On February 28, 2019, the First Department issued a decision in Rizack v. Signature Bank, N.A., 2019 NY Slip Op. 01494, holding that a claim was time-barred because it was not assigned to the plaintiff until after the statute of limitations had run, explaining:
In September 2007, West End Financial Advisors LLC entered into a $200 million credit and security agreement with the German Bank then known as WestLB AG. Two months later, as provided for in the credit agreement, WestLB entered into an interest reserve account agreement (IRA agreement) with defendant Signature Bank. Plaintiff alleges that, from early 2008 to January 2009, defendant permitted West End’s principal to make transfers out of the interest reserve account in breach of the IRA agreement.
In 2011, WestLB entered into an assignment agreement with West End where it appeared to assign all claims it held “in connection with” the credit agreement “and the other Transaction Documents” as defined in the credit agreement. This assignment, however, was explicitly amended and restated in a 2014 assignment. The 2014 assignment limited the claims actually assigned to those held in connection with the credit agreement. The language of this 2014 assignment unambiguously limits the claims transferred to the credit agreement, and there is no evidence in the assignment language that the parties intended to transfer any of WestLB’s claims under the IRA agreement. Accordingly, plaintiff did not possess or have any legal rights to the IRA agreement claim when he filed the original complaint in December 2014. Therefore, he lacked standing at the commencement of the case.
In July 2015, realizing that the 2014 assignment did not transfer the IRA agreement breach of contract claim, the parties explicitly transferred this claim. Plaintiff’s lack of standing at the commencement of this action was not cured by this subsequent assignment of the claim.
Moreover, the six-year statute of limitations for all claims alleging breach of the IRA agreement expired in January 2015. As such, the allegations in the second amended complaint were time-barred.
(Internal quotations and citations omitted).
New York law allows the owner of a legal claim to assign it someone else to prosecute. However, when an entity that owns a claim by assignment attempts to enforce it, it is not unusual for there to be litigation over whether claim was properly assigned under New York law. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding a claim that has been assigned.
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