Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-13-03325/USCOURTS-ca2-13-03325-0/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

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*  The Clerk of Court is respectfully directed to amend the official caption in this case to conform

with the caption above.

13‐3325

Cortlandt St. Recovery Corp. v. Hellas Telecommunications, S.à.r.l.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2013

(Argued:  May 8, 2014 Decided:  June 24, 2015)

Docket No. 13‐3325

Cortlandt Street Recovery Corp.,

Plaintiff‐Appellant,

v.

Hellas Telecommunications, S.à.r.l., Hellas Telecommunications I, S.à.r.l, Hellas

Telecommunications Co‐Invest Ltd., Hellas Telecommunications Employees Ltd.,

TCW HT‐Co‐Invest I L.P., TCW HT‐Co‐Invest II L.P.,

Defendants–Appellees.*

Before: JACOBS, SACK, and LYNCH, Circuit Judges.

The plaintiff appeals from an August 2, 2013, order of the United States

District Court for the Southern District of New York (J. Paul Oetken, Judge)

dismissing the plaintiffʹs claims without prejudice.  We conclude that the district

court correctly decided that the plaintiff lacked Article III standing to bring the

claims at issue.  We further conclude that the district court did not err in denying

the plaintiffʹs request to attempt to cure this standing defect under Fed. R. Civ. P.

17(a)(3).  The judgment of the district court is therefore:  

AFFIRMED.

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Judge Sack also files a separate concurring opinion.

JARED B. STAMELL, Stamell & Schager,

LLP, New York, NY (Andrew R.

Goldenberg, Stamell & Schager, LLP, New

York, NY, on the brief), for Plaintiff–

Appellant.

ROBERT S. FISCHLER, Ropes & Gray LLP,

New York, NY (Evan P. Lestelle, Ropes &

Gray LLP, New York, NY, Paul M.

OʹConnor III, David J. Abrams, Kasowitz,

Benson, Torres & Friedman LLP, New

York, NY, on the brief), for Defendants–

Appellees Hellas Telecommunications Co‐

Invest Ltd., Hellas Telecommunications

Employees Ltd., TCW HT‐Co‐Invest I L.P., and

TCW HT‐Co‐Invest II, L.P.

DWIGHT A. HEALY, White & Case LLP,

New York, NY (Katherine J. Mims, of

counsel, White & Case LLP, New York, NY,

on the brief), for Defendants–Appellees Hellas

Telecommunications, S.à.r.l., and Hellas

Telecommunications I, S.à.r.l.

SACK, Circuit Judge:

This is an appeal from a judgment of the United States District Court for

the Southern District of New York (J. Paul Oetken, Judge) dismissing the

plaintiffʹs claims without prejudice for lack of standing.  The plaintiff appeals

from that decision and from the district courtʹs denial of the plaintiffʹs request to

attempt to cure the standing defect by having the real party in interest ʺratify,

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join, or be substituted into the actionʺ pursuant to Fed. R. Civ. P. 17(a)(3).  

Because we agree that the plaintiff lacked standing to pursue its stated claims,

and because we conclude that the district court did not abuse its discretion in

declining to allow ratification, joinder, or substitution under Rule 17(a)(3), we

affirm.

BACKGROUND

Cortlandt Street Recovery Corp. (ʺCortlandtʺ), a New York corporation, is

attempting to collect approximately €83.1 million allegedly owed to it under

defaulted ʺSubordinated Notesʺ (ʺSub Notesʺ) issued in 2006 by a now‐dissolved

entity, Hellas Telecommunications (Luxembourg) II, S.C.A. (ʺHellas IIʺ).  

Cortlandt alleges that the holders of the Sub Notes, citizens severally of Greece,

the British Virgin Islands, the Cayman Islands, and Gibraltar assigned Cortlandt

a portion of the notes in 2011, thereby authorizing Cortlandt to bring the present

action.1   

                                                            

1 The only evidence of assignment that is in the record pertains to a tranche of

notes unrelated to the Sub Notes.   Cortlandt asserts here, as it did before the district

court, however, that the language of this assignment is identical to the language of the

Sub Notes assignment.  We assume that to be true for purposes of this appeal.  The

relevant portion of the assignment reads:

The Noteholder hereby assigns to Cortlandt Street Recovery Corp. . . . full rights

to collect amounts of principal and interest due on the Notes, and to pursue all

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Cortlandt contends, in substance, that the private equity firms TPG

Capital, L.P. (ʺTPGʺ) and Apax Partners, LLP (ʺApaxʺ), which are not parties to

the present suit, used the Sub Notes to defraud their creditors.  According to

Cortlandt, TPG and Apax owned a group of related foreign companies including

Hellas II and defendants Hellas Telecommunications, S.à.r.l. and Hellas

Telecommunications I, S.à.r.l., also Luxembourg entities (the ʺHellas

Defendantsʺ).  Cortlandt alleges that TPG and Apax issued promissory notes, in

the name of one of the Hellas Defendants, pledging TPGʹs and Apaxʹs equity in

the company and its subsidiaries as collateral.  According to Cortlandt, the firms

then used the proceeds from this sale to buy their own collateral, rendering the

Hellas entities insolvent.

                                                                                                                                                                                               

remedies with respect to the Notes against Hellas Finance [or related entities] . . .

and any other person or entity who may be liable to Noteholder.  The Noteholder

remains the owner of the Notes and person in whose name the Notes are

registered.

The Noteholder hereby irrevocably appoints [Cortlandt] its true and lawful

attorney and proxy, with full power of substitution, to pursue collection and all

remedies with respect to the Notes . . . .  Under this appointment [Cortlandt]

shall have all requisite power and authority . . . to make any request or demand

or to take any other action under or with respect to the Notes, or under the

December 21, 2006 Indenture under which the Notes were issued.

J.A. 109‐10.

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Cortlandt argues that this process—termed a ʺbleed‐outʺ—rendered both

the Hellas Defendants and several now‐dissolved foreign investment funds that

owned or financed the Hellas entities2 (the ʺSponsor Defendantsʺ) liable to the

noteholders or their assignees.  In November 2012, Cortlandt, as purported

assignee of the Sub Notes, filed a complaint against both sets of defendants in the

United States District Court for the Southern District of New York claiming, inter

alia, the right to payment under the Sub Notes, breach of contract, violations of

prohibitions on distributions, fraudulent conveyances, and unjust enrichment.  

Cortlandt requested relief in the form of payment of the amounts owed on the

Sub Notes, plus interest, and fees, costs, and expenses.  

Cortlandt also filed several other lawsuits in state and federal court

seeking to collect on the Sub Notes and on another tranche of notes it claims it

was assigned, the so‐called ʺPIK Notes,ʺ3 which are not at issue in this case.  See,

e.g., Cortlandt St. Recovery Corp. v. Aliberti, No. 12 CIV. 8686 JPO, 2014 WL 941900,

2014 U.S. Dist. LEXIS 32041 (S.D.N.Y. Mar. 11, 2014), on reconsideration,  2014 WL

                                                            

2 These funds are Hellas Telecommunications Co‐Invest Ltd., Hellas

Telecommunications Employees Ltd., TCW HT‐Co‐Invest I L.P., and TCW HT‐Co‐

Invest II L.P.

3 ʺPIKʺ is an acronym for ʺpayment‐in‐kind.ʺ  See In re TPG Troy, LLC, 492 B.R. 150, 154

(Bankr. S.D.N.Y. 2013).

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6907548, 2014 U.S. Dist. LEXIS 170277 (S.D.N.Y. Dec. 9, 2014); Cortlandt St.

Recovery Corp. v. Deutsche Bank AG, London Branch, No. 12 CIV. 9351 JPO, 2013

WL 3762882, 2013 U.S. Dist. LEXIS 100741 (S.D.N.Y. July 18, 2013), appeal

dismissed (Sept. 16, 2013); Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.à.r.l.,

996 N.Y.S.2d 476 (N.Y. Sup. Ct. Sept. 16, 2014) (consolidating four actions

initiated by Cortlandt on the Sub and PIK Notes).

In one of these other actions, Cortlandt brought suit on the Sub Notes

against Deutsche Bank AG, London Branch (ʺDeutsche Bankʺ), alleging it to be

an underwriter of the Sub Notes.  Cortlandt St. Recovery Corp. v. Deutsche Bank

AG, London Branch, No. 12 CIV. 9351 JPO, 2013 WL 3762882, 2013 U.S. Dist.

LEXIS 100741 (S.D.N.Y. July 18, 2013) (the ʺDeutsche Bank Opinionʺ), appeal

dismissed (Sept. 16, 2013); see also Complaint at 2, Cortlandt St. Recovery Corp. v.

Deutsche Bank AG, London Branch, No. 12 CIV. 9351 JPO (S.D.N.Y. 2013).  In both

the Deutsche Bank action and the present one, the defendants moved to dismiss

on several grounds, including that the court lacked subject matter jurisdiction

over the action.  See Fed. R. Civ. P. 12(b)(1).  Specifically, the defendants argued

that Cortlandt lacked title to the Sub Notes and therefore lacked Article III

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standing to bring claims related to those notes.  See Deutsche Bank Op., 2013 WL

3762882, at *1 & n.1, 2013 U.S. Dist. LEXIS 100741, at *1 & n.1.

The district court granted the defendantsʹ motions to dismiss in both cases.  

In July 2013, the court issued an order and opinion in the Deutsche Bank case

concluding that Cortlandt had failed adequately to plead title to claims arising

under the Sub Notes and that Cortlandt had therefore failed adequately to plead

facts on which Article III standing could be based.  See Deutsche Bank Op., 2013

WL 3762882, at *3, 2013 U.S. Dist. LEXIS 100741, at *9‐10.  In August 2013, the

court issued an order in the present action explaining that the action was

dismissed without prejudice ʺ[f]or the reasons set forth in [the Deutsche Bank

Opinion].ʺ  Order, Cortlandt St. Recovery Corp. v. Aliberti, No. 12 Civ. 8685 JPO

(S.D.N.Y. Aug. 2, 2013).4  

Cortlandt appealed.

  DISCUSSION

Cortlandt argues that the district court erred in granting the defendantsʹ 

motion to dismiss its complaint for lack of subject matter jurisdiction pursuant to

Fed. R. Civ. P. 12(b)(1).  Cortlandt further asserts that the district court erred in

                                                            

4 Defendant Giancarlo Aliberti was voluntarily dismissed from the action.

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failing to grant to it the opportunity to cure any standing defect under Fed. R.

Civ. P. 17(a)(3), which allows for ʺthe real party in interest to ratify, join, or be

substituted intoʺ a pending action.  We disagree with both contentions.

I. Standard of Review

A district court properly dismisses an action under Fed. R. Civ. P. 12(b)(1)

for lack of subject matter jurisdiction if the court ʺlacks the statutory or

constitutional power to adjudicate it,ʺ Makarova v. United States, 201 F.3d 110, 113

(2d Cir. 2000), such as when (as in the case at bar) the plaintiff lacks

constitutional standing to bring the action.  See W.R. Huff Asset Mgmt. Co., LLC v.

Deloitte & Touche LLP, 549 F.3d 100, 104, 106 (2d Cir. 2008); see also Alliance for

Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 88 n.6 (2d Cir. 2006)

(ʺ[T]he proper procedural route [for standing challenges at the pleadings stage]

is a motion under Rule 12(b)(1).ʺ).  On appeal from a dismissal under Rule

12(b)(1), we review the courtʹs factual findings for clear error and its legal

conclusions de novo.  Makarova, 201 F.3d at 113.

The plaintiff bears the burden of ʺalleg[ing] facts that affirmatively and

plausibly suggest that it has standing to sue.ʺ  Amidax Trading Grp. v. S.W.I.F.T.

SCRL, 671 F.3d 140, 145 (2d Cir. 2011).   In assessing the plaintiffʹs assertion of

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standing, ʺwe accept as true all material allegations of the complaint[] and . . .

construe the complaint in favor of the complaining party.ʺ  W.R. Huff, 549 F.3d at

106 (internal quotation marks omitted).  In deciding a Rule 12(b)(1) motion, the

court may also rely on evidence outside the complaint.  Makarova, 201 F.3d at 113.

ʺ[A] district courtʹs decision whether to dismiss pursuant to Rule 17(a) is

reviewed for abuse of discretion.ʺ  Stichting Ter Behartiging Van de Belangen Van

Oudaandeelhouders In Het Kapitaal Van Saybolt Intʹl B.V. v. Schreiber, 407 F.3d 34,

43‐44 (2d Cir.), certified question accepted, 5 N.Y.3d 730, 832 N.E.2d 1185 (2005),

certified question withdrawn sub nom. Intʹl B.V. (Found. of Sʹholdersʹ Comm.

Representing Former Sʹholders of Saybolt Intʹl B.V.) v. Schreiber, 421 F.3d 124 (2d Cir.

2005).

II. Standing

ʺIn its constitutional dimension, standing imports justiciability: whether

the plaintiff has made out a ʹcase or controversyʹ between himself and the

defendant within the meaning of Art. III.ʺ   Warth v. Seldin, 422 U.S. 490, 498

(1975).  To have such Article III standing, ʺthe plaintiff [must have] ʹalleged such

a personal stake in the outcome of the controversyʹ as to warrant [its] invocation

of federal‐court jurisdiction and to justify exercise of the courtʹs remedial powers

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on [its] behalf.ʺ  Id. at 498‐99 (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)).  

Others may benefit ʺcollaterallyʺ from a resolution favorable to the plaintiff, id. at

499, or suffer from an unfavorable one, but the plaintiffʹs genuinely personal

stake ensures the presence of ʺthat concrete adverseness which sharpens the

presentation of issues upon which [a] court so largely depends.ʺ  Baker, 369 U.S.

at 204.

A plaintiff claiming such a stake must establish, first, that it has sustained

an ʺinjury in factʺ which is both ʺconcrete and particularizedʺ and ʺactual or

imminent,ʺ Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal

quotation marks omitted); second, that the injury was in some sense caused by

the opponentʹs action or omission, id.; and finally, that a favorable resolution of

the case is ʺlikelyʺ to redress the injury, id. at 561.  These elements form an

ʺirreducible constitutional minimumʺ without which a federal court may not

proceed to the merits of a claim.  Id. at 560.  ʺ[T]he jurisdictional issue must be

resolved before the merits issue . . . .ʺ  Alliance For Envtl. Renewal, 436 F.3d at 85.

Cortlandt does not allege that it has suffered direct injury as a result of the

defendantsʹ actions.  It points instead to the well‐established principle that

ʺ[l]awsuits by assignees . . . are ʹcases and controversies of the sort traditionally

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amenable to, and resolved by, the judicial process.ʹʺ  Sprint Commcʹns Co., L.P. v.

APCC Servs., Inc., 554 U.S. 269, 285 (2008) (quoting Vt. Agency of Natural Res. v.

United States ex rel. Stevens, 529 U.S. 765, 777–78 (2000)).  The defendants, for their

part, do not dispute that an assignment of claims from the noteholders to

Cortlandt would allow Cortlandt to ʺstand in the place of the injured partyʺ and

satisfy constitutional standing requirements.  W.R. Huff, 549 F.3d at 107.  Neither

do they dispute that the noteholders could have assigned their claims to

Cortlandt.  See Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 17

(2d Cir. 1997) (ʺIn general, claims or choses in action may be freely transferred or

assigned to others.ʺ).  Instead, the parties dispute whether the noteholders

actually did assign the claims such that Cortlandt has standing to bring suit on

the Sub Notes.

To assign a claim effectively, the claimʹs owner ʺmust manifest an intention

to make the assignee the owner of the claim.ʺ  Id. (internal quotation marks and

brackets omitted).  A would‐be assignor need not use any particular language to

validly assign its claim ʺso long as the language manifests [the assignorʹs]

intention to transfer at least title or ownership, i.e., to accomplish ʹa completed

transfer of the entire interest of the assignor in the particular subject of

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assignment.ʹʺ  Id. (emphasis added) (citations omitted).  An assignorʹs grant of,

for example, ʺʹthe power to commence and prosecute to final consummation or

compromise any suits, actions or proceedings,ʹʺ id. at 18 (quoting agreements that

were the subject of that appeal), may validly create a power of attorney, but that

language would not validly assign a claim, because it does ʺnot purport to

transfer title or ownershipʺ of one.  Id.

Cortlandt has not carried its burden of showing a valid assignment of a

claim.  First, Cortlandtʹs complaint does not allege ʺa completed transferʺ of the

noteholdersʹ ʺentire interestʺ in any claim arising under the Sub Notes.  Id. at 17.  

The complaint alleges that Cortlandt was assigned ʺfull rights under the

assignments to collect principal and interest due and to pursue all remedies,ʺ 

Pl.ʹs First Am. Compl. ¶ 12 (J.A. 60), and that Cortlandt is ʺauthorized to sue and

collect on the Sub Notesʺ on behalf of the assignors, id. ¶ 108 (J.A. 82).  It does

not, however, indicate that Cortlandt was assigned ownership of the claims.  

Cortlandt argues that an ʺassignment of full rights to collect is sufficientʺ to

satisfy the injury‐in‐fact requirement.  Appellantʹs Br. at 11.  But, as we have

explained,

[a] provision by which one person grants another the power to sue

on and collect on a claim confers on the grantee a power of attorney

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with respect to that claim.  The grant of a power of attorney,

however, is not the equivalent of an assignment of ownership; and,

standing alone, a power of attorney does not enable the grantee to

bring suit in his own name.

Advanced Magnetics, 106 F.3d at 17‐18 (citations omitted); cf. 6A Charles Alan

Wright et al., Fed. Prac. & Proc. Civ. § 1545 (3d ed. 2014) (ʺ[T]he mere transfer of

a general power of attorney . . . does not create a sufficient interest or right in the

chose and the grantor of the power remains the only real party in interest.ʺ).

Nor has Cortlandt pointed to anything in the assignment, or to other

evidence in the record, suggesting that title to claims arising under the Sub Notes

was assigned to it.5  The assignment reads:

The Noteholder hereby assigns to Cortlandt Street Recovery

Corp. . . . full rights to collect amounts of principal and interest due

on the Notes, and to pursue all remedies with respect to the Notes

against Hellas Finance [or various other related entities] . . . and any

other person or entity who may be liable to Noteholder.  The

Noteholder remains the owner of the Notes and person in whose

name the Notes are registered.

The Noteholder hereby irrevocably appoints [Cortlandt] its true and

lawful attorney and proxy, with full power of substitution, to pursue

collection and all remedies with respect to the Notes . . . .  Under this

appointment [Cortlandt] shall have all requisite power and

authority . . . to make any request or demand or to take any other

                                                            

5   As noted above: ʺIn resolving a motion to dismiss for lack of subject matter

jurisdiction under Rule 12(b)(1), a district court may refer to evidence outside the

pleadings.ʺ  Makarova, 201 F.3d at 113.   

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action under or with respect to the Notes, or under the December 21,

2006 Indenture under which the Notes were issued.

J.A. 109‐10.  The language of the assignment confirms that Cortlandt was

authorized to collect payment on behalf of the noteholders, but it does not so

much as hint that title to the claims at issue was being transferred.  An

assignment such as the one in issue, which does not transfer ownership of claims,

is, on its own, ʺinsufficient to permit [a purported assignee] to sue on those

claims in its name.ʺ  Advanced Magnetics, 106 F.3d at 18.

Cortlandt urges us to reconsider the approach of Advanced Magnetics in

light of Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269 (2008).  

We think Advanced Magnetics remains persuasive.  In Sprint, payphone operators

had assigned their right to collect specified payments from telephone carriers to

collection firms called ʺaggregators.ʺ  Id. at 271‐72.  Through a separate

agreement, the aggregators agreed to remit any payments obtained from the

carriers to the payphone operators, less a fee for the aggregatorsʹ services.  Id. at

272.  The aggregators brought suit against the carriers.  Id.  The carriers moved to

dismiss the complaint on the ground that the remittance agreement deprived the

aggregators—mere ʺassignees for collectionʺ—of any real interest in the claims

and, therefore, of standing to pursue them, despite the valid assignment.  Id.

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The Court rejected the carriersʹ challenge, recognizing the longstanding

ʺhistorical tradition of suits by assignees, including assignees for collection.ʺ  Id.

at 285.  Whatever the aggregators did with their payments post‐lawsuit, the

Court reasoned, was of no constitutional moment.  After all, the aggregatorsʹ 

ʺinjuries would be redressed whether the aggregators remit[ted] the litigation

proceeds to the payphone operators, donate[d] them to charity, or use[d] them to

build new corporate headquarters.ʺ  Id. at 287.

Cortlandt argues that ʺ[n]othing in Sprint suggests that ʹtitleʹ or ʹownershipʹ 

must be recitedʺ in an assignment to confer standing upon an assignee.  

Appellantʹs Reply Br. at 4.  But Sprint did not focus on the aggregatorsʹ title to the

claims because there was ʺno reason to believe the assignment [was] anything

less than a complete transfer to the aggregator[s] of the injury and resulting

claim.ʺ  Sprint, 554 U.S. at 286 (internal quotation marks omitted).  The

assignment at issue in Sprint ʺassign[ed], transfer[red] and set[] over to [the

aggregator] for purposes of collection, all rights, title and interest of the [payphone

operators] in [the operatorsʹ] claims, demands, or causes of action.ʺ  Id. at 272

(emphases added).  The assignment here, by contrast, confers only ʺfull rights to

collect amounts of principal and interest due on the Notes, and to pursue all

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remedies with respect to the Notes,ʺ making no mention of title to, or ownership

of, the claims.  Whereas the payphone operators in Sprint ʺassigned their claims

to the aggregators lock, stock, and barrel,ʺ id. at 286, the noteholders in the case at

bar assigned to Cortlandt only the ability to collect under the claims.  Although

Sprint confirms that an assignee need not possess more than title to a claim to

bring suit upon that claim, nothing in that case suggests that an assignee may

proceed with less.

If there was any doubt about the continuing relevance of Advanced

Magnetics in light of Sprint, it was settled by W.R. Huff Asset Management Co., LLC

v. Deloitte & Touche LLP, 549 F.3d 100 (2d Cir. 2008).  There we concluded that

Sprint ʺimplicitly supports the holding of Advanced Magnetics that a mere power‐

of‐attorney . . . does not confer standing to sue in the holderʹs own right.ʺ  Id. at

108.  It is still true that ʺthe minimum requirement for an injury‐in‐fact is that the

plaintiff have legal title to, or a proprietary interest in, the claim.ʺ  Id.

Cortlandt argues, finally on this score, that an assignment of rights to

collect payments under the Notes and to pursue all remedies under the notes

confers an interest ʺat least as broad asʺ that conferred by an assignment of title.  

Appellantʹs Br. at 12.  The dispositive inquiry does not go to the breadth of the

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assignment, however, but rather to its nature.  ʺThere is an important distinction

between simply hiring a lawyer and assigning a claim to a lawyer . . . .  The latter

confers a property right (which creditors might attach); the former does not.ʺ  

Sprint, 554 U.S. at 289.  Our caselaw confirms that a purported assignee of a claim

must plead a proprietary interest in that claim, and not simply the ability to

pursue the claim on behalf of another, to bring the claim in his or her own name

and satisfy the requirements of constitutional standing.

III. Rule 17

Cortlandt further argues that even if it lacked constitutional standing, the

district court erred by not providing Cortlandt with the opportunity to cure this

deficiency under Fed. R. Civ. P. 17(a)(3).   As noted above, ʺa district courtʹs

decision whether to dismiss pursuant to Rule 17(a) is reviewed for abuse of

discretion.ʺ  Schreiber, 407 F.3d at 43‐44.

Rule 17(a)(1) requires that an action ʺbe prosecuted in the name of the real

party in interest.ʺ  In Part II of our opinion, above, we concluded that the district

court was correct in deciding that, absent an assignment of the claims in issue,

this lawsuit was not brought or prosecuted in the name of the real party in

interest.   But Rule 17(a)(3) prohibits a court from dismissing an action for failure

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to comply with subsection (a)(1) ʺuntil, after an objection, a reasonable time has

been allowed for the real party in interest to ratify, join, or be substituted into the

action.ʺ 

The real party in interest principle embodied in Rule 17 ensures that only

ʺa person who possesses the right to enforce [a] claim and who has a significant

interest in the litigationʺ can bring the claim.  Schreiber, 407 F.3d at 48 n.7

(quoting Va. Elec. & Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 83 (4th Cir.

1973)); see also Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 193 (2d Cir. 2003)

(ʺ[A]n action must be brought by the person who, according to the governing

substantive law, is entitled to enforce the right.ʺ (internal quotation marks

omitted)).  The rule was initially adopted to ensure that assignees could bring

suit in their own names, contrary to the common‐law practice.  See Fed. R. Civ. P.

17 advisory committeeʹs notes, 1966 Amendment.  However, ʺthe modern

function of the rule . . . is [] to protect the defendant against a subsequent action

by the party actually entitled to recover, and to insure generally that the

judgment will have its proper effect as res judicata.ʺ  Id.; see also Gogolin & Stelter

v. Karnʹs Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir. 1989) (ʺThe purpose of the

rule is to prevent multiple or conflicting lawsuits by persons such as assignees,

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executors, or third‐party beneficiaries, who would not be bound by res judicata

principles.ʺ).  The dismissal provision in Rule 17(a)(3) was added later ʺto avoid

forfeiture and injustice when an understandable mistake has been made in

selecting the party in whose name the action should be brought.ʺ  6A Charles

Alan Wright et al., Fed. Prac. & Proc. Civ. § 1555 (3d ed. 2014).  That provision

codifies the modern ʺjudicial tendency to be lenient when an honest mistake has

been made in selecting the proper plaintiff.ʺ  Id.

If a party successfully moves for ratification, joinder, or substitution, ʺthe

action proceeds as if it had been originally commenced by the real party in

interest.ʺ  Fed. R. Civ. P. 17(a)(3).  Crucially for statute of limitations purposes,

the claim of the real party in interest therefore dates back to the filing of the

complaint.  Cortlandt argues that although its lawsuit was dismissed for lack of

subject matter jurisdiction, the dismissal was based solely on the fact that

Cortlandt was not the real party in interest.  It should therefore have been

permitted either to amend the complaint to substitute the parties who actually

held the claims at issue as plaintiffs in the lawsuit, or to amend its agreement

with the real parties in interest to transfer title to the claims to Cortlandt, thereby

making it the real party interest.

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The defendantsʹ first argument to the contrary is that Cortlandt forfeited

any Rule 17(a)(3) objection by failing to raise the issue before the district court.  

ʺ[I]t is a well‐established general rule that an appellate court will not consider an

issue raised for the first time on appeal.ʺ   Bogle‐Assegai v. Connecticut, 470 F.3d

498, 504 (2d Cir. 2006) (internal quotation marks omitted).  Cortlandt asserts that

it preserved the objection by requesting the opportunity to amend its complaint

ʺif the [c]ourt conclude[d] there [were] any defects or deficiencies.ʺ  Mem. in

Oppʹn to the Sponsor Defs.ʹ Mot. to Dismiss at 25 n.21, Dkt. No. 68, Cortlandt St.

Recovery Corp. v. Aliberti, No. 12 Civ. 8685 JPO (S.D.N.Y. Apr. 22, 2013); Mem. in

Oppʹn to the Mot. to Dismiss of [the Hellas Defs.] at 24 n.22, Dkt. No. 77,

Cortlandt St. Recovery Corp. v. Aliberti, No. 12 Civ. 8685 JPO (S.D.N.Y. May 31,

2013).  

Cortlandt did not explicitly refer to Rule 17 or specify a means by which it

hoped to remedy any standing deficiency in the action as filed.  But it did invoke

Rule 17 in the context of the defendantʹs standing objection in the Deutsche Bank

action, arguing that it should have been given the opportunity to substitute the

noteholders as the real parties in interest or to obtain a new assignment.  

Deutsche Bank Op., 2013 WL 3762882, at *3, 2013 U.S. Dist. LEXIS 100741, at *10‐

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11.  And the district court squarely addressed those arguments, denying the

requests.  Id., 2013 WL 37628827, at *3 & n.4, 2013 U.S. Dist. LEXIS 100741 at *11‐

12 & 12 n.4.  Because the district court dismissed the present action ʺ[f]or the

reasons set forthʺ in the Deutsche Bank Opinion, Order, Cortlandt St. Recovery

Corp. v. Aliberti, No. 12 Civ. 8685 JPO (S.D.N.Y. Aug. 2, 2013), thus reaching and

rejecting Cortlandtʹs implied 17(a)(3) objection, and because we may in any event

exercise our discretion to consider an issue raised for the first time on appeal

ʺwhere the argument presents a question of law and there is no need for

additional fact‐finding,ʺ Bogle‐Assegai, 470 F.3d at 504 (internal quotation marks

omitted), we decline to conclude that Cortlandt has forfeited its rights under

Rule 17.

The question then is whether the district court abused its discretion in

denying an amendment request under Rule 17.  We have had few occasions on

which to address this issue.  See Schreiber, 407 F.3d at 43 (noting that as of 2005

ʺthis [C]ircuit appears never to have stated the proper standard of review for a

district courtʹs application of the curative procedures set forth in that ruleʺ).  In

Advanced Magnetics, our Circuitʹs leading case interpreting the Rule, we

concluded that the assignment agreements in issue ʺwere insufficient to transfer

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to [the plaintiff] ownership of the claims of the [assignors] and hence were

insufficient to permit [the plaintiff] to sue on those claims in its name.ʺ  106 F.3d

at 18 (emphasis added).

We nonetheless returned the case to the district court directing ʺthat leave

to file the proposed amended complaint substituting the [assignors] as plaintiffs

to pursue their own claims [be] granted under Rule 17(a).ʺ  Id. at 21.  We

reasoned that such substitution was warranted for three reasons:   First, ʺ[t]he

complaintʹs only pertinent flaw was the identity of the party pursuing those

claims.ʺ  Id. at 20.  In other words, the proposed amended complaint sought only

to substitute one name for another; the factual and legal allegations of the

complaint would remain unaltered.  Second, there was no indication of ʺbad faith

or . . . an effort to deceive or prejudice the defendants.ʺ  Id. at 21.  Finally, the

proposed substitution did not threaten to prejudice the defendants, who had

timely notice of the substance of the allegations, the relevant parties, and their

claims.  Id.   

But the facts underlying our decision in Advanced Magnetics differ from

those in the case at bar in at least one significant respect:  There, unlike here, the

named plaintiff had standing irrespective of any amendment under Rule 17 to

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pursue at least some of its claims against the defendants; Cortlandt did not.  The

district court here followed the lead of several other district courts in this Circuit

by distinguishing Advanced Magnetics based on that difference.6  See, e.g., Clarex

Ltd. v. Natixis Sec. Am. LLC, No. 12 CIV. 0722 PAE, 2012 WL 4849146, at *8, 2012

U.S. Dist. LEXIS 147485, at *20‐21 (S.D.N.Y. Oct. 12, 2012); In re SLM Corp. Sec.

Litig., 258 F.R.D. 112, 115 (S.D.N.Y. 2009).

In Cortlandtʹs case, absent a complete assignment of the only claims on

which the lawsuit was based, there was no valid lawsuit pending before the

district court in which to permit an amended complaint.  The district court

reasoned that ʺ[s]tanding . . . ʹis to be determined as of the commencement of

suit.ʹ  Lujan, 504 U.S. at 570 n. 5.  A court may not permit an action to continue,

even where the jurisdictional deficiencies have been subsequently cured, ʹif

jurisdiction [was] lacking at the commencement of a suit . . . .ʹ  Disability

Advocates, Inc. v. N.Y. Coal. for Quality Assisted Living, Inc., 675 F.3d 149, 160 (2d

Cir. 2012).ʺ  Deutsche Bank Op., 2013 WL 3762882, at *3, 2013 U.S. Dist. LEXIS

100741, at *11 (second ellipsis in original).  The court also noted that ʺʹwhere

                                                            

6 Advanced Magnetics did not explicitly rely on the fact that the plaintiff had standing

on some claims to reach the plaintiffʹs Rule 17 objection as to the other claims, nor did it

examine the relationship between constitutional standing requirements and Rule 17.

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courts in this Circuit have used [] Rule 17(a)(3) to remedy defects in standing,

they have generally done so where the plaintiff clearly had standing on another

claim that it brought.ʹʺ  Id., 2013 U.S. Dist. LEXIS 100741, at *11‐12 (quoting Clarex

Ltd., 2012 WL 4849146, at *8, 2012 U.S. Dist. LEXIS 147485, at *22) (brackets in

original).  In other words, in the absence of a plaintiff with standing, this lawsuit

was a nullity, and there was therefore no lawsuit pending for the real party in

interest to ʺratify, join, or be substituted intoʺ under Rule 17(a)(3) or otherwise.

The question whether a plaintiff may use Rule 17(a)(3) to remedy a

standing deficiency when it lacks standing as to all of its claims – as is the case

here – appears to be an issue of first impression in this Court, if not the district

courts in this Circuit.  See W.R. Huff, 549 F.3d at 104 n.3 (avoiding Rule 17(a)

question where only issue on appeal was constitutional standing); Lunney v.

United States, 319 F.3d 550, 556‐57 (2d Cir. 2003) (avoiding Rule 17(a) question by

affirming dismissal on other jurisdictional grounds).  At least one other circuit

has addressed the question, see Zurich Ins. Co. v. Logitrans, Inc., 297 F.3d 528, 531

(6th Cir. 2002) (plaintiff that ʺhad no standing to bring th[e] action [had] no

standing to make a motion to substitute the real party in interestʺ), although this

decision has met with some criticism, see, e.g., Park B. Smith, Inc. v. CHF Indus.

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Inc., 811 F. Supp. 2d 766, 773‐74 & n.3 (S.D.N.Y. 2011) (declining to follow Zurich

Insurance Co. based on the district courtʹs view that that case adopted an

unnecessarily ʺrigidʺ approach); 13A Charles Alan Wright et al., Fed. Prac. &

Proc. Civ. § 3531 n.61 (3d ed. 2014) (characterizing Zurich Insurance Co. as

ʺparticularly troublingʺ).  

We need not, however, resolve this question to dispose of Cortlandtʹs

request to attempt to cure the standing defect under Fed. R. Civ. P. 17(a)(3).  We

affirm because neither of the requests made by Cortlandt in its effort to cure the

standing problem would have been consistent with Rule 17(a)(3).  Therefore, the

district courtʹs decision to deny relief under that rule was not an abuse of

discretion.

Cortlandt made two specific, alternative requests:  first, to substitute the

noteholders for it as plaintiffs, or, second, for leave to obtain a new assignment

from the noteholder vesting in Cortlandt sufficient title to maintain this lawsuit.7  

                                                            

7 As the district court described it:

During a recent telephone conference, Cortlandt suggested that, were the

[c]ourt to hold that Cortlandt lacked standing, it should be permitted to

cure the deficiency by ʺinterven[ing] the real party . . . or establish[ing]

authorizationʺ through a new agreement. (Trans. at 5:16‐18; see also id. at

5:18‐22 (Plaintiffʹs Counsel: ʺIf [Defense Counsel] is questioning whether

the authorization is sufficient, rather than to say that this is sufficient

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We conclude that neither provides the plaintiff with a means of employing the

provisions of Rule 17(a)(3) to solve its standing problems.  

As to Cortlandtʹs first request, substitution of the noteholders as plaintiffs

would cure the standing defect.  Simultaneously and necessarily, though, it

would create a different, fatal jurisdictional defect.  Cortlandt conceded at oral

argument that the noteholders, foreign citizens, are not diverse from the

defendants, also foreign entities.  While

diversity is present when the action is between ʺcitizens of a State and

citizens or subjects of a foreign state,ʺ 28 U.S.C. § 1332(a)(2), or between

ʺcitizens of different States and in which citizens or subjects of a foreign

state are additional parties,ʺ id. § 1332(a)(3)[,] diversity is lacking within

the meaning of these sections where the only parties are foreign entities.

Universal Licensing Corp. v. Paola del Lungo S.p.A., 293 F.3d 579, 580‐81 (2d Cir.

2002).  It is undisputed that the only potential basis for federal subject matter

jurisdiction in this case is diversity.  We have explained that ʺ[t]he procedural

mechanisms set forth in Rule 17(a) for ameliorating real party in interest

problems may not, under the Rules Enabling Act, 28 U.S.C. § 2072(b), be

employed to expand substantive rights.ʺ  Schreiber, 407 F.3d at 49.   Thus, ʺRule

                                                                                                                                                                                               

where he says it isnʹt, he is just giving me language that he wants to see,

why donʹt I just go out and get it?ʺ).

Deutsche Bank Op., 2013 WL 3762882, at *3, 2013 U.S. Dist. LEXIS 100741, at *10‐11.

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17(a) . . . does not extend or limit the subject matter jurisdiction of a federal courtʺ 

by conferring subject matter jurisdiction when it would ʺnot otherwise exist.ʺ  

Airlines Reporting Corp. v. S & N Travel, Inc., 58 F.3d 857, 861 n.4 (2d Cir. 1995)

(internal quotation marks omitted); see also Lunney, 319 F.3d at 556‐57.  Because

the noteholders Cortlandt sought to substitute would have lacked subject matter

jurisdiction to bring the claims, the district court did not abuse its discretion by

denying Cortlandtʹs request to substitute those entities under Rule 17(a)(3).  See 4

Mooreʹs Federal Practice 3D § 17.12[1][c] (ʺIf joinder or substitution of, or

ratification by, a real party in interest would destroy the courtʹs jurisdiction, the

action must be dismissed.ʺ).

If Cortlandtʹs second request—for leave to obtain a new assignment—were

pursued, diversity jurisdiction would not appear to present a barrier.  The

diversity jurisdiction that now obtains between the plaintiff and the defendants

would survive.  But while granting Cortlandtʹs request to create and execute a

new assignment transferring complete title and ownership of the claims in issue

to Cortlandt might theoretically create a claim litigable by Cortlandt, it would

not enable Cortlandt to alter its complaint in the district court pursuant to Rule

17(a)(3) to reflect the contents of the revised transfer.   

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As we have discussed, Cortlandtʹs First Amended Complaint alleges that it

was assigned ʺfull rights under the assignments to collect principal and interest

due and to pursue all remedies.ʺ  Pl.ʹs First Am. Compl. ¶ 12 (J.A. 60).  In order to

have standing, however, Cortlandt would have to allege that it was assigned title

to the claims, not merely a power of attorney.  A new assignment would ʺalter[]

the original complaintʹs factual allegations as to the events or the participants,ʺ 

Advanced Magnetics, 106 F.3d at 20, because the language of the new complaint, to

cure the standing bar, would necessarily reflect the contents of the new

assignment.

We have ordinarily allowed amendments under Rule 17 only ʺwhen a

mistake has been made as to the person entitled to bring suit and such

substitution will not alter the substance of the action.ʺ  Park B. Smith, Inc., 811 F.

Supp. 2d at 773.  Cortlandtʹs legal claims might remain unaltered if a new

assignment were substituted for the old one, but the factual allegations

supporting them would not.  Unlike a substitution, such as the one requested in

Advanced Magnetics or Zurich Insurance Co., pleading the existence of a new and

substantively different assignment would require more than a ʺmerely formalʺ 

alteration of the complaint.  See Advanced Magnetics, 106 F.3d at 20.  Such an

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attempt to employ Rule 17(a)(3) to cure the standing problem here would thus be

fated to fail.

We cannot rule out the possibility that Cortlandt might have avoided these

challenging procedural pitfalls through a request for leave to obtain a valid

assignment under some other rule of civil procedure.  It did not.  It has relied

upon only Rule 17 in the present appeal.  For the reasons set forth above, its

request falls outside the bounds of the proper application of that rule. 8

                                                            

8 We have apparently never, in a precedential opinion, adopted a rule to the effect

ʺthat even when [a] claim is not assigned until after [an] action has been instituted, the

assignee is the real party in interest and can maintain the action.ʺ  6A Charles Alan

Wright et al., Fed. Prac. & Proc. Civ. § 1545 (3d ed. 2014); see, e.g., Dubuque Stone Prod.

Co. v. Fred L. Gray Co., 356 F.2d 718, 724 (8th Cir. 1966); Kilbourn v. W. Sur. Co., 187 F.2d

567, 571 (10th Cir. 1951); see also 4 Mooreʹs Federal Practice § 17.11[1][e].  But see

Lambrinos v. Exxon Mobil Corp., 349 F. Appʹx 613, 614 (2d Cir. 2009) (summary order)

(apparently relying on this rule).  The ʺruleʺ apparently predates adoption of Rule

17(a)(3), but modern courts sometimes support their approval of such post‐

commencement assignment by reference to Rule 17(a).  See, e.g., Campus Sweater &

Sportswear Co. v. M. B. Kahn Constr. Co., 515 F. Supp. 64, 84 (D.S.C. 1979), affʹd, 644 F.2d

877 (4th Cir. 1981).  We need not determine under what circumstances, if ever, a post‐

commencement assignment might be appropriate under 17(a)(3) or some other

provision of the Federal Rules, although we note that Advanced Magnetics suggests that

17(a)(3) alone would not authorize such an assignment under these circumstances.  

Cortlandt has not made this argument in the district court or before us.  See McCarthy v.

S.E.C., 406 F.3d 179, 186 (2d Cir. 2005) (ʺWe think it reasonable to hold appellate counsel

to a standard that obliges a lawyer to include his most cogent arguments in his opening

brief, upon pain of otherwise finding them waived.ʺ).

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Conclusion

For the foregoing reasons, the district court did not err in concluding that

the plaintiff lacked standing nor did the court abuse its discretion in denying the

plaintiff relief under Rule 17(a)(3).  It therefore did not err in dismissing the

complaint without prejudice.  The judgment of the district court is therefore

AFFIRMED.

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