REILS Finance SPV v. CIP 1300 U Street Owner, LLC
- Jesse Furman
- 1:22-cv-07280
- U.S. District Court · Southern District of New York
- 2
In REILS Finance SPV v. CIP 1300 U Street Owner, LLC, Judge Furman required jurisdictional information before deciding default judgment.
REILS Finance SPV was required to provide additional jurisdictional information and amend its complaint; the order concerned the court’s authority to consider REILS’s default-judgment request against CIP 1300 U Street Owner, LLC, and Robert W. Clippinger.
What happened
REILS Finance SPV asked the court to enter a default judgment against CIP 1300 U Street Owner, LLC, and Robert W. Clippinger. A hearing on that request was scheduled for November 10, 2022.
Before entering a default judgment, the court said it had to confirm that it had subject-matter jurisdiction, meaning legal authority to hear the case. The court found that the complaint did not adequately allege the citizenship of a trustee connected to one trust and therefore did not adequately establish the citizenship of that trust or the limited partnership connected to it.
The court ordered REILS Finance SPV to file a letter brief and amend the complaint by November 9, 2022, at noon. The order did not decide the default-judgment request. Judge Jesse M. Furman issued the order.
The detailed version
- REILS Finance SPV v. CIP 1300 U Street Owner, LLC · No. 1:22-cv-07280
- Jesse Furman
- Nov. 4, 2022
Background
REILS Finance SPV moved for entry of a default judgment under Rule 55(b)(2) of the Federal Rules of Civil Procedure and the applicable local rule. The court noted that a hearing on the motion was scheduled for November 10, 2022, at 4:30 p.m. The defendants named in the caption were CIP 1300 U Street Owner, LLC, and Robert W. Clippinger.
Jurisdictional issue
Before entering a default judgment, the court had to confirm that subject-matter jurisdiction existed. The amended complaint relied on diversity jurisdiction and alleged that several members of CIP 1300 U Street Owner, LLC, were common-law grantor trusts and that one member was a limited partnership whose sole partner was the Trietsch Family Survivor’s Trust.
The complaint alleged the citizenship of the trustees for the trusts that were members of the limited liability company. For the limited partnership, however, it alleged the residence—not the citizenship—of the trustee of the Trietsch Family Survivor’s Trust. The court explained that residence alone does not establish citizenship for diversity-jurisdiction purposes. As a result, the complaint did not properly allege the citizenship of that trustee, the trust, or the limited partnership.
The court also explained that a trust’s citizenship is not always determined only by the citizenship of its trustees. Depending on the type of trust, the citizenship of its beneficial owners may also matter. The court therefore required clarification about how the citizenship of the trusts should be determined.
Order
The court ordered REILS Finance SPV, no later than November 9, 2022, at noon, to do two things: (1) submit a letter brief addressing whether the citizenship of the trusts that were members of the defendant limited liability company was properly determined by the citizenship of their trustees; and (2) amend the complaint to properly allege the citizenship of all parties.
The opinion did not grant or deny the motion for default judgment and did not resolve the merits of the claims. Judge Jesse M. Furman issued the order.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.