Wang Ex Rel. Wong v. New Mighty U.S. Trust
2016 U.S. App. LEXIS 21878
| D.C. Cir. | 2016Background
- Plaintiff sued on behalf of Yueh‑Lan Wang (a Taiwanese citizen) alleging transfers to New Mighty U.S. Trust reduced her marital share; suit originally filed by Winston Wong as her attorney‑in‑fact.
- New Mighty is a trust formed under District of Columbia law; Clearbridge, LLC is its trustee and New Mighty Foundation is a beneficiary.
- District court dismissed under Rule 12(b)(1) for lack of complete diversity, treating the trust as an artificial entity whose citizenship includes all beneficiaries and ordering disclosure of beneficiaries’ citizenship.
- Disclosure showed some beneficiaries were citizens of the British Virgin Islands, so the district court found diversity lacking.
- After filing the appeal, Yueh‑Lan died; executors were appointed and moved to be substituted under Fed. R. App. P. 43(a)(1).
- The D.C. Circuit considered whether (post‑Americold) a “traditional trust” takes the citizenship of its trustees (thus preserving diversity) and whether substitution should be allowed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How to determine a trust's citizenship for § 1332 diversity | A traditional trust's citizenship is that of its trustees only | Trust named as a party must be treated as an artificial entity whose citizenship includes all beneficiaries/members | A traditional trust lacks juridical personhood; its citizenship follows its trustees (Clearbridge) |
| Is New Mighty a "traditional trust" under applicable law | New Mighty is a D.C. donative/trust governed by Title 19 and lacks juridical personhood | New Mighty is part of a broader "trust structure" including foreign statutory trusts, so Carden membership test applies | New Mighty is a traditional trust under D.C. law and not a statutory/juridical entity |
| Did complete diversity exist at filing | Diversity exists because trustee Clearbridge's citizenship controls for New Mighty | Beneficiaries (including foreign citizens) defeat diversity if trust is treated as an artificial entity | Complete diversity exists between Yueh‑Lan (Taiwan) and the defendants when trustee citizenship is used |
| Substitution after decedent plaintiff's death | Executors should be substituted under Fed. R. App. P. 43(a)(1) | Defendants argued plaintiff lacked capacity to sue originally (power of attorney defects) and sought dismissal | Substitution granted; district court to consider defendants’ dismissal arguments in the first instance (motion granted without prejudice) |
Key Cases Cited
- Americold Realty Tr. v. ConAgra Foods, Inc., 136 S. Ct. 1012 (2016) (explains distinction between traditional trusts and unincorporated business trusts and applies Carden to entitylike trusts)
- Navarro Sav. Ass'n v. Lee, 446 U.S. 458 (1980) (trustees suing in their own names carry their citizenship for diversity)
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (artificial unincorporated entities take citizenship of all members)
- Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir. 1997) (diversity does not reach suits between aliens; timing and identity rules for diversity analysis)
- Bullard v. City of Cisco, Tex., 290 U.S. 179 (1933) (historical precedent treating beneficiaries' citizenship as immaterial where trustees hold legal title)