Plaintiffs allege that defendant breached two credit default swap agreements between defendant and CRAFT. However, in the indentures, CRAFT granted nonparty HSBC Bank USA, as trustee, all of CRAFT's rights under the swap agreements, including the right to bring actions and proceedings. Therefore, the motion court, on the record before it, properly found that CRAFT lacked standing to sue (see James McKinney & Son v Lake Placid 1980 Olympic Games, 61 N.Y.2d 836, 838 [1984]; National Fin. Co. v Uh, 279 A.D.2d 374, 375 [1st Dept 2001]; Wagner v Braunsberg, 5 A.D.2d 564, 568 [1st Dept 1958]).
Defendant also contends that CRAFT lacks standing because it lacks damages, in that it is a pass-through entity — any recovery it obtains will be passed on to the noteholders. We rejected precisely this argument in Hildene Capital Mgt., LLC v Bank of N.Y. Mellon, 105 A.D.3d 436, 437-438 [1st Dept 2013]).
As noted earlier, the contracts for whose breach plaintiffs are suing are between defendant and CRAFT; plaintiff Arco Capital Corporation Ltd. is not a party to those contracts. That plaintiff Arco is a note holder and a third-party beneficiary under the indentures does not mean that it is a third-party beneficiary of the swap agreements (see ASR Levensverzekering NV v Breithorn ABS Funding plc, 102 A.D.3d 556, 557 [1st Dept 2013]).
We have considered plaintiffs' remaining arguments and find that they do not warrant reversal or further modification of the 2015 order.
The original complaint was superseded by the amended
CRAFT now asserts that it subsequently entered into an agreement in which HSBC assigned back to CRAFT any and all rights it had to sue defendant under the swap agreement relating to the class E and F notes. However, that agreement is not part of the appellate record and the issue should be addressed in the first instance in the motion court.
