FILED 

 U.S. COURT OF APPEALS

 ELEVENTH CIRCUIT 

 April 16, 2004 

 THOMAS K. KAHN 

 CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 03-11975 

________________________

D.C. Docket No. 02-01244-CV-JOF-1

GRAY MURRAY, SAM RAMSEY, KEN HENSON,

MARIAM LEWIS, BUD HARTLEY, individually and

as representatives of a Class of Certificate Holders of

TriCity Hospital Authority Revenue Certificates,

Plaintiffs-Appellants,

JUSTIN J. KARL, IRA LEE BROWN, FREDERICK C.

FOLLMER, SHARON R. FOLLMER, BOBBY G.

BANKSTON, RALPH B. TRUELOVE, LILLIAN A.

TRUELOVE, PHILIP H. DAVIS,

Consolidated-Plaintiffs-Appellants,

versus

U.S. BANK TRUST NATIONAL ASSOCIATION,

SOUTHTRUST BANK, f.k.a. Southtrust Bank, N.A.,

Defendants-Appellees,

RELIANCE TRUST COMPANY,

Consolidated-Defendant-Appellee.

________________________

Appeal from the United States District Court

for the Northern District of Georgia

_________________________

(April 16, 2004)
 We recite the factual background, including the contentions of the parties, that form the 1

basis of the amended complaint and answer. By these recitations, however, we neither pass upon

nor intimate any resolution of these conflicting contentions. We refer to them purely to

illuminate the circumstances leading up to the dismissal of the amended complaint by the district

court. We adjudicate only the propriety, vel non, of the dismissal. 

2

Before ANDERSON, BLACK and HILL, Circuit Judges.

HILL, Circuit Judge:

This is an appeal from a district court order denying the bondholder

plaintiffs’ motion to certify a class action and dismissing their complaint without

prejudice on the grounds that they, as trust beneficiaries, lack standing to bring

suit against the three trust fiduciary defendants, or, in the alternative, that as to one

trust fiduciary defendant, their case is not yet ripe. Based on the following, we

affirm the judgment of the district court.

I. FACTUAL AND PROCEDURAL HISTORY1

In 1993, the Tri-City Hospital Authority (the hospital authority) issued

$39,140,000 in bonds and sold them to over one thousand bondholders. The bond
 The term ‘trust indenture’ collectively refers to the Trust Indenture (dated November 1, 2

1993, between the Master Trustee and the hospital authority), the Master Trust Indenture (dated

November 1, 1993, between the Master Trustee and the medical center), the First Supplemental

Master Trust Indenture (dated November 1, 1993, between the Master Trustee and the medical

center), the Promissory Note and Form of Promissory Note (dated November 1, 1993, between

the Master Trustee and the medical center), and the UCC-1 Financing Statements (filed

December 22, 1993). 

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issue was governed by a trust indenture. The bondholders were the intended third 2

party beneficiaries of the trust indenture. 

The hospital authority loaned $39,140,000 in bond proceeds to the South

Fulton Medical Center, Inc. (the medical center) to purchase a separate hospital

and its revenues, owned by the hospital authority, and to make necessary capital

improvements. In return, as collateral, the medical center gave the hospital

authority a security interest in the hospital’s personal property, most significantly,

its patient account receivables and inventory. Under the terms of the trust

indenture, a master trustee was appointed to oversee the transaction and collect

payments as they became due. The hospital authority pledged its security interest

to the master trustee. 

In 2002, individual bondholders filed a seventy-seven page amended

complaint against three corporate defendants: (1) U. S. Bank Trust National

Association (U. S. Bank), the master trustee of the bonds from November 4, 1999,

to the present; (2) SouthTrust Bank (SouthTrust), the former master trustee of the
 The security interest was perfected when the original UCC-1 financing statement was

3

filed on December 22, 1993. O.C.G.A. § 11-9-302(1). It was effective for a five-year period.

O.C.G.A. § 11-9-403(2). Under Georgia law, once a security interest has been perfected, it must

be maintained by the filing of a UCC-3 continuation statement, within six months prior to the

expiration of the five year period beginning on the date the original financing statement was

filed. O.C.G.A. § 11-9-515. In this case, the UCC-3 was due to be filed anytime from June 22,

1998, to and including December 22, 1998.

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bonds from October 28, 1996, through November 4, 1999; and (3) Reliance Trust

Company (Reliance), the former servicing agent for the bonds from November 1,

1993, until March 16, 1999. The bondholders sought class certification under Fed.

R. Civ. P. 23(b)(3) or 23(b)(1) and declaratory relief against the defendants, on

behalf of themselves, and a proposed class of over one thousand bondholders, for

violations of the Federal Trust Indenture Act (FTIA), breach of contract, fraud and

misrepresentation, breach of fiduciary duty, and negligence. 

At the core of their amended complaint, the bondholders allege that, as to

their secured interest in the hospital’s personal property, the defendants failed to

file a UCC-3 continuation statement on December 22, 1998. It is alleged that, on 3

that date, the perfected security interest that the bondholders held in their bonds

lapsed and they became unsecured creditors, expecting to receive only 30% of the

face value of their bonds.

When U. S. Bank assumed its fiduciary duties, it claims that it was unaware

that the bondholders’ perfected security interest had lapsed. In fact, U. S. Bank
 U. S. Bank later dismissed its case pending in state court and refiled that case with the 4

federal district court. Expenses and attorneys’ fees are to be paid by the bondholders under the

terms of the trust indenture.

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further claims that, prior to taking control, while performing its final audit, both

SouthTrust and Reliance had expressly warranted and represented to it that they

had done everything necessary to maintain the perfection. 

From November 1999, to April 2000, the medical center had continued to

make payments against the promissory note. In April 2000, however, it filed

voluntary petitions for bankruptcy under Chapter 11 of the Bankruptcy Code. 

This was considered an event of default under Section 801 of the bond trust

indenture, hence voiding the bondholders’ security interest in the collateral. 

In October 2001, U. S. Bank, as successor trustee, had filed suit on behalf of

the bondholders in the Superior Court of Fulton County, Georgia, alleging breach

of fiduciary duty and negligence against SouthTrust and Reliance, for failing to

file the UCC-3 continuation statements. It sought damages for the difference

between the value of the secured collateral and the amount actually received by the

bondholders upon a distribution by the bankruptcy estate. That case is now

pending in federal district court. 

4
 In April 2002, one set of bondholders filed a class action. In May 2002, another set of 5

bondholders filed a class action. The two lawsuits, comprised of thirteen individual bondholder

plaintiffs, were consolidated by order of the district court.

 The bondholders claim that SouthTrust and Reliance greatly prefer U. S. Bank as the 6

proper party plaintiff in the action filed against them. The bondholders claim there may be

substantial affirmative defenses available to South Trust and Reliance, i.e., comparative

negligence, avoidance and proximate cause, against U. S. Bank, that would not be otherwise

available against the bondholders. See also note 13 infra.

U. S. Bank contends that, even if affirmative defenses are asserted against it by

6

In July 2002, the present class action was filed. Here the bondholders, as

trust beneficiaries, seek class certification in an effort to replace U. S. Bank as the

proper plaintiff against SouthTrust and Reliance in pursuing their lapsed security

interest claims. They also seek to add U. S. Bank as a negligent and conflicted

defendant, claiming that it had a duty during the thirteen months prior to the

bankruptcy filing to discover that the UCC-3 continuation statements had not been

filed, and to either cure or mitigate the situation. The bondholders claim that U. S.

Bank lacks the incentive to prosecute SouthTrust and Reliance as rigorously as

they would. 

5

In rebuttal, U. S. Bank contends that, as the security interest did not lapse on

its watch, it has no conflict of interest. Further, U. S. bank argues that, as

SouthTrust and Reliance certified that all necessary filings had been done, it relied

on those certifications and was under no duty to do more. U. S. Bank claims to

have no liability as a joint tortfeasor.6
SouthTrust and Reliance, it still has every incentive to maximize a full recovery for the

bondholders in its suit against SouthTrust and Reliance. To the contrary, the bondholders claim

that U. S. Bank has every incentive to downplay the amount of damages sustained when the

security interest lapsed because, it too, may be liable for such losses. However, U. S. Bank

admits that if it does not receive a full recovery, in all likelihood, they will be liable to the

bondholders for the shortfall. 

Under the trust indenture, twenty-five percent (25%) of the bondholders could demand

that U. S. Bank be replaced as trustee. As a practical matter, the bondholders contend that there

is not a bank in the country that would voluntarily choose to get involved with the scenario

presented here, bankruptcy, lapsed security interests and multiple litigation. 

7

The district court denied class certification and dismissed the action by the

bondholders against SouthTrust and Reliance. It found that general principles of

trust law and the terms of the trust indenture itself expressly provide that U. S.

Bank is the proper party with standing to assert claims against third parties on

behalf of the trust beneficiaries. 

As to the suit by the bondholders against U. S. Bank, the district court

denied class certification and dismissed on the grounds that they lacked standing 

to sue U. S. Bank. In the alternative, in a footnote, the district court held that their

claims were unripe until such time as it is determined whether or not the action

filed by U. S. Bank against SouthTrust and Reliance would make the bondholders

whole.

The bondholders appeal the judgment of the district court.

II. STANDARD OF REVIEW
 As artfully explained in Prado-Steiman:

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Thus, it is well-settled that prior to the certification of a class, and technically

speaking before undertaking any formal typicality or commonality review, the

district court must determine that at least one named class representative has

Article III standing to raise each class subclaim. “[A]ny analysis of class

certification must begin with the issue of standing.” Griffin v. Dugger, 823 F.2d

1476, 1482 (11 Cir. 1987); see also Brown v. Sibley, 650 F.2d 760, 771 (5 Cir. th th

Unit A, July 1981)(stating that the “constitutional threshold [of standing] must be

met before any consideration of the typicality of claims or commonality of issues

required for procedural reasons by Fed.R.Civ.P. 23. “Only after the court

determines the issues for which the named plaintiffs have standing should it

address the question whether the named plaintiffs have representative capacity, as

defined by Rule 23(a), to assert the rights of others.” Griffin, 823 F.2d at 1482. It

is not enough that a named plaintiff can establish a case or controversy between

himself and the defendant by virtue of having standing as to one of many claims

he wishes to assert. Rather, “each claim must be analyzed separately, and a claim

cannot be asserted on behalf of a class unless at least one named plaintiff has

suffered the injury that gives rise to that claim.” Id. at 1483.

Prado-Steiman, 221 F.3d at 1280. Thus, just as a plaintiff cannot pursue an individual claim

unless he proves standing, a plaintiff cannot represent a class unless he has standing to raise the

claims of the class he seeks to represent. Id.

8

We review orders denying class certification for abuse of discretion. See

Wooden v. Bd. of Regents of the Univ. Sys., 247 F.3d 1262, 1271 (11 Cir. 2001), th

citing Prado-Steiman v. Bush, 221 F.3d 1266, 1278 (11 Cir. 2000). Nonetheless, th 7

“[w]hether the district court applied the correct legal standard in reaching its

decision on class certification . . . is a legal question that we review de novo.” See

London v. Wal-Mart Stores, Inc., 340 F.3d 1246, 1251 (11 Cir. 2003), citing th

James v. City of Dallas, 254 F.3d 551, 562 (5 Cir. 2001) (for the proposition that th

a district court’s decision to deny certification of a class shall only be reversed
 Section 805 reads in full:

8

 No owner of any of the [bonds] shall have any right to institute any suit,

action or proceeding in equity or at law for the execution of any trust hereunder,

or for any other remedy hereunder or on the [bonds] unless (a) such owner

previously shall have given to the Trustee written notice of an event of default as

hereinabove provided [in Section 801;] (b) the owner, or owners, of 25% of the

outstanding principal amount of the [bonds] shall have made written request of

the Trustee after the right to exercise such powers or right of action, as the case

may be, shall have accrued, and shall have afforded the Trustee a reasonable

opportunity either to proceed to exercise the powers hereinabove granted, or to

institute such action, suit, or proceeding in its name; (c) there shall have been

offered to the Trustee security and indemnity satisfactory to it against the costs,

expenses and liabilities which may be incurred therein or thereby; and (d) the

Trustee shall have refused or neglected to comply with such request within a

reasonable period of time; and such notification, request, offer of indemnity and

refusal or neglect are hereby declared in every such case, at the option of the

Trustee, to be conditions precedent to the execution of the powers and trusts of

this Indenture or for any other remedy hereunder. The parties hereto intend that

no one or more owners of the [bonds] shall have any right in any manner whatever

by his or their action to affect, disturb or prejudice the security of this Indenture,

or to enforce any right hereunder, except in the manner herein provided, and that

all proceedings at law or in equity shall be instituted, had and maintained in the

manner herein provided and for the equal benefit of all owners of the outstanding

[bonds].

Nothing in this Article contained shall, however, affect or impair the right

9

upon a showing that the court abused its discretion or that it applied incorrect legal

standards in reaching its decision).

III. DISCUSSION

A. The Trust Indenture 

1. Section 805

The controlling section of the trust indenture is Section 805, entitled “Right

of [Bondholders] to Institute Suit.” Section 805 prohibits bondholders from suing 8
of any owner of a [bond], which is absolute and unconditional, to enforce the

payment of the principal of and interest on such owner’s [bonds] out of the

moneys provided for such payment, or the obligation of the [hospital authority] to

pay the same out of the sources pledged hereto, at the time and place expressed

herein.

 Clauses such as set forth in Section 805 of the trust indenture are referred to as ‘no- 9

action clauses.’ See Cruden v. Bank of New York, 957 F.2d 961, 967-969 (2d Cir. 1992). As

trust indentures commonly vest exclusive power in the indenture trustee to enforce remedial

provisions in the event of a default, ‘no-action’ clauses typically bar bondholders from instituting

any judicial proceedings against the obligor unless the indenture trustee refuses to act after being

instructed by the requisite number of bondholders specified in the trust indenture, or, if the

indenture trustee acts in bad faith, or, has an adverse interest conflicting with its responsibilities

under the trust indenture. Id.; see also Watts v. Missouri-Kansas-Texas R. Co., 383 F.2d 571 (5

th

Cir. 1967). Such ‘no-action’clauses have generally been upheld by the courts in order to avoid a

multiplicity of lawsuits and to ensure that any litigation will inure for the equal and ratable

benefit of all bondholders. See Friedman v. Chesapeake & O.R.Co., 395 F.2d 663 (2d Cir.1968).

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third parties unless: (1) they have provided written notice to the Trustee; (2) 25%

of the bondholders have made such a request; (3) the bondholders have offered to

indemnify the Trustee; and (4) the Trustee nonetheless refuses the request. The

three fiduciary defendants argue that the bondholders lack standing to bring suit

against them because these four conditions have not been met, and therefore, that

they must await the outcome of the action filed on their behalf. If a full recovery

is made, the bondholders’ alleged claims would be moot. 

9

2. Section 902

In rebuttal, the bondholders claim that Section 902 of the trust indenture, in

essence, trumps Section 805, when the current trustee is also negligent. Although
 The bondholders try to buttress this argument by contending that, in addition to Section 10

902 of the trust indenture, Georgia law specifically and independently authorizes a cause of

action against a trustee whose acts and omissions result in injury to another person: “When trust

or confidence is reposed in a person in consideration of a payment or promise of a reward to him,

negligence in the person trusted which results in injury to the other person shall give the injured

party a right of action.” O.C.G.A. § 51-1-19. 

11

Section 902 is over three pages long, the bondholders cite only the following

language: “No provision of this Indenture shall be construed to relieve the Trustee

from liability for its own negligent action, its own negligent failure to act, or its

own willful misconduct . . . .”10

II. The Bankruptcy Court Order

The bondholders argue that the trust indenture was terminated by the

December 20, 2001, order of the bankruptcy court. They claim, therefore, that any

limitation in Section 805 in the trust indenture, such as the 25% rule, on their right

to sue third parties has been removed. The order provides in pertinent part:

The Master Indenture, the Certificate Indenture and the [bonds]

issued thereunder shall terminate as of the effective date . . . except as

necessary to administer the rights, claims, liens, and interests of the

Master Trustee, the Certificate Trustee and the [bondholders], except

[they] shall continue in effect to the extent necessary to allow the

Master Trustee and the Certificate Trustees to receive distributions

pursuant to the Plan . . . and to the extent necessary to facilitate the

Master Trustee’s prosecution for settlement of that certain action

venued in the Superior Court of Fulton County, Georgia and

Captioned U. S. Bank Trust, National Association v. SouthTrust Bank

et al . . . . 
 The bondholder get the ‘nice try of the week’ award when they claim that the trust

11

indenture has been fully terminated as the bankruptcy court order only references 

U. S. Bank’s state action, not its later, removed, federal action. 

12

(Emphasis added).

The district court found that the trust indenture was only partially

terminated by the bankruptcy court. It held it was still effective to administer “the

rights, claims, liens, and interests of the trustee and the bondholders” and “to

facilitate U.S. Bank’s suit against SouthTrust and Reliance on behalf of the trust

beneficiaries, the bondholders.” We agree. 11

III. Georgia Trust Law

1. The Turner Case

This case is governed by Georgia law. In Turner v. Trust Co. of Georgia,

105 S.E.2d 22 (1958), the current trustee filed suit against a former trustee for

malfeasance. The trust beneficiaries attempted to sue the former trustee directly. 

They claimed that the advocacy espoused by the current trustee was deficient in

that he wasn’t pursuing their case against the third party tortfeasor in the manner

that fully represented their interest in the trust estate. 

The Supreme Court of Georgia in Turner affirmed the restraint of the trust

beneficiaries from proceeding further with their suit. It held that, where the
 The Turner court illustrated its rationale using a hypothetical trust with four 12

beneficiaries, each demanding a different course of action. Turner, 105 S.E.2d at 28. The trustee

is bound to consider what effect each of the four courses of action will have upon the trust estate

and use its best judgment. Id. It would be intolerable if multiple beneficiaries were each trying

to do the job given the trustee in the trust indenture. 

13

instruments creating the trust confer upon the trustee discretionary power to be

exercised according to its judgment, a court of equity will not interfere to control

the trustee, acting bona fide, in the reasonable exercise of its discretion. Turner,

105 S.E.2d at 26 (citations omitted). The court also found that the beneficiaries 12

were bound by the result of the suit instituted by the trustee for the benefit of the

trust estate. Id. at 27(citations omitted). Their remedy lay against the current

trustee if there was a loss. Id. We find Turner applies on all fours here.

Both parties agree that Turner controls the disposition of this case, but for

different reasons. Both parties cite to the same paragraph of Turner as indicative

of their position: 

Where the title to property is put in one person for the benefit of

others, the latter take cum onere. The skill, ability, and solvency of

the trustee operate to their advantage. But as to acts within the scope

of his express or implied powers, they must suffer the consequences

when they ultimately prove detrimental to the beneficiaries. The

remedy in such a case is not to undo what has lawfully been done, but

to proceed against the trustee, . . . whose personal and financial

fitness were passed upon by the grantor when giving the land. The

very instrument which created the estate put forward the trustee as the

person who was to represent those interested therein when it became

necessary to deal with third persons.
 We have found no case law as to whether or not certain affirmative defenses, such as 13

avoidance, comparative negligence and proximate cause, potentially available against the trustee

and not the bondholders, would be sufficient cause to create an exception to the Turner rule. 

14

Turner, 105 S.E.2d at 27 (emphasis added).

a. The Contentions of U. S. Bank as to Turner

U. S. Bank relies on key language in the paragraph that states that “they

must suffer the consequences when they ultimately prove detrimental to the

beneficiaries.” It claims that the consequences here have not, as yet, been

‘ultimately proved detrimental.’ 

It is undisputed that U. S. Bank has the authority to sue its predecessor

trustee for a harm done to the trust estate. Therefore, under Turner, when it is

acting within the scope of its authority, it must be allowed to complete that action.

If that action should ultimately prove detrimental to the beneficiaries, then, at that

point in time, the beneficiaries might have a cause of action, but not before. 

13

b. The Contention of the Bondholders as to Turner

The bondholders rely on the language in the Turner paragraph that states

that their remedy is “to proceed against the trustee.” They interpret that to mean

directly and immediately. They argue that, as the Turner trustee had no conflict of

interest, and, as U. S. Bank in this case does have a conflict of interest, an
15

exception to the ‘ultimate’ language in Turner is created, and Turner must be read

in conjunction with case law dealing with conflicted trustees. 

2. When the Trustee has a Conflict of Interest

a. The Tate case

In Fulton Nat’l Bank v. Tate, 363 F.2d 562, 570 (5 Cir. 1966), the trustee th

was allegedly involved in self-dealing, both on his own behalf and in his capacity

as trustee, with a third party purchaser. The trustee was allegedly selling trust

property at a discount in order to garner a better price for his own property. The

Fifth Circuit found that there was such substantial conflict of interest on the

trustee’s part as, under Georgia law, to shift the burden of proof to the trustee to

demonstrate to the court that self-dealing was not present.

b. The Booth case

In Booth v. Sec. Mut. Life Ins. Co., 155 F. Supp. 755 (D.N.J. 1957), the

trustee conspired with third parties to loot the trust estate. It actively participated

in the wrongdoing by third parties. The district court found that the trust

beneficiaries, and not trustee, were the proper class plaintiffs in a class action

against an insurance company for alleged breaches of trust and diversions of trust

funds in connection with writing of group insurance for the trust fund.

c. The Conflict of Interest Alleged Here
 U. S. Bank claims it has every incentive to exonerate itself by making a full recovery

14

against SouthTrust and Reliance. To the contrary, the bondholders allege that U. S. Bank has

every incentive to downplay the amount of damages incurred as it too may be liable. They claim

that U. S. Bank is seeking only two million dollars in damages, when in fact, they claim that the

amount is at least six million dollars. The issue of the proper calculation of damages is presently

before the district court on a motion for partial summary judgment. 

16

The bondholders aver that U. S. Bank has a conflict of interest in its suit

against SouthTrust and Reliance because it should have discovered that the UCC3 statements weren’t filed, cured the problem by filing a new ones, and mitigated

the damage. We disagree.

What is alleged to have taken place here is not the self-dealing, conspiracy

or corruption that were present in Tate or Booth. The allegation made by the

bondholders here is of a separate wrong by U. S. Bank, independent of any action

or inaction on the part of SouthTrust and Reliance. 

Clearly, U. S. Bank is not a joint tortfeasor. We conclude that any conflict

of interest alleged here is not significant enough for us to carve out an exception to

the rule of Turner, under the auspices of either Tate or Booth.

14

3. Standing to Sue SouthTrust and Reliance

Therefore, under Georgia trust law, pursuant to the terms of the trust

indenture, kept alive in full by the bankruptcy plan of reorganization, U. S. Bank is

the party with standing to pursue the claims against SouthTrust and Reliance on
17

behalf of the trust beneficiaries. See Turner, 105 S.E. 2d at 26. The issue of the

duty of U. S. Bank to act to cure and mitigate will never be adjudicated if it

receives a full recovery from the third party tortfeasors. Id. The bondholders will

be bound by the result and their remedy will then be against U. S. Bank if there is

a loss. Id. at 27.

4. Ripeness and the Statute of Limitations as to U. S. Bank 

If and when U. S. Bank receives less than a full recovery, then and only

then, will any potential cause of action against it by the bondholders ripen and

accrue. See Turner, 105 S.E.2d at 27. At that time, the statute of limitations will

begin, and the bondholders will have their claim, as the actions taken by the

trustee, within the scope of its express or implied powers, have ultimately proved

detrimental to them, the trust beneficiaries. Id. The merits of the issue presented,

whether or not U. S. Bank had a duty to act to cure and mitigate, will then be

before a different court.

IV. CONCLUSION

Based upon the foregoing, we affirm the judgment of the district court.

AFFIRMED.
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