Trustee and Trust Are Different Entities: Trustees are Nominal and Not Real

This case shows in detail the difference between a nominal party and a real party. It can be used to clarify cases where US Bank and others pretend that the Plaintiff is the Trustee. It isn’t. As trustees they are nominal or formal parties whose citizenship is irrelevant for most purposes and irrelevant as to the facts of the case — except the issue of whether they are in fact a “Trustee” over property that forms the res of the trust.

The real party is the Trust — but only if it is an entity that exists, which means it has received money or property, in trust. And THAT is only relevant if the property held in trust includes a specific loan — not merely the implied authority to enforce a note and mortgage that have been “assigned” but not accepted by the Trustee or the Trust.

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—————-

Hat tip to Dan Edstrom

see ARGO GLOBAL SPECIAL SITUATIONS v Wells Fargo Bank 810 F Supp 2d 906-D Minn 2011 

See also Navarro v Lee – Trust Type and Person Status 1980 US Supreme Crt

ARGO GLOBAL SPECIAL SITUATIONS v. Wells Fargo Bank, 810 F. Supp. 2d 906 (D. Minn. 2011)
 
 
Wells Fargo is a nominal party …
Although Plaintiffs named Wells Fargo as a Defendant, the other Defendants argue that Wells Fargo is merely a nominal party whose citizenship must be disregarded for purposes of evaluating 910*910 subject-matter jurisdiction. Long ago, the Supreme Court “established that the `citizens’ upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy.” Navarro Savings Ass’n v. Lee, 446 U.S. 458, 460, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). “Thus, a federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Id. at 461, 100 S.Ct. 1779.[6] As the only “Defendant” alleged to be a U.S. citizen, Wells Fargo’s status as a genuine Defendant — a “real party in interest” — is thus essential to jurisdiction under Section 1332(a)(3).
 
Formal or nominal Party?
In general, “a party whose role in a law suit is that of a depositary or stakeholder is a formal or nominal party.” Colman v. Shimer, 163 F.Supp. 347, 350 (W.D.Mich.1958). Thus, a trustee or agent is merely a formal or nominal party “where, though a trustee, agent or depositary has possession of property or funds[,] rights in which are the subject of litigation, he holds them merely in a subordinate or possessory capacity as to which there is no dispute.” Id. at 351. In short, a nominal defendant is one “`against whom no real relief is sought.'” Thorn v. Amalgamated Transit Union, 305 F.3d 826, 833 (8th Cir.2002) (quoting Pecherski v. General Motors Corp., 636 F.2d 1156, 1161 (8th Cir.1981)). In other words, “[a] defendant is nominal if there is no reasonable basis for predicting that it will be held liable.” Shaw v. Dow Brands Inc., 994 F.2d 364, 369 (7th Cir.1993). Thus, the issue is whether Plaintiffs assert any claim of wrongdoing against Wells Fargo. Rose v. Giamatti, 721 F.Supp. 906, 917 (S.D.Ohio 1989) (finding baseball team to be a nominal party where player, in dispute with Commissioner, alleged no wrongdoing against team that player also named as a defendant).
*
So the first thing of note here is that this case is about diversity jurisdicition in federal courts. BUT the definitions and reasoning here corroborates what I have been writing for years — that the “Trustee”, even if it is “real” is not a real party in interest. The pattern of pursuing investigation and discovery into the Trustee is an exercise in misdirection. The “powers” claimed by the or on behalf of the “Trustee” are solely derived from whether the Trust assets exist and whether the trust assets, therefore, have been purchased by the Trust.
 *
This seems to be a point of confusion amongst not only pro se litigants but among attorneys doing foreclosure defense. Assuming that the loan legally exists, the power to exercise any rights of administration or servicing of the subject loan are derived strictly from the Trust governed by a Trust instrument with a Trustor, Trustee and beneficiaries PLUS assets that have been entrusted to the Trustee to hold on behalf of the beneficiaries according to the terms of the Trust. That is a mouthful.
 *
It is clear that the claimed beneficiaries under a deed of trust or the claimed successor mortgagees under a mortgage deed are most often some sort of trust entity. Lately, we have seen new trust names emerge as there is an illusion of the trust assets of one trust being re-securitized into another trust — thus providing another layer of obfuscation as to the real party in interest.
 *
The issue is whether anything was transferred. And the answer lies in whether the  first “selling” trust ever had ownership of the debt. And the answer to that is NO. We know that because nobody ever alleges that the trust purchased the loans as set forth in the PSA (trust instrument). And we know that is corroborated by the fact that nobody ever makes a claim on behalf of an alleged trust that it is a holder in due course — a claim that would be made if they indeed owned it through a purchase.
*
The same analysis applies to the first trust. The narrative is that it was created to hold investor money in trust and to administer those funds for the benefit of the beneficiaries of the trust. In turn the Trustee would, in the name of the Trust, purchase loans (assets) with the money entrusted to the Trustee. If those things didn’t happen then there is no trust. And there is no real party in interest in any action brought by or on behalf of the alleged trust. The Trustee is not merely nominal or formal — it is named but it has no powers under any law.
 *
If the loan has not been entrusted to the Trustee to be administered as a trust asset, then there is no trust relevant to the subject loan. If there is no trust, then there is no trustee. If there is no trust or trustee then there is no servicer. None of the “records” of any of them are relevant in an action brought on behalf of an either nonexistent trust or a trust that exists but does not own the subject loan.
 *
The entire securitization scheme is based upon assymetry of information — neither the “lenders” nor the “borrowers” know the existence of each other. The ONLY parties who have any information about the chain of money or the chain of paper are unnamed intermediaries — usually showing up as “Master Servicer” of a nonexistent or irrelevant “trust” —  who act in multiple conflicting capacities principally as underwriter for the bogus mortgage bonds and the party ultimately in control of who can claim servicing rights.
 *
With the alleged “Trust” being indispensable for the valid existence of a trustee or servicer, the inquiry, objections at trial and cross examination should be directed at this fallacy.

33 Responses

  1. I get it.

  2. Anon…
    1) i hope i’m wrong for America’s sake
    2) i hope i’m right for my sake

  3. CementBoots — think your percolating is very interesting.

  4. Anon –
    i’m STARTING to percolate the thought that all that the so-called bank claimants possess to attack us in foreclosures are “chattel paper” for future speculative interests – not actual documents that transmit a title interest in the so-called “real” (regal) “property” and we are too stupid to realize that there is no valid claim upon our homes, but then we buckle under the perceived weight of the expense of defending ourselves against a BS paper tiger with unlimited funds to keep us in court and bankrupt us if we fight… (with the court’s consent of course)

  5. Michael — You have a good point. Most mortgage loan purchase agreements refer exactly to that – a “loan” — and not the note or mortgage – or both. You know REMICs are cash pass-through conduits — you can’t pass through a mortgage – or a note — you “pass through” the cash flows. Exactly what is a “mortgage loan”??????? There is nothing on CCB 2005-1. So you don’t even know how it was organized. Trustee for what? What is it’s role? You have a good case to flush out diversity jurisdiction. I don’t think a judge can ignore. Case law posted below. What Circuit Court District are you in?

  6. ANON, on September 5, 2017 at 1:05 pm said:
    Meant regulates.
    ANON, on September 5, 2017 at 1:04 pm said:
    SEC regulated all investments.

    ANON, I went back to read your earlier post which is that the ‘loan’ is sold to the Trustee and not to the Trust in the context of a REMIC. You also write that the ‘note’ and ‘mortgage’ are not sold to the trust. Still wondering if ‘loan’ and ‘note’ define the same contract.

    So if US Bank is Trustee for the CCB 2005-1 Series Mortage Backed Certificates (previously CCB LIBOR Series 2005-1 MBC), they are claiming to be a Trustee of unregistered certificates because the SEC sent proof to me these certificates were never registered.

    But CementBoots writes that unregistered certificates can’t be handled in a REMIC? Did I get that right? If I got that right, then I would need to connect that with legal analysis to declare that US Bank cannot be a real Trustee or have standing. Need a roadmap to link up the facts and assertions, then find or be fortunate to have a federal judge that will process this argument.

  7. Meant regulates.

  8. SEC regulated all investments.

  9. Virginia. No. At one point Freddie and Fannie owned all the loans – one way or another. Not the case during and near after the crisis.

  10. re-posted here from Deadly Clear

    Let me add one more tip to the iceberg. Fannie allegedly owns everything* – but remains concealed for various reasons, not the least of which is fraud, hidden debt (if anybody even knows how big it is) and cover up. *See Fannie 2008 Servicing Guidelines.

    Who do you think has been propping up Obamacare all these years? Wrongful foreclosures, fraudulently concealed Fannie/Freddie as real party in interest, paper laundering (assignments) that go way, way out there – like to the Navajo Indians, for example. Laundered and resale funds dumped into the Treasury thru quarterly GSE Net Sweeps. There would be a whole lot of people pushing for repeal if they understood the process. IMHO assignments are merely rehypothecation pledges.

    Ever wonder why assignments between BAC and BofA with no trust ended up with Fannie standing in the wings to take it as 2nd/3rd party buyer? It was Fannie calling the shots the whole time.

    Allege Fannie as fraudulently concealed real party in interest and watch the termites scramble. BTW – Fannie destroys files…originals are highly unlikely.

    Aloha, Virginia
    DeadlyClear

  11. CementBoots, on September 5, 2017 at 1:49 am said:
    Michael – i think you’ll find that in the subsequent link i posted

    CementBoots, thanks. I am trying to see where there might be a requirement that the mortgage-backed securities or certificates must be registered. I am looking at the General Rule (a) and still studying how to extract a requirement that the certificates must be registered tor them to be considered a part of a REMIC:

    (a) General rule for purposes of this title, the terms “real estate mortgage investment conduit” and “REMIC” mean any entity—
    (2) all of the interests in which are regular interests or residual interests,
    (3) which has 1 (and only 1) class of residual interests (and all distributions, if any, with respect to such interests are pro rata),
    (4) as of the close of the 3rd month beginning after the startup day and at all times thereafter, substantially all of the assets of which consist of qualified mortgages and permitted investments,
    (6) with respect to which there are reasonable arrangements designed to ensure that—
    (A) residual interests in such entity are not held by disqualified organizations (as defined in section 860E(e)(5)), and
    (B) information necessary for the application of section 860E(e) will be made available by the entity.

    Not as straightforward as I would like to see it.

  12. ANON, on September 5, 2017 at 9:03 am said:
    “If the trust is not registered with the SEC, then the trustee’s role is not defined, and the status of the trust for diversity jurisdiction is questionable.”

    In my case, US Bank is representing that they are the Trustee of CCB Series 2005-1 Mortgage Backed Certificates. The SEC has certified these mortgage backed certificates were never registered. So the non-existence of the registration of the certificates versus the ‘Trust’ is what I have to go on.

    I have no clue where the US Bank ‘Trust’ for these certificates is incorporated, organized or registered. I have no idea how to find out if they are a legitimate Trust but they say they are a Trust.

    I can only show the ‘certificates’ are not registered.

    If I can tie the lack of registration of the certificates to disqualifying US Bank from acting or operating as a REMIC for those certificates, then that’s what is needed.

    I’ve also been told there are usually 3 REMICS setup around the same securities in some sort of Enron-like SPV accounting scheme. 1) IP REMIC 2) Payment stream REMIC 3) some sort of 1031 REMIC, all of which are operated to avoid/evade taxes. I am still trying to decipher this aspect of the problem.

  13. If the trust is not registered with the SEC, then the trustee’s role is not defined, and the status of the trust for diversity jurisdiction is questionable. This is important if you are in federal court, or one party tries to move case from state to federal court. For federal jurisdiction, the amount in controversy must exceed 75 thousand, and all parties must be from different states. No other party can be from your state or diversity jurisdiction is defeated and federal court does not have jurisdiction. So, if the trust is not registered, you need to force the issue of diversity jurisdiction, by demanding whether the trust is incorporated, what the trustee role is, and disclosure of all the members (investors) in the trust.

    Thanks CementBoots – IRS regulates REMICs.

  14. Michael – i think you’ll find that in the subsequent link i posted…

  15. Cement Boots, thanks for that link and your comment. It’s very helpful. In the case I am looking at, the SEC has certified the Mortgage Backed Certificates were never registered. I am searching then for the IRS regulation that requires registration if the trust is to act as a REMIC.

  16. just remember – if any party wants to “legally” mess with the IRS’ unlimited tax collection powers issued by congress – they better have a specific exception granted by congress! (all i’s dotted and all t’s crossed) – otherwise you know where you are headed… right?

  17. Michael-
    not SEC – they just register claims and don’t have such regulations and do not enforce – the IRS does: https://www.lexology.com/library/detail.aspx?g=baa5fe32-4f55-4cc4-a238-26fba0d83e7b

  18. From ANON, on August 25, 2017 at 5:04 pm said:
    “Unregistered with SEC then not like a REMIC”

    ANON, is there a SEC regulation that states REMICs can only transact ‘registered’ securities?

  19. instead of the old “show me the note” defense – how about the “show me the check or wire transfer record” defense to challenge whether the named originator was actually (lawfully) a “lender” or “creditor” or just broker in the initial transaction – a lot of chaff will fall from the wheat if they can’t muster up to that answer…

  20. Just distressed debt before you even knew that

  21. (sorry if redundant)

    So let me get this straight… you’ve got:

    1. a purported home loan “originator”, who loans you nothing and only acts as a broker, but claims at closing to have the status of “lender” or “creditor” within the language of a set of unsupported documents: a note plus either a mortgage or deed of trust (DOT)…

    2. a purported “assignee” (usually some alphabet soup named trust) with USBANK or similar as trustee, and said trustee does not claim any active role in accepting said assignment of debt, note, or mortgage/DOT into said purported trust, or even knowledge of it…

    3. a purported “agent” (the alleged sub-servicer); LPS or OCWEN or similar claiming to have Power of Attorney (POA) to act on behalf of the two aforementioned entities, who then purportedly assigns the purported note and mortgage/DOT of the originator to the trustee, with specific language emphasizing that their acts are without warranty or recourse (e.g. ‘you can’t blame us’)…

    So in the end, you have an alleged/purported debt/note/mortgage/DOT that does not exist between the homeowner/mortgagor and originator, assigned by a party with no proof of authority, warranty or recourse of accuracy or truth of the documents purportedly assigned, to a party who knows nothing about them; and thus the agent claims they have created a purported nexus between a plurality of trust investors and plurality of mortgage obligors, neither of which have ever entered into any fiduciary agreement, anywhere…

    Is that about right?

  22. How does CEDE obtain security to issue Certificates to the Depositor?

  23. Hey Neil –

    Would you please consider doing a topic and radio show about land trusts and how they might be an integral part of homeowner defense if they were established and ignored?

    thanks
    CB

  24. yes – if we can get past the damned 12(b)(6) or state equivalent objections to dismiss which get rubber stamped every day

  25. Yes. Know someone else in your same situation. The good thing about the diversity jurisdiction is that it can force discovery briefing.

  26. funny… all this talk about alleged “Trusts” being bad guys –

    My Atty set up a land trust for us immediately upon purchase and I sold all my interest into the trust… recorded at the County Land Records for the world to see… (I remained as a beneficiary with the right to direct the trustee but only held a private property beneficial interest – not legal or equitable title – and not the agent of the trustee) –

    Later on, when I attempted to negotiate a refinance, the stupid banksters and title company closing agents failed to read the land record and forced me to sign docs in my personal capacity instead of having me bring the trustee into the transaction. I HAD NO CAPACITY TO PLEDGE THE PROPERTY AS COLLATERAL SECURITY IN A MORTGAGE only the trustee could do that.

    So the mortgage was null and void. (subject matter)

    Then, when they sued for foreclosure, AGAIN, they failed to ascertain who the trustee was from the land record and named and served the wrong party. (personal)

    So- there was never any subject matter jurisdiction and no personal jurisdiction over our trustee/land trust and all was void.

    Judge ignored objections and proceeded anyway. (BTW no 3rd party purchaser)

    3 lawsuits later things are slowly turning around…. (yeah)

    Nothing to share yet – just saying that in THIS instance, a “real”Trust is a good thing.

  27. Unregistered with SEC then not like a REMIC

  28. Also – check out below — case cited in Americold by Supreme Court.

    Carden v. Arkoma Assocs.
    494 U.S. 185 (1990)

    Annotate this Case
    Opinion
    Annotation
    Syllabus | Case
    U.S. Supreme Court

    Carden v. Arkoma Assocs., 494 U.S. 185 (1990)

    Carden v. Arkoma Associates

    No. 88-1476

    Argued Nov. 7, 1989

    Decided Feb. 27, 1990

    494 U.S. 185

  29. Cementboots — trying my best here. See below. Fifth Circuit seems to be in real disarray. Conflicting decisions.
    AMERICOLD REALTY TRUST, Petitioner v. CONAGRA FOODS, INC., et al.
    No. 14-1382
    SUPREME COURT OF THE UNITED STATES
    136 S. Ct. 1012; 194 L. Ed. 2d 71; 2016 U.S. LEXIS 1652; 84 U.S.L.W. 4123; 26 Fla.
    L. Weekly Fed. S 21
    January 19, 2016, Argued
    March 7, 2016, Decided

    1 of 2 DOCUMENTS
    BRIAN W. JUSTICE, Plaintiff–Appellant, v. WELLS FARGO BANK NATIONAL
    ASSOCIATION, on behalf of the Registered Holders of Bear Stearns Asset Backed
    Securities, I, L.L.C., Asset-Backed Certificates, Series 2007-AC2; SELECT PORTFOLIO
    SERVICING, INCORPORATED, Defendants–Appellees.
    No. 15-20615
    UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
    674 Fed. Appx. 330; 2016 U.S. App. LEXIS 22221
    December 14, 2016, Filed
    GORDON SWOBODA, Plaintiff, VS. OCWEN LOAN SERVICING, LLC, et al, Defendants.

    CIVIL ACTION NO. 4:13-CV-2986

    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION

    2015 U.S. Dist. LEXIS 104852

    August 10, 2015, Decided
    August 10, 2015, Filed

    FOCUS – 1 of 1 DOCUMENT
    RUDY GUILLEN, Plaintiff, v. COUNTRYWIDE HOME LOANS, INC., N/K/A
    BANK OF AMERICA, N.A., et al., Defendants.
    CIVIL ACTION H-15-849
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    TEXAS, HOUSTON DIVISION
    2016 U.S. Dist. LEXIS 168134
    December 6, 2016, Decided
    December 6, 2016, Filed
    PRIOR

    FOCUS – 1 of 1 DOCUMENT
    WELLS FARGO BANK, N.A., Plaintiff, -against- 390 PARK AVENUE ASSOCIATES,
    LLC, et al., Defendants.
    16 Civ. 9112 (LGS)
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    NEW YORK
    2017 U.S. Dist. LEXIS 95833
    June 21, 2017, Decided
    June 21, 2017, Filed

    FOCUS – 1 of 1 DOCUMENT
    DHI HOLDINGS, LP, Plaintiff, VS. MORTGAGEIT, INC., et al, Defendants.
    CIVIL ACTION NO. H-17-0960
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    TEXAS, HOUSTON DIVISION
    2017 U.S. Dist. LEXIS 113804
    July 21, 2017, Decided
    July 21, 2017, Entered

    FOCUS – 1 of 1 DOCUMENT
    EDDIE PITTS, JR., et al, Plaintiffs, VS. THE BANK OF NEW YORK MELLON
    AS TRUSTEE FOR THE CWABS ASSET-BACKED CERTIFICATES TRUST
    2004-12, et al, Defendants.
    CIVIL ACTION NO. 4:16-CV-01410
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    TEXAS, HOUSTON DIVISION
    2017 U.S. Dist. LEXIS 49992
    February 14, 2017, Decided
    February 14, 2017, Filed

    FOCUS – 1 of 1 DOCUMENT
    PECHUA, INC., Plaintiff, VS. AMERICA’S WHOLESALE LENDER, et al, Defendants.
    CIVIL ACTION NO. 3:16-CV-364
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    TEXAS, GALVESTON DIVISION
    2017 U.S. Dist. LEXIS 47486
    March 30, 2017, Decided
    March 30, 2017, Entered

    FOCUS – 1 of 1 DOCUMENT
    RAYMOND LOUBIER IRREVOCABLE TRUST, NOELLA LOUBIER IRREVOCABLE
    TRUST, ESTATE OF GERVAIS A. LOUBIER, Plaintiffs-Appellants,
    –v.– NOELLA LOUBIER, RAYMOND LOUBIER REVOCABLE TRUST, NOELLA
    LOUBIER REVOCABLE TRUST, Defendants-Appellees.*
    * The Clerk of Court is directed to amend the caption as set forth above.
    Docket No. 15-802-cv
    UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
    858 F.3d 719; 2017 U.S. App. LEXIS 9643
    October 25, 2016, Argued
    June 1, 2017, Decided
    FOCUS – 1 of 1 DOCUMENT
    STANLEY J. BRYANT, Plaintiff, v. THE CIT GROUP/CONSUMER FINANCE, et
    al., Defendants.
    CIVIL ACTION H-16-1840
    UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
    TEXAS, HOUSTON DIVISION
    2017 U.S. Dist. LEXIS 55698
    April 12, 2017, Decided

    FOCUS – 1 of 1 DOCUMENT
    U.S. BANK NATIONAL ASSOCIATION (as successor in interest to Bank of America,
    National Association, as successor buy merger to LaSalle Bank National Association),
    as trustee for the Registered Holders of CD 2005-CD1 Commercial Mortgage
    Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, acting by
    and through its Special Servicer, LNR PARTNERS, LLC, Plaintiff, -against- 2150
    JOSHUA’S PATH, LLC, TEDDY D. WEISS, ARMAND D’AMATO, STATE OF
    NEW YORK DEPARTMENT OF TAXATION AND FINANCE, “JOHN DOE,”
    “MARY ROE,” and “XYZ CORPORATION” (the latter three names being fictitious
    but intending to designate tenants residing at or persons having an interest in
    the premises described in the Second Amended Complaint herein), Defendants.
    13-CV-1598 (DLI)(SIL)
    UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW
    YORK
    2016 U.S. Dist. LEXIS 109539

    U.S.) (Appellate Petition, Motion and Filing)
    Supreme Court of the United States.
    Brian W. JUSTICE, Petitioner,
    v.
    WELLS FARGO BANK, National Association, on behalf of the Registered Holders of Bear Stearns Asset Backed Securities, I, L.L.C., Asset-Backed Certificates, Series 2007-AC2; Select Portfolio Servicing, Incorporated, Respondents.
    No. 16-1460.
    June 5, 2017.
    On Petition for a Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit
    Petition For A Writ Of Certiorari
    *i QUESTION PRESENTED
    This Court recently reaffirmed that an unincorporated entity has the citizenship of all its members for purposes of diversity. Americold Realty Trust v. Conagra Foods, Inc., 136 S. Ct. 1012 (2016). However, in some unincorporated entities, the members are passive, and a non-member manager or trustee is given complete control by a formation agreement. This Court has held that in that situation, the citizenship of the controlling person – as the real party in interest – is the citizenship of the entity for purposes of diversity. Navarro Savings Assn. v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980).
    This case involves an unincorporated entity called a “real estate mortgage investment conduit” whose shareholders are not passive. REMIC’s issue mortgage-backed securities and then, through a complex, multilateral contractual arrangement, funnel the money from the mortgage payments to both the holders of the securities and the REMIC agreement signatories. The Fifth Circuit held that the citizenship of the REMIC is not the citizenship of the REMIC shareholders, but solely that of the REMIC trustee, equating the facts of this case to Navarro instead of to Americold.
    For diversity purposes, does an unincorporated entity whose members are not passive have the citizenship of the members?

    Emerald Investors Trust v.
    Gaunt Parsippany Partners, 492 F.3d 192, 203 (3d Cir. 2007)

  30. ANON
    could you please add cites to the cases and quotes you made
    thanks

  31. So say US Bank is somehow designated as Trustee for CCB Series 2005-1 Mortgage Backed Certificates (unregistered). How would one know if this trustee status oversees a REIT or REMIC or some other sort of trust?

  32. Navarro came before Americold v Conagra Foods (Supreme Court). In Americold, the “trust” is a REIT, and by the fact that the REIT was not incorporated, it was decided that the shareholders are the true owners that must be examined for diversity jurisdiction purposes. The trustee’s role was found not to be one of fiduciary responsibility, as a REIT was not deemed a “traditional” trust.

    In the case here, Argo, the trust is also not incorporated, and the trust is not a traditional trust. Thus, the trustee’s role is not found to be one of fiduciary capacity. .

    In a REMIC, the loans are “sold” to the trustee, not the trust, on behalf of certificate investors. There are no shareholders, and it is not a baseball team. The trustee acts in the fiduciary role. The trustee owns the loans and the trust cannot act in it’s own capacity. A REMIC is strictly for pass-through of cash flows. The “note” and “mortgage” are not sold to the trust. (in fact the note and mortgage are not sold either).
    The “loan” is sold to the trustee (and those “loans” are questionable). . Thus, the trustee role is in a fiduciary capacity and the trustee is the only party that can be sued. In a REMIC, the trust, if one ever existed, is simply a “shell” to hold pass through cash flows. Trusts, in traditional roles, cannot act without a trustee.

    After Americold, the Supreme Court may not address the issue again, But, there is a petition for cert regarding the status of a REMIC, whether it is incorporated, and whether it is a “traditional trust.” Yet, after Americold, Circuit Courts are still confused as to the REMIC status. But, I feel the Supreme Court will ignore because this will open a pandora’s box if the Supreme Court decided that a REMIC is not a traditional trust, and therefore subject to diversity jurisdiction proof.

    What might we really find if the diversity jurisdiction wall is broken down? Challenging the role of the trustee could, in the very least, open the door to federal court jurisdiction questioning. It could be the only discovery many may ever get.

    .

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