Evaluate Diversity Jurisdiction — Subject Matter
Jurisdiction — for a Trustee of a Trust
Determine, step by step, if there is diversity jurisdiction — subject matter
jurisdiction — pursuant to 28 U.S. Code § 1332(a)(1) when a trustee of a
trust files an action in a federal district court or removes an action to a
federal district court. The author of this flow chart is Charles Najda, who is a
graduate of Stanford University, BS Computer Science and BA Economics with
Honors.
Examples of the, step by step, application of the process, including the
Navarro and
Americold Rules, diagramed above:
Altruis Grp., LLC v. Prosight Specialty Mgmt. Co., No. 1:21-cv-10757 (MKV), 2023 U.S. Dist. LEXIS 140670, at *12 (S.D.N.Y. Aug. 10, 2023) (“The Supreme Court concluded that the trustees could
‘sue in their own right’ because they were ‘active trustees whose control over the assets . . . [was] real and substantial.’").
U.S. Bank Nat’l Ass’n v. Desrosiers, No. CV 17-7338 (AKT), 2021 U.S. Dist. LEXIS 67910, at *17 (E.D.N.Y. Mar. 31, 2021) (“Plaintiff is required to draw the Court’s attention to specific documentation, i.e., the Trust Agreement or something else, which demonstrates (a) that Plaintiff’s control over the trust assets is real and substantial to warrant the application of Plaintiff’s main office as the basis for citizenship; or (b) the citizenship of the beneficiaries of the Trust.”).
Wilmington Savings Fund Society, FSB v. Thomson, No. 18-CV-3107 NSR, 2019 U.S.
Dist. LEXIS 106184, 6-7 (S.D.N.Y. Jun. 25, 2019) (“Plaintiff has also not
established citizenship of the trust, nor that the trustee was a ‘real and
substantial’ party to the controversy, such that it’s citizenship could be used
to establish subject matter jurisdiction.”).
Wells Fargo Bank Nw., N.A. v. Synergy Aero. Corp., No. 16-CV-8065 JPO, 2017 U.S.
Dist. LEXIS 124346, 8 (S.D.N.Y. Aug. 7, 2017) (“The rule is, accordingly, as
follows: ...[w]here the action is brought in the name of the trustee, courts
must inquire into whether the trustee is more than just a ‘sham’ who has no real
power to control the litigation or the property at issue.”).
U.S. Bank Trust, N.A. v. Monroe, No. 15-CV-1480 LEK, 2017 U.S. Dist. LEXIS
32874, 10-11 (N.D.N.Y. Mar. 8, 2017) (“U.S. Bank [N.A. as Trustee for LSF9
Master Participation Trust] has included no allegations concerning the type of
trust at issue here, its degree of control over the trust assets, or,
alternatively, the citizenships of the trust’s beneficiaries … and the Complaint
thus fails to sufficiently allege the existence of subject matter
jurisdiction.”).
Pitts v. Bank of N.Y. Mellon, No. 16-CV-01410 MSH, 2017 U.S. Dist. LEXIS 49992,
10 (S.D. Tex. Feb. 14, 2017) (“[T]he burden is on Defendants to classify the
trust, establish its citizenship, and prove complete diversity. Defendants have
not done so. This failure, coupled with Plaintiffs’ assertions, is ‘sufficient
to cast doubt on whether this court has subject matter jurisdiction.’
Accordingly, this Court must remand.”).
Smith v. Bank of N.Y. Mellon, No. 16-CV-01669 GHM, 2017 U.S. Dist. LEXIS 56337, 2
(S.D. Tex. Jan. 18, 2017) (“because Defendants merely recited the Navarro standard and
failed to provide any evidence of such ‘customary powers,’ the court finds that
Defendants did not meet their burden for removal.”).
U.S. Bank Trust, N.A. v. Dupre, No. 15-CV-0558 LEK, 2016 U.S. Dist. LEXIS
127848, 11-12 (N.D.N.Y. Sep. 20, 2016) (“Despite U.S. Bank [Trust, N.A., as
trustee for LSF8 Master Participation Trust]’s argument, … this Delaware
statutory trust seems precisely like the type considered by the Supreme Court in
Americold, and U.S. Bank has failed to demonstrate that it is a real party to
the controversy that can proceed in its own right and without reference to the
citizenship of the trust’s beneficiaries …this action must be dismissed for lack
of subject matter jurisdiction.”).
Notes:
1. The district courts shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between — citizens of different States;
28 U.S. Code § 1332(a)(1).
2. This flow chart assumes the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs.
3. Four Circuit Courts found that fiduciary relationships, e.g. traditional trusts, retain the citizenship
of their trustees.
BRT Mgmt. LLC v.
Malden Storage LLC, 68 F.4th 691, 697 (1st Cir. 2023);
GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888 F.3d 29,
34 (3d Cir. 2018);
Raymond Loubier Irrevocable Trust v. Loubier, 858 F.3d 719,
729 (2d Cir. 2017);
Yueh-Lan Wang v. New Mighty U.S. Trust, 843 F.3d 487,
494 (D.C. Cir. 2016).
4. The materials available at this website are for informational purposes
only and not for the purpose of providing legal advice.
To contact Charles Najda, email:
charles.najda (at) diversityjurisdiction.com
Copyright © 2024 Charles Najda