U.S. Bank Trust, N.A. v. Licata et al

Filing 14

DECISION AND ORDER denying 10 Motion for Default Judgment and dismissing complaint for lack of subject matter jurisdiction. Signed by Hon. Michael A. Telesca on 06/21/2017. (CDH). -CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
U.S. BANK TRUST, N.A., AS TRUSTEE FOR
LSF9 MASTER PARTICIPATION TRUST,
Plaintiff,

No. 6:17-cv-6037(MAT)
DECISION AND ORDER

-vsDUANE J. LICATA, LORI A. LICATA,
Defendants.

I.

Introduction
Plaintiff

U.S.

Bank

Trust,

N.A.

(“plaintiff”)

alleges

nonpayment of a mortgage by defendants Duane J. Licata and Lori A.
Licata (collectively defendants).
judgment.

Docket No. 10.

Plaintiff has moved for default

For the reasons set forth below,

plaintiff’s motion is denied and the action is dismissed for lack
of subject matter jurisdiction.
II.

Background
Plaintiff, through its counsel, Gross Polowy LLC (“Gross

Polowy”), commenced the instant action on January 17, 2017. Docket
No. 1.

Plaintiff alleges that defendants have failed to make

payments under the terms of a mortgage held by it and secured by
property

owned

by

defendants,

and

seeks

a

judgment

for

the

outstanding amount of the loan, as well as foreclosure and sale of
defendants’ property.

Id.

Plaintiff asserts federal subject matter jurisdiction based
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solely

on

diversity

of

citizenship.

Specifically,

plaintiff

asserts that defendants are both citizens of New York and that it
is “a national association” with its principal place of business in
Texas.

Id. at ¶¶ 2-3.

Plaintiff purports to bring this action as

trustee for the LSF9 Master Participation Trust (the “Trust”), but
has provided no details regarding its powers as trustee or the
citizenship of the Trust’s beneficiaries.
Defendants failed to appear in this action despite having been
duly served, and a Clerk’s Entry of Default was entered on March 7,
2017.

Docket No. 8.

Plaintiff filed the instant motion for a

default judgment on May 5, 2017.

Docket No. 10.

III. Discussion
A.

Subject Matter Jurisdiction

“Federal courts are courts of limited jurisdiction whose power
is

limited

strictly

by

congressional statute.”

Article

III

of

the

Constitution

and

United Food & Commercial Workers Union,

Local 919, AFL-CIO v. CenterMark Properties Meriden Square, Inc.,
30 F.3d 298, 303 (2d Cir. 1994).

Accordingly, there exists an

“inflexible rule” that “if a court perceives at any stage of the
proceedings that it lacks subject matter jurisdiction, then it must
take proper notice of the defect by dismissing the action.”

Cave

v. E. Meadow Union Free Sch. Dist., 514 F.3d 240, 250 (2d Cir.
2008); see also R.S. v. Bedford Cent. Sch. Dist., 899 F. Supp. 2d
285, 289 (S.D.N.Y. 2012) (subject matter jurisdiction is not a
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prudential or discretionary doctrine, but rather, is an inflexible
rule that without exception requires federal courts, on their own
motion, to determine if jurisdiction is lacking).

“A federal

court’s jurisdiction must clearly appear from the face of [the]
complaint. . . .”
696643,

at

*1

Verosol USA, Inc. v. Fla. Shades, Inc., 1992 WL

(S.D.N.Y.

Sept.

17,

1992)

(internal

quotation

omitted). “And when a complaint fails to plead subject matter
jurisdiction, the Court is obligated to dismiss it sua sponte.”
Receivables Exch., LLC v. Hotton, 2011 WL 239865, at *1 (E.D.N.Y.
Jan. 21, 2011) (citing Fed. R. Civ. P. 12(h)(3)).
In this case, plaintiff has failed to adequately allege
subject matter jurisdiction.

In a recent decision, the United

States District Court for the Northern District New York dismissed
a complaint filed by Gross Polowy on behalf of plaintiff for
precisely this reason.

See U.S. Bank Trust, N.A. v. Monroe, 2017

WL 923326, at *3 (N.D.N.Y. Mar. 8, 2017).

The court in the Monroe

case noted that Gross Polowy has, on several previous occasions,
filed actions in federal court that fail to properly allege subject
matter jurisdiction.

Specifically, the court explained that the

citizenship of a national banking association is determined by the
state designated in its articles of association as its main office.
Id. at *4 (citing Wachovia Bank v. Schmidt, 546 U.S. 303, 306
(2006)).

In this case, as in the Monroe case, plaintiff has not

provided any information regarding its articles of incorporation,
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and has therefore failed to provide the Court with the information
necessary to ascertain its citizenship.
Moreover,

and

as

the

Monroe

court

discussed

in

detail,

plaintiff has commenced this action in its role as trustee for the
Trust.

“The rule for determining the diversity citizenship of a

trust (when it is the citizenship of the trust itself that matters)
depends

on

the

type

of

trust

at

issue.

If

the

trust

is

a

traditional trust, meaning it was established primarily for gift or
estate planning purposes, courts have held it takes the citizenship
of its trustees without regard to the trust’s beneficiaries. . . .
On the other hand . . . business trusts - which are established as
an alternative to incorporation and are intended to make a profit take the citizenships of their beneficiaries.”
citations and quotations omitted).

Id.

(internal

Here, as in Monroe, plaintiff

“has included no allegations concerning the type of trust at issue
here,

its

degree

of

control

over

the

trust

assets,

or,

alternatively, the citizenships of the trust’s beneficiaries.” Id.
at

*5.

sufficient

Accordingly,
to

plaintiff

establish

that

has

this

failed

Court

has

to

allege

subject

facts
matter

jurisdiction over the instant matter.
Plaintiff’s attorneys have been warned that it is improper to
pursue an action in federal court without properly asserting
subject matter jurisdiction. See id. (“The Court strongly cautions
U.S. Bank (and its attorneys, Gross Polowy) against continuing to

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claim federal jurisdiction in this or other lawsuits if it either
lacks an arguable basis for doing so or does not wish to invest the
effort required to make its case.”).

It nevertheless filed the

instant motion for default judgment without making any attempt to
remedy

the

deficiencies

in

its

pleading.

Under

these

circumstances, the Court finds that dismissal of the complaint is
appropriate.

See id. (“If a case is significant enough to warrant

a federal forum, properly pleading and showing jurisdiction is a
reasonable price of admission.

If not, the courts of New York are

perfectly capable of handling a foreclosure action for nonpayment
of a mortgage (perhaps even more so than a federal district
court).”);

see

also

U.S.

Bank

Trust,

N.A.

for

LSF9

Master

Participation Trust v. Gross, 2017 WL 2602057, at *3 (W.D.N.Y. June
14, 2017) (dismissing complaint brought by Gross Polowy on behalf
of

plaintiff

for

failure

to

properly

allege

subject

matter

jurisdiction).
B.

Default Judgment

Because

the

Court

finds

that

the

complaint

should

be

dismissed, it need not consider the merits of plaintiff’s motion
for default judgment.

The Court notes, however, that plaintiff’s

motion for a default judgment is procedurally deficient.

See

Gross, 2017 WL 2602057, at *3 (“Although this Court lacks subject
matter jurisdiction to entertain this case, the Court notes several
other missteps committed by Plaintiff’s attorney to allow for
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greater efficiency in the event Plaintiff chooses to re-file this
action.”).

In this case, as in Monroe, Gross, and numerous other

actions filed by Gross Polowy, plaintiff has failed to satisfy the
requirements of the New York Real Property Actions and Proceedings
Law and has filed a deficient request for attorneys fees.

The

Court will not reiterate the specific details of these procedural
failings, which have been exhaustively pointed out in previous
court decisions.
Civil

Procedure

Instead, the Court notes that Federal Rule of
11

imposes

certain

appearing in federal court.
requirements
especially

of

in

Rule

light

11
of

requirements

on

attorneys

Counsel is advised to consider the
when

the

filing

numerous

any

future

warnings

they

pleadings,
have

been

provided by this Court and others.
III. Conclusion
For the foregoing reasons, Plaintiff’s motion for a default
judgment (Docket No. 10) is denied and the complaint is dismissed
for lack of subject matter jurisdiction. The Clerk of Court is
directed to close this case.
ALL OF THE ABOVE IS SO ORDERED.
s/ Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

June 21, 2017
Rochester, New York.

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