Wilmington Trust, National Association v. Aevri Salina Meadows LLC
1:23-cv-08824
| S.D.N.Y. | Feb 5, 2025Background
- Defendant Aevri Salina Meadows LLC (“Aevri”) borrowed $25 million secured by mortgage and related agreements for a commercial property in Syracuse, NY, with repayment personally guaranteed by Moshe Rothman.
- The loan and supporting documents were later assigned from the Bank of Montreal to Wilmington Trust, National Association, as Trustee for the BBCMS Mortgage Trust 2022-C15.
- The Trust in question is a New York common law (REMIC) trust; Wilmington Trust as Trustee manages the assets according to the Pooling and Servicing Agreement (PSA).
- Rialto Capital Advisors, LLC acts as Special Servicer for the Trust and initiated foreclosure proceedings after Aevri defaulted and failed to cure.
- Defendants moved to dismiss, arguing lack of subject matter jurisdiction because the Trustee failed to allege the citizenships of the trust beneficiaries and the special servicer.
- The procedural posture is on a motion to dismiss for lack of subject matter jurisdiction based on diversity under 28 U.S.C. § 1332.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whose citizenship controls for diversity? | Trustee's citizenship suffices | Must plead citizenships of trust beneficiaries | Only Trustee’s citizenship is relevant |
| Does special servicer's citizenship matter? | Rialto is merely agent; not a party | Rialto is a real party to the controversy | Rialto is agent only; its citizenship irrelevant |
| Is the trust a "business trust" per Americold? | Trustee is the real, active party | Trust operates as a business trust so all members count | Only a traditional trust, not a juridical entity |
| Sufficiency of allegations of complete diversity | Delaware citizenship of Trustee and NY/NJ for Defendants | Insufficient without other parties’ citizenships | Complete diversity exists as pled |
Key Cases Cited
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (Trustee with real powers is real party for diversity jurisdiction)
- Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378 (Distinguishes between traditional trusts and business trusts for citizenship)
- Strawbridge v. Curtiss, 7 U.S. 267 (Requires complete diversity for federal jurisdiction)