1 

14-1463 

CP III Rincon Towers, Inc. v. Richard D. Cohen

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 TO A SUMMARY ORDER MUST SERVE A 

COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

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

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

29th 3 day of November, two thousand sixteen. 

4 

5 Present: 

6 RALPH K. WINTER, 

7 DEBRA ANN LIVINGSTON,

8 DENNY CHIN,

9 Circuit Judges. 

10 _____________________________________ 

11 

12 CP III RINCON TOWERS, INC., 

13 

14 Plaintiff-Appellant, 

15 

16 v. 14-1463 

17 

18 RICHARD D. COHEN, 

19 

20 Defendant-Appellee. 

21 _____________________________________ 

22 

23 For Plaintiff-Appellant: BARRY W. LEE, Manatt, Phelps & Phillips, LLP, San 

24 Francisco, CA (Kimo S. Peluso, Nirav S. Shah, New 

25 York, NY, on the brief) 

26 

27 For Defendant-Appellee: JANICE MAC AVOY, Fried, Frank, Harris, Shriver & 

28 Jacobson LLP, New York, NY (Justin Santolli, Jesse 

29 Ryan Loffler, on the brief) 

30 

31 

32 
2 

Appeal from a judgment of the United States District Court for the Southern District of 

New York (Batts, J.) 

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND 

DECREED that the judgment of the district court is VACATED, and the case is REMANDED

for further proceedings consistent with this order.

Plaintiff-Appellant CP III Rincon Towers, Inc. (“CP III”) appeals from a judgment 

entered on April 7, 2014 in the United States District Court for the Southern District of New 

York (Batts, J.) granting Defendant-Appellee Richard D. Cohen’s motion for summary judgment 

on CP III’s claim, which sought enforcement of certain provisions of a guaranty agreement 

Cohen had signed. We assume the parties’ familiarity with the facts, procedural history of the 

case, and the issues on appeal. 

A. Background 

In 2005, Beacon Capital Partners (“Beacon”) purchased a mixed-use development project 

in San Francisco (the “Project”). The Project included a high-rise apartment building (the 

“Property”) with 320 units that Beacon intended to convert into condominiums. Cohen is a 

successful real estate investor who, in 2007, indicated an interest in purchasing the Property from 

Beacon. Cohen set up three special purpose entities, Rincon EV Realty LLC, Rincon ET Realty 

LLC, and Rincon Residential Towers LLC (collectively, “Borrower”). Cohen serves as 

president of all three LLCs. In order to purchase, and subsequently develop, the Property, 

Cohen needed to secure financing, and he wished to do so quickly to take advantage of tax 

benefits for like-kind exchanges. Cohen contacted Bear Stearns Commercial Mortgage, Inc. 

(“Bear Stearns”; it, and each of its successors, the “Lender”) seeking $110 million in financing. 

Negotiations began in mid-May and continued for approximately three weeks. 
3 

Because Bear Stearns anticipated that, at least initially, the net operating income from the 

Property would be less than the interest due, Bear Stearns required Cohen to enter into an 

agreement guaranteeing the loan in his personal capacity. Cohen agreed to the guaranty in 

concept, but sought to cabin his liability under the guaranty in practice. The record reflects that 

the parties thereafter engaged in substantial negotiations over the terms of that guaranty. On 

June 8, 2007, Borrower and Bear Stearns entered into a $110 million loan agreement (the “Loan 

Agreement”). Cohen and Bear Stearns entered into an accompanying agreement as to the 

guaranty (the “Guaranty Agreement”), the terms of which are discussed in greater detail below. 

Under the Loan Agreement, Borrower was required to invest in renovations of the 

Property. Angotti & Reilly (“Angotti”) was hired as the Property’s general contractor, and 

Angotti, in turn, retained, as one of its subcontractors, a company called Interior Design 

Services. In late 2008, Borrower issued only a conditional payment to Agnotti, asserting 

Angotti’s work was unsatisfactory, and on December 23, 2008, Angotti filed a notice and claim 

of mechanic’s lien in the amount of $766,420.30. Interior Design Services also filed a 

mechanic’s lien, in the amount of $142,700.51. Two other companies – Bacon Plumbing Co., 

Inc. and Allsite Construction Company – also filed mechanics liens, which, together, totaled 

approximately $100,000. 

Agnotti subsequently brought its claims to arbitration. The arbitrator awarded Agnotti 

over $1.5 million, including amounts past due, attorneys’ fees, and costs. This award was 

thereafter confirmed in California state court. On June 7, 2010, Agnotti recorded a judgment 

lien against the Property. 

Borrower was separately party to a common development agreement administered by 

Beacon (the “REOA”), under which certain easements and covenants necessary to the Project 
4 

had been established. The Loan Agreement required Borrower to remain current with the 

payments required by the REOA, and to comply with all of its terms. By mid-2008, Borrower 

had fallen into arrears on its payments under the REOA, and, on December 23, 2008, Beacon 

recorded a notice of delinquency and a claim of lien against Borrower for nearly $700,000. 

This initial lien was released in January of 2009, but, by May, Beacon had filed another claim for 

about $650,000, later amended down to a claim for just over $400,000. We refer to these liens 

collectively – Angotti’s original lien, the mechanic’s liens, Angotti’s judgment lien, and the lien 

filed pursuant to the REOA – as the “Disputed Liens.” 

The term of the loan ran through mid-2009, though Borrower sought to exercise its 

contingent contractual right under the Loan Agreement to extend the term of the loan through 

June 2010. By this time, rights under the Loan Agreement had passed from Bear Stearns to a 

vehicle created by the Federal Reserve Bank of New York during the financial crisis that began 

in 2007 to hold certain of the assets that JPMorgan Chase & Co. declined to assume as part of its 

government-backed acquisition of the Bear Stearns parent company. In early 2010, the loan 

was sold to CP III at auction for about $83 million. CP III waited until after June 12, 2010 – 

the maturity date on the loan if Borrower had legitimately exercised its right to extend the term 

of the loan – to file notice of default and seek to foreclose on the Property. CP III acquired the 

Property at the subsequent foreclosure sale with a credit bid of $73 million. To recover on the 

unpaid loan, CP III filed suit against Cohen in the Southern District of New York, alleging that 

the recording of the Disputed Liens triggered Cohen’s personal liability under the Guaranty 

Agreement.
5 

B. The Guaranty Agreement 

The Guaranty Agreement provides for a springing, rather than an absolute, guaranty. In 

other words, the loan itself is structured to be non-recourse with respect to Cohen, except that, 

under the Guaranty Agreement, certain events trigger Cohen’s personal liability. Cohen’s 

liability under the Guaranty Agreement is bifurcated: in some circumstances, Cohen’s liability is 

merely “loss recourse,” requiring Cohen to cover losses sustained by the Lender as a result of 

Borrower’s failure to comply with certain of the obligations imposed by the Loan Agreement, 

while in other circumstances, the guaranty becomes “full recourse,” exposing Cohen to liability 

for the entire amount of the loan.1 

Particularly relevant here are three provisions of the Guaranty Agreement triggering full 

recourse to Cohen: the Indebtedness Clause, the voluntary Lien Clause, and the Transfer Clause. 

The subsection in which the Indebtedness Clause and the voluntary Lien Clause appear states 

that Cohen shall be liable for the entire amount of the debt “if Borrower fails to obtain Lender’s 

prior written consent to any Indebtedness . . . or voluntary Lien encumbering the Property (to the 

extent such consent is required under the Loan Agreement[)].” App’x 23. The Transfer 

Clause makes the loan full recourse to Cohen “if Borrower fails to obtain Lender’s prior written 

consent to any Transfer if required by the Loan Agreement . . . .” Id. 

“Indebtedness,” “Lien,” and “Transfer” are all defined terms under the Loan Agreement, 

incorporated by reference into the Guaranty Agreement. The Loan Agreement defines 

“Indebtedness” as the sum of, inter alia, “(a) all indebtedness or liability . . . and (g) obligations 

 

1

 Loss- and full-recourse provisions like the ones Cohen agreed to are frequently termed “bad boy 

guarantees.” Bad boy guarantees are frequently required by lenders providing financing to special 

purpose entities, often in real estate transactions, to permit the lender to pursue the individual controlling 

the special purpose borrower for actions that undermine the value of the lender’s collateral. However, as 

is the case here, these “bad boy guarantees” are by and large a creature of contract and we therefore apply 

general principles of contract interpretation in construing their scope. 
6 

secured by any Liens, whether or not the obligations have been assumed (other than the 

Permitted Encumbrances and Permitted Equipment Financing).” App’x 49-50. “Lien” is 

defined as “any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security 

interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, the Property, 

any portion thereof or any interest therein, including, without limitation, any conditional sale or 

other title retention agreement, any financing lease having substantially the same economic 

effect as any of the foregoing, the filing of any financing statement, and mechanic’s, 

materialmen’s and other similar liens and encumbrances.” App’x 52. 

A “Transfer” occurs when Borrower, by action or inaction does, inter alia, any of the 

following: “sell, convey, mortgage, grant, bargain, encumber, pledge, assign, grant options with 

respect to, or otherwise transfer or dispose of (directly or indirectly, voluntarily or involuntarily, 

by operation of law or otherwise, and whether or not for consideration or of record) the Property 

or any part thereof or any legal or beneficial interest therein.” App’x 102. The Loan 

Agreement further provides that “Lender shall not be required to demonstrate any actual 

impairment of its security or any increased risk of default hereunder in order to declare the Debt 

immediately due and payable upon Borrower’s Transfer without Lender’s consent. This 

provision shall apply to every Transfer regardless of whether voluntary or not, or whether or not 

Lender has consented to any previous Transfer.” App’x 103. 

C. Proceedings Below 

On April 7, 2014, the district court denied CP III’s motion, and granted Cohen’s 

cross-motion, for summary judgment. The district court held that, under the plain language of 

the Loan and Guaranty Agreements, any Lien – including the Disputed Liens at issue here – 

would trigger the Guaranty Agreement’s Transfer Clause, but found the Guaranty Agreement 
7 

ambiguous because reading the Transfer Clause this broadly would render the voluntary Lien 

Clause superfluous. The district court therefore turned to the extrinsic evidence, concluding 

that the course of negotiations demonstrated that the parties had not intended that the Disputed 

Liens trigger Cohen’s full recourse guaranty. As further support for its conclusion, the district 

court found that allowing the Disputed Liens to trigger full recourse liability would be 

commercially unreasonable, because the Guarantor had no control over when and whether the 

companies conducting the renovations on the Property contemplated by the Loan Agreement 

might file a lien. Finally, the district court concluded that though certain of the Disputed Liens 

undoubtedly constituted “liabilities,” and so Indebtedness under the Loan Agreement, the 

Indebtedness Clause had not been triggered because the Loan Agreement did not require written 

consent prior to incurring these Disputed Liens and the Indebtedness Clause, by its terms, applies 

only to debts for which the Loan Agreement requires the Lender’s prior written consent. 

D. Discussion 

We review the district court’s grant of summary judgment de novo, drawing all factual 

inferences against the party seeking summary judgment, and affirm only when there are no 

genuine issues of fact to be resolved at trial. Lucente v. Int’l Bus. Machs. Corp., 310 F.3d 243, 

253-54 (2d Cir. 2002). In the context of a contract dispute, a motion for summary judgment is 

generally granted only where the agreement’s language is unambiguous and conveys a definite 

meaning.2

 Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 

1094 (2d Cir. 1993). 

 

2

 Pursuant to the terms of the Guaranty Agreement, we apply New York law in interpreting the parties’ 

contract. 
8 

The primary objective of contract interpretation is to give effect to the intent of the 

contracting parties “as revealed by the language they chose to use.” Id. We do not resort to 

extrinsic evidence unless the contract’s language itself is ambiguous; if, in the context of the 

entire agreement, the plain meaning of the text is clear, our inquiry ends there. Id. at 1095. 

We have explained that ambiguity exists when contract language is not susceptible of “a definite 

and precise meaning, unattended by danger of misconception in the purport of the contract itself, 

and concerning which there is no reasonable basis for a difference of opinion.” Id. (internal 

quotation marks and modifications omitted). 

The core of CP III’s argument is that the Disputed Liens triggered the Transfer Clause 

and, independently, the Indebtedness Clause, of the Guaranty Agreement, thus making Cohen 

personally liable for the full amount of the debt. As described above, the Loan Agreement 

defines Transfers broadly, and as including any encumbrance of the Property, whether Borrower 

agreed to so encumber the Property or not, and whether the encumbrance occurred by operation 

of law or otherwise. The Transfer covenant in the Loan Agreement indisputably requires that, 

except as otherwise specifically provided, Borrower obtain the Lender’s written consent prior to 

any Transfer. Because a lien against the Property is, by definition, an encumbrance, the 

Disputed Liens – whether incurred voluntarily or not – were Transfers for which Borrower 

needed to obtain the Lender’s prior written consent. Neither party credibly contends that 

Borrower obtained the required consent with respect to each of the Disputed Liens. Thus, 

looking solely to the Transfer Clause of the Guaranty Agreement, the Disputed Liens would 

trigger Cohen’s personal liability. 

However, as the district court recognized, this reading of the Transfer Clause is in some 

tension with the provision of the Guaranty Agreement immediately prior to it. Under the 
9 

voluntary Lien Clause, voluntary Liens on the Property recorded without the prior consent of the 

Lender (and for which such prior consent is required) trigger Cohen’s full recourse liability. As 

is clear, and as the definition of the term in the Loan Agreement reiterates, an encumbrance on 

the Property would constitute a Lien. As applied to encumbrances, therefore, the Transfer 

Clause covers much the same substantive territory as the voluntary Lien Clause. Thus, if we 

read the voluntary Lien Clause as identifying a subset of Liens triggering full recourse to Cohen, 

that clause would be entirely subsumed within the scope of the Transfer Clause that immediately 

follows it. In other words, the voluntary Lien Clause would be superfluous. 

It is well-established that we disfavor readings of a contract that render provisions of an 

agreement superfluous. Int’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 86 

(2d Cir. 2002). This is reflected in the basic rule that “contracts should be construed to give 

force and effect to their provisions and not in a manner so as to render [those provisions] 

meaningless.” Yoi-Lee Realty Corp. v. 177th St. Realty Assocs., 208 A.D.2d 185, 190 (1st 

Dep’t 1995); see also Columbus Park Corp. v. Dep’t of Hous. Pres. & Dev., 80 N.Y.2d 19, 31 

(1992) (“[A] construction which makes a contract provision meaningless is contrary to basic 

principles of contract interpretation.”). Though superfluity is not necessarily fatal to a contract, 

we do take the fact that a given interpretation would render a provision superfluous into account 

in evaluating whether the relevant provisions, read together, are ambiguous. See RJE Corp. v. 

Northville Indus. Corp., 329 F.3d 310, 314 (2d Cir. 2003). 

Here, the tension between the voluntary Lien Clause and the Transfer Clause, and 

between the opposing principles of contract interpretation which would support giving effect to 

one clause or the other, renders the Guaranty Agreement ambiguous. If we were to give full 

effect to the Loan Agreement’s expansive definition of Transfer, we would necessarily be 
10 

rendering the voluntary Lien Clause a nullity, contrary to the principle that we seek to give effect 

to every provision of an agreement. See Golden Gate Yacht Club v. Société Nautique de 

Genève, 12 N.Y.3d 248, 256-57 (2009). On the other hand, giving the voluntary Lien Clause 

independent meaning requires carving encumbrances out of the Transfer Clause, cutting against 

the rule that the meaning the parties have clearly ascribed to a term in their agreement (here, 

“Transfer”) is controlling. See Law Debenture Trust Co. v. Maverick Tube Corp., 595 F.3d 

458, 469 (2d Cir. 2010); Banco Espírito Santo, S.A. v. Concessionária do Rodoanel Oeste S.A., 

100 A.D.3d 100, 107-08 (1st Dep’t 2012). Absent a clearer explanation for how these clauses 

should be coordinated solely by reference to the four corners of the agreement, the Guaranty 

Agreement’s treatment of encumbrances like the Disputed Liens is ambiguous. 

Finding the agreement ambiguous, the district court turned to extrinsic evidence to 

resolve the question whether the Disputed Liens triggered full recourse to Cohen. In particular, 

to establish the status of the Disputed Liens under the agreement, the district court looked to the 

course of negotiations between the parties, including the proposed and final modifications to the 

draft contract. This analysis focused specifically on the removal of a provision in an early draft 

of the agreement which provided for loss recourse in the event of Borrower non-payment of bills 

for labor, materials, or other similar charges which, in the absence of payment, would generate 

liens against the Property (the “Mechanic’s Lien Clause”). Observing that, if the parties 

removed the loss recourse trigger embodied in the Mechanic’s Lien Clause, the parties 

presumably did not expect mechanic’s liens to trigger full-recourse liability, the district court 

held this drafting history to have conclusively resolved the parties’ intended treatment of all 

Disputed Liens under the Guaranty Agreement. 
11 

Given the posture of this case, this determination was inappropriate. Standard rules 

governing the disposition of motions for summary judgment apply to resolving ambiguities in a 

contract, and, therefore, as a general rule, we leave determination of the parties’ intent to the 

ultimate factfinder. Compagnie Financiere de CIC et de L’Union Europeenne v. Merrill Lynch, 

Pierce, Fenner & Smith, Inc., 232 F.3d 153, 158 (2d Cir. 2000). Though, as discussed 

immediately below, this general rule demands refinement, none of our clarifications of the rule 

make the grant of summary judgment suitable in this case. 

First, paralleling the general rule on summary judgment, extrinsic evidence can help to 

set the interpretation of a contract at summary judgment where the evidence “is so one-sided” 

that no reasonable factfinder could read the contract differently. Id. at 159. However, this is 

not the case here. As CP III points out, removal of the Mechanic’s Lien Clause had no 

substantive effect on the rights of the parties, because the revised draft that followed provided for 

loss recourse in nearly identical circumstances under a clause (the “SPE Clause”) triggered upon 

Borrower’s breach of the Loan Agreement’s special purpose entity covenant.3 While it is true 

that the parties removed the Mechanic’s Lien Clause, incorporation of the more-expansive SPE 

Clause – which provides for loss recourse whenever Borrower has “Liens of any nature against 

it” – undermines the inference that the parties intended to remove coverage of all liens similar to 

the Disputed Liens from the contract.4

 App’x 65. Put simply, it is the rare circumstance when 

 

3

 The Loan Agreement defines a “Special Purpose Entity” as, inter alia, an entity that “has no judgments 

or Liens of any nature against it except for tax liens not yet due and the Permitted Encumbrances.” 

App’x 65. Borrower covenanted to maintain its status as a Special Purpose Entity so long as the loan 

was outstanding. Though the Guaranty Agreement refers to a “Single Purpose Entity” rather than a 

Special Purpose Entity, neither party contends that this is anything other than scrivener’s error. 

4

 We need not give definitive meaning to the SPE Clause to recognize that its inclusion creates an open 

factual question not properly resolved on summary judgment. 
12 

an alteration without apparent legal effect conclusively resolves the meaning of the parties’ 

contract. 

Moreover, the mere fact that the Mechanic’s Lien Clause was removed in the course of 

the parties’ negotiations does not resolve the textual ambiguity the district court was confronted 

with. Insofar as it reflects on the meaning of ambiguous text or the import of facially 

conflicting provisions of a contract, extrinsic evidence can be useful. In such a case, extrinsic 

evidence can allow the court to discern the intended meaning of the ambiguous language. 

British Int’l Ins. Co. Ltd. v. Seguros La Republica, S.A., 342 F.3d 78, 82 (2d Cir. 2003). In 

other words, such evidence can sometimes clarify the meaning of the explicit terms of the 

agreement. See Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 430 (2d Cir. 1992) 

(holding that “because the interrelationship of the two provisions . . . is susceptible to several 

reasonable interpretations . . . [i]t cannot be definitely and precisely gleaned which reading was 

intended by the parties” and extrinsic evidence is properly considered). 

That is not the case here. At most, the removal of the Mechanic’s Lien Clause reflects 

that the parties did not intend Borrower’s failure to pay for labor, materials or other charges, 

which failure could generate a lien against the Property as a matter of state law, to operate as a 

full recourse trigger. But this evidence does not clarify the interaction between the voluntary 

Lien and Transfer Clauses. Even if the extrinsic evidence suggests that the Transfer Clause 

should not be read to apply to the liens formerly covered by the Mechanic’s Lien Clause, the 

import of this evidence is purely negative: it identifies only one specific set of liens that the 

Transfer Clause does not cover. This evidence does not reflect whether the Transfer Clause 

applies to liens not covered by the Mechanic’s Lien Clause, such as the liens entered pursuant to 

the Angotti judgment and the terms of the REOA. It also does not clarify whether the voluntary 
13 

Lien Clause displaces the Transfer Clause, or, if it does, the scope of the carve-out from full 

recourse liability implied by the voluntary Lien Clause.5

 Because the extrinsic evidence neither 

supplies an unambiguous interpretation of the terms of the Guaranty Agreement nor indisputable 

evidence of the parties’ intent with respect to the interaction between the Transfer and voluntary 

Lien Clauses, the district court should not have resolved these ambiguities on summary 

judgment.6

 We therefore vacate the district court’s grant of summary judgment in favor of 

Cohen on this point and remand for further proceedings. 

The district court also incorrectly granted summary judgment to Cohen with respect to 

the Indebtedness Clause. The entirety of the subsection of the Guaranty Agreement containing 

the Indebtedness and voluntary Lien Clauses provides for full recourse “if Borrower fails to 

obtain Lender’s prior written consent to any Indebtedness (provided such Indebtedness exceeds 

$250,000.00 or if any such Indebtedness is in the form of mezzanine debt or preferred equity) or 

voluntary Lien encumbering the Property (to the extent such consent is required under the Loan 

Agreement[)]” App’x 23. The district court correctly understood the phrase “prior written 

consent” to mean what it says, an interpretation that is only further confirmed by the closing 

parenthetical. As a result, this provision of the Guaranty Agreement is triggered only when 

Borrower has both failed to obtain Lender’s prior written consent for, for instance, Indebtedness, 

and was required to obtain such consent under to the terms of the Loan Agreement. The district 

court held that, because the Loan Agreement did not require the Lender’s written consent prior to 

 

5

 In this respect, we note that the term “voluntary Lien” is not self-defining. 

6

 For similar reasons, analysis of the commercial reasonability of the agreement is insufficient, absent an 

accompanying clear interpretation of the agreement’s terms, to resolve the ambiguity in the Guaranty 

Agreement. See Greenwich Capital Fin. Prods., Inc. v Negrin, 74 A.D.3d 413, 415 (1st Dep’t 2010). 
14 

Borrower’s incurring the liabilities embodied in the Disputed Liens, the Disputed Liens did not 

trigger this full recourse provision of the Guaranty Agreement. 

However, the district court did not fully consider the interaction between this provision of 

the Guaranty Agreement and the special purpose entity provisions of the Loan Agreement. As 

CP III points out, the special purpose entity covenant in the Loan Agreement requires Borrower 

to secure consent from the Lender prior to taking any action affecting Borrower’s special 

purpose entity status.7

 As noted above, the term “Special Purpose Entity” is defined broadly, 

and, as relevant here, its definition provides that each special purpose entity “shall have no 

Indebtedness other than (i) the Loan, (ii) liabilities incurred in the ordinary course of business . . . 

in amounts not to exceed [$1,000,000] which liabilities are not more than sixty [] days past the 

date incurred . . . and (iii) such other liabilities that are permitted pursuant to [the Loan] 

Agreement.” App’x 63. 

For one of the special purpose vehicles used by Cohen to hold the Property to incur more 

than one million dollars in ordinary course Indebtedness without obtaining the Lender’s prior 

written consent to Borrower’s carrying such liabilities forward would, therefore, plainly be a 

breach of the Loan Agreement’s special purpose entity covenant. The district court did not, 

however, consider whether, and under what circumstances, the same might trigger full recourse 

to Cohen under the Guaranty Agreement as Indebtedness for which the Lender’s prior written 

consent is required under the Loan Agreement.8

 Because it did not reach this question, the 

district court also did not have the opportunity to evaluate how the interaction between these 

 

7

 All consents required under the Loan Agreement must be in writing. 

8

 We note, however, that the district court correctly rejected Cohen’s argument that a broad reading of the 

Guaranty Agreement’s full recourse provisions would make the Guaranty Agreement’s loss recourse SPE 

Clause – triggered upon breach of the Loan Agreement’s special purpose entity covenant – superfluous. 
15 

provisions of the two agreements would affect the treatment of the Disputed Liens under the 

Guaranty Agreement. We decline to consider these questions in the first instance, and therefore 

vacate and remand the matter to the district court for further proceedings. 

* * * 

We have considered the parties’ remaining arguments and find them to be without merit. 

Accordingly, we VACATE the judgment of the district court and REMAND for further 

proceedings consistent with this order. 

 FOR THE COURT: 

 Catherine O’Hagan Wolfe, Clerk