# United States Court of Appeals **for the Fifth Circuit**

No. 21-20657

Arig, Incorporated,
Plaintiff—Appellant ,

versus
Wilmington Savings Fund Society, FSB, as Trustee of Stanwich Mortgage Loan Trust F; Carrington Mortgage Services, L.L.C.; JP Morgan Chase Bank, N.A.; Mortgage Electronic Registration Systems, Incorporated,
Defendants—Appellees

.

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:20-CV-2857

Before Richman, Chief Judge , and Elrod and Oldham, Circuit Judges

. Per Curiam: * Plaintiff-Appellant, Arig Inc., appeal s the district court’s denial of its motion to remand. It alleges that, upo n removal to federal court, Defendants-

* This opinion is not designated for publication. See 5th Cir. R. 47.5. Judge Oldham concurs only in the judgment. United States Court of Appeals Fifth Circuit 

### FILED March 27, 2023 Lyle W. Cayce Clerk Case: 21-20657 Document: 00516690651 Page: 1 Date Filed: 03/27/2023No. 21-20657

2 Appellees never established complete di versity of citizens hip. Because we hold that the district court had subject matter jurisdiction ov er the case based on complete diversity of the parties, we AFFIRM

. I In 2008, a non-party to this case obtained a loan to purchase real property. He secured his obligation to repay his loan by executing a deed of trust granting a lien to Mortgage Elec tronic Registration Systems, Inc., as nominee for SecurityNational and its successors and assigns. MERS assigned the deed of trust to JPMorg an Chase Bank, N.A. JPMorgan then assigned the deed of trust to Wilmingt on Savings Fund Society, FSB, as trustee of the Stanwich Mortgage Lo an Trust F. Carrington Mortgage Services, LLC services the loan. In 2012, the homeowners’ associat ion of the non-party’s property sued for past-due assessments, obtained a default judgment, and ultimately sold the property at a constable’s sale . Arig Inc. purchased the property, foreclosing the judgment on March 3, 2020. Arig Inc. subsequently sued Defendants-Appellees in state court on July 10, 2020. 1 Arig Inc. sought to quiet title to the property in its name and declare the security instrument void and unenforceable. Thereafter, JPMorgan and MERS f iled notices of removal to the Southern District of Texas, Hous ton Division, asserting diversity jurisdiction. The remaining defendan ts at the time of removal (Wilmington Savings, SecurityNational, and Carring ton Mortgage Services) consented to

1 Arig Inc. named MERS, SecurityNational, JPMorgan Chase Bank, Carrington Mortgage Services, and Wilmin gton Savings Fund Society as defendants. The district court voluntarily dismissed SecurityNational by agreement of the parties, and it is not part of this appeal. Case: 21-20657 Document: 00516690651 Page: 2 Date Filed: 03/27/2023No. 21-20657

3 removal. JPMorgan and MERS amende d their removal notice to include additional information regarding Wilm ington Savings’s interest in the Stanwich Trust. Defendants-Appellees asserted that Wilmington Savings’s citizenship, as trustee for the Stanwich Trust, controls for diversity purposes. Arig Inc. moved to remand, disputing that the Stanwich Trust’s citizenship was properly established. The district court denied Arig In c.’s motion to remand, denied Arig Inc.’s amended motion to r emand, and granted the DefendantsAppellees’ motion to dismiss with prejudi ce. The district court also denied Arig Inc.’s request for leave to amend its second amended complaint. Arig Inc. appeals the district court’s or der denying its amended motion to remand. 2

II

We review a denial of a motion to remand de novo

. SGK Props., L.L.C. v. U.S. Bank Nat’l Ass’n , 881 F.3d 933, 939 (5th Cir. 2018). “Under 28 U.S.C. § 1332(a), diversity jurisdic tion exists when there is complete diversity of citizenship among the pa rties and the amount in controversy exceeds $75,000.” Bynane v. Bank of N.Y. Mellon , 866 F.3d 351, 355 (5th Cir. 2017). “Complet e diversity requires that al l persons on one side of the controversy be citizens of differen t states than all pe rsons on the other side.” Settlement Funding, L.L.C. v. Rapid Settlements, Ltd. , 851 F.3d 530, 536 (5th Cir. 2017) (alteration omitted) (quoting McLaughlin v. Miss. Power Co. , 376 F.3d 344, 353 (5th Cir. 2004)). The party seeking the federal forum has the burden of establishing diversity jurisdiction. Id

.

2 Arig Inc. also appeals the grant of De fendants-Appellees’ motion to dismiss and the denial of its motion for leave to amend its se cond amended complaint. Arig Inc.’s brief, however, assigns no error to the latter two acti ons. Accordingly, we do not address them. Case: 21-20657 Document: 00516690651 Page: 3 Date Filed: 03/27/2023No. 21-20657

4 Arig Inc. claims that the district court should have required the Defendants-Appellees to establish the citizenships of the Stanwich Trust’s shareholders before determining that it ha d jurisdiction. Arig Inc. alleges that “Wilmington is not an active trustee.” Put differently, despite naming Wilmington Savings as the sole defendant, Arig Inc. alleges that Wilmington Savings is a nominal or formal party and that the beneficial shareholders destroy diversity jurisdiction. Arig In c. is correct that “[i]n determining diversity jurisdiction, ‘a federal co urt must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.’” Bynane , 866 F.3d at 356 (quoting Navarro Sav. Ass’n v. Lee , 446 U.S. 458, 461 (1980)). However, relying on Navarro and our cases applying it, we determine that the distri ct court did not err in concluding that diversity existed.

“Where a trustee has been sued or f iles suit in her own name, the only preliminary question a court must answer is whether the party is an active trustee whose control over the assets held in its name is real and substantial.” Id . at 357 (internal quotation marks, al teration, and citation omitted). In Navarro , the seminal case on th is topic, the Supreme Court determined that a group of trustees had the requisite degree of control because they held legal title to trust assets, were authorized to invest those assets for the benefit of shareholders and could sue and be sued in their capacity as trustees. 446 U.S. at 464. But there was nothing talismanic about that combination. In Bynane , we determined that a trustee had suffici ent control citing only the facts that the trustee held legal title to trust a ssets and certificate holders had limited power over trust operations. 866 F.3d at 357. Similarly, in SGK Props. , it was enough that a trustee was “assignee of the trust’s assets” and “holder of the Note and all rights due unde r it.” 881 F.3d at 940. The case law demonstrates, moreover, that limits on a trustee’s authority do not necessarily disqualify th e trustee from real party status. The Case: 21-20657 Document: 00516690651 Page: 4 Date Filed: 03/27/2023No. 21-20657

5 trustees in Navarro could be fired by shareholders and had to secure shareholders’ permission before disposi ng of more than half the trust’s assets. 466 U.S. at 465 n.14 (expla ining that “these limited powers of intervention” do “not strip the trustees of the powers that make them real parties to the controversy for purposes of diversity jurisdiction”). And the trustee in Bynane was subject to certificateholders ’ “limited rights to vote or otherwise control the operation of the trust.” 866 F.3d at 357. We have little trouble determining that Wilmington Savings wields the necessary degree of control for real party status. The governing trust agreement expressly vests legal title to trust assets in the trustee. 3 Wilmington Savings is also empowered to convey and transfer mortgage assets with the consent of certif icateholders or the trust manager; is assigned various recordkeeping responsibilities; is designated to serve as the mortgagee of record an d to pay premiums on HUD mortgage assets; is authorized to perform duties in connect ion with finance transactions using trust assets, selling trust assets, an d making liquidation distributions; and is responsible to establish accounts and re ceive, maintain, invest and disburse funds. Wilmington Savings is also empowe red to bind the trust without the certificateholders’ involvement, subjec t to a few enumerated exceptions. Yet these exceptions are analogous to the Navarro agreement’s requirement that

3 The trust agreement initially appears to limit Wilmington Savings’s legal title to Mortgage Loans and REO property. Nevertheless, there is good reason to think that legal title to all assets is held by the trustee beca use this provision contains the caveat that all assets shall be vested in the trustee where required by law. And “for a trust to be a trust” in Texas, “the legal title must immediately pass to the trustee, and beneficial or equitable interest to the beneficiaries.” Bank One Tex. v. United States , 157 F.3d 397, 400 (5th Cir. 1998) (quoting Cutrer v. Cutrer , 334 S.W.2d 599, 605 (Tex.C iv.App.—San Antonio 1960), aff’d , 345 S.W.2d 513 (Tex. 1961)). Case: 21-20657 Document: 00516690651 Page: 5 Date Filed: 03/27/2023No. 21-20657

6 trustees secure the permission of shareholders before disposing of more than half of the trust’s assets in that they implicate the very existence of the trust. 4 To be sure, the trust agreement does not cede unfettered control over trust assets to the trustee. It prov ides that Wilmington Savings may not convey or transfer certain categories of assets without the consent of the certificateholders or the trust manager, must often take direction from the trust manager, and can be remo ved by the certificateholders. All the same— as with shareholders’ “limited powers of intervention” in Navarro and certificateholders’ “limited rights to vote or otherwise control the operation of the trust” in Bynane —we hold that the various checks on Wilmington Savings’s authority leave it with sufficiently significant control that the district court was correct to deem it the real party in interest.

* * * For the foregoing reasons, we AFFIRM the district court’s judgment.

4 Wilmington Savings does not have unila teral decision-making authority over: (1) amending or dissolving the trust, (2) declaring bankruptcy on certif icates, (3) merging the trust with other entities, (4) creating liens no t permitted by the trust, (5) incurring debt not permitted by the trust, or (6) issuing new certificates not permitted by the trust. Case: 21-20657 Document: 00516690651 Page: 6 Date Filed: 03/27/2023