Leoris v. Chicago Title Land Trust Company et al

Filing 13

MEMORANDUM Opinion and Order Signed by the Honorable John J. Tharp, Jr on 6/5/2018: For the reasons explained in the accompanying opinion, defendant Jean Leoris is directed to file an amended notice of removal identifying the citizenship of the parties and the amount in controversy by June 26, 2018. Defendants' answers to the complaint are due by June 29, 2018. The status hearing set for June 7, 2018 is reset for July 10, 2018 at 9:00 a.m. Mailed notice(air, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DRAKE JAMES LEORIS JR.,
Plaintiff,
v.
CHICAGO TITLE LAND TRUST
COMPANY AND JEAN M. LEORIS,
Defendants.

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No. 18-CV-02575
Judge John J. Tharp, Jr.

MEMORANDUM OPINION AND ORDER
Plaintiff Drake James Leoris, Jr. filed suit in the Circuit Court for the Nineteenth Judicial
Circuit, Lake County, Illinois, seeking a declaratory judgment that he is the sole beneficiary of
Illinois Land Trust 50677T (“the land trust”). According to Drake Leoris Jr.’s complaint, he and
his father, Drake Leoris Sr., were joint tenants in the land trust, which owns property located at
620-622 Laurel Avenue in Highland Park, Illinois (“the property”). Before Leoris Sr.’s death, he
assigned his interest in the land trust to his wife (and Leoris Jr.’s stepmother), Jean M. Leoris.
Leoris Jr.’s suit challenges that assignment, alleging, among other things, that Leoris Sr. was
mentally incapacitated at the time it was made. The suit names as defendants Jean Leoris and
Chicago Title Land Trust Company, the land trust’s trustee.
Jean Leoris removed the suit to federal court. See Notice of Removal, ECF No. 1.
According to the removal notice, Leoris Jr. is a resident of Illinois, Jean Leoris is a resident of
Wisconsin, and the land trust is an “Illinois land trust.” Id. at 1. Although the removal notice
does not identify an amount in controversy, the light it sheds is dim, merely noting that at one
point Leoris Sr. owed $500,000 in debt encumbering the property. The Court has raised the issue
of subject matter jurisdiction sua sponte. “Courts have an independent obligation to determine

whether subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010).
The existence vel non of subject matter jurisdiction in this case poses a novel question of
the role the Illinois land trust—a unique type of trust in which the trustee has virtually no
power—plays in assessing diversity. When a property is placed in a land trust, “both the legal
and equitable title to the res are vested in the trustee, not the beneficiary.” Estate of Bowgren v.
C.I.R., 105 F.3d 1156, 1160 (7th Cir. 1997). But technical legal ownership is, more or less, the
beginning and the end of the trustee’s power over the res. “Land trusts vest the usual attributes of
ownership—the rights of possession and management of the property, as well as the rights to
rents and proceeds from the property—in the beneficiary or beneficiaries.” Id. The beneficiaries’
interests in the property are categorized as personal property interests rather than real estate
interests. Id. Because the beneficiaries have complete control over the property, “the trustee has
no duties or powers other than to execute deeds and mortgages or otherwise to deal with the
property as directed by the holder of the power of direction.” Id.
As an initial matter, the parties dispute whether the land trust bears the citizenship of the
trustee or the beneficiaries. Typically, in cases concerning a trust, the relevant citizenship
depends on who is suing or being sued: “[T]he citizenship of the litigant controls. . . . When the
trustee sues (or is sued), the trustee’s citizenship matters. And when the beneficiary sues or is
sued, or a trust litigates in its own name, again the citizenship of the party controls.” RTP LLC v.
ORIX Real Estate Capital, Inc., 827 F.3d 689, 691 (7th Cir. 2016). In RTP, the Seventh Circuit
reversed its long-standing precedent and determined that the citizenship of the beneficiaries of a
trust—rather than the citizenship of the trustee—are relevant for diversity purposes when a trust
itself is sued. In this case, however, the trustee (Chicago Title), not the trust itself, is the named

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defendant, and it is undisputed that Chicago Title is an Illinois citizen. Moreover, even if the
relevant citizenships were those of the land trust’s beneficiaries rather than that of the trustee, the
land trust would still (likely)1 be a citizen of Illinois because the removal notice identifies Leoris
Jr., who is at least a partial beneficiary of the land trust, as a resident of Illinois.
All this suggests, then, that the Court has no subject matter jurisdiction over the case
because Leoris Jr., the plaintiff, is probably a citizen of Illinois, as is one of the defendants (the
trustee). But there is another wrinkle. For purposes of assessing diversity, the Court may ignore a
nominal defendant, who “can be joined to aid the recovery of relief without an assertion of
subject matter jurisdiction only because he has no ownership interest in the property which is the
subject of the litigation.” S.E.C. v. Cherif, 933 F.2d 403, 414 (7th Cir. 1991). “Because the
nominal defendant is a trustee, agent, or depositary, who has possession of the [property] which
are the subject of the litigation, he must often be joined purely as a means of facilitating
collection. The court needs to order the nominal defendant to turn over [the property] to the
prevailing party.” Id. The trustee in this case is a nominal party. There is no dispute that the land
trust owns the property; the dispute in this case concerns who, as between Leoris Jr. and Jean
Leoris, holds the “personal property interests” attendant to being a beneficiary of the land trust.
Bowgren, 105 F.3d at 1160. No party asserts that the trustee has personal property interests as a
beneficiary of the land trust. Instead, the trustee is a mere conduit through which proper
beneficiaries of the land trust exercise their personal property rights. Viewing the case through
that lens, the trustee is hardly different than an escrow agent or any other individual who
possesses property, but whose only role in a dispute is to deliver the property to the victor. Leoris
Jr. contends that the trustee is not a nominal party because it is “a necessary defendant in order
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As the Court discusses below, the complaint improperly identifies the residencies, rather
than the citizenships, of Leoris Jr. and Jean Leoris.

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for the court to effectuate complete relief,” Pl.’s Jurisdictional Br. 6, ECF No. 10, but this
describes precisely the circumstance in which a party is nominal: when the party must be joined
to a suit to provide the ultimate relief, but otherwise has no interest in the outcome of the case.
See Matchett v. Wold, 818 F.2d 574, 576 (7th Cir. 1987) (“The addition to a lawsuit of a purely
nominal party—the holder of the stakes of the dispute between the plaintiff and the original
defendant—does not affect diversity jurisdiction.”).
That the trustee’s citizenship may be ignored, however, does not mean that Jean Leoris
filed a proper notice of removal. The removal notice lists only Leoris Jr.’s and Jean Leoris’s
residencies rather than their states of citizenship, and allegations of residency are insufficient to
establish diversity jurisdiction. See Simon v. Allstate Employee Group Med. Plan, 263 F.3d 656,
658 n.1 (7th Cir. 2001). The removal notice is also deficient because neither it nor the complaint
alleges an amount in controversy exceeding $75,000—or an amount in controversy at all. See
Webb v. Fin. Indus. Regulatory Auth., Inc., 889 F.3d 853, 856 (7th Cir. 2018) (“The diversity
statute, 28 U.S.C. § 1332, grants jurisdiction when there is complete diversity of citizenship
between the parties and the amount in controversy exceeds $75,000, exclusive of interest and
costs.”). Jean Leoris is therefore directed to file an amended removal notice properly identifying
the citizenships of the parties and the amount in controversy by June 26, 2018, or this case will
be remanded to state court.

Dated: June 5, 2018

John J. Tharp, Jr.
United States District Judge

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