IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF OHIO 

EASTERN DIVISION 

MSCI 2007-IQ16 GRANVILLE RETAIL, LLC, 

 

 Plaintiff, 

 

 vs. Case No. 2:11-cv-487 

 Magistrate Judge King 

UHA CORPORATION, LLC, et al., 

 

 Defendants. 

 

OPINION AND ORDER 

This is a diversity action in which plaintiff MSCI 2007-IQ16 

Granville Retail, LLC (“plaintiff” or “MSCI”), as assignee, seeks a 

money judgment, declaratory relief and foreclosure of mortgaged 

premises in Delaware, Fairfield and Franklin Counties, and associated 

leases and personal property, following the alleged default of 

defendant UHA Corporation, LLC (“UHA”), on a commercial loan. First 

Amended Complaint, ECF 29. UHA asserts counterclaims for an 

accounting and accord and satisfaction. Amended Answer of Defendant 

UHA Corporation, LLC to the Complaint, ECF 36. With the consent of 

the parties pursuant to 28 U.S.C § 636(c), this matter is before the 

Court on UHA’s Motion for Realignment of Parties and Dismissal of 

Case, ECF 77 (“UHA’s Motion”).1

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND2

 On June 6, 2011, Bank of America, National Association (“BOA”), 

 

1 Because UHA’s Motion can be resolved on the filings, UHA’s request for oral 

argument is denied. 

2 The statements contained in this section are set forth for purposes of 

resolving only UHA’s Motion. 

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as successor by merger to LaSalle Bank National Association, as 

Trustee for the Holders of Morgan Stanley Capital I Inc., Commercial 

Mortgage Pass-Through Certificates, Series 2007-IQ16 filed this 

action. Complaint, ECF 1. BOA, a citizen of North Carolina and a 

national banking association, named UHA, an Ohio limited liability 

company, as the sole defendant. Id. at ¶¶ 1, 3. BOA invoked this 

Court’s diversity jurisdiction under 28 U.S.C. § 1332, alleging 

complete diversity between the parties existed and claiming more than 

$75,000.00 in damages. Id. at ¶ 4. On August 17, 2011, the Court 

administratively closed the case pending resolution of the bankruptcy 

proceedings of defendant UHA, Order, ECF 11, but reactivated the case 

on October 23, 2013, Order, ECF 13. 

 Thereafter, MSCI filed a motion for an order designating it as 

the real party in interest and substituting it as plaintiff. ECF 15 

(“Motion for Substitution”). On November 15, 2013, the Court, by 

agreed order, granted the Motion for Substitution: 

The Court finds as follows: 

 1. Plaintiff Bank of America, National Association, 

as successor by merger to LaSalle Bank National 

Association, as Trustee for the Holders of Morgan Stanley 

Capital I Inc., Commercial Mortgage Pass-Through 

Certificates, Series 2007-JQ16 (“BOA”), held all of the 

loan documents that are the basis of this action herein 

(collectively the “Loan Documents”). 

 2. Pursuant to the Assignments and Allonges as more 

fully described in the Motion, BOA assigned its interest in 

the Loan Documents to Assignee #2 (as that term is defined 

in the Motion), which in turn has assigned them to MSCI. 

 3. MSCI is the real party in interest with regard to 

the Loan Documents and is therefore entitled to prosecute 

this action as plaintiff. 

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 Accordingly, the Court, being duly advised in the 

premises and for good cause shown, finds the Motion well 

taken and hereby grants the same. 

 

WHEREFORE, IT IS HEREBY ORDERED, ADJUDGED and DECREED

that MSCI 2007-IQ16 Granville Retail, LLC shall be, and 

hereby is, substituted as Plaintiff for all purposes 

herein, and that the caption of this case shall henceforth 

be, MSCI 2007-IQ16 Granville Retail, LLC, Plaintiff, v. UHA 

Corporation, LLC, Defendant. 

Agreed Order Substituting MSCI 2007-IQ16 Granville Retail, LLC as 

Plaintiff Herein, ECF 16, pp. 1-2 (“Agreed Order”) (emphasis in 

original). 

 MSCI later moved to amend the complaint in order to join as 

defendants the treasurers of Delaware, Fairfield, and Franklin 

Counties (collectively, “the Treasurers”). ECF 26. In support of its 

request for leave to amend, MSCI argued that the Treasurers “are 

necessary parties to this foreclosure action because they hold 

interests in mortgaged properties located in their respective 

counties.” Id. at 1. See also id. at 4-5. the Court granted MSCI’s 

unopposed motion for leave to file the amended complaint. Order, ECF 

28. 

 According to MSCI, an Ohio limited liability company, the 

Treasurers “may claim to have some interest in or lien upon certain of 

the real estate which is the subject of this action by virtue of 

unpaid real estate taxes, assessments, penalties and interest.” First

Amended Complaint, ECF 29, ¶¶ 1, 3-5 (“Amended Complaint”). MSCI went 

on to assert that this Court is vested with diversity jurisdiction 

under 28 U.S.C. § 1332 because complete diversity between the parties 

existed at the time the original Complaint was filed, the amount in 

controversy exceeds $75,000.00, and “subsequent substitution of 

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parties does not defeat jurisdiction under 28 U.S.C. § 1332.” Id. at 

¶ 6. MSCI seeks a money judgment, declaratory relief and foreclosure 

of mortgaged premises in Delaware, Fairfield and Franklin Counties, 

and associated leases and personal property. Id. at p. 16. 

Thereafter, two of the Treasurers acknowledged their interest in the 

subject property. Answer of Defendant, Fairfield County Treasurer, 

ECF 34, p. 1 (asking “that his interest in subject property be 

protected and that he be found to have a valid first and best lien 

against the premises and that he be paid according to the priority of 

his lien upon the sale of the premises and for such other and further 

relief to which he may be entitled”); Answer of Defendant Jon 

Peterson, Treasurer of Delaware County, Ohio to First Amended 

Complaint, ECF 38, ¶ 1 (“The Treasurer has an interest in the 

parcel(s) as identified in the First Amended Complaint and in the 

above caption. Such interest is in the form of real estate taxes and 

assessments. Real estate taxes and assessments are the statutory 

first and best lien against the parcel(s).”). 

 UHA now moves to realign the Treasurers as party plaintiffs and 

to dismiss the action for lack of jurisdiction. MSCI opposes UHA’s 

Motion. Plaintiff MSCI 2007-IQ16 Granville Retail, LLC’s Memorandum 

in Opposition to Defendant UHA Corporation’s Motion for Realignment of 

Parties and Dismissal of Case, ECF 79 (“Opposition”). With the filing 

of the Amended Memorandum of Defendant, UHA Corporation, LLC in 

Response to Plaintiff’s Memorandum in Opposition to Motion for 

Realignment of Parties and Dismissal of Case, ECF 81 (“Reply”), this 

matter is ripe for resolution. 

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II. STANDARD 

“[T]he courts, not the parties, are responsible for aligning the 

parties according to their interests in the litigation.” U.S. 

Fidelity & Guaranty Co. v. Thomas Solvent Co., 955 F.2d 1085, 1089 

(6th Cir. 1992) (internal citation omitted). “If the interests of a 

party named as a defendant coincide with those of the plaintiff in 

relation to the purpose of the lawsuit, the named defendant must be 

realigned as a plaintiff for jurisdictional purposes.” Id. See also

Safeco Ins. Co. of Am. v. City of White House, 36 F.3d 540, 545 (6th 

Cir. 1994) (“In considering whether there is complete diversity, a 

federal court must look beyond the nominal designation of the parties 

in the pleadings and should realign the parties according to their 

real interests in the dispute.”). In determining the appropriate 

alignment of parties in an action based on diversity jurisdiction, 

“whether the necessary collision of interests . . . exists[] is [] 

not to be determined by mechanical rules. It must be ascertained from 

the principal purpose of the suit, . . . and the primary and 

controlling matter in dispute.” U.S. Fidelity & Guaranty Co., 955 

F.2d at 1089 (internal quotation marks and citations omitted). 

Accordingly, “[r]ealignment, then, may create or destroy diversity 

jurisdiction.” Safeco Ins. Co. of Am., 36 F.3d at 545. 

III. DISCUSSION 

 This Court first notes that the parties agree that MSCI’s 

substitution as a plaintiff did not destroy diversity jurisdiction. 

The parties also agree that the Treasurers are necessary parties to 

this litigation. The parties disagree, however, whether the 

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Treasurers’ interests align with MSCI’s interests and, therefore, 

whether realignment of the Treasurers as party plaintiffs is 

appropriate. UHA argues that the Treasurers are more properly aligned 

as plaintiffs because their interests are “almost identical” to MSCI’s 

interest as they all seek foreclosure and ask that their liens be paid 

in full. UHA’s Motion, pp. 5-6 (citing, inter alia, Cleveland Housing 

Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554 (6th Cir. 

2010)); Reply, pp. 5-7. To the extent that there may exist some 

dispute between MSCI and the Treasurers as to liens on the properties, 

UHA contends that any such dispute is secondary to the primary issue 

of foreclosure. Id. UHA further argues that, with the this 

realignment sought by it, complete diversity will be destroyed. Id. 

MSCI, however, contends that in actions seeking to adjudicate 

interests in real estate, holders of competing interests in real 

estate, such as the Treasurers in this foreclosure action, are 

properly aligned as defendants, Opposition, pp. 5-10, and notes 

that other district courts in this circuit have denied requests for 

realignment in such actions. Id. at 5-6, 10-11 (citing, inter alia, 

Citizens Bank v. Plasticware, LLC, 830 F. Supp.2d 321, 327 (E.D. Ky. 

2011); MSCI 2007-IQ16 Retail 9654, LLC v. Prospect Square 07 A, LLC, 

No. 1:13-cv-592 (S.D. Ohio) (Barrett, J.), attached thereto as Exhibit 

A). 

 MSCI’s arguments are well-taken. Another court in this district 

recently considered a similar request for realignment in a foreclosure 

action. See WBCMT 2007-C33 Office 7870, LLC v. Breakwater Equity 

Partners, LLC, No. 1:14-CV-588, 2014 U.S. Dist. LEXIS 164368 (S.D. 

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Ohio Nov. 24, 2014). In that case, one of the defendants argued that 

the Hamilton County Treasurer should be realigned as a plaintiff 

because its interest was not adverse to the plaintiff’s interests in 

the real property. Id. at *12. Commenting that the primary purpose 

of the lawsuit was determinative of the issue, the WBCMT court noted 

that a foreclosure action required the plaintiff to establish its 

right to foreclose on the property and to establish the validity and 

priority of its lien. Id. at 14. The Hamilton County Treasurer’s 

interest was “not necessarily directly aligned” with the plaintiff’s 

interest because the treasurer “may dispute the validity or priority 

of Plaintiff’s lien or assert a claim to real estate taxes that is 

dispute by Plaintiff.” Id. at *14-15. The court concluded that “[i]t 

thus is no surprise that courts repeatedly have aligned the Treasurer 

as defendant in foreclosure proceedings.” Id. at *15 (citing case 

authority, local rules, and Ohio Rev. Code § 2329.192 (“aligning state 

lienholder as a party-defendant in an action seeking judicial sale of 

real estate that is subject to a state lien”). Realignment of the 

treasurer as a plaintiff was therefore “unnecessary and improper in 

this instance.” Id. See also Citizens Bank, 830 F. Supp.2d 321, 327 

(refusing to realign parties in a foreclosure action where lienholders 

had conflicting interests); MSCI 2007-IQ16 Retail 9654, LLC, No. 1:13-

cv-592, p. 11, attached as Exhibit A to Opposition). 

 This Court finds this reasoning persuasive. “A suit to foreclose 

a mortgage is a proceeding to determine the existence, extent, and 

priority of a mortgage lien and to obtain the sale of the real 

property pledged to secure its satisfaction.” United States v. 

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Scholnick, 606 F.2d 160, 165 (6th Cir. 1979). As the recitation of 

the procedural history in this case establishes, the Treasurers and 

MSCI each assert an interest in proceeds from a future foreclosure 

sale of the subject property. In the event that the sale proceeds are 

insufficient to satisfy these claims in full, the priority of the 

liens determines which lienholder is paid first from a limited fund 

generated by sale proceeds. Here, the Treasurers’ liens take priority 

over MSCI’s liens,3

 reducing the amount of money available to MSCI. 

Under these circumstances, the Treasurers’ interests are adverse to 

MSCI’s interest and realignment is therefore improper in this case. 

See, e.g., WBCMT 2007-C33 Office 7870, LLC, 2014 U.S. Dist. LEXIS 

164368, at *15; Citizens Bank, 830 F. Supp.2d 321, 327 (refusing to 

realign parties in a foreclosure action where lienholders had 

conflicting interests); MSCI 2007-IQ16 Retail 9654, LLC, No. 1:13-cv592, p. 11, attached as Exhibit A to Opposition). 

 UHA’s reliance on Cleveland Housing Renewal Project, 621 F.3d 

554, does not militate a different result. In that case, the 

plaintiff Cleveland Housing Renewal Project (“CHRP”) alleged that 

several vacant properties owned by the defendant bank were a public 

nuisance. Id. at 557. CHRP also named the City of Cleveland as a 

defendant because the city might have an interest in the subject real 

property because of code violations, utility assessments, and nuisance 

abatement costs. Id. at 557-58. The United States Court of Appeals 

for the Sixth Circuit determined that the primary purpose of the 

 

3 MSCI acknowledges that the Treasurers liens take priority over its own. See, 

e.g., Opposition, p. 4. 

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litigation was to abate the nuisances. Id. at 590-60. Because the 

city would benefit from abating the nuisance and preventing future 

nuisances, the city’s interest was aligned with CHRP’s interest. Id. 

The Sixth Circuit therefore concluded that the city’s liens on some of 

the properties were ancillary to the primary controversy and affirmed 

the realignment of the city as a plaintiff. Id. See also City of 

Cincinnati v. Deutsche Bank Nat'l Trust Co., No. 1:12-cv-104, 2012 

U.S. Dist. LEXIS 61163, at *13-18 (S.D. Ohio May 2, 2012) (realigning 

county treasurer as co-plaintiff where the interests of the treasurer 

and the plaintiff were aligned in the primary goal of abating 

nuisances) (citing, inter alia, Cleveland Housing Renewal Project, 621 

F.3d at 560). In the case presently before the Court, however, the 

Treasurers and MSCI do not share a similar common interest. As 

discussed supra, the primary controversy requires a determination of 

the priority of liens and payment of those liens according to that 

priority determination. This determination necessarily pits the 

interests of MSCI and of the Treasurers against each other. Cleveland 

Housing Renewal Project, a public nuisance action, is therefore 

inapposite. For all these reasons, the Court concludes that the 

present record establishes that the Treasurers have interests adverse 

to MCSI. Therefore, the realignment of the parties is not warranted. 

WHEREUPON, UHA’s Motion for Realignment of Parties and Dismissal 

of Case, ECF 77, is DENIED. 

December 12, 2014 s/Norah McCann King 

 Norah McCann King 

 United States Magistrate Judge 

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