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Dubinsky v. Mermart

ELR Citation: 40 ELR 20044
Nos. No. 09-2072, (8th Cir., 01/12/2010)

The Eight Circuit affirmed a lower court decision that granted a project developer’s motion to dismiss subordinate bondholders’ claims for breach of contract and equitable accounting, as well as for unjust enrichment, negligence, and fraudulent misrepresentation based on alleged representations that the project was free from environmental hazards. Interpreting the financing documents as a whole, the court held that the bondholders required written consent from the senior mortgagee before they could bring an enforcement action. The breach of contract and equitable accounting claims were therefore properly dismissed. Moreover, since the negligence, unjust enrichment and fraudulent misrepresentation claims arose out of the financing documents, they were enforcement actions that also required consent to sue. Since the action was filed without satisfying the applicable prerequisites, the bondholders’ claims were properly dismissed.