On March 2, 2023, the First Department issued a decision in Freedom Trust 2011-2 v. DB Structured Prods., Inc., 2023 NY Slip Op. 01136, holding that a certificateholder cannot sue a third-party without complying with the no-action clause, even when the trustee consents, explaining:
Defendant established that the no-action clause bars this suit. Plaintiff, a certificate holder bringing an action for breach of the PSA, has undisputedly not met the listed conditions for bringing it, and the no-action clause does not include any exception for certificate holder suits that are authorized by the trustee. Moreover, the clause’s specification that no certificate holder is entitled to enforce any right under the PSA except in a manner specifically enumerated in the PSA (no certificate holders shall have any right in any manner whatsoever by virtue of any provision of this Agreement to enforce any right under this Agreement, except in the manner herein provided) refutes plaintiff’s claim that an authorization issued in accordance with PSA §§ 2.03(a) or 9.02(a) could create such an exception.
The cases relied on by plaintiff are distinguishable, as they either involved far less broad prohibitions on suit, or they involved specific contractual provisions giving the plaintiffs the right to sue or concessions by the defendant that the plaintiffs had that right.
Contrary to plaintiff’s assertion otherwise, defendant may properly invoke the no-action clause. Although the final sentence of the clause states that all certificate holders and the trustee are entitled to relief for the protection and enforcement of the provisions of this Section, that sentence does not suggest that only those parties may invoke this provision. Furthermore, the trustee cannot properly waive compliance with the no-action clause because it was not intended for the trustee’s sole benefit.
(Internal quotations and citations omitted).