funding Corp. , 13-cv-3506 (SRN/HB), First Am. Compl. ¶¶ 88-96; 97-101 [Doc. No. 34].)

In its breach of contract claims, RFC alleges that Defendants breached their R & Ws regarding the quality and characteristics of the residential mortgage loans that they sold to RFC. ( See, e.g., *1127 Residential Funding Co., LLC v. Home Loan Center, Inc., 14-cv-1716 (SRN/HB), First Am. Compl. ¶¶ 24-26; 82.) RFC contends that Defendants well understood RFC's business model, whereby once the loans were sold to RFC, RFC would pool the loans, eventually selling them into securitization trusts. ( Id. ¶ 23.) RFC also alleges that Defendants knew or should have known of the defects in the loans that they sold RFC, but failed to inform RFC. ( Id. ) RFC contends that Defendants therefore breached their R & Ws, as the loans failed to materially comply with the terms of their agreements and the Client Guide. ( Id. ¶¶ 82-83.) As a result of Defendants' alleged breaches, RFC asserts that it has suffered damages. ( Id. ¶¶ 84-85.)

Similarly, with respect to indemnification, RFC alleges that under the parties' agreements and the Client Guide, Defendants expressly agreed to indemnify RFC for all liabilities, losses, and damages, including attorneys' fees and costs incurred by RFC. ( Id. ¶ 88.) It contends that it has incurred such liabilities, losses, and damages arising from the alleged material defects in Defendants' loans. ( Id. ¶ 87.) Specifically, RFC points to over $10 billion in allowed claims approved by the Bankruptcy Court, as well attorneys' fees, litigation-related expenses, and other costs associated with defending numerous lawsuits and proofs of claim against RFC stemming from the Defendants' allegedly defective loans. ( Id. )

In January 2015, to promote the just and efficient conduct of the litigation, this Court consolidated for pretrial purposes 68 of the then-pending first-wave suits. ( See Jan. 29, 2015 Am. Admin. Order at 3 [Doc. No. 100].) Throughout the discovery period, many of the lawsuits were resolved through mediation. After extensive discovery, Plaintiffs and Defendants now move for dispositive relief. The first of the individual trials between Plaintiffs and Defendants is set to begin on October 15, 2018. ( See Apr. 19, 2018 Minutes at 2 [Doc. No. 3486].)

III. DISCUSSION

A. Standard of Review

Summary judgment is appropriate if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A fact is 'material' " only if it may affect the outcome of the lawsuit. TCF Nat'l Bank v. Mkt. Intelligence, Inc. , 812 F.3d 701 , 707 (8th Cir. 2016). Likewise, an issue of material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242 , 248, 106 S.Ct. 2505 , 91 L.Ed.2d 202 (1986). The moving party bears the burden of establishing a lack of genuine issue of fact, Celotex Corp. v. Catrett , 477 U.S. 317 , 323, 106 S.Ct. 2548 , 91 L.Ed.2d 265 (1986), and the Court must view the evidence and any reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574 , 587, 106 S.Ct. 1348 , 89 L.Ed.2d 538 (1986). In responding to a motion for summary judgment, however, the nonmoving party may not " 'rest on mere allegations or denials,' but must demonstrate on the record the existence of specific facts which create a genuine issue for trial." Krenik v. Cty. of Le Sueur , 47 F.3d 953 , 957 (8th Cir. 1995).

B. Summary Judgment Motions

Plaintiffs seek summary judgment on the following issues: (1) the Client Guide confers Plaintiffs with sole discretion to (a) determine breaches of Defendants' R & Ws, and (b) enter into, and determine the amounts of, the Settlements, such that Defendants may not challenge the Settlements *1128 as unreasonable; (2) the Client Guide should be broadly interpreted to permit recovery for (a) all liabilities, not just losses, or, alternatively, (b) all losses on breaching loans; (3) Defendants' breaches caused RFC's origination-related losses and liabilities; (4) Defendants' affirmative defenses that contradict the Client Guide fail, as do any defenses that RFC's actions or other "superseding and intervening factors" may have contributed to RFC's liabilities; (5) Defendants' liability for indemnity is not extinguished by (a) RFC's bankruptcy or (b) RFC's alleged wrongdoing; (6) Plaintiffs may use statistical sampling to prove their claims and need not re-underwrite each at-issue loan; and (7) Plaintiffs' right to assert claims for remedies extends to losses and liabilities on foreclosed and liquidated loans. 13 ( See generally Pls.' Mem. Supp. Mot. for Summ. J. ("Pls.' Mem.") [Doc. No. 3243]; Pls.' Mem. in Opp'n to Defs.' Summ. J. Motion ("Pls.' Opp'n") at 55 [Doc. No. 3720] (citing March 21, 2018 Order [Doc. No. 3171] ) (permitting Plaintiffs to move for partial summary judgment on this issue).

Defendants move for summary judgment on the following issues, some of which overlap with Plaintiffs' affirmative motions: (1) RFC cannot recover damages under its Breaching Loss damages methodology because (a) Residential Funding Co., LLC v. Quicken Loans, Inc. , 2017 WL 5571222 (Minn. Dist. Ct. Feb. 1, 2017), precludes such damages, (b) repurchase damages are unavailable under RFC's "guise" of seeking indemnity for losses or liabilities under Section A212 of the Client Guide, and (c) RFC fails to prove that Defendants' alleged R & W breaches caused loan-level losses; (2) RFC cannot recover damages under its Allocated Breaching Loss damages approach because it fails to provide a non-speculative basis for allocating the RMBS Trust Settlements and Monoline Settlements; (3) RFC's Allocated Loss approach to calculating damages fails; (4) RFC is not entitled to indemnity for its own misconduct (a) as evidenced by allegations of fraud and negligence against RFC, (b) because the Client Guide does not permit indemnity for RFC's own misconduct, and (c) because even if the Client Guide permitted such recovery, it would be unenforceable; (5) RFC's claims for loans sold before May 14, 2006 are time-barred; (6) RFC is barred from recovering damages on "expired" loans; (7) RFC cannot recover damages resulting from alleged breaches of pool-wide representations; (8) RFC's indemnity claim related to the MBIA Settlement fails; (9) RFC cannot use sampling to establish liability for loans outside its samples; (10) damages for indemnity are limited to RFC's actual losses; and (11) RFC's expert opinions are inadmissible and foreclose its claims. ( See generally Defs.' Mem. Supp. Mot. for Summ. J. ("Defs.' Mem.") at 1-2, 10-11 [Doc. No. 3251].)

C. Principles of the Law of Contractual Indemnity

Under the common law indemnity doctrine, "[a] right of indemnity arises when a party seeking indemnity has incurred liability due to a breach of a duty owed to it by the one sought to be charged, and such a duty may arise by reason of a contractual obligation."

*1129 Rice Lake Contracting Corp. v. Rust Env't & Infrastructure, Inc. , 616 N.W.2d 288 , 291 (Minn. Ct. App. 2000). 14 As such, common law indemnity is considered an equitable remedy. See Zontelli & Sons, Inc. v. City of Nashwauk , 373 N.W.2d 744 , 755 (Minn. 1985) ("Indemnity is, however, an equitable doctrine that does not lend itself to hard-and-fast rules, and its application depends upon the particular facts of each case."); see also Lambertson v. Cincinnati Welding Corp. , 312 Minn. 114 , 257 N.W.2d 679 , 685 (1977) ("Contribution and indemnity are variant common-law remedies used to secure restitution and fair apportionment of loss among those whose activities combine to produce injury."); Hendrickson v. Minn. Power & Light Co. , 258 Minn. 368 , 104 N.W.2d 843 , 846-47 (1960), ("Indemnity is the remedy securing the right of a person to recover reimbursement from another for the discharge of a liability which, as between himself and the other, should have been discharged by the other.... In the modern view, principles of equity furnish a more satisfactory basis for indemnity."), overruled in part on other grounds by Tolbert v. Gerber Indus., Inc. , 255 N.W.2d 362 (Minn. 1977) ; Shore v. Minneapolis Auto Auction, Inc. , 410 N.W.2d 862 , 866 (Minn. Ct. App. 1987) ("Indemnification is a flexible, equitable remedy designed to accomplish a fair allocation of loss among parties. Such a remedy should be used to achieve fairness as applied to a particular set of facts.").

"In the contractual context," however, "a claim based on an express indemnification provision is a legal, rather than equitable, claim." Johnson v. Johnson , 902 N.W.2d 79 , 85 (Minn. Ct. App. 2017) ; see also Hendrickson , 104 N.W.2d at 848 (expressly recognizing that a duty to indemnify can arise "[w]here there is an express contract between the parties containing an explicit undertaking to reimburse for liability of the character involved"). "Indeed, when the duty to indemnify arises from contractual language, it generally is not subject to equitable considerations; rather, it is enforced in accordance with the terms of the contracting parties' agreement." 41 Am. Jur. 2d Indemnity § 13.

Under Minnesota law, and as more specifically described throughout this Order, "[a]n indemnity agreement is a contract, which is to be construed according to the principles generally applied in the construction or interpretation of other contracts." Buchwald v. Univ. of Minn. , 573 N.W.2d 723 , 726 (Minn. Ct. App. 1998) ; see also Grand Trunk W. R.R., Inc. v. Auto Warehousing Co. , 262 Mich.App. 345 , 686 N.W.2d 756 , 761 (2004) ("Contractual indemnity is an area of law guided by well-settled general principles. Nonetheless, each case must ultimately be determined by the contract terms to which the parties have agreed."). An indemnity contract is "to be given 'a fair construction that will accomplish its stated purpose.' " Sorenson v. Safety Flate, Inc. , 306 Minn. 300 , 235 N.W.2d 848 , 852 (1975) ( quoting N.P. Ry. Co. v. Thornton Bros. Co. , 206 Minn. 193 , 288 N.W. 226 , 227 (1939) ).

In these claims of contractual indemnity, which Plaintiffs assert here, the threshold question is whether that for which the indemnitee seeks indemnification-whether it be losses, damages, or liabilities-falls within the language of the *1130 contract. This initial inquiry involves not only interpreting the indemnity contract to determine its scope, but also evaluating whether the facts of the case fit within that scope. See Art Goebel, Inc. v. N. Suburban Agencies, Inc. , 567 N.W.2d 511 , 515 (Minn. 1997) (holding that unambiguous contract language required three conditions to be met before one party would indemnify another, that one of those conditions was not met, and hence that there was no duty to indemnify); see also 41 Am. Jur. 2d Indemnity § 13 (describing the "threshold question [of] whether the fact situation is covered by the indemnity contract" as requiring "only a straightforward analysis of the facts and the contract terms").

Assuming that the facts fall within the indemnity contract, particular issues arise when a party seeks indemnity for a settlement, as is the case here. 15 Although "the right to recover indemnity is not lost by reason of any settlement with the claimant," Altermatt v. Arlan's Dep't Stores , 284 Minn. 537 , 169 N.W.2d 231 , 232 (1969) (per curiam), where one party seeks to recover from another "for a settlement 'entered into before trial ..., the party seeking indemnification must show the settlement was reasonable and prudent.' " Jackson Nat'l Life Ins. Co. v. Workman Sec. Corp. , 803 F.Supp.2d 1006 , 1012 (D. Minn. 2011) (emphasis added) (quoting Osgood v. Med., Inc. , 415 N.W.2d 896 , 903 (Minn. Ct. App. 1987) ). "The test as to whether the settlement is reasonable and prudent is what a reasonably prudent person in the position of the defendant would have settled for on the merits of plaintiff's claim." Miller v. Shugart , 316 N.W.2d 729 , 735 (Minn. 1982). As more thoroughly explained below, what is reasonable and prudent "involves a consideration of the facts bearing on the liability and damage aspects of plaintiff's claim, as well as the risks of going to trial." Id. With respect to the considerations of the underlying liability, "[t]he party seeking indemnification need only show it could have been liable under the facts shown at trial not whether they would have been liable." Jackson , 803 F.Supp.2d at 1012 (quoting Glass v. IDS Fin. Servs., Inc. , 778 F.Supp. 1029 , 1083 (D. Minn. 1991) ). Indeed, "[r]easonableness ... is not determined by conducting the very trial obviated by the settlement." Alton M. Johnson Co. v. M.A.I. Co. , 463 N.W.2d 277 , 279 (Minn. 1990).

D. Principles of Contract Interpretation

There is no dispute that Minnesota law applies to the interpretation of the Client Guide, as well as to RFC's breach of contract and indemnity claims. 16 When construing a contract under Minnesota law, a court's "primary goal ... is to *1131 determine and enforce the intent of the parties." Loftness Specialized Farm Equip., Inc. v. Twiestmeyer , 818 F.3d 356 , 361 (8th Cir. 2016) (quoting Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc. , 666 N.W.2d 320 , 323 (Minn. 2003) ). Where the contracting parties' intention is ascertainable from the language of a written contract, the construction of the contract is for the court. Chergosky v. Crosstown Bell, Inc. , 463 N.W.2d 522 , 526 (Minn. 1990). If the parties' intent is unambiguously expressed, "[t]he language found in a contract is to be given its plain and ordinary meaning." Turner v. Alpha Phi Sorority House , 276 N.W.2d 63 , 67 (Minn. 1979) ; Bass v. Ring , 215 Minn. 11 , 9 N.W.2d 234 , 236 (1943) ). While courts apply the plain and ordinary meaning of contractual terms to the interpretation of a contract, those terms are construed in the context of the entire contract. Quade v. Secura Ins. , 814 N.W.2d 703 , 705 (Minn. 2012) (citing Emp'rs Mut. Liab. Ins. Co. of Wis. v. Eagles Lodge of Hallock, Minn. , 282 Minn. 477 , 165 N.W.2d 554 , 556 (1969) ).

In construing a contract, courts attempt to harmonize all of the contract's provisions. Chergosky , 463 N.W.2d at 525 . Also, "[b]ecause of the presumption that the parties intended the language used to have effect," courts "attempt to avoid an interpretation of the contract that would render a provision meaningless." Id. at 526 .

"A contract is ambiguous if, based on the language alone, it is reasonably susceptible of more than one interpretation." Art Goebel, 567 N.W.2d at 515 . "If there is ambiguity, extrinsic evidence may be used, and construction of the contract is a question of fact for the jury unless such evidence is conclusive." Hickman v. SAFECO Ins. Co. of Am. , 695 N.W.2d 365 , 369 (Minn. 2005) (citing Donnay v. Boulware , 275 Minn. 37 , 144 N.W.2d 711 , 716 (1966) ). While ambiguity in a contract can be construed against the drafter, see, e.g., Premier Bank v. Becker Dev., LLC , 767 N.W.2d 691 , 698 (Minn. App. 2009), courts should do so only after attempting to "determine the parties' intent behind an ambiguous term, using extrinsic evidence if available." Staffing Specifix, Inc. v. TempWorks Mgmt. Servs. , 913 N.W.2d 687 , 694 (Minn. 2018). Moreover, "this rule has less application as between parties of equal bargaining power or sophistication," Re-Sols.Intermediaries, LLC v. Heartland Fin. Grp., Inc. , No. A09-1440, 2010 WL 1192030 , at *3 (Minn. Ct. App. Mar. 30, 2010), and where both parties are represented by sophisticated legal counsel during the formation of the contract. Porous Media Corp. v. Midland Brake, Inc. , 220 F.3d 954 , 960 (8th Cir. 2000).

As a general matter, Minnesota upholds principles of freedom of contract, in which "parties are generally free to allocate rights, duties, and risks," Lyon Fin. Servs. v. Ill. Paper & Copier Co., 848 N.W.2d 539 , 545 (Minn. 2014), and "[c]ourts are not warranted in interfering with the contract rights of parties as evidenced by their writings which purport to express their full agreement," Cady v. Bush , 283 Minn. 105 , 166 N.W.2d 358 , 362 (1969). Indeed, "[w]here the parties have contracted to create duties that differ or extend beyond those established by general principles of law, and the terms of the contract are not otherwise unenforceable, the parties must abide by the contractual duties created." Grand Trunk W. R.R. , 686 N.W.2d at 761 . Terms of those contract provisions must "be given their ordinary meaning, as well as the interpretations adopted in prior cases." Ritrama, Inc. v. HDI-Gerling Am. Ins. Co. , 796 F.3d 962 , 969 (8th Cir. 2015) (quoting Boedigheimer v. Taylor , 287 Minn. 323 , 178 N.W.2d 610 , 613 (1970) ).

*1132 E. Cross Motions for Summary Judgment

Respectively, the parties move for summary judgment on several identical bases. These include whether RFC's alleged "misconduct" precludes recovery on its claims for indemnification, whether RFC can recover losses and liabilities incurred from "expired" loans, whether RFC's liabilities were extinguished in bankruptcy, and whether RFC may use statistical sampling as a means of establishing liability and damages. 17 The Court addresses the parties' arguments on these overlapping issues below.

1. Misconduct Defense Against Indemnification

Defendants contend that underlying claims of fraud and negligent misrepresentation are non-indemnifiable under Minnesota law. (Defs.' Mem. at 57-59.) Because the Settlements resolved underlying claims asserting RFC's misconduct, Defendants assert that Plaintiffs may not allocate any value to these claims. In addition, Defendants argue that the Client Guide does not provide for indemnification for RFC's own misconduct, ( id. at 59-61), and permitting indemnification under these circumstances would violate public policy. ( Id. at 61-62.) Defendants therefore argue, "Summary judgment on RFC's allocation approaches is warranted because RFC has failed to account for the value of these non-indemnifiable claims based on its own alleged misconduct." ( Id. at 57.)

Plaintiffs also move for summary judgment on this issue, arguing that Defendants cannot avoid liability based on unproven underlying allegations of "negligence" and "fraud" against RFC. (Pls.' Mem. at 44-46.) They assert that there has never been a finding that RFC engaged in wrongdoing with respect to the settled claims. ( Id. at 45; Pls.' Opp'n at 40.) While Plaintiffs find this lack of evidence dispositive, they also assert that the Client Guide's plain language required Defendants to indemnify RFC for its own alleged misconduct and negligence, (Pls.' Opp'n at 37-39), and that those Client Guide provisions are enforceable and not violative of public policy. ( Id. at 40-41.)

Defendants identify underlying claims of fraud and negligent misrepresentation against RFC, grouping them together under the general label of "misconduct." (Defs.' Mem. at 57-58.) Under Minnesota law, "negligent misrepresentation constitutes fraud." Hardin Cty. Sav. Bank v. Housing & Redevelopment Auth. of Brainerd , 821 N.W.2d 184 , 191 (Minn. 2012). Under New York law, however, where many of the underlying claims were filed, negligent misrepresentation is considered a form of negligence, Kortright Capital Partners LP v. Investcorp Inv. Advisers Ltd. , 257 F.Supp.3d 348 , 359 (S.D.N.Y. 2017) (finding negligent misrepresentation claim duplicative of negligence claim), for which intent is not a required element. 18

*1133 Abu Dhabi Commercial Bank v. Morgan Stanley & Co. , 910 F.Supp.2d 543 , 546 (S.D.N.Y. 2012) ("[U]nder New York negligent misrepresentation law, the question is not whether an affirmative misrepresentation can be attributed to a defendant, but whether a defendant breached a duty to provide a plaintiff with accurate information.") Because the enforceability of an indemnification provision for underlying claims of negligence versus underlying claims of intentional conduct is slightly different, the Court addresses the two theories of underlying liability separately.

As to claims of negligence, Minnesota law generally disfavors agreements that seek to indemnify the indemnitee for its own negligence. DeWitt v. London Rd. Rental Ctr., Inc. , 910 N.W.2d 412 , 416 (Minn. 2018). Such provisions are therefore strictly construed against the indemnitee. Id. The word "negligence" is not required in the indemnification provision, but the clause must contain "specific, express language that 'clearly and unequivocally' states the contracting parties' intent for the indemnitor to indemnify the indemnitee for the indemnitee's own negligence." Id. at 417 (quoting Johnson v. McGough Constr. Co. , 294 N.W.2d 286 , 288 (Minn. 1980), superseded by statute on other grounds , Minn. Stat. § 337.02 , as recognized in Katzner v. Kelleher Constr. , 545 N.W.2d 378 , 381 (Minn. 1996) ). In short, such clauses must "fairly apprise" the indemnitor of the transfer of liability for the indemnitee's acts of negligence. Id. (citing Yang v. Voyagaire Houseboats, Inc. , 701 N.W.2d 783 , 791 n.5 (Minn. 2005) ).

As the Court will explain later in this Order, the Client Guide allows RFC to seek indemnification of its actual losses and liabilities incurred in the Settlements under Section A212 and A202(II). Section A212 requires Defendants to indemnify RFC for "all losses ... resulting from any Event of Default." (Client Guide § A212.) Defendants argue that the phrase "resulting from any Event of Default" limits the scope of this indemnification provision to breaches caused by the Client or third parties. (Defs.' Mem. at 59.) Because "Event of Default" is a specifically defined term that does not include the actions of RFC, they contend that any obligations to indemnify arising from an "Event of Default" do not extend to RFC's own underlying actions. ( Id. )

The Court does not read the Client Guide so narrowly. While it does not use the specific word "negligence," it nevertheless makes clear the parties' intent to indemnify RFC for its own negligent acts. Under Section A202(II), Defendants agreed to indemnify RFC from "any claim, demand, defense or assertion against or involving [ ]RFC based on or grounded upon, or resulting from such misstatement or omission [by Defendants] or a breach of any representation, warranty or obligation made by [ ]RFC in reliance upon such misstatement or omission." (Client Guide § A202(II) ) (emphasis added). Similarly, Section A212 requires indemnification for liabilities resulting from "any breach of any representation, warranty or obligation made by [ ]RFC in reliance upon any warranty, obligation or representation made by the Client contained in the Client Contract[.]" ( Id. § A212) (emphasis added). These provisions expressly apprised Defendants of their indemnification obligations for RFC's own negligent conduct. See McGough Constr. Co. , 294 N.W.2d at 288 (finding coverage for claims of indemnitee's negligence based on coverage for *1134 "claims for which the [indemnitee] may be, or may be claimed to be, liable").

Moreover, the Client Guide provisions are unlike those in National Hydro Systems v. M.A. Mortenson Co. , 529 N.W.2d 690 (Minn. 1995), and Servais v. T.J. Management of Minneapolis, Inc. , 973 F.Supp. 885 (D. Minn. 1997), cited by Defendants. The indemnification provisions in those cases required indemnification for claims related to the indemnitor's conduct. Nat'l Hydro , 529 N.W.2d at 692 (requiring a contractor to indemnify for claims arising out of his own work); Servais , 973 F.Supp. at 892 (finding that while a broad indemnification clause conceivably covered the indemnitee's own negligence, it was instead limited to the indemnitor's actions by additional language requiring indemnification for "any liabilities ... resulting from injury ... to employees injured while utilizing the services of [the indemnitor]"). Likewise, the provisions here are unlike those in DeWitt , in which the Minnesota Supreme Court found that broad indemnification language for "any and all liabilities" was not unequivocally linked to the indemnitee's own negligence. 910 N.W.2d at 418 -20 . The indemnitee had argued that because the provision included an exception for the indemnitee's own intentional misconduct, the provision must be construed to cover all other acts of the indemnitee, including torts. Id. The court rejected this argument, finding that the language failed to expressly inform the indemnitor of its obligation for such coverage. Id. In contrast, the language here specifically provides for indemnification based on RFC's own representations, warranties, or obligations, as discussed above.

Defendants further argue that the indemnification provisions are limited to underlying claims for breach of contract, but not for claims for negligence, because the Client Guide refers to indemnity for RFC's "breaches." The Court disagrees, finding that the obligations in Sections A202(II) and A212 to indemnify for "any breach of any representation, warranty or obligation made by [ ]RFC," (Client Guide § A212), and for "any" claim against RFC "based on or grounded upon, or resulting from [Defendants'] misstatement or omission or a breach of any representation, warranty or obligation made by [ ]RFC in reliance upon such misstatement or omission," ( id. § A202(II) ), extend to claims for negligent representation. See Abu Dhabi Commercial Bank. , 910 F.Supp.2d at 547 (stating that under New York law, claims for negligent misrepresentation may be based on a breach of the defendant's duty to provide a plaintiff with accurate information). The Court thus finds that Sections A202(II) and A212 clearly and unequivocally express the parties' intent to transfer liability to Defendants for RFC's own acts of negligence. Moreover, because RFC and Defendants were sophisticated business parties, there can be no claim that Defendants lacked either understanding or notice of their obligation to indemnify RFC for such claims. Harleysville Ins. Co. v. Physical Distrib. Servs., Inc. , 716 F.3d 451 , 457-58 (8th Cir. 2013) (finding, under Minnesota law, no public policy violation rendering indemnification provision unenforceable where parties to the agreement were sophisticated businesses who fully understood the agreement's terms and had clear notice of the obligation to indemnify for the indemnitee's negligence).

Turning to the allegations of Plaintiffs' intentional underlying conduct, courts may void an indemnification provision on public policy grounds where the indemnitor shows that the indemnitee's underlying conduct was intentional, willful, or wanton. ACLU of Minn. v. Tarek ibn Ziyad Acad. , 788 F.Supp.2d 950 , 967-68 (D. Minn. 2011) (stating that an indemnification *1135 provision is enforceable if it is "(1) not ambiguous; (2) does not release intentional, willful, and wanton acts; and (3) does not violate public policy"). However, in order to avoid the enforcement of an indemnification provision on these grounds, the misconduct must be proven, and not merely alleged, as Judge Glenn observed when ruling on the same issue under Minnesota law: "[W]here there has not been a threshold finding of illegal or even intentional misconduct," indemnification is not precluded. In re Residential Capital, LLC , 524 B.R. 563 , 597 (Bankr. S.D.N.Y. 2015) (citation omitted); see also Feed Mgmt. Sys., Inc. v. Comco Sys., Inc. , 823 F.3d 488 , 495 n.6 & 7 (8th Cir. 2016) (rejecting indemnitor's argument that the indemnification provision was void as it would require coverage for intentional acts, where the record did not support a "finding that [the indemnitee] actually engaged in the alleged misconduct."); Gibbs-Alfano v. Burton, 281 F.3d 12 , 21 (2d Cir. 2002) (observing that no New York courts have "declined to enforce an otherwise valid indemnification agreement between parties where the party seeking indemnification settled, without admitting liability, claims against it alleging intentional wrongdoing. Thus, in the absence of a judgment of intentional conduct on the part of the [indemnitees], we do not find any reason under New York public policy to hold the Indemnification Clause unenforceable."); St. Paul Fire & Marine Ins. Co. v. Perl , 415 N.W.2d 663 , 667 (Minn. 1987) (finding that because "there has never been a finding of illegal or even intentional misconduct," public policy exception to enforcement of indemnification agreement was inapplicable).

The parties apparently disagree about who bears the evidentiary burden of establishing the finding of intentional misconduct. ( Compare Defs.' Mem. in Opp'n to Pls.' Mot. for Summ. J. ("Defs.' Opp'n") [Doc. No. 3602] at 48 (stating that RFC must show that its losses did not result from its own intentional torts or deliberate acts) with Pls.' Mem. at 34 ("Defendants fail to offer any evidence that any of the settlements resulted from RFC's alleged misconduct").) The question is essentially moot, however, because there is no fact question as to whether Plaintiffs were found liable for intentional misconduct with respect to the underlying claims. As discussed below, the claims were settled without adjudication on the merits. Defendants do not argue to the contrary.

Defendants instead highlight allegations of RFC's intentional misconduct. (Defs.' Mem. at 57-58.) Specifically, they refer to fraud and negligent misrepresentation claims filed by Allstate, MBIA, BNYM, and U.S. Bank as illustrative examples, and cite testimony of Plaintiff's expert Donald Hawthorne in support of their position. ( Id. )

As to the underlying Allstate claims, Defendants state that Allstate sued RFC for defrauding investors into accepting risks based on RFC's "shoddy lending and underwriting practices." ( Id. at 57) (citing Smallwood Decl., Ex. 50 (Ex. A to Allstate PoC # 4499 ¶ 57).) But Plaintiffs do not seek indemnity for the Allstate claims, (Pls.' Opp'n at 36), making any allegations of fraud in Allstate's proof of claim irrelevant.

Regarding the RMBS Trustees for BNYM and U.S. Bank, Defendants assert that these Trustees filed underlying misrepresentation claims against RFC. (Defs.' Mem. at 58) (citing Smallwood Decl., Ex. 15 (BNYM PoC # 6773 ¶ 49); id. , Ex. 52 (U.S. Bank PoC # 6655 ¶ 50).) However, the allegations of misrepresentation in the BNYM and U.S. Bank proofs of claim were merely allegations-and conditional allegations, at that:

*1136 The Claimant alleges that, to the extent a Seller of mortgage loans to the RMBS Trusts ... knew or should have known of certain breaches of [R & Ws], including that, at the time the Seller transferred the mortgage loans to certain of the RMBS Trusts ..., it knew that the mortgage loans did not comply with the [R & Ws], the Claimant has a claim for common law fraud and/or negligent misrepresentation....

(Smallwood Decl., Ex. 15 (BNYM PoC # 6773 ¶ 49) (emphasis added); id. , Ex. 52 (U.S. Bank PoC # 6655 ¶ 50).) These allegations do not constitute a finding of misrepresentation, In re Residential Capital , 524 B.R. at 597 , and may not even satisfy the heightened pleading standard for such a claim.

As to the MBIA claims, Defendants cite one legal decision, MBIA Ins. Co. v. Residential Funding Co., LLC , No. 603552/08, 26 Misc.3d 1204 (A), 2009 WL 5178337 , at *1 (N.Y. Sup. Ct. Dec. 22, 2009), noting that the court there denied RFC's motion to dismiss the plaintiff's fraud claims. 19 (Defs.' Mem. at 58.) But on a motion to dismiss, the court must take the plaintiff's allegations as true and view them in the light most favorable to the plaintiff. See Kolchins v. Evolution Markets, Inc. , 31 N.Y.3d 100 , 73 N.Y.S.3d 519 , 96 N.E.3d 784 , 787 (2018) (applying New York procedural law). Thus, a determination that MBIA's fraud allegations survived a motion to dismiss does not constitute a finding of liability for fraud.

Defendants also cite MBIA's fraud and negligent misrepresentation pleadings, which alleged that RFC engaged in three improper underwriting practices not permitted under the Client Guide, making its representations false by: (1) agreeing that loan originators could originate mortgage loans that failed to comply with the Client Guide; (2) knowingly purchasing loans in bulk whether or not they complied with the Client Guide; and (3) buying loans using RFC's automated electronic loan underwriting program Assetwise, even if the loans did not comply with the Client Guide. (Defs.' Mem. at 57-58) (citing Smallwood Decl., Ex. 51 ( MBIA Second Am. Compl. ¶¶ 40, 59-60, 62, 64, 78).) Again, there is no evidence that Plaintiffs were adjudged liable for this alleged conduct.

While Defendants do not point to any such findings, they assert that MBIA's allegations of fraud are supported by evidence in the record. (Defs.' Mem. at 58.) They cite RFC employee testimony about RFC's exception agreements that allowed clients to deliver a loan to RFC outside of the normal program guidelines, ( id. ) (citing Smallwood Decl., Ex. 53 (Jackman Dep. at 55); id. , Ex. 54 (Ex. 108-004 to Jackman Dep.) ), and testimony that it was "common" for RFC to buy bulk loans that were "not originated to RFC's guidelines. ( Id. ) (citing Smallwood Decl., Ex. 55 (Forget Dep. at 52-53, 95-100); id. , Ex. 56 (Ex. 262-0002 to Forget Dep.); id. , Ex. 57 (Ex. 262-0013 to Forget Dep.).) They further cite deposition testimony for the proposition that RFC used Assetwise to buy loans that were not in compliance with the Client Guide, ( id. ) (citing Smallwood Decl., Ex. 58 (Ex. 145-0011 to Maki Dep. at 3); id , Ex. 59 (Maki Dep. at 154-55) ), and that the purchases of such loans represented RFC's "business decision[s]." ( Id. ) (citing Smallwood Decl., Ex. 60 (1/10/18 Payne Dep. at 38-41, 59, 83-84, 117-20).)

But the RFC employee testimony regarding the MBIA Settlement neither supports *1137 a finding of intentional misconduct nor connects MBIA's allegations to any at-issue loans. RFC does not contest that it sometimes bought loans outside of the normal program guidelines, observing that the Client Guide permitted it to do so. (Pls.' Opp'n at 36) (citing Client Guide § J600.) With respect to Plaintiffs' purported policy of using Assetwise to buy loans that failed to comply with the Client Guide, the first page of RFC's internal policy, which Defendants cite, provides for various circumstances in which "An Assetwise approval is NOT valid," and further states, "The Client is still responsible to ensure the loan conforms to RFC guidelines." (Smallwood Decl., Ex. 58 (Ex. 145-0011 to Maki Dep.) (transmitting Revised Credit Policy Issue # 10) ) (emphasis in original).

Finally, as their last evidence of RFC's misconduct, Defendants point to statements of Plaintiffs' expert Donald Hawthorne, in which he admitted that it was reasonable for RFC to consider the significant risk that a Monoline's fraud claim could expose it to damages. (Defs.' Mem. at 58) (citing Smallwood Decl., Ex. 39 (Corr. Hawthorne Rpt. ¶ 237).) But an acknowledgement of potential risk is hardly evidence of fraud, nor is it even an admission of liability. Fireman's Fund Ins. Co. v. W. Nat'l Mut. Grp. , 851 F.Supp. 1361 , 1368-69 (D. Minn. 1994) (noting that even if "fear of an adverse judgment was a factor in the antitrust defendants' decision settle, that would not be enough to fit within the willful misconduct exception," as "it ha[d] never been adjudged that the antitrust plaintiffs were liable by reason of willful misconduct."). Because RFC settled its claims with the Monolines without admitting liability for alleged fraud or misrepresentation claims, the indemnification provisions between RFC and Defendants remain enforceable.

In sum, there has not been a threshold finding that RFC engaged in fraud or other misconduct with respect to the claims underlying the Settlements, and the Client Guide expressly permitted RFC to seek indemnification for its own negligence. Given the lack of any evidence of intentional wrongdoing, the Court finds no public policy violation in permitting Plaintiffs to seek indemnification for these claims. While the indemnification provisions remain enforceable, Plaintiffs still bear the burden of establishing causation and damages. As to Defendants' misconduct defenses, however, Plaintiffs are entitled to summary judgment on this ground, and Defendants' summary judgment motion on this ground is denied.

2. Whether Plaintiffs Can Recover Losses and Liabilities Incurred from "Expired" Loans

Another common basis on which the parties move for relief concerns whether Plaintiffs may recover for certain foreclosed upon and liquidated loans. Defendants seek partial summary judgment as to Plaintiffs' claims for loans sold to RFC that were subsequently foreclosed upon, or as Defendants call them, "expired" loans. (Defs.' Mem. at 65-71.) They point to the provision for the survival of remedies in Section A209(C) of the Client Guide, which states:

[ ]RFC's remedies for breach of the [R & Ws] and covenants shall survive the sale and delivery of the Loan to [ ]RFC and funding of the related purchase price by [ ]RFC, and will continue in full force and effect for the remaining life of the Loans , notwithstanding any termination of this Client Guide and the related Funding Documents, or any restrictive or qualified endorsement on any mortgage Note or assignment of mortgage or Loan approval or other examination *1138 of or failure to examine any related mortgage Loan file by [ ]RFC.

(Client Guide § A209(C) ) (emphasis added).

Defendants argue that this provision controls the time period in which RFC could file lawsuits arising from a breach of the R & Ws. (Defs.' Mem. at 66.) They claim that it provided a "discrete survival period" for RFC to assert a remedy beyond the date of sale, at which point, they argue, RFC's right to seek recovery would have otherwise "expire[d] as a matter of law." ( Id. at 66-70.) Defendants contend that once the "life of the Loans" ceased to exist, which Defendants argue was upon foreclosure, RFC's right to assert a claim related to these loans also ceased to exist. ( Id. at 67-70.)

Plaintiffs argue that Defendants completely misconstrue the meaning of Section A209(C). In fact, they maintain that the Court should not only deny Defendants' motion for partial summary judgment, but grant summary judgment to Plaintiffs and rule that their right to assert claims for remedies extends to losses and liabilities on foreclosed and liquidated loans. (Pls.' Opp'n at 55) (citing March 21, 2018 Order) (permitting Plaintiffs to move for partial summary judgment on this issue). Plaintiffs do not interpret "for the remaining life of the loans" as a limitations period, and assert that the Court "need not even reach the meaning of the phrase." ( Id. at 60.) In addition, they assert that Defendants' interpretation of Section 209(C) cannot be reconciled with other provisions of the Client Guide that expressly preserve RFC's remedies with respect to foreclosed and liquidated loans. ( Id. at 55.) Further, they assert that Defendants' interpretation would produce absurd results, as it would permit Defendants to avoid liability merely by waiting for the liquidation of breaching loans, and would effectively nullify Defendants' contractual duty, in Section A210, to notify RFC of breaches. ( Id. at 59.)

As noted, where the parties' intention is ascertainable from the written contract, construction is for the court. Chergosky , 463 N.W.2d at 525 . Courts are to construe a contract as a whole and attempt to harmonize all of the contract's provisions. Id. at 525-26 . In addition, "[b]ecause of the presumption that the parties intended the language used to have effect," courts "attempt to avoid an interpretation of the contract that would render a provision meaningless." Id. at 526 .

The crux of this particular dispute concerns Defendants' misunderstanding about the operative effect of Section A209(C). Defendants are correct that as a general matter, under Minnesota law, the life of a loan typically ends upon foreclosure. (Defs.' Mem. at 69) (citing Bestrom v. Bankers Tr. Co. , 114 F.3d 741 , 744 (8th Cir. 1997) (noting "long-settled" Minnesota law that "foreclosure extinguishes the mortgage); In re Stacy , 9 F.Supp. 61 , 64 (D. Minn. 1934) (stating that upon foreclosure, a mortgage becomes " functus officio ," or, without further legal effect) ).

Fully consistent with that authority, Section A209(C) provides that for the entire "life of the loan"-from the date of sale to, generally, foreclosure-RFC is entitled to remedies for any related losses and liabilities it incurs during that period. But Section A209(C) merely addresses the scope of Plaintiffs' remedies-it does not impose on RFC any limitations period different than the six-year statutory period for making a claim. It does not vitiate RFC's right to seek relief simply because a loan ended in foreclosure prior to the Settlements. 20 While any action to enforce *1139 RFC's remedies is of course subject to the applicable statute of limitations, the plain language of Section A209(C) does not implicate the time in which RFC must file a claim for relief, nor does it eliminate, wholesale, RFC's right to make a claim related to foreclosed or liquidated loans. But cf. Eckert v. Titan Tire Corp. , 514 F.3d 801 , 803 (8th Cir. 2008) (holding that contract's plain language required that claims for breaches of R & Ws be brought within one year where the contract provided that "[t]he representations of the parties ... and the right to make a claim for indemnification hereunder for breaches of [R & Ws] ... shall survive only for a period of one (1) year after the Closing Date.") (emphasis added).

Defendants' cited legal authority does not dictate a different result, nor is it persuasive. Defendants cite MASTR Asset Backed Sec. Tr. 2006-HE3 ex rel. U.S. Bank Nat'l Ass'n v. WMC Mortg. Corp., No. 11-cv-2542 JRT/TNL, 2012 WL 4511065 , at *4 (D. Minn. Oct. 1, 2012), for the proposition that this Court has rejected any argument that loans survive beyond foreclosure. (Defs.' Mem. at 69-70.) The Court does not disagree with this generally applicable principle, although Defendants correctly note that even in MASTR Asset, the Court observed that some states provide deficiency periods that permit a mortgagee to sue a borrower if the foreclosure proceeds fail to satisfy the underlying debt. Id. at *5 n.7. In any event, unlike the Client Guide, the contract in MASTR Asset designated repurchase as the sole contractual remedy for breaches-in other words, the contract only permitted the remedy of specific performance. Id. at *5-6. Because foreclosed loans could not be repurchased, the sole remedy was unavailable, so the Court granted summary judgment to the defendant. Similarly, in Nationwide Advantage Mortgage Co. v. Mortgage Services III, LLC , No. 13 C 83 , 2013 WL 1787551 , at *2 (N.D. Ill. April 25, 2013), the court dismissed the plaintiff's claims for breach of contract predicated on a repurchase provision where the loans had been foreclosed upon, but denied the motion to dismiss as to indemnification, noting the language of that provision obliged the defendant to indemnify the plaintiff.

Defendants rely on other non-Minnesota authority, arguing that "for the remaining life of the Loans" is similar to language in Capstead Mortgage Corp. v. Sun America Mortgage Corp. , 45 S.W.3d 233 , 237 (Tex. Ct. App. 2001), where the R & Ws were to continue "for the full remaining life of each Mortgage Loan." The court in Capstead granted summary judgment as to loans foreclosed upon before the suit was filed, finding that "the mortgage loan ceased to exist upon foreclosure." Id. at 238 . But Capstead is inapposite because the basis for that court's decision was the plaintiff's own admission that the mortgage note was extinguished upon foreclosure, since the plaintiff itself had initiated foreclosure proceedings. Id. In essence, the plaintiff had elected a different remedy. Id. That is not the case here.

Defendants' other authorities are similarly distinguishable because unlike here, the contractual language expressly limited the period for the survival of remedies and/or representations to a certain number *1140 of months. See Union Carbide Corp. v. Thiokol Corp., 890 F.Supp. 1035 , 1049 (S.D. Ga. 1994) (stating that the R & Ws would survive the closing for 18 months); Pierson Sand & Gravel, Inc. v. Pierson Township , 851 F.Supp. 850 , 858-59 (W.D. Mich. 1994) (stating that the R & Ws would survive the closing date and remain in full force and effect thereafter for three years); GRT, Inc. v. Marathon GTF Tech., Ltd. , Civ. No. 5571-CS, 2011 WL 2682898 , at *1 (Del. Ch. July 11, 2011) (stating that the parties' representations and remedies would survive for one year and thereafter terminate). The language here, however, is not a temporal limitation on Plaintiffs' right to bring a cause of action. Rather, it defines the period during which RFC possesses remedies for liabilities and losses incurred resulting from the loans. That period exists for "the life of the loan."

Defendants' interpretation of Section A209(C) is also inconsistent with other provisions of the Client Guide that suggest the availability of remedies for as long as a loan exists. As such, Defendants' interpretation conflicts with the principle that contracts are to be construed as a whole, and with harmonization of all of the provisions in mind. See Chergosky , 463 N.W.2d at 525-26 . While a loan's existence typically ends upon foreclosure, RFC's remedies are not so strictly limited. For example, with respect to the right to repurchase, Section A210(B) states, "[ ]RFC may demand that a Client repurchase, and Client must repurchase, a Loan after foreclosure ...." (Client Guide § A201(B) ) (emphasis added). In addition, liquidation proceeds are one element factored into the calculation of a repurchase price, which is equal to the sum of: (1) the actual principal balance of the loan at the time of repurchase; (2) all interest and fees incurred in recovering on the loan; (3) a buy-out fee; (4) RFC's potential additional purchase amounts; (5) minus the amount of any proceeds realized by the owner of the loan upon the final liquidation of the loan. ( Id. § A210(B) ) (emphasis added).

Other language extends remedies to the latest of several events, including the date on which the loans are "paid in full." Pursuant to Section 205(C) ("Survival of Representations, Warranties, Covenants and Remedies"), RFC's remedies survive under the following circumstances:

Client's representations, warranties and covenants with respect to each Loan, and [ ]RFC's remedies for Client's breach of such representations, warranties and covenants with respect to each Loan will continue in full force and effect until the latest of: (i) the date such Loan has been irrevocably paid in full , (ii) the date the last limitations period for bringing claims against [ ]RFC or its successors or assigns concerning the subject matter of Client's representations and warranties with respect to such Loan expire under all applicable law, and (iii) the date any claim, suit or other proceeding against [ ]RFC or its successors or assigns concerning the subject matter of Client's representations, warranties and covenants with respect to such Loan have been conclusively determined or settled and all applicable appeals have been exhausted.

( Id. § 205(C) ) (emphasis added). Plaintiffs contend that because foreclosed loans have not been paid in full, RFC's remedies for losses related to these loans are not precluded. (Pls.' Opp'n at 55) (citing Client Guide § 205(C).) While Defendants assert that Section 205(C) is not uniformly applicable, and only addresses the consequences of a client's disqualification, suspension, or inactivation, (Defs.' Mem. at 70-71), even so, the provision contemplates RFC's available remedies in different ways.

*1141 In advocating their "life of the loans" construction, Defendants point to a section in the Client Guide which requires Clients to "keep the mortgage insurance coverage in effect for the entire life of the Loan." ( Id.; see Client Guide § F302(3).) Defendants contend that this language is synonymous with "before a loan is extinguished." ( Id. ) The Court does not take issue with that interpretation. But again, the question is not the meaning of the "life of the loans," but whether the plain language of Section A209(C) prohibits Plaintiffs from filing claims to effectuate their remedies only up to the date of foreclosure. It does not, which is entirely consistent with the other provisions of the Client Guide.

Finally, the Court agrees with Plaintiffs that Defendants' interpretation of Section A209(C) would be nonsensical, as it would require RFC to anticipate breaches, and could potentially allow Defendants to escape liability for the most defective loans. In response, Defendants argue that RFC could simply give notice of a potential breach during "a loan's life" and if the originator did not repurchase the loan, RFC could pursue its remedies after foreclosure. (Defs.' Reply at 32 [Doc. No. 3894].) The Court rejects this argument, which is at variance with Defendants' position that Plaintiffs' right to seek relief is precluded upon foreclosure. Furthermore, the Client Guide does not require RFC to anticipate breaches or, as discussed earlier, demand repurchase within any particular time period, if at all. (Client Guide § A210.) Instead, the Client Guide requires Defendants to notify RFC of breaches, ( id. )-a provision that would be nullified under Defendants' reading of Section A209(C). Again, courts are to avoid any contract interpretation that would render a provision meaningless. Chergosky , 463 N.W.2d at 526 .

The Court therefore finds that Section A209(C) provides that Plaintiffs' remedies, and their right to damages, extend to liquidated or foreclosed loans, subject to the applicable statutory limitations periods. Section A209(C) does not function as a contractually-agreed upon limitations period, nor does it preclude recovery for RFC's losses and liabilities on foreclosed or liquidated loans. The Court therefore denies Defendants' motion for summary judgment on this issue and grants summary judgment to Plaintiffs that their remedies extend to foreclosed and liquidated loans.

3. Recovery for Claims Released in Bankruptcy

Both parties move for summary judgment regarding whether Plaintiffs may recover for claims that RFC released in bankruptcy. Defendants argue that RFC's indemnity claim is barred to the extent that it seeks recovery for more than its actual losses, claiming that RFC and its bankruptcy estate were released from all liabilities through bankruptcy. (Defs.' Mem. at 87; Defs.' Opp'n at 14-16.) They acknowledge that certain Defendants previously raised this argument in a motion to dismiss, which the Court denied. (Defs.' Mem. at 87-88.) But, they contend that (1) this Court was wrong, and (2) new evidence further supports their position. ( Id. at 88.)

Plaintiffs argue that this Court has already rejected Defendants' argument, finding instead that " 'the plain language of the Bankruptcy Court's Confirmation Order and the Chapter 11 Plan demonstrates that the claims at issue were not extinguished upon confirmation of the Plan.' " (Pls.' Opp'n at 50) (quoting June 16, 2015 Am. Order at 18 [Doc. No. 537] ). They contend that there is no "new evidence" warranting a departure from the prior ruling, ( id. at 51-52), and that Defendants *1142 would receive a windfall if RFC's bankruptcy insulated them from liability. (Pls.' Mem. at 43.)

As the parties correctly observe, in June 2015, the Court ruled on this very issue, in response to a motion to dismiss filed by Home Loan Center, one of the remaining Defendants, and Decision One Mortgage, which is no longer a party. ( See June 16, 2015 Am. Order at 16-22.) The Court incorporates that ruling herein by reference. In the June 2015 Order, the Court noted that although the estate of a debtor normally ceases to exist once a Chapter 11 plan is confirmed, this is not always true. ( Id. at 18-19) (citing United States v. Unger , 949 F.2d 231 , 233 (8th Cir. 1991) ). Courts have recognized that termination of a bankruptcy estate " 'is expressly subject to the terms and provisions of the confirmed plan, and that the confirmed plan need not state in explicit terms that the bankruptcy estate is to continue in existence.' " ( Id. ) (quoting In re Canton Jubilee, Inc. , 253 B.R. 770 , 776 (Bankr. E.D. Tex. 2000) (internal citations omitted); also citing Hillis Motors, Inc. v. Haw. Auto. Dealers' Ass'n , 997 F.2d 581 , 587 (9th Cir. 1993) ("The reversion of property from the estate to the debtor upon confirmation contained in 11 U.S.C. § 1141 (b) is explicitly subject to the provisions of the plan."); In re Ernst , 45 B.R. 700 , 702 (Bankr. D. Minn. 1985) ("All estate property is vested in the debtor at confirmation, except as the plan specifically provides otherwise. Accordingly, in the absence of a plan provision retaining property in an estate, the estate ceases to exist.") ).)

In the June 2015 Order, this Court found that the express language of the Bankruptcy Court's Confirmation Order and Chapter 11 Plan demonstrated that the claims at issue were not extinguished upon confirmation of the Plan. ( Id. at 16-22.) Because "[p]rinciples of contract interpretation apply to the interpretation of a reorganization plan," courts consider the legal implications from the face of the plan. OneBeacon Am. Ins. Co. v. A.P.I., Inc., No. 06-cv-167 (JNE), 2006 WL 1473004 , at *5 (D. Minn. May 25, 2006) (citation omitted). Here, the Confirmation Order and the Plan contemplated the very relief that Plaintiffs seek in this consolidated action. It authorized the creation of a "Liquidating Trust," i.e., the Rescap Liquidating Trust, into which RFC was to transfer and assign its assets, and they preserved the Liquidating Trust's (and Estates') causes of action: 21

48. Preservation of Causes of Action. Unless any Causes of Action against an Entity are expressly waived , relinquished, exculpated, released, compromised, or settled in the Plan ... the Borrower Claims Trust with respect to Borrower-Related Causes of Action, and the Liquidating Trust with respect to all other Causes of Action, shall retain and may enforce all rights to commence and pursue, as appropriate, any and all Causes of Action of the Debtors or the Debtors' Estates .... The Liquidating Trustees and the Borrower Claims Trustee, as applicable, are deemed representatives of the Estates for the purpose of prosecuting, as applicable, the Liquidating Trust Causes of Action , Borrower-Related Causes of Action and any objections to Claims pursuant to section 1123(b)(3)(B) of the Bankruptcy Code.

*1143 (Scheck Decl., Ex. 32 (Bankr. Confirm. Order ¶ 48); id. , App. 1 (Bankr. Plan at 74-75) ) (emphases added).

Although cited, but not quoted, in the June 2015 Order, the language of the Plan contains additional language-in bold-face type-that unequivocally preserves Rescap's right to indemnification for the claims at issue here:

The Liquidating Trust and the Borrower Claims Trust may pursue their respective Causes of Action, as appropriate, in accordance with the best interests of the respective Trust. No Entity may rely on the absence of a specific reference in the Plan or the Disclosure Statement to any Cause of Action against such Entity as any indication that the Liquidating Trust or Borrower Claims Trust, as the case may be, will not pursue any and all available Causes of Action against such Entity. The Liquidating Trust and the Borrower Claims Trust expressly reserve all rights to prosecute any and all Causes of Action against any Entity, except as otherwise expressly provided in the Plan. Unless any Causes of Action against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or a Bankruptcy Court order, the Liquidating Trust expressly reserves all Causes of Action other than Borrower-Related Causes of Action, and the Borrower Claims Trust expressly reserves all Borrower-Related Causes of Action, for later adjudication, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches, shall apply to such Causes of Action upon, after, or as a consequence of the Confirmation or Consummation. For the avoidance of doubt, the Plan does not release any Causes of Action that the Plan Proponents or the Liquidating Trust or Borrower Claims Trust have or may have now or in the future against any Entity other than the Released Parties (and only in their capacity as Released Parties). The Liquidating Trustees and the Borrower Claims Trustee, as applicable, are deemed representatives of the Estates for the purpose of prosecuting, as applicable, the Liquidating Trust Causes of Action, Borrower-Related Causes of Action and any objections to Claims pursuant to section 1123(b)(3)(B) of the Bankruptcy Code.

Except as otherwise provided in the Plan or in a Final Order, the Liquidating Trust reserves and shall retain Causes of Action notwithstanding the rejection of any Executory Contract or Unexpired Lease during the Chapter 11 Cases or pursuant to the Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, any Causes of Action that the Debtors may hold against any Entity that is not released under the Plan or a separate settlement approved by Final Order shall vest in the Borrower Claims Trust with respect to Borrower-Related Causes of Action and in the Liquidating Trust with respect to all other Causes of Action. The Liquidating Trust and Borrower Claims Trust, as the case may be, through their respective authorized agents or representatives, shall retain and may exclusively enforce any and all such Causes of Action. The Liquidating Trust has the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any Causes of Action other than Borrower-Related Causes of Action, or to decline to do any of the foregoing, without the consent or approval of any third party or any further notice to or *1144 action, order, or approval of the Bankruptcy Court. The Borrower Claims Trust has the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any Borrower-Related Causes of Action, or to decline to do any of the foregoing, without the consent or approval of any third party or any further notice to or action, order, or approval of the Bankruptcy Court.

( Id. , App. 1 (Bankr. Plan at 75) ) (emphases in original). Claims against the originating lenders were not waived or otherwise excepted from these provisions of the Confirmation Order and Plan.

In the Court's prior decision, it found that only the debtors' personal liability was discharged, citing the Confirmation Order's discharge provision:

42. Discharge. Except as expressly provided in the Plan or the Confirmation Order, (a) each holder (as well as any trustees and agents on behalf of each holder) of a Claim against or Equity Interest in a Debtor shall be deemed to have forever waived, released and discharged the Debtors , to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Equity Interests, rights and liabilities that arose prior to the Effective Date and (b) all such holders shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any discharged Claim against or terminated Equity Interest in the Debtors .

(June 16, 2015 Am. Order at 19) (quoting Bankr. Confirm. Order ¶ 42) (emphases added).

While Defendants argued then, as now, that the Allowed Claims were discharged, the creditors received "Units" in exchange for the allowed claims, which entitle them to receive a pro rata share of recoveries that the Liquidating Trust obtains on their claims, and the Liquidating Trust is obligated to maximize those recoveries. ( Id. at 20) (referring to the Plan and the Liquidating Trust Agreement). Thus, the Court concluded in its prior decision that the liabilities underlying RFC's indemnity claims were not extinguished by virtue of RFC's bankruptcy. ( Id. )

Now, three years later, Defendants seek to "revisit" this ruling, arguing that the Court was "in error." (Defs.' Mem. at 88.) Defendants refer to "new evidence," and invoke previously cited legal authority in support of their position. ( Id. at 87-89.) The Court finds no basis to alter its prior decision. Given the clear language of the Confirmation Order and Plan, there is no need to consult extrinsic evidence. 22 The *1145 plain language of the provisions for "Preservation of Causes of Action" found in the Confirmation Order and Plan expressly grant the Liquidating Trust the right to bring causes of action such as the instant cases. (Scheck Decl., Ex. 32 (Bankr. Confirm. Order ¶ 48); id. , App. 1 (Bankr. Plan at 74-75).)

As to legal authority, Defendants again rely on some of the same cases that this Court distinguished in its earlier ruling. ( See Defs.' Mem. at 89) (citing Trapp v. R-Vec Corp , 359 N.W.2d 323 , 328 (Minn. Ct. App. 1984) ; Bank of India v. Trendi Sportswear, Inc. , No. 89 CIV.5996 JSM, 2002 WL 84631 , at *1-4 (S.D.N.Y. Jan. 18, 2002) ). The Court previously found Trapp distinguishable because the claims in that case were not discharged by the Bankruptcy Court's Confirmation Order. (June 16, 2015 Am. Order at 19-20) (citing 359 N.W.2d at 328 ). And the Court distinguished Bank of India because, unlike here, there was no contractual indemnification agreement. ( Id. at 20) (citing 2002 WL 84631 , at *1-4 ). Defendants now also cite Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp. , 418 F.3d 168 , 179-80 (2d Cir. 2005), but there, the court found against the plaintiff because it had not incurred the fees for which it claimed indemnification.

Again, while the estate of a debtor typically ceases to exist once a Chapter 11 plan is confirmed, the termination of a bankruptcy estate is subject to the terms and provisions of the confirmed plan. The language of confirmation orders and bankruptcy plans will obviously differ from case to case. As this Court has again explained, the applicable language in this case did not extinguish the Allowed Claims themselves or Defendants' obligation to indemnify Plaintiffs for them. Accordingly, the Court reaffirms its June 2015 decision and grants summary judgment to Plaintiffs and denies summary judgment to Defendants.

4. Sampling

Earlier in this consolidated action, the Court issued a preliminary ruling on the use of loan sampling as a means for Plaintiff to initially make their case for liability and damages. (April 16, 2015 Order [Doc. No. 374].) Plaintiffs had sought an order in limine approving their proposed sampling methodology to determine a breach rate for a group of loans sold by Defendants in 23 cases where the total number of loans exceeded 500 in an individual case. ( Id. at 3.) Plaintiffs described the sampling protocol that their expert, Dr. Karl Snow, proposed to utilize in order to extrapolate breach rates to the population from which a given sample was drawn. ( Id. ) (citing Snow Decl. ¶¶ 37-41 [Doc. No. 157-11] ).)

Because the Court found that early decisions on sampling issues would streamline the administration of these complex cases, it granted the motion in part and denied it without prejudice in part, holding that: (1) Dr. Snow was a qualified expert witness with respect to the selection and construction of RFC's proposed samples, and the extrapolation of a breach rate from those samples to the populations from which they were drawn; (2) subject to the reservation of Defendants' rights, the sampling *1146 protocol set forth in Dr. Snow's declaration was scientifically valid and admissible for the purpose of identifying a random sample of loans from the population of loans at issue in each case; and (3) Defendants agreed that they would not challenge the proposition that a 150-loan sample is sufficiently large to identify a breach rate with a margin of error at the 95% confidence level of no more than +/-8 percentage points for binary questions. ( Id. at 11.) To the extent that Plaintiffs sought further early Daubert or admissibility rulings, the Court denied the motion without prejudice. ( Id. ) Dr. Snow has since completed his sampling protocol and issued an opinion. Defendants seek to preclude that opinion in a Daubert motion that the Court will address in a separate ruling.

Plaintiffs and Defendants have also filed cross summary judgment motions on the question of whether Plaintiffs may use loan sampling as a method of proof. Defendants seek to preclude the use of statistical sampling to establish liability for loans outside of the sample population. (Defs.' Mem. at 85.) They assert that Client Guide Sections A202 and A212 require RFC to establish liability on a loan-by-loan basis, ( id. ), consistent with a "judicial tide" of RMBS case law against the use of sampling, ( id. at 86-87; Defs.' Reply at 39). In addition, Defendants take issue with the methodology of Plaintiffs' expert Dr. Karl Snow, arguing that his opinion is impermissibly speculative. ( Id. at 86-87.)

Plaintiffs disagree. In their affirmative motion, they ask that the Court enter summary judgment holding that RFC may prove its breach of contract and indemnification claims using statistical sampling and need not re-underwrite each at-issue loan. (Pls.' Mem. at 46.) They argue that the Client Guide does not limit how they may prove breaches. (Pls.' Opp'n at 63.) Rather, they argue, it permits them to exercise any remedy outlined in the Client Guide or permitted by law. ( Id. ) (citing Client Guide § A209(A).) Plaintiffs also cite legal authority approving the use of sampling as a means of establishing liability in RMBS litigation. ( Id. ) Furthermore, they argue that as a practical matter, sampling is necessary, because re-underwriting each at-issue loan and offering loan-by-loan proof would be unmanageable, if not impossible, for the parties, the jury, and the Court. (Pls.' Mem. at 49-51.)

As a general matter, statistical sampling is a commonly used and accepted means of assembling and analyzing data, particularly in complex litigation. The U.S. Supreme Court has noted, "A representative or statistical sample, like all evidence, is a means to establish or defend against liability," and "is used in various substantive realms of the law." Tyson Foods, Inc. v. Bouaphakeo , --- U.S. ----, 136 S.Ct. 1036 , 1046, 194 L.Ed.2d 124 (2016). The Eighth Circuit has likewise approved the use of sampling methodology as a means of establishing breach and causation in breach of contract litigation. See Marvin Lumber & Cedar Co. v. PPG Indus., Inc. , 401 F.3d 901 , 916 (8th Cir. 2005). In litigation involving excess insurance indemnification, this Court has stated that the question of the reasonableness of underlying settlements could also be demonstrated by expert sampling of a statistically significant number of claims files. UnitedHealth Group Inc. v. Columbia Cas. Co., No. 05-cv-1289 (PJS/SRN), 2010 WL 11537514 , at *25 (D. Minn. Aug. 10, 2010).

Defendants cite legal authority for the proposition that there is a "clear trend" against permitting the use of statistical sampling in RMBS cases. (Defs.' Opp'n at 51-52.) The Court disagrees with the notion that there is any such "trend." Rather, the question of whether sampling *1147 is permitted frequently turns on the scope of remedies available under the parties' governing agreement. For instance, several of Defendants' cases involve the more limited question of whether statistical sampling is an acceptable method of proof where the parties' agreements provide for a sole remedy. See Homeward Residential, Inc. v. Sand Canyon Corp. , No. 12 Civ. 5067 (JFK), 2017 WL 5256760 , at *7 (S.D.N.Y. Nov. 13, 2017) (denying pre-discovery sampling motion because sole remedy provision required proof of notice or discovery of breaches); Royal Park Invs. v. HSBC Bank USA, Nat'l Ass'n , No. 14-CV-08175 (LGS) (SN), 2017 WL 945099 , at *5 (S.D.N.Y. Mar. 10, 2017) (involving sole remedies of cure and repurchase); MASTR Adjustable Rate Mortgs. Tr. 2006-OA2 v. UBS Real Estate Sec. Inc. , No. 12-cv-7322 (PKC), 2015 WL 764665 , at *11 (S.D.N.Y. Jan. 9, 2015) ("[M]ost significant, the PSAs expressly provide[ ] that cure or repurchase are the 'sole remedies,' and thus, they foreclose the 'pervasive breach' theory."); W & S Life Ins. Co. v. Bank of N.Y. Mellon, No. A1302490, 2017 WL 3392855 (Ohio Ct. C.P. Aug. 4, 2017) (finding that sampling could not establish the discovery of breaches, which was required by the sole remedy provisions of the controlling agreement). Given that the Client Guide does not limit Plaintiffs to a sole remedy, these cases are not persuasive.

Moreover, as Plaintiffs observe, statistical sampling has been approved in numerous cases involving large numbers of mortgage loans. See, e.g., Deutsche Bank Nat'l Tr. Co. v. Morgan Stanley Mortg. Capital Holdings LLC , 289 F.Supp.3d 484 , 504 (S.D.N.Y. 2018) ("Here, Deutsche Bank is permitted to seek damages on both the R & W and Notice Claims, and statistical sampling is an entirely appropriate method of attempting to prove both liability and damages."); Assured Guar. Mun. Corp. v. Flagstar Bank, FSB , 920 F.Supp.2d 475 , 512 (S.D.N.Y. 2013) ("Sampling is a widely accepted method of proof in cases brought under New York law, including cases relating to RMBS and involving repurchase claims"); Order Granting Pls.' Mot. in Limine Permitting Use of Statistical Sampling, In re Residential Capital, LLC , No. 14-07900-mg. [Bankr. Doc. No. 56 at 3-4] (Bankr. S.D.N.Y. Jan. 13, 2015) (Glenn, B.J.) (stating that statistical sampling and calculation of breach rates are commonly used methodologies in RMBS litigation, as sampling followed by extrapolation "permits cases like these to be efficiently litigated in a cost-effective manner without compromising the fairness of the results"); Nat'l Credit Union Admin Bd. v. RBS Sec. Inc. , No. 11-2340-JWL, 2014 WL 1745448 , at *5 (D. Kan. Apr. 30, 2014) (approving the use of expert sampling methodology); Syncora Guarantee Inc. v. EMC Mortg. Corp. , No. 09 Civ. 3106 (PAC), 2011 WL 1135007 , at *1, *6 n.4 (S.D.N.Y. Mar. 25, 2011) (permitting plaintiff to seek pool-wide remedy using sampling and extrapolation for repurchase claims); see also Nomura Holding , 873 F.3d 85 (upholding an $806 million bench trial judgment involving use of statistical sampling in RMBS case); Deutsche Bank Nat'l Tr. Co. v. WMC Mortg., LLC , No. 3:12-cv-933 (CSH), 2014 WL 3824333 , at *9 (D. Conn. Aug. 4, 2014) (stating that statistical sampling, in principle, "is an acceptable way of proving liability and damages in an RMBS case").

Even in one of Defendants' cited cases, BlackRock Allocation Target Shares v. Wells Fargo Bank, N.A , No. 14-cv-9371 (KPF) (SN), 2017 WL 953550 , at *5 (S.D.N.Y. Mar. 10, 2017), although the court decided that the expense and burden of sampling was not proportional to the *1148 needs of that case, 23 it nonetheless observed that "statistical sampling is an accepted method of proving liability in this District, 'including in cases relating to RMBS and involving repurchase claims.' " 24 Id. (citations omitted).

Defendants criticize Plaintiffs' legal authority as "easily distinguished"-referring simply to "certain RMBS cases in which sampling was allowed," without actually identifying the purportedly inapposite cases by name. (Defs.' Opp'n at 51.) They contend that unlike the facts here, certain of Plaintiffs' cited cases concerned pool-wide claims against aggregators and sponsors of RMBS, in which the plaintiffs asserted misrepresentations of the overall characteristics of entire pools. ( Id. ) Defendants appear to argue this case does not involve such broad claims, therefore, statistical sampling is ill-suited and improper. ( See id. )

But Plaintiffs assert that many of their cited cases approved the use of sampling where the claims were not pool-wide claims against RMBS aggregators or sponsors. 25 (Pls.' Reply at 26 [Doc. No. 3909].)

*1149 Moreover, the Court agrees with Plaintiffs that the relevant distinction in the case law is not between pool-wide and loan-by-loan cases, but between cases in which the governing agreement includes a sole remedy provision and those that do not, as discussed above. As noted, in cases involving sole remedy provisions, such as repurchase, courts have found a pervasive breach theory foreclosed, often due to repurchase notice and demand provisions. See, e.g., Homeward Residential , 2017 WL 5256760 , at *7. But here, the Client Guide's repurchase provision does not require RFC to even make a repurchase demand, (Client Guide § A210), nor does it require RFC to give notice of litigation that might trigger an originating lender's indemnification obligations. ( Id. § A212.) And, perhaps most importantly, the Client Guide does not limit Plaintiffs' remedies to a single type. To the contrary, it contemplates wide-ranging relief:

[ ]RFC may exercise any remedy outlined in this Client Guide or as allowed by law or in equity. [ ]RFC's exercise of one or more remedies in connection with a particular Event of Default will not prevent it from exercising:

• One or more other remedies in connection with the same Event of Default

• Any other rights which it may have at law or in equity.

(Id. § A209.)

Defendants highlight certain singular nouns in Sections A202 and A212 as evidence that the Client Guide requires loan-by-loan proof to establish liability. (Defs.' Mem. at 85-86.) For example, they point to references to "each Loan" in A202:

Each of the Loans delivered and sold to [ ]RFC meets the applicable program terms and criteria set forth in this Client Guide. All information relating to each Loan delivered and sold to [ ]RFC is true, complete and accurate .... The Client is in compliance with, and has taken all necessary actions to ensure that each Loan is in compliance with all representations, warranties and requirements contained in this Client Guide.

(Client Guide § A202) (emphases added). Although other Courts have found that the usage of singular nouns requires loan-by-loan proof, see, e.g., Homeward Residential , 2017 WL 5256760 , at *7, this Court is not persuaded. The "each Loan" language in the Client Guide does not state that Plaintiffs must prove breaches loan by loan. Rather, the Section A202 language quoted above, for example, requires Defendants to make their representations loan by loan. Defendants identify no Client Guide provisions that expressly require Plaintiffs to prove liability loan by loan.

The Court in Deutsche Bank , 289 F.Supp.3d at 506 , rejected this same argument based on the use of singular nouns in the parties' contract. There, as here, the governing contract contained no language requiring the party providing notice to specifically identify or offer proof as to each and every loan subject to repurchase. Id. Moreover, here, Defendants' actual knowledge of breaches is irrelevant because the Client Guide obliged originating lenders to assume liability for any misrepresentations or breaches, regardless of their knowledge or RFC's knowledge. (Client Guide § A200.)

Moreover, as Plaintiffs note, even if Plaintiffs were required to prove liability *1150 on a loan-by-loan basis, two courts have recently suggested that sampling is one means by which to do so. ( See Scheck Decl., Ex. 64 (Mar. 8, 2018 Lehman Hr'g Tr. at 78) (stating that loan-by-loan proof is required, "either directly or through a sound extrapolation methodology"); Deutsche Bank , 289 F.Supp.3d at 505 (finding statistical sampling consistent with the plaintiff's repurchase obligations under the parties' agreement, as it "is a well-established and scientifically sound method of inferring (to varying degrees of certainty) how many individual loans in the pool contain material breaches"). The Court in Assured Guaranty similarly stated:

The very purpose of creating a representative sample of sufficient size is so that, despite the unique characteristics of the individual members populating the underlying pool, the sample is nonetheless reflective of the proportion of the individual members in the entire pool exhibiting any given characteristic.

920 F.Supp.2d at 512 .

The use of sampling evidence here is particularly important for another reason. Establishing liability and damages in this case without the use of sampling would be unmanageable. As noted in Tyson Foods , "[i]n many cases, a representative sample is 'the only practicable means to collect and present relevant data' establishing a defendant's liability." 136 S.Ct. at 1046 (quoting Complex Litigation § 11.493, p. 102 (4th ed. 2004) ). Discussing the repurchase protocol and whether individualized proof was required in a case involving numerous loans, the court in Syncora stated:

The repurchase protocol is a low-powered sanction for bad mortgages that slip through the cracks. It is a narrow remedy ("onesies and twosies") that is appropriate for individualized breaches and designed to facilitate an ongoing information exchange among the parties. This is not what is alleged here. Here, Syncora alleges massive misleading and disruption of any meaningful change by distorting the truth. The futility of applying an individualized remedy to allegedly widespread misrepresentations is evident in the fact that, of the 1,300 loans actually submitted under the repurchase protocol, EMC has remedied only 20. This .015% success rate does not bode well for the efficiency of employing the repurchase protocol for a generalized claim of breach. Accordingly, EMC cannot reasonably expect the Court to examine each of the 9,871 transactions to determine whether there has been a breach, with the sole remedy of putting them back one by one. This transaction was put together in days and months. It is now in its second year of litigation.

2011 WL 1135007 , at *6 n.4.

Plaintiffs note that when they initially moved to approve the use of statistical sampling in February 2015, the at-issue loan population consisted of nearly 90,000 loans. (Pls.' Reply at 28.) Although sampling reduced that number by almost 85%, Plaintiffs claim that re-underwriting the remaining 14,000 loans "required multiple vendors, experts, and attorneys, and hundreds of subpoenas, over a period of years." ( Id. ) Defendants minimize the proof required for the approximately 7,000 loans pending as of June 2018, claiming that Plaintiffs "exaggerate[ ]" the difficulties of re-underwriting them. (Defs.' Opp'n at 52.) They argue that the sample sizes here "pale in comparison" to sample sizes in some RMBS cases. ( Id. ) (citing Fed. Hous. Fin. Agency v. JPMorgan Chase , No. 11-cv-6188(DLC), 2012 WL 6000885 , at *5 (S.D.N.Y. Dec. 3, 2012) (sample size included more than 40,000 loans, with 100 *1151 loans from each of 427 securitizations across 15 cases); MBIA Ins. Corp. v. Countrywide Home Loans, Inc. , No. 602825/08, 30 Misc.3d 1201 (A), 2010 WL 5186702 (N.Y. Sup. Ct. Dec. 22, 2010) (sample of 6,000 loans, with 400 loans from each of 15 securitizations); Nat'l Credit Union , 2014 WL 1745448 , at *1 (9,700 loans, with 100 loans from each of 97 loan groups) ). But even counsel for Home Loan Center acknowledged that the process of producing rebuttal re-underwriting disclosures for 150 loan samples was an "incredibly expensive and time-consuming task." (July 21, 2016 CMC Tr. at 75 [Doc. No. 1699].) If Plaintiffs were required to submit loan-by-loan re-underwriting evidence, Defendants would obviously be required to respond in kind. Such a process is not practicable for the parties, the jury, or the Court and is another reason why sampling evidence will be permitted.

Finally, Defendants argue that they are entitled to summary judgment because Dr. Snow's sampling methodology is merely speculative. (Defs.' Mem. at 85; Defs.' Opp'n at 49.) But "statistical sampling is not guesswork," and it is "not a shot in the dark." Deutsche Bank , 289 F.Supp.3d at 496 , 505 . Rather, "it is a well-established and scientifically sound method of inferring (to varying degrees of certainty) how many individual loans in the pool contain material breaches." Id. In their opposition to Plaintiffs' motion, Defendants point out alleged "flaws" in Dr. Snow's methodology which, they assert, render his opinion unreliable. (Defs.' Opp'n at 51.) Whether Dr. Snow's opinion is sufficiently reliable under Daubert is a different question, which will be addressed in the Court's separate ruling on Daubert motions.

For the reasons set forth above, Plaintiffs' motion for summary judgment on the issue of sampling is granted and Defendants' motion is denied.

F. Plaintiffs' Motions for Summary Judgment

Having addressed several of the common bases on which the parties seek dispositive relief, the Court now turns to Plaintiffs' remaining arguments for summary judgment, which include that (1) under the Client Guide, (a) they have sole discretion to determine breaches of Defendants' R & Ws, and (b) RFC has sole discretion to enter into, and determine the amounts of, the Settlements, such that Defendants may not challenge the Settlements as unreasonable; (2) Plaintiffs can recover RFC's liabilities, not just its actual losses; (3) Defendants' breaches caused RFC's origination-based losses and liabilities; and (4) Defendants' affirmative defenses, as well as their claim that RFC's actions or other "superseding and intervening factors" may have contributed to RFC's liabilities, fail.

1. The Scope of Plaintiffs' Sole Discretion under the Client Guide

a. The Scope of Plaintiffs' Sole Discretion to Determine Breaches

Plaintiffs argue that, as a matter of law, the plain language of the Client Guide grants them the power to determine, in their sole discretion, whether any of the loans that Defendants sold to RFC breached the R & Ws of the Client Guide. (Pls.' Mem. at 9.) Plaintiffs argue that Defendants, as sophisticated business entities, well understood that they were bound by these determinations. ( Id. ) Plaintiffs primarily ground their arguments in the plain language of several provisions of the Client Guide. Most importantly, they point to Section 113(B), a provision that governs every section of the Client Guide:

*1152 Whenever any provision of this Client Guide contract requires [ ]RFC to make a determination of fact or a decision to act , or to permit, approve or deny another party's action such determination or decision shall be made in [ ] RFC's sole discretion .

(Client Guide § 113(B) (emphasis added).) Plaintiffs next point to Section A210, which envisions RFC's exercise of its sole discretion and provides inter alia , that

If [ ]RFC determines that an Event of Default has occurred with respect to a specific Loan, the Client agrees to repurchase the Loan and its servicing (if the Loan was sold servicing released) within 30 days of receiving a repurchase letter or other written notification from [ ]RFC.

...

Where [ ]RFC determines that repurchase of a Loan and/or the servicing is not appropriate, the Client shall pay [ ] RFC all losses, costs, and expenses incurred by [ ]RFC and/or the Loan's Servicer as a result of an Event of Default . This includes all reasonable attorneys' fees and other costs and expenses incurred in connection with enforcement efforts undertaken.

( Id. § A210(A) (emphasis added).) Section A208, in turn, provides that an "Event of Default" occurs, for instance, when

(2) The Client has breached any agreement outlined or incorporated by reference in the Client Contract or any other agreement between the Client and [ ]RFC.

(3) The Client breaches any of the representations, warranties or covenants set forth in this Client Guide , fails to perform its obligations under this Client Guide or the Program Documents, makes one or more misleading representations, warranties or covenants to [ ]RFC, or has failed to provide [RFC] with information in a timely manner, including information required under Regulation AB or any successor regulation, that is true, complete and accurate.

( Id. § A208) (emphasis added). Finally, Plaintiffs point to Section A212, which provides that

The Client shall indemnify [ ]RFC from all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments, and any other costs, fees and expenses resulting from any Event of Default . This includes, without limitation, liabilities arising from (i) any act or failure to act, (ii) any breach of warranty, obligation or representation contained in the Client Contract; [and] (iii) any claim, demand, defense or assertion against or involving [ ]RFC based on or resulting from such breach ....

(Id. § A212 (emphasis added).) 26

Plaintiffs argue that the plain meaning of these provisions grants them sole discretion to determine whether Events of Default, i.e., breaches, have occurred. More specifically, Plaintiffs argue that Section 113(B), titled "[ ]RFC's Sole Discretion," plainly grants them sole discretion to make a determination of fact, and that "Events of Default" are such determination of facts. Sections A210 and A212, Plaintiffs argue, then speak simply to the remedies that RFC is entitled to exercise once it makes a determination that an Event of Default has occurred. Plaintiffs *1153 acknowledge that such discretion cannot be exercised in bad faith. ( See June 19, 2018 Hr'g Tr. ("June 19 Hr'g Tr.") at 15 [Doc. No. 3940].)

Plaintiffs buttress their plain language argument with this Court's opinion in Residential Funding Co. v. Terrace Mortgage Co. ( Terrace ), 850 F.Supp.2d 961 (D. Minn. 2012), aff'd , 725 F.3d 910 ( Terrace II ) (8th Cir. 2013), as affirmed by the Eighth Circuit. In Terrace , this Court held that the plain language of the Client Guide-which had identical language to the relevant provisions here-gave RFC "the sole and essentially unreviewable authority to determine if a particular loan must be repurchased because it failed to meet the underwriting criteria in the Client Guide[ ]." 850 F.Supp.2d at 969 . The Eighth Circuit affirmed. Terrace II, 725 F.3d at 916 -18 . Thus, Plaintiffs argue, the plain language of the Client Guide, as already interpreted by this Court in Terrace , compels summary judgment in their favor on this issue.

Defendants disagree. They contend that the Client Guide only grants RFC the sole discretion to determine breaches when exercising a particular remedy-repurchase under Section A210. According to Defendants, " Terrace makes clear that Section A210 grants RFC discretion for a particular purpose: namely, 'to determine if a particular loan must be repurchased because it failed to meet the underwriting criteria provided in the Client Guides.' " (Defs.' Opp'n at 3) (quoting Terrace , 850 F.Supp.2d at 969 ). In other words, they concede that RFC has the power to determine, in its sole discretion, if a loan is in breach of a R & W, but only insofar as RFC seeks to have the originating bank repurchase that loan. ( See Defs.' Mem. at 2 (" Terrace affirmed RFC's discretion in a specific context (applying the Client Guide's repurchase protocol) to make a specific determination (whether loans breached the Guide) in connection with a specific remedy (repurchase).").) In all other circumstances, Defendants contend, RFC does not have sole discretion to determine breaches. (Defs.' Opp'n at 2-8.)

This Court disagrees with Defendants' strained reading of the Client Guide and the Terrace decisions. Based on the plain language of the contract the parties willingly signed, the Court concludes that the Client Guide grants RFC sole discretion to determine Events of Default in all circumstances, and that that discretion is derived from Section 113(B). In clear, unambiguous language, Section 113(B) grants RFC sole, unreviewable discretion to make determinations of fact. And as this Court held in Terrace , one such determination of fact involves declaring Events of Default. Indeed, in affirming this Court's Terrace decision, the Eighth Circuit held that "[t]he Client Guide gives [RFC] 'sole discretion' to determine whether an Event of Default has occurred." Terrace II , 725 F.3d at 916 .

Once that determination of fact has occurred, i.e., once RFC determines that an Event of Default has occurred, Sections A210 and A212 simply speak of remedies that RFC may exercise under the contract. For instance, Section A210 simply states that " If [ ]RFC determines that an Event of Default has occurred with respect to a specific Loan, the Client agrees to repurchase the Loan ...." (Client Guide § A210 (emphasis added).) Contrary to Defendants' contention, this section does not empower RFC with sole discretion. Rather, Section A210 presupposes that RFC has such power and then simply sets forth the clients' obligations once that discretion has been exercised. The source of the power is Section 113(B). Similarly, Section A212 speaks of a remedy that RFC may utilize after it has determined that an Event of *1154 Default has occurred. It provides that Defendants " shall indemnify [ ]RFC from all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments, and any other costs, fees and expenses resulting from any Event of Default ." ( Id. § A212) (emphasis added). Like Section A210, this provision does not empower RFC with sole discretion to make a determination of fact-it presupposes that RFC has that authority-an authority again derived from Section 113(B).

Dispelling any doubt about this interpretation, the Eighth Circuit essentially held as much in Terrace II . In a particularly relevant passage, the Eighth Circuit noted:

The Client Guide gives Residential "sole discretion" to determine whether an Event of Default has occurred, and Terrace agreed to buy back the loan if Residential determined as much. There is nothing ambiguous about this language.

Terrace II , 725 F.3d at 916 (internal citations omitted). In other words, as just described, Section 113(B) gives RFC sole discretion to determine breaches, and Defendants contractually agreed to certain remedies in the event that RFC made such determinations.

Admittedly, the Client Guide gives RFC considerable discretion to act and wide-ranging remedies. But as the Eighth Circuit has stated, Defendants here have "identifie[d] no ambiguity in the language of the contract which would permit us to look beyond its plain language." Id. The court in Syncora , 2011 WL 1135007 , at *5, addressed a similarly expansive contract, explaining that "[t]he Operative Documents grant especially broad rights and remedies to Syncora because, as the financial guarantor under an unconditional and irrevocable insurance policy, it bears the greatest loss if the loans underperform and the other parties break their contractual obligations." The contract here was one that several sophisticated entities willingly signed. And as poignantly stated by the Second Circuit, "in commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves." James Baird Co. v. Gimbel Bros. , 64 F.2d 344 , 346 (2d Cir. 1933).

b. The Scope of Plaintiffs' Sole Discretion to Make All Settlement Decisions

Plaintiffs next urge this Court to hold, as a matter of law, that the Client Guide "confer[s] upon RFC sole discretion to enter into the Settlements," such that "RFC's exercise of that discretion is not reviewable absent a showing [of] fraud, bad faith, or a grossly mistaken exercise of judgment," which they argue Defendants have failed to show. (Pls.' Mem. at 11.) They point out that Section A212 of the Client Guide provides that RFC "has the right to control any litigation or governmental proceeding related to a Loan, including but not limited to .... making settlement decisions ." (Client Guide § A212 (emphasis added).) And "making settlement decisions," according to Plaintiffs, is a "determination of fact or a decision to act" that Section 113(B) of the Client Guide empowers RFC to make in its "sole discretion." (Pls.' Mem. at 12.) Thus, Plaintiffs argue, Defendants may not challenge RFC's settlement decisions at all and Plaintiffs need not show that the Settlements were reasonable. ( Id. )

Defendants disagree. They contend that Plaintiffs misread the Client Guide, as the language of Section A212 merely "gives RFC 'the right to control' the litigation, including 'choosing defense counsel and making settlement decisions,' " (Defs.' Opp'n at 9), but in no way precludes Defendants *1155 from later challenging the reasonableness of a settlement pursuant to the principle of Minnesota law that "a party seeking indemnity for a pre-trial settlement must prove not only the existence of indemnifiable claims, but also the reasonableness of the settlement." ( Id. at 8).

This Court agrees with Defendants. The issue Plaintiffs present is again one of contract interpretation-a question of law-unless ambiguity exists. Trondson v. Janikula , 458 N.W.2d 679 , 681 (Minn. 1990). The contract language on which Plaintiffs rely provides that

Except for notices for reimbursement, [ ]RFC is not required to give Client notice of any litigation ... that may trigger indemnification obligations.... [ ]RFC has the right to control any litigation ... related to a Loan, including but not limited to choosing defense counsel and making settlement decisions .

(Client Guide § A212 (emphasis added) ). As relevant here, the import of this language is twofold. First, as Plaintiffs point out, ( see Pls.' Reply at 8-9), Defendants waived notice of any litigation that could trigger indemnification obligations of the type asserted here. Although no Minnesota precedent addressing notice in these precise circumstances has been called to this Court's attention, the general rule is that an indemnitee's duty, if any, to provide notice to an indemnitor is discerned from the express language of the indemnity provision. See United States v. Schwartz , 90 F.3d 1388 , 1392-93 (8th Cir. 1996) (applying Minnesota law and holding that indemnitee did not need to provide notice where contract language did not unambiguously require it); see also Fontenot v. Mesa Petroleum Co. , 791 F.2d 1207 , 1221 (5th Cir. 1986) ("Where the indemnity agreement does not require notice, the courts will not infer a notice requirement as a condition precedent to a right to recover on the indemnity contract."); Premier Corp. v. Econ. Research Analysts, Inc. , 578 F.2d 551 , 554 (4th Cir. 1978) (applying "the general rule that notice is unnecessary unless the contract of indemnity requires it"); Smithson v. Wolfe , No. C94-1015 MJM, 1999 WL 33656866 , at *4 (N.D. Iowa July 19, 1999) ("[T]he general rule is that an indemnitee is not required to provide notice ... to the indemnitor under an indemnification contract, unless the contract itself requires notification ...."). Here, the unambiguous terms of the indemnity contract provide that RFC did not need to notify Defendants of any litigation or proceeding that may trigger indemnification.

Second, the indemnity provision on which RFC relies gives RFC the sole discretion to enter into settlements that would trigger Defendants' duty to indemnify. The relevant language of Section A212 gave RFC the "right to control any litigation ... related to a Loan, including ... making settlement decisions." Interpreted in tandem with Section 113(B), this clause unambiguously gives RFC the power, and discretion, to control litigation, such that RFC need not consult with Defendants when making any litigation-related decisions, including whether to settle or actually litigate any claims related to a loan.

It is well-established in Minnesota, however, that a party seeking indemnity for a settlement must show that the settlement was reasonable. See, e.g., Brownsdale Coop. Ass'n v. Home Ins. Co. , 473 N.W.2d 339 , 342 (Minn. Ct. App. 1991) ("Although notice was not required, the settlement must be reasonable and entered in good faith to be enforceable."). Nothing in the Client Guide-and certainly nothing in the provision on which Plaintiffs rely-overrides this principle. While this Court finds that the Client Guide grants RFC

*1156 sole discretion to settle without notice to the indemnitor, the Client Guide does not grant RFC sole discretion to determine the reasonableness of the Settlements. Accordingly, as the party seeking indemnity, RFC has the burden of proving that the Settlements were reasonable.

Plaintiffs argue that, even if they do not have sole discretion to determine the reasonableness of the Settlements, this Court should hold that no reasonable juror could find otherwise and that, therefore, the Settlements were reasonable as a matter of law. ( See Pls.' Mem. at 15.) Plaintiffs argue that the Settlements "meet the standard for approval under Minnesota law, which asks whether a reasonably prudent person would have entered into the settlements based upon the strengths and weaknesses of the underlying merits." ( Id. ) Defendants disagree, contending that their rebuttal of Plaintiffs' experts "raise triable issues of fact as to whether RFC can meet its burden of proving reasonableness." (Defs.' Opp'n at 11.)

In his opinion on the reasonableness of RFC's Settlements, Plaintiffs' expert Donald Hawthorne describes RFC's business model, the underlying litigation, the Settlements, and RFC's bankruptcy. (Scheck Decl., Ex. 19 (Corr. Hawthorne Rpt. ¶¶ 16-29, 463).) Among other things, in formulating his opinion, Hawthorne evaluates RFC's representations that gave rise to liability, the relative strengths and weaknesses of the underlying claims and defenses, the cost of litigating the underlying claims, various settlement benchmarks in similar cases, and the settling parties' good faith in reaching the Settlements. ( See id. ¶¶ 164-462.) Hawthorne notes that the Settlements for which RFC seeks recovery here were "the product of arms-length negotiation and mediation," and were "approved as reasonable by the Bankruptcy Court." ( Id. ¶ 463.) Ultimately, he concludes at the end of his 236-page report that the Settlements were reasonable. ( Id. )

Defendants disagree. They dispute Hawthorne's opinion on reasonableness, pointing in particular to RFC's settlement with MBIA. This settlement was "facially unreasonable," Defendants contend, because RFC settled with MBIA for allowed claims that exceeded MBIA's losses by over one billion dollars. (Defs.' Opp'n at 10-11; see also Defs.' Mem. at 78-85.) In addition to singling out the MBIA Settlement as one basis for denying summary judgment to Plaintiffs, Defendants affirmatively seek summary judgment that the MBIA Settlement was unreasonable and therefore not indemnifiable. (Defs.' Mem. at 78-85.)

In making their calculations challenging the reasonableness of the MBIA Settlement, Defendants include MBIA's separate settlements with GMAC Mortgage and ResCap LLC, in the total amount, arguing that they are related to MBIA's claims on the RFC-sponsored trusts. ( Id. at 80.) Asserting that Plaintiffs' experts "ignore that the MBIA [S]ettlement provided MBIA with allowed claims against ResCap and GMACM on the same RFC-sponsored trusts," Defendants contend that the total amount of allowed claims that MBIA obtained for RFC-sponsored trusts exceeded MBIA's total losses on those trusts. ( Id. at 81.) They maintain that MBIA essentially obtained a double recovery, rendering the MBIA Settlement facially unreasonable. ( Id. at 82) (citing Wirig v. Kinney Shoe Corp. , 461 N.W.2d 374 , 379 (Minn. 1990) ; Gronquist v. Olson , 242 Minn. 119 , 64 N.W.2d 159 , 164 (1954) ; Toyota-Lift of Minn., Inc. v. Am. Warehouse Sys., LLC , 868 N.W.2d 689 , 696 (Minn. Ct. App. 2015) ).

But Plaintiffs argue that MBIA's separate settlements with GMAC Mortgage and ResCap LLC are irrelevant to the *1157 reasonableness of the settlement between RFC and MBIA. (Pls.' Opp'n at 48-49.) And while Plaintiffs agree with the general principle that a party may not obtain a double recovery, they contend that Defendants' argument "ignore[s] that a bankruptcy creditor may recover from multiple entities (including debtors) for the same loss, provided that the creditor does not actually receive more than it is owed in total. ( Id. at 48) (citing Ivanhoe Bldg. & Loan Ass'n v. Orr , 295 U.S. 243 , 245, 55 S.Ct. 685 , 79 L.Ed. 1419 (1935) ; Bd. of Comm'rs v. Hurley , 169 F. 92 , 97 (8th Cir. 1909) ).

Defendants' critique of the reasonableness of the Settlements is not limited to the MBIA Settlement. They further contend that their experts raise several issues of fact as to whether the rest of the Settlements were reasonable. (Defs.' Opp'n at 11.)

"The test as to whether the settlement is reasonable and prudent is what a reasonably prudent person in the position of the defendant would have settled for on the merits of plaintiff's claim." Miller , 316 N.W.2d at 735 . This inquiry "involves a consideration of the facts bearing on the liability and damage aspects of plaintiff's claim, as well as the risks of going to trial." Id. ; see also Glass , 778 F.Supp. at 1084 (citing Miller , 316 N.W.2d at 735 ). Moreover, "[t]he party seeking indemnification need only show it could have been liable under the facts shown at trial not whether they would have been." Jackson , 803 F.Supp.2d at 1012 (emphasis removed) (citing Glass , 778 F.Supp. at 1083 ). Further, "in the context of a contractual duty to indemnify, ... when the parties have a written indemnity contract, 'the actual liability requirement [is] superfluous.' " Id. (quoting Glass , 778 F.Supp. at 1084 n.88 ) (granting summary judgment to party seeking indemnity, finding that the settlement was reasonable where facts "could have triggered" party's liability (emphasis removed) ).

On this record, the Court is unable to rule that the Settlements were reasonable as a matter of law. At oral argument, counsel for Defendants suggested that the parties could, before trial, submit evidence to the Court on the issue of reasonableness such that the question would not need to be decided by a jury. ( See June 19 Hr'g Tr. at 55-56 ("There is Minnesota authority saying that that factual decision can be made by the Court rather than by the jury. So I don't necessarily think it will be made by the jury, but we can brief that issue at a later time.").) While Plaintiffs' counsel expressed a willingness to "explore [that]," she raised potential Seventh Amendment issues with "having a sudden bench trial where we siphon off an issue that affects damages." ( Id. at 68.) The Court has asked for supplemental briefing on this issue. ( See Order for Suppl. Briefing [Doc. No. 4128].) Accordingly, the Court denies Plaintiffs' summary judgment motion on the reasonableness of the Settlements and denies Defendants' motion for summary judgment as to indemnification for the MBIA Settlement. The reasonableness of the MBIA Settlement and the Settlements generally is a fact issue and genuine issues of material fact remain in dispute.

2. The Scope of Plaintiffs' Potential Recovery in Indemnity

Plaintiffs next argue that this Court should grant summary judgment interpreting the Client Guide, as a matter of law, to provide that Plaintiffs may recover "(a) indemnity for RFC's liabilities, not just [its out-of-pocket] losses," or, in the alternative, "(b) all losses on breaching loans." (Pls.' Mem. at 15; see also Pls.' Reply at 9-15.) Each issue is addressed in turn.

*1158 a. Recovery in Indemnity for RFC's Losses and Liabilities (the Allowed Claims), Not Just Actual Losses Incurred

Plaintiffs first urge this Court to interpret the Client Guide to require Defendants to indemnify RFC for its "liabilities," which Plaintiffs define as "the claims agreed upon in the Settlements and allowed by the Bankruptcy Court," or the so-called "Allowed Claims," rather than only its out-of-pocket losses, i.e., what RFC distributed to its creditors. (Pls.' Mem. at 16.) Specifically, Plaintiffs contend that Section A212 expressly provides for indemnification from all "judgments," "liabilities," and "claim[s]" against or involving RFC-terms that all encompass the Allowed Claims. ( Id. at 16-18; see Pls.' Reply at 10-12.)

Defendants concede that the version of Section A212 that took effect in December of 2005 would require them to indemnify RFC for liabilities. 27 (Defs.' Opp'n at 12.) They argue, however, that the language in the pre-December 2005 Client Guide does not require them to indemnify for liabilities, as the earlier version of Section A212 provided for indemnity for only actual, out-of-pocket losses. ( Id. )

At the outset, this Court concludes, as a matter of law, that the post-December 2005 Client Guide requires Defendants to indemnify RFC for the liabilities as well as for out-of-pocket losses. In Minnesota, parties may contract for indemnity against losses suffered as well as for indemnity against liabilities incurred. See Johnson , 902 N.W.2d at 85 ("[C]aselaw distinguishes between a 'strict contract of indemnity against loss or damage' and indemnity 'against mere liability.' " (quoting Trapp , 359 N.W.2d at 327 ) ). "A party's use of certain terms can aid the determination of what type of indemnity was considered by the parties." Lindsey v. Jewels by Park Lane, Inc. , 205 F.3d 1087 , 1093 (8th Cir. 2000). Here, the post-December 2005 Client Guide states that:

The Client shall indemnify [ ]RFC from all losses , damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments , and any other costs, fees and expenses resulting from any Event of Default. This includes , without limitation, liabilities arising from (i) any act or failure to act, (ii) any breach of warranty, obligation or representation contained in the Client Contract; [and] (iii) any claim, demand, defense or assertion against or involving [ ]RFC based on or resulting from such breach .....

(Client Guide § A212 (emphasis added).)

This language provides for indemnification for the Allowed Claims in at least three ways. First, it expressly provides for indemnification "from all ... judgments." 28 Notably, the term "judgments"

*1159 is utilized in addition to the term "losses." And as Plaintiffs point out, ( see Pls.' Reply at 11-12), the Confirmation Order approving the Second Amended Plan, ( see Scheck Decl., Ex. 32 (Bankr. Confirm. Order) ), constitutes a final judgment. See United Student Aid Funds, Inc. v. Espinosa , 559 U.S. 260 , 269, 130 S.Ct. 1367 , 176 L.Ed.2d 158 (2010) (holding, in a Chapter 13 case, that the Bankruptcy Court's order confirming debtor's proposed plan was a final judgment for the purposes of appeal); see also In re Laing , 31 F.3d 1050 , 1051 (10th Cir. 1994) (holding that, for res judicata purposes, the debtor's "earlier confirmed Chapter 11 plan b[ound] him as a final judgment on the merits" even though the Chapter 11 bankruptcy was later converted to Chapter 7); Paul v. Monts , 906 F.2d 1468 , 1471 n.3 (10th Cir. 1990) ("[A] confirmed plan functions as a judgment with regard to those bound by the plan ...."). And, significantly, this final judgment set forth the Allowed Claims, which are, by definition, liabilities. See 11 U.S.C. § 101 (5)(A), (12) ; In re Tribune Media Co. , 552 B.R. 282 , 292 (Bankr. D. Del. 2016) ; In re Palisades at W. Paces Imaging Ctr., LLC , 501 B.R. 896 , 906 (Bankr. N.D. Ga. 2013). Accordingly, the plain language of the Client Guide requires Defendants to indemnify Plaintiffs for the Allowed Claims set out in the Plan.

Second, eliminating any doubt as to whether the post-December 2005 Client Guide provided for indemnity against liabilities, it expressly states that Defendants' obligation to indemnify RFC from "all losses, ... [and] judgments" includes, "without limitation, liabilities arising from ... (ii) any breach of warranty, obligation or representation contained the Client Contract Guide." (Client Guide § A212.) As described above, the Allowed Claims include, by definition, liabilities incurred.

And finally, the Client Guide provides that Defendants' indemnity obligations also extend to "liabilities arising from ... (iii) any claim , demand, defense or assertion against or involving [ ]RFC based on or resulting from such breach." ( Id. ) Under Minnesota law, where a contract provides for indemnification from a "claim" rather than just "loss" or "damage," it is one for indemnification against liabilities rather than simply losses. See Trapp , 359 N.W.2d at 327 ; see also Christy v. Menasha Corp. , 297 Minn. 334 , 211 N.W.2d 773 , 777 (1973), overruled on other grounds by Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc. , 281 N.W.2d 838 , 842 n. 4 (Minn. 1979) ("[An] agreement ... to indemnify not just against loss or damage but also against mere claims, ... a fortiori must be construed to be an indemnity agreement against accrued liability as well as against loss or damage."); Burns & McDonnell Eng'g Co. v. Torson Constr. Co. , 834 S.W.2d 755 , 758 (Mo. Ct. App. 1992) (holding contract provided for indemnity against liability where indemnitor agreed to indemnify against "claims," but also provided for indemnity against loss where indemnitor agreed to indemnify against "losses").

The Court reaches the same conclusion as to the pre-December 2005 Client Guide. In relevant part, Section A212 read as follows before the December 2005 amendment:

The Client shall indemnify [ ] RFC from all losses, damages, penalties, fines, forfeitures, court costs and reasonable attorneys' fees, judgments , and any other costs, fees and expenses resulting from any Event of Default. This includes any *1160 act or failure to act or any breach of warranty, obligation or representation contained in the Client Contract; or from any claim , demand, defense or assertion against or involving [ ]RFC based on or resulting from such breach or a breach of any representation, warranty or obligation made by [ ]RFC in reliance upon any warranty, obligation or representation made by the Client contained in the Client Contract.

(Scheck Decl., App. 1 (Evolution of Client Guide § A212).)

Plaintiffs argue that the above language covers indemnification for liabilities in two ways. (Pls.' Reply at 10-12.) First, they contend that the only grammatical reading of the clause is that Defendants would indemnify RFC " from all losses , damages ..., judgments ...; or from any claim ." ( Id. at 10-11.) And this reading, Plaintiffs contend, clearly distinguishes "losses" from "claims," i.e., liabilities. ( Id. ) Second, they argue, even the pre-December 2005 language included indemnification for "judgments," a term, as described above, that includes liabilities. ( Id. at 11-12.)

Defendants take a contrary view. First, they disagree with Plaintiffs' contention that the term "any claim" is distinct from the term "losses." (Defs.' Opp'n at 13.) Rather, they argue, "any claim" is merely a subset of "losses." ( Id. ) Second, and relatedly, they contend that Section A212 was amended in December of 2005 precisely to add indemnity for "liabilities," a term that is notably absent from the pre-December 2005 Client Guide, although they cite no factual evidence to support that contention. ( Id. at 12-14.)

In the beginning of this case, the Court considered the same arguments that the parties advance now, but in the context of a motion to dismiss. ( See June 16, 2015 Am. Order at 17.) At that juncture, the Court found the pre-December 2005 language to be "sufficiently ambiguous to prevent resolution of th[e] issue on a motion to dismiss" and thus permitted the parties to conduct discovery. ( See id. at 18.) Now, at the summary judgment stage, the parties again raise the issue, but alert the Court that they have no extrinsic evidence to present. ( See June 19 Hr'g Tr. at 156 (counsel for Defendants indicating that there was no extrinsic evidence); id. at 186 (same) ). Accordingly, the issue is one for the Court to determine as a matter of law. See Mervin v. Magney Const. Co. , 416 N.W.2d 121 , 123-24 (Minn. 1987) (holding that where there is no extrinsic evidence to aid in the interpretation of an ambiguous contract, the trial court "properly treated the construction and application of [the contract] as a question of law"); Turner , 276 N.W.2d at 66 (same).

The Court now concludes, as a matter of law, that the pre-December 2005 language includes indemnity for liabilities as well as for actual losses. First, Section A212 has always included indemnity for judgments as well as actual losses. As described above, indemnity for judgments necessarily encompasses the Allowed Claims in this case. Second, the language "the Client shall indemnify ... from all losses ...; or from any claim " seems clearly to distinguish losses from claims. Defendants' contrary interpretation-that "claim" is a subset of "losses"-is simply an ungrammatical construction, which this Court declines to adopt. See Brookfield Trade Ctr., Inc. v. Cty. of Ramsey , 584 N.W.2d 390 , 394 (Minn. 1998) (courts "will not construe the terms so as to lead to a harsh and absurd result").

This Court is similarly unpersuaded by Defendants' contention that the pre-December 2005 Guide did not cover liabilities because it did not expressly include that term. As described, the pre-December 2005 Guide included claims , which denote *1161 liability. To be sure, the contract was later amended to expressly include "liabilities," but this Court is persuaded this change only served to clarify the language rather than to materially alter the terms of the contract.

Likewise, this Court is unpersuaded by Defendants' argument that it must construe the provision against Plaintiffs because RFC drafted the contract. "[T]his rule has less application as between parties of equal bargaining power or sophistication." Re-Sols. Intermediaries, 2010 WL 1192030 , at *3. In fact, the Eighth Circuit has "refused to give a contra proferentem instruction even where one party supplied the form 'due to the relatively equal bargaining strengths of both parties and the fact that [the appellant] was represented by sophisticated legal counsel during the [contract formation]." Porous Media , 220 F.3d at 960 (quoting Terra Int'l, Inc. v. Miss. Chem. Corp. , 119 F.3d 688 , 692 (8th Cir. 1997). Although Defendants claim that the Client Guide was not a product of negotiation, ( see June 19 Hr'g Tr. at 160), "[a]n agreement between parties with business experience is not the product of unequal bargaining power." Alpha Sys. Integration, Inc. v. Silicon Graphics, Inc. , 646 N.W.2d 904 , 910 (Minn. Ct. App. 2002) (discussing claim of a contract of adhesion).

Here, it is beyond dispute that Plaintiffs and Defendants are sophisticated parties that enjoyed the benefit of counsel. See Terrace II , 725 F.3d at 917 (emphasizing, in similar case, that the contract "was a freely negotiated agreement between two sophisticated parties" and that Terrace "acknowledged that it is experienced regarding the transactions described in the Client Guide, had the opportunity to obtain advice from able counsel, and made its own independent decision to enter into the contract.").

Accordingly, this Court concludes, as a matter of law, that Section A212 of the Client Guide, both before and after the December 2005 amendment, covered indemnity from liabilities. Accordingly, it grants Plaintiffs' Motion for Summary Judgment on this issue.

Alternatively, this Court also holds that Plaintiffs are entitled to indemnity for liabilities under Section A202(II) of the Client Guide. Section A202(II), titled "Loan Securitization," provides that Defendants "recognize[d] that it [wa]s [ ]RFC's intent to securitize some or all of the Loans sold to [ ]RFC by [Defendants]," and "agree[d] to provide [ ]RFC with all such information concerning the [Defendants] generally ... as may be reasonably requested by [ ]RFC for inclusion in a prospectus or private placement memorandum published in connection with such securitization." (Client Guide § A202(II).) This provision further states that Defendants would "cooperate in a similar manner with [ ]RFC in connection with any whole Loan sale or other disposition of any Loan sold to [ ]RFC by [Defendants]." ( Id. ) Immediately after these provisions, Section A202(II) provides that Defendants "agree[d]" to

indemnify and hold [ ]RFC harmless from and against any loss, damage, ... reasonable attorneys' fees, judgment, ... or liability incurred by [ ]RFC as a result of any material misstatement in or omission from any information provided by the Client to [ ]RFC; or from any claim, demand, defense or assertion against or involving [ ]RFC based on or grounded upon, or resulting from such misstatement or omission or a breach of any representation, warranty or obligation made by [ ]RFC in reliance upon such misstatement or omission.

( Id. (emphases added).)

Plaintiffs argue that this provision has two separate clauses obligating Defendants *1162 to indemnify RFC for its liabilities. (Pls.' Mem. at 17.) First, Plaintiffs contend, Section A202(II) includes indemnification for "liability incurred," which encompasses the Allowed Claims. ( Id. ) Second, they again point to the words "claim," "demand," and "assertion," all which "denote[ ] indemnification of liability." ( Id. (citing Trapp , 359 N.W.2d at 327 ).)

Defendants do not dispute Plaintiffs' textual arguments. They dispute, however, that Section A202(II) applies to the facts of this case. (Defs.' Opp'n at 14.) Defendants contend that Plaintiffs' reliance on Section A202(II) is altogether misplaced, as that clause does not apply to indemnity for alleged breaches of loan-level R & Ws, but rather deals exclusively with Defendants' obligation to indemnify RFC for losses or liabilities associated with any misrepresentation/omission of information that Defendants were required to provide to RFC about themselves . ( Id. )

Defendants read Section A202(II) too narrowly. Here, the unambiguous language of Section A202(II) states that Defendants agreed to indemnify RFC for " any ... liability incurred by [ ]RFC as a result of any material misstatement in or omission from any information provided by [Defendants] to [ ]RFC." (Client Guide § A202(II).) Simply, the limitation Defendants advocate for is not present in the language of the contract. As Plaintiffs contend, " '[a]ny' is the broadest possible term." (Pls.' Reply at 10.) Indeed, as the Eighth Circuit has reasoned, "[u]nless 'any' does not mean any ... we see nothing equivocal about this provision." Harleysville , 716 F.3d at 458 (citing Webster's Third New International Dictionary 97 (1993) (defining "any" as "one, no matter what one").) Section A202(II) provides that Defendants would indemnify RFC for any claims or liabilities "incurred by [ ]RFC as a result of any material misstatement in or omission from any information provided by the Client to [ ]RFC," and thus presents an alternative avenue through which RFC may seek indemnity.

b. Recovery for All Losses

To avoid redundancy, the Court addresses this issue in the context of its discussion of Dr. Snow's proposed Breaching Loss Approach, infra , Section III.G.3. In accordance with that reasoning, Plaintiffs' summary judgment motion as to recovery of all losses resulting from Defendants' breaches is denied.

3. Causation

Plaintiffs next move for summary judgment on three issues related to causation. First, they ask this Court to "grant summary judgment interpreting the [Client] Guide , as a matter of law, to provide that Plaintiffs need only establish 'a causal connection' between Defendants' breaches and the liabilities and losses that RFC incurred in the Settlements"-or, in other words, that the legal standard for causation for indemnification under the Client Guide is "but for" cause rather than "proximate cause." (Pls.' Mem. at 27 (emphasis added).) Second, they ask this Court to hold, as a matter of law, that they have met their burden of proving "but for" causation, as "there is no genuine dispute that RFC's potential liability to the RMBS Trusts and Monolines, and thus the resulting Settlements, were caused by Defendants' underwriting breaches." 29 ( Id. ) Finally, they ask this Court to dismiss Defendants' "affirmative defenses that RFC's actions or other 'superseding and intervening factors' may *1163 have contributed to RFC's liabilities, because RFC need show only that Defendants' breaches were a 'but for' cause of those liabilities." ( Id. at 27-28.) Each issue is discussed below.

a. Applicable Legal Standard

As described, the Client Guide requires Defendants to indemnify RFC against, inter alia , losses and liabilities: " resulting from any Event of Default" or " arising from ... any breach of [R & Ws]," ( see Client Guide § A212 (emphasis added) ), or "incurred ... as a result of any material misstatement in or omission from any information provided by [Defendants] to [ ]RFC," ( id. , § A202(II) ). Plaintiffs argue that under Minnesota law, "each of these formulations-'as a result of,' 'resulting from,' and 'arising from'-is synonymous," and denotes a "but-for causal connection, not a proximate cause." (Pls.' Mem. at 28.) Accordingly, Plaintiffs argue, they need not prove that Defendants' breaches were the sole cause of RFC's losses and liabilities; rather, they need only prove that "Defendants' breaches were a contributing cause." ( Id. at 29.)

Defendants contend that "[i]n Minnesota, as elsewhere, it is black-letter law that a contract plaintiff must prove the defendant's breach proximately caused its damages," and that "nothing in the Client Guide displaces this bedrock rule." (Defs.' Opp'n at 31.) In the alternative, they contend that even if only a "causal connection" is needed under the contract, "something more than literal but-for causation is necessary to find that an injury 'arose out of' a particular event." ( Id. (quoting Capitol Indem. Corp. v. Ashanti , 28 F.Supp.3d 877 , 883 (D. Minn. 2014).) In any event, Defendants contend, "[t]he Court need not decide the precise test for causation, ... as RFC's motion fails under any conceivable standard." ( Id. at 32.)

At the outset, the Court underscores that its focus is on the narrow issue on which Plaintiffs moved for summary judgment-the causation standard under the Client Guide's indemnity provisions . Accordingly, as a preliminary matter, the Court rejects Defendants' contention that the common law breach of contract standard of proximate cause applies. Defendants generally conflate the causation requirement required for a breach of contract claim with the causation standard under the Client Guide's indemnity provisions. 30 "In contractual indemnity, liability is controlled by the provisions of the contract." N. Nat. Gas Co. v. Roth Packing Co. , 323 F.2d 922 , 929 (8th Cir. 1963). Indeed, "[w]here the parties have contracted to create duties that differ or extend beyond those established by general principles of law, and the terms of the contract are not otherwise unenforceable, the parties must abide by the contractual duties created." Grand Trunk W. R.R. , 686 N.W.2d at 761 . Terms of those contract provisions must "be given their ordinary meaning, as well as the interpretations adopted in prior cases." Ritrama , 796 F.3d at 969 (quoting Boedigheimer, 178 N.W.2d at 613 ).

*1164 Here, the Client Guide provides that Defendants agreed to indemnify RFC for losses and liabilities "resulting from," "arising from," or that were "a result of" Events of Default or breaches of R & Ws. In Minnesota, all of these phrases have been construed to be synonymous. In Mork Clinic v. Fireman's Fund Ins. Co. , the Minnesota Court of Appeals held that " '[r]esulting from' has the same ordinary and plain meaning as 'arising out of.' " 575 N.W.2d 598 , 602 (Minn. Ct. App. 1998) (citing American Heritage College Dictionary 73 (3d ed. 1997) ); see also SECURA Supreme Ins. Co. v. M.S.M. , 755 N.W.2d 320 , 326 (Minn. Ct. App. 2008) (holding that the court could "derive no principled basis on which to treat the[ ] two phrases differently"). The Eighth Circuit, although it did not hold so explicitly, has reached a similar conclusion. In Allstate Insurance Co. v. Steele , the Eighth Circuit interpreted the phrase "resulting from" contained in an insurance policy by relying on Minnesota case law construing the phrase "arising out of." 74 F.3d 878 , 881 (8th Cir. 1996).

The phrase "arising out of," in turn, has been broadly construed by Minnesota courts to "mean causally connected with, not 'proximately caused by.' " Faber v. Roelofs , 311 Minn. 428 , 250 N.W.2d 817 , 822 (1977) ; see also Capitol Indem. Corp. , 28 F.Supp.3d at 883 . Indeed, the phrase " '[a]rising out of' generally means 'originating from,' 'growing out of,' or 'flowing from.' " Dougherty v. State Farm Mut. Ins. Co. , 699 N.W.2d 741 , 744 (Minn. 2005). Although the Court notes that most of the cases interpreting these phrases examine insurance policies, it can glean no principled reason why this contractual indemnification language would be subject to a different interpretation. In fact, as some courts have noted, "the rules of contractual indemnity are derived primarily from insurance and construction cases." Grand Trunk W. R.R. , 686 N.W.2d at 762 . 31

Turning to the contract terms, the Court holds, as a matter of law, that to prevail on its contractual indemnity claim, Plaintiffs must show that the losses and liabilities for which they seek indemnity have a "cause and result relationship" with, Faber , 250 N.W.2d at 822 , or a "causal connection" to, Ross v. City of Minneapolis , 408 N.W.2d 910 , 912 (Minn. Ct. App. 1987), Defendants' breaches of R & Ws or Events of Default. This does not require that Plaintiffs show that any individual Defendant's breaches were the sole cause of Plaintiffs' liabilities and los

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