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20-1312-cv

Phoenix Light SF DAC, et al. v. U.S. Bank National Association

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order filed 

on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate 

Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a 

document filed with this Court, a party must cite either the Federal Appendix or an 

electronic database (with the notation “summary order”). A party citing a summary order 

must serve a copy of it on any party not represented by counsel.

At a stated term of the United States Court of Appeals for the Second Circuit, held at 

the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, 

on the 4th day of October two thousand twenty-one.

PRESENT: JOSÉ A. CABRANES,

ROSEMARY S. POOLER,

JOSEPH F. BIANCO,

Circuit Judges.

PHOENIX LIGHT SF DAC et al.,

Plaintiffs-Appellants, 20-1312-cv

v.

U.S. BANK NATIONAL ASSOCIATION,

Defendant-Appellee.

*

FOR PLAINTIFFS-APPELLANTS: WILLIAM A. MAHER (David H. Wollmuth, 

Lyndon M. Tretter, Steven S. Fitzgerald, on the 

brief), Wollmuth Maher & Deutsch LLP, New 

York, NY

* The Clerk of Court is directed to amend the caption as set forth above. 
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FOR DEFENDANT-APPELLEE: LOUIS A. CHAITEN (Amanda R. Parker, David 

F. Adler, Michael T. Marcucci, on the brief) 

Jones Day, Cleveland, OH, Boston, MA.

Appeal from orders of the United States District Court for the Southern District of New 

York (Vernon S. Broderick, Judge).

UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, 

ADJUDGED, AND DECREED that the orders of the District Court be and hereby are

AFFIRMED.

Plaintiffs—Phoenix Light SF Limited (“Phoenix Light”), Blue Heron Funding VI Ltd., Blue 

Heron Funding VII Ltd., Kleros Preferred Funding V PLC, Silver Elms CDO PLC, Silver Elms 

CDO II Limited, C-Bass CBO XIV Ltd., and C-bass CBO XVII Ltd.— appeal orders granting 

summary judgment and denying reconsideration. 

Plaintiffs are issuers of collateralized debt obligations (“CDOs”), who bring breach of 

contract claims, alleging that they have suffered losses from their investments in certain Residential 

Mortgage Backed Securities (“RMBS”) trusts. Defendant U.S. Bank National Association is one of 

the RMBS trustees. Plaintiffs purchased RMBS certificates from third parties and then used those 

RMBS certificates as collateral to back the CDO notes they issued. Plaintiffs transferred their RMBS 

certificates to CDO Indenture Trustees and conveyed to them “all . . . right, title, and interest” in the 

certificates. Special App. 64–65. When Plaintiffs initially filed suit, the District Court (Katherine B. 

Forrest, Judge) dismissed the complaint for lack of standing. The CDO Indenture Trustees 

subsequently assigned the rights to pursue these claims back to the Plaintiffs, the Plaintiffs filed an 

amended complaint, and the District Court allowed the matter to proceed to discovery. The matter 

was re-assigned, and the District Court (Vernon S. Broderick, Judge) granted Defendant’s motion for 

summary judgment. The District Court found the assignments champertous under New York law, 

rendering them invalid and leaving Plaintiffs without standing. We assume the parties’ familiarity 

with the underlying facts, the procedural history of the case, and the issues on appeal. 

We review a district court’s grant of summary judgment de novo. In re World Trade Ctr. Lower 

Manhattan Disaster Site Litig., 846 F.3d 58, 63 (2d Cir. 2017). We review a district court’s denial of a 

motion for reconsideration for an “abuse of discretion.” Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174, 

177 (2d Cir. 2015); see generally, In re Sims, 534 F.3d 117, 132 (2d Cir. 2008).

A.

Where, as here, a case presents questions of both constitutional and prudential standing, “we 

may assume Article III standing and address ‘the alternative threshold question’ of whether a party 

has prudential standing.” Hillside Metro Assocs., LLC v. JPMorgan Chase Bank, Nat’l Ass’n, 747 F.3d 44, 

48 (2d Cir. 2014) (quoting Kowalski v. Tesmer, 543 U.S. 125, 129 (2004)). Because Plaintiffs granted 
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the CDO Indenture Trustees “all of [their] right, title, and interest” in the RMBS certificates, valid 

assignments—from the CDO Indenture Trustees back to the Plaintiffs—of the right to bring claims 

against the RMBS trustees were necessary in order for Plaintiffs to have prudential standing. Special 

App. 64–65. Defendant argues that the assignments made were invalid because they constituted

champerty under New York Judiciary Law § 489. Based on the factual findings of the District Court, 

it is clear that the assignments made were indeed champertous, as they were made “with the intent 

and for the primary purpose of bringing a lawsuit.” Justinian Cap. SPC v. WestLB AG, 28 N.Y.3d 160, 

163 (N.Y. 2016). For substantially the reasons given by Judge Broderick, we conclude the 

assignments were therefore invalid. 

Plaintiffs argue that they had a “preexisting proprietary interest” in the RMBS certificates 

and the assignments were therefore valid under Trust for the Certificate Holders of Merrill Lynch Mortgage

Investors, Inc. v. Love Funding Corp., 13 N.Y.3d 190, 195 (N.Y. 2009) (“We hold that a corporation or 

association that takes an assignment of a claim does not violate Judiciary Law § 489(1) if its purpose 

is to collect damages, by means of a lawsuit, for losses on a debt instrument in which it holds a 

preexisting proprietary interest.”). But Plaintiffs cannot point to sufficient facts in the record to raise 

a question of material fact that they had such a “preexisting proprietary interest.” 

Three aspects of Plaintiffs’ arguments are noteworthy. First, to the degree they claim some 

sort of residual ownership interest in the RMBS certificates, Plaintiffs run up against both the

particular language of their CDO indentures and the law of our Circuit, which support the 

conclusions of both Judge Forrest and Judge Broderick that a grant of “all . . . right, title, and 

interest” to an indenture trustee is a “complete transfer,” Nat’l Credit Union Admin. Bd. v. U.S. Bank 

Nat’l Ass’n, 898 F.3d 243, 253 (2d Cir. 2018). A CDO making such a grant “convey[s] in toto all 

interest that they had . . . in the Underlying Securities.” Nat’l Credit Union Admin. Bd. v. U.S. Bank 

Nat’l Ass’n, No. 14-CV-9928 (KBF), 2016 WL 796850, at *8 (S.D.N.Y. Feb. 25, 2016), aff’d, 898 F.3d 

243 (2d Cir. 2018). Second, Plaintiffs’ arguments based on various obligations they have under the 

indentures were plainly not made in their opposition to summary judgment. We decline Plaintiffs’

invitation to reach those arguments now. Palmieri v. Lynch, 392 F.3d 73, 87 (2d Cir. 2004) (“[Plaintiff] 

failed to . . . raise this argument in his opposition to summary judgement. Thus, this argument has 

been waived.”). Third, Plaintiffs essentially entwine discussions of Article III standing and the Love 

Funding champerty analysis, arguing that because their interests in the underlying securities suffice for 

Article III standing, those same interests must qualify them for the Love Funding “exception.” We 

reject that proposition, which is without support in case law. Moreover, unlike the plaintiff in Love 

Funding, who held the underlying loan at issue, here Plaintiffs retain no ownership interest in the 

RMBS certificates. 

B.

Separately, Plaintiffs contend that Phoenix Light’s Trust Agreement with Deutsche Bank 

was different than the indenture agreements of the other Plaintiffs insofar as Section 3.7 of the Trust 
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Agreement authorized Phoenix Light “to collect or have collected . . . or otherwise exercise or deal 

with (which terms shall, for the avoidance of doubt, include the enforcement of any security) the 

rights pledged under Clause 3.2.” App. 2580. Plaintiffs conclude that “[t]his means that, from the 

very beginning of this case, Phoenix Light indisputably had both Article III and contractual standing 

to sue on claims relating to RMBS Certificates—Phoenix Light did not grant ‘all . . . right, title, and 

interest’ to the claims and retained authority to sue.” Appellant’s Br. 55. That is not so. Phoenix 

Light did grant “all . . . right, title, and interest” in their “Account Collateral” (including the CDO 

notes they held and RMBS certificates at issue in this case) to their trustee, Deutsche Bank. See App. 

2558-59, 2577-78. The Trust Agreement and U.S. Security Agreement leave no daylight between 

Phoenix Light and the other CDO plaintiffs for the purposes of the champerty analysis. 

C.

Plaintiffs amended their notice of appeal to include the District Court’s Opinion and Order 

denying their Fed. R. Civ. P. 59(e) motion to alter or amend the judgment, but they appear to 

abandon this aspect of their appeal in briefing. Regardless, we find no indication that the District 

Court abused its discretion in denying that motion. Analytical Survs., Inc. v. Tonga Partners, L.P., 684 

F.3d 36, 52 (2d Cir. 2012) (“[T]he standard for granting [a Rule 59 motion for reconsideration] is 

strict, and reconsideration will generally be denied unless the moving party can point to controlling 

decisions or data that the court overlooked. Denials of motions for reconsideration are reviewed 

only for abuse of discretion.” (internal quotation marks omitted) (second alteration in original)).

CONCLUSION

We have reviewed all of the arguments raised by Plaintiffs on appeal and find them to be 

without merit. For the foregoing reasons, we AFFIRM the March 18, 2020 and August 12, 2020 

orders of the District Court.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk