Circuit Court Opens Up CMBS Litigation to Federal Courts

"Circuit Court Opens Up CMBS Litigation to Federal Courts" A recent decision by the U.S. Court of Appeals for the Fifth Circuit could make it easier for litigation related to commercial mortgage-backed security trusts to be adjudicated in federal courts. Hometown 2006-1 1925 Valley View, LLC vs. Prime Income Asset Management LLC, No. 15-10881 clarifies the establishment of subject matter jurisdiction and is expected to have the biggest effect on special servicers, which can now assume a single national strategy for resolving properties and loans in CMBS workouts. "[This decision will allow special servicers] to do a workout without having to change their strategies to account for the multiple jurisdictions they have [to litigate in]," said Christopher Chauvin, partner at Thompson & Knight, who argued on behalf of the plaintiff. "Most of our clients like having the option of being in federal court."

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