Friedman Kaplan Obtains Complete Banking Litigation Victory
Friedman Kaplan recently obtained the dismissal with prejudice of an $85 million lawsuit that was initially filed in 2021 by New York City construction developer Rise Development Partners, LLC (and its subsidiaries and principals, together, “Rise”) against now defunct Signature Bank and several of its subsidiaries. In its decision, a New York federal court enforced several provisions in Signature Bank’s account agreement that barred Rise’s claims, and the dismissal is a complete victory for Friedman Kaplan’s client, the Federal Deposit Insurance Corporation as Receiver for Signature Bank (“FDIC-R”).
Rise claimed that certain of its entities were Signature Bank customers, and that they were fraudulently or negligently induced by a Signature Bank employee to borrow money at usurious rates and to lend money to an entity that later defaulted on the loan. In 2021, Rise sued Signature Bank in New York state court, asserting fifteen causes of action, including negligent hiring, fraud, malpractice, breach of fiduciary duties, and breach of contract. Friedman Kaplan defended the bank in that case until March 12, 2023, when the New York State Department of Financial Services closed the bank and appointed the FDIC as receiver. The FDIC-R then engaged Friedman Kaplan to represent it as the substituted defendant, and Friedman Kaplan removed the case to federal court.
After Rise exhausted its administrative remedies under the Financial Institutions Reform, Recovery, and Enforcement Act, it filed an amended complaint in 2024 which contained generally the same causes of action. Friedman Kaplan moved to dismiss all of Rise’s claims with prejudice on the bases that they were barred by the one-year statute of limitations contained in the Signature Bank account agreements; that all claims other than Rise’s breach of contract claim were waived by a provision in the account agreements limiting customers’ right to relief to breach of contract; and that even if the claims were not barred for these reasons, Rise had failed to allege sufficient facts to support essential elements of each of their claims.
Judge John G. Koeltl of the U.S. District Court for the Southern District of New York granted our client’s motion with prejudice, dismissing all of Rise’s claims for multiple reasons, including that they are all time-barred and inadequately pled, and that all claims other than the breach of contract claim were waived by the terms of the account agreements. That ruling was not appealed. This marks Friedman Kaplan’s second complete victory in a matter of months on behalf of FDIC-R, following on a September 2024 dismissal of a lawsuit brought by HK Capital.
The Friedman Kaplan team was led by partner John Orsini and included partner Elizabeth Bierut, associate Carolyn Young, and paralegal Emily Redunski. The Signature Bank subsidiaries were separately represented by Mitra P. Singh of Hinshaw & Culbertson LLP.
The victory was featured in a Law360 article. The decision is Rise Development Partners, LLC et al. v. Signature Bank, et al., No. 23-CV-4242 (JGK), 2024 WL 4555758 (S.D.N.Y. Oct. 22, 2024).
