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FMAC LOAN RECEIVABLE TRUST 1997-C v. STRAUSS

United States District Court, Southern District of New York


April 14, 2003

FMAC LOAN RECEIVABLE TRUST 1997-C, ET AL., PLAINTIFFS,
v.
MICHAEL L. STRAUSS, DEFENDANT.

The opinion of the court was delivered by: Lewis A. Kaplan, District Judge

ORDER

This is a purported diversity action for breach of a guaranty.

On March 31, 2003, the Court issued an order noting that the action would be dismissed for lack of subject matter jurisdiction absent the filing, on or before April 11, 2003, of an amended complaint adequately alleging jurisdiction, noting that the complaint failed to allege the citizenship of any of the business trust plaintiffs or of the defendant.

Plaintiffs have filed an amended complaint which alleges that defendant is a citizen of California; plaintiff Wilmington Trust Company, the trustee of the busines trusts, is a citizen of Delaware; plaintiff Bay View Franchise Mortgage Acceptance Company is a citizen of New York and Delaware; and plaintiff business trusts are organized under the law of and have their principal places of business in Delaware.

Navarro Savings Ass'n v. Lee, 446 U.S. 458 (1980), held that citizenship of an active trustee of a business trust that brings an action in that capacity is the citizenship of the trustee without regard to the citizenship of the beneficiaries or shareholders of the trust. Carden v. Arkoma Associates, 494 U.S. 185 (1990), made clear, however, that Navarro goes no farther than that. Specifically, it "did not involve the question whether a party that is an artificial entity other than a corporation can be considered a `citizen' of a State . . ." Id. at 191. Carden, moreover, held that whether legal entities other than corporations — there a limited partnership — ought to be analogized to corporations for diversity of citizenship purposes was a matter for Congress, not the courts. In consequence, the limited partnership there at issue was held to be a citizen of every state of which any of its partners, general or limited, was a citizen.

Carden controls this case. Plaintiffs here named as plaintiffs a number of business trusts. The only allegations as to their citizenship are that they are organized under and have their principal places of business in Delaware, allegations betraying the fact that plaintiffs view them as corporate analogs. But the analogy fails. In the absence of any allegations establishing that no member, beneficiary or shareholder of the plaintiff business trusts is a citizen of California, the state of which the defendant is a citizen, the amended complaint fails adequately to allege the existence of complete diversity of citizenship. See Riley v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 292 F.3d 1334, 1337-38 (11th Cir. 2002).

Accordingly, the action is dismissed for lack of subject matter jurisdiction. In view of the failure of the amended complaint to cure fully the jurisdictional defects of the original complaint, the Court declines leave to amend.

SO ORDERED.

20030414

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