On a subject that has been attracting much judicial attention, New York County Commercial Division Justice Bernard J. Fried recently held in Stewardship Credit Arbitrage Fund LLC v. Charles Zucker Culture Pearl Corp.,1 that an assignee of a loan had standing to bring both tort and contract claims related to the loan documents. As this decision elucidates, language assigning “all rights and interests” in a loan can transfer to the assignee the right to bring both contract and tort claims, particularly where the assignment assigned claims “related to” the loan documents. In addition, this and other decisions teach that the assignee’s payment of full value to the assignor does not extinguish the assigned claims by eliminating the damage element of the causes of action assigned. In contrast, in the mortgage foreclosure context, the focus of the standing issue frequently turns on the timing of the assignment and the actual interest the assignor had in the mortgage at the time of assignment.
The ‘Stewardship’ Decision
The Stewardship case finds its origins in a 2007 loan in the amount of $40 million made by the original lender, Acorn, to R. Esmerian Inc. (REI), and a 2008 loan in the amount of $13.5 million that Acorn made to Vassal Jewels LLC.2 As part of the loan transactions, Acorn required both borrowers to pledge security, with the collateral pledged having minimum appraised values based on the loan amounts.3 Accordingly, REI and Vassal employed two appraisers to value the collateral, which included art collections, antiquities and jewels.4 The appraisers allegedly valued the collateral at “well in excess” of the required amounts, thus satisfying the loan agreements’ appraisal requirements.5
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