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August 7, 2024
Court Rejects Plaintiffs’ Reliance On A Security Agreement’s Contractual Venue Provision Allowing Actions In The Jurisdiction Of The Loan’s Collateral
On July 10, 2024, Justice Joel M. Cohen dismissed a lawsuit that two borrowers had filed in New York in an attempt to restrain a UCC sale of collateral located in the state, writing that only the secured party could avail itself of the relevant venue provision. In Zoey Paint Corp., et al. v. Commercial Credit Group, Inc., et al., Index No. 651989/2024, the loan and security agreements executed by the parties contained a provision designating North Carolina as the exclusive venue for any actions relating to the agreements. However, the venue provision contained an exception clause allowing “an action to recover possession of all or part of the collateral” in the state having jurisdiction over such collateral “in the sole discretion of the holder/secured party.” The Court interpreted this language to mean that only the secured party could bring a lawsuit outside North Carolina. It explained: Read More
