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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of New York. Objections Due: February 1, 2011 Reply Due: February 4, 2011 Hearing Date: None selected Attorneys for wells fargo bank, N.a., as trustee for registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates, Series 2007-c1.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of New York. Objections Due: February 1, 2011 Reply Due: February 4, 2011 Hearing Date: None selected Attorneys for wells fargo bank, N.a., as trustee for registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates, Series 2007-c1.
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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of New York. Objections Due: February 1, 2011 Reply Due: February 4, 2011 Hearing Date: None selected Attorneys for wells fargo bank, N.a., as trustee for registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates, Series 2007-c1.
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Michelle McMahon (MM-8130) 1290 A venue of the Americas New York, New York 10104 (212) 541-2000 Christopher J. Lawhorn, admission pro hac vice pending Brian Walsh, admission pro hac vice pending 211 North Broadway St. Louis, Missouri 63102 (314) 259-2000 Objections Due: February 1, 2011 Reply Due: February 4, 2011 Hearing Date: None selected Attorneys for Wells Fargo Bank, N.A., as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders ofML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 and LNR Securities Holdings, LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------X In re: INNKEEPERS USA TRUST, eta/., Debtors. ----------------------------X Chapter 11 Case No.: 10-13800 (SCC) (Jointly Administered) REPLY SUPPORTING MOTION OF TRUSTS AND LNR SECURITIES HOLDINGS, LLC SEEKING JUDICIAL DETERMINATION OF PARTY IN INTEREST STATUS UNDER SECTION 1109(b) OF THE BANKRUPTCY CODE, OR IN THE ALTERNATIVE GRANTING INTERVENTION IN THESE BANKRUPTCY CASES PURSUANT TO FEDERAL RULE OF BANKRUPTCY 2018 The Trusts and LNR Securities (jointly, the "Movants") hereby reply to the Debtors' Omnibus Limited Objection to Certificateholders' Standing Requests (the "Debtors' Objection") and the Reply and Objection ofMidland Loan Services to the Motions of(a) Appaloosa Investment L.P. and Thoroughbred Master Ltd and (b) Motion of Trusts and LNR Securities Holdings, LLC Seeking Judicial Determination of Party in Interest Status under Section 11 09(b) of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases pursuant to Federal Rule of Bankruptcy 2018 ("Midland's Objection" and together with Debtors' Objection, the "Objections") and in support of the Motion of the Trusts and LNR Securities Holdings, LLC Seeking Judicial Determination of Party in Interest Status under Section 11 09(b) of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases pursuant to Federal Rule of Bankruptcy 2018 to be served by First Class US Mail (the "Motion"). 1 In support of this Reply, Movants state as follows: I. Movants are Parties in Interest under Section 1109(b) A. The Trusts as Creditors and LNR Securities as Preferred Shareholder are Parties in Interest under Section 11 09(b) and May Appear and be Heard on any Issue in these Cases 1. The Debtors and Midland Gointly, the "Objectors") acknowledge, as they must, that Trusts as creditors have standing as a party in interest under Section 11 09(b) of the Bankruptcy Code. The Objectors also acknowledge that Appaloosa as a preferred shareholder is a party in interest and has standing to appear and be heard. LNR Securities has recently purchased 500 shares of 8.0% Series C Cumulative Preferred Shares (the "Series C Preferred"), ~ n d thus similarly has standing to appear and be heard as a party in interest under Section 1109(b) ofthe Bankruptcy Code. 2 See Memorandum of Law of Appaloosa Investment L.P., 1 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion. 2 The fact that LNR Securities recently purchased its shares of Series Preferred C with the intent of further supporting its status as a party in interest under section I I 09 does not negate its status as a party in interest. In re First Humanics Corp., 124 B.R. 87,92-93 (Bankr. W.O. Mo. 1991) (holding that there was nothing improper about movant's acquisition of unsecured claims with the acknowledged purpose of eliminating any question as to whether movant was a party in interest). 2 C053239/0312771/1612625.4 Palomino Fund Ltd., Thoroughbred Fund L.P. and Thoroughbred Master Ltd in Support of Their Status as Parties in Interest Entitled to Standing (Docket No. 858), pp. 6-13. 2. The Objectors' efforts to limit or restrict the Movants' statutory right to appear and be heard on any issue in these cases is contrary to the plain language of the statute and the case law applying it in this district. Section 11 09(b) of the Bankruptcy Code expressly provides that parties in interest have an express right to be heard "on any issue," which would include the Bid Procedures Motion and any aspect thereof. See, e.g., Term Loan Holder Committee v. Ozer Group, LLC (In re The Caldor Corp.), 303 F.3d 161, 167-79 (2d Cir. 2002). Thus, the Movants can and should be heard on any issue in these cases and not artificially limited to issues ostensibly affecting only the Trust Secured Loans and the Series C Preferred, as argued by the Objectors. 3 3. Moreover, assuming arguendo that there is any limitation to the standing of parties in interest under Section 11 09(b) of the Bankruptcy Code, the limitation urged by the Objectors has no practical meaning in the context of the relief sought in the Bid Procedures Motion. The Trust Secured Loans are impaired under the terms of the Five Mile/Lehman Bid. The proposed Bid Procedures in their entirety affect the likelihood of any competing bid that would improve the treatment of the Trust Secured Loans. There is no separate divisible part of the Bid Procedures that relates solely or separately to the Trust Secured Loans, nor is there any part of the Bid Procedures that does not affect the likelihood that there will or will not be a better bid that improves the proposed treatment of the Trust Secured Loans. This is because the 3 The Debtors note that an Ad Hoc Committee of Preferred Shareholders has been formed and is able to represent the interests of Series C Preferred. The Debtors do not and cannot provide any authority for the implied assertion that the existence of a representative body should somehow negate or limit the ability of a party in interest to appear and be heard under Section 1109(b) ofthe Bankruptcy Code. 3 C053239/0312771/1612625.4 proposed bid procedures require Qualified Bids to include a similar whole enterprise structure and expressly provides that a bid for less than the whole is not a Qualified Bid. Any improved treatment with respect to the Trust Secured Loans will, if the Bid Procedures are approved, come only as part of a competing enterprise bid. Accordingly, any part ofthe Bid Procedures that has the interest or effect of chilling competing bids - such as the Lehman cash overbid request - directly affects the Trusts and is a matter on which the Trusts have an absolute and unequivocal right to be heard. The same will also be true with respect to the interests of the Series C Preferred. B. LNR Securities as Certificate Holder is a Party in Interest under Section 1109(b) and May Appear and be Heard on any Issue in these Cases 4. As set forth in detail in the Motion, LNR Securities as certificate holder is also a party in interest under the particular circumstances of these cases. The relief requested in the Bid Procedures Motion will directly affect LNR Securities' pecuniary interests as a certificate holder in the C7 Trust. See Stone Barn Manhattan LLC, 405 B.R. 68, 74 (finding that the official committee of unsecured creditors for the estates of the successor to the debtors, which was itself a debtor, had standing to object to a proposed settlement which would be paid from an escrow account in which the successor's estate had a contingent interest). Cf In re Teligent, Inc., 417 B.R 197, 210-211 (Bankr. S.D.N.Y. 2009 (holding that the law firm objector had no standing to object to approval under Rule 9019 of a settlement between the debtor's estate and the debtor's former CEO that would require the latter to sue the 'law firm for malpractice because the law firm 4 C053239/031277111612625.4 had no pecuniary interest in the order approving the settlement; any impact was contingent upon the result of the future malpractice litigation). 4 5. Despite the Objectors' copious citations to the pooling and servicing agreements for the C6 and C7 Trusts, such documents are not applicable here because LNR Securities is not seeking to appear and be heard on behalf of the C6 and C7 Trusts as holders of the Fixed Rate Loan. LNR Securities is seeking to appear and be heard only with respect to its interests as a certificate holder, which will be directly impacted as a result of the relief requested in the Bid Procedures Motion. LNR Securities is not seeking to represent the Fixed Rate Loan with respect to negotiations with the Debtors or voting on the Plan. LNR Securities is not seeking to enforce any rights of the C7 Trust and is therefore not violating the pooling and servicing agreement or otherwise seeking to circumvent it. Nor is LNR Securities seeking through the Motion to enforce any rights against Midland. 5 To be clear, LNR Securities is simply seeking to protect its pecuniary interests. 6. The Objectors' reference to the "no action" clauses in the pooling and servicing agreement is also a red herring. LNR Securities' proposed opposition to the Bid Procedure Motion will not "'institute any suit, action or proceeding in equity or at law upon or under or with respect to [the Pooling & Servicing Agreement or any Mortgage Loan]"' and therefore is not within the actions prohibited by section 11.03(c) of the C6 pooling and servicing agreement 4 The Bid Procedures Motion, and the marketing process and plan of reorganization it contemplates, will determine the entire restructuring of all of the Debtors. This is not substantive consolidation, but rather the process and transaction proposed by the Debtors and Midland. The Objectors' argument that Movants' standing is premised on substantive consolidation in conflict with its prior positions in these cases is a misrepresentation ofMovants' argument. 5 LNR reserves all of its rights with respect to issues raised in the litigation against CRES regarding the appointment of the special servicer for the Fixed Rate Loan, which is currently pending before this Court: LNR Partners, LLC and LNR Securities Holdings, LLC v. CRES Investment No. II, LP, Adv. Pro. 10-04237. 5 C053239/0312771/1612625.4 cited by Midland. Midland's 14 (citation omitted). Accordingly, the "no action" provision and the numerous cases cited by the Objectors prohibiting certificate holders from taking actions or blocking actions of the special servicer with respect to the loan or the collateral in violation of the applicable pooling and servicing agreements are simply not applicable to the present case. 7. Similarly, citation of cases by the Objectors for the proposition that standing is limited to the party in interest's assertion of its own rights and interests also miss the point. LNR is not seeking to enforce a legal right of the C6 and C7 Trust. Cf Roslyn Savings Bank v. Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571 (2d Cir. 1983) (holding that the mortgagee, which was not a creditor of the tenant-debtor, was not a party in interest under 11 U.S. C. 362(d) entitled to seek relief from the automatic stay to name the tenant-debtor in the foreclosure action); In re Saint Vincents Catholic Medical Centers of New York, 429 B.R. 139 (Bankr. S.D.N.Y. 2010) (granting debtors' motion to enforce the automatic stay against state court plaintiffs seeking to compel the New York State Department of Health to oppose closure of the hospital); Southern Boulevard, Inc. v. Martin Paint Stores (In re Martin Paint Stores), 207 B.R. 57,61 (S.D.N.Y. 1997) (affirming bankruptcy court's ruling that tenant did not have standing to oppose debtor's assumption and assignment of another lease with a common landlord where such assignment would violate the terms of the tenant's lease with landlord). 8. The Objectors' heavy reliance on In re Refco Inc., 505 F.3d 109 (2d Cir. 2007) is misplaced because contrary to the investors in Refco, LNR Securities is challenging the Bid Procedures Motion on the basis that it is not a valid exercise of the Debtors' business judgment, which issue will be before the Court. The Debtors have been influenced by the pressure brought to bear by Five Mile itself and Midland's unwavering support for Five Mile's efforts to acquire 6 C053239/0312771/1612625.4 the Debtors. This rushed marketing and selection of a stalking horse bidder has been to the detriment of all of the Debtors' stakeholders. Moreover, despite the Debtors' assertion that the relief sought in the Bid Procedures Motion is supported by the Debtors' two largest creditors, this characterization is misleading. In fact, the relief sought is being supported by Lehman, which as a stalking horse bidder would of course support its own transaction, and by Five Mile. For this reason, the relief requested by the Movants in the Motion is consistent with the ruling in In re Refco Inc., 505 F.3d 109 (2d Cir. 2007). 9. The relief sought by the Motion is consistent with both the ruling of the court, and the position advocated by LNR Partners, LLC ("LNR Partners"), in Bank of America, NA. eta/ v. PCV St. Owner LP. et al., Case No. 10-cv-1178 (AKH) (S.D.N.Y. 2010) ("Stt(Ytown"). In Stt(Ytown, the certificate holder argued that it was entided to intervene and oppose a foreclosure action initiated by the special servicer merely because the special servicer was affiliated with the controlling class representative and was thus alleged to have a conflict of interest and therefore was not representing the interests of the certificate holders. The basis for certificate holder standing alleged in Stt(Ytown- the fact that the controlling class representative was an affiliate of the special servicer -is common in the commercial mortgage backed securities industry and certainly does not present a conflict. 10. By contrast, in the Innkeepers cases the interests of Five Mile, as both the stalking horse bidder and the controlling class representative, and the unrelenting advancement of such interests by Midland in a manner that is contrary to maximizing the recoveries on the Fixed Rate Loan is direcdy contrary to the interests of the certificate holders. It is this conflict, resulting from the fact that Five Mile is on both sides of the deal- both the stalking horse and the controlling class representative of the lender that "supports" the deal- that justifies the standing of LNR Securities 7 C053239/031277111612625.4 in opposing these particular cases. In short, the relief sought by the Motion is consistent with both the position advocated by LNR Partners and the court's ruling in Stl!Jfown. 11. The Objectors' warnings that the Court will be flooded with certificate holders if LNR Securities is permitted to appear can be addressed by limiting any ruling on the Motion to the unique facts and circumstances of these cases. Further, any such policy concerns cannot overcome the plain language of the statute. Similar arguments have been raised in response to an expansive interpretation of section 11 09(b) of the Bankruptcy Code and dismissed. See In re The Caldor Corp, 303 F.3d at 175-6 (discussing cases on both sides of the policy debate and holding that the court "need not choose among the competing policy rationales for and against an unconditional right to intervene" because '"it suffices that the natural reading of the text produces the result we announce."') (citations omitted). Finally, such concerns are unfounded in these cases. To date, Appaloosa and LNR Securities have been the only certificate holders active in these cases. There is no indication that hundreds of certificate holders will suddenly appear and seek to be involved in the briefing and expedited discovery scheduled on the Bid Procedures Motion. II. Alternatively, LNR Securities Should he Permitted to Intervene in the Debtors' Bankruptcy Cases Pursuant to Rule 2018 12. Permissive intervention under Rule 2018(a) may be permitted for cause, which is "an economic or similar interest in the case or one of its aspects." In rePublic Service Co. of New Hampshire, 88 B.R. 546,551 (Bankr. N.H. 1988). LNR Securities' economic interests in the Debtors' bankruptcy cases would be negatively affected by the relief sought in the Bid Procedures Motion and the marketing process and plan of reorganization contemplated thereby. 8 C053239/0312771 /1612625.4 13. Contrary to the Objectors' assertions, cause is not limited to those situations where the intervenor holds a direct, non-contingent claim against the Debtors. Midland's citation to the non-binding transcript decision in Stuytown is not on point. In Stuytown, the proposed intervenor's contingent claim discussed in the cited portion of the transcript was one for negligence against the special servicer for alleged breaches of the servicing standard. Bank of America, N.A. et al v. PCV St. Owner L.P. et al., Case No. 1 0-cv-1178 (AKH), Transcript of Hearing held on April29, 2010, pp. 36:19-25 and 37:1-13 6 As discussed in detail above, LNR Securities is not seeking to enforce any rights against Midland through this proceeding, and any claims it may have against Midland are not the bases for the relief it seeks in the Motion or the objectors will file with respect to the Bid Procedures Motion. 14. The factors that the courts consider in determining whether to permit intervention under Rule 2018 are: (i) whether the intervenor's interests are already adequately represented and (ii) whether intervention would result in undue delay or prejudice to the original parties. See e.g., In rePublic Service Co. ofNew Hampshire, 88 B.R. at 551. The courts have authorized "a very broad and elastic interpretation" of those parties entitled to participate in a case as parties in interest or intervenors under section 1109(b) and Rule 2018(a). Id As set forth in detail in the Motion, LNR Securities satisfies both requirements. First, LNR Securities is not adequately represented because Midland's actions to pressure the Debtors into rushing the marketing process and selection of Five Mile/Lehman as the stalking horse have resulted in a flawed marketing process and a lower overall stalking horse bid. Second, the Objectors have not identified any actual delay that will occur as a result of LNR Securities intervention in the case. The discovery and briefing deadlines for the Bid Procedures Motion have already been 6 A copy of the transcript is attached to Midlands' Objection as Ex. 7. 9 C053239/0312771/1612625.4 established and LNR Securities has not asked to modify these dates to accommodate its intervention. III. Conclusion 15. As set forth in detail above, under the unique facts present in these cases Movants have the right to participate in the Debtors' bankruptcy cases to protect their interests as secured creditors and certificate holders. Each Movant is a party in interest under section 1109(b) of the Bankruptcy Code and as such is entitled to appear and be heard on any issue. Additionally, LNR Securities has demonstrated cause supporting its request to intervene under Rule 2018. In order for the bid procedures ultimately approved by this Court and the marketing process and plan of reorganization contemplated thereby to be the result of a truly fair process, the interests of all affected parties should be heard. Dated: New York, New York February 4, 2011 C053239/0312771/1612625.4 10 BRYAN CAVE LLP Is/ Lawrence P. Gottesman Lawrence P. Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 A venue of the Americas New York, New York 10104 Tel: (212) 541-2000; Fax: (212) 541-4630 Christopher J. Lawhorn, admission pro hac vice pending Brian Walsh, admission pro hac vice pending 211 North Broadway St. Louis, Missouri 63102 (314) 259-2000 Counsel for the Trusts and LNR Securities Holdings, LLC CERTIFICATE OF SERVICE I, Lawrence P. Gottesman, hereby certify, under penalty of perjury, that on February 4, 2011, I caused a copy of the Reply Supporting Motion of Trusts and LNR Securities Holdings, LLC Seeking Judicial Determination of Party in Interest Status under Section 11 09(b) of the Bankruptcy Code, or in the Alternative Granting Intervention in these Bankruptcy Cases pursuant to Federal Rule of Bankruptcy 2018 to be served by First Class US Mail upon the parties listed on the attached service list. C053239/031277111612625.4 BRYAN CAVE LLP Is/ Lawrence P. Gottesman Lawrence P. Gottesman (LG-7061) 1290 Avenue ofthe Americas New York, New York 10104-3300 (212) 541-2000 (tel) (212) 541-4630 (fax) Innkeepers USA Trust, et al. - Master Service List American Hotel Register Co. 16458 Collections Center Drive Chicago, IL 60693 F A.X: 847-743-2079 Arnold & Porter LLP Attn: Marc Daniel Counsel to Five Mile 399 Park Avenue New York. NY 10022 FAX: 212-715-1399 Email: Marc.Daniel@aporter.com Barlett Hackett Feinberg P.C. Attn: Frank F. McGinn Cow!Sel for Iron Mountain Information Management, Inc. 155 Federal Street 9th Floor Boston, MA 02110 FAX: 617-422-0383 Email: ffin@bostonbusinesslaw.com Bryan Cave LLP Attn: Lawrence P. Gottesman, Esq 1290 Avenue of the Americas New York. NY 10104 FAX: 212-541-4630 Email: lawrence.gottesman@bryancave.com Carrier Corp PO Box 905303 Charlotte, NC 28290 FAX: 860-622-7331 CSE Mortgage, LLC 4445 Willard Avenue 12th Floor Chevy Chase, MD 20815 FAX: 301-841-2340 Dechert LLP Attn: Nicole B. Herther-Spiro 1095 Avenue of the Americas NewYork, NY 10036 FAX: (212) 698-3599 Email: nicole.hertherspiro@deehert.com Page 1 of8 Apollo Investment Corporation Attn: Joseph D. Glatt 9 West 57th Street New York. New York 10019 FAX: (212) 515-3443 Email: JGiatt@apollocapital.com Arnold & Porter LLP Ath!: Michael Crullling Counsel to Five Mile 399 Park Avenue New York, NY 10022 FAX: 212-715-1399 Email: michael.eanning@aporter.com Best Western lntcmationallnc 6201 North 24th Parkway Phoenix, AZ 85016 FAX: 602-957-5641 Bryan Cave LLP Attn: Michelle McMahon, Esq 1290 Avenue ofthe Americas New York, NY 10104 FAX: 212-541-4630 Email: michelle.mcmahon@bryancave.com Centerline Servicing, Inc. Attn: Steve Oltmrulll 5221 N O'Connor Blvd, Suite 600 Irving, TX 75039 Email: soltmann@centerline.com CW Capital Asset Mrutagement LLC 18500 Von Karman Avenue, Suite 515 Attn: Ira Haynie Irvine, CA 92612 Dechert LLP clo Stephrutie M. Tita 30 Rockefeller Plaza New York, NY 10112 FAX: 212-698-3599 Email: stephanie.tita@dcchcrt.com Arnold & Porter LLP ATTN: ALAN LAWRENCE CoWISelto Five Mile 399 Park Avenue New York, NY 10022 FAX: 212-715-1399 Email: AJan.Lawrcncc@aporter.com Arnold & Porter LLP Attn: Michael J. Canning Counsel for Five Mile Capital II Pooling International LLC 399 Park Avenue New York, New York I 0022 FAX: (212) 715-1399 Email: michael.canning@aporter.com Brickman Group, Ud 3630 Solutions Center Chicago, IL 60677 Caprnark Finance Inc. Attn: Portfolio Manager, Specialty Asset Management 1600 Tysons Blvd Suite 1100 McLean, VA 22102 Cintas Corporation 97627 Eagle Way Chicago, IL 60678-9760 FAX: 708-563-0108 CWCapital Performing Loan Management- CMBS Ira Haynie, Associate-Asset Manager 18500 Von Karman Avenue, Suite 515 Irvine, CA 92612 Email: ihaynie@cwcapital.com Dechert LLP CoWISelto Lehman Attn: Andrew L Buck 1095 Avenue ofthe Americas New York. NY 10036 FAX: 212-698-3599 Email: Andrew.Buck@dechert.com Innkeepers USA Trust, eta!.- Master Service List Dechert LLP Counsel to Lehman Attn: Brian E. Greer 1095 A venue of the Americas NcwYork,NY 10036 FAX: 212-698-3599 Email: Brian.Grccr@dcchcrt.com Deutsche Bane Mortgage Capital, LLC Alb!: Director. Mortgage Backed Securities 60 Wall Street lOth Floor New York, NY 10005 Dewey & LcbocufLLp Attn: Martin J. Bienenstock, Esq 1301 Avenue of the Americas New York, NY 10019 FAX: 212-2559-6333 Email: mbienenstock@dl.com Duane Morris LLP Attn: Phillip K. Wang Counsel for LNR Partners, LLC, One Market Plaza, Spear Tower Suite 2200 San Francisco, CA 94105-1127 FAX: ( 415) 358-4725 Email: pwang@duancmorris.com Elite Heating & Air 214 Cherry Avenue V oorhecs. NJ 08043 FAX: 856-354-8655 Fire & Oak 55 Route 17 South Rochelle Park, NJ 07662 FAX: 201-307-1200 Guest Supply, Inc. P0Box910 Monmouth Juction, NJ 08852 FAX: 609-514-2692 Page 2 of8 Dechert LLP Counsel to Lehman Attn: Justin Gdula 1095 Avenue of the Americas New York, NY 10036 FAX: 212-698-3599 Email: Justin.Gdula@dcchcrt.com Deutsche Bank Securities Inc. Attn: General Counsel 1301 Avenue of the Americas 8th Floor New York, NY 10019 Dewey & Leboeuf LLP Attn:Timothy Q. Karcher, Esq. 1301 Avenue of the Americas New York, NY 10019 FAX: 212-259-6333 Email: tkarcher@dl.com Ecolab PO Box 905327 Charlotte, NC 28290-5327 Eric Ryan Corporation 1 Early Street EllwoodCity,PA 16117 FAX: 724-752-8999 Global Restaurant Design, Corp 31368 Via Colinas Suite #108 Westlake Village, CA 91362 FAX: 818-706-7701 Haynes and Boone, LLP Attn: John D. Penn. Esq. Counsel for Midland Loan Services, Inc. 201 Main Street, Suite 2200 Fort Worth. TX 76102 FAX: (817) 348-2300 Email: jolm.penn@haynesboone.com DcchcrtLLP Counsel to Lehman Attn: Michael J. Sage 1095 Avenue of the Americas New York, NY 10036 FAX: 212-698-3599 Email: Michaci.Sagc@dcchcrt.com Dewey & LeboeufLLP Attn: Irena M. Goldstein, Esq. 1301 Avenue ofthc Americas New York, NY 10019 FAX: 212-259-6333 Email: igoldstcin@dl.com Doublctrcc Hotel Systems, Inc. 9336 Civic Center Drive Attn: General Counsel Beverly Hills, CA 90210 FAX: (310)205-7655 Ecolab Pest Elimination 3535 S 31st Street PO Box 6007 Grand Forks, ND 58206 FAX: 701-775-2536 Fibcrcare 7701 Pillsbury Avenue South Richfield, MN 55423 FAX: 612-277-1514 Goldenbock EisemanAssor Bell & Peskoe LLP Attn: Jonathan L. Flaxcr, ESQ. 437 Madison Avenue New York, NY 10022 FAX: 212-754-0330 Email: jtlaxer@gnlenbock.com Haynes and Boone, LLP Lenard M. Parkins, Esq. Mark Elmore, Esq. Counsel for Midland Loan Services, Inc. 1221 Avenue of the Americas, 26th Floor New York. NY 10020 FAX: (212) 884-8211 Email: lenard.parkins@haynesboone.com Innkeepers USA Trust, et al. - Master Service List HD Supply Facilities PO Box 509058 Maintenance San Diego, CA 92150-9058 fAX: 800-930-4930 Hyatt Summerfield Suites 194Parl<.Ave. Morristo ... n, NJ 07960 fAX: 973-971-00 13 JMCGiobal 7 Grogans Park Drive Ste II The Woodlands, TX 77380 FAX: 832-381-2495 Kasowitz, Benson, Torres & friedman LLP Attn: David M. friedman Counsel for five Mile Capital Partners LLC 1633 Broadway NcwYorl<,NY 10019 FAX: 212-506-1800 Email: dfiiedman@kasowitz.com Kilpatrick & Associates, P.C. Attn: Richardo I. Kilpatrick Counsel for Creditor Oakland Cowtty Treasurer 903 North Opdyke Road, Suite C Auburn Hills, Ml 48326 Email: ecf@kaalaw.com Kilpatrick Stockton LLP Attn: Rex R Veal, Esq. C-aunsel for TriMont Real Estate Advisors, Inc. Suite 2800 II 00 Peachtree Street, NE Atlanta, GA 30309-4530 FAX: 404-815-6555 Email: rveal@kilpatrickstockton.com Kirkland & Ellis, LLP Attn: Marc Carmel, Partner 300 North La Salle Chicago, IL 60654 FAX: 312-862-2200 Email: marc.carmcl@kirl<land.com Page 3 of8 Hilton Hotels Corporation 4649 Paysphcrc Circle Chicago, IL 60674-4694 FAX: 901-374-5425 Intemal Revenue Service PO Box21I26 Philadelphia, PA 19114 Kasowitz, Benson, Torres & Friedman LLP Attn: Adam L. Shiff, Esq. Cowtsel for Five Mile Capital Partners LLC 1633 Broadway New York, NY 10019 FAX: 212-506-1800 Email: ashifl@kasowitz.com Kaufmann Gildin Robbins & Oppenheim LLP Attn: Bruce R. Alter. Esq. Counsel to Hilton Worldwide, Inc. 550 Mamaroneck Avenue, Suite 510 Harrison, New Y orl< I 0528 FAX: (914) 670-0031 Email: info@altergoldlaw.com Kilpatrick Stockton LLP Attn: Jonathan E. Polonsky, Esq. Counsel for TriMont Real Estate Advisors, Inc. 31 West 52nd Street 14th Floor New York, NY 10019 FAX: (212) 775-8819 Email: jpolonsky@kilpatrickstockton.com Kilpatrick Stockton LLP Attn: Todd C. Meyers, Esq. Counsel for TriMont Real Estate Advisors, Inc. Suite 2800 II 00 Peachtree Street, NE Atlanta, Georgia 30309-4530 FAX: (404) 815-6555 Email: tmeycrs@kilpatrickstockton.com Kohner, Mann & Kailas, S.C. Attn: Samuel C. Wisotzkey Counsel for Ecolab Inc. 4650 North Port Washington Road Milwaukee, WI 53212-1059 FAX: (414) 962-8725 Email: swisotzkey@kmksc.com Hilton Inns, Inc. 9336 Civic Center Drive Attn: General Counsel Beverly Hills, CA 90210 FAX: (310)205-7655 Jenkins/Gales & Martinez 5933 West Centw:y Blvd Suitc#IOOO Los Angeles, CA 90045 FAX: 310-670-8721 Kasowitz, Benson, Torres & Friedman LLP Attn: Daniel A. Fliman Counsel for Five Mile Capital Partners LLC 1633 Broadway NewYorl<,NY 10019 FAX: 212-506-1800 Email: dfliman@kasowitz.com Kaufinann Gildin Robbins & Oppenheim LLP David J. Kaufinann, Esq. Kevin M. Shelley, Esq. Counsel for Hilton Worldwide, Inc. 777 Third Avenue, 24th Floor New York, NewYorl< 10017 FAX: (212) 755-3174 Email: dkaufiruum@kaufinanngildin.com Kilpatrick Stockton LLP Attn: Marl< A. Fink, Esq. Counsel for TriMont Real Estate Advisors, Inc. Suite 2800 1100 Peachtree Street, NE Atlanta, GA 30309-4530 FAX: 404-815-6555 Email: mtink@kilpatrickstockton.com Kirkland & Ellis, LLP Attn: Jennifer Marines, Associate Citigroup Center 601 Lexington Avenue New York, NY 10022 FAX: 212-446-6460 Email: jennifer.marines@kirldand.com LAMCOLLC Susanne frey 1271 Avenue of the Americas, 39th Floor New York, NY 10020 Email: susanne.frey@larncollc.com Innkeepers USA Trust, et at. - Master Service List LaSalle Bank National Association Ann: Global Securities and Trust Services LB-UBS Commercial Mortgage Trust 2007-C6 135 South LaSalle Street Suite 1625 Chicago, IL 60603 Lehman ALI, Inc. Attn: Charlene Thomas 399 Park Avenue New York, NY I 0022 FAX: 646-758-4544 Lehman ALI, Inc. c/o David Forti, Esq. 2929 Arch Street Philadelphia, P A 19103 FAX: 215-994-2222 Email: david.forti@dechert.com Linebarger Goggan Blair & Sampson, LLP Counsel for Bexar County 711 Navarro, Suite 300 San Antonio, TX 78205 FAX: (210) 225-64IO Email: sanantonio.bankruptcy@publicans.com LNR Property Corporation 1601 Washington Avenue, Suite 800 Miami Beach, FL 33 139 Marriott International, Inc. 10400 Fernwood Road VP 0\\-ner and F ranehise Services Bethesda, MD 208 I 7 Midland Loan Services, Inc. I 0851 Mastin Suite 700 Overland Park, KS 66210 Page4 of8 Lasalle Bank National Association C/0 Wells Fargo Conun Mortgage Servicing 1320 Willow Pass Road, Suite 300 Concord, CA 94520 FAX: 925-798-8831 Lehman ALI, Inc. Attn: Michael E. Lascher 1271 Avenue ofthc An1cricas 39th Floor NEW YORK, NY 10020 FAX: 646-758-4544 LG Electronics USA Inc PO Box 905337 Charlotte, NC 28290 FAX: 201-408-9076 LNR Partners, Inc. Attn: Chris Brown I601 Washington Avenue, Suite 700 Miami Beach, FL 33139 FAX: (305) 695-5601 Email: CBrown@LNRProperty.com Marriott Hotels 180 Hawley Lane T nun bull, CT 06484 FAX: 203-378-4958 Marx Realty & Improvement Co. 708 Third Ave. 21st Floor New York, NY 10017-4I46 FAX: 212-983-4532 Email: Stephanie.T@marxrealty.com Midland Loan Services, Inc. Attn: President P.O. Box 25965 Shawnee Mission, KS 66225 FAX: 913-253-900I Law Oflices of Robert E. Luna, P.C. Ann: Andrea Sheehan, Esq. Counsel for Carrollton- Farmers Branch Independent Scholl District 4411 N. Centeral Expressway Dallas, TX 75205 FAX: 214-521-1738 Email: shcehan@txschoollaw.com Lehman ALI, Inc. Attn: Michael E. Lascher 1271 Avenue of the Americas, 39th Floor New York. NY 10020 FAX: 646.285.9336 Linebarger Goggan Blair & Sampson, LLP Attn: Elizabeth Weller 2323 BI)'llll Street Suite 1600 Dallas, TX 75201 FAX: 469-221-5002 Email: dallas.bankruptcy@publicans.com LNR Partners, Inc. Attn: Director of Servicing 1601 Washington Avenue Suite 700 Miami, FL 33139 Email: cbrown@Lnrproperty.com Marriott International, Inc. 10400 Fernwood Road Franchise Attnrney Law Department 52/923.25 Bethesda. MD 20817 Merrill Lyuch Mortgage Lending Inc. Fonr World Financial Center 16th Floor New York. NY I0080 Morrison & Foerster, LLP Attn: Lorenzo Marinuzzi Counsel for Official Committee ofUnseenred Creditors 1290 Avenue ofthe Americas New York. NY 10 I 04-0050 FAX: (212) 468-7900 Email: LMarinuzzi@rnofo.com Innkeepers USA Trost, et al. - Master Service List Morrison & Foerster, LLP Attn: Brett H. Miller Counsel for Official Committee of Unsecured Creditors 1290 Avenue of the Americas New York, NY 10 I 04-0050 FAX: (212) 468-7900 Email: BMillcr@mofo.com Oak Roofing. Inc. 220Hcmlock Wood Dalc.IL 60191 FAX: 630-238-0288 Office of the Attorney General I 00 West Randolph Street Chicago, IL 6060 I FAX: 312-814-3589 Office of the Attomey General 1412 Main Street Suite 810 Dallas, TX 75202 FAX: 214-969-76I5 Email: greg.abbott@oag.state.tx.us Office of the Attorney General 25 Market Street CN080 Trenton, NJ 08625 FAX: 609-292-3508 Office of the Attomcy General 6 State House Station Augusta, ME 04333 FAX: 207-626-8518 Office of the Attorney General California Department of Justice Attn: Public Inquiry Unit PO Box 944255 Sacramento, CA 94244-2550 FAX: 916-323-5341 PageS of8 Morrison & F oerstcr, LLP Attn: Jordan A. Wishnew Counsel for Official Committee of Unsecured Crediors 1290 Avenue of the Americas New York, NY 10104-0050 FAX: (212) 468-7900 Email: JWishncw@mofo.com Office Depot PO Box 633211 Cincinnati, OH 45263-3211 FAX: 800-685-5010 Office of the Attorney General 1125 Washington Street SE PO Box40!00 Olympia, W A 98504-0100 FAX: 360-664-0228 Email: rob.mckenna@atg.wa.gov Office of the Attomey General 1525 Sherman St., 5th Floor Denver, CO 80203 FAX: 303-866-5691 Email: cab@statc.co.us Office of the Attorney General 40 Capitol Square SW Atlanta, GA 30334 FAX: 404-657-8733 Office of the Attomcy General 900 East Main Street Richmond, VA 23219 FAX: 804-786-!991 Office ofthe Attomey General Deputy AG JcffKoziar 25 Market Street CN080 Trenton, NJ 08625 FAX: 609-292-3508 National Assn. of Attomcys General Karen Cordry 750 First St., N.E .. Suite 1100 Washington, DC 20570 Office of Attorney General State of Florida The Capitol PL-0 I Tallahassee, FL32399-1050 FAX: 850-488-5865 Office of the Attorney General 1300 I Street, Suite 1740 Sacramento, CA 95814 FAX: 916-323-5341 Office of the Attorney General 200 St. Paul Place Baltimore, MD 21202 Email: oag@oag.state.mdus Office of the Attorney General 55 Elm Street Hartford, CT 06141 FAX: 860-808-5389 Office of the Attorney General 900 I Mail Service Center Raleigh, NC 27699-900 I FAX: 919-716-6750 Office of the Attorney General G. Metmen Williams Building, 7th Floor 525 W. Ottawa St. PO Box 30212 Lansing. MI 48909 FAX: 517-373-3042 Innkeepers USA Trust, et al.- Master Service List O!licc of the Attorney General Indiana Government Center South-5th Floor 402 W. Washington St. Indianapolis, IN 46204 FAX: 317-232-7979 Email: Constituent@atg.in.gov Otlice ofthe Attorney General P0Box629 Raleigh, NC 27602 FAX: 919-716-6750 Onyx Scalcoating. Inc. 15113 S. Kilbourn Midlothan, IL 60445 Paul, Weiss, Rifkand, Wharton & Garrison, LLP Attn: Lauren Shumejda Counsel to Apollo Investment Group 1285 Avenue ofthe Americas New York, New York 10019-6064 FAX: (212) 757-3990 Email: lshumejda@paulweiss.com Perkins C oie Counsel for CWCapital Performing Loan Management- CMBS Attn: Beth Understahl 290 I North Central Avenue Suite 2000 Phoenix, AZ. 85012-2788 Email: BUnderstahl@perkinscoie.com Quoizel, Inc. 6 Corporate PkY.y. Goose Creek, SC 29445 FAX: 631-231-7102 Romero Law Firm Attn: Martha E. Romero Counsel for San Bernardino County, a California Taxing Authority BMR Professional Building 6516 Bright Ave. Whittier, CA 90601 FAX: 562-907-6820 Email: rornero@mrornerolawfmn.corn Page 6 of8 O!lice of the Attorney General McCorntack Building One Ashburton Place Boston, MA 02108 O!lice of the Attorney General The Capitol- 2nd Floor Albany, NY 12224-0341 Paul, Weiss. Rifkand. Wharton & Garrison, LLP Attn: Alan W. Kornberg, Esq. Counsel to Apollo Investment Group 1285 Avenue of the Americas New York, NY 10019-6064 FAX: 212-757-3990 Email: akornbcrg@paulweiss.com Pdq Consulting, Inc. 407 Wood Lake Drive Allen TX 75013 FAX: 972-767-3472 Perkins Coie LLP Attn: David Neff 131 So nth Dearborn S trc<:t Suite 1700 Chicago, IL 60603 FAX: 312-324-9689 Email: DNeff@perkinscoie.com Rhs Commercial LLC I 003 Stafford Road Kalamazoo, MI 49006 Royal Cup Dine-Mor PO Box I 70971 Birmingham, AL 35217 Office of the Attorney General PO Box 120 Hartford, CT 06141-0120 FAX: 860-808-5383 Email: attorney.gcncral@et.gov Otlice of the Attorney General The Capitol, Room 116 700 Capitol Avenue Frankfort, KY 40601-3449 FAX: 502-696-5389 Email: attomey.gcncral@ag.ky.gov Paul, Weiss, Rifkand, Wharton & Garrison, LLP Attn: Andrew J. Ehrlich Counsel to Apollo Investment Group 1285 Avenue ofthe Americas New York, New York 10019-6064 FAX: (212) 757-3990 Email: achrlich@paulweiss.com Pennsylvania O!lice of the Attorney General 16th Floor, Strawberry Square Harrisburg, PA 17120 FAX: 717-787-8242 Promus Hotels, Inc. 9336 Civic Center Drive Attn: General Counsel Beverly Hills, CA 90210 FAX: (310)205-7655 Romala Stone, Inc. 315 S. Beverly Drive Suite 506 Beverly Hills, CA 902124316 Saul Ewing LLP Attn: Jeffrey C. Hampton Counsel for U.S. Foodscrvicc, Inc. Centre Square West 1500 Market Street, 38th Floor Philadelphia, PA 19102 FAX: (215) 972-1848 Email: jhampton@saul.corn Innkeepers USA Trust, et al. - Master Service List Saul Ewing LLP Attn: Melissa W. Rand, Esq. Counsel for U.S. Foodservice, Inc. Centre Square West 1500 Market Street. 38th Floor Philadelphia, PA 19102 FAX: (215) 972-1872 Email: mrand@saul.com Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 FAX: 212-735-2000 State of Michigan, Department of Treasury Michael A. Cox, Attorney General Juandisha M. Harris, Assistant Attomey General Cadillac Place, Ste. 10-200 3030 W. Grant Blvd. Detroit, MI 48202 Email: harrisjm@michigan.gov Swank Audio Visuals, LLC 639 E. Garvois Bluffs St. Louis, MO 63026 FAX: 636-680-2898 Texas Attorney General's Office Hal F. Morris & Ashley F. Bartram Bankruptcy & Collections Div. PO Box 12548, MC-008 Austin, TX 78711-2548 FAX: 512475-2994 Triangle Renovations 3760 Louisville Road Louisville, TN 37777 Waste Management PO Box 930580 Atlanta, GA 31193 FAX: 630-218-1560 Page 7 of8 Sheppard Mullin Richter & Hampton LLP Attn: Jane Qin 30 Rockefeller Phl7.a, Suite 2400 New York, NY 10112 FAX: 212-653-870 I Emai I: jqin@sheppardmullin.com Springfield Corporation PO Box 620189 Atlanta, GA 30362 FAX: 770-729-0995 Summerfield Hotel Company LLC Attn: SVP Franchising 20 West Monroe 8th Floor Chicago, IL 60606 SYSCOFood POBox 1508 Walnut, CA 91788 FAX: 909-598-6383 The Sheraton LLC 600 Galleria Parkway Suite 1700 Attn: General Counsel -Franchise Division Atlanta, GA 30339 United States Trustees Office Region2 33 Whitehall Street, 21st Floor New York, NY 10004 FAX: (212) 668-2255 Wells Fargo Bank Carol Anderson, Asset Manager 1901 Harrison St, 2nd Floor Oakland, CA 94612 Sheppard Mullin Richter & Hampton LLP Carron Shulman, Esq. 30 Rockefeller Plaza, Suite 2400 New York, NY 10112 FAX: 212-653-8701 Email: cshulman@sheppardmullin.com Starwood Hotels& Resorts Worldwide Inc. Attn: Sandy Olson 9841 Airport Blvd., Ste 812 Los Angeles, CA 90045 FAX: 914-640-8310 Sunset Pools, Inc. 1808-l I Street NW Ste 20 I Washington, DC 20006 FAX: 703-933-0077 Tashjian & Padian Gerald Padian, Esq. & Bradley M. Rank, Esq. Counsel for CWCapital Asset Management, LLC and C-lll Asset Management LLC 729 Seventh Avenue New York, NY 10019 FAX: (212) 319-9883 Email: gpadian@tashpad.com The Sheraton LLC c/o Starwood Hotels and Resorts Worldwide Ill! Westchester Ave Attn: General Counsel White Plains, NY 10604 Us Wall Decor 487 Myatt Drive Madison, TN 37115 Wells Fargo, N.A. c/o Capmark Finance Inc. Attn: Portfolio Managers Three Ravina Drive, Suite 200 Atlanta, GA 30346 Innkeepers USA Trust, et al. - Master Service List Wells Fargo, N.A. c/o Christopher J. Hart, Esq. Locke Liddle & Sapp LLP 401 9th Street, N.W. Suite 400 Washington. DC 20004 FAX: (202) 220-6945 Email: chart@lockclord.com Page 8 of8 Westem State Design, Inc. 25616 Nickle Place Hayward, CA 94545 Creditors: 149 EXHIBIT A Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 1 of 12 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ X BANK OF AMERICA, N.A., as Trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007-C30, acting by and through its Special Servicer, CWCapital Asset Management LLC, BANK OF AMERICA,N.A., as Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2 and Wachovia Bank Commercial Mortgage Trust 2007 -C31, acting by and through CWCapital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12, 2007 and U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC Commercial Mortgage Trust 2007-6, acting by and through CW Capital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12, 2007, Plaintiffs, -against- PCV ST OWNER LP, ST OWNER LP, TRI-LINE CONTRACTING CORP., ATLAS FIRE PROTECTION, INC., POMALEE ELECTRIC CO, INC., REFUSE SYTEMS CORP., PRO TILE DISTRIBUTORS, INC., TRITON STONE AND MARBLE LLC, S.T.S. TRADING INC. d/b/a S.T. LUMBER & HOME CENTER, ELECTRICAL, PLUMBING, S.D. INT'L d/b/a S.D. STONE DEPOT, ELBEX AMERICA OF NEW YORK, INC., NEW YORK CITY DEPARTMENT OF TRANSPORTATION PARKING VIOLATIONS BUREAU, NEWYORK CITY ENVIRONMENTAL CONTROL BOARD and FIRE DEPARTMENT OF THE CITY OF NEW YORK, Defendants, -against- APPALOOSA INVESTMENT L.P., I, PALOMINO FUND LTD., THOROUGHBREDFUND L.P.; and THOROUGHBRED MASTER LTD. Intervenor-Defendants. ___________________________________________ .X 10 Civ. 1178 (SHS) ECFCase MOTION TO INTERVENE AS PARTY DEFENDANT BY APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD. 1 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 2 of 12 TO THE HONORABLE JUDGE STEIN: Pursuant to Rule 24(a) of the Federal Rules of Civil Procedure, Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. (collectively, "Appaloosa" or the "Appaloosa Intervenors") file this motion to intervene as a matter of right in this action as an intervenor-defendant. Intervention is required because Plaintiff CW Capital has pursued foreclosure in breach of its fiduciary obligations to the Appaloosa Intervenors. Plaintiff CW Capital is also deeply conflicted, and does not adequately represent the interests of the Appaloosa Intervenors, who have more than three quarters of a billion dollars at stake in the trusts secured by the property at issue in the foreclosure action; namely, the mortgage on Peter Cooper Village and Stuyvesant Town (the "Property"). Plaintiff CW Capital's actions in pursuing foreclosure on Peter Cooper Village and Stuyvesant Town ("Stuyvesant Town") violate its obligations as Special Servicer to act as a prudent commercial mortgage servicer seeking to maximize value for the benefit of all Certificateholders. By rushing to foreclose, when other less hazardous avenues were available, Plaintiff CW Capital has recklessly and imprudently exposed the Appaloosa Intervenors-and other Certificateholders-to wholly avoidable losses, risks, and injuries, including: Double and Unnecessary Transfer Taxes: A foreclosure judgment will require a double payment of New York City's $100 million transfer tax on the Property: once when title is transferred by foreclosure, and a second time when the Property is sold in the inevitably necessary workout of this loan. No prudent commercial mortgage lender would willingly assume these tax liabilities, particularly when they could be limited by other means, or avoided entirely in bankruptcy. Environmental Liabilities: The documents governing the trusts state clearly that Plaintiff CW Capital may not pursue foreclosure unless, within six months prior to initiating the Action, it has obtained an environmental assessment certifying that the relevant mortgaged property is in compliance with applicable 2 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 3 of 12 environmental laws and regulations. The Appaloosa Intervenors do not believe any such assessment has been obtained. Excess Rent Claims: The tenants at the Property are the beneficiaries of an un- liquidated, potentially massive excess rent claim that may, in the future, be converted into a damage judgment worth hundreds of millions of dollars. The status of this liability is uncertain, as is its effect on the rights of the Certificateholders and the value of the underlying mortgaged property. Proceeding precipitously to take title by foreclosure, in the face of this uncertainty, is again imprudent and not in the best interest of the Certificateholders. Creation of Unnecessary Losses for Certificateholders: By subjecting the property to transfer tax liability on foreclosure, Plaintiff CW Capital may obtain a priming lien at the top of the capital structure to secure repayment of that advance. This priming lien would create additional losses that would not otherwise be suffered by holders of subordinated tranches, including tranches of Certificates owned by Appaloosa. Voting Rights: Tranches whose recovery is wiped out by CW's priming lien will also be deprived of voting rights they otherwise would enjoy under the trusts. The Appaloosa Intervenors stand to suffer unique and irreparable injuries as a result of Plaintiff CW Capital's actions. The Appaloosa Intervenors own over $750,000,000 of Certificates issued by five trusts that hold securitized interests in the mortgage on the Property, including the Wachovia Bank Commercial Mortgage C-30 Trust (the "C-30 Trust"). The C-30 Trust is the largest of these five trusts. Under the documents that defined the relationship between the trusts, the C-30 Trust is entitled to administer and enforce the mortgage on the Property for the benefit of the Certificateholders in all of the trusts. Although much of Appaloosa's holdings are senior debt, Appaloosa holds over 30% of three subordinated tranches of C-30 Trust Certificates. At a reported valuation range of $1.8 - $2.2 billion, Appaloosa's particular series of subordinated Certificates are likely to be the next loss-absorbing layers in the C-30 debt stack, and would thus become impaired by the incurrence of $200 million of priming liens and back-end transfer taxes. Moreover, the thickness of these 3 Case 1 : 1 0-cv-0 1178-AKH Document 16-2 Filed 02/23/1 0 Page 4 of 12 debt layers is so narrow ($50-$100 million), that the additional costs would likely be the difference between a recovery of zero and par on Appaloosa's particular tranches. These securities are likely to be the fulcrum securities in any restructuring of the Property. Appaloosa owns significant amounts of Certificates in other pivotal tranches, as well. These losses( could be avoided if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary obligations. Appaloosa is thus uniquely at risk from CW Capital's reckless disregard of its obligations to act as a prudent, post-default fiduciary in servicing of the Mortgage. All Certificateholders, however, will be injured if foreclosure proceeds; as is explained below, foreclosure will serve only to magnify the Certificateholders' losses, rather than to maximize their recovery as would be the case if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary obligations. No other party to the Action can or will adequately represent the interests of the Appaloosa Intervenors. Plaintiff CW Capital is not only acting imprudently, it is subject to a profound conflict of interest. The governmental entity defendants stand to benefit, too: Plaintiff CW Capital's actions, if it forecloses, will subject the Property to $200 million of wholly unnecessary transfer tax liability. This tax liability does not benefit the Certificateholders; instead, every dollar goes solely to benefit the governmental entities. Absent an intervention, no party in the lawsuit will adequately hold Plaintiff CW Capital accountable to perform its obligations as Special Servicer. The Appaloosa Intervenors should not be made to wait for a damages remedy for breach of Plaintiff CW Capital's fiduciary obligations when intervention of right is warranted, and could avoid these damages entirely. 4 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 5 of 12 The Appaloosa Intervenors' Interests The Appaloosa Intervenors hold over three quarters of a billion dollars of Certificates (debt instruments that are sometimes referred to as notes) 1 whose repayment is secured by multi- billion dollar securitizations ("Securitizations") of the mortgage on the Property. The Appaloosa Intervenors have a clear interest in the Property that is the subject of the Action. See FED. R. CIV. P. 24(a)(2). The Appaloosa Intevenors' Interest May Be Injured or Impaired By the Disposition of the Action On February 16, 2010, without consulting with Appaloosa, Plaintiff CW Capital, in its capacity as Special Servicer and on behalf of the Trustees of the trusts, filed a Complaint ("Action") seeking to foreclose on the Property. As is explained in the accompanying memorandum of law, when it acts as Special Servicer, Plaintiff CW Capital is required to act in the best interests of all Certificateholders, without regard to who owns the certificates. See C-30 Trust Pooling and Servicing Agreement, -dated as of March 1, 2007 (the "PSA") at 1.01 "Servicing Standard." The Special Servicer must also perform its work "with a view to the maximization of the recovery on such Mortgage Loans on a net present value basis and the best interests of the Certificateholders ... " /d. (emphasis added). Plaintiff CW Capital's actions in pursuing foreclosure are wholly imprudent. They threaten to magnify losses, rather than maximize recoveries, for the Certificateholders in general, and for the Appaloosa Intervenors in particular. 1 As noted, certain of the Certificates are held in the C-30 Trust. The other Certificates are held in the COBALT CMBS Commercial Mortgage Trust 2007-C2, Wachovia Bank Commercial Mortgage Trust 2007-C31, the ML-CFC Commercial Mortgage Trust 2007-5, and the ML-CFC Commercial Mortgage Trust 2007-6 ("Other Trusts" and with the C-30 Trust, collectively, the ''Trusts"). 5 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 6 of 12 An obvious example of Plaintiff CW Capital's breach of its fiduciary obligations as a prudent servicer is that foreclosure would subject the Securitizations to double liability for New York City's transfer tax. This liability could have been limited to a single payment, had Plaintiff CW Capital pursued a prudent workout outside of bankruptcy. It could have been avoided entirely had Plaintiff CW Capital instituted bankruptcy proceedings. In a Chapter 11 bankruptcy case, a properly structured transaction made pursuant to a plan would avoid the imposition of a transfer stamp or similar tax. 11 U.S.C. 1146(a). Plaintiff CW Capital's reckless decision to pursue foreclosure-and risk double transfer tax liability-when other means were available to maximize the Certificateholders' recovery, is in plain violation of the Servicing Standard. The fact that Plaintiff CW Capital has already breached its obligations to the Appaloosa Intervenors, and to the other Certificateholders, demonstrates that it does not adequately represent their interests in this proceeding. There is a second, unique injury that may impair or impede the Appaloosa Intervenors' interest in the Property, and their ability to exercise their rights to recover on the debt they hold. Under the PSA, Plaintiff CW Capital as Special Servicer may receive a priming lien for advances it makes to pay the transfer tax. This priming lien will, on a dollar for dollar basis, further subordinate the existing tranches of junior debt. The Appaloosa Intervenors hold more than 30% of the debt in the subordinated tranches that will be affected most directly by this needless priming lien, potentially reducing their recovery from par to zero. If CW Capital is permitted, unilaterally, to strip the value of these Certificates, Appaloosa and similarly situated holders also risk losing valuable voting and control rights. It will be difficult (if not impossible) to "un-ring the bell" once the transfer tax liability is incurred. It will also be very difficult to quantify the 6 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 7 of 12 actual and consequential damages that will flow to the Appaloosa Intervenors if these rights are destroyed or impaired. There are other examples of Plaintiff CW' s reckless behavior, and its heedless disregard for the liabilities and injuries it is inflicting on the Certificateholders, including the Appaloosa Intervenors. No prudent servicer would foreclose on a World War 11-era property without first obtaining an environmental assessment to ensure it was not assuming potentially catastrophic environmental liabilities. The PSA recognizes this. It permits Plaintiff CW Capital to proceed to foreclosure only if-within the preceding six months-an environmental assessment has been performed. See 3.09(c) of the PSA. The Appaloosa Intervenors are not aware that any such environmental assessment has been performed. Plaintiff CW Capital's rush to foreclose without first obtaining the required environmental assessment is yet another example of why it does not adequately represent the Appaloosa Intervenors' interests. Equally baffling is Plaintiff CW Capital's insistence on foreclosure in the face of the substantial uncertainty surrounding the currently unliquidated, but potentially massive excess rent claim in favor of present and former tenants of the Property. It makes little sense that the current owner of the Property-an affiliate of TishmanSpeyer-would not have filed for bankruptcy to limit its own liability on this claim. That Plaintiff CW Capital has rushed to foreclosure, without regard to the risk that liability for that claim might transfer with ownership, makes even less sense. No prudent mortgage lender would willingly take title to this Property without first ascertaining: a) whether this judgment and potential liability run with the Property; b) whether the tenants would be entitled to recover any such judgment by way of rent deductions in the future; c) whether the Trustee's taking title to the Property in a foreclosure sale would result in an assumption of this potential and significant liability on the part of the Trustee or the 7 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 8 of 12 Certificateholders;.d) whether foreclosure would extinguish the direct or contribution liability of those who charged and pocketed the excess rents to or for the benefit of the Property, the Trustee, or the Certificateholders; and e) whether another vehicle for sale or restructuring could result in the discharge of such potential liability. These are concrete financial risks to all of the Certificateholders if the foreclosure proceeds, but Plaintiff CWCAM has imprudently and recklessly ignored them. Plaintiff CW Capital's imprudent, irresponsible actions and its move to foreclose in the face of unknown environmental and litigation risks are more than sufficient to establish that the Appaloosa Intervenors' interests "may be impaired or injured" by the disposition of the Property. Intervention should be granted to ensure that, before foreclosure proceeds, Plaintiff CW Capital is required to act in a manner consistent with the Servicing Standard and its obligations under the PSA. As explained below, in the absence of intervention, no current party to the case has any incentive or ability to demand CW Capital's faithful performance of its obligations. The Appaloosa Intervenors' Interests Are Not Adequately Represented The interests of the Appaloosa Intervenors are not adequately represented by any party in the Action. This is no.t the typical case in which a neutral Indenture Trustee can be trusted to act faithfully and in the best interests of all of the Certificateholders. To the contrary, Plaintiff CW Capital is significantly conflicted because it occupies competing roles, with divergent interests from other Certificateholders in the Trusts. The remaining party defendants stand only to benefit if Plaintiff CW Capital recklessly exposes the Securitizations and the Certificateholders to excessive tax liabilities and litigation risks. 8 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 9 of 12 Plaintiff CW Capital's Conflicting Interests Plaintiff CW Capital is subject to a conflict of interest created by its irreconcilable roles as Special Servicer and Controlling Certificateholder under the Securitizations. As is explained in the accompanying memorandum of law, when it acts as Special Servicer, Plaintiff CW Capital is required to act in the best interests of all Certificateholders and without regard to who owns a certificate. When it acts as Controlling Certificateholder, however, Plaintiff CW Capital is permitted to instruct the Special Servicer-here, itself-to take actions solely in CW Capital's individual interests as a holder of notes. 4 This presents an irreconcilable conflict of interest for CW Capital. While CW Capital may have a contractual right to pursue its own conflicted self interest, this contractual right cannot override its overall fiduciary obligation as Special Servicer to act in the interests of all Certificateholders. This conflict precludes CW Capital from "adequately representing," FED. R. Civ. P. 24(a)(2), the interests of all Certificateholders, including the Appaloosa Intervenors. The pending appraisal of the Property is just one example of how this conflict places CW Capital, as Special Servicer, directly at odds with the interests of other Certificateholders. CW Capital is obligated, and likely already is proceeding, to obtain an appraisal of the Mortgage collateral. That valuation may very well establish that, while the quick path to foreclosure that CW Capital has chosen as the Controlling Class Representative would place CW Capital in control of the Property post-foreclosure, the junior notes for which it acts may prove to be significantly "out-of-the-money." Thus, the de facto controlling class-of which Appaloosa 4 See PSA at 6.11 (b) (noting that the Controlling Class Representative "may take actions that favor the interests of one or more Classes of the Certificates over other Classes of the Certificates, ... may have special relationships and interests that conflict with those of Holders of some Classes of the Certificates, ... [and] may act solely in the interests of the Holders of the Controlling Class .... ") and (a) (providing that "the Special Servicer will disregard any direction or objection ... of the Controlling Class Representative ... if such direction or objection causes ... the Special Servicer to violate the Servicing Standard .... "). 9 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 1 0 of 12 currently holds more than 30%-may be a class in which CW Capital holds no debt interest but merely serves as the Special Servicer fiduciary. Under 6.10 of the PSA, the Special Servicer may go to the Certificateholders (and in this case certainly at a minimum the Certificateholders in the de facto controlling class) to confirm that its action, or its intended action, complies with the servicing standard under the PSA. CW Capital not only has not elected to so proceed, it has rebuffed any efforts by Certificateholders to even enter into a dialogue regarding the most prudent path to take. When the Appaloosa Intervenors asked CW Capital to discuss all of these issues, it has received "responses" of two varieties: no response at all, or flippant responses from CW Capital's counsel. These responses are inconsistent with CW Capital's obligations as a fiduciary to the Certificateholders, and they fundamentally ignore the grave losses and risks to which CW Capital's reckless conduct has exposed all of the Certificateholders. The Appaloosa Intervenors Meet the Requirements to Intervene as of Right The Appaloosa Intervenors have met all of Rule 24's requirements for intervention as of right. This intervention is timely. As the holder of more than three quarters of a billion dollars of Certificates whose repayment is secured by the Property, the Appaloosa Intervenors "have an interest relating to the property that is the subject" of this foreclosure Action. See Rule 24(a)(2). Successful disposition of the action will, as a practical matter, impair or impede Appaloosa's rights by creating priming liens that wipe out their recovery, and by exposing them and other Certificateholders to hundreds of millions of dollars of wholly avoidable and unnecessary taxes and litigation risks. Foreclosure will also irreparably injure their voting rights, and their rights as holders of fulcrum securities. Finally, the Appaloosa Intervenors' interests are not adequately represented by any current party to the Action. Plaintiff CW Capital is irreconcilably conflicted 10 Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 11 of 12 and is acting irrationally and imprudently. The governmental entity defendants do not represent these intervenors' interests, either; to the contrary, they stand to benefit if the foreclosure action results in a double payment of the transfer tax at the Certificateholders' expense. Intervention of Right Should be Granted For these reasons, and those stated in greater detail in their accompanying Memorandum of Law, the Appaloosa Intervenors respectfully request that the court grant them intervention as of right, and that they be permitted to file the Complaint in Intervention attached to this Motion as Exhibit "A." Dated: New York, New York February 23, 2010 OF COUNSEL: GIBBS & BRUNS LLP Kathy D. Patrick Texas Bar No. 15581400 Robert M. Madden Respectfully submitted, WARNER PARTNERS, P.C. By: ----"'sf,__ ______ _ 11 Kenneth E. Warner KW 5524 KWarner@WarnerPartnersLaw.com 950 3rd A venue New York, NY 10022-2705 (212) 593-8000 ATTORNEYS FOR INTERVENORS APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD. Case 1:1 0-cv-01178-AKH Document 16-2 Filed 02/23/10 Page 12 of 12 Texas Bar No. 00784511 Sydney Ballesteros State Bar No. 24036180 Anthony N. Kaim State Bar No. 24065532 1100 Louisiana, Ste. 5300 Houston, Texas 77002 Tel: (713) 650-8805 Fax: (713) 750-0903 12 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 1 of 15 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK __________________________________________ X BANK OF AMERICA, N.A., as Trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007 -C30, acting by and through its Special Servicer, CWCapital Asset Management LLC, BANK OF AMERICA,N.A., as Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007 -C2 and Wachovia Bank Commercial Mortgage Trust 2007 -C31, acting by and through CWCapital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12,2007 and U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC Commercial Mortgage Trust 2007-6, acting by and through CW Capital Asset Management LLC pursuant to the authority granted under that certain Amended and Restated Co-Lender Agreement dated March 12, 2007, Plaintiffs, -against- 10 Civ. 1178 (SHS) ECFCase PCV ST OWNER LP, ST OWNER LP, TRI-LINE CONTRACTING CORP., ATLAS FIRE PROTECTION, INC., POMALEE ELECTRIC CO, INC., REFUSE SYTEMS CORP., PRO TILE DISTRffiUTORS, INC., TRITON STONE AND MARBLE LLC, S.T.S. TRADING INC. d/b/a S.T. LUMBER & HOME CENTER, ELECTRICAL, PLUMBING, S.D. INT'L d/b/a S.D. STONE DEPOT, ELBEX AMERICA OF NEW YORK, INC., NEW YORK CITY DEPARTMENT OF TRANSPORTATION PARKING VIOLATIONS BUREAU, NEWYORK CITY ENVIRONMENTAL CONTROL BOARD and FIRE DEPARTMENT OF THE CITY OF NEW YORK, Defendants, -against- APPALOOSA INVESTMENT L.P., I, PALOMINO FUND LTD., THOROUGHBREDFUND L.P., and THOROUGHBRED MASTER LTD. Intervenor-Defendants. ___________________________________________ .X Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 2 of 15 COMPLAINT IN INTERVENTION AS A PARTY DEFENDANT AND REQUEST FOR PRELIMINARY AND PERMANENT INJUCTION OF APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD. Pursuant to Rule 24(a) of the Federal Rules of Civil Procedure, Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. (collectively, "Appaloosa" or the "Appaloosa Intervenors") file this Complaint in Intervention as an Intervenor-Defendant. INTRODUCTION 1. The Appaloosa Intervenors are required to file this action seeking intervention in the present action because Plaintiff CW Capital has pursued foreclosure in breach of its fiduciary obligations to the Appaloosa Intervenors. Plaintiff CW Capital Asset Management LLC ("CW Capital") is also deeply conflicted, and does not adequately represent the interests of the Appaloosa Intervenors, who have more than three quarters of a billion dollars at stake in the trusts secured by the property at issue in the foreclosure action; namely, the mortgage on Peter Cooper Village and Stuyvesant Town (the "Property"). 2. Plaintiff CW Capital's actions in pursuing foreclosure on Peter Cooper Village and Stuyvesant Town ("Stuyvesant Town") violate its obligations as Special Servicer to act as a prudent commercial mortgage servicer seeking to maximize value for the benefit of all Certificateholders. By rushing to foreclose, when other less hazardous avenues were available, Plaintiff CW Capital has recklessly and imprudently exposed the Appaloosa Intervenors-and other Certificateholders-to wholly avoidable losses, risks, and injuries, including: 2 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/1 0 Page 3 of 15 Double and Unnecessary Transfer Taxes: A foreclosure judgment will require a double payment of New York City's $100 million transfer tax on the Property: once when title is transferred by foreclosure, and a second time when the Property is sold in the inevitably necessary workout of this loan. No prudent commercial mortgage lender would willingly assume these tax liabilities, particularly when they could be limited by other means, or avoided entirely in bankruptcy. Environmental Liabilities: The documents governing the trusts state clearly that Plaintiff CW Capital may not pursue foreclosure unless, within six months prior to initiating the action, it has obtained an environmental assessment certifying that the relevant Mortgaged Property is in compliance with applicable environmental laws and regulations. The Appaloosa Intervenors do not believe any such assessment has been obtained. Excess Rent Claims: The tenants at the Property are the beneficiaries of an un-liquidated, potentially massive excess rent claim that may, in the future, be converted into a damage judgment worth hundreds of millions of dollars. The status of this liability is uncertain, as is its effect on the rights of the Certificateholders and the value of the underlying mortgaged property. Proceeding precipitously to take title by foreclosure, in the face of this uncertainty, is again imprudent and not in the best interest of the Certificateholders. Creation of Unnecessary Losses for Certificateholders: By subjecting the property to transfer tax liability on foreclosure, Plaintiff CW Capital may obtain a priming lien at the top of the capital structure to secure repayment of that advance. This priming lien would create additional losses that would not otherwise be suffered by holders of subordinated tranches, including tranches of Certificates owned by Appaloosa. Voting Rights: Tranches whose recovery is wiped out by CW's priming lien will also be deprived of voting rights they otherwise would enjoy under the trusts. 3. The Appaloosa Intervenors stand to suffer unique and irreparable injuries as a result of Plaintiff CW Capital's actions. They own over $750,000,000 of Certificates issued by five trusts that hold securitized interests in the mortgage on the Property, including the Wachovia Bank Commercial Mortgage C-30 Trust (the "C-30 Trust"). Although much of Appaloosa's holdings are senior debt, Appaloosa holds over 30% of 3 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 4 of 15 three subordinated tranches of C-30 Trust Certificates. At a reported valuation range of $1.8 - $2.2 billion, Appaloosa's particular series of subordinated Certificates are likely to be the next loss-absorbing layers in the C-30 debt stack, and would thus become impaired by the incurrence of $200 million of priming liens and back-end transfer taxes. Moreover, the thickness of these debt layers is so narrow ($50-$100 million), that the additional costs would likely be the difference between a recovery of zero and par on Appaloosa's particular tranches. These securities are likely to be the fulcrum securities in any restructuring of the Property. Appaloosa owns significant amounts of Certificates in other pivotal tranches, as well. These losses could be avoided if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary obligations. 4. No other party to the action can or will adequately represent the interests of the Appaloosa Intervenors. Plaintiff CW Capital is not only acting imprudently, it is subject to a profound conflict of interest. The governmental entity defendants stand to benefit, too: Plaintiff CW Capital's actions, if it forecloses, will subject the Property to $200 million of wholly unnecessary transfer tax liability. This tax liability does not benefit the Certificateholders; instead, every dollar goes solely to benefit the governmental entities. Absent an intervention, no one in the lawsuit will adequately hold Plaintiff CW Capital accountable to perform its obligations as Special Servicer. 5. The Appaloosa Intervenors should not be made to wait for a damages remedy for breach of Plaintiff CW Capital's fiduciary obligations when intervention of right is warranted, and could avoid these damages entirely. PARTIES 4 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 5 of 15 6. Intervenor Appaloosa Investment LP I is a Delaware limited partnership. Its principal place of business is care of its investment manager, Appaloosa Management L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078. 7. Intervenor Palomino Fund Ltd. is a British Virgin Islands company. Its principal place of business is care of its investment manager, Appaloosa Management L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078 8. Intervenor Thoroughbred Fund L.P. is a Delaware limited partnership. Its principal place of business is care of its investment manager, Appaloosa Management L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078. 9. Intervenor Thoroughbred Master Ltd is a British Virgin Islands company. Its principal place of business is care of its investment manager, Appaloosa Management L.P., 51 John F. Kennedy Parkway, Short Hills, NJ 07078. 10. According to its Complaint, Plaintiff CW Capital is a limited liability company organized under the laws of the Commonwealth of Massachusetts. 11. Also according to its Complaint: Plaintiff CW Capital filed its Complaint (a) in its capacity as Special Servicer for Bank of America, N.A., as Trustee for the Registered Holders of W achovia Bank Commercial Mortgage Trust 2007 -C30, (b) on behalf of Bank of America, N.A., as Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2, and Bank of America, N.A., as Trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust 2007-C31, and (c) on behalf of U.S. Bank National Association, as Trustee for the Registered Holders of ML-CFC Commercial Mortgage Trust 2007-5 and ML-CFC Commercial Mortgage Trust 2007-6. 5 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 6 of 15 a. Bank of America, N.A. is a national banking association and is a citizen and resident of North Carolina. b. U.S. Bank National Association is a national banking association and is a citizen and resident of Minnesota. 12. According to the Complaint, Defendants are as follows: a. PCV ST Owner LP is a limited partnership organized and existing under and by virtue of the laws of the state of Delaware, having an address c/o Tishman Speyer, 45 Rockefeller Center, New York, New York, 10111. b. ST Owner LP is a limited partnership organized and existing under and by virtue of the laws of the state of Delaware, having an address c/o Tishman Speyer, 45 Rockefeller Center, New York, New York, 10111. c. Tri-Line Contracting Corp. is a domestic corporation having its principal place of business at 253 West 35th Street, 5th Floor, New York, New York 10001. d. Atlas Fire Protection, Inc. is a domestic corporation having a business address at 59-02 56th Street, Maspeth, New York, New York 10123. e. Pomalee Electric Co. Inc. is a domestic corporation having a business address at 450 Seventh Avenue, New York, New York 10123. f. Refuse System Corp. is a domestic corporation having a business address at 602 Tiffany Street, Bronx, New York 10474. g. Pro Tile Distributors, Inc. is a domestic corporation having a business address at 230 East 7th Street, Mount Vernon, New York 10550. 6 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 7 of 15 h. Triton Stone and Marble LLC is a domestic limited liability company having a business address at 22 Wheeler Drive, Cortlandt Manor, New York 10567. 1. S.T.S. Trading Inc. d/b/a S.T. Lumber & Home Center, Electrical, Plumbing is a domestic corporation having a business address at 15 Anthony Street, Brooklyn, New York 11222. J. S.D. Int'l, Inc. d/b/a S.D. Stone Depot is a domestic corporation having a business address at 728 Meeker A venue, Brooklyn, New York 11222. k. Elbex America of New York, Inc. is a domestic corporation having a business address at 300 Corporate Drive, Suite 5, Blauvelt, New York 10913. 13. Other parties named in the Complaint are as follows: a. The New York City Department of Transportation, Parking Violations Bureau, an agency and/or instrumentality of the City of New York. b. The New York City Environmental Control Board, an agency and/or instrumentality of the City of New York. . c. The Fire Department of the City of New York, an agency and/or instrumentality of the City of New York. JURISDICTION AND VENUE 14. This Court has jurisdiction over this action for the reasons set forth in the prior-filed CW Capital Complaint. Venue is proper in this district for the reasons set forth in the prior-filed CW Capital Complaint. 7 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 8 of 15 FACTUAL ALLEGATIONS 15. On February 16, 2010, Plaintiff CW Capital in its capacity as Special Servicer and on behalf of the Trustees, Bank of America, N.A. and U.S. Bank National Association, filed its Complaint in this action against the above-named Defendants seeking to foreclose on the Property. 16. CW Capital's Complaint is a foreclosure action regarding the Property. The Property is sometimes referred to as "Stuyvesant Town" and is part of a number of large mortgage-backed securitizations (the "Securitizations") whereby the Property secured $3 billion in mortgage-backed debt in the form of various tranches of pass- through certificates (the "Certificates"). Certain of the Certificates are held in the C-30 Trust. Other Certificates are held in the COBALT CMBS Commercial Mortgage Trust 2007-C2, Wachovia Bank Commercial Mortgage Trust 2007-C31, the ML-CFC Commercial Mortgage Trust 2007-5, and the ML-CFC Commercial Mortgage Trust 2007-6 ("Other Trusts," together with the C-30 Trust, collectively referred to as the "Trusts"). 17. CW Capital, acting as Special Servicer, seeks to foreclose on the Property as a result of Defendant Borrowers' failure to pay monthly installments of interest required by the Certificates secured by the Property, resulting in an Event of Default. 18. The Appaloosa Intervenors hold over $750,000,000 of Certificates 1 whose repayment is secured by the Securitizations of the mortgage on the Property. 19. CW Capital's foreclosure action violates its duties under the Pooling and Servicing Agreement (the "PSA") controlling the C-30 Trust, among others. Under the PSA, the Special Servicer is required to administer the loans with "the same care, skill, 1 Certain of the Certificates are held in the Other Trusts. 8 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 9 of 15 prudence, and diligence" that would be the customary and usual standards of practice of prudent institutional commercial lenders servicing their own loans. See PSA at 3.01 (directing the Special Servicer to adhere to the Servicing Standard) and 1.01, defining the "Servicing Standard." The Special Servicer must also perform its work "with a view to the maximization of the recovery on such Mortgage Loan on a net present value basis and the best interests of the Certificateholders .. . " /d. (emphasis added). Thus, CW Capital owes a fiduciary duty to the Certificateholders, including the Appaloosa Intervenors, to act in their best interests in resolving the default regarding the Property. 20. CW Capital has already violated these duties by recklessly and imprudently exposing the Appaloosa Intervenors-and other Certificateholders-to wholly avoidable losses, risks, and injuries including: Double and Unnecessary Transfer Taxes: A foreclosure judgment will require a double payment of New York City's $100 million transfer tax on the Property: once when title is transferred by foreclosure, and a second time when the Property is sold in the inevitably necessary workout of this loan. No prudent commercial mortgage lender would willingly assume these tax liabilities, particularly when they could be limited by other means, or avoided entirely in bankruptcy. Environmental Liabilities: The documents governing the trusts state clearly that Plaintiff CW Capital may not pursue foreclosure unless, within six months prior to initiating the action, it has obtained an environmental assessment certifying that the relevant mortgaged property is in compliance with applicable environmental laws and regulations. The Appaloosa Intervenors do not believe any such assessment has been obtained. Excess Rent Claims: The tenants at the Property are the beneficiaries of an un-liquidated, potentially massive excess rent claim that may, in the future, be converted into a damage judgment worth hundreds of millions of dollars. The status of this liability is uncertain, as is its effect on the rights of the Certificateholders and the value of the underlying mortgaged property. Proceeding precipitously to take title by foreclosure, in the face of this uncertainty, is again imprudent and not in the best interest of the Certificateholders. 9 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 10 of 15 Creation of Unnecessary Losses for Certificateholders: By subjecting the property to transfer tax liability on foreclosure, Plaintiff CW Capital may obtain a priming lien at the top of the capital structure to secure repayment of that advance. This priming lien would create additional losses that would not otherwise be suffered by holders of subordinated tranches, including tranches of Certificates owned by Appaloosa. Voting Rights: Tranches whose recovery is wiped out by CW's priming lien will also be deprived of voting rights they otherwise would enjoy under the trusts. 21. The Appaloosa Intervenors stand to suffer unique and irreparable injuries as a result of Plaintiff CW Capital's actions. The Appaloosa Intervenors own over $750,000,000 of Certificates in the Trusts. Although much of this is senior debt, Appaloosa also holds over 30% of three subordinated tranches of C-30 Trust Certificates. At a reported valuation range of $1.8 - $2.2 billion, Appaloosa's particular series of subordinated Certificates are likely to be the next loss-absorbing layers in the C-30 debt stack, and would thus become impaired by the incurrence of $200 million of priming liens and back-end transfer taxes. Moreover, the thickness of these debt layers is so narrow ($50-$100 million), that the additional costs would likely be the difference between a recovery of zero and par on Appaloosa's particular tranches. These securities are likely to be the fulcrum securities in any restructuring of the Property. Appaloosa owns significant amounts of Certificates in other pivotal tranches, as well. These losses could be avoided if Plaintiff CW Capital were acting prudently and with due regard for its fiduciary obligations. 22. Moreover, when CW Capital acts as Special Servicer it is subject to an irreconcilable conflict of interest because it also: (i) occupies the position of Controlling Certificateholder under the C-30 Trust; and (ii) is the holder of certain Certificates held in 10 Case 1 : 1 0-cv-0 1178-AKH Document 16-3 Filed 02/23/1 0 Page 11 of 15 collateralized debt obligations controlled by it. When acting as. Special Servicer, CW Capital is required to act in the best interests of all Certificateholders and without regard to who owns a certificate. When it acts as Controlling Certificateholder, however, Plaintiff CW Capital is permitted to instruct the Special Servicer-here, itself--to take actions solely in CW Capital's individual interests as a holder of notes. 2 This presents an irreconcilable conflict for CW Capital, one that cannot-and does not, under the PSA- override its overall fiduciary obligation as Special Servicer to act in the interests of all Certificateholders. The existence of this clear conflict precludes CW Capital from adequately representing or protecting the interests of all Certificateholders, including the Appaloosa Intervenors. 23. These are concrete financial risks to all of the Certificateholders if the foreclosure proceeds, but CW Capital has imprudently and recklessly ignored them. 24. As the holder of Certificates secured by the Property, the Appaloosa Intervenors have an interest relating to the Property that is the subject of this foreclosure action. Successful disposition of the Action will, as a practical matter, impair or impede the Appaloosa Intervenors' rights by creating priming liens, by exposing them and other Certificateholders to hundreds of millions of dollars of wholly avoidable and unnecessary losses, and by impairing their voting rights under the C-30 Trust. REQUEST FOR PRELIMINARY AND PERMANENT INJUNCTION 2 See PSA at 6.11 (b) (noting that the Controlling Class Representative "may take actions that favor the interests of one or more Classes of the Certificates over other Classes of the Certificates, ... may have special relationships and interests that conflict with those of Holders of some Classes of the Certificates, ... [and] may act solely in the interests of the Holders of the Controlling Class .... ") and (a) (providing that "the Special Servicer will disregard any direction or objection ... of the Controlling Class Representative ... if such direction or objection causes ... the Special Servicer to violate the Servicing Standard .... "). 11 Case 1:10-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 12 of 15 25. The allegations contained in paragraphs 10 through 24, supra, are incorporated herein. 26. Pursuant to Fed. R. Civ. P. 65, the Appaloosa Intervenors request that, following discovery and upon hearing, the Court enter a temporary injunction prohibiting CW Capital from finalizing or completing foreclosure on the Property until such time as CW Capital can satisfy its burden of showing the fairness of such a foreclosure to the Certificateholders. 27. In the absence of a preliminary injunction, if CW Capital is permitted to go forward with and complete foreclosure on the Property, the Appaloosa Intervenors will be irreparably harmed because such foreclosure will create priming liens and expose the Appaloosa Intervenors and other Certificateholders to hundreds of millions of dollars of wholly avoidable and unnecessary losses. These harms are irreparable by money damages because they are difficult to quantify. Moreover, the Appaloosa Intervenors will be irreparably harmed by the wrongful impairment or elimination of certain of its voting rights and rights as holders of fulcrum securities in the C-30 Trust if CW Capital is permitted to foreclose on the Property. 28. For the reasons set forth in this Complaint, the Appaloosa Intervenors are likely to succeed on the merits. Plaintiff CW Capital has a clear legal duty to act in the best interest of all Certificateholders. Its breach of that duty is manifest: it has, in violation of its obligation as Special Servicer, proceeded recklessly and imprudently with a foreclosure that will create unnecessary priming liens, duplicative tax liabilities, and environmental and litigation risks for all of the Certificateholders. These injuries are likely to be irreparable, particularly as they pertain to the Appaloosa Intervenors. As 12 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 13 of 15 described above, the Appaloosa Intervenors hold over three quarters of a billion dollars of Certificates. Among those holdings are Certificates representing more than 30% of tranches that are likely to be the fulcrum securities in any restructuring of the Property. If the foreclosure proceeds, however, these very valuable rights will be destroyed. There is no adequate remedy at law for the loss of these rights, because the foreclosure bell-once tolled--cannot be "un-rung." In any event, it will be very difficult to calculate the damages that Appaloosa will suffer if it loses the valuable rights it currently holds in these fulcrum tranches, particularly if those rights are lost as a result of the heedless and reckless behavior of their own fiduciary, CW Capital. 29. CW Capital bears the burden to establish that its actions in pursuing a precipitous foreclosure were in the best interests of all of the Certificateholders. It has not met, and cannot meet, this burden. 30. The balance of hardships also tips strongly in favor of Appaloosa, and against Plaintiff CW Capital. By granting a preliminary injunction against foreclosure, and requiring CW Capital to first demonstrate that it has met the Servicing Standard and otherwise complied with the PSA, the Court avoids the possibility that it will grant a foreclosure judgment that could inflict irreparable injuries on all of the Certificateholders, and in particular on the Appaloosa Intervenors. Plaintiff CW Capital would not be burdened by this injunction; to the contrary, it already has the burden to demonstrate fairness under the PSA. The other Certificateholders will not be injured, either; to the contrary, entry of an injunction would prevent the disastrous and unnecessary priming liens, transfer tax, and other liabilities that are sure to injure them if the foreclosure proceeds. The grant of an injunction serves the public interest. It does not serve the 13 Case 1:1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 14 of 15 interests of judicial economy to permit CW Capital to proceed heedlessly with a foreclosure, only to find itself subject to a lawsuit by the Certificateholders seeking damages for its reckless conduct. Although these damages would be difficult to calculate, and would not be a wholly adequate remedy for the Certificateholders' injuries, they would nonetheless be in the hundreds of millions of dollars. Finally, based on all of the evidence, there is a sufficiently serious question as to whether CW Capital can meet its burden of showing fairness in the foreclosure such that an injunction should not issue, particularly given that the consequences of proceeding in the face of these massive uncertainties creates risks and injuries to other Certificateholders who are not parties to this case. WHEREFORE, Intervenor-Defendant Appaloosa respectfully requests: (1) After discovery and upon hearing, an order of the Court temporarily enjoining CW Capital from completing any foreclosure proceeding on the Property until such time as it can carry its burden of demonstrating the fairness of the transaction to all Certificateholders including the Appaloosa Intervenors; (2) An order of the Court permitting Appaloosa to participate in expedited discovery relevant to CW Capital's Complaint to allow Appaloosa to test the fairness of CW Capital's actions, and to adequately protect Appaloosa's interests; (3) Upon trial on the merits, entry of an order permanently enjoining CW Capital from proceeding with foreclosure until such time as it demonstrates to the Court that foreclosure is fair to all Certificateholders; and, 14 Case 1 :1 0-cv-01178-AKH Document 16-3 Filed 02/23/10 Page 15 of 15 (4) An award to the Appaloosa Intervenors of such other and/or further relief as may be just and proper. Dated: New York, New York February 23, 2010 OF COUNSEL: GIBBS & BRUNS LLP Kathy D. Patrick Texas Bar No. 15581400 Robert M. Madden State Bar No. 00784511 Sydney Ballesteros State Bar No. 24036180 Anthony N. Kaim State Bar No. 24065532 Gibbs & Bruns L.L.P. 1100 Louisiana, Ste. 5300 Houston, Texas 77002 Tel: (713) 650-8805 Fax: (713) 750-0903 Respectfully submitted, WARNER PARTNERS, P.C. By: 15 sf Kenneth E. Warner KW 5524 KW arner@W arnerPartnersLaw .com 950 3rct A venue New York, NY 10022-2705 (212) 593-8000 ATTORNEYS FOR INTERVENORS APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD.