Citibank, N.A. v. Najda et al

Filing 503

Judge George A. OToole, Jr: ORDER entered. OPINION AND ORDER. (de Oliveira, Flaviana)

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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 14-13593-GAO
CITIBANK, N.A., not in Its Individual Capacity but Solely as
Separate Trustee for PMT NPL FINANCING 2015-1,
Plaintiff,
v.
RENEE ANNA NAJDA, a/k/a RENEE NAJDA, and ANDREW NAJDA,
Defendants and Counterclaimants,
v.
CITIBANK, N.A., not in Its Individual Capacity but Solely as
Separate Trustee for PMT NPL FINANCING 2015-1, and CITIMORTGAGE, INC.,
Counterclaim Defendants.
OPINION AND ORDER
September 7, 2023
O’TOOLE, D.J.
On June 9, 2023, the Court of Appeals remanded this case for the limited purpose of
clarifying whether Citibank, N.A., is properly considered to be of diverse citizenship from the
defendants so that diversity of citizenship jurisdiction was properly invoked under 28 U.S.C. §
1332(a)(1). This Court requested that the parties submit their respective views on the question.
Their responses are papers 498 through 502 on this Court’s docket. Their principal responses are
attached hereto for convenience as Exhibit A (Defs.’ Mem. (dkt. no. 498)) and Exhibit B (Pl.’s
Mem. (dkt. no. 500)). This Court concludes that Citibank’s proposition is correct. The complaint
is filed by Citibank as Trustee of the identified Trust. In their counterclaim, the defendants sued
Citibank as Trustee. The Trust itself is not named or included as a party litigant.

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The jurisdictional allegations agreed to by both Citibank and the Najdas demonstrated that
diversity jurisdiction existed at the outset of the case, their positions having respectively been
recited in their pleadings, Citibank in its complaint and the Najdas in their counterclaim. Their
positions were consistent with the holding of Navarro Savings Association v. Lee, 446 U.S. 458,
464 (1980), that the citizenship of the trustee(s) of a business trust determines whether diversity
of citizenship exists for purposes of § 1332.
Other First Circuit District Judges have followed the rule established by Navarro. See U.S.
Bank Trust, N.A. v. Dedoming, 308 F. Supp. 3d 579 (D. Mass. 2018); 1900 Cap. Trust III by U.S.
Bank Trust Nat’l Ass’n v. Sidelinger, Civ. No. 2:19-CV-220-DBH, 2021 WL 864951 (D. Me.
Mar. 8, 2021); Ibanez v. U.S. Bank Nat’l Ass’n, C.A. No. 11-11808-RGS, 2011 WL 5928583 (D.
Mass. Nov. 29, 2011). As Judge Young succinctly put it:
Here, U.S. Bank Trust, N.A. is acting solely in its capacity as trustee of LSF9
Master Participation Trust. The trustee is acting for the trust in bringing and
maintaining this action. Thus, the citizenship of U.S. Bank Trust, N.A., as trustee,
is controlling for the purposes of diversity analysis. See U.S. Bank, Nat’l Ass’n v.
UBS Real Estate Sec. Inc., 205 F. Supp. 3d 386, 411 (S.D.N.Y. 2016).
Dedoming, 308 F. Supp. 3d at 580.
It should be noted that the substantive validity of a claim is not a factor in determining the
question of diversity jurisdiction. That is clear from the plain language of § 1332(a)(1): “The
district courts shall have original jurisdiction of all civil actions where the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens
of different States[.]” Section 1332 does not require any demonstration of a plaintiff’s probable
success as a substantive matter. A properly diverse plaintiff for purposes of determining federal
subject matter jurisdiction may have no valid claim at all, but that is a matter of subsequent
adjudication, most commonly by a motion by a defendant to dismiss the claim for “failure to state

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a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). The defendants did not move
to dismiss the original complaint under Rule 12(b)(6) or to require the presence of additional
parties, such as the Trust as an entity, and accordingly the record is sparse as to the parties’ views
(if they had any) about what powers Citibank did or did not have as trustee or whether the Trust
needed to be formally added as an additional plaintiff. But Navarro has essentially answered that
question. In any event, whether an additional party or parties might have been required to be added
or substituted as plaintiffs, the outcome of that question would have no effect on whether the
parties actually named were of diverse citizenship or not, for purposes of subject matter jurisdiction
under § 1332.
Further, to the extent it may be thought necessary to go beyond determining the citizenship
of the parties and the amount in controversy based upon the uncontroverted factual allegations of
the complaint, (i) the suit was brought by Citibank as Trustee, (ii) while Citibank remained in the
case as a party plaintiff, it maintained suit in its own name without objection by the defendants,
(iii) Citibank was named as the assignee in the Assignment of Mortgage from PennyMac
Corporation that was attached to the complaint, and (iv) Citibank was identified as the entity for
which the servicer acted when serving foreclosure-related materials attached to the complaint.
Citibank appears to have controlled the litigation until Christiana Trust was formally substituted
as the plaintiff. It thus appears that as far as the parties were concerned Citibank both had and
exercised the customary powers to hold, manage, and dispose of assets for the benefit of others.
In sum, the original named plaintiff when the case was commenced was Citibank, N.A., as
Trustee. The Trust was not a named party to the complaint.

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Accordingly, what mattered in the assessment of whether diversity jurisdiction under §
1332 existed was Citibank’s citizenship, which, it was not disputed, was in New York.

George A. O’Toole, Jr.
United States District Judge

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EXHIBIT A

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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CITIBANK, N.A., NOT IN ITS INDIVIDUAL
CAPACITY, BUT SOLELY AS SEPARATE
TRUSTEE FOR PMT NPL FINANCING 2015-1,
Plaintiff,
v.
RENEE ANNA NAJDA et al.,
Defendants,
v.

Case No. 14-13593-GAO

SANTANDER BANK N.A. f/k/a SOVEREIGN
BANK, Party-in-Interest,

RENEE ANNA NAJDA et al.,
Defendants/Counterclaim Plaintiffs,
v.
CITIBANK, N.A., … FOR PMT NPL FINANCING
2015-1 et al.,
Plaintiff/Counterclaim Defendants.
DEFENDANTS’ MEMORANDUM ON WHY THERE WAS NO EVIDENCE ADDUCED
AT THE TRIAL THAT CITIBANK NO. 1 HAD POWERS OVER THE TRUST
PURSUANT TO THE NAVARRO STANDARD
I.

INTRODUCTION
Defendants/Counter-Plaintiffs Renee and Andrew Najda (collectively, the “Najdas”),

respond to this Court’s order for a memorandum “regarding their positions as to ‘the powers of
Citibank as trustee vis-á-vis the trust,’” by stating there was no “evidence adduced at the trial that
Citibank [No. 1] 1 had the customary powers to hold, manage, and dispose of assets for the benefit

Citibank, N.A., as Trustee for the Benefit of SWDNSI Trust Series 2010-3 (“Citibank No. 1”).
The original plaintiff.
1

1

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of others” when this action commenced. Dkt. No. 496, Order; Dkt. No. 495, Second Remand Order
at 2 (citing Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 464 (1980); BRT Mgmt. LLC v. Malden
Storage LLC, 68 F.4th 691 (1st Cir. 2023)). At trial, plaintiff Citibank No. 22, PennyMac Loan
Services, LLC (“PLS”), Specialized Loan Servicing, LLC (“SLS”), PennyMac, Corp. (“PMC”),
and CitiMortgage, Inc. (“CitiMortgage”) did not introduce “[r]elevant state law, trust documents,
or other indicia of control” to prove by a preponderance of the evidence the original plaintiff,
Citibank No. 1, was an active trustee, with real and substantial control, of SWDNSI 2010 3. Dkt.
No. 496. Citibank No. 2, undermining its ability to establish jurisdiction, stipulated to the exclusion
of the trust documents and prevailed in excluding the note’s ownership history from the trial.
In contrast, “[t]he record in this case [was] replete with undisputed documentary evidence[,
included with the Najdas’ motion for directed verdict brought during the trial (Dkt. No. 337),] that
permit[ed] [this Court] to ascertain” that Citibank No. 1 was a passive trustee, without real and
substantial power over SWDNSI 2010’s assets and litigation. Baker v. United Transp. Union, 455
F.2d 149, 155 (3d Cir. 1971). Citibank No. 2, PLS, SLS, PMC, and CitiMortgage did not dispute
the evidence that PNMAC Capital Management, LLC (“PNMAC”) had “sole investment
discretion for [SWDNSI 2010’s]” assets and controlled the litigation strategy at the outset. Dkt.
No. 337-3, PNMAC Part 2A of Form ADV at 4; Dkt. No. 63, Local Rule 16.1 Cert. at 2.
This Court’s February 27, 2023 order, during the first remand, merely restated the Navarro
standard as a “conclusory finding [as to Citibank No. 1’s role as trustee], illuminated by no
subsidiary findings or reasoning on all the relevant facts”. Atl. Thermoplastics Co. v. Faytex Corp.,
5 F.3d 1477, 1479 (Fed. Cir. 1993). During the second remand, this Court cannot “identify and

2

Citibank, N.A. not in its individual capacity, but solely as separate trustee for PMT NPL
Financing 2015-1 (“Citibank No. 2”). The third plaintiff after two substitutions.
3
SWDNSI Trust Series 2010-3 (“SWDNSI 2010”).
2

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detail the ‘evidence adduced at the trial that Citibank [No. 1]’” was an active trustee, with real and
substantial control of SWDNSI 2010, because no such evidence was introduced at the trial. Dkt.
No. 495 at 2. This Court, therefore, should report to the United States Court of Appeals for the
First Circuit (“First Circuit”) that no “evidence [was] adduced at the trial that Citibank [No. 1] had
the customary powers to hold, manage, and dispose of assets for the benefit of [SWDNSI 2010]”.
Id.
II.
A.

REMAND HISTORY
First Remand
On December 30, 2022, the First Circuit “remanded to the district court for further fact

finding and a determination whether there was minimal or complete diversity between the parties
at the time the action was commenced”. Dkt. No. 472, First Remand Order. On January 19, 2023,
this Court ordered “the parties [to] file memoranda regarding their positions as to whether there
was … diversity”. Dkt. No. 473. The Najdas filed their memorandum as did Citibank No. 2 and
CitiMortgage. Dkt. Nos. 479, 482, 483. However, PLS, SLS, and PMC did not file memoranda.
On February 27, 2023, this “court issued an ‘Opinion and Order’ concerning this issue (the
‘Opinion’)”. Dkt. No. 490, Opinion; Dkt. No. 495 at 2. The Opinion included the “mere boilerplate” that “it was clear from evidence adduced at the trial that Citibank had the customary powers
to hold, manage, and dispose of assets for the benefit of others” “but unsupported by evaluation of
the facts”. Protective Comm. for Indep. Stockholders of TMT Trailer Ferry v. Anderson, 390 U.S.
414, 434 (1968); Dkt. No. 490 at 2. Upon conclusion of the first remand, the Najdas argued “[t]he
[Court’s] conclusory reference to the record provide[d] no basis for [the First Circuit] to validate
the finding”. Carnival Cruise Lines v. Shute, 499 U.S. 585, 594 (1991); Najdas’ Brief at 32, 1st.
Cir. Case. No. 23-1284.
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B.

Second Remand
“On review of the Opinion and the supplemental briefing, [the First Circuit] conclude[d]

that a second remand [was] appropriate.” Dkt. No. 495, Second Remand Order at 2 (citing United
States v. Twp. of Brighton, 282 F.3d 915, 919 (6th Cir. 2002)). On June 9, 2023, the First Circuit
“remand[ed] for the district court to identify and detail the ‘evidence adduced at the trial that
Citibank had the customary powers to hold, manage, and dispose of assets for the benefit of others,’
referred to in the Opinion.” Dkt. No. 495 at 2. “[I]n [the First Circuit’s] view, the most relevant
evidence would be that which establishe[d] the powers of Citibank as trustee vis-à-vis the trust on
whose behalf Citibank first [had] filed suit.” Id. On June 13, 2023, this Court directed the parties
to “file memoranda, with citations to the record, regarding their positions as to ‘the powers of
Citibank as trustee vis-á-vis the trust,’ and specifically as to whether ‘Citibank had the customary
powers to hold, manage, and dispose of assets for the benefit of others’ at the outset of the
litigation.” Dkt. No. 496.
III.
A.

ARGUMENT
Limited Scope of the Second Remand
On remand, “a lower court ‘should confine its ensuing inquiry to matters coming within

the specified scope of the remand.’” Biggins v. Hazen Paper Co., 899 F. Supp. 809, 816 (D. Mass.
1995) (quoting Kotler v. The American Tobacco Co., 981 F.2d 7, 13 (1st Cir. 1992)). In the present
matter, “jurisdiction over the case was in the court of appeals; the only issue before the district
court by reason of [the First Circuit’s] limited remand” was “for the district court to identify and
detail the ‘evidence adduced at the trial that Citibank had the customary powers to hold, manage,
and dispose of assets for the benefit of others,’ referred to in the Opinion.” United States v.
Wooden, 230 F. App’x 243, 244 (4th Cir. 2007); Dkt. No. 495 at 2.
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The June 13, 2023 order for memoranda did not use the language “evidence adduced at the
trial” even though the First Circuit’s order had circumscribed the second remand, with the
Opinion’s language, to “detail[ing] the ‘evidence adduced at the trial’”. Dkt. No. 495, Second
Remand Order at 2 (quoting Dkt. No. 490, Opinion at 2). Notwithstanding the missing language,
this means “the district court lack[s] jurisdiction” to solicit or identify evidence outside the trial to
attempt to explain the Opinion’s conclusory finding that “it was clear from evidence adduced at
the trial that Citibank had the customary powers to hold, manage, and dispose of assets for the
benefit of others.” Wooden, 230 F. App’x at 244; Dkt. No. 490 at 2.
B.

No Evidence Was Introduced at the Trial Proving Citibank No. 1 Had Real and
Substantial Control Over SWDNSI 2010
To begin, there was no support in the trial record for the Opinion’s conclusory finding.

Neither Citibank No. 2 nor the other counterclaim defendants introduced evidence or testimony at
the trial to prove by a preponderance of the evidence that Citibank No. 1 was an active trustee with
real and substantial control over SWDNSI 2010, an unincorporated entity. Dkt. No. 1, Complaint
⁋ 3 (“Delaware Statutory Trust”). Citibank No. 2 did not introduce evidence or testimony at trial
to prove Citibank No. 1 had controlled SWDNSI 2010’s assets. Nor did Citibank No. 2 introduce
evidence or testimony to prove Citibank No. 1 had controlled the litigation strategy.
Citibank No. 2, not only indolent in meeting its jurisdictional burden, actively undermined
its ability to establish jurisdiction. For instance, Citibank No. 2 stipulated to the exclusion of all
trust documents. Dkt. No. 453, Nov. 2, 2017 Hr’g Tr. 41:6-8 (“we didn’t produce [the trust
documents] and … we would not be introducing it at trial”). Upon receipt of the stipulation, this
Court mooted the Najdas’ motions in limine (Dkt. Nos. 281, 289) to preclude the trust documents
and evidence of the trustee’s authority, which Citibank No. 1 had not produced during discovery.
Dkt. No. 312, November 2, 2017 Hr’g Notes. Citibank No. 2, by its willful stipulation, cannot
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attempt to cite the trust documents for customary powers. PLS, SLS, PMC, and CitiMortgage
implicitly supported making it harder to establish jurisdiction because they failed to object.
Doubling down on leaving itself without a lifeline to establish jurisdiction, Citibank No. 2
brought a motion in limine to exclude the note’s ownership history, which was granted. Dkt. Nos.
249, 285. Leaving Citibank No. 2 unable to prove Citibank No. 1 controlled the note “at the time
of filing.” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571 (2004). Citibank No. 2,
fixated on blocking such evidence, declared, “[t]he prior transfer of the note is completely
irrelevant”. Dkt. No. 437, Nov. 7, 2017 Trial Tr. 2-58:5-6. Likeminded, this Court ruled, “[t]he
history of the transfer is just not getting in.” Id. 2-58:12-13.
Derelict in meeting the jurisdictional burden, Citibank No. 2, PLS, SLS, PMC, and
CitiMortgage cannot deploy the Opinion as a jurisdictional shield. Consistent with there being no
evidence that Citibank No. 1 controlled SWDNSI 2010, this Court’s Opinion neither cited a line
of testimony nor named a piece of “evidence adduced at the trial that Citibank [No. 1] had the
customary powers”. Dkt. No. 490 at 2. In the face of that case, this Court should report to the First
Circuit that no “evidence [was] adduced at the trial that Citibank [No. 1] had the customary powers
to hold, manage, and dispose of assets for the benefit of [SWDNSI 2010]”. Dkt. No. 495 at 2.
C.

Evidence Established Citibank No. 1 Was a Passive Trustee
There was an absence of evidence that Citibank No. 1 was an active trustee. Not so for the

inverse. Citibank No. 2, PLS, SLS, PMC, and CitiMortgage did not dispute the evidence, in the
Najdas’ motion for directed verdict at trial, that proved Citibank No. 1 was “a purely naked
trustee”, without real and substantial control, over SWDNSI 2010. McNutt v. Bland, 43 U.S. 9, 1314 (1844); Dkt. No. 337. Evidence proved Citibank No. 1 neither “manage[d] the assets” nor
“control[ed] the litigation” nor made decisions regarding the loan. Navarro, 446 U.S. at 465.

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1.

Investment Advisor PNMAC Managed SWDNSI 2010’s Assets, Not Citibank No. 1
PNMAC managed SWDNSI 2010’s assets when this action began. Not Citibank No. 1.

PNMAC, “registered with the Securities and Exchange Commission (‘SEC’) as an investment
adviser”, “ha[d] management agreements with PennyMac Mortgage Investment Trust (“PMT”)
[and its subsidiary SWDNSI 2010]” whereby PNMAC “select[ed] investments … and place[ed]
purchase and sale orders for investments on behalf of such entities.” Dkt. No. 337-2, PNMAC’s
Parent 10-Q Note 1 at 1 (June 30, 2014); Dkt. No. 337-3, PNMAC Part 2A of Form ADV at 4;
Dkt. No. 337-4, PMT 10-K Report (“SWDNSI Trust Series 2010-3” is a PMT “Entity”). PNMAC
had “sole investment discretion for [PMT and its subsidiary SWDNSI 2010] … with respect to
their respective assets and ma[de] all decisions affecting each client’s assets”. Dkt. No. 337-3,
PNMAC Part 2A of Form ADV at 4. Importantly, Citibank No. 2, PLS, SLS, PMC, and
CitiMortgage did not deny that PNMAC had “sole investment discretion”. Id.
2.

Investment Advisor PNMAC Controlled the Litigation Strategy, Not Citibank No. 1
PNMAC controlled the litigation strategy and budget at the start. Not Citibank No. 1. At

the Local Rule 16.1(D)(3) conference, PNMAC’s “Assistant General Counsel, Mortgage
Operations” directed Citibank No. 1’s counsel on how to proceed with the litigation. Dkt. No. 63,
Local Rule 16.1 Cert. at 2; Dkt. No. 419-5, Eric Jorgensen Profile. Prior to and during the first
remand, Citibank No. 2, PLS, SLS, PMC, and CitiMortgage did not dispute that PNMAC, through
assistant general counsel Eric Jorgensen, controlled the litigation strategy.
3.

Citibank No. 1 Admitted It Did Not Make Decisions and Did Not Possess Documents
Related to the Note and Mortgage
There was more. Confirming PNMAC’s controlling role and Citibank No. 1’s passive

position, Citibank No. 1 admitted “it did not make any decisions” and “d[id] not [] possess any
documents regarding the Najdas’ Note and Mortgage”. Dkt. No. 337-1, Resp. to Interrogatory Nos.
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8, 11; Dkt. No. 110 at 5. Citibank No. 1 was “a purely naked trustee”, nothing more than a “mere
conduit” without control of SWDNSI 2010’s assets and litigation strategy. McNutt, 43 U.S. at 1314. In keeping with the prior waiver, Citibank No. 2, PLS, SLS, PMC, and CitiMortgage did not
deny that PNMAC made decisions, relevant to the Navarro standard, for SWDNSI 2010.
Citibank No. 2, PLS, SLS, PMC, and CitiMortgage wholly failed to rebut the compelling
evidence proving Citibank No. 1 was a passive trustee, without substantive powers over SWDNSI
2010. Consequently, this Court should report to the First Circuit that there was no “evidence
adduced at the trial that Citibank [No. 1] had the customary powers to hold, manage, and dispose
of assets for the benefit of [SWDNSI 2010]”. Dkt. No. 495 at 2.
IV.

CONCLUSION
“[F]ederal courts are courts of limited jurisdiction, and . . . may exercise only the authority

granted to them by Congress.” Commonwealth of Mass. v. Andrus, 594 F.2d 872, 887 (1st Cir.
1979). When this action commenced, original plaintiff Citibank No. 1 was a passive trustee,
without real and substantial control, of SWDNSI 2010, a Delaware statutory trust. Consequently,
SWDNSI 2010’s citizenship controlled for evaluating diversity. Navarro, 446 U.S. at 465-66. An
unincorporated entity, SWDNSI 2010 inherited the citizenship of all its members rendering it and
the Najdas co-citizens of Massachusetts. Americold Realty Tr. v. ConAgra Foods, Inc., 577 U.S.
378, 383 (2016). Both minimal diversity and complete diversity were absent from the start.
The absence of subject matter jurisdiction was not an unimportant error of law. This action
continuing for years, even though jurisdiction was lacking, caused a cascade of consequences.
There was an unjust outcome for the Najdas: eight years of litigation expenses, thousands of hours
spent researching and drafting, and charges for substantial accrued interest and payments that

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would not exist had Citibank No. 2 acted competently and not brought an action without subject
matter jurisdiction. The damage extended further.
Substantial judicial resources were expended. The First Circuit ordered two consecutive
remands. On the first remand, this Court restated the Navarro standard as a conclusory finding
even though there had been no “evidence adduced at the trial that Citibank [No. 1] had the
customary powers to hold, manage, and dispose of assets for the benefit of [SWDNSI 2010]”. Dkt.
No. 495 at 2. After which, this action was “remand[ed a second time] for the district court to
identify and detail the ‘evidence adduced at the trial that Citibank had the customary powers to
hold, manage, and dispose of assets for the benefit of others,’ referred to in the Opinion.” Id. To
sum up, there is no such evidence to identify because none was introduced at the trial. An expected
outcome because Citibank No. 1 was a passive trustee of SWDNSI 2010.
The Najdas respectfully request this Court report to the First Circuit that no “evidence
[was] adduced at the trial that Citibank [No. 1] had the customary powers to hold, manage, and
dispose of assets for the benefit of [SWDNSI 2010]” and enter an Order granting such other and
further relief to which this Court finds the Najdas are otherwise entitled. Id.

Respectfully submitted,
Andrew Najda and Renee Najda,
/s/ Andrew Najda
and
/s/ Renee Najda

Date: July 11, 2023

71 Flint Road,
Concord, MA 01742

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V.

CERTIFICATE OF SERVICE
I certify that, on July 11, 2023, I filed the foregoing document with the Clerk of the United

States District Court for the District of Massachusetts via the CM/ECF system. All attorneys in
this case who are registered CM/ECF users were served accordingly.

/s/ Andrew Najda
Andrew Najda

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EXHIBIT B

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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
)
CITIBANK, N.A., NOT IN ITS INDIVIDUAL
)
CAPACITY, BUT SOLELY AS SEPARATE
)
TRUSTEE FOR PMT NPL FINANCING
)
2015-1,
)
)
)
Plaintiff,
)
)
v.
)
Case No. 14-13593-GAO
)
RENEE ANNA NAJDA et al.,
)
)
Defendants,
)
)
v.
)
)
SANTANDER BANK N.A. f/k/a SOVEREIGN
)
BANK,
)
)
Party-in-Interest,
)
__________________________________________)
)
RENEE ANNA NAJDA et. al.,
)
)
Defendants/Counterclaim Plaintiffs,
)
)
v.
)
)
CITIBANK, N.A. AS TRUSTEE FOR
)
THE BENEFIT OF SWDNSI TRUST
)
SERIES 2010-3, et al.,
)
)
Counterclaim Defendants.
)
__________________________________________)
PLAINTIFF’S MEMORANDUM REGARDING THE ORIGINAL PLAINTIFF’S
POWERS AS TRUSTEE
Plaintiff Citibank, N.A., not in its individual capacity, but solely as separate trustee for
PMT NPL Financing 2015-1 (“Plaintiff”) hereby submits this memorandum regarding “the powers

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of Citibank as trustee vis-á-vis the trust” and “whether Citibank had the customary powers to hold,
manage, and dispose of assets for the benefit of others” at the outset of the litigation pursuant to
this Court’s June 13, 2023 Order. See ECF No. 496.
ARGUMENT & AUTHORITIES
I.

Determining Trustee Citizenship
The only remaining legal issue, which Defendants Renee and Andrew Najda (the “Najdas”)
are ultimately estopped from raising as a result of their repeated invocation and consent to this
Court’s jurisdiction, is whether the original plaintiff, Citibank, N.A., as Trustee for the benefit of
SWDNSI Trust Series 2010-3 (the “Original Plaintiff’), commenced this litigation on its own
accord in its capacity as trustee.1 Thus, it is essential to identify the legal standard applicable to
determining the citizenship of corporates trustees for purposes of diversity jurisdiction. A seminal
decision on this point is Navarro Sav. Assoc. v. Lee, 446 U.S. 458, 465 (1980). There, eight
individual trustees of a business trust organized under the laws of Massachusetts invoked diversity
jurisdiction to bring a breach of contract action against a Texas citizen in federal district court. Id.
at 459-460. After the court dismissed the matter for lack of subject matter jurisdiction, the
Supreme Court affirmed the decision of the Fifth Circuit Court of Appeals to reverse. Id. at 460.
Importantly, the Court explained that it would not look to the beneficial shareholders of the
underlying trust for purposes of diversity jurisdiction. Rather, the Court stated in reference to the
trustees:
They have legal title; they manage the assets; they control the litigation. In short,
they are parties to the controversy. For more than 150 years, the law has permitted
trustees who meet this standard to sue in their own right, without regard to the

1

Plaintiff has recited the factual background, procedural background, and basic legal framework concerning
diversity jurisdiction extensively. For the purpose of this memorandum, which is the latest in a series of
briefs concerning this issue, Plaintiff assumes this Court’s and the parties’ familiarity with the case history
and undisputed principles of diversity jurisdiction.
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citizenship of the trust beneficiaries. We find no reason to forsake that principle
today.
Id. at 455-456.
In Americold Realty Tr. v. Conagra Foods, Inc., the Court distinguished Navarro on review
of a case where a group of plaintiff corporations sued a real estate investment trust organized under
Maryland law. 577 U.S. 378, 379 (2016). There, the Court held that the trust itself was a citizen
of every state in which its individual shareholders were citizens.

Id. at 382.

The Court

acknowledged, however, that this left its ruling in Navarro undisturbed and stated that “Navarro
reaffirmed a separate rule that when a trustee files a lawsuit in her name, her jurisdictional
citizenship is the State to which she belongs – as is true of any natural person.” Id.
Courts in the First Circuit have applied Navarro in circumstances similar to the instant
matter. In Ibanez v. U.S. Bank, N.A., for example, this Court found that “when a suit is filed by or
against the trustee, so long as the trustee is a ‘real party to the controversy,’ the citizenship of the
trustee – and not that of the beneficiaries – is at play.” No. 11-11808-RGS, 2011 WL 5928583,
*2 (D. Mass. Nov. 29, 2011) (denying motion to remand) (citing Navarro, 446 U.S. at 464).
Similarly, in U.S. Bank Tr., N.A. for LSF9 Mater Participation Tr. v. Dedoming, this Court
explained that in the case of a business trust, citizenship depends on (i) whether the trust is an
incorporated entity and (ii) whether the trust or its trustees are parties to the litigation. 308 F.
Supp. 3d 579, 580 (D. Mass. 2018) [hereinafter, Dedoming]. After invoking Navarro, the court
stated, “The trustee is acting for the trust in bringing and maintaining this action. Thus, the
citizenship of U.S. Bank Trust, N.A., as trustee, is controlling for the purposes of the diversity
analysis.” Id. at 580. Additionally, in McLarnon v. Deutsche Bank Nat’l Tr. Co., this Court found
complete diversity between the parties where the plaintiff mortgagor was a citizen of

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Massachusetts and the defendant mortgagee, a trustee for a mortgage trust, was a citizen of
California. No. 15-11799-FDS, 2015 WL 4207127, *3 (D. Mass. July 10, 2015).
To the extent that the Najdas dispute diversity jurisdiction based on the citizenships of the
Original Plaintiff’s shareholders, the Ninth Circuit recently disposed of such an argument in
Demarest v. HSBC Bank USA, N.A, 920 F.3d 1223, 1228-1229 (9th Cir. 2019). In an opinion that
thoroughly discussed the contours of citizenship for both trusts and trustees, the Ninth Circuit
Court of Appeals found the case “easily resolved” where the trustee sued in its own name. Id.
Shortly after issuing its decision in Demarest, the Ninth Circuit affirmed this approach in Bank of
New York Mellon v. Thunder Props., Inc., 778 Fed. Appx. 488, 489 (9th Cir. Sep. 25, 2019)
(unpublished). There, where the trustee did nothing more than file suit in its own name, the court
fully credited its jurisdictional allegations and noted that inferences were to be drawn in the
trustee’s favor in the absence of a factual attack on the pleadings. Id.
II.

First Circuit Precedent Compels a Finding that The Original Plaintiff Was the Real Party
In Interest
Here, it is important to note that the Original Plaintiff has been absent from this litigation

since the February 9, 2016 substitution of Christiana Trust, a division of Wilmington Savings Fund
Society, FSB, not in its individual capacity, but solely as separate trustee for PMT NPL Financing
2015-1 (“Christiana Trust”) as plaintiff. See ECF No. 96. Prior to that substitution, neither the
Original Plaintiff’s corporate identity nor the details of its role as a trustee were disputed or of any
interest whatsoever.

In fact, the Najdas pled counterclaims against the Original Plaintiff

acknowledging its citizenship and invoking this Court’s diversity jurisdiction. See ECF No. 13, ¶
8; ECF No. 45, ¶ 8. The Najdas did not raise claims against the trust itself. This, without more,
confirms that the Original Plaintiff had traditional trustee powers. See Ibanez, 2011 WL 5928583,
*2 (“[W]hen a suit is filed by or against the trustee, so long as the trustee is a real party to the

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controversy . . . the citizenship of the trustee – and not that of the beneficiaries – is at play.”)
(internal citations omitted). Additionally, as a consequence of the Original Plaintiff’s dismissal
from this case at a relatively early stage in the litigation, there are few, if any, portions of the record
discussing the Original Plaintiff’s powers as trustee.
The few portions of the record, or other publicly available records, that address the Original
Plaintiff indicate that it was indisputably authorized to commence this lawsuit. First, consider
Exhibit F to the Original Plaintiff’s Complaint. Exhibit F is a June 24, 2014 Assignment of
Mortgage from PennyMac Corp., the Najdas’ former mortgagee, to “Citibank, N.A., as trustee for
the benefit of SWDNSI Trust Series 2010-3” [the Original Plaintiff] recorded in the South
Middlesex County Registry of Deeds at Book 63818, page 527. See ECF No. 1, Ex. F. Notably,
the trustee was the named assignee, not the trust itself or any of its beneficiaries. Thus, this
Assignment irrefutably demonstrates that the Original Plaintiff, as the then-current mortgagee, was
authorized to commence this action when it filed the complaint on September 9, 2014. It
maintained the action as trustee until its substitution in 2016. Thus, it is the Original Plaintiff’s
citizenship, rather than the citizenship of each underlying trust beneficiary, that controls for
purposes of diversity jurisdiction. See Dedoming, 308 F. Supp. 3d at 580. Insofar as the Original
Plaintiff was a citizen of New York and the Najdas were, and are, citizens of Massachusetts, this
Court’s exercise of diversity jurisdiction was proper. See ECF No. 1, ¶¶ 2, 4-5.
Other records appended to the Complaint also support this position. For example, (i)
Exhibit G is a May 7, 2013 150 Day Notice of Right to Cure letter from Specialized Loan
Servicing, LLC (“SLS”) to the Najdas and (ii) Exhibit H is a May 7, 2013 150 Day Notice of Right
to Request a mortgage Modification from SLS to the Najdas. Both letters unambiguously state
that they are from “Specialized Loan Servicing LLC on behalf of Citibank, N.A., as trustee for the

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benefit of SWDNSI Trust Series 2010-3[.]” See Compl., Ex. G, p. 2; Ex. H, p. 2. These letters
demonstrate that, long before the Complaint was filed, the mortgage’s servicer acted on the
Original Plaintiff’s behalf and accurately identified the trustee, not the trust, as the interested party.
Other publicly available documents support this conclusion. Consider, for example, the
November 12, 2015 Assignment of Mortgage whereby the Original Plaintiff assigned its rights to
the Najdas’ mortgage to Christiana Trust. A copy of this document is attached hereto as Exhibit
A. This record evidences a transaction whereby the Original Plaintiff acted in its capacity as
trustee in respect of the Najdas’ mortgage. Upon examination, for example, this assignment was
executed not by the underlying trust but by a series of agents acting on the trust’s behalf. The
signature block reads:
SWDNSI Trust Series 2010-3
By: CitiBank, N.A., not in its individual capacity, but solely as certificate
trustee
By: PennyMac Loan Services, LLC, its attorney-in-fact
Ex. A. (emphasis added). This delegation of authority belies any assertion that the underlying trust
could have acted in its own capacity with respect to the Najdas’ mortgage or the resulting litigation.
To the contrary, the Original Plaintiff brought and controlled this action until it assigned the
mortgage and was properly substituted by this Court.
Here, as in Dedoming, the Original Plaintiff “act[ed] for the trust in bringing and
maintaining this action[.]” 308 F. Supp. 3d at 580. The pleadings and other records that reflect
the state of affairs at the time of this action’s filing support that conclusion.
III.

Conclusion
The record of the Original Plaintiff’s status at the commencement of this matter is not the

subject of any reasonable dispute. Rather, the records referenced herein indicate that the Original
Plaintiff had the customary powers to hold, manage, and dispose of the underlying trust’s assets.

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This informs but one conclusion: Navarro and its First Circuit progeny compel this Court to find
that the Original Plaintiff was in fact the real party to this controversy at the time of filing.

Respectfully Submitted,
Plaintiff Citibank, N.A., not in its individual
capacity, but solely as separate trustee for
PMT NPL Financing 2015-1,
By its attorneys,
/s/ Kevin P. Polansky
Kevin P. Polansky (BBO# 667229)
[e-mail]
Daniel M. Curran (BBO #709082)
[e-mail]
Nelson Mullins Riley & Scarborough LLP
One Financial Center, Suite 3500
Boston, Massachusetts 02111
p. [phone]
f. [phone]

Dated: July 11, 2023

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CERTIFICATE OF SERVICE
I, Kevin P. Polansky, hereby certify that this document filed through the ECF system will
be sent electronically to the registered participants as identified on the Notice of Electronic Filing
(NEF) and paper copies will be sent to those indicated as non-registered participants on this date.
Dated: July 11, 2023

/s/ Kevin P. Polansky

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EXHIBIT A

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