B yo rde r da ted O ctob er 3 1 , 2 0 0 7 , the c o u rtg ran ted L o v e F u n d ing C o rpo rati o n ’s 1 m ot i on t o w i t hdr aw i t s cr os s - appea l
. See O r der , T rus tfort he C er t i fi cat e H ol der s of t he M erril l L yn ch M o rt g ag e In v esto rs, I nc. M ort gage Pas s - T hr ough C ert i fi cat es, S eries 1 9 9 9 C -1 v . L o v e F u n d in g C o rp ., N o . 0 7 -1 2 8 5 -c v (2 d C ir. O c t. 31 , 2 0 0 7 ). T h e C le r k o f C o u rt is t herefore di re c ted t o am end t he cap t i on t o co nfo rm t o o ur t i t l i ng of the part i es as, r es pect i vel y , “pl ai nt i ff- appel l ant ” and “ defe ndant
- appel l ee. ” 1 No. 07 -10 50 -cv Trust for the Certificate H olders of the Merrill Lynch Mortgage I nves tor s, I nc. Mortgage Pa ss - T

hrough Ce r ti

fi cates, S eries 199 9- C1 v. L oveFu ndi ng C

or porati on UN I TED STATES CO UR T OF A PP EALS

F ORTH E S EC ON D C IR C U IT
A ugus tT er m , 2008 ( A r gued: Sept ember 26, 2008 D eci ded: February13, 2009) D ocketN o. 07- 1050- cv
T RUS T F ORTH E C ER TI F I C ATE H OL DER S OF TH E M E R R ILL L YN C H M OR TGA GE I NVESTORS , I NC . M OR TGA GE P ASS -T HR OU GH C ER TI F I C ATE S , S ERI ES 1999- C 1, b ya n d th ro u g h O rix

C ap it al M ark ets, L L C , as M aster S erv icer an d S p ec ial S erv icer, P l ai nt i f f

-Appel l ant ,

— v . — L OV E F UN DING C ORPO RATI ON , D ef endant

-Appel l ee . 1T h e H o n o rab le Jo h n F
. K ee n an , o f t h e U n it ed S tat es D istri ct C o u rtfo r t h e S o u thern 2 D i s t r i ctof N ew Y or k, s i t t i ng bydes i gnat i on. B eca us e the H onor abl e G ui d o C alabr es i , or i gi nal l yas s i gned t o t hi s panel , r ecus ed hi m s el f fr om cons i der at i on of t hi s appea l , t he dec i s i on announce d i n t hi s opi ni on has been rea ch ed b ythe p an el’s rem ainin g tw o jud g es p u rsua n t t o L o ca l R u le § 0
. 1 4 (b). 2 B efor e: R AG GI , C i r cui tJudge , K EEN AN , Seni orD is t r i ct Judge
. 2

___________________ A ppeal fr om a j udgm ent of t he U ni t ed St at es D i s t r i ct C our tfort he Sout hern D i s t r i ct of N ew Y or k ( Shi r a A
. Schei ndl i n, J udge) , ent er ed aft er a bench t r i al, v o iding as champer t ous an as s i gnm entof r i ght s t o pl ai nt i ff, a trus tr epr es ent i ng t he hol der s of
comm er ci al m or t gage- backe d s ecur i t i es , w h ich ass i gnm entenabl ed pl ai nt i ff t o s ue Love F u n d in g C o rp o ra tio n , the o rig in a to r o f a se c u ritize d lo a n h e ld b yp lain tiff. O n th is a p p e a l, p lain tiff c o n te n d s th a t, as a m a tter o f law , the a ss ig n m e n t at iss u e d o e s n o t co n stitu te champer t yunderN ew Y or k J udi ci ary L aw § 489( 1)
. B eca us e w e conc l ude thatr es ol ut i on
o f th is iss u e d e p e n d s o n sig n if ica n t an d u n se ttl e d q u e stio n s o f N e w Y o rk law , w e c e rtify t o th e N e w Y o rk C o u rt o f A p p e a ls th e q u e s tio n s s ta te d a t th e e n d o f th is o p in io n . D eci s i on r es e r ved pendi ng t he r es pons e of the N ew Y or k C our tof A ppeal s t o cert i fi ed q u e s t i o n s o f

s t a t e l a w.3 I RA M. F EINBERG (L o ra n e F . H e b e rt , J a k e M . S h ie ld s , on the br i ef ) , H ogan & H a rt s o n L L P , N e w Y o rk , N e w Y o rk , f orP l ai nt i f f

-Appel l ant . A L EC W. F ARR(M ic h a e l G . B ig g e rs , A n n a C . U rs a n o , on the br i ef ) , B r y an C a v e L L P , W a s h in g to n , D .C ., f orD ef endant

-Appel l ee .

R EEN A R AG GI , C i r cui t

Judge : T hi s appea l ar i s es outof t he s al e of comm er ci al m or t gage- backe d s ecur i t i es , compl ex fi nanci al pr oduct s hel d by W al l St r eet banks i n an appr oxi m at e am ount of $100 bi l l i on. See L oui s e S t o r y , Fe a r s Ove rComme r c i a l Pr o p e r t yLo a n s , N. Y. Ti me s , Aug
. 2 2 , 2 0 0 8 , a tC 1;
see also L aS all e B an k N at’l A ss’n v . N o m u ra A sset C ap it al C o rp., 4 2 4 F
. 3 d 1 9 5 , 1 9 9 (2d C ir
. 2005) ( not i ng t hatcomm er ci al m or t gage- backe d s ecur i t i es compri s e a “mul t i
- bi l l i on dol l ar
m a rk e t” ). Pl a i n t i f

f , t h e Tru s t f

o r t h e Ce r t i f

i c a t e Hol d e r s o f t h e M e r r i l l Lynch M or t gage In v e sto rs, In c . M o rtg a g e P a ss -T h ro u g h C e rtific a tes , S e rie s 1 9 9 9 -C 1 , b ya n d th r o u g h O rix C api t al M ar ket s , L L C , as M as t er Ser vi cer and S peci al Ser vi cer( “the Trus t ”) , as as s i gnee of
ce rt ain ri g h ts o f U B S R ea l E stat e S ec u ri ti es, Inc
. (“U B S ”), s ued L ove Fundi ng C orpor at i on ( “Love Fundi ng”) forbr eac h of ce r t ai n r epr es ent at i ons and w arr ant ies tha tL ove Fundi ng
m a de in a m ort gag e-l oan -purchase agreem ent gove rni ng t he o ri ginat i on of ce rt a in
comm er ci al m or t gage l oans hel d byt he Trus t . A m ong ot her defe ns es , L ove Fundi ng ar gued t hatt he Trus t ’ s s ui t w as bar r ed byN ew Y or k’ s s t atut or ypr ohi bi t i on agai ns tchamper t y , s ee N
. Y
. J ud. L aw § 489( 1) , beca us e t he Trus t ’ s pr i m arypurpos e i n obt ai ni ng t he as s i gnm entof4

U B S ’s ri g h ts w as to su e L o v e F u n d ing
. A fter a b en ch tr ial in th e U n it ed S tat es D istri ct C o u rt f o r th e S o u th e rn D istric t o f N e w Y o rk , Ju d g e S h ira A . S c h e in d lin h e ld th e a ss ig n m e n t v o id
a s c h a m p e rto u s a n d e n ter e d ju d g m e n t in f a v o r o f L o v e F u n d in g . S e e T ru st f o r th e C e rtific a te H ol der s of t he M err i l l L ynch M or t gage I nves t or s , I nc. M or t gage Pas s - T hr ough C er t i fi cat es Ser i es 1999- C 1 v. L ove F undi ng C orp. ( “Trus t v. L ove F undi ng”) , 499 F. Supp. 2d 314, 325 (S .D .N .Y . 2 0 0 7 ). O n appea l fr om t hat j udgm ent , t he T rus t ar gues t hat t he di s t r i ct court m isco n strued N e w Y o rk c h a m p e rty law , w h ich , it a ss e rts, w a s “ n e v e r in ten d e d to p ro h ib it as sig n m e n ts in
c o m p le x c o m m e rc ia l tr a n s a c tio n s w h e re th e a s s ig n e e h a s a s u b s ta n tia l in te re s t a t s ta k e .” A ppel l ant ’ s B r . at26. W e concl ude t hat r es ol ut i on of t hi s appea l depends on s i gni fi cantand
uns et t l ed ques t i ons of N ew Y or k l aw t hatar e pr oper l yans w er ed, i n t he fi r s ti ns t ance , byt he N ew Y or k C our t of A ppeal s . A ccor di ngl y , w e cer t i fy t he quest i ons s t at ed att he conc l us i on of t hi s opi ni on t o t he C our t of A ppeal s . W e r et ai n j ur i s di ct i on s o t hat , upon r ece i ptof t hat
c o u rt’s r e sp o n se s, w e m a yru le o n th is a p p e a l. I . Backg r ound A
. T he M or t gage- L oan- Pur chas e A gr eement B etw een Love Fundi ng and Pai ne W ebberR eal E s t at e Secur i t i es , I nc. L ove Fundi ng i s a comm er ci al
- m or t gage- banki ng companyt hator i gi nat es m or t gage lo a n s o n in c o m e -p ro d u c in g re a l es tate . In 1 9 9 8 a n d 1 9 9 9 , L o v e F u n d in g w a s in v o lv e d in

“ c o n d u it le n d in g ,” a pr act i ce i n w hi ch l ar ge i nves t m entfi r m s par t nerw i t h s m al l erm or t gage-S p e c if ica lly , L o v e F u n d in g re p re se n ted th a t 3 [t ] her e i s no defa ul t , br eac h, vi ol at i on or eventof ac cel er at i on exi s t i ng under t he r el at ed M or t gage or the r el at ed M or t gage N ot e and no e vent( ot hert han p a y m e n ts d u e b u t n o t y e t d e lin q u e n t) w h ich , w ith th e p a ss a g e o f tim e o r w ith not i ce a n d t h e e x p i r a t i o n o f a n y g r a c e o r c u r e p e r i o d , wou l d c o n s t i t ut e a defa ul t , br eac h, vi ol at i on oreventof ac cel er at i on. L o v e M L P A § 5 .0 2 (c c ). 5 banki ng compani es i n m aki ng l oan arr angement s . A s par tof th at p rac t i ce, L ove Fundi ng
s ought l oan pr os pect s foran i nves t m entbank t o fund, t ypi cal l yr ece i vi ng a fe e of 1% of t he lo a n a m o u n t f

o r i ts s e rv ic e s . I n A pr i l 1999, L ove Fundi ng ent er ed i nt o a condui t - l endi ng arr angementw i t h Pai ne W ebberR eal E s t at e Secur i t i es , I nc. (“ P ai neW ebber ”)
. T hatarr angement , w hi ch w as go verned byN ew Y ork l aw , w as m em ori al i zed i n an A pri l 23 , 19 99 m ort gag e-l oan -purchase agr eement( “the L ove M L PA ”)
. I n t he L ove M L PA , L ove Fundi ng r epr es ent ed, i nt eral i a, th a t n o n e o f

th e u n d e rly in g m o rtg a g e lo a n s w e re in d e f a u lt. 3 I n the e ve ntL ov e Fun di ng br e a c he d tha torothe rr e pr e s e nt a t i on s , t he Love M LPA p ro v id e d P a in e W e b b e r w ith c e rta in re m e d ies , n o tab ly : W i t hi n s i xt y( 60) day s of t he ea r l i erof ei t herdi s coverybyornot i ce t o t he S e lle r [ i.e ., L o v e F u n d in g ] o f a n yB re a c h o f

a re p re s e n ta tio n o r w a rr a n t y, [Love Fundi ng] s hal l cur e s uch B r eac h i n al l m at er i al r es pect s and, i f s uch b re a c h c a n n o t b e c u re d , [ L o v e F u n d in g ] s h a ll, a t th e P u rc h a s e r’ s [ i.e ., P ai neW ebb er’ s] op t i on , repurchase such M ort gag e L oan att he R epu rchase Pr i ce. L o v e M L P A § 5 .0 3 (b )
. T h e L o v e M L P A a lso a f f o rd e d P a in e W e b b e r th e rig h t toU B S a lso su c c e e d e d in in ter e st to P a in e W e b b e r’s rig h ts a n d o b lig a tio n s in a se p a ra te 4 m o rtg a g e -lo a n -p u rc h a se a g re e m e n t w ith M e rrill L yn c h In v e sto rs, In c ., d isc u ss e d in f ra a t [ 7- 9 ]
. L ove Fundi ng w as t he nomi nal l ender ; Pai neW ebberpr ovi ded the actual fi nanci ng.

5 6 i ndemni fi cat i on “fr om and ag ains tal l demands, cl ai m s oras s er t ed cl ai m s , l i abi l i t i es or
a ss e rte d liab ili ties , co sts a n d e x p e n se s, in c lu d in g re a so n a b le a tto rn e y s’ f e e s, in c u rre d
. . . in anyw ayar i s i ng fr om or r el at ed t o any br eac h of anyr epr es ent at i on, w arr anty , covena ntor
a g re e m e n t o f

[ L o v e F u n d in g ] h e re u n d e r.” Id . § 9 .1 4 (a ). I n N ovember 2000, pur s uant t o a mer gerof t hei rpar entcompani es , U B S suc cee ded in in ter e st t o P a in e W e b b e r’s rig h ts an d o b lig a tio n s u n d e r th e L o v e M L P A
. T h u s , i n th is 4

o p in io n , ref

e re n c e s to p o st-m e rg e r e v e n ts w ill b e to U B S ; re f e re n c e s to p re -m e rg e r e v e n ts
w ill b e to P a in e W e b b e r. B
. T he A r l i ngt on L oan I n J ul y1999, pur s uantt o t he Love M L PA , L ove Fundi ng arr anged a $6. 4 m i l l i on
m or t gage l oan t o an ent i t ycal l ed the C yrus I I Par t ner s hi p ( “C yrus ”) , w hi ch w as s ecur ed by a mort g ag e on L oui s i ana pr oper t yknow n as t he A r l i ngt on A par t m ent s . T hi s “A r l i ngt on 5 L oan” w as fur t hers ecur ed bya per s on al guar ant ee e xecut ed byM ondona R afi zade h, p reside n t of

B ah ar D ev elop m en t, Inc
. (“B ah ar” ), a co rpo rate en ti tythat serv ed as C yrus’s g e n e ra l p a rt n e r.A s m as t erand s peci al s er vi cer , O r i x w as r equi r ed t o per for m var i ous admi ni s t r at i ve 6 funct i ons , i ncl udi ng col l ect i ng m or t gage- l oan paym ent s and depos i t i ng t hos e paym ent s for t he bene fi tof t he ce r t i fi cat e hol der s . O r i x w as al s o r equi r ed t o m oni t ort he mort gage l oans hel d byt he Trus t , a t as k t hatenabl ed i t , i f appr opr i at e, t o for ecl os e upon pr oper t ys ecur i ng th e s e lo a n s . 7 C
. T h e M o rtg a g e -L o a n -P u rc h a se A g re e m e n t B e tw e e n P a in e W e b b e r a n d M e rrill L ynch I nves t or s , I nc. 1. T he S ecuri t i zat i on P rocess A s par t of a l ar ger comm er ci al
- m or t gage- backe d s ecur i t i es t r ans act i on, on N ovember 1 , 1 9 9 9 , P a in e W e b b e r e n ter e d in to a se p a r a te m o rtg a g e -lo a n -p u rc h a se a g re e m e n t w ith M e rrill L yn c h In v e sto rs, In c . (“M e rrill L yn c h ” ). P u rsu a n t to th a t a g re e m e n t (“ th e M e rrill L ynch M L PA ”) , Pai neW ebbers ol d and as s i gned 36 l oans t o M err i l l L ynch, t hr ee of w hi ch

— in c lu d in g th e A rl in g to n L o a n — h a d b e e n o ri g in a te d b yL o v e F u n d in g . I n a s er i es of r el at ed t r ans act i ons , t hes e 36 l oans w er e t hen s ecur i t i zed, i
. e. , pool ed and p ac k ag ed i n a mannert hatal l ow ed fors al e t o i nves t or s . See gene r al l yG ar i etyv. G r ant T ho rnt on , L L P , 36 8 F
. 3d 35 6, 35 9 ( 4th C i r. 20 04 ) ( descri bing si m i l ar s ecuri t i zat i on process fors ub- pr i m e mort gage l oans )
. C entr al t o t hat s ecur i t i zat i on pr oces s w as t he exe cut i on of
a s e p a ra te a g re e m e n t, d a te d N o v e m b e r 1 , 1 9 9 9 , c a lle d a “ p o o lin g a n d s e rv ic in g a g re e m e n t.” Pur su an t to t hi s agr eement , t he pl ai nt i ff Tr us tw as cr eat ed, w i t h M err i l l L ynch ac t i ng as depos i t or ; O r i x R eal E s t at e C api t al M ar ket s , L L C (“O ri x ”) , s er vi ng as m as t erand s peci al
s er vi cer of t he l oans ; and N or w es t B ank M i nnes ot a, N at i onal A s s oci at i on, act i ng as t rus t ee. 6 A ddi t i onal l y , M err i l l L ynch as s i gned t o t he Trus tal l of i t s “r i ght [s ] , t i t l e and i nt er es t. . . i n,Speci fi cal l y , Pai neW ebberr epr es ent ed that 7 [t ] her e i s no m at er i al defa ul t , br eac h, vi ol at i on or event of acc el er at i on exi s t i ng undert he r el at ed M or t gag e o rM or t gage N ot e, and t o t he M or t gage Loan S e ller’ s [ i.e., P a in e W e b b e r’s ] k n o w led g e , the re is n o e v e n t (o th e r th a n p a y m e n ts due butnoty etdel i nquent ) w hi ch, w i t h t he pas s age of t i m e or w i t h not i ce a nd th e e x p ira tio n o f

a n yg ra c e o r c u re p e rio d , w o u ld c o n stitu te s u c h a d e f a u lt, br eac h, vi ol at i on oreventof ac cel er at i on. M e rr ill L yn c h M L P A , S c h e d u le I ¶ (v ii)
. 8 t o and under( i ) t he M or tgag e L o an s [i ncl udi ng t he l oans s ol d byPai neW ebber ] , ( i i ) eac h M o rtg a g e L o a n P u rc h a se A g re e m e n t an d (iii) all o th e r a ss e ts in c lu d e d o r to b e in c lu d e d ” in th e T ru s t. P o o lin g a n d S e rv ic e s A g re e m e n t § 2 .0 1 (a ). T he bene fi ci al ow ner s h i p of t he Trus tw as evi dence d byt he i s s uance of t he “M or t gage P a ss -T h ro u g h C e rtific a tes , S e r ie s 1 9 9 9 -C 1 ,” w h ich w e re so ld to in v e sto rs v ia p riv a te pl ace m entorpubli c o ff eri ng. T hos e ce r t i fi cat es , r efe r r ed t o as “comm er ci al m or t gageb a c k e d s e c u ri tie s ” o r “ C M B S ,” see L aS all e B a n k N a t’ l A s s ’n v . N o m u ra A s s e t C a p ita l C o rp ., 4 2 4 F .3 d a t 2 0 0 , w e re se c u re d b yth e u n d e rly in g c o m m e rc ial m o rtg a g e s a n d e n tit led th e ir h o ld e rs to in te re s t p a y m e n ts g e n e ra te d b yth e u n d e rl y in g m o rt g a g e lo a n s .

2. T he M er r i l l L ynch M L PA R epr es ent at i ons I n t he M err i l l L ynch M L PA , Pai neW ebber m ade a re pr es ent at i on, aki n t o t hati n t he L ove M L PA , t hatnone of the mort gage l oans convey ed w er e i n defa ul t . Pa ineW ebber 7 expr es s l y acknow l edged t hat t hi s r epr es ent at i on, as w i t h ot her s , w as m ade f ort he bene fi tof t he Trus t ’ s cert i fi cat e hol der s and coul d be enf or ced byt he trus t ee ori t s desi gnee. See9

M err i l l L ynch M L PA §§ 3. 3( d) , 5. 3. In th e e v e n t th a t P a in e W e b b e r b re a c h e d its repr esent at i on s, t he M err i l l L ynch M L P A affo rded t he fo l l ow i ng rem edy , am on g o t hers: W i t hi n 90 day s of t he ea r l i erof i t s di s coveryori t s r ecei p t o f n ot i ce of any . . . D e f

e c tiv e M o rt g a g e L o a n . . . , th e M o rt g a g e L o a n S e lle r [ i.e ., Pai neW ebber ] s hal l cur e s uch D ocument D efe ct o r B r eac h i n al l m at er i al r es pect s , w hi ch s hal l i ncl ude paym entof l os s es and anyexpens es as s oci at ed t her ew i t h, or , i f s uch D ocument D efe ctor B r eac h cannot be cur ed w i t hi n s uch 90- dayper i od, ei t her( i ) r epur chas e the af fec t ed M or t gage Loan att he appl i cabl e R epur chas e Pr i ce notl at er than the end of suc h 90- dayper i od, or ( i i ) s ubs t i tut e a Q ual i fi ed Subs t i tut e M or t gage Loan fo r su ch aff ect ed M o rt g a g e L o a n . Id . § 3 .3 (b ). D
. T he A r l i ngt on L oan For ecl os ur e Pr ocee di ngs I n M ar ch 2002, al t hough C yrus w as curr ent on pr i nci pal and i nt er es tpaym ent s on t he A rl ing ton L o an , itfa il ed to p ayinto e scro w the a m o u n t r eq u ir ed fo r rep lace m en t and rep airs on t he A r l i ngt on A par t m ent s . A s a r es ul t , on M ar ch 8, t he Trus tdecl ar ed the A r l i ngt on L oan t o be i n defa ul tand ac cel er at ed paym enton t he ful l amount of t he i ndebt ednes s . W hen C yrus f a iled to c o m p ly, o n M a r c h 1 3 , the T ru st c o m m e n c e d a m o rtg a g e -f o re c lo su re a c tio n in L o u is ia n a s ta te c o u rt . Pur s uantt o t hes e for ecl os ur e pr ocee di ngs , t he A r l i ngt on A partm en ts w er e s ol d on O ct ob er 21, 20 04 , real i zi ng app roxi m at el y$6
. 5 m i l l i on i n net proceed s, from w hich t he T rust
s ubs equent l y r ece i ved $5. 9 m i l l i on. T her eaf t er , on D ece m ber23, 2004, t he Trus tobt ai ned a monet aryj udgm ent agai ns tC yrus , B ahar , and R afi zade h i n t he amount of $10, 893, 350. 96.A s the di s t r i ctcour tnot ed, i ti s undi s put ed thatL ove Fundi ng w as unaw ar e of 8 Cy r u s ’ s f

r a u d a tth e t i m e i ta s s i g n e d t h e A r l i n g t o n L o a n p u r s u a n tt o t h e L o v e ML P A. I ndeed, t he part i es s t i pul at ed t hat L ove F undi ng onl y l earned of C yrus ’ s fr aud i n t he fa l l of 2002, s om e mont hs aft ert he T rus t i t s el f l earned t hi s fac t . See Trus tv. L ove Fundi ng, 499 F. Supp. 2d at317. 10 A m o n g o th e r f

in d in g s , th e L o u isia n a sta te c o u rt ru led th a t C yru s h a d c o m m itt e d f ra u d to
o b tain th e A rlin g to n L o a n , w h ich f ra u d c o n stitu ted a n e v e n t o f d e f a u lt. T h e T ru st re p re se n ts t hat , t o dat e, i t has r ecove r ed l es s t han $5, 000 fr om C yrus and i t s pr i nci pal s on t he Loui s i ana ju d g m e n t. E. Th e Tru s t ’ s S u i tAg a i n s tUBS W ith in m o n th s o f

in stitu tin g th e L o u isia n a f o re c lo su re a c tio n , the T ru st p re ss e d its
r emedi es agai ns tU B S. T he Trus tt heor i ze d that, beca us e fr aud byC yrus had putt he A r l i ngt on L oan i n defa ul tfr om t he out s et , Pai neW ebber( and, hence , i t s s ucce s s orU B S) had
nece s s ar i l ybr eac hed i t s r epr es ent at i on i n t he M err i l l L ynch M L PA t hatt he A r l i ngt on L oan cont ai ned no mat e r i al defa ul t . T he Trus tdemanded t hatU B S r epur chas e the A r l i ngt on L oan 8

as w el l as ot herl oans purpor t edl yi nfec t ed bydefa ul t s . U B S r efus ed, t r i gger i ng w hatt he d i s t r i c tc o u r ta p t l yd e s c r i b e d a s a p p r o x i ma t e l yt wo y e a r s o f “ s c o r c h e d e a r t h l i t i g a t i on” b e tw e e n th e T ru s t a n d U B S . T ru s t v . L o v e F u n d in g , 4 9 9 F . S u p p . 2 d a t 3 1 8
. O n Sept ember 13, 200 4 , the T rus tand U B S se t t l ed thei rl i t i gat i on pur s uantt o an agr eement w her eby t hey excha nged m utual r el eas es as t o futur e cl ai m s r el at i ng t o 33 l oans
as s i gned byU B S and depos i t ed i n t he Trus t . A s cons i der at i on for t he re l eas es on 32 of t he11

loan s, U B S p aid th e T rust $ 1 9
. 3 7 5 m il li o n . W ith resp ec t t o the A rl ing ton L o an , h o w e v e r, t he s ol e cons i der at i on fort he Trus t ’ s release w as U B S’ s as s i gnm entt o t he Trus tof al l of U B S’ s r i ght s embodi ed i n t he Love M L PA
. See i d. at 319. T hat as s i gnm enti s t he s ubj ect
o f th e p a rt ie s ’ c h a m p e rt yd is p u te . F. T he Trus t ’ s Sui tA gai ns tL ove Fundi ng O n N o v e m b e r 1 , 2 0 0 4 , th e T ru st su e d L o v e F u n d in g in th e S u p re m e C o u rt o f th e S tate
o f N ew Y o rk. In a let ter sen t tw o d ay s lat er, th e T rust “d em an d [e d ] t h at L o v e F u n d ing cu re [i t s ] br eac hes or , i f ( but onl y i f) cur e i s not pos s i bl e, r epur chas e t he A r l i ngt on L oan at the R e p u rc h a s e P ri c e a s re q u ir e d b y S e c tio n 5 .0 3 o f th e M L P A .” L e tter f

ro m M ich a e l F . W u rst, D i r ect or , D i s t r es s ed & Pr opr i et ar yA s s et s , O r i x C api t al M ar ket s , L L C , t o K ar en For d, Seni or V i ce Pr es i dent , L ove Fundi ng C orp. ( N ov. 3, 2004) , at 2. L ove Fundi ng r ej ect ed the demand and s ubs equen tl y rem o v ed t he Trus t ’ s l aw s ui t— t he s ubj ectof t hi s appea l — t o fede r al
c o u rt . G
. T he D i s t r i ctC our tPr ocee di ngs

1. O ct ober11, 2005 D eci s i on O n cross -m oti on s fo r sum m ary j ud gm ent, t he d i stri ctcou rtrul ed in favo r of t he T rust
o n th e is s u e o f

L o v e F u n d in g ’s b re a c h o f § 5 .0 2 (c c ) o f

th e L o v e M L P A , the p ro v isio n in
w h ich L o v e F u n d in g h a d re p re se n ted th a t th e c o n v e y e d m o rtg a g e n o tes c o n tain e d n o d e f a u lt, br eac h, vi ol at i on, oreventof ac cel er at i on. See Trus tfort he C er t i fi cat e H o lders o f t he12

M e rr ill L yn c h M o rt g a g e P a s s -T h ro u g h C e rt if ic a te s S e ri e s 1 9 9 9 -C 1 v . L o v e F u n d in g C o rp ., N o. 04 C i v. 9890, 2005 W L 25 8 2 1 7 7 , at * 7 (S. D
. N
. Y
. O ct . 11, 2005)
. A tt he s ame t i m e, how ever , t he di s t r i ctcour tauthor i zed Love Funding to am end i t s ans w ert o as s er tt he
a f f ir m a tiv e d e f

e n s e o f c h a m p e rt y . Id . a t * 4
. 2. February27, 2007 D eci s i on O n F e b ru a ry2 7 , 2 0 0 7 , af ter a b e n c h trial, th e d istric t c o u rt ru led th a t, w ith re sp e c t to t h e A r l i n g t o n L o a n a s s i g n m e n t , L o v e F u n d i n g h a d p r o v e d i t s c h a m p e r t y d e f e n s e b y a pr eponder ance of t he evi dence
. See Trus t v. L ove Fundi ng, 499 F. Supp. 2d at324- 25. T he di s t r i ctcour tobs er ved t hatt o demonst r at e thatt he tr ans act i on w as champer t ous underN ew Y ork Judici ary L aw § 489 (1) , L ov e F un ding had t o s ho w t hat t he T rust ’s “‘pr i m arypu rpose [for ] , i f nott he s ol e m ot i vat i on behi nd, ent er i ng i nt o t he tr ans act i on’ ” ati s s ue w as t o s ue on th e a s s ig n e d c la im
. Id
. a t 3 1 5 (q u o tin g B lu e b ir d P a rt n e rs , L .P
. v . F ir s t F id e lity B a n k , N .A ., 9 4 N .Y .2 d 7 2 6 , 7 3 6 , 7 0 9 N .Y .S .2 d 8 6 5 , 8 7 1 (2 0 0 0 )). A lth o u g h th e T ru st a rg u e d th a t it s N o v e m b e r 3 , 2 0 0 4 lette r to L o v e F u n d in g d e m o n stra ted th a t it s p u rp o se w a s, in f a c t, “to
r es ol ve i t s cl ai m s w i t houtl i t i gat i o n , ” the di s t r i ctcour tr ej ect ed thi s ar gum entas “di s i ngenuous ” gi ven t hatt he T rust h ad alr eadyi ni t i at ed a l aw s ui tt w o day s ear l i er . I d. at 3 2 1 -2 2
. I n a n ye v e n t , t h e d i s t r i c tc o u r tf o u n d t h a tt h e c i r c u ms t a n c e s l e a d i n g u p t o t he A r l i ngt on L oan as s i gnm ent and t he t er m s of t he as s i gnm entconvi nci ngl ydemonst r at ed that “the Trus t ’ s pr i m arypurpos e i n acc ept i ng t he A s s i gnm ent w as t o buy a l aw s ui t agai ns tL ove13

F u n d in g .” Id . at 3 2 2 . N o tab ly , the c o u rt sta ted th a t, [d] ur i ng s ett l ement negot i at i ons , U B S and t he Trus tdi s cus s ed var i ous w ay s of s et t l i ng t he A r l i ngt on L oan di s put e. O ne opt i on w as t hatU B S w oul d r epayt he T ru st f o r its o v e rp a y m e n t to U B S f o r th is n o w -d e f

a u lted lo a n . A t o n e p o in t, t he Trus thad r eques t ed t hatU B S payi tan addi t i onal “$4 or$5 m i l l i on” as c o m p e n s a tio n f

o r A rl in g to n . A n a ltern a tiv e o p tio n , the o n e u lt im a telyc h o se n , w a s th e A ss ig n m e n t. In iti a lly , h o w e v e r, th e T ru st w a s re lu c tan t to a c c e p t th e A ss ig n m e n t. [O rix re p re se n tativ e Jo h n ] D in a n tes tifie d th a t: I r e c a ll th e re b e in g a d is c u s s io n a b o u t, yo u k n o w . . . if w e [ i.e ., t h e T ru s t ] t a k e t h e a s s i g n me n t , t h e n we ’ r e b a s i c a l l y— wh i c h we di d notw antt o do, y ou know , t hen w e’ r e j us t— w e’ r e cont i nui ng a mi cr ocos m of t he l i t i gat i on t hathas al r eadybeen goi ng on for th e la s t th re e y e a rs w ith U B S
. J ames Thom ps on, Pr esi d ent and C E O of O r i x U SA , char act er i zed the A ssign m en t si m il arlyin an em ail h e sen t to B ri an H arris of U B S a w ee k b ef

o re t he S et t l em ent w as fi nali zed. T ho m pson w rot e: “.
. . ou r [t he T rust ’s ] guy s .

. . do l i ke the Love Fundi n g clai m , butt hat ’ s a w hol e new l aw s ui t , w hi ch d o e s n ’t tu rn a lo t o f

f o lk s o n .” Id. at 31 9 -20 (em p h ase s an d fin al alt era ti o n in o ri g inal) (fo o tno tes o m itted). Fr om t hes e fa ct s , t he di s t r i ctcour tdet er m i ned that U B S and t he Trus tt r eat ed the A r l i ngt on L oan s epar at el y fr om al l of t he other [M err i l l L ynch] L i t i gat i on l oans . N ota ce n t o f U B S’ s $19. 375 m i l l i on Set t l ement p ay m en t t o t he Trus tw as al l ocat ed t o t he A r l i ngt on L oan. T he T rus t t ook, as i t s s ol e consi der at i on fr om U B S for l os s es r el at ed t o A r l i ngt on, a l l o f UB S ’ s r i g h t s a n d c l a i ms a g a i n s t L o v e F u n d i n g u n d e rt h e L o v e M L P A. I d. at320. T he di s t r i ctcour t concl uded t hat t hi s “ca r ve outof a s i ngl e l oan fr om a gr oup of l oans t hatw er e s et t l ed for s i gni fi cant paym ent s ” di s t i ngui s hed t he ca s e fr om ot her s r el i ed on byt he Trus ti n w hi ch cl ai m as s i gnm ent s w er e notdeemed champer t ous . I d. at324 & n. 7614

(c o lle c tin g c a s e s ). T h e d is tr ic t co u rt d e e m e d it “[ c ]ritica l” to its id e n tific a tio n o f c h a m p e rtyth a t aft ert w o y ear s of angry an d expens i ve l i t i gat i on, t he onl ycompensa t i on t he T rus tt ook i n excha nge forr el eas i ng U B S fr om t he A rl ing t on L oan — a “pos t erchi l d” of the [M err i l l L ynch] L i t i gat i on
— w as t he A s s i gnm ent . T he r ecor d i s devoi d of evi d en ce s ugges t i ng w hyt he Trus tw oul d cons i dert he A s s i gnm entadequa t e cons i der at i on i f i t s pr i m ary purpos e w as not t o s ue Love Fundi ng t her eunder
. Q ui t e l i t er al l y , t he Trus thad negoti ated f ori t s el f “a w ho l e new l aw sui t , ” w i t h the i ntent t o “basi cal l y. . . con t i nu [e] a m i crocosm o f th e lit ig a tio n th a t h a [ d ] a lre a d yb e e n g o in g o n f o r th e las t th re e y e a rs w ith U B S .” I d. at322- 23 ( emphasi s and l as tt w o al t er at i ons i n or i gi nal ) ( footnot es om i t t ed)
. T he di s t r i ct
co u rtalso fo u n d that the c h am p ertou s n ature o f th e a ssign m en t w as e v iden ce d b ythe T rust’s per cept i on t hat i t coul d r ecove r “mi l l i ons of dol l ar s m or e” on the A r l i ngt on L oan bys ui ng Love Fun di ng t ha n b ypu r s ui ng a c a s h s e t t l e mentfr om U BS: U ndert he Love M L PA , t he T rus tcoul d s ue ( and i s s ui ng) L ove Fundi ng for th e p ri ncipal balance of the l oan , as w el l as for m i l l i on s of do l l ars i n sim p le a nd defa ulti nter estt hat have b een ac crui ng on t he loan fo r y ears . B ecause sim pl e i nt er es tbegan a ccrui ng s hor t l yaft ert he Trus tnot i fi ed C yrus t hatt he l oan w as i n defa ul t , in Jan u ary 2002, i tnow t ot al s over$2. 5 m i l l i on. A nd gi ven a Louisi ana c our t ’ s fi ndi ng t hatdefa ul ti nt er es tbegan a ccrui ng on t he l oan as of J ul y7, 1999, t he Trus ti s now cl ai m ing addi t i onal damages of appr oxi m at el y$2. 4 m i l l i on. I d. at322- 23 ( foot not es om i t t ed). Fi nal l y , t he di s t r i ctcour tfound t hat , byacc ept i ng t he assi gn m ent, t he T rust bel i eved i t coul d al s o pot ent i al l yr ecove ri ndemni fi cat i on damages fr om L ove Fundi ng unders ect i on 9. 14 of t he Love M L PA
. T he Trus t ’ s par t i cul ar a ttrac tio n to th is p ro v isio n is c lea r f ro m th e f

a c t th a t se c tio n 9 .1 4 is th e o n ly pr ovi s i on of t he Love M L PA s peci fi cal l yi dent i fi ed i n t he l anguage of t heI n i t s br i ef t o t hi s cour t , t he Trus tas s er t s t hati t“does s eek i n d em n ifi ca ti o n fr om 9 L ove Fundi ng undert he i ndemni fi cat i on pr ovi s i on of t he Love Fundi ng M L PA , and s eeks to re c o v e r t h e a tto rn e y s ’ f e e s a n d c o s t s to w h ic h it is e n title d u n d e r t h a t c o n tr a c t.” A ppel l ant ’ s B r . at45. Si m i l ar l y , t he Trus tconfi r m ed at or al ar gum entt hati tcons t rued the as s i gnm entt o al l ow i tt o pur s ue ful l yU B S’ s r i ght s of i ndemni fi cat i on agai ns tL ove Fundi ng. In a f in a l f o o tn o te to its F e b ru a ry 2 7 , 2 0 0 7 o p in io n , th e d istric t co u rt sta ted th a t, i f 10 th e A rl i ng t on L oan assi gn m ent w ere not vo i ded bycham pert y , i tw ou l d aw ard t he T rust $1, 736, 668. 35 i n damages , cons i s t i ng of t he l oan re pur chas e pri ce as of S ept ember 30, 2002, offs etbyt he Trus t ’ s m odes tr ecove r yt o dat e fr om C yrus , B ahar, an d R afi zade h, and t he pr ocee ds fr om t he sal e of t he A r l i ngt on A par t m ent s . See i d. at325 n. 79. T hi s hypot het i cal aw ard , w h ich li m it ed the T rust’s c lai m s fo r d ef au lt -i n terest p ay m en ts an d d ec li n ed to aw ard di s put ed i ndemni fi cat i on damages , w as cons i der abl y l es s t han the r oughl y$10, 000, 000 t hat th e d istric t co u rt f

o u n d th e T ru st u n re a listica llyto h a v e d e m a n d e d f ro m L o v e F u n d in g to a v o id litig a tio n . S e e id . a t 3 2 0 -2 1
. 15 A ss ig n m e n t. U n d e r se c tio n 9 .1 4 , L o v e F u n d in g c o u ld b e re q u ire d to i ndemni fyt he Trus tnot onl y forat t or ney s ’ fee s and cos t s expende d pur s ui ng L ove Fundi ng, but al s o for al l at t or ney s ’ fee s and cos t s expende d for ecl os i ng on t he pr oper t yand pur s ui ng C yrus and R afi zade h. M or eover , t he Trus tur ges t hi s C our t t o fi nd t hat s ect i on 9. 14 al s o obl i gat es L ove F undi ng t o i ndemni fy the Trust for a po rt i on of t he l egal fees U B S i ncu rr ed duri ng t h e [ M e rrill L yn ch ] L it igation [i. e., the f ee s U B S incu rred in it s li ti g ati o n w ith the T rust]. I d. at 3 2 3 (em p h as i s i n or i gi nal ) ( foot not es om i t t ed)
. T hus , t he di s t r i ctcour tconcl uded, 9 “the Trus thad a s t r ong i ncent i ve to sue L ove Fundi ng fr om t he t i m e i tacc ept ed the A s s i gnm ent . ” I d. 10 T hi s appea l fol l ow ed. I I . D i s cus s i on A
. C er t i fi cat i on St andar ds U nderourl ocal ru les, w hen author i zed bys t at e l aw , “‘ t hi s C our tm aycert i fyt o t he16

hi ghes tcour tof a s t at e an uns et t l ed and s i gni fi cant ques t i on of s t at e l aw t hatw i l l contr ol t he
o u tcom e o f a ca se p en d ing b ef o re this C o u rt . ’” Israe l v. C h ab ra, 53 7 F
. 3 d 8 6 , 1 0 0 (2d C ir
. 2 0 0 8 ) (qu o ti n g S ec o n d C ir
. R
. § 0
. 2 7 ). S ec ti o n 5 0 0 .2 7 o f th e N ew Y o rk R u les o f C o u rt
a u th o riz e s c e rtific a tio n “ [ w ]h e n e v e r it ap p e a rs to . . . an yU n ited S tate s C o u r t o f A p p e a ls

. . . t hatdet er m i nat i ve ques t i ons of N ew Y or k l aw ar e i nvol ved i n a cas e pendi ng befor e that
c o u r t f o r wh i c h n o c o n t r o l l i n g p r e c e d e n t o f t h e [ Ne w Yo r k ] Co u r t o f Ap p e a l s e x i s t s . ” N. Y. C om p. C odes R
. & R egs . t i t . 22, § 500. 27( a)
. A l t hough w e have des cr i bed ce r t i fi cat i on as
an “exc ept i onal pr ocedur e, ” i t i s appr opr i at el y i nvoked w her e a “s t atut e’ s pl ai n la nguage does noti ndi cat e the ans w er t o t he ques t i on pendi ng befor e t he cour t , and t her e i s an abs ence of au t ho ri t at i ve st at e c o u rt in t erpr et at i on s of t he st at e st atute. ” M cG rath v
. T oy s “R ” U s, I nc. , 356 F. 3d 246, 250 ( 2d C i r . 2004) ( i nt ernal ci t at i on and quot at i on m ar ks om i t t ed)
. Such is o u r c a s e . B
. T he U ns et t l ed Q ues t i ons of N ew Y or k L aw N ew Y or k’ s pr ohi bi t i on agai ns tchamper t yi s codi fi ed i n N ew Y o rk Ju di ci aryL aw § 4 8 9 (1 ). T h a t p ro v isio n sta tes , in r e lev a n t p a rt: [N ] o corpor at i on oras s oci at i on, di r ect l yori ndi r ect l y , i t s el f orbyort hr ough i t s offi cer s , agent s or empl oy ees , s hal l s ol i ci t , buyort ake a n as s i gnm entof, or be i n anym anneri nt er es t ed i n buy i ng ort aki ng an as s i g nm entof a bond, pr om i s s or ynot e, bi l l of exc hange, book debt , orot hert hi ng i n act i on, orany cl ai m ordemand, w i t h t he i nt entand fort he purpos e of br i ngi ng an ac t i on or p ro c e e d in g th e re o n .T he s t atut e w as amended i n 2004 t o add s ect i ons ( 2) and ( 3) , w hi ch r efe r ence a s afe 11 harbor for cert ai n transact i on s. S ee 2004 N
. Y
. S ess. L aw s C h. 39 4 (M cK i nn ey ). B ecause t he T rustdid not s eek the shel t er of t he safe h arbor, w e hav e no cause t o co nsi der t hese se c tio n s. W e n o te th e sta tu te’ s a m e n d m e n t sim p lyto e x p lain th a t o u r re f e re n c e to th e h isto ric champer t y pr ovi s i on now codi fi ed at § 489( 1) i s i nt ended t o corr el at e w i t h pr e- amendm ent re f e re n c e s to § 4 8 9
. 17 I d. 11 W h ile N e w Y o rk c o u rts h a v e h a d se v e ra l o c c a sio n s to c o n stru e th is s tatu to rytex t, t hos e i nt erpr et at i ons have, as w e not ed i n E l l i ot tA s s oci at es , L
. P. v. B anco de l a N aci on, 194 F
. 3d 36 3, 3 7 7 (2 d C i r. 19 99 ), no tal w ay s been c l ear orcon si st ent. In E l l i ottA ssoci at es, how ever , t her e w as cons i s t encyon w hat m at t er ed: N ew Y or k cas es had cons i s t ent l yr efus ed t o char act er i ze a s champer t ous a t r ans act i ng par t y ’ s acqui s i t i on of a debt i ns t rum ent fort he p rim a ryp u rp o se o f

e n f o r c in g it. S e e id . at 3 7 8 . T h u s, b e c a u se th e d istric t co u rt in E lli o tt A ss o c iate s h a d d e ter m in e d th a t th e p lain tiff ’s “ ‘p rim a ry g o a l in p u rc h a sin g th e d e b t w a s to be pai d i n ful l , ’ ” i d. , w e w er e abl e t o appl y t he es t abl i s hed s t at e pr i nci pl e on appe al w i t hout anyneed f

orcert i fi cat i on, s ee i d. at370. I n t hi s c a s e , t h e d i s t r i c t c o u r t di d not fi nd t hat t he Trus t ’ s pr i m ar y i nt ent w hen p u rcha s i ng t he debt i ns t rum ent s w as t o be pai d i n ful l
. R ather , i t found t hat the T rust’s “pri m a ry p u rp ose” i n acce pti ng t he ch al l eng ed assi gn m ent w as “t o b uya l aw sui tagainst L ove Fundi ng. ” Trus tv. L ove Funding , 499 F. Supp. 2d at322; s ee a l s o i d. at324 n. 75 (d istin g u ish in g E lli o tt A ss o c iate s). T h e T ru st c h a llen g e s th is a ss e ss m e n t o f its in ten t, i n
esse n ce asse rt ing that th e fa cts cit ed b ythe d istri ct co u rtto su p p o rtit s co n clus ion are18

in su f f icie n t a s a m a tter o f N e w Y o rk law to p ro v e c h a m p e rty . T h is arg u m e n t f o rc e s u s to
c o n f ro n t se v e ra l q u e stio n s o f N e w Y o rk law n o t cle a rlya n sw e re d b ye sta b lish e d p re c e d e n t. M i ndful t hatt hes e ques t i ons ar i s e i n t he cont ext of “sophi s t i cat ed busi nes s t r ans act i ons , ” and of the i m po rt ance o f N ew Y ork l aw t o t he S t at e’s preem i nen trol e i n w orl d financial affair s, B l uebi r d Par t ner s , L
. P. v. Fi r s tFi del i t yB ank, N
. A
. , 94 N
. Y
. 2d at739, 709 N
. Y
. S. 2d at873,
w e c o n c lu d e th a t ce rtific a tio n o f th e se q u e stio n s to th e N e w Y o r k C o u rt o f A p p e a ls is
w a rr a n te d
. 1
. T h e L e v e l o f In ten t N e c e ss a ryto D e m o n stra te C h a m p e rty T he fi r s ti s s u e rai s ed byt hi s appea l i s w hethert he di s t r i ctcour t ’ s fi ndi ng t hatt he T rus t ’ s “pr i m ar y ” i nt entw as “t o buya l aw s ui tagai ns tL ove F u n di ng, ” Trus tv. L ove Fundi ng, 499 F. Supp. 2d at322, i s l egal l ys uffi ci entt o demonst r at e cha m per t yunderN ew Y or k J udi ci ar yL aw § 489( 1)
. B efor e addr es s i ng w hetheran i nt ent“t o buya l aw s ui t ” i s , on th e f a c ts of th is ca se , leg a lly su f f icie n t to d e m o n stra te c h a m p e rty , w e n o te so m e a m b ig u ity i n N ew Y or k j ur i s prudence as t o w hethert he l evel of cha m pert o u s int entpr os cr i bed by § 489( 1) can be “pr i m ary ” orw hetheri tm us t , i n fac t , be “s ol e. ” T he amb igu it y or i gi nat es w i t h t he s emi nal N ew Y or k champer t ycas e, M os es v. M cD i vi t t , 88 N
. Y
. 62 ( 1882) , w hi ch see m s t o al l ude t o bot h pr i m aryand s ol e i nt ent . A tone poi nt , M os es expl ai ns t hat , t o vi ol at e § 489, “the pr i m arypurpos e of the pur chas e m us tbe to e n a b le [ a tra n sa c tin g p a rty ] t o b rin g a su it, a n d th e in ten t to b rin g a su it m u st no t b e m e re ly i nci dent al and cont i ngent . ” I d. at 65 ( emphasi s added)
. A tt he s ame t i m e, how ever , M os es19

s t at es t hat“a mer e i nt entt o br i ng a s ui ton a cl ai m pur chas ed does not cons t i tut e the off ens e; t he pur chas e mustbe made fort he verypurpos e of br i ngi n g s uch s ui t , and thi s i m pl i es an
e x c lu sio n o f a n y o th e r pu rp o se .” Id . (em p h a se s a d d e d ). T h e h ig h lig h ted lan g u a g e su g g e sts that the p rosc ri b ed inten t m u st be sing u lar. Subse quentcas es di d l i t t l e t o cl ar i fyt he s t atut e’ s i n t e n tr e q u i r ement . C om par e Sprung
v. J aff e, 3 N
. Y
. 2d 539, 544, 169 N
. Y
. S. 2d 456, 460 ( 1957) ( hol di ng t hats t atut e i s vi ol at ed “onl yi f t he pr i m ar y purpos e of t he pur chas e ort aki ng byas s i gnm entof t he thi ng i n act i on is to e n a b le th e a tto rn e yto c o m m e n c e a su it th e re o n ” (e m p h a sis a d d e d ) ) , w ith F a irc h ild H i l l erC orp. v . M cD o n n ell D ougl as C orp. , 28 N
. Y
. 2d 325, 330, 321 N
. Y
. S. 2d 857, 860 ( 1971) ( r efe r enci ng “exc l us i on of anyot herpurpos e” a n d “pr i m arypurpos e” phr as es us ed i n M os es an d S p run g v. J aff e i n hol di ng t hatchal l enged a s s i gnm entw as notchamper t ous beca us e as s i gnee di d not r ece i ve i t “fort he s ol e and pr i m arypurpos e of br i ngi ng an ac t i on” (e m p h a s is a d d e d ))
. I n B l uebi r d Par t ner s , L
. P. v. Fi r s tFi del i t yB ank, N
. A
. , 94 N
. Y
. 2d at735- 36, 709 N
. Y
. S
. 2d at87 1, the N ew Y ork C ou rt of A pp eal s r ecog nized t he int erpr et i ve tensi on i n these pr ece dent s . M or eover , i tacknow l edged that“a purpos e that i s pr i m ary i s notnece s s ar i l yt he
s ol e purpos e. ” I d. at736, 709 N
. Y
. S. 2d at871. I n B l uebi r d Par t ner s , how ever , t he C our tof A ppeal s di d not have t o choos e betw een thes e tw o degr ees of i nt entbeca us e the r ecor d i n t he
cas e di d notper m i ta fi ndi ng of a pr i m arychamper t o u s m o ti v ati on, a conc l us i on t hat
nece s s ar i l yfor ecl os ed anyfi ndi ng as t o a s ol e cha m per tou s int ent . See i d. T hi s fac tualE m bedded i n B l uebi r d Par t ner s ’ di s cus s i on of cha m per t ous i nt enti s t he s t at ement 12 t h a tt h e p r i m a r y/ s o l e d i s t i n c t i o n “ i s o n e w i t h o u ta l e g a l d i f f e r e n c e w h e n t h e ‘ p r i m a r y’ el ement i s pr es ent . ” 94 N
. Y
. 2d at 736, 709 N
. Y
. S. 2d at 871. St andi ng al one, t hi s s t at ement m ig h t b e c o n stru e d to sig n a l th a t a f in d in g o f p ri m a r y inte n t is, b yitse lf , su f f icie n t to v o id a tr ans act i on as champer t ous . I n t he fa ctual cont extof t he ca s e, how ever , the C our tof A ppeal s m ayhave meantt o comm uni cat e t hat t he pri m ary/ s ol e di s t i nct i on i s w i t houtl egal sig n if ica n c e w h e n , as in B lu e b ird P a rtn e rs, p rim a ryin ten t is n o t p r e se n t. In re sp o n d in g to th e c e rtifie d q u e stio n s, th e C o u rt o f A p p e a ls m a yw ish to c lar if yth is p o in t. 20 cont exti s cr i t i cal t o under s t andi ng t he C our tof A ppeal s ’ rul i ng t hat “the founda t i onal i nt ent to su e o n th a t c la im m u st a t lea st h a v e b e e n th e p rim a ryp u rp o se f o r, if n o t th e so le
m o tiv a tio n b e h in d , en ter in g in to th e tra n sa c tio n .” Id . (em p h a sis a d d e d ). T h e ter m “ a t lea st” g e n e ra llyin d ica tes th a t a c e rta in sh o w in g is “ n e c e ss a ry ” b u t n o t alw a y s “ su f f icie n t” to
es t abl i s h a part i cul arfac t . K
. M
. B
. W ar ehous e D ist ri b s. , I nc. v. W al kerM fg. C o. , 61 F. 3d 1 2 3 , 1 2 9 ( 2 d C ir
. 1 9 9 5 ) (in ter p re tin g ter m in o th e r c o n tex t). T h u s, b yu sin g “ a t lea st” to d isc u ss a p rim a ryc h a m p e rto u s in ten t in B lu e b ird P a rtn e rs, th e C o u rt o f A p p e a ls a p p e a rs to have r es er ved for another day t he quest i on of w hether t he proof of i nt entul t i m at el yr equi r ed is “ p ri m a ry” o r “ s o le .” 12 T h u s , w e n o w a s k t h e C o u r to f A p p e a l s t o c l a r i f

y w h e t h e ra f

i n d i n g o f a “ p r i m a r y” ch am p ertou s inten t i s leg all ysu ff ici en t t o v o id an assig n m en t u n d er § 4 8 9 (1), or w h ethe r a fur t herfi ndi ng i s r equi r ed thatt he pr os cr i bed i nt entw as “s ol e. ”

2. T he Scope of

t he § 489( 1) Pr os cr i pt i on A s al w ay s i n cert i fy i ng ques t i ons t o t he N ew Y or k C our t of A ppeal s , w e do notbi nd th e cou rtt o the part i cularqu est i on s st at ed. In t his case, t he C ou rtof A pp eal s m ayw ell21

concl ude thatt he cr i t i cal i s s ue t o as s es s i ng t he s uffi ci encyof t he cha m per t y fi ndi ng i s nott he d e n o m in a tio n o f

th e T ru st’s in ten t as “ p rim a ry ” o r “ so le,” b u t th e p u rp o se b e h in d its
a c q u is itio n o f

ri g h ts th a t a llo w e d it to s u e L o v e F u n d in g . A s t hi s cour t r ecogni zed i n E l l i otA s s oci at es , L
. P. v. B anco de l a N aci on, t he l anguage
o f § 4 8 9 ap p ea rs t o “f

o rbid [] e ssen ti all yall ‘sec o n d ary ’ tran sac ti o n s in d eb t i n stru m en ts w h ere t he pur chas erhad an i nt ent t o enfor ce t he debtobl i gat i on t hr ough l i t i gat i on. ” 194 F. 3d at372. N ew Y or k, how ever , has pl ai nl y decl i ned t o cons t rue t he st atut e so broa dl y . M i ndful of t he t r adi t i onal l ynar r ow s cope o f cha m per t y , w hi ch foc us ed pr i m ar i l yon pr event i ng per s ons “f rom fil ing su itm ere lyas a v eh icl e f o r ob ta in in g c o s ts [ an d ] att o rne y s’ fe es,” B lueb ir d Par t ner s , L
. P. v. Fi r s t Fi del i t y B ank, N
. A
. , 94 N
. Y
. 2d at 734, 709 N
. Y
. S. 2d at870 ( r evi ew i ng hi s t or yof champer t y ) , t he C our tof A ppeal s has expr es s l yhel d t hatan i nt entt o s ue “c annot aut om at i cal l ybecome s ynony m ous w i t h champer t y , for l i t i gat i on can be an a ppr opr i at e and
comm onl yus ed s t r at egy , ” i d. at 738, 709 N
. Y
. S. 2d at872; s ee a l s o E l l i ot tA s s ocs . , L
. P. v. B anco de l a N aci on, 194 F. 3d at372- 73 ( di s cus s i ng s t atut e’ s focus on pr event i ng acqui s i t i on of debt s “as an expe di entvehi cl e for obt ai ni ng cos t s ” and hol di ng t hat “ac qui s i t i on of a de bt
w i t h i nt ent t o br i ng s ui t agai ns tt he debt ori s nota vi ol at i on of t he s t atut e w her e, as her e, t he p ri m a ry p u rp o s e o f

th e s u it is th e c o lle c tio n o f th e d e b t a c q u ir e d ” ). T hus , a ques t i on ar i s es as t o w hethert he i nt entt o “buya l aw s ui t ” i dent ifi ed byt he di s t r i ctcour t , T ru st v . L ove Fundi ng, 499 F. Supp. 2d at322, nece s s ar i l yequat es w i t h t he i nt entpr os cr i bed byN ew Y or k J udi ci aryL aw § 489( 1)
. Speci fi cal ly , w o u ld i tm ake a22

di ffe r ence w hethert he new l aw s ui t w as pur chas ed (a ) t o al l ow t he purc has er t o pr ofi tfr om t he cos t s and fe es t hatcoul d be gener at ed by t hat l aw s ui t , or , i ns t ead, ( b) t o pr ovi de a means t o e n f o r c e a n o t h e r wi s e l e g i t i ma t e o b l i g a t i o n ? T he Trus tw as not , aft er al l , a par t y w i t h no i nt er es ti n t he l oans t hatL ove Fundi ng had t r ans ferr ed t o Pai neW ebberpur s uantt o t he Love M L PA
. T o t he contr ary , as t he end hol der of t he A r l i ngt on L oan, t he Trus tw as t he par t yt hatw oul d di r ect l ys uffe rt he damages of any defa ul ton t hat i ns t rum ent . T o be s ur e, t he def aul tt hatt he Trus tdecl ar ed aga i ns tC yrus for fai l ure t o p ostrequi red col l at eral w as di st i nct fr om t he d efau l tt he d i strict cou rtfou nd as a
re su lt o f C yru s’s in iti a l f

ra u d in a c q u irin g th e lo a n . N o tab ly , the f o rm e r d e f

a u lt w o u ld n o t, byi t s el f, have s uppor t ed a c l ai m t hatL ove Fundi ng had mat er i al l ybr eac hed i t s r epr es ent at i on t o Pai neW ebber ( and, hence , t o i t s s ucce s s or U B S)
. T he T rus tcoul d not , how ever , s ue Love Fun d ing di r ect l yfordamages l i nked t o C yrus ’ s i ni t i al fr aud fort he s i m pl e r eas on t hatno pr i vi t y exi s t ed bet w een t he T rus t and L ove F undi ng. T hus , t he Trus tfi r s ts ued U B S and, t hen, byaccep t i ng i n set t l em ent an assi gn m ent o f U B S ’s ri gh t s i n the L ov e M L P A , t he T rust eff ect i vel yacqui r ed pr i vi t yw i t h L o ve Fundi ng. I ti s i n t hi s s ens e thatt he Trus tm i ghtbe vi ew ed, as t he di s t r i ctcour tfound, to h av e boughta “‘ w hol e new l aw s ui t , ’ ” Trus tv. L ove Fundi ng, 499 F. Supp. 2d at 322, i
. e. , a l aw s ui t t hati tcoul d nothave f i l ed on i t s ow n — but h a rd ly o n e in v o lv in g a d e b t o b lig a tio n th a t it h a d n o in te re s t in c o lle c tin g . I ti s notcl earw hetherN ew Y or k l aw w oul d vi ew an i nt ent t o acqui r e a l aw s ui ti n s uch ci rcum st ances as cham pert ou s. In B el l arno I nternati on al L t d. v. Irving T rustC o. , t he F i rs t23

D e p a rtm e n t h e ld th a t an a ss ig n m e n t w a s n o t ch a m p e rto u s w h e r e th e “ p lain tiff w a s n o t a
s t r angert o t he t r ans act i on, and t he as s i gnm entw as m ade f ort he purpos e of f

aci l i t at i ng a
r ecove r yas compensa t i on foran al l eged w r ong, i n an ac t i on al r eadycomm ence d and pendi ng. ” 165 A
. D
. 2d 809, 809, 560 N
. Y
. S. 2d 287, 288 ( 1s tD ep’ t1990) ( i nt ernal ci t at i ons
om i t t ed) ; s ee a l s o W i l l i ams Pavi ng C o. v. U
. S. Fi d. & G uar . C o. , 6 7 A
. D
. 2d 827, 828, 413 N
. Y
. S
. 2 d 7 3 , 7 4 (4th D ep ’t1 9 7 9 ) (ho lding assig n m en t no t cha m p e rt o u s w h ere assig n ee ’s

“ p r i ma r yp u rp o s e was t o p r o t e c ti t s o wn i n t e r e s t i n a t t e mpt i n g t o c o l l e c t i t s j u d g me n t ” )
. To b e s u r e , a t t h e t i me t h e Tru s t a c q u i r e d t h e a s s i g n me n t , t h e Tru s t ’ s o r i g i n a l a c t i o n a g a i n s tUBS
on t he A r l i n g t o n Lo a n was n o l o n g e r“ p e n d i n g . ” M o r e o v e r , a s t h e d i s t r i c tc o u r to b s er ved, neither t he T rustno r U B S had ever soug ht t o im plead L ov e F un ding throug ho ut the co urse of thei r pr otr acte d lit ig a ti on . S ee T rustv. L ov e F un ding, 49 9 F
. S up p. 2d at32 5. T hese
c irc u m sta n c e s, h o w e v e r, d o n o t in d ica te th a t th e T ru st a c q u ire d U B S ’s in ter e sts sim p lyto pur s ue the cl as s i c r ew ar ds of cha m per t y , i
. e. , t he cos t s and fe es i tcoul d g ener at e fr om new litig a tio n . I ndeed, w e ar e aw ar e of no N ew Y or k cas e addr es s i ng fac t s aki n t o t hos e pr es ent ed on t hi s appea l , i
. e. , w her e a pa r t yt hathol ds a pr opr i et ary i nt er es t i n a debt i ns t rum ent acc ept s an
as s i gnm entof r i ght s t hat all o w s itt o s ue a pa r t yt hathad purpor t edl ym i s r epr es ent ed t o t he
a ss ig n o r th a t th e in stru m e n t w a s n o t in d e f a u lt. T h u s, w e a sk th e N e w Y o rk C o u rt o f A p p e a ls t o i ndi cat e w hethert he i nt entt o acqui r e s uch ri ght s , even i f pr oper l ychar act er i zed a s t heW e expe ctt hatanycons i der at i on of t hi s ques t i on w i l l be i nfor m ed byt he fa ctt hat 13 t he cha l l enged A r l i ngt on L oan as s i gnm entar os e i n the cont extof a br oad s et t l ement agr eement , s ee Fai r chi l d H i l l er C orp. v. M cD onnel l D ougl as C orp. , 28 N
. Y
. 2d at330, 321 N
. Y
. S. 2d at 861 ( not i ng t hat chal l enged as s i gnm ent w as “an i nci dent al par tof a s ubs t ant i al comm er ci al t r ans act i on”) , as w el l as by t he di s t r i ct cour t ’ s fi ndi ng t hat t hi s as s i gnm entw as “ca r ve[d] out ” fr om “a gr oup of l oans t hatw er e sett l ed fors i gni fi cantpaym ent s , ” Trus tv. L o v e F u n d in g , 4 9 9 F . S u p p . 2 d a t 3 2 4
. W e not e t hat , on appea l , t he T rus t cl ai m s t hat t he i ndemni fi cat i on damages i ts eeks 14 fr om L ove Fundi ng “ar e al m os t i dent i cal t o t he damages t hatt he Trus tcoul d pr evi ous l yhave 24 i n t e n tt o “ t o b u y a l a w s u i t , ” i d
. a t3 2 2 , i s l e g a l l y s u f f i c i e n tt o c o n s t i tu t e c h a m p e r t y. 13 3. W hether an I nt ent t o R eal i ze M or e Fr om a Law s ui tt o E nfor ce A s s i gned R i ght s T han O ne M i ghtH ave Recover ed i n Set t l ement fr om t he A s s i gni ng Par t yM akes t he A s s i gnm entC hamper t ous I n voi di ng t he cha l l enged a s s i gnm entas champer t ous , t he di s t r i ctcour tfound t hatt he T rus t ’ s i nt ent i n s ui ng L ove Fundi ng w as t o r ecove r m or e i n compensa t i on fori t s l os s es on t he A r l i ngt on L oan t han i thad demanded i n s et t l ement fr om U B S on thi s debtobl i gat i on. See T ru st v . L o v e F u n d in g , 4 9 9 F . S u p p . 2 d a t 3 2 3 (“ F ro m th e T ru st’s p e rsp e c tiv e , a la w su it agai ns tL ove Fundi ng coul d pot ent i al l y r eap m i l l i ons of dol l ar s m or e t han the Trus thad bee n pr epar ed t o acc ept fr om U B S on t he A r l i ngt on L oan. ”)
. Fur t her , t he di s t r i ct cour t not ed that t he as s i gnm entenabl ed t he Trus tt o pur s ue U B S’ s r i ght s t o i ndemni ficat i on agai ns tL ove Fundi ng, w hi ch, i n t h e T rust’s vi ew , al l ow ed i tt o s ue fort he ext ens i ve att or ney s ’ fee s and cost s i nc u rred i n fo recl osi ng on t he A rl i ng t on A part m ents and i n p ursui ng cl ai m s agai nst C yrus , R afi zade h, and Love Fundi ng, as w el l as cert ai n fee s and cos t s t hatU B S had i ncurr ed i n defe ndi ng i t s l i t i gat i on w i t h t he T rus t i t s el f. See i d. T he T rus tfur t hers oughtt o r ecove r 14s oughtfr om U B S. ” A ppel l ant ’ s B r . at 45. T he di s t r i ct cour t , how ever , di d notm ake s uch

a f in d in g ; th u s , o n th is a p p e a l, w e tr e a t th a t a s s e rt io n a s u n re s o lv e d
. 25 f ro m L o v e F u n d in g th e in te re s t th a t h a d b e e n a c c ru in g o n t h e l o a n o v e r t h e y e a rs . S e e id
. A s a r es ul t , t he di s t r i ctcour tconcl uded that t he Trus t ’ s i nt enti n s ui ng L ove Fundi ng w as not
o n lyto b e m a d e w h o le o n lo ss e s s u sta in e d f ro m th e A rlin g to n L o a n d e f a u lt, b u t als o to p ro f

it from t he l i t i gati on i t sel f, a m oti vati on app arent l y con si st ent w i t h cham pert y . S ee i d. ; see al so P rom en ad e v . S ch ind ler E leva tor C o rp., 3 9 A
. D
. 3 d 2 2 1 , 2 2 3 , 8 3 4 N
. Y
. S
. 2 d 9 7 , 9 9 (1st D ep ’t 2 0 0 7 ) ( s u g g e s tin g im p ro p ri e ty o f o b ta in in g a s s ig n m e n t a s “ in v e s tm e n t” ). A s w e have al r eadyobs er ved, a part y ’ s acqui s i t i on of ri ght s i n or der t o pr ofi tfr om t he veryactof m ai ntai ning a l aw sui tbygen e ra tin g com pen sabl e cost s and f ees con st i tutes a cl as s i c cas e of champer t y . See B l uebi r d Par t ner s , L
. P. v. Fi r s t Fi del i t y B ank, N
. A
. , 94 N
. Y
. 2d at734, 709 N
. Y
. S. 2d at870; E l l i ot tA s s ocs . , L
. P. v. B anco de l a N aci on, 194 F. 3d at373. B ut
w e have i dent i fi ed no N ew Y or k cas e hol di ng t hat champer t y i s evi dence d byt he s et t l ement
o f one l egi t i m at e di s put e ( t hatbetw een the Trus tand U B S) t hr ough an as s i gnm entof i ndemni fi cat i on r i ght s forr eas onabl e cos t s and fee s i ncurr ed i n l egal act i ons t hathave a l r eady tra n sp ire d
. T o th e e x ten t su c h rig h ts m ig h t b e v iew e d a s ak in to a n y o th e r de b t o b lig a tio n h e ld b y the assig n ing p arty , a q u esti o n arises a s to w h ethe r t h eir acq u isi ti o n co u ld leg all ysu p p o rt a cl ai m of cha m per t y , par t i cul ar l y i f t he ac qui r i ng par t y ’ s i nt enti s s i m pl yt o obt ai n paym ent of t hat deb t “even shou l d l i t i gati on beco m e necessary . ” B l ueb i rd P artners, L
. P
. v. F irst F idelity B a n k , N
. A
. , 9 4 N
. Y
. 2 d at 73 7 , 7 0 9 N
. Y
. S
. 2 d at 87 1
. T h u s, w e a sk the N ew Y o rk26

C our tof A ppeal s t o i ndi cat e w hethers uch an a s s i gnm ento f co sts a nd fee s i n t he
c ir c u m s ta n c e s o f

th is c a s e c o n s titu te s c h a m p e rt y . S im ilarly , w e h a v e id e n tifie d n o N e w Y o r k c a se in d ica tin g w h e th e r, w h e n a p a rty ( her e, t he Trus t ) s et t l es a di s put e byacc ept i ng a tr ans ferof r i ght s ( U B S’ s r i ght s undert he L ov e M L P A ) that hol d the p otent i al for a great er r ecov eryt han t he p art i es had e xp l ored as a
cas h s et t l ement , t he ac qui s i t i on of s uch r i ght s can be deemed champer t ous i f t he ac qui r i ng par t y i s , i n fac t , us i ng l i t i gat i on t o s eek ful l paym ent of t he purpor t ed debtobl i gat i on r ather t han “mer el yas a vehi cl e forobt ai ni ng cos t s [and] at t or ney s ’ fee s . ” I d. at734, 709 N
. Y
. S. 2d
a t 8 7 0
. A c c o rd in g ly , m in d f u l o f th e N e w Y o rk C o u rt o f A p p e a ls’ c o n c e rn th a t th e “ c h a m p e rty cl oud” notcas t a s hadow “t oo eas i l y over m odern bus i nes s pr act i ces and di s put e r es ol ut i ons i nvol vi ng t he ac qui s i t i on of s ecur i t i es and t hei r concomi t ant r i ght s , ” i d. at 737, 709 N
. Y
. S. 2d at87 1, w e ask t hat courtt o clar i fyt he ap pli cat i on of the cham pert ydo ct ri ne to t hese facts
. I I I . C oncl usi on For t he r eas ons s t at ed, t he courther ebycert i fi es t he fol l ow i ng quest i ons t o t he N ew Y ork C ou rtof A pp eal s: 1. I s i ts uffi ci entas a mat t er o f law t o fi nd t hata part yacc ept ed a c hal l enged
as s i gnm ent w i t h t he “pr i m ary ” i nt ent pr os cr i bed by N ew Y or k J udi ci aryL aw § 4 8 9 (1 ), o r m u st th e re b e a f in d in g o f “ so le” in ten t? 2
. A s a m a tter o f

law , d o e s a p a r ty c o m m it ch a m p e rtyw h e n it “b u y s a law su it” t hati tcoul d notot herw i se have pur s ued i f i t s purpos e i s t her ebyt o col l ect27 d am ages forl os s es on a debti ns t rum enti n w hi ch i thol ds a pr e- exi s t i ng p ro p rie tar yin ter e st? 3. ( a) A s a m at t er of l aw , does a part ycomm i tchamper t yw hen, as t he hol derof
a d e f a u lted d e b t o b lig a tio n , ita c q u ire s th e rig h t to p u rsu e a la w s u it ag a in st a t hi r d par t yi n or dert o col l ectm or e dam ages t hr ough t hat l i t i gat i on t han i thad d em an d ed in se tt lem en t from the a ssign o r? ( b) I s t he ans w ert o ques t i o n 3( a) aff ect ed byt he fa ctt hatt he cha l l enged
as s i gnm entenabl ed the as s i gnee t o ex erc is e the as s i gnor ’ s i ndemni fi cat i on ri gh t s for r easona ble cost s and att orney s’ fees? T he C ou rtof A pp eal s m ayansw er these qu est i on s i n w hatever or der i tdee m s b e stt o assi st t hi s cour t i n det er m i ni ng w hether t he fac t s of t hi s cas e demonstr at e cha m per t y . Si m i l ar l y , t he C our tof A p p ea l s m ayexpand thes e ce r t i fi ed ques t i ons t o addr es s anyotheri s s ues of N ew Y o rk la w p e rt in e n t to th is a p p e a l. T h is pa n el retai n s jurisdicti o n fo r pu rpo ses o f reso lving this a p p ea l o n ce the N ew Y o rk C our tof A ppeal s has r es ponded t o ourcert i fi cat i on. It is , th e re f

o re , O R DER ED t hatt he C l er k of t hi s C our tt r ans m i tt o t he C l er k of t he N ew Y or k C our t o f App e a l s a c e r t i f i c a t e , a s s e t f

o r t h b e l o w, t o g e t h e r wi t h t h i s o p i n i o n and a
com plet e setof b ri efs, app end i ces, and t he record fi l ed in t his case byt he p art i es. IV . C er ti fi ca te T h e f o reg o ing is he reb yce rt ifi ed to the C o u rt o f A p p e a ls o f th e S tat e o f N ew Y o rk28

pur s uantt o Second C i r . R
. § 0
. 2 7 and N
. Y
. C om p. C odes R
. & R egs . t i t . 22, § 500. 27, as
o rd e re d b yth e U n ited S tate s C o u rt o f A p p e a ls f

o r th e S e c o n d C irc u it.