451 Grand LLC, v. 84 George LLC et al

Filing 37

MEMORANDUM AND ORDER denying 20 Motion to Reopen Case; terminating 20 Motion to Dismiss for Lack of Jurisdiction; denying 20 Motion to Vacate. No costs of disbursements. Ordered by Senior Judge Jack B. Weinstein, on 6/4/2012. (Barrett, C)

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UNITED STATES DISTRICT COURT
. EASTERN DISTRICT OF NEW YORK
U.S. BANK, N.A., AS TRUSTEE FOR THE
REGISTERED HOLDERS OF
COUNTRYWIDE COMMERCIAL
MORTGAGE TRUST 2007-MFl ,
COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2007MFI

MEMORANDUM AND
ORDER
09-CV-4553

Plaintiff,

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IN CLE~ K'S ~r'l : .. , :
U.S. DI STRICT CCU F,T [ .D.I'. Y

*

jUN 0 6 2012

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BROOKLYN OFFICE

- against 84 GEORGE LLC, ISRAEL PERLMUTTER,
MENACHEM STARK, THE DEPARTMENT
OF HOUSING PRESERV A nON AND
DEVELOPMENT OF THE CITY OF NEW
YORK, AND THE ENVIRONMENTAL
CONTROL BOARD OF THE CITY OF NEW
YORK,

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Defendants.

JACK B. WEINSTEIN, Senior United States District Judge:
Defendant 84 George LLC seeks to reopen this case and vacate the amended final
judgment entered two years ago in April 2010, arguing that the judgment was void for lack of
jurisdiction. It relies upon Rule 60(b)(4) of the Federal Rules of Civil Procedure.
Defendant contends that diversity jurisdiction to enter the default judgment was lacking,

see 28 U.S.C § 1332; it asserts that (I) the plaintiff-trustee in this case lacks the customary
powers of a trustee, (2) the trust assets are in fact managed by the beneficiaries, who are the real
parties in interest in this case, and (3) some of those beneficiaries are citizens of New York, as is
defendant. Complete diversity of citizenship, defendant claims, was absent.

Defendant received notice of the complaint in December 2009 and did nothing to answer,
relying, he says, on ongoing negotiations. No valid ground for failing to answer has been shown.
Reliefunder Rule 60(b)(4) is exceptional. Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.
1986).
In the context ofa Rule 60(b)(4) motion, ajudgment may be declared void
for want of jurisdiction only when the court plainly usurped jurisdiction,
or, put somewhat differently, when there is a total want of jurisdiction and
no arguable basis on which it could have rested a finding that it had
jurisdiction.
Cent. Vt. Pub. Servo Corp.

V.

Herbert, 341 F.3d 186, 190 (2d Cir. 2003) (internal quotation marks

omitted) (emphasis added).
This rule serves the judicial system's interest in finality. Because "final judgments
should not be lightly reopened, Rule 60(b) may not be used as a substitute for timely appeal.
Since 60(b) allows extraordinary relief, it is invoked only upon a showing of exceptional
circumstances." Jd. (internal quotation marks, bracketing, and ellipses omitted).
"For purposes of diversity jurisdiction, the citizenship of the fiduciary-not the
beneficiary-generally controls." Catskill Dev., L.L.c. v. Park Place Enter. Corp., 547 F.3d
115,124 (2d Cir. 2008). The parties in this case essentially dispute whether the trustee had
power sufficient for its citizenship, rather than that of its beneficiaries, to be operative pursuant
to 28 U.S.C. § 1332.
That question is, given the facts and the nature of the trust instrument, at the very least, an
"arguable" one. See Herbert, 341 F.3d at 190. There is the color of diversity jurisdiction. It can
be assumed that without an answer the allegations of a jurisdictional basis in the instant case
were true. See Fed. R. Civ. P. 8(b)(6) (effect offailing to deny); cf City ofNew York V. Mickalis

·
Pawn Shop, LLC, 645 FJd 114, 138-49 (2d Cir. 2011) (emphasizing effect of failing to assert

personal jurisdiction defense and referring to cases analyzing subject matter jurisdiction).
Defendant should have answered and denied two years ago. No equitable or legal ground
for reopening the case is presented.

is denied. No costs or disbursements.

ck B. Weinstein
Senior United States District Judge
Date: June 4, 2012
Brooklyn, New York