United States District Court, E.D. Missouri, Eastern Division
MARC ALPER, in his capacity as Trustee of THE AMERICAN COUNCIL OF ENGINEERING COMPANIES BUSINESS INSURANCE TRUST, Plaintiff,
MARSH, USA, INC., Defendant.
MEMORANDUM AND ORDER
CATHERINE D. PERRY UNITED STATES DISTRICT JUDGE.
March 6, 2018, plaintiff Marc Alper, in his capacity as
Trustee Emeritus of the American Council of Engineering
Companies Business Insurance Trust, filed this suit for
injunctive relief, breach of contract, and tortious
interference against Marsh USA, Inc. That same day, Alper
filed a Motion for Temporary Restraining Order and
Preliminary Injunction. At the hearing the following day I
expressed concern about whether this Court has subject-matter
jurisdiction to decide this case. I denied the Temporary
Restraining Order at that time but ordered that the parties
file briefs on the threshold jurisdictional issue.
alleges that this Court has diversity jurisdiction because
the named plaintiff, Trustee Alper, is a citizen of Missouri
and defendant Marsh is a New York corporation with its
principal place of business in New York. I conclude, however,
that the citizenship of the Trust must be determined based on
the citizenship of all the trustees. Because at least one
trustee is a citizen of New York, complete diversity does not
exist and the case must be dismissed for lack of
American Council of Engineering Companies Business Insurance
Trust is a trust established and created under the laws of
Missouri. The Trust's main purpose is administering
insurance programs operated for the benefit of the American
Council of Engineering Companies (ACEC), an association whose
members include thousands of engineering and consulting
companies across the United States.
in 1983, the Trust contracted with defendant Marsh to be the
exclusive broker of certain insurance coverage and related
programs offered on an exclusive basis to ACEC members. At
the conclusion of the most recent agreement, the Trust
decided not to renew the contract with Marsh. Instead, it
contracted with one of Marsh's competitors to take over
the administration and brokerage of its insurance offerings
to ACEC members. The Marsh agreement contained clauses
restricting Marsh's post-termination ability to continue
to sell insurance to ACEC members, although the meaning and
scope of these clauses is disputed. When the Trust learned
that Marsh had developed a competing program and continued to
solicit ACEC members in competition with the Trust's
newly-designated insurer, the Trustees delegated to Trustee
Emeritus Alper the power to bring this suit against Marsh;
the complaint alleges Marsh is breaching the contract and
seeks injunctive relief.
courts are courts of limited jurisdiction, and jurisdictional
statutes must be strictly construed. Sheehan v.
Gustafson, 967 F.2d 1214, 1215 (8th Cir. 1992). When
jurisdiction is challenged, the party seeking the federal
forum bears the burden of proving by a preponderance of the
evidence that the prerequisites to jurisdiction are
satisfied. Id. The Eighth Circuit has admonished
district courts “to be attentive to a satisfaction of
jurisdictional requirements in all cases.” Sanders
v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987).
determine the citizenship of an unincorporated association
for diversity jurisdiction, the courts must consider the
citizenship of “all the members” of the
association. See Carden v. Arkoma Assocs., 494 U.S.
185, 195-96 (1990) (quoting Chapman v. Barney, 129
U.S. 677, 682 (1889)). In Carden the Supreme Court
held that the citizenship of limited as well as general
partners must be considered in determining citizenship of a
limited partnership. Carden specifically rejected
the argument that it was appropriate to “consult the
citizenship of less than all of the entity's
members” when considering the citizenship of an
unincorporated association. 494 U.S. at 195.
1980 business trust case where the trustees brought suit in
their own names, the Supreme Court rejected an argument that
the real parties in interest were all of the shareholders of
the business trust. Navarro Sav. Ass'n v. Lee,
446 U.S. 458, 465 (1980). Navarro held that the
“real parties to the controversy” were the
trustees who held legal title, managed the assets, and
controlled the litigation, and thus the trustees could invoke
diversity jurisdiction based on their own citizenship, like
any natural person. Id.
recently, in 2016, the Supreme Court referred back to its
“oft-repeated rule” that the citizenship of all
members must be considered in the context of determining the
members of a “trust” for purposes of
jurisdiction. Americold Realty Trust v. Conagra Foods,
Inc. 136 S.Ct. 1012 (2016). Americold clarified
that not every entity that “happens to call itself a
trust” possesses the citizenship of its trustees alone.
Id. at 1016. The Court found that a real-estate
investment trust created under state law was not a
traditional trust but a “separate legal entity, ”
and held that its members were its shareholders for purposes
of diversity jurisdiction. Id. Americold pointed out
that Navarro did not deal with citizenship of the
trust itself, and did not contradict the rule that
“when an artificial entity is sued in its
name, it takes the citizenship of each of its members.”
Id. at 1016 (emphasis in the original).
does not dispute that the diversity jurisdiction analysis of
the Trust turns on trustee citizenship. Instead he argues
that because the other Trustees designated him to bring this
suit, only his citizenship should be considered.
Federal Rule 17(a), a trustee of an express trust may bring
an action in his own name as the “real party in
interest” without joining the people for whose benefit
the action is brought. Fed.R.Civ.P. 17(a)(1)(E). However, as
noted by the Supreme Court in Navarro, although a
party may be a “real party in interest” under
Rule 17(a), to establish diversity it may be necessary to
rely upon the citizenship of that party's members. 446
U.S. at 462 n.9. Such is the case here. The court must
consider the citizenship of all of the trustees for diversity
purposes. To do otherwise would be in direct violation of the
Supreme Court's “oft-repeated rule” that
“diversity jurisdiction in a suit by or against [an]
entity depends on the citizenship of ‘all the
members.' ” Carden, 494 U.S. at 195-96.
For a trust in the traditional sense - like we have here -
the members are the trustees. Americold, 136 S.Ct.
at 1015-16. Because one trustee is a New York citizen and
therefore nondiverse from the defendant, this case must be
dismissed for lack of subject-matter jurisdiction.
argument that because all the trustees delegated their power
to himonly his citizenship should be considered
ignores long-established rules regarding diversity
jurisdiction. Complete diversity of citizenship “is
tested by the citizenship of the real parties to the
controversy, and the citizenship of an agent who merely sues
on behalf of the real parties must be ignored.”
Associated Ins. Mgmt. Corp. v. Arkansas General Agency,
Inc., 149 F.3d 794, 796 (8th Cir. 1998). In the
Associated Ins. case the Eighth Circuit looked at
the underlying agreements between the parties and the
applicable state law in order to determine the “real
and substantial parties to the dispute.” Id.
at 798. An agent who merely sues on behalf of the real
parties is ignored for citizenship purposes. Id. at
796. Even though the delegation to Alper here was proper both
under the Trust Agreement and under Missouri law,
that delegation does not change the real and substantial
parties to the dispute. The real power to control the Trust -
including “certain customary powers to hold, ...