United States District Court, W.D. New York
U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Plaintiff,
DUANE J. LICATA, LORI A. LICATA, Defendants.
DECISION AND ORDER
MICHAEL A. TELESCA United States District Judge.
U.S. Bank Trust, N.A. (“plaintiff”) alleges
nonpayment of a mortgage by defendants Duane J. Licata and
Lori A. Licata (collectively defendants). Plaintiff has moved
for default judgment. Docket No. 10. For the reasons set
forth below, plaintiff's motion is denied and the action
is dismissed for lack of subject matter jurisdiction.
through its counsel, Gross Polowy LLC (“Gross
Polowy”), commenced the instant action on January 17,
2017. Docket No. 1. Plaintiff alleges that defendants have
failed to make payments under the terms of a mortgage held by
it and secured by property owned by defendants, and seeks a
judgment for the outstanding amount of the loan, as well as
foreclosure and sale of defendants' property.
asserts federal subject matter jurisdiction based solely on
diversity of citizenship. Specifically, plaintiff asserts
that defendants are both citizens of New York and that it is
“a national association” with its principal place
of business in Texas. Id. at ¶¶ 2-3.
Plaintiff purports to bring this action as trustee for the
LSF9 Master Participation Trust (the “Trust”),
but has provided no details regarding its powers as trustee
or the citizenship of the Trust's beneficiaries.
failed to appear in this action despite having been duly
served, and a Clerk's Entry of Default was entered on
March 7, 2017. Docket No. 8. Plaintiff filed the instant
motion for a default judgment on May 5, 2017. Docket No. 10.
Subject Matter Jurisdiction
courts are courts of limited jurisdiction whose power is
limited strictly by Article III of the Constitution and
congressional statute.” United Food &
Commercial Workers Union, Local 919, AFL-CIO v. CenterMark
Properties Meriden Square, Inc., 30 F.3d 298, 303 (2d
Cir. 1994). Accordingly, there exists an “inflexible
rule” that “if a court perceives at any stage of
the proceedings that it lacks subject matter jurisdiction,
then it must take proper notice of the defect by dismissing
the action.” Cave v. E. Meadow Union Free Sch.
Dist., 514 F.3d 240, 250 (2d Cir. 2008); see also
R.S. v. Bedford Cent. Sch. Dist., 899 F.Supp.2d 285, 289
(S.D.N.Y. 2012) (subject matter jurisdiction is not a
prudential or discretionary doctrine, but rather, is an
inflexible rule that without exception requires federal
courts, on their own motion, to determine if jurisdiction is
lacking). “A federal court's jurisdiction must
clearly appear from the face of [the] complaint. . . .”
Verosol USA, Inc. v. Fla. Shades, Inc., 1992 WL
696643, at *1 (S.D.N.Y. Sept. 17, 1992) (internal quotation
omitted). “And when a complaint fails to plead subject
matter jurisdiction, the Court is obligated to dismiss it
sua sponte.” Receivables Exch., LLC v.
Hotton, 2011 WL 239865, at *1 (E.D.N.Y. Jan. 21, 2011)
(citing Fed.R.Civ.P. 12(h)(3)).
case, plaintiff has failed to adequately allege subject
matter jurisdiction. In a recent decision, the United States
District Court for the Northern District New York dismissed a
complaint filed by Gross Polowy on behalf of plaintiff for
precisely this reason. See U.S. Bank Trust, N.A. v.
Monroe, 2017 WL 923326, at *3 (N.D.N.Y. Mar. 8, 2017).
The court in the Monroe case noted that Gross Polowy
has, on several previous occasions, filed actions in federal
court that fail to properly allege subject matter
jurisdiction. Specifically, the court explained that the
citizenship of a national banking association is determined
by the state designated in its articles of association as its
main office. Id. at *4 (citing Wachovia Bank v.
Schmidt, 546 U.S. 303, 306 (2006)). In this case, as in
the Monroe case, plaintiff has not provided any
information regarding its articles of incorporation, and has
therefore failed to provide the Court with the information
necessary to ascertain its citizenship.
and as the Monroe court discussed in detail,
plaintiff has commenced this action in its role as trustee
for the Trust. “The rule for determining the diversity
citizenship of a trust (when it is the citizenship of the
trust itself that matters) depends on the type of trust at
issue. If the trust is a traditional trust, meaning it was
established primarily for gift or estate planning purposes,
courts have held it takes the citizenship of its trustees
without regard to the trust's beneficiaries. . . . On the
other hand . . . business trusts - which are established as
an alternative to incorporation and are intended to make a
profit -take the citizenships of their beneficiaries.”
Id. (internal citations and quotations omitted).
Here, as in Monroe, plaintiff “has included no
allegations concerning the type of trust at issue here, its
degree of control over the trust assets, or, alternatively,
the citizenships of the trust's beneficiaries.”
Id. at *5. Accordingly, plaintiff has failed to
allege facts sufficient to establish that this Court has
subject matter jurisdiction over the instant matter.
attorneys have been warned that it is improper to pursue an
action in federal court without properly asserting subject
matter jurisdiction. See id. (“The Court
strongly cautions U.S. Bank (and its attorneys, Gross Polowy)
against continuing to claim federal jurisdiction in this or
other lawsuits if it either lacks an arguable basis for doing
so or does not wish to invest the effort required to make its
case.”). It nevertheless filed the instant motion for
default judgment without making any attempt to remedy the
deficiencies in its pleading. Under these circumstances, the
Court finds that dismissal of the complaint is appropriate.
See Id. (“If a case is significant enough to
warrant a federal forum, properly pleading and showing
jurisdiction is a reasonable price of admission. If not, the
courts of New York are perfectly capable of handling a
foreclosure action for nonpayment of a mortgage (perhaps even
more so than a federal district court).”); see also
U.S. Bank Trust, N.A. for LSF9 Master Participation Trust v.
Gross, 2017 WL 2602057, at *3 (W.D.N.Y. June 14, 2017)
(dismissing complaint brought by Gross Polowy on behalf of
plaintiff for failure to properly allege subject matter