Victory for Signature Financial on Case Discussed at ELFA Legal Forum
By Marc Hamroff
At the Legal Update presented at the ELFA Legal Forum last week in Washington, D.C., we discussed a recent decision by a Federal judge in the Southern District of New York upholding the enforceability of a “floating forum selection clause” under both Federal and New York State Law. An article on the Forum Decision appears in the May/June issue of Equipment Leasing & Finance magazine. Both the article and the presentation noted that the Forum Decision issued in Signature Financial, LLC v. Neighbors Global Holdings, LLC et al, 281 F. Supp 3d. 438 (S.D.N.Y. 2017) was an interim decision and that the case was still pending.
On May 9, 2018, the Court filed a final decision in Signature v. Neighbors, which granted Signature’s motion for summary judgment in full on all counts. The Summary Judgment Decision first analyzed the validity of the assignments of the subject leases from the original vendor of the equipment to the first assignee, EverBank, and then from EverBank to Signature. After finding the assignments valid, the Court then disposed of allegations of fraudulent inducement that Neighbors had made against the vendor in an effort to void the leases. Finally, the Court enforced the “hell-or-high-water” provision and waiver of defenses against assignees, noting that the leases expressly provided that if they were assigned by the vendor, the assignees would have all of the vendors’ rights and benefits under the leases, but not its obligations. Therefore, any allegations of a failure to provide ongoing service or other obligations under the leases could not be asserted as a defense to Signature’s claims. The end result was an award to Signature of the full accelerated lease balances, possession of the leased equipment, and attorney’s fees and costs.
At the Legal Forum, we indicated that we were not at liberty to discuss the strategic decisions in defending the lessee’s litigation against Signature and many other funding sources in Texas as contrasted to the strategic decision to commence separate litigation in New York against the lessee for the accelerated lease balance on several schedules. We will now be able to do so at future gatherings!
Marc Hamroff is Partner at Moritt Hock & Hamroff LLP.