New York court dismisses Clark Tower's foreclosure lawsuit against Wells Fargo and Axonic Capital

In a decision issued on April 24, 2025, New York’s Appellate Division, First Department, ruled in favor of Wells Fargo Bank, N.A., and Axonic Capital LLC in a dispute over the foreclosure of a commercial property in Tennessee.

The case began when Clark Tower, LLC sued Wells Fargo and others after losing the property, arguing that Axonic had improperly interfered with its refinancing efforts. Clark Tower claimed that Axonic, which advises the trust managing the mortgage, disrupted negotiations that could have saved the property from foreclosure.

But the court didn’t buy it. Judges found that Axonic had a clear contractual right to advise the trust’s servicers on refinancing deals. They also pointed out a crucial fact: Clark Tower had failed to exercise its option to extend the loan in time, an oversight that directly led to the foreclosure. Because of that missed deadline, the court said, the blame lay squarely with Clark Tower - not Axonic.

The judges applied Tennessee law to the case, since that's where the property is located and where the key events happened. Under Tennessee rules, corporate advisors like Axonic aren’t usually on the hook for interfering with contracts when they’re acting properly within their roles. The court found that Axonic was doing just that.

Clark Tower had also made claims tied to damages from an alleged wrongful foreclosure, but it later dropped that part of the appeal, making the damages issues irrelevant.

Importantly for insurance and finance professionals watching the case, there was no discussion of insurance policies or coverage disputes. The legal fight focused purely on contract rights, advisory responsibilities, and whether a refinancing plan could have - or should have - gone forward.

In the end, the case offers a strong reminder: timing matters in loan agreements, and contractual advisors may be shielded from lawsuits if they stay within the bounds of their authority.