MREF REIT LENDER LLC v. BM (2024)

Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered on or about June 20, 2023, which denied defendant Bank Leumi Le–Israel BM's (BLITA) motion to dismiss the claims against it for lack of personal jurisdiction, unanimously affirmed, with costs.

The court correctly determined that BLITA is subject to personal jurisdiction under CPLR 302(a)(1) (see Wilson v. Dantas, 128 A.D.3d 176, 181–182, 9 N.Y.S.3d 187 [1st Dept. 2015], affd 29 N.Y.3d 1051, 58 N.Y.S.3d 286, 80 N.E.3d 1032 [2017]).  BLITA transacted business in New York given its execution of a participation agreement in which it purchased from its subsidiary, New York-based defendant Bank Leumi USA (BLUSA), a 66.67% participation interest in the face amount of BLUSA's loan in connection with One Seaport, a New York real estate development project that involved a New York real estate developer and affiliates.

Contrary to BLITA's contention, there is also an “articulable nexus” or “substantial relationship” between BLITA's business transaction and the claims asserted against it (Licci v. Lebanese Can. Bank, SAL, 20 N.Y.3d 327, 339, 960 N.Y.S.2d 695, 984 N.E.2d 893 [2012] [internal quotation marks omitted]).  BLITA argues that there is a distinction between the One Seaport project, in which it concedes involvement, and the loan extended by plaintiff MREF Reit Lender 14, LLC (the Amity loan) that underlies the claims against it.  However, the complaint alleges that the purpose of the Amity loan was to fund the second restructuring of the One Seaport debt;  a restructuring that, plaintiffs allege, they were misled to believe would salvage the troubled One Seaport project, and that reduced BLITA's and others’ exposure.  In light of these allegations, BLITA's argument that plaintiffs’ decision to extend the Amity loan did not involve it or relate to its participation interest in the senior loan is unavailing.

BLITA's other arguments contravene the allegations of the complaint or supporting documents.  For instance, BLITA asserts that it did not become a party to the senior loan when it entered into the participation agreement with BLUSA, and cites certain loan documents where it is referred to as a loan participant and not as a lender.  However, BLITA does not address the complaint's allegations, which, citing to a senior credit agreement, state that BLITA became a senior lender under the senior loan documents.  Moreover, by claiming that it was a party only to the participation agreement, BLITA fails to contend with the fact that the participation agreement, by its express terms, was subject to, and not severable from, the terms of the senior loan documents.

In any event, BLITA does not show that the distinction between “loan participant” and “lender” is relevant to the jurisdictional analysis here.

BLITA argues that it is not alleged to have made any misrepresentations that caused plaintiffs’ losses.  However, causation is not required to satisfy the requirements under CPLR 302(a)(1) (see Wilson, 128 A.D.3d at 184, 9 N.Y.S.3d 187).  More generally, whether BLITA engaged in any wrongful conduct such that any benefits reaped from the Amity loan could be found, as plaintiffs claim, “unjust,” goes to the merits of the claims at issue and is beyond the scope of this appeal.

BLITA contends that the court relied largely on its prior opinion in a related action, and failed to analyze whether the allegations underlying plaintiffs’ claims arose out of or relate to BLITA's execution of the participation agreement.  The order appealed includes the court's analysis of each of the claims at issue here.

BLITA's due process arguments, which largely rest on the same points made as to personal jurisdiction, are also unavailing.  The requisite “minimum contacts” with New York have been established, such that the exercise of jurisdiction here “does not offend traditional notions of fair play and substantial justice” (Matter of James v. iFinex Inc., 185 A.D.3d 22, 29, 127 N.Y.S.3d 456 [1st Dept. 2020]).

We have considered BLITA's remaining arguments and find them unavailing.