For ORIX Capital Markets, staying innovative means relying on the knowledge and experience of its management team, as well as the skill and expertise of its outside partners. It is strategic teamwork and collaboration that allows the Texas-based company to maintain its leadership position in the financial services industry.
ORIX Capital Markets (ORIX) is a diversified real estate, finance and asset management company. A subsidiary of ORIX USA Corporation, ORIX has more than $1 billion in assets under management, including collateralized debt obligations, mortgage-backed securities and municipal securities.
ORIX is unique because of the manner in which it combines talented teams and proprietary approaches in a style that redefines the term "bold." The company is known for pursuing action with an intense sense of purpose and hires outside legal counsel who share the same intensity and focus.
A Winning Legal Strategy
In late 2008, ORIX demonstrated its focused management style by relying on a strong litigation team to try a lawsuit that had been pending for more than four years against a business antagonist it had tangled with in other cases. The dispute had ramifications for many of the securitized real estate loans it services.
Before trial, the parties had endured through two failed mediations and five prior trial settings. Despite these obstacles, the ORIX litigation team pushed on to the sixth trial setting, armed with its unconventional approach to litigation staffing.
Instead of sending its in-house counsel to oversee an outside counsel's trial team, ORIX asked Winstead to join and co-counsel at trial with the company's in-house litigation team. “It’s a challenge. Many outside lawyers are hesitant to work with a co-counsel who they don’t always work with,” explains Nicola Hobeiche, an associate counsel in ORIX's litigation department.
Hobeiche served as litigation co-counsel in the 2008 lawsuit, partnering with Winstead Commercial Litigation Shareholder Talmage Boston, who quickly assimilated into ORIX's trial team. Hobeiche noted, “Talmage was not only impressive as a first chair commercial litigator, he fit in smoothly with our team.”
The Center of the Conflict
The case that united Hobeiche and Boston was as contentious and principled as a commercial lawsuit can get. ORIX was sued for declaratory relief by two borrowers—partnerships owned by a Dallas real estate developer with whom ORIX had crossed swords in other cases. The borrowers had refused ORIX's request (based on the pertinent provisions in the mortgage instruments) that they purchase terrorism insurance in the aftermath of September 11, 2001, to protect the commercial properties that served as collateral for the non-recourse loans.
Even after the federal government enacted legislation that required insurance carriers to provide affordable terrorism policies, the real estate developer still refused to purchase the insurance, and filed suit seeking declaratory relief against ORIX, asking the court to declare that under the contested language in the mortgage instruments, the borrowers were not required to purchase the terrorism insurance.
In response to the borrower's lawsuit, ORIX filed a counterclaim on the basis that the mortgage instruments did require the borrowers to purchase the terrorism coverage that ORIX (as the loan servicer) had requested, and therefore, the real estate developer had breached the loan agreements. This entitled ORIX to pursue and collect interest on the subject loans at the default rate from the borrowers.
While ORIX was frustrated by the borrower's intransigence exhibited throughout the litigation, the company remained steadfastly focused on the greater purpose—the need to establish its clear right to enforce the loan documents and its policies governing the servicing of securitized, single asset, non-recourse real estate loans in the post 9/11/01 era.
Passionate Principled Advocacy
Working seamlessly as a team, Boston and Hobeiche were assisted by ORIX trial paralegal Valerie Prowell, another distinctive trial preference for the company. The approach worked. The litigation team’s effort so impressed veteran Dallas District Judge Anne Ashby that during the trial she told counsel that although she had expected the case to be another “dry contract dispute case,” she found herself “hanging on the words” of the ORIX litigation team with the same level of engagement as if she was "hearing a sexual harassment case."
After his initial review of the facts, Boston knew the case would be challenging because although there were some New York cases that created a precedent for ORIX’s position, there were none in Texas. In order for ORIX to win the case, the judge would have to understand and appreciate not only the rationale behind the holdings in the New York cases, but also the company's business interests in requiring terrorism insurance policies on all of its securitized real estate loans, even those collateralized by low risk properties (on the two subject loans, the real estate collateral on one was a two-story apartment complex in Texas, and on the other was an eight-story medical office building in California).
When the 13-day, non-jury trial concluded, the ORIX team defeated the borrowers' affirmative claims, prevailed on its counterclaim, and recovered more than one million dollars in default interest and attorneys' fees.
Trusted Resource for the ORIX Team
Boston and ORIX's in-house litigation department formed a bond and a level of mutual respect before, during and after the trial. "Nicola trusted me at every step, and I made no decision without her input. She proved to be a worthy co-counsel in every aspect of the case," commented Boston. “Talmage was energetic, passionate and highly intelligent—it’s what every client dreams of, someone who not only looks for truth and justice, but fights for it," recalls Hobeiche.
In the time since the trial, Hobeiche has continued to use Boston as a resource for ORIX in other legal matters. “Instead of spending a half day researching an issue I need information on, I can call Talmage,” shares Hobeiche. "In no time at all, he’ll have the answer or direct me to a Winstead colleague who does—and that is definitely a powerful resource for me.”
That same team-player attitude—cooperative, efficient and effective—defines other areas of collaboration between Winstead and ORIX. Winstead Shareholder Tom Helfand, chair of the Taxation, Employee Benefits & Private Business Practice Group, leads the firm's ORIX Client Team. Helfand regularly communicates with Elizabeth Daane, executive vice president and general counsel of ORIX, to stay current with the company’s concerns.
Whether Winstead is advising Daane and her team on corporate, tax, bankruptcy, finance or real estate foreclosure matters, Helfand and his team understand what motivates ORIX to act, along with its penchant for results, high quality and high integrity.
After teaming with Winstead, associate counsel Hobeiche predicts that as the volume of unhealthy loans rises, so will litigation, and she’s pleased that ORIX can count on Winstead as a law firm that clearly shares its purpose.