Gerschel v. Bank of America , N.A.
MEMORANDUM AND ORDER granting 19 Motion to Intervene; granting 20 Motion to Intervene. For the foregoing reasons, the Proposed Intervenors' motions to intervene are GRANTED. The Clerk of Court is respectfully directed to terminate the motions pending at ECF No. 19 and ECF No. 20. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 4/26/2021) (mml)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
MEMORANDUM AND ORDER
- against –
20 Civ. 5217 (NRB)
BANK OF AMERICA, N.A.,
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Plaintiff Marianne Gerschel (“Marianne”) sued defendant Bank
of America, N.A. (the “Bank”) with respect to three trusts for
which the Bank had served or currently serves as trustee.
one of those trusts is implicated in the current motions to
grandfather, Andre Meyer, in 1950 (the “1950 Marianne Trust”).1
In this action, Marianne seeks to remove the Bank as trustee of
the 1950 Marianne Trust, leaving her as the sole remaining trustee.
The motions before the Court are for leave to intervene brought by
Mark Giannone (“Giannone”) and Patrick Gerschel (“Patrick”) - who
are trustees of the 1950 Patrick Trust - and Philippe Gerschel
(“Philippe”), Alexander Gerschel (“Alexander”) and Andre Gerschel
In addition to the 1950 Marianne Trust, in 1950, Meyer settled trusts
for his other grandchildren (and Marianne’s brothers) Patrick and Laurent
(referred to herein as the “1950 Patrick Trust” and the “1950 Laurent
Trust”). Later, he would settle two additional trusts for Marianne (referred
to herein as the “1969 Marianne Trust” and the “1984 Marianne Trust”), which
are also subjects of this litigation although not relevant to these motions.
(“Andre”) – who are trustees of the 1950 Laurent Trust.2
Patrick Trust and 1950 Laurent Trust are the contingent remainder
beneficiaries of the 1950 Marianne Trust.
For the following
reasons, the motions to intervene are granted.
1. The 1950 Marianne Trust
As relevant to the Proposed Intervenors’ motions, the 1950
Marianne Trust instrument provides that:
[T]he Trustee shall pay to [Marianne] the
entire net current income, in quarterly
installments during her lifetime. . . . Upon
the death of [Marianne], this Trust herein
created shall terminate and the Trustee shall
pay over the principal thereof to the then
surviving issue of [Marianne], in equal parts
In the event that [Marianne]
shall leave no issue her surviving, the
Trustee shall then divide the principal of the
said trust estate into two equal parts
and . . . shall distribute one such equal
parts to the Trustee [of the 1950 Patrick
Trust] . . . [and] shall distribute the other
equal part of the said principal to the
Trustee [of the 1950 Laurent Trust].4
To restate, Marianne is entitled to the income of the trust but
has no entitlement to the principal.
As Marianne currently has no
issue, the 1950 Patrick Trust and the 1950 Laurent Trust are
contingent remainder beneficiaries of the 1950 Marianne Trust,
Collectively, we will refer to the movants as the “Proposed
The facts herein are drawn from Marianne’s complaint and the
declarations submitted in connection with the Proposed Intervenors’ motions.
The 1950 Marianne Trust instrument is attached in full to the
Declaration of Marshall A. Camp, ECF No. 19-2.
and, upon Marianne’s death, would be entitled to the trust’s
Furthermore, in the event that either the 1950 Patrick
Trust or the 1950 Laurent Trust terminates before Marianne’s death,
beneficiary of such trust.
successors to the original trustee, naming several substitute
individual trustees and allowing that if there remains a single
named substitute individual trustee, that trustee is authorized to
designate a bank or trust company to act as co-trustee or to
succeed as sole trustee.
In 1988, Marianne’s uncle, Phillipe
Meyer, was the sole remaining substitute individual trustee of the
1950 Marianne Trust, and appointed the U.S. Trust Company of New
York (“U.S. Trust”) to act with him as co-trustee.
In 2006, U.S.
Trust was acquired by the Bank, and the Bank and Marianne currently
serve as co-trustees of the 1950 Marianne Trust according to
2. Procedural History of the Instant Action
Marianne filed her complaint against the Bank on July 7, 2020.
ECF No. 1.
The Complaint alleges that the Bank breached its
fiduciary duties to Marianne because it failed to turn over the
Neither the Complaint nor the motion papers make clear how Marianne
succeeded to co-trustee of the 1950 Marianne Trust.
assets of the 1969 Marianne Trust and 1984 Marianne Trust and is
therefore unfit to continue serving as trustee of the 1950 Marianne
The complaint therefore asks the Court to remove the Bank
as trustee of the 1950 Marianne Trust and that the full amount of
the assets held by the 1950 Marianne Trust be transferred to
Marianne, who would then be the sole remaining trustee.
complaint further states that, regardless, the Bank wishes to
resign as trustee of the 1950 Marianne Trust but has advised that
it believes it needs permission from a court to resign.
The Court scheduled an initial pre-trial teleconference for
October 1, 2020 (the “October 1 Teleconference”).
28, 2020, the Bank filed a letter where it indicated that it
intended to move for judgment on the pleadings as it did not oppose
transferring the assets of the 1969 Marianne Trust and 1984
Marianne Trust to Marianne, and also did not oppose resigning as
trustee of the 1950 Marianne Trust and transferring those assets
to Marianne with court approval.
ECF No. 8.
On the day prior to the October 1 Teleconference, counsel for
Patrick and Giannone, trustees of the 1950 Patrick Trust, appeared
and submitted a letter asking for leave to file a motion to
intervene under Fed. R. Civ. P. 24 and to participate in the
ECF No. 10.
The letter indicated that if
contemplated motion for judgment on the pleadings and/or move to
dismiss the case with respect to the 1950 Marianne Trust.
Counsel for Patrick and Giannone, as well as counsel for the
trustees of the 1950 Laurent Trust – Philippe, Alexander and Andre
addressed prior to the Bank’s proposed motion for judgment on the
We also indicated that the parties should address
whether the Proposed Intervenors were necessary parties under Fed.
R. Civ. P. 19, and how their joinder would affect the Court’s
jurisdiction, given that Marianne and Patrick are both residents
of New York.
On November 6, 2020 the Proposed Intervenors filed
A nonparty may intervene as of right if it “claims an interest
relating to the property or transaction that is the subject of the
action, and is so situated that disposing of the action may as a
practical matter impair or impede the movant’s ability to protect
its interest, unless existing parties adequately represent that
Fed. R. Civ. P. 24(a)(2).
A nonparty that seeks to
intervene must “(1) timely file an application, (2) show an
interest in the action, (3) demonstrate that the interest may be
impaired by the disposition of the action, and (4) show that the
interest is not protected adequately by the parties to the action.”
Floyd v. City of New York, 770 F.3d 1051, 1057 (2d Cir. 2014)
(quoting “R” Best Produce, Inc. v. Shulman–Rabin Mktg. Corp., 467
F.3d 238, 240 (2d Cir. 2006)).
“While an applicant must satisfy
all four requirements, this test ‘is a flexible and discretionary
one, and courts generally look at all four factors as a whole
rather than focusing narrowly on any one of the criteria.’”
Kings Corp. v. Westchester Fire Ins. Co., No. 16 Civ. 2016, 2017
WL 396741, at *1 (S.D.N.Y. Jan. 27, 2017) (quoting Tachiona ex
rel. Tachiona v. Mugabe, 186 F. Supp. 2d 383, 394 (S.D.N.Y. 2002)).
The parties do not dispute that the Proposed Intervenors’
motion was timely filed.
Instead, Marianne asserts that the
Proposed Intervenors do not have a valid interest in the action,
as the instrument creating the 1950 Marianne Trust gives no role
to the beneficiaries in the removal or selection of trustees.
However, case law speaking directly on this issue unambiguously
provides that beneficiaries including contingent remainders have
an interest in proceedings to replace a trustee and therefore have
a right to intervene.
In Ramm v. Allen, 118 A.D.3d 708, 709-10
(N.Y. App. Div., 2d Dep’t., 2014), the court held that the proposed
intervenor “as a contingent remainder of the subject trust, has
standing to intervene in this proceeding . . . and a real and
substantial interest in the outcome of the proceeding” “to remove
the father as trustee of the subject trust, to appoint the mother
as the successor trustee, and for an accounting.”
This was so
even when the father did not object to his removal as trustee, and
the trust instrument explicitly named the mother as the successor
See also In re Bellinger’s Est., 35 A.D.2d 1078, 1078
(N.Y. App. Div., 4th Dep’t., 1970) (“Where, as in this case,
removal is sought on the ground of misconduct all persons having
an interest in the administration of the trust should have an
opportunity to be heard.”).6
In its submission supporting intervention, the Bank points
Surrogate’s Court instead of federal District Court, she would
have had to provide notice to the Proposed Intervenors of her
action to remove a trustee, and the Proposed Intervenors would
have had the clear right to appear and contest the requested
See ECF No. 24; N.Y. Surrogate’s Court Procedure Act
The realities of this case demonstrate plainly why remainder
beneficiaries have an interest in the identity of the trustee.
Marianne as co-trustee, who is only entitled to the income of the
1950 Marianne Trust, seeks to remove an independent corporate
While it is unclear whether the question of the Bank’s alleged
misconduct will ever enter into these proceedings, as both Marianne and the
Bank want, albeit on different terms, for the Bank to resign as trustee of
the 1950 Marianne Trust, the complaint nevertheless provides the Bank’s
alleged breach of fiduciary duty as a basis for removal.
However, as sole trustee, Marianne would presumably have
complete access to the principal of the trust.
beneficiaries to the principal, the 1950 Patrick Trust and 1950
preservation by a disinterested trustee.
sufficient interest in the proceedings, and the other requirements
of intervention by right are easily met.
Their interest to
tautologically be impaired if this Court were to dispose of the
proceeding to remove the Bank as trustee without offering them an
Moreover, it is clear that the current parties to the action cannot
adequately protect the Proposed Intervenors’ interests.
so much as acknowledges this when it did not object to the Proposed
Intervenors’ motion, and indeed affirmatively urged the Court to
grant intervention, presumably to ensure that it would not be at
risk of violating any fiduciary duty by resigning.
ECF No. 24
In any event, neither plaintiff nor defendant has an
interest in advancing the Proposed Intervenors’ stated position
that Marianne, as the 1950 Marianne Trust’s income beneficiary,
should not be able to succeed to sole trustee of the same trust
without identifying an uninterested corporate trustee to replace
See Baliga on behalf of Link Motion Inc. v. Link Motion
Inc., No. 18 Civ. 11642, 2020 WL 5350271, at *23 (S.D.N.Y. Sept.
4, 2020) (citing Trbovich v. United Mine Workers of Am., 404 U.S.
For these reasons, pursuant to Rule 24(a), the
Proposed Intervenors are entitled to intervene as of right in the
action between Marianne and the Bank.8
At the October 1 Conference, it was brought to the Court’s
attention that Patrick is a citizen of New York – citizenship which
he shares with Marianne.
The Court instructed the parties to
address how this fact might or might not affect the Court’s
jurisdiction over this case.
For the following reasons, we
The Court makes no determination at this point whether the Proposed
Intervenors can succeed in their opposition to Marianne’s action – only that
they be afforded an opportunity to oppose the action.
Marianne’s remaining objections to intervention lack merit. She first
argues that intervention would be used to expand the scope of the case, but
as is made clear by Proposed Intervenors’ papers, Proposed Intervenors seek
only to oppose the relief sought by Marianne with respect to the 1950
Marianne Trust. The scope of the case is not expanded whatsoever by the
intervention of the Proposed Intervenors. Marianne’s discussion of Article
III standing is relatedly inapt. “[A]n intervenor of right must demonstrate
Article III standing when it seeks additional relief beyond that requested by
the plaintiff.” Town of Chester, N.Y. v. Laroe Ests., Inc., 137 S. Ct. 1645,
1647 (2017) (emphasis added). Again, Proposed Intervenors merely intend to
oppose the relief that Marianne requests. There is no additional relief for
the Court to consider. Proposed Intervenors therefore have a right to
intervene under Rule 24(a). As such, the Court need not determine whether
Proposed Intervenors are entitled to permissive intervention pursuant to Rule
conclude that Patrick may intervene despite not being diverse to
Marianne and that his intervention does not vitiate this Court’s
subject matter jurisdiction. This result is reached by application
of the principles of supplemental jurisdiction.
Under 28 U.S.C. § 1367(a), in civil actions where the district
courts have original jurisdiction, “the district courts shall have
supplemental jurisdiction over all other claims that are so related
to [the original] claims . . . that they form part of the same
case or controversy . . . .
Such supplemental jurisdiction shall
Under Section 1367(b), where a court’s
original jurisdiction is predicated solely on diversity – as is
the case here – the court does not have supplemental jurisdiction
“over claims by plaintiffs against persons made parties under Rule
14, 19, 20, or 24 [intervention] of the Federal Rules of Civil
Procedure . . . when exercising supplemental jurisdiction over
requirements of section 1332.”
The limitations to the court’s supplemental jurisdiction
under Section 1367(b) do not prevent an intervening defendant from
bringing counterclaims against plaintiffs, and courts routinely
exercise supplemental jurisdiction over these claims. See, e.g.,
Mayer Rosen Equities LLC v. Lincoln Nat’l Life Ins. Co., No. 14
Civ. 10087, 2015 WL 9660015, at *5 (S.D.N.Y. Dec. 9, 2015);
Aristocrat Leisure Ltd. v. Deutsche Bank Tr. Co. Americas, 727 F.
Supp. 2d 256, 285 (S.D.N.Y. 2010).
Likewise, courts retain
jurisdiction where, as is the case here, intervening defendants do
not raise affirmative counterclaims but seek to oppose the relief
sought by plaintiffs.
See Underpinning & Found. Skanska, Inc. v.
Berkley Reg’l Ins. Co., 262 F.R.D. 196, 199 (E.D.N.Y. 2009) (“[T]he
Court has supplemental jurisdiction over [intervening defendant]’s
answer to [plaintiff]’s complaint under the provisions of Section
1367.”); see also 6 Moore’s Federal Practice § 24.22 (Matthew
Bender 3d ed.) (“The movant who seeks to intervene only to defend
Therefore, the Court may exercise
supplemental jurisdiction over the Proposed Intervenors, including
Patrick, and retain jurisdiction over the case.
Even if the Court were to lack jurisdiction over Patrick, it
would not follow that the case must be dismissed for failure to
Because Marianne does not raise claims against the Proposed Intervenors
themselves, we need not analyze whether the Court could maintain jurisdiction
over such claims, but note that at least in certain circumstances, courts
have retained jurisdiction over a plaintiff’s original claims as those claims
are newly applied to non-diverse intervening defendants. See Aristocrat
Leisure Ltd., 727 F. Supp. 2d at 285 (finding that plaintiff was not
precluded “from asserting its original declaratory judgment claims against
[non-diverse intervening defendants] . . . because [plaintiff did] not assert
any new claims against [intervening defendants]; rather [intervening
defendants] merely [were] defending against [plaintiff]’s original claim”).
But see UNI Storebrand Ins. Co., UK v. Star Terminal Corp., No. 96 Civ. 9556,
1997 WL 391125, at *4 (S.D.N.Y. July 11, 1997) (declining to exercise
supplemental jurisdiction over intervenor where plaintiff’s non-diverse claim
“‘substantially predominate[d]’ over the claim which [gave the court]
join an indispensable party under Rule 19.
Rule 19 establishes a
two-part test for determining whether a court must dismiss an
action for failure to join an indispensable party.
Int’l, Inc. v. Kearney, 212 F.3d 721, 724 (2d Cir. 2000).
the court must ask whether the absentee is required under Rule
Second, if the absentee is a required party, and if
the absentee cannot be joined for jurisdictional or other reasons,
the court must determine if the absentee is indispensable under
Id. at 725.
If the court determines that the absent
party is indispensable, the action should be dismissed.
While Patrick may be a “required party” under Rule 19(a),10
the factors of Rule 19(b) would not warrant dismissal of the
The Court would be able to exercise jurisdiction over
each of the other Proposed Intervenors, including Patrick’s cotrustee of the 1950 Patrick Trust, Giannone,11 who is diverse to
Marianne and who would presumably act consistently with Patrick’s
interest to maximize the size of the 1950 Patrick Trust. Moreover,
See MasterCard Int’l Inc. v. Fed’n Inernationale de Football Ass’n, No.
06 Civ. 3036, 2006 WL 3065598, at *1 (S.D.N.Y. Sept. 26, 2006), aff’d sub
nom. MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, Inc., 471 F.3d 377 (2d
Cir. 2006) (quoting Uni Storebrand Ins. Co., 1997 WL 391125, at *5) (“[T]he
analysis for ‘necessary’ party and for intervention as of right under Rule
24(a) is essentially the same.”).
Giannone is a resident of New Jersey. Because the Second Circuit has
reasoned that trustees bring or defend against suits of traditional trusts in
their own name, see Raymond Loubier Irrevocable Tr. v. Loubier, 858 F.3d 719,
730-31 (2d Cir. 2017), there does not appear to be a reason why Giannone
cannot represent the interests of the 1950 Patrick Trust in his individual
capacity as trustee in the absence of Patrick, barring some prohibition in
the trust instrument.
the remaining intervenors’ success or failure in opposing the
action would equally affect Patrick’s interests.
See Fed. R. Civ.
P. 19(b)(1); see also Fed. Ins. Co. v. SafeNet, Inc., 758 F. Supp.
2d 251, 259 (S.D.N.Y. 2010) (quoting Jaser v. New York Property
Ins. Underwriting Assoc., 815 F.2d 240, 242 (2d Cir. 1987)) (“The
Second Circuit has instructed district courts to take a ‘flexible
approach’ to the Rule 19(b) analysis and has concluded that ‘very
few cases should be terminated due to the absence of nondiverse
parties unless there has been a reasoned determination that their
nonjoinder makes just resolution of the action impossible.’”).
For the reasons stated above, however, we retain jurisdiction over
Patrick, which affords the parties the benefit of a comprehensive
litigation were Patrick not able to participate in this action.
For the foregoing reasons, the Proposed Intervenors’ motions
to intervene are GRANTED.
The Clerk of Court is respectfully
directed to terminate the motions pending at ECF No. 19 and ECF
New York, New York
April 26, 2021
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
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