Raymond Loubier Irrevocable Trust v. Noella Loubier
2017 U.S. App. LEXIS 9643
| 2d Cir. | 2017Background
- Decedent Raymond Loubier’s estate is held in multiple revocable and irrevocable trusts; plaintiffs are two irrevocable trusts (2000 agreements) and beneficiary Gervais Loubier (estate substituted on appeal).
- The 2000 Irrevocable Trust Agreements name Roland Loubier as sole trustee; later 2003/2005 instruments named Noella as trustee, but parties agree the 2000 trusts are the operative plaintiffs on appeal.
- Defendants are Noella Loubier (individual) and two 1999 revocable trusts for which she serves as trustee; plaintiffs allege breach of fiduciary duties and seek accounting and recovery.
- District court dismissed for lack of subject‑matter jurisdiction under 28 U.S.C. § 1332, concluding a lack of complete diversity because it believed Noella was trustee of plaintiff trusts.
- Second Circuit held the operative 2000 trusts are traditional common‑law trusts (not separate juridical entities under Florida law), so a trust’s citizenship is that of its trustee, not its beneficiaries.
- The court vacated and remanded because the record did not adequately establish trustee Roland Loubier’s citizenship (Canadian address but no sworn statement of citizenship/domicile).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How is a trust’s citizenship determined for diversity? | Trusts take the citizenship of their trustees (so diversity exists if trustees are diverse). | A trust sued in its own name is an unincorporated entity whose citizenship includes all beneficiaries. | For "traditional" common‑law trusts that are not separate juridical entities, citizenship follows the trustee; the Carden/all‑members rule applies only to trusts that state law treats as separate entities. |
| Are the plaintiff trusts the 2000 irrevocable trusts (trustee Roland) or later trusts (trustee Noella)? | 2000 irrevocable trusts are the operative plaintiffs (Roland is trustee). | Defendants relied on later instruments naming Noella as trustee. | The parties agree and the court treats the 2000 trusts (Roland trustee) as the plaintiff trusts; district court erred in assuming Noella was trustee of the plaintiff trusts. |
| Does Florida law treat these trusts as separate juridical entities able to sue/be sued in their own names? | No; Florida follows common‑law trust principles—these are traditional trusts sued only through trustees. | Defendants argued naming the trust as a party makes beneficiaries relevant for citizenship. | Florida law and the trust terms indicate these are traditional trusts; they cannot sue/be sued as separate entities—litigation must proceed through trustees. |
| Was the record sufficient to establish diversity? | Plaintiffs claimed trustee Roland is Canadian (non‑Florida) so diversity exists. | Defendants argued beneficiaries on both sides (Noella, Gervais) defeat diversity; also challenged sufficiency of proof about Roland’s citizenship. | Record did not satisfactorily establish Roland’s citizenship or domicile; remand required for plaintiffs to allege or prove trustee’s citizenship. |
Key Cases Cited
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (trustees’ citizenship controlled where trustees were real parties in interest)
- Carden v. Arkoma Assocs., 494 U.S. 185 (unincorporated entities’ citizenship depends on citizenship of all members)
- Americold Realty Tr. v. Conagra Foods, Inc., 136 S. Ct. 1012 (2016) (REIT treated as unincorporated entity whose citizenship is that of its shareholders; distinguishes traditional fiduciary trusts)
- Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d 315 (2d Cir. 2001) (U.S. citizens domiciled abroad are not citizens of any State for § 1332)