In the Matter of the Trusts established under the Pooling and Servicing Agreements

Filing 473

POST-REMAND ORDER ISSUING JUDICIAL INSTRUCTIONS: NOW, THEREFORE, the Court having considered all of the issues raised in the Settlement Agreement, Appaloosa's Proposed Allocation, and Appaloosa's Motion for Attorneys' Fees and all obje ctions thereto, it is hereby ORDERED that: The Settlement Agreement is APPROVED. Appaloosa's Proposed Allocation is APPROVED. Appaloosa's Motion for Attorneys' Fees is GRANTED IN PART. Within 20 days of this Order being entered, CWC shall pay the sum of $27,500,000.00 (the "Settlement Payment") to an escrow agent (the "Escrow Agent"), which may be U.S. Bank National Association or another nationally recognized financial institution acceptable to Appaloos a and CWC, to hold the Settlement Payment in an escrow account subject to a reasonable escrow agreement (the "Escrow Agreement") and appropriate compensation for the Escrow Agent to be agreed upon by the Escrow Agent, Appaloosa, and CWC, un til this Order becomes final and non-appealable. Within 30 days of this Order becoming final and non-appealable, pursuant to the terms of the Escrow Agreement, the Escrow Agent shall distribute the Settlement Payment, net of any compensation paid to the Escrow Agent (the "Net Settlement Payment"), as follows: and further set forth in this Order. The April 2020 Order and the April 2020 Judgment remain in full force and effect except to the extent inconsistent with (and hence superse ded by) the terms of this Order and the March 2024 Decision. The Clerk of the Court is directed to enter judgment in accordance with this Order, terminate all pending motions, adjourn all remaining conferences, and close this case. (Signed by Judge Katherine Polk Failla on 4/8/2024) (rro) (Signed by Judge Katherine Polk Failla on 4/8/2024) (rro) Transmission to Finance Unit (Cashiers) for processing. Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In the Matter of the Trusts Established under
the Pooling and Servicing Agreements relating
to the Wachovia Bank Commercial Mortgage
Trust Commercial Mortgage Pass-Through
Certificates, Series 2007-C30; COBALT
CMBS Commercial Mortgage Trust 2007-C2
Commercial Mortgage Pass-Through
Certificates, Series 2007-C2; Wachovia Bank
Commercial Mortgage Trust Commercial
Mortgage Pass-Through Certificates, Series
2007-C31; ML-CFC Commercial Mortgage
Trust 2007-5 Commercial Mortgage PassThrough Certificates, Series 2007-5; and MLCFC Commercial Mortgage Trust 2007-6
Commercial Mortgage Pass-Through
Certificates, Series 2007-6

No. 17-cv-1998-KPF

POST-REMAND ORDER ISSUING
JUDICIAL INSTRUCTIONS

KATHERINE POLK FAILLA, District Judge:
WHEREAS, on December 17, 2015, Petitioner U.S. Bank National Association, as trustee
(the “Trustee”), filed a petition (the “Petition”) in the District Court for the Second Judicial District
of Minnesota (the “MN State Court”), seeking judicial instructions concerning the proper
interpretation and construction of certain provisions of the PSAs for the Trusts with respect to the
proper allocation of certain proceeds (the “Disputed Funds”) from the December 2015 sale of Peter
Cooper Village and Stuyvesant Town (collectively, “Stuy Town”), an REO property that was held
by the Trusts;1
WHEREAS, on December 18, 2015, the MN State Court entered an Order directing the
Trustee to provide notice of the Petition to, inter alia, the holders and beneficial owners of the

1

Capitalized terms used but not defined herein shall have the meanings set forth in the Petition.

certificates issued by the Trusts (together, the “Certificates”) pursuant to a notice program
described in the Order (the “Initial Notice Program”);
WHEREAS, on January 4, 2016 and February 5, 2016, the Trustee filed affidavits
confirming compliance with the Initial Notice Program;
WHEREAS, the following interested parties appeared and participated in this proceeding:
(i) CWCapital Asset Management LLC (“CWC”), the then-Special Servicer for certain of the
Trusts; (ii) the Federal Home Loan Mortgage Corporation (“Freddie Mac”), a beneficial owner of
certain Certificates issued by the Trusts; (iii) the Federal National Mortgage Association (“Fannie
Mae,” and together with Freddie Mac, the “GSEs”), a beneficial owner of certain Certificates
issued by the Trusts; and (iv) Appaloosa Investment L.P. I and Palomino Master Ltd. (collectively,
“Appaloosa”), beneficial owners of certain Certificates issued by the Trusts;
WHEREAS, this case was removed to the United States District Court for the District of
Minnesota and thereafter transferred to this Court;
WHEREAS, on March 19, 2020, this Court entered an Opinion and Order (the “March
2020 Decision”), inter alia, granting CWC’s and GSEs’ motions for summary judgment and
denying Appaloosa’s motion for partial summary judgment;
WHEREAS, following entry of the March 2020 Decision, the Court entered an Order
Issuing Judicial Instructions on April 29, 2020 (the “April 2020 Order”) and a Judgment on April
30, 2020 (“April 2020 Judgment”) that, among other things, instructed the Trustee, CWC, the
holders and beneficial owners of the Certificates issued by the Trusts, each of the parties to the
PSAs and any other interested parties as to the proper allocation of the Disputed Funds;
WHEREAS, Appaloosa filed an appeal from the April 2020 Judgment to the United States
Court of Appeals for the Second Circuit;

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WHEREAS, on July 14, 2022, the United States Court of Appeals for the Second Circuit
(the “Court of Appeals”) issued a Summary Order (the “July 2022 Summary Order”), which in
relevant part reversed the denial of Appaloosa’s motion for partial summary judgment and the
portion of the Court’s order granting CWC summary judgment with respect to the proper manner
of payment of Interest on Advances;
WHEREAS, the Court of Appeals interpreted the definition of “REO Loan” and Section
3.05(a) of the pooling and servicing agreement governing the C30 Trust (the “C30 PSA”) in a
manner that led it to conclude that pursuant to Section 3.05(a) “any portion of the $67.2 million
attributable to Interest on Advances accruing after June 3, 2014 must be paid out of Gain-on-Sale
Proceeds from the sale of Stuy Town; [while] any portion attributable to Interest on Advances
accruing on or before June 3, 2014 must be paid out of late payment charges and Penalty Interest”
(July 2022 Summary Order at 11);
WHEREAS, the Court of Appeals remanded to this Court to determine pursuant to Section
3.05(a) which respective portions of the $67.2 million in Interest on Advances accrued on or before
June 3, 2014 and after June 3, 2014;
WHEREAS, in order to avoid protracted litigation and associated costs and expenses,
Appaloosa and CWC entered into a Settlement Agreement in which they agreed to stipulate that
the amount of Interest on Advances that accrued on or before June 3, 2014 is $27.5 million (the
“Settlement Agreement”); and
WHEREAS, on December 5, 2022, this Court approved the following schedule (the
“Schedule”): (i) December 9, 2022: Deadline for the Trustee to submit a proposed order specifying
the form and method of dissemination for the notice to be provided to the Trusts’ Certificateholders
(the “Notice Program”) of: (a) the settlement between CWC and Appaloosa, (b) Appaloosa’s

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anticipated motion seeking attorneys’ fees (“Appaloosa’s Motion for Attorneys’ Fees”), and (c) the
opportunity to be heard prior to the entry of a final judgment and any decision on Appaloosa’s
anticipated motion; (ii) December 23, 2022: Deadline for Appaloosa to file any motion seeking
attorneys’ fees; (iii) Later of: (a) Two Business Days After Approval of Proposed Order or (b)
December 30, 2022: Deadline for the Trustee to disseminate the specified notice to
Certificateholders and to file with the Court a copy of the notice and proof of the notice’s
dissemination; (iv) 28 Days After Trustee Sends Notice: Deadline for any party in interest to
submit memoranda of law objecting to the settlement or opposing Appaloosa’s Motion for
Attorneys’ Fees; (v) 40 Days After Trustee Sends Notice: Deadline for CWC, Appaloosa, or the
Trustee to submit any reply in further support of the settlement or Appaloosa’s Motion for
Attorneys’ Fees; and (vi) March 16, 2023, at 3:30 p.m.: Hearing in Courtroom 618 of the
Thurgood Marshall Courthouse, 40 Foley Square, New York, New York on the settlement and
Appaloosa’s Motion for Attorneys’ Fees (the “Hearing”);
WHEREAS, on December 12, 2022, the Court approved the Trustee’s proposed Notice
Program;
WHEREAS, on December 23, 2022, Appaloosa filed Appaloosa’s Motion for Attorneys’
Fees;
WHEREAS, on December 28, 2022, the Court extended the Trustee’s deadline to comply
with the Notice Program from December 30, 2022 until January 13, 2023, and extended the
remaining deadlines accordingly;
WHEREAS, on January 20, 2023, the Trustee filed an affidavit certifying the Trustee’s
compliance with the Notice Program;

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WHEREAS, the notice disseminated by the Trustee pursuant to the Notice Program:
(i) described (a) the amount of the settlement payment to be paid by CWC (the “Settlement
Payment”) to the Trusts, and (b) Appaloosa’s proposed allocation of the Settlement Payment
among the Trusts and their Certificateholders (“Appaloosa’s Proposed Allocation”); and
(ii) attached a Proposed Post-Remand Order Issuing Judicial Instructions describing Appaloosa’s
Proposed Allocation of the Settlement Payment;
WHEREAS, on February 10, 2023, CWCapital Cobalt Vr Ltd. (“Cobalt”) submitted a
memorandum of law objecting to Appaloosa’s Proposed Allocation and opposing Appaloosa’s
Motion for Attorneys’ Fees;
WHEREAS, on February 22, 2023, Appaloosa submitted a memorandum of law
responding to Cobalt’s objection to Appaloosa’s Proposed Allocation and replying in further
support of Appaloosa’s Motion for Attorneys’ Fees;
WHEREAS, on March 7, 2023, Cobalt submitted a supplemental brief in further support
of its objection to Appaloosa’s Proposed Allocation;
WHEREAS, on March 9, 2023, DW Partners, LP submitted a letter in support of
Appaloosa’s Proposed Allocation;
WHEREAS, on March 15, 2023, the Court adjourned the Hearing until May 5, 2023;
WHEREAS, on May 5, 2023, the Court held the Hearing and heard argument on whether
the Court should: (i) approve the Settlement Agreement; (ii) approve Appaloosa’s Proposed
Allocation; and (iii) grant Appaloosa’s Motion for Attorneys’ Fees;
WHEREAS, on September 22, 2023, the Court issued an order stating that “[a]ny party
wishing to be heard on the legal standards pursuant to which the Court should evaluate the

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proposed settlement – including the proposed allocation of the settlement fund – is directed to
submit a supplemental letter brief on or before October 13, 2023”;
WHEREAS, on October 13, 2023, Appaloosa and Cobalt submitted letter briefs pursuant
to the Court’s September 22, 2023 order;
WHEREAS, on March 5, 2024, the Court issued an Opinion and Order (the “March 2024
Decision”) in which the Court: (i) approved the Settlement Agreement; (ii) approved Appaloosa’s
Proposed Allocation; and (iii) granted in part Appaloosa’s Motion for Attorneys’ Fees;
NOW, THEREFORE, the Court having considered all of the issues raised in the Settlement
Agreement, Appaloosa’s Proposed Allocation, and Appaloosa’s Motion for Attorneys’ Fees and
all objections thereto, it is hereby ORDERED that:
1.

The Settlement Agreement is APPROVED.

2.

Appaloosa’s Proposed Allocation is APPROVED.

3.

Appaloosa’s Motion for Attorneys’ Fees is GRANTED IN PART.

4.

Within 20 days of this Order being entered, CWC shall pay the sum of

$27,500,000.00 (the “Settlement Payment”) to an escrow agent (the “Escrow Agent”), which may
be U.S. Bank National Association or another nationally recognized financial institution
acceptable to Appaloosa and CWC, to hold the Settlement Payment in an escrow account subject
to a reasonable escrow agreement (the “Escrow Agreement”) and appropriate compensation for
the Escrow Agent to be agreed upon by the Escrow Agent, Appaloosa, and CWC, until this Order
becomes final and non-appealable.
5.

Within 30 days of this Order becoming final and non-appealable, pursuant to the

terms of the Escrow Agreement, the Escrow Agent shall distribute the Settlement Payment, net of
any compensation paid to the Escrow Agent (the “Net Settlement Payment”), as follows:

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(i)
$7,073,994.14 to Appaloosa as reimbursement for attorneys’ fees and
expenses incurred by Appaloosa in connection with this proceeding (the “Appaloosa Fee
and Expense Award”);
(ii)
50% of the Net Settlement Payment, net of the Appaloosa Fee and Expense
Award (the “Trust Settlement Payment”), to Computershare Trust Company, N.A.
(“Computershare Trust Company”), as agent for Wells Fargo Bank, N.A. (“Wells Fargo”),
as Paying Agent for the Wachovia Bank Commercial Mortgage Trust Commercial
Mortgage Pass-Through Certificates, Series 2007-C30;
(iii) 8.33% of the Trust Settlement Payment to Computershare Trust Company,
as agent for Wells Fargo, as Trustee Agent for the COBALT CMBS Commercial Mortgage
Trust 2007-C2 Commercial Mortgage Pass-Through Certificates, Series 2007-C2;
(iv)
8.26% of the Trust Settlement Payment to Computershare Trust Company,
as agent for Wells Fargo, as Paying Agent for the Wachovia Bank Commercial Mortgage
Trust Commercial Mortgage Pass-Through Certificates, Series 2007-C31;
(v)
26.67% of the Trust Settlement Payment to Computershare Trust Company,
as agent for Wells Fargo, as Certificate Administrator for the ML-CFC Commercial
Mortgage Trust 2007-5 Commercial Mortgage Pass-Through Certificates, Series 2007-5;
and
(vi)
6.74% of the Trust Settlement Payment to U.S. Bank National Association,
as Trustee for the ML-CFC Commercial Mortgage Trust 2007-6 Commercial Mortgage
Pass-Through Certificates, Series 2007-6.
6.

The related Trustee, Paying Agent, Trustee Agent, and/or Certificate Administrator

(and, to the extent applicable, their agents) are instructed to (a) characterize each Trust’s portion
of the Trust Settlement Payment as payments on account of principal, and (b) take all necessary
and reasonable steps to distribute the Trust Settlement Payment, net of reasonable attorneys’ fees
and expenses related to the settlement and distribution of the Trust Settlement Payment and any
other reasonable fees and expenses reimbursable from the Trusts of the related Trustee, Paying
Agent, Trustee Agent, and/or Certificate Administrator, and to the extent applicable, their agents
(the “Net Trust Settlement Payment”), in accordance with the PSA for each Trust, to registered
Certificateholders of the Trusts as of the related record date for the first related distribution date
for each Trust after receipt of the Trust Settlement Payment; provided, however that if the related

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Trustee, Paying Agent, Trustee Agent, and/or Certificate Administrator (and, to the extent
applicable, their agents) receive the Trust Settlement Payment after the determination date related
to such first distribution date (as such terms are defined in the applicable agreements), such parties
shall distribute the funds on the next occurring distribution date. To the extent that any Trust has
terminated before the distribution of the Net Trust Settlement Payment, the Net Trust Settlement
Payment will be distributed as of the last record date before the termination of such Trust.
7.

Any actions taken (or omissions made) by the Trustee, Wells Fargo (or

Computershare Trust Company as agent for Wells Fargo), CWC, the other parties to the PSAs, or
the Escrow Agent, including through their agents, if applicable, in accordance with this Order shall
be deemed to comply with all applicable duties under, and be fully authorized and protected by,
the PSAs and any other document governing the administration of the Trusts. Because neither the
Trustee, Master Servicer, Special Servicer, nor Wells Fargo as Trustee Agent, Paying Agent, or
Certificate Administrator, as applicable (or Computershare Trust Company, acting as agent for
Wells Fargo in such capacities), nor the other parties to the PSAs for the Trusts, nor the Escrow
Agent, have any ability or responsibility under the PSAs to ensure that the DTC complies with this
Order, neither the Trustee, Master Servicer, Special Servicer, nor Wells Fargo as Trustee Agent,
Paying Agent, or Certificate Administrator, as applicable (or Computershare Trust Company
acting as agent for Wells Fargo in such capacities), nor the other parties to the PSAs for the Trusts,
nor the Escrow Agent, shall have any liability for any actions taken by the DTC or any failure to
act by the DTC.
8.

The holders and beneficial owners of the Certificates issued by the Trusts, each of

the parties to the PSAs and any other interested parties are barred from asserting claims against
the Trustee, Wells Fargo (or Computershare Trust Company acting as agent for Wells Fargo),

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CWC, the other parties to the PSAs, Appaloosa, or the Escrow Agent, including their agents, if
applicable, arising from the issues addressed in the March 2020 Decision, the July 2022 Summary
Order, and/or the March 2024 Decision, or from any acts or omissions taken in accordance with
the April 2020 Order, the April 2020 Judgment, and/or this Order.
9.

The April 2020 Order and the April 2020 Judgment remain in full force and effect

except to the extent inconsistent with (and hence superseded by) the terms of this Order and the
March 2024 Decision.
10.

Neither the Trustee, nor the Trusts shall be subject to the continuing supervision of

the Court, except that the Court shall have the authority to enforce compliance with the terms of
this Order.
11.

This Order is final as to all matters determined by it and binding on the Trusts, the

Trustee, Wells Fargo (and Computershare Trust Company as agent for Wells Fargo), CWC, all
other parties involved in the administration of the Trusts, including their agents, if applicable, all
persons or entities claiming any legal or beneficial interest in the Trusts (including, without
limitation, the past, present, and future holders and beneficial owners of the Certificates issued by
the Trusts) and any other interested parties, and all of their successors, agents, or assigns.
12.

The Clerk of the Court is directed to enter judgment in accordance with this Order,

terminate all pending motions, adjourn all remaining conferences, and close this case.
SO ORDERED.
Date: April 8, 2024
New York, New York

KATHERINE POLK FAILLA
United States District Judge

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