When does amendment of a complaint to assert a new breach of contract claim relate back to the date of the original complaint asserting different breaches of the same contract? The Court of Chancery recently addressed this issue inCentral Mortgage v. Morgan Stanley Mortgage Capital Holdings LLC , C.A. No. 5140-CS (Del. Ch.).

This litigation arose from a 2005 contract between plaintiff Central Mortgage and defendant Morgan Stanley for the purchase of servicing rights for mortgage loans that Morgan Stanley intended to sell to government agencies and private investors. Under the master agreement, Central Mortgage obtained the right, but not the obligation, to purchase servicing rights for specific pools of loans. Central Mortgage had access to the loan files before purchasing service rights to each loan pool so it could review the loans. Morgan Stanley represented that information set forth in a mortgage loan schedule it made available to Central Mortgage along with accompanying data files was complete and accurate. Morgan Stanley also represented that it did not commit fraud with regard to the loans and, to the best of its knowledge, neither did the originator or borrower. If Central Mortgage learned that Morgan Stanley breached any of its representations or warranties, it had to provide prompt written notice of such a breach. Morgan Stanley then had the opportunity to cure. If the breach was not curable, Central Mortgage could opt to require Morgan Stanley to repurchase the servicing rights affected by the breach for a set price.

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