IKB INTERNATIONAL v. MORGAN STANLEY (2026)

Order, Supreme Court, New York County (Melissa A. Crane, J.), entered on or about August 7, 2024, which, to the extent appealed from, granted in part defendants' motions for an order excluding evidence of alleged misstatements concerning collateral characteristics other than loan to value/cumulative loan to value and owner occupancy, and Morgan Stanley's alleged knowledge of defects with regard to securities, loans, or originators other than those for the 12 securitizations under suit, and for an order excluding certain proffered expert testimony (mot seq. 13 and 14), unanimously affirmed, with costs.  Order, same court and Justice, entered on or about August 7, 2024, which, to the extent appealed from, granted defendants' motion in limine to exclude evidence of certain conduct by defendant Morgan Stanley (mot seq. 17), unanimously affirmed, with costs.  Order, same court and Justice, entered on or about August 7, 2024, which, to the extent appealed from, granted in part defendants' motion in limine to preclude plaintiffs from introducing evidence relating to the February 2016 civil settlement between the U.S. Department of Justice and Morgan Stanley (mot seq. 18), unanimously affirmed, with costs.  Appeal from order, same court and Justice, entered on or about August 7, 2024, which, to the extent appealed from, granted defendants' motion in limine to exclude evidence relating to plaintiffs' postpurchase reviews of the certificates at issue (mot seq. 20), unanimously dismissed, without costs, as abandoned.  Appeal from order, same court and Justice, entered on or about August 29, 2024 (the consent order), which dismissed the complaint on consent, unanimously dismissed, without costs, as taken by a nonaggrieved party.

Plaintiffs may not appeal from the consent order as they are not aggrieved by that order.  The order granted plaintiffs' request to dismiss the complaint (see CPLR 5511;  Pennsylvania Gen. Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465, 472, 510 N.Y.S.2d 67, 502 N.E.2d 982 [1986];  Cruz v. Angamarca, 235 A.D.3d 485, 485, 227 N.Y.S.3d 317 [1st Dept. 2025] ).  Appealability goes to the court's subject matter jurisdiction, which cannot be conferred by consent (see People v. Ainsworth, 145 A.D.2d 74, 76, 537 N.Y.S.2d 798 [1st Dept. 1989], lv granted 74 N.Y.2d 660, 543 N.Y.S.2d 403, 541 N.E.2d 432 [1989], appeal withdrawn 74 N.Y.2d 894, 548 N.Y.S.2d 426, 547 N.E.2d 953 [1989];  People v. McDonald, 68 N.Y.2d 1, 14 n.9, 505 N.Y.S.2d 824, 496 N.E.2d 844 [1986] ).  To that end, the consent order's grant of dismissal “without prejudice to the rights of any party to appeal” does not change the analysis.

Although the consent order is not appealable, plaintiffs have separately appealed certain decisions resolving defendants' in limine motions.  The decisions resolving motion sequences 13, 14, 17, and 18 are appealable.  Those orders “did not merely determine the admissibility of evidence but also limited the scope of issues to be tried” (Frankel v. Vernon & Ginsburg, LLP, 118 A.D.3d 479, 479, 988 N.Y.S.2d 28 [1st Dept. 2014];  see Nineteen Eighty–Nine LLC v Icahn, 116 A.D.3d 624, 624, 984 N.Y.S.2d 358 [1st Dept. 2014];  Piorkowski v. Hospital for Special Surgery, 116 A.D.3d 560, 560, 983 N.Y.S.2d 720 [1st Dept. 2014] ).  They appropriately sought, among other things, to narrow the evidence in accordance with this Court's prior decision finding that Supreme Court properly dismissed the fraud-based claims to the extent they were based on plaintiffs' reliance on purported misrepresentations regarding adherence to underwriting guidelines (see IKB Intl. S.A. v. Morgan Stanley, 225 A.D.3d 542, 207 N.Y.S.3d 488 [1st Dept. 2024];  State of New York v. Metz, 241 A.D.2d 192, 198, 671 N.Y.S.2d 79 [1st Dept. 1998] ).

Plaintiffs also appealed from the order dated August 7, 2024, deciding motion sequence 20, but they do not raise any arguments with regard to that order.  Therefore, plaintiffs have abandoned that appeal (see McNaughton v. 5 W. 14 Owners Corp., 235 A.D.3d 471, 475, 227 N.Y.S.3d 299 [1st Dept. 2025], lv dismissed in part, denied in part 45 N.Y.3d 960, 254 N.Y.S.3d 455, 278 N.E.3d 444 [2026] ).

However, plaintiffs did not file an appeal from the order dated August 26, 2024, in which the court granted defendants' motion (mot seq. 19) to exclude, among other things, the testimony of one of plaintiffs' experts, Gary Shev. Accordingly, we do not consider plaintiffs' arguments regarding Shev's testimony.

As to the merits, Supreme Court providently limited the admissible evidence at trial.  The fraud claims in the complaint relied on misstatements about loan-to-value ratios (LTV), cumulative loan-to-value ratios (CLTV), owner occupancy status (OO), and the now dismissed underwriting guidelines.  The other “collateral characteristics” identified by plaintiffs were not alleged in the complaint nor were they part of summary judgment, thus plaintiffs, as Supreme Court held, “charted [their] course.”  Supreme Court therefore properly excluded evidence concerning any loan characteristics other than LTV, CLTV and OO;  knowledge of defects in loans;  originators;  and securitizations other than the ones at issue in this case, as placing that evidence before a fact-finder would have tended to prejudice defendants (see Abe v. New York University, 180 A.D.3d 420, 421, 119 N.Y.S.3d 84 (2020)).

We have considered plaintiffs' remaining contentions and find them unavailing.

Motion to dismiss appeal granted to the extent of dismissing the appeal from the consent order and disregarding plaintiffs' arguments about motion sequence 19.