United States District Court, S.D. West Virginia, Charleston Division
NYOKA WURTS, ADMINISTRATOR OF THE ESTATE OF SALLY KAY Plaintiff,
BRANCH BANKING AND TRUST COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
R. GOODWIN UNITED STATES DISTRICT JUDGE
before the court is the plaintiff's Motion to Remand [ECF
No. 8]. For the reasons that follow, the Plaintiff's
Motion is DENIED. I. Background The plaintiff, Nyoka Wurts,
Administrator of the Estate of Sally Kay, brought this case
pursuant to W.Va. Code § 55-13-4 seeking a declaratory
judgment against BB&T regarding the validity of Sally
Kay's trust agreement. Compl. [ECF No. 1-1] 8- 9. The
Sally Anne Kay Revocable Trust was created pursuant to the
laws of West Virginia with Sally Kay as the grantor and
BB&T as the trustee [ECF No. 1-1] 23. The plaintiff,
Nyoka Wurts, is a resident of West Virginia. [ECF No.
1]. The defendant and trustee, BB&T, is a North
Carolina corporation with its principal place of business in
North Carolina. Id. The plaintiff has moved to
remand this action to the Circuit Court of Kanawha County,
West Virginia, arguing the court lacks subject matter
jurisdiction because the parties are not diverse. [ECF No.
8]. The amount in controversy is not in dispute.
issue before the court is whether the Sally Anne Kay
Revocable Trust is a traditional trust, and if so, whether
the citizenship of a traditional trust is determined by the
trustee of the trust.
jurisdiction exists where the amount in controversy exceeds
$75, 000 and no plaintiff is a citizen of the same state as
any defendant. Lincoln Property Co. v. Roche, 546
U.S. 81, 84 (2005). “Diversity jurisdiction is
typically determined from the face of the plaintiff's
well-pled complaint.” Ashworth v. Albers Med.,
Inc., 395 F.Supp.2d 395, 402 (S.D. W.Va. 2005). The
statute authorizing diversity jurisdiction requires
“complete diversity” of citizenship between the
parties to a controversy. 28 U.S.C. § 1332 (2006);
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267
(1806). The party seeking removal “bears the burden of
proof, by a preponderance of the evidence, to show the
parties' citizenship to be diverse.”
Zoroastrian Ctr. & Darb-E-Mehr of Metro. Washington,
D.C. v. Rustam Guiv Found. of New York, 822 F.3d 739,
748 (4th Cir. 2016).
Defining a Traditional Trust
plaintiff first argues that the Sally Anne Kay Revocable
Trust is not a “traditional trust.” Pl.'s
Mot. Remand [ECF No. 8] 1.
is a “fiduciary relationship with respect to property,
” where the settlor, the person who creates the trust,
gives legal title of the trust property to the trustee for
the benefit of the trust beneficiaries, who hold equitable
title to the trust property. See Restatement
(Second) of Trusts § 2 (1959); see also
Restatement (Third) of Trusts § 2 (2003). A traditional
trust is typically a donative transfer created to pass
personal or family wealth, and the grantor receives no
compensation. S.I. Strong, Congress and Commercial Trusts:
Dealing with Diversity Jurisdiction Post-Americold, 69 Fla.
L. Rev. 1021, 1037 (2017). “Traditionally, a trust was
not considered a distinct legal entity, but a
‘fiduciary relationship' between multiple
people.” See Americold Realty Tr. v. Conagra Foods,
Inc., 136 S.Ct. 1012, 1016 (2016). Thus, “such a
relationship was not a thing that could be haled into court;
legal proceedings involving a trust were brought by or
against the trustees in their own name.” Id.
In Americold, the trust in question was a real
estate investment trust, a distinct legal entity with
shareholders created pursuant to Maryland law, which happened
to call itself a trust. Id. at 1015-16. However,
merely calling something a trust does not make it a trust in
the traditional sense. See Id. In contrast, a
traditional trust operates through its trustee and is not a
separate legal entity. See id.
case, I find the Sally Anne Kay Revocable Trust is a
traditional trust. Sally Kay, as settlor, transferred
property to the trustee, BB&T, pursuant to a trust
agreement. [ECF No. 1-1]. The trust agreement
describes the duties and powers of the trustee to distribute
the trust during the settlor's lifetime and, upon the
settlor's death, to distribute the trust property to the
trust beneficiaries. Id. The trust represents a
donative transfer to the trust beneficiaries. See
id.; see S.I. Strong, Congress and
Commercial Trusts: Dealing with Diversity Jurisdiction
Post-Americold, 69 Fla. L. Rev. 1021, 1037 (2017). As
trustee, BB&T became the fiduciary of the trust and has
fiduciary duties and powers under West Virginia law to the
trust, including the duty of prudent administration, the duty
of loyalty, and the duty of impartiality. See [ECF
No. 1-1]; see generally W.Va. Code §44D-8. The
West Virginia Code did not confer juridical person status on
the Sally Anne Kay Revocable Trust Agreement. See Alliant
Tax Credit 31, Inc v. Murphy, 924 F.3d 1134, 1143 (11th
Cir. 2019). Thus, the trust here is not a separate legal
entity that can be haled into court. See Americold,
136 S.Ct. at 1016; See Raymond Loubier Irrevocable Tr. v.
Loubier, 858 F.3d 719, 722, 731 (2d Cir. 2017). The
trust is not like the real estate investment trust in
Americold, which was created under Maryland law as a
distinct, unincorporated legal entity with shareholders.
See Americold, 136 S.Ct. at 1016. The trust is an
agreement between Sally Kay and BB&T to create a
traditional trust, which establishes a fiduciary relationship
and operates through the trustee. See [ECF No. 1-1];
Americold, 136 S.Ct. at 1016; Loubier, 858
F.3d at 722; Wang by & through Wong v. New Mighty
U.S. Tr., 843 F.3d 487, 495 (D.C. Cir. 2016).
Citizenship of a Traditional Trust
plaintiff contends that the defendant and trustee, BB&T,
is not the “real and substantial party to this suit for
purposes of diversity jurisdiction.” Pl.'s Mem.
Mot. Remand [ECF No. 9] 3. According to the plaintiff, the
trustee, BB&T, “should be in a winding down period
preparing for distribution to the named distributees and the
termination of the trust.” Pl.'s Mot. Remand [ECF
No. 8] 1. Therefore, the plaintiff argues the
citizenship of the trustee should not be considered for
purposes of diversity jurisdiction. Pl.'s Mem. Mot.
Remand [ECF No. 9] 3.
there has been widespread confusion regarding the citizenship
of trusts for purposes of diversity jurisdiction. See
Americold, 136 S.Ct. at 1016; Zoroastrian
Center, 822 F.3d 739, 749. However, the Court stated in
Americold that because a traditional trust is not a
distinct legal entity, “there is no need to determine
its membership, as would be true if the trust, as an entity,
were sued.” Americold, 136 S.Ct. at 1016.
Therefore, “when a trustee files a lawsuit or is sued
in her own name, her citizenship is all that matters for
diversity purposes.” Id. (citing Navarro
Savings Assn. v. Lee, 446 U.S. 458, 462-66 (1980)).
Fourth Circuit chose to leave the question open as to whose
citizenship counts for purposes of diversity jurisdiction for
a trust. See Zoroastrian Center, 822 F.3d at 749-50.
However, I find the citizenship of the trustee is what
matters for purposes of diversity jurisdiction of a
traditional trust because it is not a separate legal entity.
Rather, a traditional trust is merely an agreement between
the settlor and trustee, creating a fiduciary relationship
where the trustee holds legal title to the trust property for
the benefit of the trust beneficiaries. See
Americold, 136 S.Ct. at 1016. In addition, every other
circuit court that has approached this issue post
Americold is trending this way.See
Loubier, 858 F.3d at 722; Wang, 843 F.3d at
495; Doermer v. Oxford Fin. Grp., Ltd., 884 F.3d
643, 647 (7th Cir. 2018); Bynane v. Bank of New York
Mellon, 866 F.3d 351, 356 (5th Cir. 2017);
GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888
F.3d 29, 32 (3d Cir. 2018); Demarest v. HSBC Bank
USA, 920 F.3d 1223, 1228 (9th Cir. 2019);
Alliant, 924 F.3d at 1143. Thus, the plaintiff's
arguments that BB&T's citizenship ...