The opinion of the court was delivered by: SWEET
Plaintiffs Gasper Celamo, Michael Montana, and John Norton, plaintiffs in three class actions, have moved to remand the actions which have been removed by defendant Citibank, N.A. ("Citibank") from the Supreme Court of the State of New York. The motion is denied for the reasons set forth below.
Each of the named plaintiffs is a citizen and resident of the United States and seeks to represent a proposed plaintiff class of citizens for each of whom at least one trust fund was to be maintained in the United States with Citibank as trustee and fiduciary (the "Plaintiffs").
The plaintiffs and proposed plaintiff class members are an underwriting members of Lloyd's of London ("Lloyd's"), known as "Names." Each accepts insurance risks by participating in underwriting syndicates under various agreements described in greater detail below. Each Name is responsible solely for his or her share of any claims, and his or her assets may not be reached to satisfy the obligations of any other Name.
Citibank, a national banking association with its principal place of business in New York, is a trustee under the trust agreements described below and individually as a fiduciary under New York law.
On December 29, 1995, two of the present actions were commenced by filing of summonses and complaints in the Supreme Court of the State of New York, County of New York, captioned Celauro v. Citibank, N.A., (Index No. 60139/95) and Montana v. Citibank, N.A., (Index No. 601040/95). These actions were subsequently consolidated under the caption In re Lloyd's American Trust Fund Litigation, (Consolidated Index No. 661039/95) by stipulation and order dated January 23, 1996. The third action, Norton v. Citibank, N.A., (Index No. 600692/96), was commenced on February 9, 1996, and made a part of the consolidated proceedings.
On or about February 21, 1996, Citibank filed a Notice of Removal, removing the actions to this Court. The sole basis set forth in the Notice of Removal for subject matter jurisdiction in the federal court was the Edge Act, 12 U.S.C. § 632 ("Section 632").
The instant motion to remand was filed by the Plaintiffs on April 6, and affidavits were filed in opposition to the motion describing the agreements and activities at issue. The motion was argued on April 17, 1996, at which time it was considered fully submitted.
II. The California Action
On February 21, 1996, the California Commissioner of Corporations, on behalf of all Names resident in California, filed suit against Lloyd's, Citibank as trustee of the Lloyd's American Trust Fund ("LATF"), and a number of other Lloyd's-related entities in the Superior Court of California for the County of Los Angeles by filing a summons and complaint captioned People of the State of California v. Lloyd's of London, et al., Case No. BC144755 (the "California Complaint"). The California Complaint asserted various violations of state securities laws and sought, among other relief, a temporary restraining order imposing an equitable lien on the LATF and a freeze of all funds in the LATF. The Complaint requested the same relief in the form of a preliminary injunction.
On March 4, 1996, the Commissioner of Corporations filed a motion for remand asserting, inter alia, that the involvement of the LATF and Citibank in the lawsuit did not sufficiently implicate Section 632 for the purposes of establishing federal jurisdiction. On March 15, 1996, Judge Hatter denied the Commissioner's motion. See People of the State of California v. Lloyd's of London, et al., CV 96-1357 (C.D. Cal. March 15, 1996).
As set forth in the Complaints, the Plaintiffs and the class allege that Citibank breached its duties and responsibilities as the trustee of the trust fund of each plaintiff. It is alleged, inter alia, that Citibank engaged in a pattern of transferring money from the trust funds maintained by solvent Names to trust funds of insolvent Names in order to meet the latters' obligations, that Citibank engaged in unauthorized commingling of the funds in different trust funds, and that Citibank failed to maintain appropriate and necessary records with respect to each trust fund.
Specific allegations of improper activities include: improper loans and overdrafts (Comp. PP 60, 62, 64, 70, 71, 72, 102, 105, 109, 110, 114); improper transfers of money (Comp. PP 19(b)(vii), 86, 104, 107, 115); failure to establish and properly maintain bank accounts (Comp. PP 10, 45, 49, 52, 96, 103); improper investment of account funds (Comp. PP 47(f), 48); breaches of fiduciary duty (Comp. PP 96, 104, 106, 107, 115, 116); failure to render reports and accountings of bank accounts at Citibank (Comp. PP 11, 84, 93, 99); and violations of regulations issued by the Comptroller of the Currency that specifically govern banks (Comp. P 19(b)(xii)).
Based on these alleged breaches and wrongful conduct, the plaintiffs seek an accounting by Citibank as to each trust fund, recovery of any damages suffered as a result of Citibank's breaches of its fiduciary and contractual duties, and an injunction enjoining Citibank from continuing to commit any breaches of the fiduciary ...