Mills 2011 LLC v. Synovus Bank
2013 U.S. Dist. LEXIS 15602
S.D.N.Y.2013Background
- Defendant Synovus Bank removed to federal court on August 10, 2012.
- Mills 2011 LLC alleges it purchased eight secured loans from Synovus and contends representations and warranties regarding loan identification and cross-collateralization were breached.
- Plaintiff asserts breach of contract, breach of representations and warranties, breach of implied covenant of good faith and fair dealing, and seeks specific performance.
- Court must determine subject matter jurisdiction, including complete diversity, and may remand if jurisdiction is lacking.
- Mills argues diversity is destroyed because one member of Mills’ chain is a Georgia citizen.
- Court also considers whether jurisdictional discovery is appropriate and whether to proceed with Synovus’s motion to dismiss or transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Test for citizenship of a trust for diversity purposes | Mills argues beneficiary citizenship should control | Synovus argues Navarro governs trustee citizenship | Complex rule adopted; court analyzes Emerald dual trustee-beneficiary approach |
| Whether Mills is a Georgia citizen through the trust chain | Tracing ownership shows Georgia beneficiaries through Able Trust 2011-1 | Citizenship of trustees/beneficiaries not settled; Navarro/Carden controls | Jurisdiction likely lacking; need discovery to verify citizenship chain |
| Whether jurisdictional discovery should be allowed | Court should proceed with removal if jurisdiction clear | Discovery necessary to challenge Mills’ asserted citizenship | Court may order limited discovery; three-week window to amend removal showing colorable diversity |
| Impact of diversity ruling on Synovus’s motions (personal jurisdiction/transfer) | Remand reasoned on lack of subject matter jurisdiction | If jurisdiction exists, case can be transferred or dismissed for other reasons | Motion to dismiss/transfer denied without prejudice pending jurisdictional showing |
Key Cases Cited
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (U.S. 1980) (trust citizenship not resolved by Navarro; real parties to controversy)
- Carden v. Arkoma Assocs., 494 U.S. 185 (U.S. 1990) (consideration of all members of an artificial entity for diversity)
- Emerald Investors Trust v. Gaunt Parsippany Partners, 492 F.3d 192 (3d Cir. 2007) (dual trustee-beneficiary approach appropriate for trusts as plaintiff)
- Catskill Dev., L.L.C. v. Park Place Entm’t Corp., 547 F.3d 115 (2d Cir. 2008) (trust citizenship not determined solely by trustees; Navarro noted but not controlling)
- Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314 (7th Cir. 1998) (trust citizenship considerations and Navarro/Carden lineage)
- Hicklin Eng’g, L.C. v. Bartell, 439 F.3d 346 (7th Cir. 2006) (trustee-centric view of citizenship challenged)
- Mullins v. TestAmerica Inc., 564 F.3d 386 (5th Cir. 2009) (trust citizenship discussions in various circuits)
- Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (trust citizenship depends on trustees/complex trusts)
- O’Brien v. AVCO Corp., 425 F.2d 1030 (2d Cir. 1969) (estate/administration analog used in trust analysis)
- Dodge v. Tulleys, 144 U.S. 451 (1892) (trust/suit in trustee name; historical relevance to real party inquiry)
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (central authority on all-member doctrine for artificial entities)