Ibanez v. U.S. Bank National Association et al
Filing
16
Judge Richard G. Stearns: ORDER entered denying 13 Motion to Remand (RGS, law3)
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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 11-11808-RGS
ANTONIO IBANEZ,
v.
U.S. BANK NATIONAL ASSOCIATION, as Trustee for THE STRUCTURED
ASSET SECURITIES CORP. PASS-THROUGH CERTIFICATE SERIES 2006-Z;
AMERICAN HOME MORTGAGING SERVICING, INC.; SAND CANYON
CORP. also known as OPTION ONE MORTGAGE CORP.
MEMORANDUM AND ORDER
ON PLAINTIFF’S MOTION TO REMAND
November 29, 2011
STEARNS, D.J.
This action stems from a seminal January of 2011 decision of the Massachusetts
Supreme Judicial Court (SJC). See US Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637
(2011). The principal parties involved in that case are the parties here, although their
roles are now reversed.1 In the wake of the SJC’s decision, in July of 2011, Ibanez
filed a Complaint against U.S Bank National Association as Trustee for the Structured
Asset Securities Corporation Pass-Through Certificates, Series 2006-Z (U.S. Bank as
1
In the case before the SJC, a consolidated case was also heard; Sand Canyon
Corp. and American Home Mortgage Servicing, Inc. (AHMSI), were not plaintiffs in
the state action.
Trustee), and AHMSI in the Superior Court. In October of 2011, AHMSI removed the
case to the federal district court, with the assent of co-defendants U.S. Bank as Trustee
and Sand Canyon. The basis for removal was diversity, pursuant to 28 U.S.C. §§ 1332,
1441, and 1446. Ibanez now requests that the court remand the action to the Superior
Court, arguing that complete diversity does not exist.
BACKGROUND
Ibanez, a citizen of Massachusetts, brought suit against defendants claiming
intentional and negligent misrepresentation; breach of the implied covenant of good
faith and fair dealing; breach of contract; and trespass. The claims arise from the
invalid foreclosure conducted by U.S. Bank as Trustee on Ibanez’s mortgaged property
and the resulting purchase of the property by U.S. Bank as Trustee at the foreclosure
sale. See Ibanez, 458 Mass. at 638 & Compl. ¶¶ 7-16.
U.S. Bank as Trustee is a national banking association organized under the laws
of the United States, with a principal place of business and head offices in Minnesota.
U.S. Bank as Trustee was the assignee of Ibanez’s original mortgage, but foreclosed
on the property before the assignment physically took place. See Ibanez, 458 Mass.
at 643. AHMSI is a corporation organized under the laws of Delaware with a principal
2
place of business in Texas.2 Sand Canyon is a corporation organized under the laws
of California with a principal place of business in California. Sand Canyon is the
successor-in-interest to Option One Mortgage, the original assignee of the mortgage.
See Ibanez, 458 Mass. at 640-641 & Compl. ¶ 4.
DISCUSSION
The removal and diversity jurisdiction statutes are strictly construed – any doubts
about the propriety of a removal are resolved in favor of remand. Danca v. Private
Healthcare Sys., Inc., 185 F.3d. 1, 4 (1st Cir. 1999); In re Massachusetts Diet Drug
Litig., 338 F. Supp. 2d. 198, 202 (D. Mass. 2004). Diversity of citizenship “must be
complete” to satisfy 28 U.S.C. § 1332. In re Olympic Mills Corp., 477 F.3d 1, 6 (1st
Cir. 2007). “Since diversity of citizenship is a jurisdictional requirement, the Court is
always ‘called upon to decide’ it.” Carden v. Arkoma Assocs., 494 U.S. 185, 195
(1990).
The parties contest whether the citizenship of defendant U.S. Bank as Trustee
should be defined by the citizenship of the Trustee, or whether the court must also
consider the citizenship of the Trust’s certificateholders, that is, each of the Trust’s
2
According to Ibanez, 458 Mass. at 634, AHMSI assigned the Ibanez mortgage
to U.S. Bank as Trustee, as AHMSI was “successor-in-interest” to Option One
Mortgage Corporation, the record mortgage holder.
3
beneficiaries. Ibanez relies on this court’s interpretation of Carden in Bergeron v.
Ridgewood Elec. Power Trust et al., 2007 WL 1959209, at *2 (D. Mass. July 5, 2007).
In Bergeron, this court held that the citizenship of a trust, for the purpose of diversity
jurisdiction, is determined by the citizenship of both the trustee and the beneficiaries.
Id. Ibanez contends that because defendants have failed to disclose the citizenship of
the certificateholders, they cannot meet their burden of proving the complete diversity
required for a removal. See Pl.’s Mot. to Remand. Defendants, for their part, concede
that Ibanez’s argument would be correct if the Trust was itself a party to this dispute,
but it is not. Rather, Ibanez has sued the Trustee. Thus, the court’s interpretation of
Carden is not at issue.
In Bergeron, plaintiff sued derivatively on behalf of a trust alleging wrongdoing
by the trustees. See Bergeron, 2007 WL 1959209, at *1-2. The court found that
“[b]ecause defendants Power Trust V and Power Growth Fund are ‘artificial entities
other than corporations,’ their citizenship for purposes of determining diversity
jurisdiction depends on the citizenship of ‘all the members.’” Id. at *2, quoting Carden,
494 U.S. at 195. On the other hand, when a suit is filed by or against the trustee, so
long as the trustee is a “real party to the controversy,” see Navarro Sav. Ass’n v. Lee,
446 U.S. 458, 464 (1980), the citizenship of the trustee - and not that of the
4
beneficiaries - is at play.3 See Emerald Investors Trust v. Gaunt Parsippany Partners,
492 F.3d 192, 200-201 (3d Cir. 2007); see also Carden, 494 U.S. at 192-193
(distinguishing Navarro from Carden because “Navarro had nothing to do with the
citizenship of the ‘trust,’ since it was a suit by the trustees in their own names.”).
Because here only the Trustee is a party to the suit, complete diversity exists, and the
case was properly removed.
ORDER
For the foregoing reasons, Ibanez’s motion to remand is DENIED.
SO ORDERED.
/s/ Richard G. Stearns
_______________________________
UNITED STATES DISTRICT JUDGE
3
“[A] trustee is a real party to the controversy for purposes of diversity
jurisdiction when he possesses certain customary powers to hold, manage, and dispose
of assets for the benefit of others.” Navarro, 446 U.S. at 464. Ibanez contests whether
defendant U.S. Bank as Trustee fits within this definition. However, as defendants
points out, Ibanez has asserted actual wrongdoing on the part of U.S. Bank as Trustee.
That is a sufficient admission of Ibanez’s confidence that defendant Trustee possessed
the type of customary powers generally granted to a trustee that could later render it a
real party to a controversy.
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