Opinion
6747 Index 652571/16
05-31-2018
M.H. DAVIDSON & CO., et al., Plaintiffs–Appellants, v. C–III ASSET MANAGEMENT, LLC, Defendant–Respondent, Commercial Mortgage Pass–Through Certificates Series 2007–C5 Trust, Nominal Defendant.
Kazowitz Benson Torres LLP, New York (Michael A. Hanin of counsel), for appellants. Venable LLP, New York (Gregory A. Cross of counsel), for respondent.
Kazowitz Benson Torres LLP, New York (Michael A. Hanin of counsel), for appellants.
Venable LLP, New York (Gregory A. Cross of counsel), for respondent.
Sweeny, J.P., Richter, Andrias, Kahn, Moulton, JJ.
Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered August 2, 2017, which granted defendants' motion to dismiss the complaint, unanimously affirmed.
Plaintiffs held commercial mortgage pass-through certificates in a trust, and alleged that defendant, the Special Servicer for the trust, breached the pooling and services agreement (PSA) by manufacturing a default for one of the largest mortgages held by the trust, the Gulf Coast loan, and orchestrating the sale of another defaulted mortgage loan, the Jericho loan, for an artificially low price in exchange for the purchase option for the Gulf Coast loan.
In bringing this action, plaintiffs were required to comply with the PSA's no-action clause (see Greene v. New York United Hotels, Inc., 236 A.D. 647, 648, 260 N.Y.S. 405 [1st Dept. 1932], affd 261 N.Y. 698, 185 N.E. 798 [1933] ; see also Alden Global Value Recovery Master Fund, L.P. v. KeyBank N.A., 159 A.D.3d 618, 627, 74 N.Y.S.3d 559 [1st Dept. 2018] ). Plaintiffs failed to comply with this clause.
The PSA in section 11.03(c) provides, in relevant part, that "[n]o Certificateholder ... shall have any right by virtue of any provision of this Agreement to institute any suit ... upon or under or with respect to this Agreement or any Mortgage Loan, unless, in the case of a Certificateholder ... such Holder previously shall have given to the Trustee a written notice of default hereunder, and of the continuance thereof, as herein before provided." Similar to Alden Global Value Recovery Master Fund , 159 A.D.3d at 628, 74 N.Y.S.3d 559, plaintiffs did not provide the trustee with written notice of an actionable Event of Default under the PSA prior to instituting this action and therefore do not have standing to assert this claim. Accordingly, the action was properly dismissed.
Given this determination, we need not reach any of plaintiffs' remaining arguments.