Wang Ex Rel. Wong v. New Mighty U.S. Trust

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 21, 2016 Decided December 9, 2016
No. 12–7038
YUEH-LAN WANG, BY AND THROUGH HER ATTORNEY-IN-FACT,
WINSTON WEN-YOUNG WONG,
APPELLANT
v.
NEW MIGHTY U.S. TRUST, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:10–cv–01743)
Mark W. Stoutenburg argued the cause for the appellant.
Daniel S. Weinberger was with him on brief. Steven M.
Chasin entered an appearance.
Clifford M. Sloan argued the cause for the appellees.
David B. Leland, John Gardiner and Andrew Muscato were
with him on brief. David E. Carney entered an appearance.
Before: HENDERSON, KAVANAUGH and MILLETT, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
2
KAREN LECRAFT HENDERSON, Circuit Judge: This case
presents the question of how to determine the citizenship of a
trust for diversity subject-matter jurisdiction pursuant to 28
U.S.C. § 1332(a). In light of the United States Supreme
Court’s recent decision in Americold Realty Trust v. ConAgra
Foods, Inc., 577 U.S.__, 136 S. Ct. 1012 (2016), we conclude
that a so-called “traditional trust” carries the citizenship of its
trustees. We accordingly reverse the district court’s Rule
12(b)(1) dismissal and remand for further proceedings. Fed.
R. Civ. P. 12(b)(1). We also grant the plaintiff’s pending
motion to substitute as hereinbelow discussed.
I. BACKGROUND
The facts giving rise to this lawsuit began over eighty
years ago and thousands of miles away.1 In 1935, Yueh-Lan
Wang (Yueh-Lan)—in whose name this action was
brought—married Yung-Ching Wang (Y.C.). 2 Perhaps
presaging the advice given Dustin Hoffman’s eponymous
character in the 1967 movie The Graduate,3 Y.C. went into
plastics, founding the Formosa Plastics Group in 1954. He
achieved tremendous success and, by the time of his death in
1
Because the district court dismissed the complaint for lack of
subject-matter jurisdiction, we take the facts alleged in the amended
complaint as true, see United States ex rel. Oliver v. Philip Morris
USA Inc., 826 F.3d 466, 469 n.2 (D.C. Cir. 2016), and draw upon
other documents as necessary, see Am. Freedom Law Ctr. v. Obama,
821 F.3d 44, 49 (D.C. Cir. 2016).
2
Some of the parties have the surname “Wang” or “Wong.”
According to the complaint, the alternate spellings refer to the same
Chinese-language surname.
3
“I just want to say one word to you. Just one word . . . . Are
you listening? . . . . Plastics.”
3
2008, Y.C. was ranked by Forbes magazine as the 178th
wealthiest person in the world with an estimated net worth of
up to $6.8 billion. Although Y.C. remained married to
Yueh-Lan over the course of his life, at the same time he had a
number of children with two other women, Wang Yang Chiao4
and P.C. Lee. Yueh-Lan helped to rear at least one of those
children, Winston Wen-Young Wong (Winston), whose
biological mother was Wang Yang Chiao. According to her
will, Yueh-Lan considered Winston her son.
Y.C. died on October 15, 2008. Three years earlier,
however, allegedly in an effort to reduce Yueh-Lan’s share of
the marital estate, Y.C. made various distributions and stock
transfers to, inter alia, the New Mighty U.S. Trust (New
Mighty), a trust formed under the laws of the District of
Columbia to hold certain of Y.C.’s assets.5 In an effort to
account for and recover Yueh-Lan’s share of the marital estate,
Winston—a citizen of Taiwan and allegedly acting as
Yueh-Lan’s attorney-in-fact—brought suit in October 2010
against New Mighty, along with its trustee, Clearbridge, LLC,
and the New Mighty Foundation, one of New Mighty’s
beneficiaries. Up to now, the case has had little to do with the
legitimacy of Y.C.’s pre-2008 distributions.
In July 2011, the defendants moved to dismiss the
complaint on a variety of grounds, including lack of diversity.
4
The defendants refer to Wang Yang Chiao as Yang Jiao
Wang. See Appellees’ Br. 2.
5
The amended complaint alleges that P.C. Lee and members
of her family—without Y.C.’s knowledge—created several trusts,
including New Mighty, in order to reduce Yueh-Lan’s share of the
marital estate. According to the amended complaint, the trusts
resulted from the undue influence P.C. Lee and her family exerted on
Y.C.
4
The district court concluded that a traditional trust (like New
Mighty) is an artificial entity that “assumes the citizenship of
all of its ‘members’ for purposes of diversity jurisdiction.”
Wang ex rel. Wong v. New Mighty U.S. Tr., 841 F. Supp. 2d
198, 205 (D.D.C. 2012). Reasoning that New Mighty’s
“members” must include its beneficiaries, the court held that,
because the amended complaint lacked allegations sufficient to
establish the citizenship of at least some beneficiaries,
subject-matter jurisdiction could not be determined. Id. at
206–07. Accordingly, the court instructed the defendants to
produce a list of all beneficiaries and their citizenship. Id. at
208. The list revealed that New Mighty’s beneficiaries
included several entities that were citizens of the British Virgin
Islands. As a result, complete diversity did not exist:
defendant Clearbridge was a citizen of Virginia and the District
of Columbia; defendant New Mighty Foundation was a citizen
of Delaware and the District of Columbia and defendant New
Mighty was then deemed a citizen of Delaware, the District of
Columbia and the British Virgin Islands. With both an alien
plaintiff and at least one alien defendant, the district court
found diversity lacking. Winston sought reconsideration,
arguing that the defendants had to show that the beneficiaries
in fact received a distribution to qualify as beneficiaries under
the trust and, therefore, their citizenship was irrelevant without
such showing. In April 2012, the district court denied
reconsideration. This appeal followed.
Shortly after the notice of appeal was filed, however,
Yueh-Lan died. The appeal was held in abeyance and,
consistent with this Court’s instructions, Winston filed a series
of reports on the status of legal proceedings underway in
Taiwan to appoint an executor of Yueh-Lan’s will.
Eventually, three persons—Chen-Teh Shu, Dong-Xung Dai
and Robert Shi—were designated joint executors. Winston
and the executors moved to substitute the executors as
5
Yueh-Lan’s personal representative pursuant to Federal Rule
of Appellate Procedure 43(a)(1). The defendants opposed the
motion, arguing that Winston was not the proper party to have
initiated the lawsuit in the first place and that it should
therefore be dismissed and the substitution motion denied.
Both the substitution and dismissal motions were referred to
this merits panel for disposition.6 The questions before us,
then, are whether the district court lacked subject-matter
jurisdiction and whether the pending motion to substitute
should be granted.
II. ANALYSIS
A. SUBJECT-MATTER JURISDICTION
“The judicial Power” of the United States
“extend[s] . . . to Controversies . . . between a State, or the
Citizens thereof, and foreign . . . Citizens . . . .” U.S. Const.
art. III, § 2, cl. 1. Although the Congress has granted the
district court jurisdiction of a civil action in which “the matter
in controversy exceeds . . . $75,000 . . . and is between . . .
citizens of a State and citizens or subjects of a foreign state,” 28
U.S.C. § 1332(a) (2006), that provision—which requires
“complete” diversity—does not reach disputes between aliens,
see Saadeh v. Farouki, 107 F.3d 52, 54–55, 61 (D.C. Cir.
1997). This lawsuit was originally brought by Winston on
behalf of Yueh-Lan, a Taiwanese. Whether diversity
jurisdiction exists depends, first, on correctly identifying the
defendants and, then, determining their citizenship.
6
Shortly after that order issued, Winston and the executors
filed an emergency motion to stay briefing pending the Supreme
Court’s Americold decision. The Court granted the motion and held
the case in abeyance. Shortly thereafter, Americold was decided
and, on Winston’s and the executors’ motion, the stay was lifted and
a briefing schedule imposed.
6
Supreme Court Precedent
In determining a trust’s citizenship, we were guided
pre-Americold by the Supreme Court’s decisions in Navarro
Savings Association v. Lee, 446 U.S. 458 (1980), and Carden
v. Arkoma Associates, 494 U.S. 185 (1990). Although neither
case addressed the issue directly, both informed the Court’s
analysis in Americold and here, too, they provide a useful point
of departure.
In Navarro the question was “whether the trustees of a
business trust may invoke the diversity jurisdiction of the
federal courts on the basis of their own citizenship, rather than
that of the trust’s beneficial shareholders.” 446 U.S. at 458.
In that case, the plaintiffs—eight individual trustees of Fidelity
Mortgage Investors (Fidelity), “a business trust organized
under Massachusetts law”—had lent $850,000 to a Texas firm.
Id. at 459. In return, the Texas firm provided a promissory
note payable to the plaintiffs as trustees. Id. The note was, in
turn, partially secured by a commitment letter under which
Navarro Savings Association (Navarro)—the
defendant—agreed to lend the Texas firm $850,000 to cover
the latter’s obligation. Id. When the plaintiff trustees asked
Navarro to make the loan, Navarro refused. Id. They
brought suit in federal district court, invoking its diversity
jurisdiction. Id. The district court, however, found diversity
lacking. Id. at 460. In its view, the Massachusetts business
trust was a citizen of every state in which its shareholders
resided and, although defendant Navarro was a citizen of Texas
and all eight plaintiff trustees were citizens of other states,
some of Fidelity’s shareholders were citizens of Texas and
therefore defeated diversity. Id. On appeal, the Fifth Circuit
reversed, reasoning that the trustees—and not Fidelity’s
beneficial shareholders—were “charged with the power to sue
and be sued on behalf of the trust, . . . the persons in actual
7
control of the trust and the real parties in interest.” Lee v.
Navarro Savs. Ass’n, 597 F.2d 421, 425 (5th Cir. 1979). The
Supreme Court affirmed. Navarro, 446 U.S. at 460. As the
Court explained, the plaintiff trustees were the “real parties to
the controversy,” id. at 461, 465; “[t]hey ha[d] legal title; they
manage[d] the assets; they control[led] the litigation[,]” id. at
465.
Navarro contended that Fidelity’s “business trust” status
“mask[ed] an unincorporated association of individuals who
make joint real estate investments,” id. at 461, and, therefore,
as an unincorporated association made up of a “mere
collection[] of individuals,” id., citizenship of those individuals
“determines the diversity jurisdiction of a federal court,” id.
Although the Court concluded that it “need not reject the
argument that Fidelity share[d] some attributes of an
association,” it determined that the litigation “involve[d]
neither an association nor a corporation” but instead “an
express trust.” Id. at 462.
Despite its relatively plain holding that Fidelity’s
trustees—not its shareholders—were the real parties to the
controversy, Navarro could arguably be read as also laying
down a rule to determine the non-party trust’s citizenship—as
was subsequently attempted in Carden. In Carden, plaintiff
Arkoma Associates (Arkoma), a limited partnership organized
under Arizona law, sued two individual defendants who were
citizens of Louisiana, invoking diversity jurisdiction. 494
U.S. at 186. 7 The defendants unsuccessfully moved to
dismiss, claiming that one of Arkoma’s limited partners was a
citizen of Louisiana. Id. The case proceeded to trial and,
after Arkoma prevailed, the defendants appealed. Id. The
7
Arkoma had both general and limited partners. Carden, 494
U.S. at 205–06 (O’Connor, J., dissenting).
8
Fifth Circuit affirmed, concluding that Arkoma’s citizenship
turned on that of its general partners alone, without regard to
the citizenship of its limited partners. Id. at 187. The
Supreme Court concluded otherwise. Id. at 198. It began by
recognizing that complete diversity could exist under either of
two scenarios. First, diversity could exist if a limited
partnership is a “citizen” of the state that created it. Id. at 187.
Second, diversity could exist if it depended on the citizenship
of the general partners only. Id. The Court rejected both. It
first determined that, with one exception, 8 the only state
law-created artificial entity that can be treated as a citizen of
that state under Supreme Court precedent is the corporation.
Id. at 187–92. It rejected Arkoma’s argument that Navarro
prescribed a similar treatment for a trust. Id. at 191–92.
Navarro “did not involve the question whether a party that is
an artificial entity other than a corporation can be considered a
‘citizen’ of a State,” the Supreme Court explained, but instead
“the quite separate question whether parties that were
undoubted ‘citizens’ (viz., natural persons) were the real
parties to the controversy.” Id. at 191. In then concluding
that the citizenship of both the limited and the general partners
of Arkoma counted, the Supreme Court rejected the notion that
Navarro dealt with a trust’s citizenship. Id. at 192–96. To
the contrary, “Navarro had nothing to do with the citizenship
of the ‘trust,’ since it was a suit by the trustees in their own
names.” Id. at 192–93. The Court “adhere[d] to [its]
oft-repeated rule that diversity jurisdiction in a suit by or
against the entity depends on the citizenship of ‘all the
members,’ ‘the several persons composing such association,’
‘each of its members.’” Id. at 195–96 (emphasis added)
(citations omitted).
8
The one exception is Puerto Rico’s sociedad en comandita.
Carden, 494 U.S. at 189–90.
9
The holdings in Navarro and Carden are clear enough: the
citizenship of a Massachusetts business trust’s trustees suing in
their own names is the determinative citizenship,
notwithstanding the non-party trust itself has some attributes of
an unincorporated association, Navarro, 446 U.S. at 462, 465–
66; and diversity in a suit by or against an “artificial entity”
created under state law is determined by the citizenship of all
of the entity’s members, Carden, 494 U.S. at 195. Less clear
is the reach of these holdings and various approaches to
determining a trust’s citizenship have proliferated. See
Emerald Investors Tr. v. Gaunt Parsippany Partners, 492 F.3d
192, 201–03 (3d Cir. 2007) (collecting approaches).
The district court attempted to apply the Navarro and
Carden holdings. Wang, 841 F. Supp. 2d at 203–05.
Although it recognized that Navarro “could arguably be read
to imply that when a trustee possesses certain customary
powers to hold, manage, and dispose of assets for the benefit of
others, a court should refer only to the citizenship of the
trustee,” it also found significant Carden’s declaration that
“‘Navarro had nothing to do with the citizenship of the
trust[.]’” Id. at 204 (citation and some internal quotation
marks omitted) (quoting, inter alia, Carden, 494 U.S. at 192–
93). Even if that language constituted dicta, the district court
reasoned, Carden persuasively read Navarro to make clear that
“[d]etermining which parties before the court are the real
parties and determining the citizenship of a given party . . . are
distinct questions.” Id. at 205. Believing it faced the latter
question because New Mighty was named as a party defendant,
the district court turned to Carden’s membership test. Id. It
used Carden’s “artificial entity” language, concluded that a
10
trust is an artificial entity and therefore thought it “clear that
the Carden rule also applies to trusts.” Id.9
After the district court’s decision, the Supreme Court
decided Americold. Americold involved a lawsuit brought by
several corporations against the owner of an underground
warehouse containing the corporations’ food products; the
warehouse had been destroyed by fire. 136 S. Ct. at 1014.
The plaintiff corporations sued in Kansas state court and the
defendant warehouse owner—Americold Realty Trust
(Americold), a real estate investment trust (REIT) created
under Maryland law—removed the lawsuit to federal district
court, which held for Americold. Id. On appeal, the Tenth
Circuit sua sponte requested briefing on the district court’s
diversity jurisdiction. Id. It eventually concluded that the
plaintiff corporations were citizens of Delaware, Nebraska and
Illinois and that Americold’s citizenship was determined, per
Carden, by reference to its members, including its
shareholders. Id. at 1014–15. Without record evidence of
Americold’s shareholders’ citizenship, the Tenth Circuit
decided that the parties had failed to demonstrate that diversity
of citizenship existed, see id. at 1015, and remanded the case to
the district court to vacate its judgment and remand the matter
to state court, ConAgra Foods, Inc. v. Americold Logistics,
LLC, 776 F.3d 1175, 1182 (10th Cir. 2015). The Supreme
Court affirmed, relying on Carden to conclude that, under
Maryland law, the citizenship of a REIT included its
shareholders. Americold, 136 S. Ct. at 1015–17. In so doing,
however, the Supreme Court singled out for discussion
Americold’s argument that, under Navarro, “anything called a
9
The district court reached this conclusion in light of the
“plain meaning” of “artificial entity,” Wang, 841 F. Supp. 2d at 205,
Carden’s distinguishing of those artificial entities to which its rule
did not apply and Carden’s “repeated discussion and differentiation
of Navarro,” id.
11
‘trust’ possesses the citizenship of its trustees alone, not its
shareholder beneficiaries as well.” Id. at 1016. The Court
first repeated its observation that “Navarro had nothing to do
with the citizenship of [a] ‘trust.’” Id. (alteration in original)
(some internal quotation marks omitted) (quoting Carden, 494
U.S. at 192–93). As the Court explained, “Navarro
reaffirmed a separate rule that when a trustee files a lawsuit in
her name, her jurisdictional citizenship is the State to which
she belongs,” a rule that “coexists” with the proposition that
“when an artificial entity is sued in its name, it takes the
citizenship of each of its members.” Id. (emphases in
original). The Court acknowledged, however, that
“Americold’s confusion regarding the citizenship of a trust is
understandable and widely shared” and posited that such
“confusion can be explained, perhaps, by tradition.” Id. It
elaborated:
Traditionally, a trust was not considered a distinct
legal entity, but a “fiduciary relationship” between
multiple people. 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. And when a trustee files
a lawsuit or is sued in her own name, her citizenship is
all that matters for diversity purposes. For a
traditional trust, therefore, there is no need to
determine its membership, as would be true if the
trust, as an entity, were sued.
Many States, however, have applied the “trust” label
to a variety of unincorporated entities that have little
in common with this traditional template. Maryland,
for example, treats a real estate investment trust as a
“separate legal entity” that itself can sue or be sued.
So long as such an entity is unincorporated, we apply
12
our “oft-repeated rule” that it possesses the
citizenship of all its members. But neither this rule
nor Navarro limits an entity’s membership to its
trustees just because the entity happens to call itself a
trust.
Id. (emphases added) (citations omitted).
With respect, the meaning of the highlighted language is
not easy to ascertain. As the Fourth Circuit recently declared:
Having settled the diversity of citizenship question for
real estate investment trusts, perhaps the Supreme
Court in Americold intended this statement to globally
resolve the issue for other trusts. However, the
statement may generate as many questions as it
answers. Putting aside the lack of a comprehensive
definition of a “traditional trust,” the “as would be
true if the trust, as an entity were sued” phrase seems
open to several interpretations.
For example, does the phrase mean that there is no
need to determine entity membership for diversity
purposes when a “traditional trust” is sued as an
entity? Or do we read the statement to mean that a
trust sued as an entity must prove entity membership
because it is a separate legal person from the
individual trustees?
Zoroastrian Ctr. & Darb-E-Mehr of Metro. Wash., D.C. v.
Rustam Guiv Found. of N.Y., 822 F.3d 739, 749 (4th Cir.
2016).10 And the parties here too disagree about Americold’s
10
In Zoroastrian Center, a nonprofit entity sued a charitable
trust in state court seeking to renew a lease the trust had allegedly
terminated. 822 F.3d at 743–44. The trust removed the lawsuit to
13
meaning. 11 According to Winston, Americold means that
diversity jurisdiction in a suit involving a traditional trust
depends only on the trustees’ citizenship. According to the
defendants, Americold distinguishes not between a traditional
trust and an entity only nominally a trust but instead between a
suit in which a trust is the named party and one in which the
trustees are the named parties.12
Although not all courts have to date read Americold to
distinguish between traditional trusts and other artificial
federal court and the district court granted summary judgment to the
trust. Id. On appeal, the plaintiff sought remand to Virginia state
court on the ground that the trust failed to establish diversity of
citizenship. Id. at 747. The Fourth Circuit did not resolve the
Americold question because diversity existed regardless of whose
citizenship—that of the trustees, the trust beneficiaries or both—was
considered. Id. at 749–50.
11
Winston participated as amicus in the Americold
proceedings. Br. of Winston Wen-Young Wong as Amicus Curiae
in Supp. of Pet’rs at 18, Americold Realty Tr. v. ConAgra Foods,
Inc., 577 U.S.__, 136 S. Ct. 1012 (2016) (No. 14-1382), 2015 WL
7732607, at *18 (“[D]iversity of citizenship in a suit by or against a
traditional trust should be determined by the citizenship of its trustee
alone . . . .”).
12
The defendants claim that Winston waived his “traditional
trust” argument. There is good reason to conclude, however, that
Winston did not waive the argument; in any event, we can
appropriately determine this “important[] and recurring question of
federal law” resulting in part from “an intervening change in the
law.” Roosevelt v. E.I. Du Pont de Nemours & Co., 958 F.2d 416,
419 n.5 (D.C. Cir. 1992) (noting that, in such circumstances,
appellate court can exercise discretion to consider issues raised for
first time on appeal).
14
entities, some have done so. See Juarez v. DHI Mortg. Co.,
No. CV H-15-3534, 2016 WL 3906296, at *2 (S.D. Tex. July
19, 2016) (“Americold provides that if the trust itself is suing or
being sued, then further analysis is required to determine
whether the trust is a traditional trust . . . or a business
entity . . . .”); Wells Fargo Bank, N.A. v. Transcon. Realty
Investors, Inc., No. 3:14-CV-3565-BN, 2016 WL 3570648, at
*3 (N.D. Tex. July 1, 2016) (“The citizenship of a trust may
depend on whether it is a traditional trust or what some have
called a business trust.”), appeal docketed, No. 16-11167 (5th
Cir. July 29, 2016); cf. Sutter Ranch Corp. v. Cabot Oil & Gas
Corp., No. CIV-16-42-M, 2016 WL 3945834, at *1 (W.D.
Okla. July 19, 2016) (“[T]he United States Supreme Court has
recently held that the citizenship of a trust, in particular a
business type trust, is the citizenship of all of its members, i.e.,
its beneficiaries.”).
We think Winston’s reading of Americold—that is, the
citizenship of a traditional trust depends only on the trustees’
citizenship—is the better one.13 First, Americold is clear that
13
Moreover, Supreme Court precedent predating Navarro,
Carden and Americold considered the citizenship of a trust
beneficiary immaterial in determining diversity of citizenship. See
Bullard v. City of Cisco, Tex., 290 U.S. 179, 190 (1933) (“As the
transfers under which the plaintiffs held the bonds and coupons were
made to them as trustees, were real . . . and invested them with the
full title, they were entitled, by reason of their citizenship and of the
amount involved, to bring the suit in the federal court. The
beneficiaries were not necessary parties and their citizenship was
immaterial.”); Bonnafee v. Williams, 44 U.S. 574, 577 (1845)
(“Where the citizenship of the parties give[s] jurisdiction, and the
legal right to sue is in the plaintiff, the court will not inquire into the
residence of those who may have an equitable interest in the claim.
They are not necessary parties on the record. A person having the
legal right may sue, at law, in the federal courts, without reference to
the citizenship of those who may have the equitable interest.”).
15
“[m]any [s]tates . . . have applied the ‘trust’ label to a variety
of unincorporated entities that have little in common with th[e]
traditional template” for a trust. 136 S. Ct. at 1016. And
Americold is equally clear that, “[s]o long as such an entity is
unincorporated, [courts] apply [the] ‘oft-repeated rule’ that it
possesses the citizenship of all its members.” Id. (quoting
Carden, 494 U.S. at 195). Because Americold involved an
entity to which the Court applied the Carden test, see id. at
1015–16, and because, “[t]raditionally, a trust was not
considered a distinct legal entity,” id. at 1016, we believe
Americold would not apply the Carden test to a traditional
trust, as it is not an entity. Second, and relatedly, the Supreme
Court was clear that, “[t]raditionally, a trust was . . . not a thing
that could be haled into court.” Id. We doubt that the
Supreme Court envisaged a test by which a court decides that a
party that traditionally cannot be brought into court, see id., can
nevertheless be “sued as an entity,” Appellees’ Br. 32
(emphasis omitted).
New Mighty Qua Traditional Trust
With these principles in mind, we must decide whether
New Mighty is in fact a traditional trust. We conclude that it
is. New Mighty is a creature of D.C. law. See Joint
Appendix 469. As both parties recognized at oral argument,
see Recording of Oral Argument at 21:20–23, 38:26–36 (Sept.
21, 2016), New Mighty is governed by Title 19 of the D.C.
Code, which title includes D.C.’s version of the Uniform Trust
Code (UTC), see D.C. CODE §§ 19-1301.01 et seq.; compare
also D.C. CODE § 19-1304.01(2) (trust may be created by
“[d]eclaration by the owner of property that the owner holds
identifiable property as trustee.”), with Joint Appendix 461
(“Clearbridge LLC, as Trustee[,] declares a trust over one
16
hundred U.S. dollars ($100.00).”).14 Although Americold did
not provide a comprehensive definition of a “traditional trust,”
it did consider instructive section 2 of the Second Restatement
of Trusts,15 136 S. Ct. at 1016, a source to which D.C. courts
have also turned, see Cabaniss v. Cabaniss, 464 A.2d 87, 91
(D.C. 1983). 16 According to Americold as well as the
Restatement, a traditional trust for diversity generally
describes a fiduciary relationship regarding property where the
trust cannot sue and be sued as an entity under state law.
More broadly, we conclude that a traditional trust is a trust that
14
The parties do not dispute that New Mighty is not a statutory
trust within the meaning of Title 29 of the D.C. Code. Enacted
several years after New Mighty’s 2005 formation, see 58 D.C. Reg.
1720–21, 2157–79 (Mar. 11, 2011), D.C.’s “Uniform Statutory Trust
Entity Act of 2010”—contained in Title 29—requires that, “[t]o
form a statutory trust, a person shall deliver a certificate of trust to
the [m]ayor for filing,” see D.C. CODE §§ 29-1201.01,
29-1202.01(a). The record contains no such certificate.
15
Section 2 of the Restatement provides:
A trust, as the term is used in the Restatement of this
Subject, when not qualified by the word “charitable,”
“resulting” or “constructive,” is a fiduciary relationship
with respect to property, subjecting the person by whom
the title to the property is held to equitable duties to deal
with the property for the benefit of another person, which
arises as a result of a manifestation of an intention to create
it.
RESTATEMENT (SECOND) OF TRUSTS § 2 (1959).
16
The enactment of the UTC did not replace all of D.C.’s
common law of trusts. See D.C. CODE § 19-1301.06 (unless
modified by D.C. law, “[t]he common law of trusts and principles of
equity supplement [the UTC]”).
17
lacks juridical person status. Whether a particular trust has or
lacks juridical person status can be determined by reference to
the law of the state where the trust is formed. New Mighty is
not a juridical person. Under D.C. law, New Mighty is a
donative trust governed by Title 19, chapter 13 of the D.C.
Code and, thus, New Mighty cannot sue and be sued as an
entity under D.C. law. See, e.g., Matijkiw v. Strauss, 139
Daily Wash. L. Rptr. 1345, 1349, 1351 (D.C. Super. Ct. July 1,
2011); In re Nat’l Student Mktg. Litig., 413 F. Supp. 1159,
1160 (D.D.C. 1976). It is, therefore, a traditional trust.
For their part, the defendants suggest that New Mighty’s
structure makes it other than traditional, pointing to the
amended complaint’s allegation that “Defendant New Mighty
Trust is a trust structure that includes a trust formed under the
laws of the District of Columbia and a trust formed under the
laws of the Cayman Islands pursuant to the Special Trusts
Alternative Regime.” Appellees’ Br. 24–25 (emphasis and
internal quotation marks omitted) (quoting Am. Compl. ¶ 60).
In their view, “[w]hatever is meant by a ‘traditional trust,’ it
certainly cannot include trusts formed pursuant to a foreign
statutory regime that was promulgated in 1997.” Id. at 25.
The allegation the defendants rely on, however, does not refer
to New Mighty alone; the amended complaint uses the phrase
“New Mighty Trust” to refer to all of the defendants
collectively—that is, New Mighty, the New Mighty
Foundation and Clearbridge. Whether these three defendants
collectively make up a “trust structure” that includes a trust
formed under Cayman Islands law is not the same question as
whether New Mighty itself is a traditional trust. And on the
latter point, the amended complaint expressly alleges that New
Mighty “is a trust formed under the laws of the District of
Columbia.” Am. Compl. ¶ 14. We conclude, then, that New
18
Mighty is a traditional trust 17 and therefore assumes its
trustees’ citizenship for diversity jurisdiction.18
Having established that New Mighty is a traditional trust,
we conclude complete diversity of citizenship exists.
Yueh-Lan, Y.C.’s now-late widow, was a citizen of Taiwan.19
17
The trust declaration describes New Mighty’s purpose “to
hold, manage and administer interests in . . . member[s] of the
Formosa Plastics Group of companies[] for the benefit of [certain
entities] pursuant to the Founders [sic] Vision for the betterment of
mankind.” Joint Appendix 461.
18
At oral argument, New Mighty’s counsel posited that the
District of Columbia added “significant . . . variations” to the model
Uniform Trust Code, making it difficult to differentiate a traditional
trust from a statutory trust. He argued that, under D.C. Code
§ 19-1301.03(11), “[p]erson” is defined to include a trust and that,
per D.C. Code § 19-1304.18, a trust can hold property. We think
New Mighty’s reliance on these provisions misplaced. Other
provisions of D.C. law make clear that New Mighty is a traditional
trust. Compare, e.g., D.C. CODE § 19-1308.09 (“A trustee shall
take reasonable steps to take control of and protect the trust
property.”), and D.C. CODE § 19-1308.11 (“A trustee shall take
reasonable steps . . . to defend claims against the trust.”), with
RESTATEMENT (SECOND) OF TRUSTS § 175 (“The trustee is under a
duty to the beneficiary to take reasonable steps to take and keep
control of the trust property.”), and RESTATEMENT (SECOND) OF
TRUSTS § 178 (“The trustee is under a duty to the beneficiary to
defend actions which may result in a loss to the trust estate, unless
under all the circumstances it is reasonable not to make such
defense.”).
19
All parties look to Yueh-Lan to determine citizenship on the
plaintiff’s side. See, e.g., Saadeh, 107 F.3d at 57 (“[D]iversity of
citizenship is determined at the time the complaint is filed.”).
Winston brought suit as Yueh-Lan’s attorney-in-fact; when
19
On the other side of the litigation, the amended complaint
alleges that the New Mighty Foundation is a citizen of the
District of Columbia and the State of Delaware and
Clearbridge, New Mighty’s trustee, is a citizen of the
Commonwealth of Virginia and the District of Columbia.
Because New Mighty is a “traditional trust,” it is its trustee
Clearbridge’s citizenship that is determinative. To the extent
New Mighty itself is a named party to the lawsuit, it is only a
nominal one, see Navarro, 446 U.S. at 461 (“[A] federal court
must disregard nominal or formal parties and rest jurisdiction
only upon the citizenship of real parties to the controversy.”).20
B. WINSTON’S MOTION TO SUBSTITUTE AND DEFENDANTS’
MOTION TO DISMISS
As noted earlier, Winston and the three joint executors of
Yueh-Lan’s will moved to substitute the three executors in
place of Yueh-Lan pursuant to Federal Rule of Appellate
Procedure 43(a)(1). 21 The defendants raise a host of
objections in response, primarily relating to the allegedly
defective power of attorney Winston exercised in bringing suit,
which, in their view, should result in dismissal. It is “our
Yueh-Lan later died, Winston and the three executors assumed the
citizenship of the decedent. See 28 U.S.C. § 1332(c)(2).
20
We do not reach Winston’s alternative argument that New
Mighty should be dismissed as a dispensable party pursuant to
Federal Rule of Civil Procedure 21.
21
“If a party dies after a notice of appeal has been filed or
while a proceeding is pending in the court of appeals, the decedent’s
personal representative may be substituted as a party on motion filed
with the circuit clerk by the representative or by any party.” Fed. R.
App. P. 43(a)(1).
20
usual . . . practice” to “declin[e] to address arguments
unaddressed by the district court,” Pollack v. Hogan, 703 F.3d
117, 121 (D.C. Cir. 2012) (per curiam), and we follow that
practice here—the district court should consider the
defendants’ arguments in the first instance. Accordingly, we
grant the substitution motion without prejudice to the
defendants’ ability to renew in district court those arguments
they have pressed before us. See Appellees’ Br. 41–55;
Appellees’ Resp. to the Mot. of Winston-Wen-Young Wong
and Chen-Teh Shu, Dong-Xung Dai and Robert Shi.22
For the foregoing reasons, we reverse the district court’s
dismissal, grant the Rule 43(a)(1) substitution motion and deny
without prejudice the defendants’ motion to dismiss. We
remand for further proceedings consistent with this opinion.
So ordered.
22
We note Yueh-Lan’s counsel’s acknowledgement at oral
argument that the defendants’ arguments are unaffected by our grant
of the Rule 43(a)(1) motion.