Court Holds Initial Lender’s Assignee Has Standing To Substitute As Plaintiff In Action For Breach Of Guaranties

Posted: August 10, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Breach of Contract, Court Rules/Procedures, Commercial

Court Holds Initial Lender’s Assignee Has Standing To Substitute As Plaintiff In Action For Breach Of Guaranties

On July 23, 2026, in CPIF Lending, LLC v Segal, Index No. 652592/2025, Justice Robert R. Reed of the New York County Commercial Division held that a nonparty assignee had standing to move to substitute as plaintiff in an action for breach of guaranty.

Plaintiff CPIF Lending, LLC sued defendants Gary Segal and Igal Namdar for breach of their respective guaranties of a loan that, as amended, reached a principal balance of approximately $44.5 million. After the action was filed, CPIF Lending assigned its interest in the loan, the loan documents, and the litigation itself to nonparty Fordham South Lender LLC, which then moved under CPLR 1018 and 1021 to substitute itself as plaintiff. Standing to make such a motion is conferred on any person with a direct stake in the matter, and a party to whom an interest is transferred must, at minimum, provide evidence of ownership of that interest. Fordham South Lender submitted an Amended and Restated Assignment and Assumption of Interests and Obligations documenting the transfer, together with an allonge endorsing the underlying promissory note in its favor. Defendant Segal opposed, arguing that Fordham South Lender was affiliated with his co-defendant Namdar, but the Court found that argument immaterial to whether Fordham South Lender had made the required evidentiary showing. Based on the assignment and allonge, the Court held that Fordham South Lender had established standing to move for substitution. The Court explained:

CPLR 1021 governs substitution procedure and authorizes the successors or representatives of a party, or any party, to move for substitution. CPLR 1021 also requires that the movant have standing to make the motion. Standing to make the motion for substitution is conferred on any person with a direct stake in the matter. To establish entitlement to substitution, a party to whom an interest is transferred must, at minimum, provide evidence of ownership of that interest. . . . Proposed Plaintiff has, therefore, made a prima facie showing that the Note was validly transferred to it. Defendant's contention that co-defendant Namdar is in any way involved in the assignment of the Note, or is the true party in interest, is immaterial to the court's determination of whether Proposed Plaintiff has standing to properly move for substitution. (citations omitted)

The attorneys at Schlam Stone & Dolan LLP frequently litigate disputes concerning loan guaranties and the enforcement of loan documents, on behalf of both lenders and guarantors. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.