Aberdeen Developers, LLC v. Wells Fargo Bank, N.A.

── Aberdeen Developers, LLC v. Wells Fargo Bank, N.A. ── Court: Court of Appeals for the Seventh Circuit Date: May 28, 2026 Category: General In the United States Court of Appeals For the Seventh Circuit ____________________ No. 25-1667 ABERDEEN DEVELOPERS, LLC, Plaintiff-Appellant, v. WELLS FARGO BANK, N.A., as Trustee for Registered Holders of Deutsche Mortgage & Asset Receiving Corporation, CD 2019-CD8 Mortgage Trust, Commercial Mortgage Pass- Through Certificates, Series 2019-CD8, a National Bank and LNR PARTNERS, LLC, Defendants-Appellees. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:23-cv-14279 — John F. Kness, Judge. ____________________ ARGUED MAY 14, 2026 — DECIDED MAY 28, 2026 ____________________ Before RIPPLE, SCUDDER, and ST. EVE, Circuit Judges. SCUDDER, Circuit Judge. Aberdeen Developers, LLC, se- cured a loan by offering a mixed-use building as collateral. During the COVID-19 pandemic, one of the building’s largest tenants filed for bankruptcy, allowing the loan servicer, LNR 2 No. 25-1667 Partners, LLC, to hold excess building revenue (like rental in- come) in a special account as additional security. The parties dispute how long LNR Partners may hold that excess reve- nue. The district court dismissed Aberdeen Developers’ breach-of-contract claim, concluding that the relevant agree- ments unambiguously favored the defendants. We disagree. The agreements are ambiguous because both sides offer rea- sonable constructions. So we reverse and remand for further proceedings. I In 2018, MUFG Union Bank loaned Aberdeen Developers $41 million. Aberdeen Developers secured the loan with a mixed-use building in Chicago worth around $73 million. MUFG Union Bank then sold its rights as the lender to a cor- poration that named Wells Fargo Bank as the trustee. Wells Fargo eventually appointed LNR Partners as the loan’s spe- cial servicer. As servicer, LNR Partners makes all substantive decisions about loan administration. Two documents govern the loan. The first is the Loan Agreement, which provides the general terms of the loan. The second is the Cash Management Agreement, also known as the CMA, which clarifies how to handle cash flow from the mixed-use building. Aberdeen Developers and the original lender signed and are parties to both agreements. Things went smoothly until the COVID-19 pandemic. In January 2021, one of the building’s largest tenants filed for bankruptcy. Under the terms of the CMA, that event allowed the servicer to declare a Cash Sweep Trigger Event, which in- itiated a Cash Sweep Event Period. The CMA provides special rules that apply during a Cash Sweep Event Period. By way No. 25-1667 3 of example, the CMA states that income generated by the mixed-use building must go into a Cash Management Ac- count held by LNR Partners instead of the Borrower Operat- ing Account maintained by Aberdeen Developers. The Cash Sweep Event Period ends only when LNR Partners deter- mines that a Cash Sweep Cure has occurred. The CMA also dictates how LNR Partners should apply the funds in the Cash Management Account during the Cash Sweep Event Period. Section 3.4 provides that each month, LNR Partners must disburse the funds in a certain order of priority, paying taxes, insurance, fees, and expenses before eventually holding the remainder in a subaccount as extra se- curity or giving it back to Aberdeen Developers. Here is how the contract puts it: Application of Cash Management Account Funds. Provided no Event of Default shall have occurred and is continuing, commencing on the first Business Day of each Collection Period fol- lowing a