Five Mile Capital SPE B LLC v. Fillmore West JPM Finance Subsidiary

Five Mile Capital SPE B LLC v Fillmore W. JPM Fin. Subsidiary (2016 NY Slip Op 01439)

Five Mile Capital SPE B LLC v Fillmore W. JPM Fin. Subsidiary

2016 NY Slip Op 01439

Decided on March 1, 2016

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on March 1, 2016
Acosta, J.P., Renwick, Andrias, Moskowitz, JJ.

651463/13 -356A 356 355

[*1]Five Mile Capital SPE B LLC, Plaintiff-Appellant,

v

Fillmore West JPM Finance Subsidiary, et al., Defendants-Respondents.

Haynes and Boone LLP, New York (David M. Siegal of counsel), for appellant.

Dechert LLP, New York (Joseph F. Donley of counsel), for Fillmore West JPM Finance Subsidiary, FWF PHOV Equity LLC, FWF PHOV Mezzanine LLC, PHF New Orleans L.L.C., PHF Metairie L.L.C., PHF FL LLC, PHF Somerset LLC, PHF East Brunswick LLC, PHF Ruby LLC, PHF Oak Brook LLC, PHF Oceanfront LP and PHF Plantation LP, respondents.

Katsky Korins, LLP, New York (Joel S. Weiss of counsel), for GSREA, LLC, respondent.

Judgment, Supreme Court, New York County (Eileen Bransten, J.), entered May 28, 2014, dismissing plaintiff's complaint, based on orders, same court and Justice, entered May 16, 2014, which granted defendants' motions to dismiss the complaint in its entirety with prejudice, unanimously affirmed, with costs. Appeals from the orders, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

The court properly dismissed the complaint in its entirety. The special servicer, defendant GSREA, acted within its authority and discretion, and did not breach its obligations under the pooling and servicing agreement to act in accordance with the accepted servicing standards by executing a series of transactions in which the value of the syndicated loan was written down so that its outstanding balance matched the appraised value of the collateral, and defendant FWF PHOV Equity LLC took over ownership interests of the collateral from the property owner defendants, who were released from liability on the loan. The court correctly found that the transactions here did not implicate the obligations of a special servicer where a loan in default is resolved by providing the lenders a deed in lieu of foreclosure. The allegations that GSREA acted in bad faith, such as by accepting substantial fees and other consideration in connection with executing these transactions, are conclusory and insufficient to state any breach claim, and absent any viable claim of breach by GSREA, plaintiff's remaining causes of actions for a declaration and imposition of a constructive trust, as well as the claims against the other defendants, are without basis.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: MARCH 1, 2016

CLERK