CP III Rincon Towers, Inc. v. Cohen
13 F. Supp. 3d 307
S.D.N.Y.2014Background
- CP III Rincon Towers, Inc. sues Richard Cohen to enforce a Guaranty tied to Rincon’s $110 million loan.
- Loan documents included a Deed of Trust, Promissory Note, Security Agreement, and Allonge, with Bear Stearns as lender and Maiden Lane/Maiden Lane trustee structure later.
- Disputed Liens (REOA lien, mechanic’s liens, and a judgment lien) arose without lender consent and allegedly trigger full recourse provisions.
- Rincon sought to extend the loan; default notices were issued; negotiations for new terms occurred but were unsuccessful.
- CP III purchased the loan in 2010 and demanded full repayment; foreclosures ensued, culminating in a trustee sale, with CP III as bidder.
- Plaintiff allege the Disputed Liens triggered the Guaranty’s Voluntary Lien, Transfer, and Indebtedness full-recourse provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the Voluntary Lien Provision trigger liability here? | Disputed Liens are voluntary liens that trigger full recourse against Cohen. | Disputed Liens are involuntary and do not trigger the Voluntary Lien Provision. | Voluntary Lien Provision not triggered; Cohen granted summary judgment on this issue. |
| Does Transfer Provision encompass the Disputed Liens as Transfers? | Disputed Liens encumber the Property and thus are Transfers triggering full recourse. | Transfer is ambiguous; extrinsic evidence could show no intended inclusion of such liens. | Transfer Provision is ambiguous; extrinsic evidence shows the parties did not intend these liens to trigger full recourse; Cohen granted summary judgment on Transfer. |
| Did the Indebtedness Provision trigger due to late REOA/Angotti charges? | Late payments constitute Indebtedness that requires lender consent to trigger full recourse. | Indebtedness requires prior consent only if consent is required under the Loan; here, consent was not required for these charges. | Indebtedness Provision not triggered; Cohen granted summary judgment on Indebtedness. |
Key Cases Cited
- United States v. Ron Pair Enters., Inc., 489 U.S. 235 (Supreme Court 1989) (distinguishes voluntary vs involuntary claims loosely applicable to lien discussions)
- LaSalle Bank Nat'l Ass'n v. Nomura Asset Capital Corp., 424 F.3d 195 (2d Cir. 2005) (choose plain meaning and enforce contract as written when unambiguous)
- Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153 (2d Cir. 2000) (extrinsic evidence if contract ambiguous, to resolve meaning)
- Garza v. Marine Transp. Lines, Inc., 861 F.2d 23 (2d Cir. 1988) (superfluous clause interpretation; ambiguity if renders clause meaningless)
- Inter’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76 (2d Cir. 2002) (remand when interrelationship of contract provisions is ambiguous)
- Galli v. Metz, 973 F.2d 145 (2d Cir. 1992) (interpret contract to give meaning to all terms)
- Albany Sav. Bank, FSB v. Halpin, 117 F.3d 669 (2d Cir. 1997) (avoid rendering contract terms meaningless)