United States District Court, S.D. Texas, Houston Division
Stanley J. Bryant, Plaintiff,
The CIT Group/Consumer Finance, et al., Defendants.
MEMORANDUM OPINION AND ORDER
H. Miller United States District Judge.
before the court is a motion to remand filed by plaintiff
Stanley J. Bryant. Dkt. 16. After considering the motion,
response, reply, supplemental authority, and the applicable
law, the court is of the opinion that the motion to remand
should be DENIED.
case relates to the foreclosure sale of property located at
2234 Dawn Shadow Way, Fresno, Texas 77545 (the
“Property”). Dkt. 20 (first amended complaint).
Bryant filed suit against the defendants in the 434th
Judicial District Court in Fort Bend County, Texas, on May
17, 2016. Dkt. 1-5 (original petition). He asserts that he
executed a mortgage note on the Property secured by a deed of
trust (the “Loan”) with the CIT Group/Consumer
Finance, Inc. (“CIT”) on December 20, 2005. Dkt.
20. However, he fell into default in 2011 after experiencing
medical problems. Id. He alleges that he received
several notices of sale and that the Property sold on April
5, 2016. Id. The purchaser was defendant Bank of New
York Mellon as Trustee for the CWABS, Inc. Asset-Backed
Certificates, Series 2006-BC4 (the “Bank of NY”).
Id. Bryant contends that the Bank of NY threatened
to sue Bryant for eviction if he did not vacate the Property.
to Bryant's state-court petition and amended complaint,
the only recorded assignment of the Loan is a fraud and
forgery and even if it were not there is no complete and
unbroken chain of assignments from CIT to the Bank of NY.
Dkts. 1-5, 20. Bryant argues that Chester Levings, an
Assistant Secretary of the Mortgage Electronic Registration
Systems, Inc. (“MERS”), “purportedly
signed” an assignment of the Loan to the Bank of NY on
August 23, 2011, but the assignment does not state that MERS
was acting as nominee for any other entity. Dkt. 20. Bryant
asserts that this and other documents related to the chain of
assignments are void ab initio because they are
forgeries. Id. He also asserts that if the Loan was
securitized into the 2006-BC4 Trust as the Bank of NY claims,
it was not properly and validly transferred according to the
Trust's Pooling and Servicing Agreement
(“PSA”) and the law of the state in which the
Trust was created (New York). Id. He contends the
note was not legally or validly assigned and/or transferred
as required by Texas and New York law for standing to
foreclose as a real party in interest. Id. His
claims include (1) violation of § 12.002 of the Texas
Civil Practices and Remedies Code against K.N.A. Bank of
America, N.A. (“BOA”), MERS, and the Bank of NY;
(2) negligence per se against BOA, MERS, and the Bank of NY;
(3) gross negligence and gross negligence per se against BOA,
MERS, and Bank of NY; (4) money had and received against the
Bank of NY, BOA, and Ditech Financial LLC
(“Ditech”); (5) unjust enrichment against the
Bank of NY, BOA, and Ditech; (6) declaratory judgment of lack
of standing to foreclose against the Bank of NY and Ditech;
(7) declaratory judgment against all defendants; (8) quiet
title against all defendants; (9) declaratory relief under
the statute of limitations against all defendants; (10) fraud
against the CWABS, Inc. Asset-Backed Certificates, Series
2006-BC4 Trust (the “CWABS Trust”), Bank of NY,
and Ditech; and (11) violation of the Texas Debt Collection
Act against Bank of NY, BOA, and Ditech. Id.
and the Bank of NY removed the case to this court on June 27,
2016, alleging diversity jurisdiction. Dkt. 1. They noted
that defendants BOA and MERS consented to the removal, and
they asserted that no consent was required from the CWABS
Trust or CIT because they are nominal parties that had been
fraudulently joined. Id. They additionally noted
that the consent of the CWABS Trust, CIT, and CWABS, Inc.,
was not required because these parties have not been served
and no citations have been issued to them. Id.
filed a motion to remand on September 23, 2016. Dkt. 16. He
alleges that the notice of removal fails to state the
citizenship of all the defendants and should thus be
remanded. Id. Specifically, he asserts that the
CWABS Trust must prove that the citizenship of each of its
members and beneficiaries is diverse from Bryant's
citizenship under the U.S. Supreme Court's March 2016
Americold decision. Id. (citing
Americold Realty Tr. v. Conagra Foods, Inc., 136
S.Ct. 1012, 1016 (2016)). Bryant argues that, in accordance
with Americold and this court's decision in
Juarez v. DHI Mortgage Co., LTD, NO. H-15-3534, 2016
WL 3906296 (S.D. Tex. Jul. 19, 2016) (Miller, J.), the
defendants must demonstrate that the CWABS Trust is a
traditional donative trust and not an unincorporated
artificial business entity in order for the court to look
only at the citizenship of the trustee when considering the
citizenship of the trust. Id.
and the Bank of NY contend that the trustee's (Bank of
NY) citizenship, not the citizenship of the CWABS Trust, is
what counts for diversity purposes. Dkt. 21. Ditech and the
Bank of NY further contend that even if the court were to
consider the citizenship of the CWABS Trust, it would find
that the CWABS Trust is a traditional trust and the
citizenship of its members is irrelevant for diversity
purposes. Id. Ditech and the Bank of NY also assert
that the CWABS Trust is a nominal party improperly joined.
Id. Ditech and the Bank of NY argue that the
controlling issue here is whether the real and substantial
party to this controversy is the Bank of NY or the CWABS
Trust; Ditech and the Bank of NY argue it is the Bank of NY.
reply, Bryant asserts that “[i]t cannot be clearer that
Plaintiff intended to sue the trust itself, ” pointing
out that he named the trust in his original petition and
alleged that the CWABS Trust did not have the right to
foreclose on the Property. Dkt. 23. With regard to the
argument that the trust is improperly joined, Bryant notes
that Fifth Circuit law states that a court may not consider a
claim of improper joinder if the defendants fail to allege a
non-diverse defendant. Id. (citing McDonal v.
Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005)).
may remove to federal court “any civil action brought
in a State court of which the district courts of the United
States have original jurisdiction.” 28 U.S.C. §
1441 (2012). The party seeking removal bears the burden of
establishing federal jurisdiction. Willy v. Coastal
Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). This
statutory right to removal is strictly construed because
“removal jurisdiction raises significant federalism
concerns.” Id. (citations omitted).
“[A]ny doubt about the propriety of removal must be
resolved in favor of remand.” Gasch v. Hartford
Accident & Indem. Co., 491 F.3d 278, 281-82 (5th
Cir. 2007). Ditech and Bank of NY claim that the court has
removal jurisdiction based on diversity of citizenship. Dkt.
1 at 4-5. Subject matter jurisdiction premised on diversity
requires (1) complete diversity of citizenship between the
parties and (2) an amount in controversy in excess of $75,
000. 28 U.S.C. § 1332 (2012). The only disputed issue is
whether the diversity requirement is satisfied.
have taken a two-step approach to determining the citizenship
of a trust for purposes of diversity: (1) identify whether
the trust or the trustee is the real and substantial party to
the controversy, and (2) if the trust is the real party, then
determine whether it is a “traditional trust”
where a court looks to the citizenship of the trustee, or
whether it is a “business trust” (unincorporated
association) where a court looks to the citizenship of the
trust's members to determine jurisdiction. Americold
Realty Tr. v. Conagra Foods, Inc., 136 S.Ct. 1012, 1016
outset, the court must determine who is the real and
substantial party to the controversy that is being haled to
court-the trust or the trustee. “[A] federal court must
disregard nominal or formal parties and rest jurisdiction
only upon the citizenship of real parties to the
controversy.” Corfield v. Dall. Glen Hills LP,
355 F.3d 853, 857 (5th Cir. 2003). The two main U.S. Supreme
Court cases addressing the citizenship of a trust,
Americold and Navarro, do not
“limit an entity's membership to its trustees
just because the entity happens to call itself a
trust.” Id.; see also, e.g.,
Wells Fargo Bank, N.A. v. Transcon. Realty Inv'rs,
Inc., No. 3:14-CV-3565-BN, 2016 WL 3570648, at *2 (N.D.
Tex. July 1, 2016); Juarez v. DHI Mortg., Ltd., No.
CV H-15-3534, 2016 WL 3906296, at *2 (S.D. Tex. July 19,
2016) (Miller, J.).
trustee is suing or is being sued in his or her own name, or
if the trust is a traditional trust, then the
Navarro standard applies. Navarro Savs.
Ass'n v. Lee, 446 U.S. 458, 100 S.Ct. 1779 (1980).
Trustees that have exclusive authority over the property
(i.e. the declaration of the trust “authorizes the
trustees to take legal title to trust assets, to invest those
assets for the benefit of the shareholders, and to sue and be
sued in their capacity as trustees”) may “sue in
their own right, without regard to the citizenship of the
trust beneficiaries.” Id. at 464-66. In these
instances, the court will look to the citizenship of the
trustee alone to determine jurisdiction.
trust is an unincorporated artificial business entity like
the trust considered in Americold, the
“shareholders appear to be in the same position as the
shareholders of a joint-stock company or the partners of a
limited partnership.” Americold, 136 S.Ct. at
1016. In ...