Cortlandt Street Recovery Corp. v. Hellas Telecommunications
790 F.3d 411
| 2d Cir. | 2015Background
- Cortlandt Street Recovery Corp. (Cortlandt) sued several foreign defendants to collect on subordinated notes (Sub Notes) it claimed to have been assigned, seeking about €83.1 million.
- The purported assignments granted Cortlandt "full rights to collect" and an irrevocable power of attorney/proxy, but expressly stated the noteholders remained the owners of the Notes.
- Defendants challenged Article III standing, arguing Cortlandt lacked title to the claims; the district court dismissed for lack of standing and denied Cortlandt leave under Fed. R. Civ. P. 17(a)(3) to cure the defect.
- Cortlandt appealed, arguing (1) it had standing as assignee-for-collection and (2) the court should have allowed ratification, joinder, or substitution under Rule 17(a)(3).
- The Second Circuit affirmed: Cortlandt lacked the proprietary interest/title required for Article III standing and the district court did not abuse its discretion in denying relief under Rule 17(a)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing — whether Cortlandt can sue in its own name | Assignment of "full rights to collect" suffices; Sprint permits assignees to sue even if they remit proceeds | The assignment conferred only a power of attorney/authority to collect, not title; without title Cortlandt lacks injury-in-fact | Held: No standing — Cortlandt lacked legal title or proprietary interest in the claims; a power-to-collect is insufficient |
| Application of Advanced Magnetics/Sprint — whether Sprint undermines Advanced Magnetics | Sprint shows assignees-for-collection can have standing even without explicit "title" language | Sprint involved an assignment that clearly transferred title; Advanced Magnetics still controls when only a power of attorney exists | Held: Advanced Magnetics remains persuasive; Sprint does not permit standing where the assignment does not transfer title |
| Rule 17(a)(3) — whether court must allow cure by substitution/ratification | If lacking standing, Rule 17(a)(3) should allow substitution of real parties in interest or leave to obtain new assignment | Substitution or post-commencement assignment cannot create subject-matter jurisdiction that did not exist at filing; substitution here would defeat diversity | Held: No abuse of discretion — substitution would destroy diversity jurisdiction; Rule 17(a)(3) cannot be used to effect a new assignment that would alter the complaint’s substantive factual allegations |
| Leave to obtain a post-commencement assignment to cure standing | Court should allow Cortlandt to obtain a valid assignment and amend complaint to allege title | A new assignment would change the complaint’s core factual allegations and cannot be cured under Rule 17(a)(3); Rule 17(a) cannot expand jurisdiction | Held: Denied — obtaining a new assignment would materially alter the complaint and is not the kind of "mere formal" cure Rule 17(a)(3) contemplates |
Key Cases Cited
- Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008) (recognizing historical tradition of suits by assignees and that a complete transfer of claims supports standing)
- Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11 (2d Cir. 1997) (power-of-attorney to collect does not equal assignment of ownership; assignee must plead proprietary interest to sue in its own name)
- W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100 (2d Cir. 2008) (reiterating that title or proprietary interest in the claim is the minimum for injury-in-fact)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (articulating the irreducible Article III standing requirements)
- Stichting Ter Behartiging v. Schreiber, 407 F.3d 34 (2d Cir. 2005) (Rule 17(a) review is for abuse of discretion; real party in interest principle explained)