United States District Court, N.D. Texas, Dallas Division
Leslie L. Leonard, Plaintiff,
CitiBank NA, as trustee, in trust for Registered Holders of WaMu Asset-Backed Certificates WaMu Series 2007-HE3 Trust, Defendant.
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
HARRIS TOLIVER UNITED STATES DISTRICT JUDGE.
to 28 U.S.C. § 636(b) and Special Order 3, this
case has been referred to the undersigned United States
magistrate judge for pretrial management. Pending before the
Court is Plaintiff's First Motion to Remand to State
Court, Doc. 8. For the reasons that follow, the motion
should be GRANTED.
case originated in 193rd Judicial District Court of Dallas
County. Doc. 1-4 at 2. In his Original Petition,
filed in January 2019, Plaintiff asserts a variety of claims
against “Citibank, NA., as Trustee, in Trust for
Registered Holders of Wamu Asset-Backed Certificates Wamu
Series 2007-He3 Trust” (“Defendant” or
“Citibank”). Doc. 1-4 at 2, 4. In February 2019,
on the basis of diversity jurisdiction, Defendant removed the
case to this Court. Doc. 1 at 1, 3. Plaintiff now moves for
remand, arguing that (1) the Court lacks diversity
jurisdiction, (2) alternatively, the Court should permit
discovery on jurisdictional facts, (3) Defendant waived
federal jurisdiction, and (4) the Court should abstain from
hearing this case. Doc. 8 at 7-11. Third-Party Defendant Jane
F. Leonard has adopted Plaintiff's instant motion. Doc.
13. Because the Court finds Plaintiff's first argument
dispositive, it need not address Plaintiff's remaining
Applicable Law and Analysis
moves for remand because Defendant asserts the citizenship of
CitiBank, the Trustee of the He3 Trust (the
“Trust”) without demonstrating that CitiBank is a
“real party in interest” in this case. Doc. 8 at
9. Since CitiBank is not a real party in interest, Plaintiff
continues, its citizenship cannot support diversity
jurisdiction. Doc. 8 at 8-10. Defendant responds that the
Pooling and Servicing Agreement (“PSA”) for the
Trust “makes clear that CitiBank is the real party to
the controversy” and that, thus, CitiBank's
citizenship properly supports the Court's diversity
jurisdiction over this case. Doc. 17 at 11.
may remove an action from state to federal court if the
federal court possesses subject matter jurisdiction over the
action. 28 U.S.C. § 1441(a). Federal courts have subject
matter jurisdiction over all civil actions where the matter
in controversy exceeds $75, 000 and the parties are
completely diverse. 28 U.S.C. § 1332. Diversity of
citizenship exists between the parties if each plaintiff has
a different citizenship from each defendant. Getty Oil
Corp. v. Ins. Co. of North America, 841 F.2d 1254, 1258
(5th Cir. 1988).
deciding whether it has federal jurisdiction, the Court
focuses on the plaintiff's pleadings “as they
existed at the time of removal.” See
Manguno v. Prudential Prop. & Cas. Ins. Co., 276
F.3d 720, 723 (5th Cir. 2002). But the Court “may be
required to survey the entire record . . . and base its
ruling on the complaint, on undisputed facts, and on its
resolution of disputed facts.” Aquafaith Shipping,
Ltd. v. Jarrillas, 963 F.2d 806, 808 (5th Cir. 1992).
Any “ambiguities are construed against removal, ”
and the removing party “bears the burden of showing
that federal jurisdiction exists.” Manguno,
276 F.3d at 723.
a trustee files a lawsuit or is sued in [its] own name, [its]
citizenship is all that matters for diversity purposes,
” Americold, 136 S.Ct. at 1016, so long as the
trustee wields “real and substantial” control
over the assets held in its name. Justice v. Wells Fargo
Bank Nat'l Ass'n, 674 Fed.Appx. 330, 332 (5th
Cir. 2017) (per curium) (citation omitted). Since Plaintiff
does not dispute the amount in controversy requirement, Doc.
8 at 8, and CitiBank was sued in its name, Doc. 1-4 at 2, the
only question is whether Defendant has shown or can show that
it wields real and substantial control over the Trust's
assets. That question is answered in the negative.
relies on the Justice holding, wherein the United
States Court of Appeals for the Fifth Circuit found that the
parties' PSA established that Wells Fargo, as trustee,
enjoyed sufficient control to render it a real party in the
case. Justice, 674 Fed.Appx. at 332. Defendant
reasons that the PSA provision in Justice is
analogous to section 2.01 of the PSA here. Doc. 17 at 12.
However, this case is anopposite. As already stated, the PSA
in Justice conveyed control rights to Wells Fargo as
trustee. Id. at 332 (citing to the parties' PSA
and noting that “Wells Fargo as the trustee holds
‘all the right, title and interest of the Depositor in
and to the Trust Fund.'”). Conversely, the PSA here
conveys control rights to the Trust. SeeDoc. 18 at
152 (“The Depositor . . . does hereby transfer, assign,
set over and otherwise convey to the Trust, without recourse,
all the right, title, and interest of the
Depositor.”). Moreover, section 11.10 of the PSA in this
case-which is not cited by either party-confirms that the
parties “intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage
Loans and assets constituting the Trust Fund by the Depositor
to the Trust.” Doc. 18 at 278.
also relies on section 11.03 of the PSA, Doc. 17 at 13, but
while it addresses the rights of certificate holders, it says
nothing about CitiBank's control of the Trust's
assets. Doc. 18 at 275. And Defendant's assertion that
“[n]umerous courts have found” provisions like
section 11.03 “dispositive” is incorrect, because
in each of the cases Defendant relies on for that
proposition, the court considered provisions similar to 11.03
in addition to some other provision of the PSA that
demonstrated the trustee had real and substantial control of
a trust's assets.Doc. 17 at 13 n. 2. Defendant, however, has
not identified any such provision here.
the Court concludes that Defendant has not satisfied its
burden to show that CitiBank wields “real and
substantial” control over the Trust's assets.
Justice, 674 Fed.Appx. at 332; Manguno, 276
F.3d at 723 (noting that “ambiguities are construed
against removal” and that the removing party
“bears the burden of showing that federal jurisdiction
exists”). As such, remand is warranted.
foregoing reasons, Plaintiff s First Motion to Remand to
State Court, Doc. 8, should be GRANTED,
and this case should be remanded to the 193rd Judicial