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Torchlight Loan Services, LLC v. Column Financial, Inc.

United States District Court, Second Circuit

July 23, 2013

TORCHLIGHT LOAN SERVICES, LLC, AS SPECIAL SERVICER TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, AS SUCCESSOR-IN-INTEREST TO BANK OF AMERICA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007 C-2, Plaintiff,
v.
COLUMN FINANCIAL, INC., AND CREDIT SUISSE (USA), INC., Defendants.

SATERLEE STEPHENS BURKE & BURKE LLP, Christopher R. Belmonte, Esq., Pamela A. Bosswick, Esq., Nathan J. Berkebile, Esq., New York, New York, Attorneys for Plaintiff.

DUVAL & STACHENFELC LLP, Allan N. Taffet, Esq., Brian A. Burns, Esq., Joshua C. Klein, Esq., New York, New York, Attorneys for Defendants.

OPINION

ROBERT W. SWEET, District Judge.

Plaintiff Torchlight Loan Services, LLC ("Plaintiff" or "Torchlight") has moved for an order remanding this action to the Supreme Court of the State of New York, New York County (the "New York Court"). Concurrently, defendants Column Financial, Inc. ("Column") and Credit Suisse (USA), Inc. ("Credit Suisse" and, together with Column, "Defendants") have moved to sever certain of the claims asserted in the instant action pursuant to Fed.R.Civ.P. 21 ("Rule 21").

Upon on the conclusions set forth below, Plaintiff's motion is granted, and Defendants' motion is denied.

Prior Proceedings

On November 19, 2012, Torchlight filed a complaint (the "Complaint") in the New York Court, asserting causes of action relating to alleged misrepresentations by Column regarding a commercial property located in Elgin, Illinois (the "Elgin Claims") and alleged misrepresentations by Column with respect to a commercial property located in Circle Pines, Minnesota (the "Circle Pines Claims").

On November 26, 2012, Defendants removed the action to this Court on the basis of diversity jurisdiction.

On December 21, 2012, Defendants moved to sever the Circle Pines Claims from this action.

On December 26, 2012, Torchlight moved to remand the instant action to New York Court.

Defendants' motion to sever and Torchlight's motion to remand were heard and marked fully submitted on February 6, 2013.

The Facts

Plaintiff Torchlight is a citizen of New York, and is the special servicer of a mortgage-backed security offering called Series 2007-C2 (the "MBS"). The MBS comprises a pool of hundreds of commercial mortgage loans that were originated by defendant Column and then, pursuant to a mortgage loan purchase agreement dated May 1, 2007 (the "MLPA"), sold to Credit Suisse First Boston ("CSFB"), which is an affiliate of defendant Credit Suisse. Pursuant to a pooling and servicing agreement dated May 1, 2007 (the "PSA"), CSFB transferred the pool of loans into a trust (the "Trust") established to hold the loans for the benefit of the certificate holders of the MBS. The Trust then issued certificates (the "Certificates") to CSFB, which sold them to an underwriter, who in: turn eventually resold them to those wishing to invest in the MBS. U.S. Bank National Association ("U.S. Bank" or the "Trustee") is the current trustee of the Trust.

Pursuant to the MLPA, Column made a number of express representations and warranties regarding the constituent loans of the MBS, including the two loans - the Elgin Loan and the Circle Pines Loan - that are the subject of the instant action. Torchlight has alleged in the Complaint that a number of those representations and warranties were false with respect to the Elgin Loan and the Circle Pines Loan, ...


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