A shell company that sought to profit from a failed investment portfolio built on mortgage-backed securities has no standing to sue the investment manager because its motive for suing violates New York’s champerty doctrine, a Manhattan state court judge ruled.
The Feb. 24 decision by Justice Shirley Kornreich (See Profile) in Justinian Capital v. WestLB AG, 600975/2010, marks a rare occasion in which a New York court found alleged conduct to be champertous, which occurs when a third party bears the expense of a claim’s litigation costs in exchange for receiving a share of the proceeds.
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