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BRYAN CAVE LLP

Lawrence P. Gottesman (LG-7061)


Michelle McMahon (MM-8130)
1290 A venue of the Americas
New York, New York 10104
(212) 541-2000
Christopher J. Lawhorn, admission pro hac vice pending
Brian Walsh, admission pro hac vice pending
211 North Broadway
St. Louis, Missouri 63102
(314) 259-2000
Objections Due: February 1, 2011
Reply Due: February 4, 2011
Hearing Date: None selected
Attorneys for Wells Fargo Bank, N.A., as trustee for the registered holders of Credit Suisse First
Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series
2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly
known as LaSalle National Bank, as Trustee for the registered holders ofML-CFC Commercial
Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 and
LNR Securities Holdings, LLC
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------X
In re:
INNKEEPERS USA TRUST, eta/.,
Debtors.
----------------------------X
Chapter 11
Case No.: 10-13800 (SCC)
(Jointly Administered)
REPLY SUPPORTING MOTION OF TRUSTS AND LNR SECURITIES
HOLDINGS, LLC SEEKING JUDICIAL DETERMINATION OF PARTY IN
INTEREST STATUS UNDER SECTION 1109(b) OF THE BANKRUPTCY
CODE, OR IN THE ALTERNATIVE GRANTING INTERVENTION IN THESE
BANKRUPTCY CASES PURSUANT TO FEDERAL RULE OF BANKRUPTCY 2018
The Trusts and LNR Securities (jointly, the "Movants") hereby reply to the Debtors'
Omnibus Limited Objection to Certificateholders' Standing Requests (the "Debtors' Objection")
and the Reply and Objection ofMidland Loan Services to the Motions of(a) Appaloosa
Investment L.P. and Thoroughbred Master Ltd and (b) Motion of Trusts and LNR Securities
Holdings, LLC Seeking Judicial Determination of Party in Interest Status under Section 11 09(b)
of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases
pursuant to Federal Rule of Bankruptcy 2018 ("Midland's Objection" and together with Debtors'
Objection, the "Objections") and in support of the Motion of the Trusts and LNR Securities
Holdings, LLC Seeking Judicial Determination of Party in Interest Status under Section 11 09(b)
of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases
pursuant to Federal Rule of Bankruptcy 2018 to be served by First Class US Mail (the
"Motion").
1
In support of this Reply, Movants state as follows:
I. Movants are Parties in Interest under Section 1109(b)
A. The Trusts as Creditors and LNR Securities as Preferred Shareholder are Parties in
Interest under Section 11 09(b) and May Appear and be Heard on any Issue in these
Cases
1. The Debtors and Midland Gointly, the "Objectors") acknowledge, as they must,
that Trusts as creditors have standing as a party in interest under Section 11 09(b) of the
Bankruptcy Code. The Objectors also acknowledge that Appaloosa as a preferred shareholder is
a party in interest and has standing to appear and be heard. LNR Securities has recently
purchased 500 shares of 8.0% Series C Cumulative Preferred Shares (the "Series C Preferred"),
~ n d thus similarly has standing to appear and be heard as a party in interest under Section
1109(b) ofthe Bankruptcy Code.
2
See Memorandum of Law of Appaloosa Investment L.P.,
1
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.
2
The fact that LNR Securities recently purchased its shares of Series Preferred C with the intent of further
supporting its status as a party in interest under section I I 09 does not negate its status as a party in interest. In re
First Humanics Corp., 124 B.R. 87,92-93 (Bankr. W.O. Mo. 1991) (holding that there was nothing improper about
movant's acquisition of unsecured claims with the acknowledged purpose of eliminating any question as to whether
movant was a party in interest).
2
C053239/0312771/1612625.4
Palomino Fund Ltd., Thoroughbred Fund L.P. and Thoroughbred Master Ltd in Support of Their
Status as Parties in Interest Entitled to Standing (Docket No. 858), pp. 6-13.
2. The Objectors' efforts to limit or restrict the Movants' statutory right to appear
and be heard on any issue in these cases is contrary to the plain language of the statute and the
case law applying it in this district. Section 11 09(b) of the Bankruptcy Code expressly provides
that parties in interest have an express right to be heard "on any issue," which would include the
Bid Procedures Motion and any aspect thereof. See, e.g., Term Loan Holder Committee v. Ozer
Group, LLC (In re The Caldor Corp.), 303 F.3d 161, 167-79 (2d Cir. 2002). Thus, the Movants
can and should be heard on any issue in these cases and not artificially limited to issues
ostensibly affecting only the Trust Secured Loans and the Series C Preferred, as argued by the
Objectors.
3
3. Moreover, assuming arguendo that there is any limitation to the standing of
parties in interest under Section 11 09(b) of the Bankruptcy Code, the limitation urged by the
Objectors has no practical meaning in the context of the relief sought in the Bid Procedures
Motion. The Trust Secured Loans are impaired under the terms of the Five Mile/Lehman Bid.
The proposed Bid Procedures in their entirety affect the likelihood of any competing bid that
would improve the treatment of the Trust Secured Loans. There is no separate divisible part of
the Bid Procedures that relates solely or separately to the Trust Secured Loans, nor is there any
part of the Bid Procedures that does not affect the likelihood that there will or will not be a better
bid that improves the proposed treatment of the Trust Secured Loans. This is because the
3
The Debtors note that an Ad Hoc Committee of Preferred Shareholders has been formed and is able to represent
the interests of Series C Preferred. The Debtors do not and cannot provide any authority for the implied assertion
that the existence of a representative body should somehow negate or limit the ability of a party in interest to appear
and be heard under Section 1109(b) ofthe Bankruptcy Code.
3
C053239/0312771/1612625.4
proposed bid procedures require Qualified Bids to include a similar whole enterprise structure
and expressly provides that a bid for less than the whole is not a Qualified Bid. Any improved
treatment with respect to the Trust Secured Loans will, if the Bid Procedures are approved, come
only as part of a competing enterprise bid. Accordingly, any part ofthe Bid Procedures that has
the interest or effect of chilling competing bids - such as the Lehman cash overbid request -
directly affects the Trusts and is a matter on which the Trusts have an absolute and unequivocal
right to be heard. The same will also be true with respect to the interests of the Series C
Preferred.
B. LNR Securities as Certificate Holder is a Party in Interest under Section 1109(b) and
May Appear and be Heard on any Issue in these Cases
4. As set forth in detail in the Motion, LNR Securities as certificate holder is also a
party in interest under the particular circumstances of these cases. The relief requested in the Bid
Procedures Motion will directly affect LNR Securities' pecuniary interests as a certificate holder
in the C7 Trust. See Stone Barn Manhattan LLC, 405 B.R. 68, 74 (finding that the official
committee of unsecured creditors for the estates of the successor to the debtors, which was itself
a debtor, had standing to object to a proposed settlement which would be paid from an escrow
account in which the successor's estate had a contingent interest). Cf In re Teligent, Inc., 417
B.R 197, 210-211 (Bankr. S.D.N.Y. 2009 (holding that the law firm objector had no standing to
object to approval under Rule 9019 of a settlement between the debtor's estate and the debtor's
former CEO that would require the latter to sue the 'law firm for malpractice because the law firm
4
C053239/031277111612625.4
had no pecuniary interest in the order approving the settlement; any impact was contingent upon
the result of the future malpractice litigation).
4
5. Despite the Objectors' copious citations to the pooling and servicing agreements
for the C6 and C7 Trusts, such documents are not applicable here because LNR Securities is not
seeking to appear and be heard on behalf of the C6 and C7 Trusts as holders of the Fixed Rate
Loan. LNR Securities is seeking to appear and be heard only with respect to its interests as a
certificate holder, which will be directly impacted as a result of the relief requested in the Bid
Procedures Motion. LNR Securities is not seeking to represent the Fixed Rate Loan with respect
to negotiations with the Debtors or voting on the Plan. LNR Securities is not seeking to enforce
any rights of the C7 Trust and is therefore not violating the pooling and servicing agreement or
otherwise seeking to circumvent it. Nor is LNR Securities seeking through the Motion to
enforce any rights against Midland.
5
To be clear, LNR Securities is simply seeking to protect its
pecuniary interests.
6. The Objectors' reference to the "no action" clauses in the pooling and servicing
agreement is also a red herring. LNR Securities' proposed opposition to the Bid Procedure
Motion will not "'institute any suit, action or proceeding in equity or at law upon or under or
with respect to [the Pooling & Servicing Agreement or any Mortgage Loan]"' and therefore is
not within the actions prohibited by section 11.03(c) of the C6 pooling and servicing agreement
4
The Bid Procedures Motion, and the marketing process and plan of reorganization it contemplates, will determine
the entire restructuring of all of the Debtors. This is not substantive consolidation, but rather the process and
transaction proposed by the Debtors and Midland. The Objectors' argument that Movants' standing is premised on
substantive consolidation in conflict with its prior positions in these cases is a misrepresentation ofMovants'
argument.
5
LNR reserves all of its rights with respect to issues raised in the litigation against CRES regarding the appointment
of the special servicer for the Fixed Rate Loan, which is currently pending before this Court: LNR Partners, LLC
and LNR Securities Holdings, LLC v. CRES Investment No. II, LP, Adv. Pro. 10-04237.
5
C053239/0312771/1612625.4
cited by Midland. Midland's 14 (citation omitted). Accordingly, the "no action"
provision and the numerous cases cited by the Objectors prohibiting certificate holders from
taking actions or blocking actions of the special servicer with respect to the loan or the collateral
in violation of the applicable pooling and servicing agreements are simply not applicable to the
present case.
7. Similarly, citation of cases by the Objectors for the proposition that standing is
limited to the party in interest's assertion of its own rights and interests also miss the point. LNR
is not seeking to enforce a legal right of the C6 and C7 Trust. Cf Roslyn Savings Bank v.
Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571 (2d Cir. 1983) (holding that the
mortgagee, which was not a creditor of the tenant-debtor, was not a party in interest under 11
U.S. C. 362(d) entitled to seek relief from the automatic stay to name the tenant-debtor in the
foreclosure action); In re Saint Vincents Catholic Medical Centers of New York, 429 B.R. 139
(Bankr. S.D.N.Y. 2010) (granting debtors' motion to enforce the automatic stay against state
court plaintiffs seeking to compel the New York State Department of Health to oppose closure of
the hospital); Southern Boulevard, Inc. v. Martin Paint Stores (In re Martin Paint Stores), 207
B.R. 57,61 (S.D.N.Y. 1997) (affirming bankruptcy court's ruling that tenant did not have
standing to oppose debtor's assumption and assignment of another lease with a common landlord
where such assignment would violate the terms of the tenant's lease with landlord).
8. The Objectors' heavy reliance on In re Refco Inc., 505 F.3d 109 (2d Cir. 2007) is
misplaced because contrary to the investors in Refco, LNR Securities is challenging the Bid
Procedures Motion on the basis that it is not a valid exercise of the Debtors' business judgment,
which issue will be before the Court. The Debtors have been influenced by the pressure brought
to bear by Five Mile itself and Midland's unwavering support for Five Mile's efforts to acquire
6
C053239/0312771/1612625.4
the Debtors. This rushed marketing and selection of a stalking horse bidder has been to the
detriment of all of the Debtors' stakeholders. Moreover, despite the Debtors' assertion that the
relief sought in the Bid Procedures Motion is supported by the Debtors' two largest creditors,
this characterization is misleading. In fact, the relief sought is being supported by Lehman,
which as a stalking horse bidder would of course support its own transaction, and by Five Mile.
For this reason, the relief requested by the Movants in the Motion is consistent with the ruling in
In re Refco Inc., 505 F.3d 109 (2d Cir. 2007).
9. The relief sought by the Motion is consistent with both the ruling of the court, and
the position advocated by LNR Partners, LLC ("LNR Partners"), in Bank of America, NA. eta/ v.
PCV St. Owner LP. et al., Case No. 10-cv-1178 (AKH) (S.D.N.Y. 2010) ("Stt(Ytown"). In Stt(Ytown, the
certificate holder argued that it was entided to intervene and oppose a foreclosure action initiated by
the special servicer merely because the special servicer was affiliated with the controlling class
representative and was thus alleged to have a conflict of interest and therefore was not representing
the interests of the certificate holders. The basis for certificate holder standing alleged in Stt(Ytown-
the fact that the controlling class representative was an affiliate of the special servicer -is common
in the commercial mortgage backed securities industry and certainly does not present a conflict.
10. By contrast, in the Innkeepers cases the interests of Five Mile, as both the stalking
horse bidder and the controlling class representative, and the unrelenting advancement of such
interests by Midland in a manner that is contrary to maximizing the recoveries on the Fixed Rate
Loan is direcdy contrary to the interests of the certificate holders. It is this conflict, resulting from
the fact that Five Mile is on both sides of the deal- both the stalking horse and the controlling class
representative of the lender that "supports" the deal- that justifies the standing of LNR Securities
7
C053239/031277111612625.4
in opposing these particular cases. In short, the relief sought by the Motion is consistent with both
the position advocated by LNR Partners and the court's ruling in Stl!Jfown.
11. The Objectors' warnings that the Court will be flooded with certificate holders if
LNR Securities is permitted to appear can be addressed by limiting any ruling on the Motion to
the unique facts and circumstances of these cases. Further, any such policy concerns cannot
overcome the plain language of the statute. Similar arguments have been raised in response to an
expansive interpretation of section 11 09(b) of the Bankruptcy Code and dismissed. See In re The
Caldor Corp, 303 F.3d at 175-6 (discussing cases on both sides of the policy debate and holding
that the court "need not choose among the competing policy rationales for and against an
unconditional right to intervene" because '"it suffices that the natural reading of the text
produces the result we announce."') (citations omitted). Finally, such concerns are unfounded in
these cases. To date, Appaloosa and LNR Securities have been the only certificate holders active
in these cases. There is no indication that hundreds of certificate holders will suddenly appear
and seek to be involved in the briefing and expedited discovery scheduled on the Bid Procedures
Motion.
II. Alternatively, LNR Securities Should he Permitted to Intervene in the Debtors'
Bankruptcy Cases Pursuant to Rule 2018
12. Permissive intervention under Rule 2018(a) may be permitted for cause, which is
"an economic or similar interest in the case or one of its aspects." In rePublic Service Co. of
New Hampshire, 88 B.R. 546,551 (Bankr. N.H. 1988). LNR Securities' economic interests in
the Debtors' bankruptcy cases would be negatively affected by the relief sought in the Bid
Procedures Motion and the marketing process and plan of reorganization contemplated thereby.
8
C053239/0312771 /1612625.4
13. Contrary to the Objectors' assertions, cause is not limited to those situations
where the intervenor holds a direct, non-contingent claim against the Debtors. Midland's
citation to the non-binding transcript decision in Stuytown is not on point. In Stuytown, the
proposed intervenor's contingent claim discussed in the cited portion of the transcript was one
for negligence against the special servicer for alleged breaches of the servicing standard. Bank of
America, N.A. et al v. PCV St. Owner L.P. et al., Case No. 1 0-cv-1178 (AKH), Transcript of
Hearing held on April29, 2010, pp. 36:19-25 and 37:1-13
6
As discussed in detail above, LNR
Securities is not seeking to enforce any rights against Midland through this proceeding, and any
claims it may have against Midland are not the bases for the relief it seeks in the Motion or the
objectors will file with respect to the Bid Procedures Motion.
14. The factors that the courts consider in determining whether to permit intervention
under Rule 2018 are: (i) whether the intervenor's interests are already adequately represented
and (ii) whether intervention would result in undue delay or prejudice to the original parties. See
e.g., In rePublic Service Co. ofNew Hampshire, 88 B.R. at 551. The courts have authorized "a
very broad and elastic interpretation" of those parties entitled to participate in a case as parties in
interest or intervenors under section 1109(b) and Rule 2018(a). Id As set forth in detail in the
Motion, LNR Securities satisfies both requirements. First, LNR Securities is not adequately
represented because Midland's actions to pressure the Debtors into rushing the marketing
process and selection of Five Mile/Lehman as the stalking horse have resulted in a flawed
marketing process and a lower overall stalking horse bid. Second, the Objectors have not
identified any actual delay that will occur as a result of LNR Securities intervention in the case.
The discovery and briefing deadlines for the Bid Procedures Motion have already been
6
A copy of the transcript is attached to Midlands' Objection as Ex. 7.
9
C053239/0312771/1612625.4
established and LNR Securities has not asked to modify these dates to accommodate its
intervention.
III. Conclusion
15. As set forth in detail above, under the unique facts present in these cases Movants
have the right to participate in the Debtors' bankruptcy cases to protect their interests as secured
creditors and certificate holders. Each Movant is a party in interest under section 1109(b) of the
Bankruptcy Code and as such is entitled to appear and be heard on any issue. Additionally, LNR
Securities has demonstrated cause supporting its request to intervene under Rule 2018. In order
for the bid procedures ultimately approved by this Court and the marketing process and plan of
reorganization contemplated thereby to be the result of a truly fair process, the interests of all
affected parties should be heard.
Dated: New York, New York
February 4, 2011
C053239/0312771/1612625.4
10
BRYAN CAVE LLP
Is/ Lawrence P. Gottesman
Lawrence P. Gottesman (LG-7061)
Michelle McMahon (MM-8130)
1290 A venue of the Americas
New York, New York 10104
Tel: (212) 541-2000; Fax: (212) 541-4630
Christopher J. Lawhorn,
admission pro hac vice pending
Brian Walsh,
admission pro hac vice pending
211 North Broadway
St. Louis, Missouri 63102
(314) 259-2000
Counsel for the Trusts and LNR Securities
Holdings, LLC
CERTIFICATE OF SERVICE
I, Lawrence P. Gottesman, hereby certify, under penalty of perjury, that on February 4, 2011, I
caused a copy of the Reply Supporting Motion of Trusts and LNR Securities Holdings, LLC
Seeking Judicial Determination of Party in Interest Status under Section 11 09(b) of the
Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases
pursuant to Federal Rule of Bankruptcy 2018 to be served by First Class US Mail upon the
parties listed on the attached service list.
C053239/031277111612625.4
BRYAN CAVE LLP
Is/ Lawrence P. Gottesman
Lawrence P. Gottesman (LG-7061)
1290 Avenue ofthe Americas
New York, New York 10104-3300
(212) 541-2000 (tel)
(212) 541-4630 (fax)
Innkeepers USA Trust, et al. - Master Service List
American Hotel Register Co.
16458 Collections Center Drive
Chicago, IL 60693
F A.X: 847-743-2079
Arnold & Porter LLP
Attn: Marc Daniel
Counsel to Five Mile
399 Park Avenue
New York. NY 10022
FAX: 212-715-1399
Email: Marc.Daniel@aporter.com
Barlett Hackett Feinberg P.C.
Attn: Frank F. McGinn
Cow!Sel for Iron Mountain Information Management, Inc.
155 Federal Street
9th Floor
Boston, MA 02110
FAX: 617-422-0383
Email: ffin@bostonbusinesslaw.com
Bryan Cave LLP
Attn: Lawrence P. Gottesman, Esq
1290 Avenue of the Americas
New York. NY 10104
FAX: 212-541-4630
Email: lawrence.gottesman@bryancave.com
Carrier Corp
PO Box 905303
Charlotte, NC 28290
FAX: 860-622-7331
CSE Mortgage, LLC
4445 Willard Avenue
12th Floor
Chevy Chase, MD 20815
FAX: 301-841-2340
Dechert LLP
Attn: Nicole B. Herther-Spiro
1095 Avenue of the Americas
NewYork, NY 10036
FAX: (212) 698-3599
Email: nicole.hertherspiro@deehert.com
Page 1 of8
Apollo Investment Corporation
Attn: Joseph D. Glatt
9 West 57th Street
New York. New York 10019
FAX: (212) 515-3443
Email: JGiatt@apollocapital.com
Arnold & Porter LLP
Ath!: Michael Crullling
Counsel to Five Mile
399 Park Avenue
New York, NY 10022
FAX: 212-715-1399
Email: michael.eanning@aporter.com
Best Western lntcmationallnc
6201 North 24th Parkway
Phoenix, AZ 85016
FAX: 602-957-5641
Bryan Cave LLP
Attn: Michelle McMahon, Esq
1290 Avenue ofthe Americas
New York, NY 10104
FAX: 212-541-4630
Email: michelle.mcmahon@bryancave.com
Centerline Servicing, Inc.
Attn: Steve Oltmrulll
5221 N O'Connor Blvd, Suite 600
Irving, TX 75039
Email: soltmann@centerline.com
CW Capital Asset Mrutagement LLC
18500 Von Karman Avenue, Suite 515
Attn: Ira Haynie
Irvine, CA 92612
Dechert LLP
clo Stephrutie M. Tita
30 Rockefeller Plaza
New York, NY 10112
FAX: 212-698-3599
Email: stephanie.tita@dcchcrt.com
Arnold & Porter LLP
ATTN: ALAN LAWRENCE
CoWISelto Five Mile
399 Park Avenue
New York, NY 10022
FAX: 212-715-1399
Email: AJan.Lawrcncc@aporter.com
Arnold & Porter LLP
Attn: Michael J. Canning
Counsel for Five Mile Capital II Pooling International LLC
399 Park Avenue
New York, New York I 0022
FAX: (212) 715-1399
Email: michael.canning@aporter.com
Brickman Group, Ud
3630 Solutions Center
Chicago, IL 60677
Caprnark Finance Inc.
Attn: Portfolio Manager, Specialty Asset Management
1600 Tysons Blvd
Suite 1100
McLean, VA 22102
Cintas Corporation
97627 Eagle Way
Chicago, IL 60678-9760
FAX: 708-563-0108
CWCapital Performing Loan Management- CMBS
Ira Haynie, Associate-Asset Manager
18500 Von Karman Avenue, Suite 515
Irvine, CA 92612
Email: ihaynie@cwcapital.com
Dechert LLP
CoWISelto Lehman
Attn: Andrew L Buck
1095 Avenue ofthe Americas
New York. NY 10036
FAX: 212-698-3599
Email: Andrew.Buck@dechert.com
Innkeepers USA Trust, eta!.- Master Service List
Dechert LLP
Counsel to Lehman
Attn: Brian E. Greer
1095 A venue of the Americas
NcwYork,NY 10036
FAX: 212-698-3599
Email: Brian.Grccr@dcchcrt.com
Deutsche Bane Mortgage Capital, LLC
Alb!: Director. Mortgage Backed Securities
60 Wall Street
lOth Floor
New York, NY 10005
Dewey & LcbocufLLp
Attn: Martin J. Bienenstock, Esq
1301 Avenue of the Americas
New York, NY 10019
FAX: 212-2559-6333
Email: mbienenstock@dl.com
Duane Morris LLP
Attn: Phillip K. Wang
Counsel for LNR Partners, LLC,
One Market Plaza, Spear Tower
Suite 2200
San Francisco, CA 94105-1127
FAX: ( 415) 358-4725
Email: pwang@duancmorris.com
Elite Heating & Air
214 Cherry Avenue
V oorhecs. NJ 08043
FAX: 856-354-8655
Fire & Oak
55 Route 17 South
Rochelle Park, NJ 07662
FAX: 201-307-1200
Guest Supply, Inc.
P0Box910
Monmouth Juction, NJ 08852
FAX: 609-514-2692
Page 2 of8
Dechert LLP
Counsel to Lehman
Attn: Justin Gdula
1095 Avenue of the Americas
New York, NY 10036
FAX: 212-698-3599
Email: Justin.Gdula@dcchcrt.com
Deutsche Bank Securities Inc.
Attn: General Counsel
1301 Avenue of the Americas
8th Floor
New York, NY 10019
Dewey & Leboeuf LLP
Attn:Timothy Q. Karcher, Esq.
1301 Avenue of the Americas
New York, NY 10019
FAX: 212-259-6333
Email: tkarcher@dl.com
Ecolab
PO Box 905327
Charlotte, NC 28290-5327
Eric Ryan Corporation
1 Early Street
EllwoodCity,PA 16117
FAX: 724-752-8999
Global Restaurant Design, Corp
31368 Via Colinas
Suite #108
Westlake Village, CA 91362
FAX: 818-706-7701
Haynes and Boone, LLP
Attn: John D. Penn. Esq.
Counsel for Midland Loan Services, Inc.
201 Main Street, Suite 2200
Fort Worth. TX 76102
FAX: (817) 348-2300
Email: jolm.penn@haynesboone.com
DcchcrtLLP
Counsel to Lehman
Attn: Michael J. Sage
1095 Avenue of the Americas
New York, NY 10036
FAX: 212-698-3599
Email: Michaci.Sagc@dcchcrt.com
Dewey & LeboeufLLP
Attn: Irena M. Goldstein, Esq.
1301 Avenue ofthc Americas
New York, NY 10019
FAX: 212-259-6333
Email: igoldstcin@dl.com
Doublctrcc Hotel Systems, Inc.
9336 Civic Center Drive
Attn: General Counsel
Beverly Hills, CA 90210
FAX: (310)205-7655
Ecolab Pest Elimination
3535 S 31st Street
PO Box 6007
Grand Forks, ND 58206
FAX: 701-775-2536
Fibcrcare
7701 Pillsbury Avenue South
Richfield, MN 55423
FAX: 612-277-1514
Goldenbock EisemanAssor Bell & Peskoe LLP
Attn: Jonathan L. Flaxcr, ESQ.
437 Madison Avenue
New York, NY 10022
FAX: 212-754-0330
Email: jtlaxer@gnlenbock.com
Haynes and Boone, LLP
Lenard M. Parkins, Esq.
Mark Elmore, Esq.
Counsel for Midland Loan Services, Inc.
1221 Avenue of the Americas, 26th Floor
New York. NY 10020
FAX: (212) 884-8211
Email: lenard.parkins@haynesboone.com
Innkeepers USA Trust, et al. - Master Service List
HD Supply Facilities
PO Box 509058
Maintenance
San Diego, CA 92150-9058
fAX: 800-930-4930
Hyatt Summerfield Suites
194Parl<.Ave.
Morristo ... n, NJ 07960
fAX: 973-971-00 13
JMCGiobal
7 Grogans Park Drive Ste II
The Woodlands, TX 77380
FAX: 832-381-2495
Kasowitz, Benson, Torres & friedman LLP
Attn: David M. friedman
Counsel for five Mile Capital Partners LLC
1633 Broadway
NcwYorl<,NY 10019
FAX: 212-506-1800
Email: dfiiedman@kasowitz.com
Kilpatrick & Associates, P.C.
Attn: Richardo I. Kilpatrick
Counsel for Creditor Oakland Cowtty Treasurer
903 North Opdyke Road, Suite C
Auburn Hills, Ml 48326
Email: ecf@kaalaw.com
Kilpatrick Stockton LLP
Attn: Rex R Veal, Esq.
C-aunsel for TriMont Real Estate Advisors, Inc.
Suite 2800
II 00 Peachtree Street, NE
Atlanta, GA 30309-4530
FAX: 404-815-6555
Email: rveal@kilpatrickstockton.com
Kirkland & Ellis, LLP
Attn: Marc Carmel, Partner
300 North La Salle
Chicago, IL 60654
FAX: 312-862-2200
Email: marc.carmcl@kirl<land.com
Page 3 of8
Hilton Hotels Corporation
4649 Paysphcrc Circle
Chicago, IL 60674-4694
FAX: 901-374-5425
Intemal Revenue Service
PO Box21I26
Philadelphia, PA 19114
Kasowitz, Benson, Torres & Friedman LLP
Attn: Adam L. Shiff, Esq.
Cowtsel for Five Mile Capital Partners LLC
1633 Broadway
New York, NY 10019
FAX: 212-506-1800
Email: ashifl@kasowitz.com
Kaufmann Gildin Robbins & Oppenheim LLP
Attn: Bruce R. Alter. Esq.
Counsel to Hilton Worldwide, Inc.
550 Mamaroneck Avenue, Suite 510
Harrison, New Y orl< I 0528
FAX: (914) 670-0031
Email: info@altergoldlaw.com
Kilpatrick Stockton LLP
Attn: Jonathan E. Polonsky, Esq.
Counsel for TriMont Real Estate Advisors, Inc.
31 West 52nd Street
14th Floor
New York, NY 10019
FAX: (212) 775-8819
Email: jpolonsky@kilpatrickstockton.com
Kilpatrick Stockton LLP
Attn: Todd C. Meyers, Esq.
Counsel for TriMont Real Estate Advisors, Inc.
Suite 2800
II 00 Peachtree Street, NE
Atlanta, Georgia 30309-4530
FAX: (404) 815-6555
Email: tmeycrs@kilpatrickstockton.com
Kohner, Mann & Kailas, S.C.
Attn: Samuel C. Wisotzkey
Counsel for Ecolab Inc.
4650 North Port Washington Road
Milwaukee, WI 53212-1059
FAX: (414) 962-8725
Email: swisotzkey@kmksc.com
Hilton Inns, Inc.
9336 Civic Center Drive
Attn: General Counsel
Beverly Hills, CA 90210
FAX: (310)205-7655
Jenkins/Gales & Martinez
5933 West Centw:y Blvd
Suitc#IOOO
Los Angeles, CA 90045
FAX: 310-670-8721
Kasowitz, Benson, Torres & Friedman LLP
Attn: Daniel A. Fliman
Counsel for Five Mile Capital Partners LLC
1633 Broadway
NewYorl<,NY 10019
FAX: 212-506-1800
Email: dfliman@kasowitz.com
Kaufinann Gildin Robbins & Oppenheim LLP
David J. Kaufinann, Esq.
Kevin M. Shelley, Esq.
Counsel for Hilton Worldwide, Inc.
777 Third Avenue, 24th Floor
New York, NewYorl< 10017
FAX: (212) 755-3174
Email: dkaufiruum@kaufinanngildin.com
Kilpatrick Stockton LLP
Attn: Marl< A. Fink, Esq.
Counsel for TriMont Real Estate Advisors, Inc.
Suite 2800
1100 Peachtree Street, NE
Atlanta, GA 30309-4530
FAX: 404-815-6555
Email: mtink@kilpatrickstockton.com
Kirkland & Ellis, LLP
Attn: Jennifer Marines, Associate
Citigroup Center
601 Lexington Avenue
New York, NY 10022
FAX: 212-446-6460
Email: jennifer.marines@kirldand.com
LAMCOLLC
Susanne frey
1271 Avenue of the Americas, 39th Floor
New York, NY 10020
Email: susanne.frey@larncollc.com
Innkeepers USA Trust, et at. - Master Service List
LaSalle Bank National Association
Ann: Global Securities and Trust Services
LB-UBS Commercial Mortgage Trust 2007-C6
135 South LaSalle Street
Suite 1625
Chicago, IL 60603
Lehman ALI, Inc.
Attn: Charlene Thomas
399 Park Avenue
New York, NY I 0022
FAX: 646-758-4544
Lehman ALI, Inc.
c/o David Forti, Esq.
2929 Arch Street
Philadelphia, P A 19103
FAX: 215-994-2222
Email: david.forti@dechert.com
Linebarger Goggan Blair & Sampson, LLP
Counsel for Bexar County
711 Navarro, Suite 300
San Antonio, TX 78205
FAX: (210) 225-64IO
Email: sanantonio.bankruptcy@publicans.com
LNR Property Corporation
1601 Washington Avenue, Suite 800
Miami Beach, FL 33 139
Marriott International, Inc.
10400 Fernwood Road
VP 0\\-ner and F ranehise Services
Bethesda, MD 208 I 7
Midland Loan Services, Inc.
I 0851 Mastin
Suite 700
Overland Park, KS 66210
Page4 of8
Lasalle Bank National Association
C/0 Wells Fargo Conun Mortgage Servicing
1320 Willow Pass Road, Suite 300
Concord, CA 94520
FAX: 925-798-8831
Lehman ALI, Inc.
Attn: Michael E. Lascher
1271 Avenue ofthc An1cricas
39th Floor
NEW YORK, NY 10020
FAX: 646-758-4544
LG Electronics USA Inc
PO Box 905337
Charlotte, NC 28290
FAX: 201-408-9076
LNR Partners, Inc.
Attn: Chris Brown
I601 Washington Avenue, Suite 700
Miami Beach, FL 33139
FAX: (305) 695-5601
Email: CBrown@LNRProperty.com
Marriott Hotels
180 Hawley Lane
T nun bull, CT 06484
FAX: 203-378-4958
Marx Realty & Improvement Co.
708 Third Ave.
21st Floor
New York, NY 10017-4I46
FAX: 212-983-4532
Email: Stephanie.T@marxrealty.com
Midland Loan Services, Inc.
Attn: President
P.O. Box 25965
Shawnee Mission, KS 66225
FAX: 913-253-900I
Law Oflices of Robert E. Luna, P.C.
Ann: Andrea Sheehan, Esq.
Counsel for Carrollton- Farmers Branch
Independent Scholl District
4411 N. Centeral Expressway
Dallas, TX 75205
FAX: 214-521-1738
Email: shcehan@txschoollaw.com
Lehman ALI, Inc.
Attn: Michael E. Lascher
1271 Avenue of the Americas, 39th Floor
New York. NY 10020
FAX: 646.285.9336
Linebarger Goggan Blair & Sampson, LLP
Attn: Elizabeth Weller
2323 BI)'llll Street Suite 1600
Dallas, TX 75201
FAX: 469-221-5002
Email: dallas.bankruptcy@publicans.com
LNR Partners, Inc.
Attn: Director of Servicing
1601 Washington Avenue
Suite 700
Miami, FL 33139
Email: cbrown@Lnrproperty.com
Marriott International, Inc.
10400 Fernwood Road
Franchise Attnrney
Law Department 52/923.25
Bethesda. MD 20817
Merrill Lyuch Mortgage Lending Inc.
Fonr World Financial Center
16th Floor
New York. NY I0080
Morrison & Foerster, LLP
Attn: Lorenzo Marinuzzi
Counsel for Official Committee ofUnseenred Creditors
1290 Avenue ofthe Americas
New York. NY 10 I 04-0050
FAX: (212) 468-7900
Email: LMarinuzzi@rnofo.com
Innkeepers USA Trost, et al. - Master Service List
Morrison & Foerster, LLP
Attn: Brett H. Miller
Counsel for Official Committee of Unsecured Creditors
1290 Avenue of the Americas
New York, NY 10 I 04-0050
FAX: (212) 468-7900
Email: BMillcr@mofo.com
Oak Roofing. Inc.
220Hcmlock
Wood Dalc.IL 60191
FAX: 630-238-0288
Office of the Attorney General
I 00 West Randolph Street
Chicago, IL 6060 I
FAX: 312-814-3589
Office of the Attomey General
1412 Main Street
Suite 810
Dallas, TX 75202
FAX: 214-969-76I5
Email: greg.abbott@oag.state.tx.us
Office of the Attorney General
25 Market Street
CN080
Trenton, NJ 08625
FAX: 609-292-3508
Office of the Attomcy General
6 State House Station
Augusta, ME 04333
FAX: 207-626-8518
Office of the Attorney General
California Department of Justice
Attn: Public Inquiry Unit
PO Box 944255
Sacramento, CA 94244-2550
FAX: 916-323-5341
PageS of8
Morrison & F oerstcr, LLP
Attn: Jordan A. Wishnew
Counsel for Official Committee of Unsecured Crediors
1290 Avenue of the Americas
New York, NY 10104-0050
FAX: (212) 468-7900
Email: JWishncw@mofo.com
Office Depot
PO Box 633211
Cincinnati, OH 45263-3211
FAX: 800-685-5010
Office of the Attorney General
1125 Washington Street SE
PO Box40!00
Olympia, W A 98504-0100
FAX: 360-664-0228
Email: rob.mckenna@atg.wa.gov
Office of the Attomey General
1525 Sherman St., 5th Floor
Denver, CO 80203
FAX: 303-866-5691
Email: cab@statc.co.us
Office of the Attorney General
40 Capitol Square SW
Atlanta, GA 30334
FAX: 404-657-8733
Office of the Attomcy General
900 East Main Street
Richmond, VA 23219
FAX: 804-786-!991
Office ofthe Attomey General
Deputy AG JcffKoziar
25 Market Street
CN080
Trenton, NJ 08625
FAX: 609-292-3508
National Assn. of Attomcys General
Karen Cordry
750 First St., N.E .. Suite 1100
Washington, DC 20570
Office of Attorney General
State of Florida
The Capitol PL-0 I
Tallahassee, FL32399-1050
FAX: 850-488-5865
Office of the Attorney General
1300 I Street, Suite 1740
Sacramento, CA 95814
FAX: 916-323-5341
Office of the Attorney General
200 St. Paul Place
Baltimore, MD 21202
Email: oag@oag.state.mdus
Office of the Attorney General
55 Elm Street
Hartford, CT 06141
FAX: 860-808-5389
Office of the Attorney General
900 I Mail Service Center
Raleigh, NC 27699-900 I
FAX: 919-716-6750
Office of the Attorney General
G. Metmen Williams Building, 7th Floor
525 W. Ottawa St.
PO Box 30212
Lansing. MI 48909
FAX: 517-373-3042
Innkeepers USA Trust, et al.- Master Service List
O!licc of the Attorney General
Indiana Government Center South-5th Floor
402 W. Washington St.
Indianapolis, IN 46204
FAX: 317-232-7979
Email: Constituent@atg.in.gov
Otlice ofthe Attorney General
P0Box629
Raleigh, NC 27602
FAX: 919-716-6750
Onyx Scalcoating. Inc.
15113 S. Kilbourn
Midlothan, IL 60445
Paul, Weiss, Rifkand, Wharton & Garrison, LLP
Attn: Lauren Shumejda
Counsel to Apollo Investment Group
1285 Avenue ofthe Americas
New York, New York 10019-6064
FAX: (212) 757-3990
Email: lshumejda@paulweiss.com
Perkins C oie
Counsel for CWCapital Performing Loan Management- CMBS
Attn: Beth Understahl
290 I North Central Avenue
Suite 2000
Phoenix, AZ. 85012-2788
Email: BUnderstahl@perkinscoie.com
Quoizel, Inc.
6 Corporate PkY.y.
Goose Creek, SC 29445
FAX: 631-231-7102
Romero Law Firm
Attn: Martha E. Romero
Counsel for San Bernardino County, a California Taxing Authority
BMR Professional Building
6516 Bright Ave.
Whittier, CA 90601
FAX: 562-907-6820
Email: rornero@mrornerolawfmn.corn
Page 6 of8
O!lice of the Attorney General
McCorntack Building
One Ashburton Place
Boston, MA 02108
O!lice of the Attorney General
The Capitol- 2nd Floor
Albany, NY 12224-0341
Paul, Weiss. Rifkand. Wharton & Garrison, LLP
Attn: Alan W. Kornberg, Esq.
Counsel to Apollo Investment Group
1285 Avenue of the Americas
New York, NY 10019-6064
FAX: 212-757-3990
Email: akornbcrg@paulweiss.com
Pdq Consulting, Inc.
407 Wood Lake Drive
Allen TX 75013
FAX: 972-767-3472
Perkins Coie LLP
Attn: David Neff
131 So nth Dearborn S trc<:t
Suite 1700
Chicago, IL 60603
FAX: 312-324-9689
Email: DNeff@perkinscoie.com
Rhs Commercial LLC
I 003 Stafford Road
Kalamazoo, MI 49006
Royal Cup Dine-Mor
PO Box I 70971
Birmingham, AL 35217
Office of the Attorney General
PO Box 120
Hartford, CT 06141-0120
FAX: 860-808-5383
Email: attorney.gcncral@et.gov
Otlice of the Attorney General
The Capitol, Room 116
700 Capitol Avenue
Frankfort, KY 40601-3449
FAX: 502-696-5389
Email: attomey.gcncral@ag.ky.gov
Paul, Weiss, Rifkand, Wharton & Garrison, LLP
Attn: Andrew J. Ehrlich
Counsel to Apollo Investment Group
1285 Avenue ofthe Americas
New York, New York 10019-6064
FAX: (212) 757-3990
Email: achrlich@paulweiss.com
Pennsylvania O!lice of the Attorney General
16th Floor, Strawberry Square
Harrisburg, PA 17120
FAX: 717-787-8242
Promus Hotels, Inc.
9336 Civic Center Drive
Attn: General Counsel
Beverly Hills, CA 90210
FAX: (310)205-7655
Romala Stone, Inc.
315 S. Beverly Drive
Suite 506
Beverly Hills, CA 902124316
Saul Ewing LLP
Attn: Jeffrey C. Hampton
Counsel for U.S. Foodscrvicc, Inc.
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102
FAX: (215) 972-1848
Email: jhampton@saul.corn
Innkeepers USA Trust, et al. - Master Service List
Saul Ewing LLP
Attn: Melissa W. Rand, Esq.
Counsel for U.S. Foodservice, Inc.
Centre Square West
1500 Market Street. 38th Floor
Philadelphia, PA 19102
FAX: (215) 972-1872
Email: mrand@saul.com
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
FAX: 212-735-2000
State of Michigan, Department of Treasury
Michael A. Cox, Attorney General
Juandisha M. Harris, Assistant Attomey General
Cadillac Place, Ste. 10-200
3030 W. Grant Blvd.
Detroit, MI 48202
Email: harrisjm@michigan.gov
Swank Audio Visuals, LLC
639 E. Garvois Bluffs
St. Louis, MO 63026
FAX: 636-680-2898
Texas Attorney General's Office
Hal F. Morris & Ashley F. Bartram
Bankruptcy & Collections Div.
PO Box 12548, MC-008
Austin, TX 78711-2548
FAX: 512475-2994
Triangle Renovations
3760 Louisville Road
Louisville, TN 37777
Waste Management
PO Box 930580
Atlanta, GA 31193
FAX: 630-218-1560
Page 7 of8
Sheppard Mullin Richter & Hampton LLP
Attn: Jane Qin
30 Rockefeller Phl7.a, Suite 2400
New York, NY 10112
FAX: 212-653-870 I
Emai I: jqin@sheppardmullin.com
Springfield Corporation
PO Box 620189
Atlanta, GA 30362
FAX: 770-729-0995
Summerfield Hotel Company LLC
Attn: SVP Franchising
20 West Monroe
8th Floor
Chicago, IL 60606
SYSCOFood
POBox 1508
Walnut, CA 91788
FAX: 909-598-6383
The Sheraton LLC
600 Galleria Parkway
Suite 1700
Attn: General Counsel -Franchise Division
Atlanta, GA 30339
United States Trustees Office
Region2
33 Whitehall Street, 21st Floor
New York, NY 10004
FAX: (212) 668-2255
Wells Fargo Bank
Carol Anderson, Asset Manager
1901 Harrison St, 2nd Floor
Oakland, CA 94612
Sheppard Mullin Richter & Hampton LLP
Carron Shulman, Esq.
30 Rockefeller Plaza, Suite 2400
New York, NY 10112
FAX: 212-653-8701
Email: cshulman@sheppardmullin.com
Starwood Hotels& Resorts Worldwide Inc.
Attn: Sandy Olson
9841 Airport Blvd., Ste 812
Los Angeles, CA 90045
FAX: 914-640-8310
Sunset Pools, Inc.
1808-l I Street NW Ste 20 I
Washington, DC 20006
FAX: 703-933-0077
Tashjian & Padian
Gerald Padian, Esq. & Bradley M. Rank, Esq.
Counsel for CWCapital Asset Management, LLC
and C-lll Asset Management LLC
729 Seventh Avenue
New York, NY 10019
FAX: (212) 319-9883
Email: gpadian@tashpad.com
The Sheraton LLC
c/o Starwood Hotels and Resorts Worldwide
Ill! Westchester Ave
Attn: General Counsel
White Plains, NY 10604
Us Wall Decor
487 Myatt Drive
Madison, TN 37115
Wells Fargo, N.A.
c/o Capmark Finance Inc.
Attn: Portfolio Managers
Three Ravina Drive, Suite 200
Atlanta, GA 30346
Innkeepers USA Trust, et al. - Master Service List
Wells Fargo, N.A.
c/o Christopher J. Hart, Esq.
Locke Liddle & Sapp LLP
401 9th Street, N.W.
Suite 400
Washington. DC 20004
FAX: (202) 220-6945
Email: chart@lockclord.com
Page 8 of8
Westem State Design, Inc.
25616 Nickle Place
Hayward, CA 94545
Creditors: 149
EXHIBIT A
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 1 of 12
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ X
BANK OF AMERICA, N.A., as Trustee for the Registered
Holders of Wachovia Bank Commercial Mortgage Trust
2007-C30, acting by and through its Special Servicer,
CWCapital Asset Management LLC, BANK OF AMERICA,N.A.,
as Trustee for the Registered Holders of COBALT CMBS
Commercial Mortgage Trust 2007-C2 and Wachovia Bank
Commercial Mortgage Trust 2007 -C31, acting by and through
CWCapital Asset Management LLC pursuant to the authority
granted under that certain Amended and Restated Co-Lender
Agreement dated March 12, 2007 and U.S. BANK NATIONAL
ASSOCIATION, as Trustee for the Registered Holders of
ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC
Commercial Mortgage Trust 2007-6, acting by and through
CW Capital Asset Management LLC pursuant to the authority
granted under that certain Amended and Restated Co-Lender
Agreement dated March 12, 2007,
Plaintiffs,
-against-
PCV ST OWNER LP, ST OWNER LP, TRI-LINE CONTRACTING
CORP., ATLAS FIRE PROTECTION, INC., POMALEE ELECTRIC
CO, INC., REFUSE SYTEMS CORP., PRO TILE
DISTRIBUTORS, INC., TRITON STONE AND MARBLE LLC,
S.T.S. TRADING INC. d/b/a S.T. LUMBER & HOME CENTER,
ELECTRICAL, PLUMBING, S.D. INT'L d/b/a S.D. STONE
DEPOT, ELBEX AMERICA OF NEW YORK, INC.,
NEW YORK CITY DEPARTMENT OF TRANSPORTATION
PARKING VIOLATIONS BUREAU, NEWYORK CITY
ENVIRONMENTAL CONTROL BOARD and FIRE
DEPARTMENT OF THE CITY OF NEW YORK,
Defendants,
-against-
APPALOOSA INVESTMENT L.P., I, PALOMINO FUND LTD.,
THOROUGHBREDFUND L.P.; and THOROUGHBRED
MASTER LTD.
Intervenor-Defendants.
___________________________________________ .X
10 Civ. 1178 (SHS)
ECFCase
MOTION TO INTERVENE AS PARTY DEFENDANT BY
APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD.,
THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD.
1
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 2 of 12
TO THE HONORABLE JUDGE STEIN:
Pursuant to Rule 24(a) of the Federal Rules of Civil Procedure, Appaloosa Investment
L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd.
(collectively, "Appaloosa" or the "Appaloosa Intervenors") file this motion to intervene as a
matter of right in this action as an intervenor-defendant. Intervention is required because
Plaintiff CW Capital has pursued foreclosure in breach of its fiduciary obligations to the
Appaloosa Intervenors. Plaintiff CW Capital is also deeply conflicted, and does not adequately
represent the interests of the Appaloosa Intervenors, who have more than three quarters of a
billion dollars at stake in the trusts secured by the property at issue in the foreclosure action;
namely, the mortgage on Peter Cooper Village and Stuyvesant Town (the "Property").
Plaintiff CW Capital's actions in pursuing foreclosure on Peter Cooper Village and
Stuyvesant Town ("Stuyvesant Town") violate its obligations as Special Servicer to act as a
prudent commercial mortgage servicer seeking to maximize value for the benefit of all
Certificateholders. By rushing to foreclose, when other less hazardous avenues were available,
Plaintiff CW Capital has recklessly and imprudently exposed the Appaloosa Intervenors-and
other Certificateholders-to wholly avoidable losses, risks, and injuries, including:
Double and Unnecessary Transfer Taxes: A foreclosure judgment will require a
double payment of New York City's $100 million transfer tax on the Property:
once when title is transferred by foreclosure, and a second time when the Property
is sold in the inevitably necessary workout of this loan. No prudent commercial
mortgage lender would willingly assume these tax liabilities, particularly when
they could be limited by other means, or avoided entirely in bankruptcy.
Environmental Liabilities: The documents governing the trusts state clearly that
Plaintiff CW Capital may not pursue foreclosure unless, within six months prior
to initiating the Action, it has obtained an environmental assessment certifying
that the relevant mortgaged property is in compliance with applicable
2
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 3 of 12
environmental laws and regulations. The Appaloosa Intervenors do not believe
any such assessment has been obtained.
Excess Rent Claims: The tenants at the Property are the beneficiaries of an un-
liquidated, potentially massive excess rent claim that may, in the future, be
converted into a damage judgment worth hundreds of millions of dollars. The
status of this liability is uncertain, as is its effect on the rights of the
Certificateholders and the value of the underlying mortgaged property.
Proceeding precipitously to take title by foreclosure, in the face of this
uncertainty, is again imprudent and not in the best interest of the
Certificateholders.
Creation of Unnecessary Losses for Certificateholders: By subjecting the
property to transfer tax liability on foreclosure, Plaintiff CW Capital may obtain a
priming lien at the top of the capital structure to secure repayment of that
advance. This priming lien would create additional losses that would not
otherwise be suffered by holders of subordinated tranches, including tranches of
Certificates owned by Appaloosa.
Voting Rights: Tranches whose recovery is wiped out by CW's priming lien will
also be deprived of voting rights they otherwise would enjoy under the trusts.
The Appaloosa Intervenors stand to suffer unique and irreparable injuries as a result of
Plaintiff CW Capital's actions. The Appaloosa Intervenors own over $750,000,000 of
Certificates issued by five trusts that hold securitized interests in the mortgage on the Property,
including the Wachovia Bank Commercial Mortgage C-30 Trust (the "C-30 Trust"). The C-30
Trust is the largest of these five trusts. Under the documents that defined the relationship
between the trusts, the C-30 Trust is entitled to administer and enforce the mortgage on the
Property for the benefit of the Certificateholders in all of the trusts.
Although much of Appaloosa's holdings are senior debt, Appaloosa holds over 30% of
three subordinated tranches of C-30 Trust Certificates. At a reported valuation range of $1.8 -
$2.2 billion, Appaloosa's particular series of subordinated Certificates are likely to be the next
loss-absorbing layers in the C-30 debt stack, and would thus become impaired by the incurrence
of $200 million of priming liens and back-end transfer taxes. Moreover, the thickness of these
3
Case 1 : 1 0-cv-0 1178-AKH Document 16-2 Filed 02/23/1 0 Page 4 of 12
debt layers is so narrow ($50-$100 million), that the additional costs would likely be the
difference between a recovery of zero and par on Appaloosa's particular tranches. These
securities are likely to be the fulcrum securities in any restructuring of the Property. Appaloosa
owns significant amounts of Certificates in other pivotal tranches, as well. These losses( could be
avoided if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary
obligations.
Appaloosa is thus uniquely at risk from CW Capital's reckless disregard of its obligations
to act as a prudent, post-default fiduciary in servicing of the Mortgage. All Certificateholders,
however, will be injured if foreclosure proceeds; as is explained below, foreclosure will serve
only to magnify the Certificateholders' losses, rather than to maximize their recovery as would
be the case if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary
obligations.
No other party to the Action can or will adequately represent the interests of the
Appaloosa Intervenors. Plaintiff CW Capital is not only acting imprudently, it is subject to a
profound conflict of interest. The governmental entity defendants stand to benefit, too: Plaintiff
CW Capital's actions, if it forecloses, will subject the Property to $200 million of wholly
unnecessary transfer tax liability. This tax liability does not benefit the Certificateholders;
instead, every dollar goes solely to benefit the governmental entities. Absent an intervention, no
party in the lawsuit will adequately hold Plaintiff CW Capital accountable to perform its
obligations as Special Servicer.
The Appaloosa Intervenors should not be made to wait for a damages remedy for breach
of Plaintiff CW Capital's fiduciary obligations when intervention of right is warranted, and could
avoid these damages entirely.
4
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 5 of 12
The Appaloosa Intervenors' Interests
The Appaloosa Intervenors hold over three quarters of a billion dollars of Certificates
(debt instruments that are sometimes referred to as notes)
1
whose repayment is secured by multi-
billion dollar securitizations ("Securitizations") of the mortgage on the Property. The Appaloosa
Intervenors have a clear interest in the Property that is the subject of the Action. See FED. R.
CIV. P. 24(a)(2).
The Appaloosa Intevenors' Interest May Be Injured or Impaired
By the Disposition of the Action
On February 16, 2010, without consulting with Appaloosa, Plaintiff CW Capital, in its
capacity as Special Servicer and on behalf of the Trustees of the trusts, filed a Complaint
("Action") seeking to foreclose on the Property. As is explained in the accompanying
memorandum of law, when it acts as Special Servicer, Plaintiff CW Capital is required to act in
the best interests of all Certificateholders, without regard to who owns the certificates. See C-30
Trust Pooling and Servicing Agreement, -dated as of March 1, 2007 (the "PSA") at 1.01
"Servicing Standard." The Special Servicer must also perform its work "with a view to the
maximization of the recovery on such Mortgage Loans on a net present value basis and the best
interests of the Certificateholders ... " /d. (emphasis added).
Plaintiff CW Capital's actions in pursuing foreclosure are wholly imprudent. They
threaten to magnify losses, rather than maximize recoveries, for the Certificateholders in general,
and for the Appaloosa Intervenors in particular.
1
As noted, certain of the Certificates are held in the C-30 Trust. The other Certificates are held in the COBALT
CMBS Commercial Mortgage Trust 2007-C2, Wachovia Bank Commercial Mortgage Trust 2007-C31, the ML-CFC
Commercial Mortgage Trust 2007-5, and the ML-CFC Commercial Mortgage Trust 2007-6 ("Other Trusts" and
with the C-30 Trust, collectively, the ''Trusts").
5
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 6 of 12
An obvious example of Plaintiff CW Capital's breach of its fiduciary obligations as a
prudent servicer is that foreclosure would subject the Securitizations to double liability for New
York City's transfer tax. This liability could have been limited to a single payment, had Plaintiff
CW Capital pursued a prudent workout outside of bankruptcy. It could have been avoided
entirely had Plaintiff CW Capital instituted bankruptcy proceedings. In a Chapter 11 bankruptcy
case, a properly structured transaction made pursuant to a plan would avoid the imposition of a
transfer stamp or similar tax. 11 U.S.C. 1146(a). Plaintiff CW Capital's reckless decision to
pursue foreclosure-and risk double transfer tax liability-when other means were available to
maximize the Certificateholders' recovery, is in plain violation of the Servicing Standard. The
fact that Plaintiff CW Capital has already breached its obligations to the Appaloosa Intervenors,
and to the other Certificateholders, demonstrates that it does not adequately represent their
interests in this proceeding.
There is a second, unique injury that may impair or impede the Appaloosa Intervenors'
interest in the Property, and their ability to exercise their rights to recover on the debt they hold.
Under the PSA, Plaintiff CW Capital as Special Servicer may receive a priming lien for advances
it makes to pay the transfer tax. This priming lien will, on a dollar for dollar basis, further
subordinate the existing tranches of junior debt. The Appaloosa Intervenors hold more than 30%
of the debt in the subordinated tranches that will be affected most directly by this needless
priming lien, potentially reducing their recovery from par to zero. If CW Capital is permitted,
unilaterally, to strip the value of these Certificates, Appaloosa and similarly situated holders also
risk losing valuable voting and control rights. It will be difficult (if not impossible) to "un-ring
the bell" once the transfer tax liability is incurred. It will also be very difficult to quantify the
6
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 7 of 12
actual and consequential damages that will flow to the Appaloosa Intervenors if these rights are
destroyed or impaired.
There are other examples of Plaintiff CW' s reckless behavior, and its heedless disregard
for the liabilities and injuries it is inflicting on the Certificateholders, including the Appaloosa
Intervenors. No prudent servicer would foreclose on a World War 11-era property without first
obtaining an environmental assessment to ensure it was not assuming potentially catastrophic
environmental liabilities. The PSA recognizes this. It permits Plaintiff CW Capital to proceed to
foreclosure only if-within the preceding six months-an environmental assessment has been
performed. See 3.09(c) of the PSA. The Appaloosa Intervenors are not aware that any such
environmental assessment has been performed. Plaintiff CW Capital's rush to foreclose without
first obtaining the required environmental assessment is yet another example of why it does not
adequately represent the Appaloosa Intervenors' interests.
Equally baffling is Plaintiff CW Capital's insistence on foreclosure in the face of the
substantial uncertainty surrounding the currently unliquidated, but potentially massive excess
rent claim in favor of present and former tenants of the Property. It makes little sense that the
current owner of the Property-an affiliate of TishmanSpeyer-would not have filed for
bankruptcy to limit its own liability on this claim. That Plaintiff CW Capital has rushed to
foreclosure, without regard to the risk that liability for that claim might transfer with ownership,
makes even less sense. No prudent mortgage lender would willingly take title to this Property
without first ascertaining: a) whether this judgment and potential liability run with the Property;
b) whether the tenants would be entitled to recover any such judgment by way of rent deductions
in the future; c) whether the Trustee's taking title to the Property in a foreclosure sale would
result in an assumption of this potential and significant liability on the part of the Trustee or the
7
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 8 of 12
Certificateholders;.d) whether foreclosure would extinguish the direct or contribution liability of
those who charged and pocketed the excess rents to or for the benefit of the Property, the
Trustee, or the Certificateholders; and e) whether another vehicle for sale or restructuring could
result in the discharge of such potential liability. These are concrete financial risks to all of the
Certificateholders if the foreclosure proceeds, but Plaintiff CWCAM has imprudently and
recklessly ignored them.
Plaintiff CW Capital's imprudent, irresponsible actions and its move to foreclose in the
face of unknown environmental and litigation risks are more than sufficient to establish that the
Appaloosa Intervenors' interests "may be impaired or injured" by the disposition of the Property.
Intervention should be granted to ensure that, before foreclosure proceeds, Plaintiff CW Capital
is required to act in a manner consistent with the Servicing Standard and its obligations under the
PSA. As explained below, in the absence of intervention, no current party to the case has any
incentive or ability to demand CW Capital's faithful performance of its obligations.
The Appaloosa Intervenors' Interests Are Not Adequately Represented
The interests of the Appaloosa Intervenors are not adequately represented by any party in
the Action. This is no.t the typical case in which a neutral Indenture Trustee can be trusted to act
faithfully and in the best interests of all of the Certificateholders. To the contrary, Plaintiff CW
Capital is significantly conflicted because it occupies competing roles, with divergent interests
from other Certificateholders in the Trusts. The remaining party defendants stand only to benefit
if Plaintiff CW Capital recklessly exposes the Securitizations and the Certificateholders to
excessive tax liabilities and litigation risks.
8
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 9 of 12
Plaintiff CW Capital's Conflicting Interests
Plaintiff CW Capital is subject to a conflict of interest created by its irreconcilable roles
as Special Servicer and Controlling Certificateholder under the Securitizations. As is explained
in the accompanying memorandum of law, when it acts as Special Servicer, Plaintiff CW Capital
is required to act in the best interests of all Certificateholders and without regard to who owns a
certificate. When it acts as Controlling Certificateholder, however, Plaintiff CW Capital is
permitted to instruct the Special Servicer-here, itself-to take actions solely in CW Capital's
individual interests as a holder of notes.
4
This presents an irreconcilable conflict of interest for
CW Capital. While CW Capital may have a contractual right to pursue its own conflicted self
interest, this contractual right cannot override its overall fiduciary obligation as Special Servicer
to act in the interests of all Certificateholders. This conflict precludes CW Capital from
"adequately representing," FED. R. Civ. P. 24(a)(2), the interests of all Certificateholders,
including the Appaloosa Intervenors.
The pending appraisal of the Property is just one example of how this conflict places CW
Capital, as Special Servicer, directly at odds with the interests of other Certificateholders. CW
Capital is obligated, and likely already is proceeding, to obtain an appraisal of the Mortgage
collateral. That valuation may very well establish that, while the quick path to foreclosure that
CW Capital has chosen as the Controlling Class Representative would place CW Capital in
control of the Property post-foreclosure, the junior notes for which it acts may prove to be
significantly "out-of-the-money." Thus, the de facto controlling class-of which Appaloosa
4
See PSA at 6.11 (b) (noting that the Controlling Class Representative "may take actions that favor the interests
of one or more Classes of the Certificates over other Classes of the Certificates, ... may have special relationships
and interests that conflict with those of Holders of some Classes of the Certificates, ... [and] may act solely in the
interests of the Holders of the Controlling Class .... ") and (a) (providing that "the Special Servicer will disregard
any direction or objection ... of the Controlling Class Representative ... if such direction or objection causes ... the
Special Servicer to violate the Servicing Standard .... ").
9
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 1 0 of 12
currently holds more than 30%-may be a class in which CW Capital holds no debt interest but
merely serves as the Special Servicer fiduciary. Under 6.10 of the PSA, the Special Servicer
may go to the Certificateholders (and in this case certainly at a minimum the Certificateholders
in the de facto controlling class) to confirm that its action, or its intended action, complies with
the servicing standard under the PSA. CW Capital not only has not elected to so proceed, it has
rebuffed any efforts by Certificateholders to even enter into a dialogue regarding the most
prudent path to take.
When the Appaloosa Intervenors asked CW Capital to discuss all of these issues, it has
received "responses" of two varieties: no response at all, or flippant responses from CW
Capital's counsel. These responses are inconsistent with CW Capital's obligations as a fiduciary
to the Certificateholders, and they fundamentally ignore the grave losses and risks to which CW
Capital's reckless conduct has exposed all of the Certificateholders.
The Appaloosa Intervenors Meet the Requirements to Intervene as of Right
The Appaloosa Intervenors have met all of Rule 24's requirements for intervention as of
right. This intervention is timely. As the holder of more than three quarters of a billion dollars
of Certificates whose repayment is secured by the Property, the Appaloosa Intervenors "have an
interest relating to the property that is the subject" of this foreclosure Action. See Rule 24(a)(2).
Successful disposition of the action will, as a practical matter, impair or impede Appaloosa's
rights by creating priming liens that wipe out their recovery, and by exposing them and other
Certificateholders to hundreds of millions of dollars of wholly avoidable and unnecessary taxes
and litigation risks. Foreclosure will also irreparably injure their voting rights, and their rights as
holders of fulcrum securities. Finally, the Appaloosa Intervenors' interests are not adequately
represented by any current party to the Action. Plaintiff CW Capital is irreconcilably conflicted
10
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 11 of 12
and is acting irrationally and imprudently. The governmental entity defendants do not represent
these intervenors' interests, either; to the contrary, they stand to benefit if the foreclosure action
results in a double payment of the transfer tax at the Certificateholders' expense.
Intervention of Right Should be Granted
For these reasons, and those stated in greater detail in their accompanying Memorandum
of Law, the Appaloosa Intervenors respectfully request that the court grant them intervention as
of right, and that they be permitted to file the Complaint in Intervention attached to this Motion
as Exhibit "A."
Dated: New York, New York
February 23, 2010
OF COUNSEL:
GIBBS & BRUNS LLP
Kathy D. Patrick
Texas Bar No. 15581400
Robert M. Madden
Respectfully submitted,
WARNER PARTNERS, P.C.
By: ----"'sf,__ ______ _
11
Kenneth E. Warner
KW 5524
KWarner@WarnerPartnersLaw.com
950 3rd A venue
New York, NY 10022-2705
(212) 593-8000
ATTORNEYS FOR INTERVENORS
APPALOOSA INVESTMENT L.P. I,
PALOMINO FUND LTD.,
THOROUGHBRED FUND L.P., AND
THOROUGHBRED MASTER LTD.
Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 12 of 12
Texas Bar No. 00784511
Sydney Ballesteros
State Bar No. 24036180
Anthony N. Kaim
State Bar No. 24065532
1100 Louisiana, Ste. 5300
Houston, Texas 77002
Tel: (713) 650-8805
Fax: (713) 750-0903
12
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 1 of 15
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
__________________________________________ X
BANK OF AMERICA, N.A., as Trustee for the Registered
Holders of Wachovia Bank Commercial Mortgage Trust
2007 -C30, acting by and through its Special Servicer,
CWCapital Asset Management LLC, BANK OF AMERICA,N.A.,
as Trustee for the Registered Holders of COBALT CMBS
Commercial Mortgage Trust 2007 -C2 and Wachovia Bank
Commercial Mortgage Trust 2007 -C31, acting by and through
CWCapital Asset Management LLC pursuant to the authority
granted under that certain Amended and Restated Co-Lender
Agreement dated March 12,2007 and U.S. BANK NATIONAL
ASSOCIATION, as Trustee for the Registered Holders of
ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC
Commercial Mortgage Trust 2007-6, acting by and through
CW Capital Asset Management LLC pursuant to the authority
granted under that certain Amended and Restated Co-Lender
Agreement dated March 12, 2007,
Plaintiffs,
-against-
10 Civ. 1178 (SHS)
ECFCase
PCV ST OWNER LP, ST OWNER LP, TRI-LINE CONTRACTING
CORP., ATLAS FIRE PROTECTION, INC., POMALEE ELECTRIC
CO, INC., REFUSE SYTEMS CORP., PRO TILE
DISTRffiUTORS, INC., TRITON STONE AND MARBLE LLC,
S.T.S. TRADING INC. d/b/a S.T. LUMBER & HOME CENTER,
ELECTRICAL, PLUMBING, S.D. INT'L d/b/a S.D. STONE
DEPOT, ELBEX AMERICA OF NEW YORK, INC.,
NEW YORK CITY DEPARTMENT OF TRANSPORTATION
PARKING VIOLATIONS BUREAU, NEWYORK CITY
ENVIRONMENTAL CONTROL BOARD and FIRE
DEPARTMENT OF THE CITY OF NEW YORK,
Defendants,
-against-
APPALOOSA INVESTMENT L.P., I, PALOMINO FUND LTD.,
THOROUGHBREDFUND L.P., and THOROUGHBRED
MASTER LTD.
Intervenor-Defendants.
___________________________________________ .X
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 2 of 15
COMPLAINT IN INTERVENTION AS A PARTY DEFENDANT
AND REQUEST FOR PRELIMINARY AND PERMANENT INJUCTION
OF APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD.,
THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD.
Pursuant to Rule 24(a) of the Federal Rules of Civil Procedure, Appaloosa
Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred
Master Ltd. (collectively, "Appaloosa" or the "Appaloosa Intervenors") file this
Complaint in Intervention as an Intervenor-Defendant.
INTRODUCTION
1. The Appaloosa Intervenors are required to file this action seeking
intervention in the present action because Plaintiff CW Capital has pursued foreclosure in
breach of its fiduciary obligations to the Appaloosa Intervenors. Plaintiff CW Capital
Asset Management LLC ("CW Capital") is also deeply conflicted, and does not
adequately represent the interests of the Appaloosa Intervenors, who have more than
three quarters of a billion dollars at stake in the trusts secured by the property at issue in
the foreclosure action; namely, the mortgage on Peter Cooper Village and Stuyvesant
Town (the "Property").
2. Plaintiff CW Capital's actions in pursuing foreclosure on Peter Cooper
Village and Stuyvesant Town ("Stuyvesant Town") violate its obligations as Special
Servicer to act as a prudent commercial mortgage servicer seeking to maximize value for
the benefit of all Certificateholders. By rushing to foreclose, when other less hazardous
avenues were available, Plaintiff CW Capital has recklessly and imprudently exposed the
Appaloosa Intervenors-and other Certificateholders-to wholly avoidable losses, risks,
and injuries, including:
2
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/1 0 Page 3 of 15
Double and Unnecessary Transfer Taxes: A foreclosure judgment will
require a double payment of New York City's $100 million transfer tax on
the Property: once when title is transferred by foreclosure, and a second
time when the Property is sold in the inevitably necessary workout of this
loan. No prudent commercial mortgage lender would willingly assume
these tax liabilities, particularly when they could be limited by other
means, or avoided entirely in bankruptcy.
Environmental Liabilities: The documents governing the trusts state
clearly that Plaintiff CW Capital may not pursue foreclosure unless, within
six months prior to initiating the action, it has obtained an environmental
assessment certifying that the relevant Mortgaged Property is in
compliance with applicable environmental laws and regulations. The
Appaloosa Intervenors do not believe any such assessment has been
obtained.
Excess Rent Claims: The tenants at the Property are the beneficiaries of
an un-liquidated, potentially massive excess rent claim that may, in the
future, be converted into a damage judgment worth hundreds of millions
of dollars. The status of this liability is uncertain, as is its effect on the
rights of the Certificateholders and the value of the underlying mortgaged
property. Proceeding precipitously to take title by foreclosure, in the face
of this uncertainty, is again imprudent and not in the best interest of the
Certificateholders.
Creation of Unnecessary Losses for Certificateholders: By subjecting the
property to transfer tax liability on foreclosure, Plaintiff CW Capital may
obtain a priming lien at the top of the capital structure to secure repayment
of that advance. This priming lien would create additional losses that
would not otherwise be suffered by holders of subordinated tranches,
including tranches of Certificates owned by Appaloosa.
Voting Rights: Tranches whose recovery is wiped out by CW's priming
lien will also be deprived of voting rights they otherwise would enjoy
under the trusts.
3. The Appaloosa Intervenors stand to suffer unique and irreparable injuries
as a result of Plaintiff CW Capital's actions. They own over $750,000,000 of Certificates
issued by five trusts that hold securitized interests in the mortgage on the Property,
including the Wachovia Bank Commercial Mortgage C-30 Trust (the "C-30 Trust").
Although much of Appaloosa's holdings are senior debt, Appaloosa holds over 30% of
3
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 4 of 15
three subordinated tranches of C-30 Trust Certificates. At a reported valuation range of
$1.8 - $2.2 billion, Appaloosa's particular series of subordinated Certificates are likely to
be the next loss-absorbing layers in the C-30 debt stack, and would thus become impaired
by the incurrence of $200 million of priming liens and back-end transfer taxes.
Moreover, the thickness of these debt layers is so narrow ($50-$100 million), that the
additional costs would likely be the difference between a recovery of zero and par on
Appaloosa's particular tranches. These securities are likely to be the fulcrum securities in
any restructuring of the Property. Appaloosa owns significant amounts of Certificates in
other pivotal tranches, as well. These losses could be avoided if Plaintiff CW Capital
were acting prudently and with due regard for its fiduciary obligations.
4. No other party to the action can or will adequately represent the interests
of the Appaloosa Intervenors. Plaintiff CW Capital is not only acting imprudently, it is
subject to a profound conflict of interest. The governmental entity defendants stand to
benefit, too: Plaintiff CW Capital's actions, if it forecloses, will subject the Property to
$200 million of wholly unnecessary transfer tax liability. This tax liability does not
benefit the Certificateholders; instead, every dollar goes solely to benefit the
governmental entities. Absent an intervention, no one in the lawsuit will adequately hold
Plaintiff CW Capital accountable to perform its obligations as Special Servicer.
5. The Appaloosa Intervenors should not be made to wait for a damages
remedy for breach of Plaintiff CW Capital's fiduciary obligations when intervention of
right is warranted, and could avoid these damages entirely.
PARTIES
4
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 5 of 15
6. Intervenor Appaloosa Investment LP I is a Delaware limited partnership.
Its principal place of business is care of its investment manager, Appaloosa Management
L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078.
7. Intervenor Palomino Fund Ltd. is a British Virgin Islands company. Its
principal place of business is care of its investment manager, Appaloosa Management
L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078
8. Intervenor Thoroughbred Fund L.P. is a Delaware limited partnership. Its
principal place of business is care of its investment manager, Appaloosa Management
L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078.
9. Intervenor Thoroughbred Master Ltd is a British Virgin Islands company.
Its principal place of business is care of its investment manager, Appaloosa Management
L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078.
10. According to its Complaint, Plaintiff CW Capital is a limited liability
company organized under the laws of the Commonwealth of Massachusetts.
11. Also according to its Complaint: Plaintiff CW Capital filed its Complaint
(a) in its capacity as Special Servicer for Bank of America, N.A., as Trustee for the
Registered Holders of W achovia Bank Commercial Mortgage Trust 2007 -C30, (b) on
behalf of Bank of America, N.A., as Trustee for the Registered Holders of COBALT
CMBS Commercial Mortgage Trust 2007-C2, and Bank of America, N.A., as Trustee for
the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007-C31, and
(c) on behalf of U.S. Bank National Association, as Trustee for the Registered Holders of
ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC Commercial Mortgage Trust
2007-6.
5
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 6 of 15
a. Bank of America, N.A. is a national banking association and is a
citizen and resident of North Carolina.
b. U.S. Bank National Association is a national banking association
and is a citizen and resident of Minnesota.
12. According to the Complaint, Defendants are as follows:
a. PCV ST Owner LP is a limited partnership organized and existing
under and by virtue of the laws of the state of Delaware, having an address c/o Tishman
Speyer, 45 Rockefeller Center, New York, New York, 10111.
b. ST Owner LP is a limited partnership organized and existing under
and by virtue of the laws of the state of Delaware, having an address c/o Tishman Speyer,
45 Rockefeller Center, New York, New York, 10111.
c. Tri-Line Contracting Corp. is a domestic corporation having its
principal place of business at 253 West 35th Street, 5th Floor, New York, New York
10001.
d. Atlas Fire Protection, Inc. is a domestic corporation having a
business address at 59-02 56th Street, Maspeth, New York, New York 10123.
e. Pomalee Electric Co. Inc. is a domestic corporation having a
business address at 450 Seventh Avenue, New York, New York 10123.
f. Refuse System Corp. is a domestic corporation having a business
address at 602 Tiffany Street, Bronx, New York 10474.
g. Pro Tile Distributors, Inc. is a domestic corporation having a
business address at 230 East 7th Street, Mount Vernon, New York 10550.
6
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 7 of 15
h. Triton Stone and Marble LLC is a domestic limited liability
company having a business address at 22 Wheeler Drive, Cortlandt Manor, New York
10567.
1. S.T.S. Trading Inc. d/b/a S.T. Lumber & Home Center, Electrical,
Plumbing is a domestic corporation having a business address at 15 Anthony Street,
Brooklyn, New York 11222.
J. S.D. Int'l, Inc. d/b/a S.D. Stone Depot is a domestic corporation
having a business address at 728 Meeker A venue, Brooklyn, New York 11222.
k. Elbex America of New York, Inc. is a domestic corporation having
a business address at 300 Corporate Drive, Suite 5, Blauvelt, New York 10913.
13. Other parties named in the Complaint are as follows:
a. The New York City Department of Transportation, Parking
Violations Bureau, an agency and/or instrumentality of the City of New York.
b. The New York City Environmental Control Board, an agency
and/or instrumentality of the City of New York.
. c. The Fire Department of the City of New York, an agency and/or
instrumentality of the City of New York.
JURISDICTION AND VENUE
14. This Court has jurisdiction over this action for the reasons set forth in the
prior-filed CW Capital Complaint. Venue is proper in this district for the reasons set
forth in the prior-filed CW Capital Complaint.
7
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 8 of 15
FACTUAL ALLEGATIONS
15. On February 16, 2010, Plaintiff CW Capital in its capacity as Special
Servicer and on behalf of the Trustees, Bank of America, N.A. and U.S. Bank National
Association, filed its Complaint in this action against the above-named Defendants
seeking to foreclose on the Property.
16. CW Capital's Complaint is a foreclosure action regarding the Property.
The Property is sometimes referred to as "Stuyvesant Town" and is part of a number of
large mortgage-backed securitizations (the "Securitizations") whereby the Property
secured $3 billion in mortgage-backed debt in the form of various tranches of pass-
through certificates (the "Certificates"). Certain of the Certificates are held in the C-30
Trust. Other Certificates are held in the COBALT CMBS Commercial Mortgage Trust
2007-C2, Wachovia Bank Commercial Mortgage Trust 2007-C31, the ML-CFC
Commercial Mortgage Trust 2007-5, and the ML-CFC Commercial Mortgage Trust
2007-6 ("Other Trusts," together with the C-30 Trust, collectively referred to as the
"Trusts").
17. CW Capital, acting as Special Servicer, seeks to foreclose on the Property
as a result of Defendant Borrowers' failure to pay monthly installments of interest
required by the Certificates secured by the Property, resulting in an Event of Default.
18. The Appaloosa Intervenors hold over $750,000,000 of Certificates
1
whose
repayment is secured by the Securitizations of the mortgage on the Property.
19. CW Capital's foreclosure action violates its duties under the Pooling and
Servicing Agreement (the "PSA") controlling the C-30 Trust, among others. Under the
PSA, the Special Servicer is required to administer the loans with "the same care, skill,
1
Certain of the Certificates are held in the Other Trusts.
8
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 9 of 15
prudence, and diligence" that would be the customary and usual standards of practice of
prudent institutional commercial lenders servicing their own loans. See PSA at 3.01
(directing the Special Servicer to adhere to the Servicing Standard) and 1.01, defining
the "Servicing Standard." The Special Servicer must also perform its work "with a view
to the maximization of the recovery on such Mortgage Loan on a net present value basis
and the best interests of the Certificateholders .. . " /d. (emphasis added). Thus, CW
Capital owes a fiduciary duty to the Certificateholders, including the Appaloosa
Intervenors, to act in their best interests in resolving the default regarding the Property.
20. CW Capital has already violated these duties by recklessly and
imprudently exposing the Appaloosa Intervenors-and other Certificateholders-to
wholly avoidable losses, risks, and injuries including:
Double and Unnecessary Transfer Taxes: A foreclosure judgment will
require a double payment of New York City's $100 million transfer tax on
the Property: once when title is transferred by foreclosure, and a second
time when the Property is sold in the inevitably necessary workout of this
loan. No prudent commercial mortgage lender would willingly assume
these tax liabilities, particularly when they could be limited by other
means, or avoided entirely in bankruptcy.
Environmental Liabilities: The documents governing the trusts state
clearly that Plaintiff CW Capital may not pursue foreclosure unless, within
six months prior to initiating the action, it has obtained an environmental
assessment certifying that the relevant mortgaged property is in
compliance with applicable environmental laws and regulations. The
Appaloosa Intervenors do not believe any such assessment has been
obtained.
Excess Rent Claims: The tenants at the Property are the beneficiaries of
an un-liquidated, potentially massive excess rent claim that may, in the
future, be converted into a damage judgment worth hundreds of millions
of dollars. The status of this liability is uncertain, as is its effect on the
rights of the Certificateholders and the value of the underlying mortgaged
property. Proceeding precipitously to take title by foreclosure, in the face
of this uncertainty, is again imprudent and not in the best interest of the
Certificateholders.
9
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 10 of 15
Creation of Unnecessary Losses for Certificateholders: By subjecting the
property to transfer tax liability on foreclosure, Plaintiff CW Capital may
obtain a priming lien at the top of the capital structure to secure repayment
of that advance. This priming lien would create additional losses that
would not otherwise be suffered by holders of subordinated tranches,
including tranches of Certificates owned by Appaloosa.
Voting Rights: Tranches whose recovery is wiped out by CW's priming
lien will also be deprived of voting rights they otherwise would enjoy
under the trusts.
21. The Appaloosa Intervenors stand to suffer unique and irreparable injuries
as a result of Plaintiff CW Capital's actions. The Appaloosa Intervenors own over
$750,000,000 of Certificates in the Trusts. Although much of this is senior debt,
Appaloosa also holds over 30% of three subordinated tranches of C-30 Trust Certificates.
At a reported valuation range of $1.8 - $2.2 billion, Appaloosa's particular series of
subordinated Certificates are likely to be the next loss-absorbing layers in the C-30 debt
stack, and would thus become impaired by the incurrence of $200 million of priming
liens and back-end transfer taxes. Moreover, the thickness of these debt layers is so
narrow ($50-$100 million), that the additional costs would likely be the difference
between a recovery of zero and par on Appaloosa's particular tranches. These securities
are likely to be the fulcrum securities in any restructuring of the Property. Appaloosa
owns significant amounts of Certificates in other pivotal tranches, as well. These losses
could be avoided if Plaintiff CW Capital were acting prudently and with due regard for
its fiduciary obligations.
22. Moreover, when CW Capital acts as Special Servicer it is subject to an
irreconcilable conflict of interest because it also: (i) occupies the position of Controlling
Certificateholder under the C-30 Trust; and (ii) is the holder of certain Certificates held in
10
Case 1 : 1 0-cv-0 1178-AKH Document 16-3 Filed 02/23/1 0 Page 11 of 15
collateralized debt obligations controlled by it. When acting as. Special Servicer, CW
Capital is required to act in the best interests of all Certificateholders and without regard
to who owns a certificate. When it acts as Controlling Certificateholder, however,
Plaintiff CW Capital is permitted to instruct the Special Servicer-here, itself--to take
actions solely in CW Capital's individual interests as a holder of notes.
2
This presents an
irreconcilable conflict for CW Capital, one that cannot-and does not, under the PSA-
override its overall fiduciary obligation as Special Servicer to act in the interests of all
Certificateholders. The existence of this clear conflict precludes CW Capital from
adequately representing or protecting the interests of all Certificateholders, including the
Appaloosa Intervenors.
23. These are concrete financial risks to all of the Certificateholders if the
foreclosure proceeds, but CW Capital has imprudently and recklessly ignored them.
24. As the holder of Certificates secured by the Property, the Appaloosa
Intervenors have an interest relating to the Property that is the subject of this foreclosure
action. Successful disposition of the Action will, as a practical matter, impair or impede
the Appaloosa Intervenors' rights by creating priming liens, by exposing them and other
Certificateholders to hundreds of millions of dollars of wholly avoidable and unnecessary
losses, and by impairing their voting rights under the C-30 Trust.
REQUEST FOR PRELIMINARY AND PERMANENT INJUNCTION
2
See PSA at 6.11 (b) (noting that the Controlling Class Representative "may take actions that favor the
interests of one or more Classes of the Certificates over other Classes of the Certificates, ... may have
special relationships and interests that conflict with those of Holders of some Classes of the Certificates, ...
[and] may act solely in the interests of the Holders of the Controlling Class .... ") and (a) (providing that
"the Special Servicer will disregard any direction or objection ... of the Controlling Class Representative
... if such direction or objection causes ... the Special Servicer to violate the Servicing Standard .... ").
11
Case 1:10-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 12 of 15
25. The allegations contained in paragraphs 10 through 24, supra, are
incorporated herein.
26. Pursuant to Fed. R. Civ. P. 65, the Appaloosa Intervenors request that,
following discovery and upon hearing, the Court enter a temporary injunction prohibiting
CW Capital from finalizing or completing foreclosure on the Property until such time as
CW Capital can satisfy its burden of showing the fairness of such a foreclosure to the
Certificateholders.
27. In the absence of a preliminary injunction, if CW Capital is permitted to
go forward with and complete foreclosure on the Property, the Appaloosa Intervenors
will be irreparably harmed because such foreclosure will create priming liens and expose
the Appaloosa Intervenors and other Certificateholders to hundreds of millions of dollars
of wholly avoidable and unnecessary losses. These harms are irreparable by money
damages because they are difficult to quantify. Moreover, the Appaloosa Intervenors will
be irreparably harmed by the wrongful impairment or elimination of certain of its voting
rights and rights as holders of fulcrum securities in the C-30 Trust if CW Capital is
permitted to foreclose on the Property.
28. For the reasons set forth in this Complaint, the Appaloosa Intervenors are
likely to succeed on the merits. Plaintiff CW Capital has a clear legal duty to act in the
best interest of all Certificateholders. Its breach of that duty is manifest: it has, in
violation of its obligation as Special Servicer, proceeded recklessly and imprudently with
a foreclosure that will create unnecessary priming liens, duplicative tax liabilities, and
environmental and litigation risks for all of the Certificateholders. These injuries are
likely to be irreparable, particularly as they pertain to the Appaloosa Intervenors. As
12
Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 13 of 15
described above, the Appaloosa Intervenors hold over three quarters of a billion dollars of
Certificates. Among those holdings are Certificates representing more than 30% of
tranches that are likely to be the fulcrum securities in any restructuring of the Property. If
the foreclosure proceeds, however, these very valuable rights will be destroyed. There is
no adequate remedy at law for the loss of these rights, because the foreclosure bell-once
tolled--cannot be "un-rung." In any event, it will be very difficult to calculate the
damages that Appaloosa will suffer if it loses the valuable rights it currently holds in
these fulcrum tranches, particularly if those rights are lost as a result of the heedless and
reckless behavior of their own fiduciary, CW Capital.
29. CW Capital bears the burden to establish that its actions in pursuing a
precipitous foreclosure were in the best interests of all of the Certificateholders. It has
not met, and cannot meet, this burden.
30. The balance of hardships also tips strongly in favor of Appaloosa, and
against Plaintiff CW Capital. By granting a preliminary injunction against foreclosure,
and requiring CW Capital to first demonstrate that it has met the Servicing Standard and
otherwise complied with the PSA, the Court avoids the possibility that it will grant a
foreclosure judgment that could inflict irreparable injuries on all of the Certificateholders,
and in particular on the Appaloosa Intervenors. Plaintiff CW Capital would not be
burdened by this injunction; to the contrary, it already has the burden to demonstrate
fairness under the PSA. The other Certificateholders will not be injured, either; to the
contrary, entry of an injunction would prevent the disastrous and unnecessary priming
liens, transfer tax, and other liabilities that are sure to injure them if the foreclosure
proceeds. The grant of an injunction serves the public interest. It does not serve the
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Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 14 of 15
interests of judicial economy to permit CW Capital to proceed heedlessly with a
foreclosure, only to find itself subject to a lawsuit by the Certificateholders seeking
damages for its reckless conduct. Although these damages would be difficult to
calculate, and would not be a wholly adequate remedy for the Certificateholders' injuries,
they would nonetheless be in the hundreds of millions of dollars. Finally, based on all of
the evidence, there is a sufficiently serious question as to whether CW Capital can meet
its burden of showing fairness in the foreclosure such that an injunction should not issue,
particularly given that the consequences of proceeding in the face of these massive
uncertainties creates risks and injuries to other Certificateholders who are not parties to
this case.
WHEREFORE, Intervenor-Defendant Appaloosa respectfully requests:
(1) After discovery and upon hearing, an order of the Court temporarily enjoining
CW Capital from completing any foreclosure proceeding on the Property until
such time as it can carry its burden of demonstrating the fairness of the
transaction to all Certificateholders including the Appaloosa Intervenors;
(2) An order of the Court permitting Appaloosa to participate in expedited
discovery relevant to CW Capital's Complaint to allow Appaloosa to test the
fairness of CW Capital's actions, and to adequately protect Appaloosa's
interests;
(3) Upon trial on the merits, entry of an order permanently enjoining CW Capital
from proceeding with foreclosure until such time as it demonstrates to the
Court that foreclosure is fair to all Certificateholders; and,
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Case 1 :1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 15 of 15
(4) An award to the Appaloosa Intervenors of such other and/or further relief as
may be just and proper.
Dated: New York, New York
February 23, 2010
OF COUNSEL:
GIBBS & BRUNS LLP
Kathy D. Patrick
Texas Bar No. 15581400
Robert M. Madden
State Bar No. 00784511
Sydney Ballesteros
State Bar No. 24036180
Anthony N. Kaim
State Bar No. 24065532
Gibbs & Bruns L.L.P.
1100 Louisiana, Ste. 5300
Houston, Texas 77002
Tel: (713) 650-8805
Fax: (713) 750-0903
Respectfully submitted,
WARNER PARTNERS, P.C.
By:
15
sf
Kenneth E. Warner
KW 5524
KW arner@W arnerPartnersLaw .com
950 3rct A venue
New York, NY 10022-2705
(212) 593-8000
ATTORNEYS FOR
INTERVENORS
APPALOOSA INVESTMENT L.P.
I, PALOMINO FUND LTD.,
THOROUGHBRED FUND L.P.,
AND
THOROUGHBRED MASTER
LTD.