US Bank National Association et al v. Gunn

Filing 140

MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 12/10/2012. (ksr, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
U.S. BANK NATIONAL ASSOCIATION as
Trustee for the Holders of the EQCC Home
Equity Loan Asset Backed Certificates,
Series 1998-3 and SELECT PORTFOLIO
SERVICING, INC.,
Plaintiffs,

v.

Civ. No. 11-1155-RGA

LA MAR GUNN,
Defendant.

Francis G. X. Pileggi, Esq., Dorothy Davis, Esq., and Jill Kornhauser Agro, Esq., Eckert
Seamans Cherin & Mellott, LLC, Wilmington, Delaware; Counsel for Plaintiffs.
La Mar Gunn, Camden Wyoming, Delaware; prose Defendant.

MEMORANDUM OPINION

DecemberiO,

2012
Wilmington, Delaware

~i:~.
I

istrict Judge:

Pending before the Court is Defendant's Verified Motion to Dismiss (D. I. 65) and
Plaintiffs' Letter/Motion to Compel (D.I. 70). For the reasons given below, the Court will
deny Defendant's Motion and will grant Plaintiffs' Motion.
Defendant La Mar Gunn moves for dismissal pursuant to Fed. R. Civ. P. 12(b) on
the following grounds: (1) lack of diversity jurisdiction; (2) Plaintiffs' lack of standing to
assert the rights of certificateholders; (3) judicial estoppel; (4) securities fraud; and (5)
failure to state a claim upon which relief may be granted. (See D.l. 66. Some of these
differ from what Defendant states in his motion- D.l. 65- and, to the extent they differ,
the Court will consider the Defendant's fuller arguments in his Memorandum). Plaintiffs
oppose the motion and argue that it lacks any basis to support the relief requested.
Initially, the Court notes that, with the exception of the lack of jurisdiction issue,
Defendant's arguments either repackage earlier arguments that were denied, or are
unintelligible to the Court. The Court will not revisit the issues. (See D. I. 15, 23, 48,
62.). Accordingly, the only issue the Court addresses is the challenge to subject matter
jurisdiction - an issue which may be raised at any time. See Grupo Dataflux v. Atlas

Global Group, L.P., 541 U.S. 567, 576 (2004)
The Complaint was filed on November 21, 2011 and asserts jurisdiction by
reason of diversity of the parties, pursuant to 28 U.S.C. § 1332. (D.I. 1.) At that time,
Plaintiff U.S. Bank National Association, as Trustee for the holders of the EQCC Home
Equity Loan Asset Backed Certificates, Series 1998-3 ("U.S. Bank") was the record
owner of residential property located at 201 Cornwell Drive, Bear, Delaware 19701 (the

2

"Property"). Plaintiff Select Portfolio Servicing, Inc. ("SPS") is the servicing agent and
attorney-in-fact for U.S. Bank. The Complaint raises claims under Delaware law for
trespass to real estate, conversion, unjust enrichment, tortious interference with
prospective business opportunities, slander of title, and abuse of process.
Defendant contends that the Court should dismiss the Complaint due to a lack of
subject matter jurisdiction because the Complaint fails to establish that the parties are
diverse. Defendant argues that the Complaint contains no allegations identifying the
citizenship of the unnamed certificateholders and, therefore, Plaintiffs have failed to
properly allege diversity jurisdiction. Defendant further contends that U.S. Bank's
naming of non-existent John Doe certificate holders of an unknown number,
intentionally misrepresents that the "unnamed certificate plaintiff certificateholders" are
persons. Plaintiffs argue in part that, because the motion includes extrinsic evidence, it
must be treated as a motion for summary judgment and, further, it raises arguments
without any legal support. In addition, they contend that subject matter jurisdiction is
appropriate as a matter of law.
Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a complaint for
lack of jurisdiction over the subject matter. Motions brought under Rule 12(b)(1) may
present either a facial or factual challenge to the Court's subject matter jurisdiction. In
reviewing a facial challenge under Rule 12(b )(1 ), the standards relevant to Rule
12(b)(6) apply. In this regard, the Court must accept all factual allegations in the
Complaint as true, and the Court may only consider the Complaint and documents
referenced in or attached to the complaint. See Gould Electronics Inc. v. United States,
220 F.3d 169, 176 (3d Cir. 2000). A complaint survives a facial attack on subject

3

matter jurisdiction if Plaintiffs' allegations, which are taken as true, sufficiently provide a
basis for subject matter jurisdiction.
In reviewing a factual challenge to the Court's subject matter jurisdiction, the
Court is not confined to the allegations of the Complaint, and the presumption of
truthfulness does not attach to the allegations in the Complaint. See Mortensen v. First
Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Instead, the Court may
consider evidence outside the pleadings, including affidavits, depositions and
testimony, to resolve any factual issues bearing on jurisdiction. See Gotha v. United
States, 115 F.3d 176, 179 (3d Cir. 1997). Once the Court's subject matter jurisdiction
over a complaint is challenged, the plaintiff bears the burden of proving that jurisdiction
exists. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936). A
party generally meets this burden by proving diversity of citizenship by a preponderance
of the evidence. /d. at 189.
Federal district courts have subject matter jurisdiction over civil actions where
the amount in controversy exceeds $75,000.00 and the suit is between citizens of
different states. See 28 U.S.C. § 1332(a). In analyzing diversity, a natural person is
deemed to be a citizen of the state where he is domiciled, see Zambelli Fireworks Mfg.
Co., Inc. v. Wood, 592 F.3d 412, 419 (3d Cir. 2010), a corporation is a citizen both of
the state where it is incorporated and the state where it has its principal place of
business, see id., and a national banking association is considered a citizen of "the
State designated in its articles of association as its main office," Wachovia Bank v.
Schmidt, 546 U.S. 303, 318 (2006). In addition, the citizenship of a trustee who

4

possesses "customary powers to hold, manage, and dispose of assets for the benefit of
others" is determined by the citizenship of the trustee, and not of the trust beneficiaries.

Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 464-66 (1980). See e.g., Emerald Investors
Trust v. Gaunt Parsippany Partners, 492 F.3d 192, 203 (3d Cir. 2007). In determining
the citizenship of a trust, the court looks to the citizenship of both the trustee and the
beneficiary. See id. "Navarro is not implicated because it dealt with a situation in which
the trustees brought the action in their own names, a situation different from that here in
which the trust is the plaintiff.").
This suit is brought by the Trustee. Thus, Navarro controls on the question of
U.S. Bank's citizenship.

Paragraphs 1 through 3 of the Complaint allege diversity

exists because U.S. Bank's main office is in Minneapolis, Minnesota, SPS is a Utah
corporation with its principal place of business in Salt Lake City, Utah, Defendant is a
resident of Dover, Delaware, and the amount in controversy exceeds $75,000.00.
Based upon the allegations in the Complaint, it survives a facial attack on subject
matter jurisdiction.
It appears that Defendant attempts to make a factual attack on subject matter
jurisdiction as he refers to, and relies upon, evidence that was not was provided to the
court, with the exception of a "Securitization Report" attached as Exhibit A. (D. I. 66).
The Report appears to be Defendant's analysis of the case, 1 and provides no support
for his position. Defendant's bald assertions do not provide evidence to contradict the

1

It is signed by Defendant as "Bloomberg Researcher/Financial Fraud
Investigator" (D.I. 66, at 42) and appears to be prepared by "Gunn Wealth
Management" for the Defendant.

5

claims of citizenship as alleged in the Complaint. Notably, Defendant's factual attack
on diversity of citizenship is devoid of evidentiary support and fails as a matter of laws.

See e.g., lbanex v. U.S. Bank Nat'/ Ass'n, 2011 WL 5928583, at *2 (D. Mass. Nov. 29,
2011) (citizenship of U.S. Bank as Trustee is defined by the citizenship of the Trustee,
not the citizenship of the Trustee's certificateholders). Therefore, the Motion to Dismiss
will be denied.
Plaintiffs served discovery requests upon Defendant on February 22, 2012. (D. I.
22.) When Defendant did not timely respond to the discovery, Plaintiffs filed a
Letter/Motion to Compel (D.I. 49), granted by the Court on April18, 2012 (D. I. 55), that
required Defendant to respond to Plaintiffs' First Set of Interrogatories and Requests for
Production of Documents no later than April 25, 2012. Plaintiffs advise the Court that
the responses are evasive and incomplete and they seek assistance from the Court in
obtaining discovery from Defendant. (D.I. 70.)
Defendant's discovery responses were filed on May 1, 2012. (See D. I. 58.) He
filed objections to the interrogatories and the request for production of documents.
However, because Defendant did not timely respond to the interrogatories, all
objections are waived and he is required to answer the interrogatories. See Fed. R.
Civ. P. 33(b)(4). With regard to the request for production of documents, the objections
based upon attorney client and/or work product privileges are not well-taken. While
Defendant responded to the Request for Production of Documents, in most of his
responses he instructed Plaintiffs to "see documents produced on the enclosed CDROM." (D. I. 58.) The broad responses do not adequately respond to each request as
they do not indicate what documents are responsive to each request. Therefore,

6

Defendant will be ordered to provide complete answers to interrogatories and to
supplement his response to the request for production by specifying which documents
contained on the CD-ROM, if any, are responsive to each Request for Production of
Documents.
For the above reasons, the Court will deny Defendant's Motion (D.I. 65) and will
grant Plaintiffs' Motion (D.I. 70).
An appropriate order will be entered.

7