Wilmington Trust, National Association v. Kunba, LLC

Background

Wilmington Trust, National Association sued Kunba, LLC, Robert Khomari, the New York City Department of Housing Preservation and Development, and County Oil Company, Inc. Wilmington Trust seeks to enforce rights under a loan, including foreclosure of property located at 430 East 162nd Street in New York, New York.

In 2019, CPC Mortgage Company LLC loaned Kunba $1,750,000. The loan was secured by the property. The loan agreement generally set Kunba’s “Base Recourse” at zero percent of the loan amount but also made Kunba personally liable for certain losses, including losses resulting from failure to pay insurance premiums when the lender did not collect an insurance reserve fund. Khomari separately guaranteed amounts for which Kunba was personally liable under Article III of the loan agreement.

The loan and related agreements were later assigned to Freddie Mac and then to Wilmington Trust as trustee for a trust holding mortgage securities. Kunba failed to repay amounts due by March 1, 2024. A later notice of default identified unpaid amounts and stated that the borrower had failed to maintain insurance on the property. Wilmington Trust filed this action on February 27, 2025. DHPD answered, and the court entered a default against County Oil.

The Motion to Dismiss

Kunba and Khomari moved under Federal Rule of Civil Procedure 12(b)(1), which challenges the court’s subject-matter jurisdiction, and Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim. They argued that the court lacked diversity jurisdiction and that the complaint did not state a claim against Khomari. The defendants had also raised arguments about whether Wilmington Trust was the assignee and about the amount owed, but withdrew those arguments in their reply brief; the court did not address them.

Subject-Matter Jurisdiction

The court held that diversity jurisdiction existed. It explained that a traditional trust—one in which a trustee holds and manages property for beneficiaries—is treated differently from a trust that is a separate legal entity with members. For a traditional trust, the trustee is the real party in interest, and the trust’s citizenship is based on the trustee rather than the beneficiaries.

The court found that the trust involved here was a traditional common-law trust. Under the pooling and servicing agreement, Wilmington Trust held legal title to the trust assets and had the duty and power to manage them for the certificate holders. The certificate holders did not have the type of control associated with shareholders or partners. The court therefore treated Wilmington Trust’s citizenship as the relevant citizenship and found that Wilmington Trust had shown, more likely than not, that diversity of citizenship existed. The court also explained that it could consider evidence outside the complaint when deciding a jurisdictional challenge.

Claim Against Khomari

The court also rejected the argument that Khomari could not be named as a defendant. Under New York law, a foreclosure plaintiff may name a guarantor to pursue a deficiency judgment after a foreclosure sale. The court read the guaranty and loan agreement as potentially making Khomari liable for amounts Kunba owed under Article III of the loan agreement.

The complaint, together with documents integral to it, alleged that Kunba failed to pay insurance premiums for the property. Because the loan agreement made Kunba personally liable for losses resulting from that event and the guaranty covered those liabilities, the court held that the complaint stated sufficient facts to name Khomari as a defendant.

Disposition

The court denied Kunba and Khomari’s May 1, 2025 motion to dismiss the complaint. A scheduling order accompanied the opinion.