On April 2, 2026, the First Department issued a decision in Hudson ES LLC v. First Franklin Fin. Corp., 2026 NY Slip Op. 02041, holding that a defendant that is not a party to a PSA still can invoke the PSA’s no-action clause, explaining:
Supreme Court properly dismissed the complaint as barred by § 10.08 of the Pooling and Service Agreement dated as of January 1, 2007 (PSA) (the no-action clause). It is undisputed that plaintiff did not meet the preconditions for bringing an action listed in the no-action clause because it did not represent 25% of the Voting Rights in the Trust and did not provide the Trustee with 60 days’ notice before commencing suit.
Plaintiff argument that First Franklin may not assert the no-action clause of the PSA as a defense because it was not a party to or a third-party beneficiary of that agreement in unavailing. The purpose of no-action clauses is to avoid duplicative suits and protect the majority interests by mandating that actions be brought by the Trustee. In cases involving residential mortgage-backed securitizations, this Court has previously held that entities such as First Franklin, that are not parties or third-party beneficiaries to an agreement, may invoke a no-action clause as a complete defense.
(Internal citations omitted).