CRAFT EM CLO 2006 LTD v. DEUTSCHE BANK AG (2019)

Orders, Supreme Court, New York County (Charles E. Ramos, J.), entered August 14, 2017, and October 19, 2018, which granted defendant's motion to dismiss the complaint, unanimously affirmed, without costs.

The court, in the order entered October 19, 2018, correctly granted defendant's motion to dismiss pursuant to CPLR 3211(a)(3) for lack of standing.  Pursuant to the granting clauses in the governing indentures, plaintiff, as issuer of the Class E, F, and G notes, transferred all of its rights under the swap agreements, one pertaining to the class E and F notes and the other to the class G notes, to the trustee.  As a result, its prior suit alleging that defendant breached the swap agreements was dismissed for lack of standing (CRAFT EM CLO 2006–1, Ltd. v. Deutsche Bank AG, 139 A.D.3d 638, 34 N.Y.S.3d 7 [1st Dept. 2016] ).

Plaintiff and the trustee then entered into assignment agreements, dated November 4 and 18, 2016, purporting to assign those claims back to plaintiff and thus to remedy the prior deficiency in standing.  Plaintiff then commenced the instant lawsuit.  However, the swap agreements require that such further transfer of such rights by the trustee be “pursuant to the [i]ndenture,” and the indentures contain no provision authorizing plaintiff, by Issuer Order, to direct the trustee to execute the assignment agreements at issue here.  As a result, the assignments were not “pursuant to” the indentures, and the attempted assignments were “null and void,” as stated in Section 5.1 of the Schedules to the ISDA Agreement.  There is no basis for concluding that this provision is merely a personal covenant (C.U. Annuity Serv. Corp. v. Young, 281 A.D.2d 292, 292, 722 N.Y.S.2d 236 [1st Dept. 2001]).

Moreover, the court correctly granted defendant's CPLR 3211(a)(5) motion to dismiss all but six breach of contract claims, relating to accountant certifications, on the additional ground that they were barred by the applicable statute of limitations.  The court correctly reasoned that plaintiff, who originally timely sued as the “issuer” under the swap agreements, could not rely on CPLR 205(a) when it refiled the suit as assignee of the trustee's claims, which were time-barred when assigned (Reliance Ins. Co. v. PolyVision Corp., 9 N.Y.3d 52, 57, 845 N.Y.S.2d 212, 876 N.E.2d 898 [2007]).

In light of our determination, we need not reach plaintiff's remaining contentions.