Pallas has secured a victory for Carl Icahn and his investment funds in an ongoing dispute with Rialto Capital Advisors over the servicing of a Nevada outlet mall in a CMBS trust. After more than two years of discovery, the court rejected the Defendant’s arguments that the Icahn funds lacked standing to bring the suit and that Icahn had suffered no injury. The Nevada court also granted the related motion by the CMBS trustee to intervene in the lawsuit to recover all damages incurred by the trust due to Rialto’s misconduct.
Our partner Mike Hanin, who led counsel for the Icahn Funds said, “Special servicers often operate on the assumption they’re not going to get sued, and legal and practical impediments have discouraged investors from acting as a natural check against bad behaviour. This decision creates a template for CMBS bondholders to bring lawsuits successfully against special servicers.”
The Pallas team representing the Icahn Funds also includes Partner Jill Forster and Associate Andrew Breland.
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