LMP Ninth Street Real Estate, LLC v. U.S. Bank National Association

Filing 37

ORDER: Plaintiff LMP Ninth Street Real Estate, LLC's Motion to Remand (Doc. # 9 ) is denied. Signed by Judge Virginia M. Hernandez Covington on 10/17/2016. (DMD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LMP NINTH STREET REAL
ESTATE, LLC,
Plaintiff,
v.

CASE NO: 8:16-cv-2463-T-33AEP

U.S. BANK NATIONAL
ASSOCIATION, as Trustee for
the Holders of Waterfall
Commercial Mortgage Trust
2015-SBC5 Commercial Mortgage
Pass-Through, Certificates,
Series 2015-SBC5, and KEYBANK
NATIONAL ASSOCIATION,
Defendants.
_______________________________/
ORDER
This matter comes before the Court on the basis of
Plaintiff LMP Ninth Street Real Estate, LLC’s motion to remand
(Doc. # 9), filed on September 2, 2016. Defendants KeyBank
National Association and U.S. Bank National Association, in
its capacity as trustee for the Certificateholders of the
Waterfall

Commercial

Mortgage

Mortgage

Pass-Through,

Trust

2015-SBC5

Certificates,

Series

Commercial
2015-SBC5

(“Trust”), filed a response in opposition on September 16,
2016. (Doc. # 23). On September 21, 2016, U.S. Bank and
KeyBank

filed

the

Pooling

1

and

Servicing

Agreement

(“Agreement”) for the Trust as an exhibit to their response.
(Doc. # 26). Then, on October, 5, 2016, U.S. Bank and KeyBank
provided further information about the citizenships of the
Trust’s Certificateholders. (Doc. # 32). For the reasons that
follow, LMP Ninth Street’s Motion is denied.
Discussion
KeyBank and U.S. Bank removed this action to this Court
from the Circuit Court of the Sixth Judicial Circuit in and
for Pinellas County, Florida, on August 26, 2016, on the basis
of diversity jurisdiction. (Doc. # 1).
When

jurisdiction

is

premised

upon

diversity

of

citizenship under 28 U.S.C. § 1332, “all parties must be
completely diverse . . . and the amount in controversy must
exceed $75,000.” Underwriters at Lloyd’s London v. OstingSchwinn, 613 F.3d 1079, 1085 (11th Cir. 2010).
Removal statutes are strictly construed against removal.
Shamrock Oil & Gas Co. v. Sheets, 313 U.S. 100, 108 (1941).
Any doubt as to proper subject matter jurisdiction should be
resolved against removal. Butler v. Polk, 592 F.2d 1293, 1296
(5th Cir. 1979).
The removing defendant has the burden of establishing
the existence of federal jurisdiction by a preponderance of
the

evidence

and

the

removing

2

party

must

present

facts

establishing its right to remove.

Williams v. Best Buy Co.

Inc., 269 F.3d 1316, 1319 (11th Cir. 2001).
the

complaint,

the

notice

of

removal,

If nothing in
or

the

record

sufficiently alleges the citizenship of the parties, the
district court may allow the defendants to submit evidence in
support of jurisdiction in order to ensure complete diversity
exists. Rolling Greens MHP, L.P. v. Comcast SCH Holdings,
L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004)(remanding to the
district

court

to

determine

citizenship

where

removing

defendant failed to adequately allege in its notice of removal
the citizenship of both parties.)
U.S. Bank and KeyBank state in their notice of removal
that LMP Ninth Street is a Florida citizen because its sole
member is LMP Properties, L.L.L.P., for which Florida citizens
Dana and Mitch Permuy are the general and limited partners.
(Doc. # 1 at ¶¶ 14-18). The notice of removal states that
U.S. Bank and KeyBank are both national banking associations
and citizens of Ohio. (Id. at ¶¶ 22, 26). They assert that
the Trust is also an Ohio citizen because it is a real estate
investment

conduit

(REMIC)

trust

whose

citizenship

is

determined by the citizenship of its trustee, U.S. Bank. (Id.
at ¶ 24).

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However, in its Motion, LMP Ninth Street argues that
this

is

the

incorrect

test

for

the

citizenship

of

an

investment trust like the Trust. According to LMP Ninth
Street, the case should be remanded to state court because
the citizenship of a REMIC trust should be determined by the
citizenships of all its certificateholders. (Doc. # 9 at 4).
The citizenships of all the Trust’s Certificateholders were
not listed in the notice of removal and U.S. Bank was unable
to prove their citizenships in its statement regarding the
identities

of

the

Certificateholders.

(Doc.

##

1,

32).

Therefore, if the citizenships of all the Certificateholders
are determinative for diversity purposes, U.S. Bank has failed
to

establish

federal

jurisdiction

and

the

case

must

be

remanded.
The “mere designation of an entity as a trust rather
than an unincorporated association is not controlling for
purposes of determining diversity of citizenship.” Bearse v.
Main St. Investments, 220 F. Supp. 2d 1338, 1344 (M.D. Fla.
2002)(citing Xaros v. U.S. Fidelity and Guaranty Co., 820
F.2d 1176, 1181 (11th Cir. 1987)). In the recent decision,
Americold Realty Trust v. Conagra Foods, Inc., 136 S. Ct.
1012 (2016), the Supreme Court held that an unincorporated
artificial entity organized under Maryland law, which called

4

itself a real estate investment trust, was a citizen of every
state in which its shareholders were located. Id. at 1013.
Although it was called a trust, the Americold trust was owned
and controlled by its shareholders under Maryland law. Id. at
1016

(“As

with

shareholders

[in

joint-stock
the

companies

Maryland

or

investment

partnerships,
trust]

have

‘ownership interests’ and votes in the trust by virtue of
their ‘shares of beneficial interest’”). Thus, that trust was
an unincorporated entity for which “diversity jurisdiction in
a suit by or against the entity depends on the citizenship of
all its members.” Id. at 1015. Americold clarified that “when
an artificial entity is sued in its name, it takes the
citizenship of each of its members.” Id. at 1016.
However,

Americold

did

not

change

the

rule

that

a

traditional trust shares the citizenship of its trustee for
diversity purposes. As the Supreme Court explained,
Traditionally, a trust was not considered a
distinct
legal
entity,
but
a
“fiduciary
relationship” between multiple people. Such a
relationship was not a thing that could be haled
into court; legal proceedings involving a trust
were brought by or against the trustees in their
own name. And when a trustee files a lawsuit or is
sued in her own name, her citizenship is all that
matters for diversity purposes. For a traditional
trust, therefore, there is no need to determine its
membership, as would be true if the trust, as an
entity, were sued.

5

Id. (internal citations omitted). The earlier Supreme Court
decision, Navarro Savings Association v. Lee, 446 U.S. 458
(1980), acknowledged that the citizenship of a trustee of an
express trust is determinative for diversity purposes when he
is the real party in interest in the case. See Navarro, 446
U.S.

at

462-66.

“[A]

trustee

is

a

real

party

to

the

controversy for purposes of diversity jurisdiction when he
possesses

certain

customary

powers

to

hold,

manage,

and

dispose of assets for the benefit of others.” Id. at 464; see
also Wells Fargo Bank, N.A. v. Mitchell's Park, LLC, 615 Fed.
App'x 561, 563 (11th Cir. 2015)(“Under the terms of the trust
agreement, Wells Fargo holds all right, title and interest in
the

trust

fund

for

the

exclusive

benefit

of

the

trust

beneficiaries. As a result, Wells Fargo constitutes the real
party in interest and can ‘sue in [its] own right, without
regard to the citizenship of the trust beneficiaries.’”)
Unlike the ‘trust’ in Americold, the Trust is not an
unincorporated artificial entity. Rather, the Agreement shows
that the Trust is a traditional trust, meaning that it is a
fiduciary relationship between the trustee, U.S. Bank, and
the

beneficiaries,

the

Certificateholders.

Under

the

Agreement, the Certificateholders, like beneficiaries of a
traditional trust, do not have voting rights or otherwise own

6

or

control

the

Trust.

(Doc.

#

26

at

§

10.3(b))(“No

Certificateholder shall have any right to vote . . . or in
any manner otherwise control the operation and management of
the Trust Fund . . . .”). The loans which comprise the Trust’s
assets, are transferred and conveyed to U.S. Bank for the
benefit of the Certificateholders. (Id. at § 2.01(a))(“The
Depositor . . . does hereby assign, sell, transfer, set over
and otherwise convey to the Trustee . . . for the benefit of
the Certificateholders all the right, title and interest of
the Depositor . . .”). As trustee, U.S. Bank holds the Trust’s
assets “in trust for the exclusive use and benefit of all
present and future Certificateholders.” (Id. at § 2.02(a)).
The trustee must also ensure the delivery of payments to the
Certificateholders by “establish[ing] and maintain[ing] the
Distribution Account.” (Id. at § 3.04(b)).
Based on U.S. Bank’s powers to hold, manage, and control
the Trust’s assets for the benefit of the Certificateholders,
the Court finds that Trust is a traditional trust and U.S.
Bank is a real party in interest in this case. See Navarro,
446 U.S. at 465-66 (“[The trustees] have legal title; they
manage the assets; they control the litigation. In short,
they are real parties to the controversy.”). As U.S. Bank is
being sued in its own name as trustee of a traditional trust,

7

U.S.

Bank’s

citizenship

is

determinative

for

diversity

purposes. Americold, 136 S. Ct. at 1016 (“And when a trustee
files a lawsuit or is sued in her own name, her citizenship
is all that matters for diversity purposes.”).
U.S. Bank is a national banking association organized
under federal law. (Doc. # 1 at ¶ 23). Pursuant to 28 U.S. C.
§ 1348, a national banking association is a citizen of the
state in which it is located. The Supreme Court has held that
a national bank is located “in the State designated in its
articles of association as its main office.” Wachovia Bank v.
Schmidt, 546 U.S. 303, 318 (2006). U.S. Bank’s main office is
located in Cincinnati, Ohio. (Doc. # 1 at ¶ 25). Thus, U.S.
Bank is a citizen of Ohio and diverse from LMP Ninth Street,
a Florida citizen. Because KeyBank is also a citizen of Ohio,
complete diversity exists between the parties.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
Plaintiff LMP Ninth Street Real Estate, LLC’s Motion to
Remand (Doc. # 9) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
17th day of October, 2016.

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