3861. STS PARTNERS FUND, LP Plaintiffs-Appellants-res, v. DEUTSCHE BANK SECURITIES, INC. def-res, WELLS FARGO BANK, N.A., ETC., Defendantres-res — Kasowitz, Benson, Torres & Friedman LLP, New York (Michael A. Hanin of counsel), for appellants-res — Alston & Bird LLP, New York (John F. Cambria of counsel), for res-res — Jones Day, New York (Jayant W. Tambe of counsel), for res — Order, Supreme Court, New York County (Eileen Bransten, J.), entered June 24, 2016, which, to the extent appealed from, granted the motion of defendants Deutsche Bank Securities, Inc. (DB Securities) and Deutsche Mortgage Securities, Inc. (DB Mortgage; together with DB Securities, the DB defendants) to dismiss the supplemental complaint as against them, and granted defendant Wells Fargo Bank, N.A.’s motion to dismiss all claims except the third cause of action as against it, unanimously modified, on the law, to grant Wells Fargo’s motion to dismiss the third cause of action to the extent it is not based on the IRR Threshold, and otherwise affirmed, without costs.
All claims against the DB defendants were correctly dismissed based on the no-action clause in the trust agreements. Quadrant Structured Prods. Co., Ltd. v. Vertin (23 NY3d 549 [2014]), which plaintiffs cite, did not involve the termination of a trust. Read in context, the sentence on which plaintiffs rely (“[T]he no-action clause applies when the Trustee is authorized to decide whether to act; it cannot serve as an outright prohibition on a suit filed by a securityholder in the case where the Trustee is without authorization to act” [id. at 567]) means that a no-action clause does not bar claims — such as breach of fiduciary duty against a corporation’s board of directors — that an indenture trustee cannot bring. Notably, the Court of Appeals ruled that “those claims sounding in breach of contract and arising from the indenture are barred—requiring the majority securityholders to bring those actions through the Trustee” (id. at 569). The claims that were dismissed included breach of the implied covenant of good faith and fair dealing and tortious interference with that covenant (id. at 558 n 10). Unlike the claims in Quadrant that were not dismissed, plaintiffs claims all arise out of the trust agreements and the amendments thereto.
