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Wells Fargo Bank, N.A. v. 390 Park Avenue Associates, LLC

United States District Court, S.D. New York

June 21, 2017

WELLS FARGO BANK, N.A., Plaintiff,
390 PARK AVENUE ASSOCIATES, LLC, et al., Defendants.


          LORNA G. SCHOFIELD, District Judge.

         Plaintiff Wells Fargo Bank, NA. ("Wells Fargo"), as Trustee for a commercial mortgage-backed security trust, brings this action "by and through" its Special Servicer CWCapital Asset Management LLC ("CWCapital") to foreclose a commercial mortgage loan. Defendant 390 Park Avenue Associates, LLC ("390 Park") moves to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. For the reasons stated below, 390 Park's motion is denied.

         I. BACKGROUND

         The following facts are taken from the Complaint and documents submitted on this motion. The facts are construed in the light most favorable to Plaintiff. See McGowan v. United States, 825 F.3d 118, 125 (2d Cir. 2016).

         On March 9, 2005, 390 Park entered into a Note and Loan Agreement evidencing a $110 million loan from Column Financial, Inc. (the "Original Lender"). On the same day, 390 Park and the Original Lender entered into several other agreements to secure the loan, including a mortgage agreement granting the Original Lender a first priority lien on certain real property commonly known as The Lever Building located at 390 Park Avenue; a guaranty agreement; and an assignment of leases and rents (collectively with the Note and Loan Agreement, the "Loan Documents"). Effective May 26, 2005, the Original Lender assigned "all the right, title and interest" in the Loan Documents to Plaintiff as Trustee for Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C2 (the "Trust").

         The Trust is referred to generally as a commercial mortgage-backed securities trust. More precisely, it is a New York common law trust designated as a real estate mortgage investment conduit ("REMIC") for federal income tax purposes. The "Trust Fund" consists of commercial and multifamily loans, including the loan to 390 Park. The beneficiaries of the Trust are the "Certificateholders."

         The Trust is governed by a Pooling and Servicing Agreement ("PSA"), which divides responsibility for the management of the Trust among three parties - the Trustee, the Master Servicer and the Special Servicer. The Trustee is charged with "hold[ing] the Trust Fund in trust for the exclusive use and benefit of all present and future Certificateholders." Any transfer of mortgage loans to the Trustee for inclusion in the Trust Fund is "absolute" and "intended by the parties to constitute a sale." The Trustee "may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, " including, in the event a default occurs, the commencement of legal proceedings. The Special Servicer is generally responsible for administration of defaulted loans and is specifically authorized "to foreclose upon or otherwise comparably convert... the ownership of any property securing such Loans." Before initiating a foreclosure action, however, the Special Servicer must obtain the consent of the "Directing Certificateholder."

         The PSA also limits the control Certificateholders may exercise over the Trust. Subject to certain exceptions, Certificateholders do not have a right to vote or otherwise control the operation or management of the Trust Fund. Additionally, Certificateholders may not take legal action with respect to any loan held in the Trust Fund unless a specified percentage of Certificateholders have made written demand on the Trustee and the Trustee has refused to file suit in its own name.

         390 Park defaulted on its loan by failing to pay the full amount due on or before the maturity date, which was March 11, 2015. On March 19, 2015, counsel for CWCapital, acting "on behalf of the Trust, " sent a default notice to 390 Park demanding payment of the outstanding amounts due under the Loan Documents. On November 22, 2016, Wells Fargo commenced this action in its own name as Trustee, by and through CWCapital, its Special Servicer. The Complaint alleges that subject matter jurisdiction exists pursuant to 28 U.S.C. § 1332(a) in that this action is between citizens of different states - Wells Fargo is a citizen of South Dakota, while none of the defendants[1] is - and the amount in controversy exceeds $75, 000.

         II. STANDARD

         In deciding motions to dismiss under Rule 12(b)(1), a court accepts as true all factual allegations in the complaint and draws all reasonable inferences in favor of the plaintiff. McGowan, 825 F.3d at 125. The plaintiff has the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists. Id. "When subject matter jurisdiction is challenged, we are free to consider materials extrinsic to the complaint." Moser v. Pollin, 294 F.3d 335, 339 (2d Cir. 2002); accord Devi v. Silva, 861 F.Supp.2d 135, 143-44 (S.D.N.Y. 2012) (citing Moser).


         390 Park's motion to dismiss for lack of subject matter jurisdiction is denied. Wells Fargo, as Trustee, is a real and substantial party to the controversy, and therefore its citizenship is used to assess diversity jurisdiction. Because the Complaint adequately alleges diversity of citizenship between Plaintiff and all Defendants and the amount in controversy requirement is met, the Court has subject matter jurisdiction under 28 U.S.C. § 1332(a).

         Diversity jurisdiction exists where the amount in controversy exceeds $75, 000 and is between "citizens of different States." 28 U.S.C. § 1332(a)(1). The diversity of citizenship must be "complete" in the sense that "all plaintiffs must be citizens of states diverse from those of all defendants." Pa. Pub. Sch. Emps.' ...

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