[00:00:00] Speaker 00:
Case number 12, that's 7038.

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Yu Wei-An Wang, by and through her attorney, in fact, Winston Wing Young Wong, appellant, versus new mighty U.S.

[00:00:10] Speaker 00:
trust at Elle.

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Mr. Statenberg for the appellant, Mr. Sloan for the appellees.

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Let's wait until the courtroom clears.

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All right.

[00:01:08] Speaker 06:
Good morning.

[00:01:09] Speaker 02:
Good morning.

[00:01:09] Speaker 02:
May it please the court, Mark Stoutenberg, for the appellants, Dr. Wong and the executors of the will of Yalon Wong.

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I've asked for two minutes for rebuttal.

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There are two issues before the court today.

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The first is the substantive issue of our appeal.

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which is the dismissal of this case for lack of diversity of jurisdiction by the district court.

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The second issue is the appellant's motion to substitute under Rule 43 the executors of the will of Yalon for these proceedings.

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That issue, that motion was made and the special panel reserved that ruling for the merits panel.

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Turning to the

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Do you dispute that if the substitution were made, would these executors have any capacity to alter the ultimate analysis of capacity to bring this lawsuit in the first instance?

[00:02:08] Speaker 05:
No.

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I think they can, but I don't think that actually that issue is before this court today.

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I think the issue is whether under Rule 43.

[00:02:18] Speaker 05:
Well, I'm trying to figure out.

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They have arguments about capacity to have brought this suit in the first instance.

[00:02:23] Speaker 02:
Correct.

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And they say you can't substitute because we've got to figure out that issue in the first instance.

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And I had thought your argument was that

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the law does, that's what we do with the executors, and all those arguments will remain just the same for them to address on capacity.

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So I'm trying to figure out what your position is.

[00:02:42] Speaker 02:
Yeah, my position is that for purposes of this appeal, in order for the appellants to actually make the substantive arguments that we need to make, a dead person can't make those arguments.

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So the executors, the court-appointed executors, should be the parties for this appeal.

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And then you can go back to the district court

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that they're successful.

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And the district court can consider the issues of nullity, of whether or not there was capacity initially, all the issues that they have raised below, which they have recycled and raised again.

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I mean, I think the argument fails.

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I think the law is clear in this circuit.

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It's not before this room.

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I don't think it's before you.

[00:03:16] Speaker 05:
I don't think it's before you.

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I'm asking about substitution.

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I'm trying to make sure.

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Normally the substitution is just automatic.

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It doesn't change anything.

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I'm trying to get a clear conclusion.

[00:03:25] Speaker 02:
And I think that's correct.

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It doesn't change anything here or when they go back to district court.

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I mean, Your Honor, if you think the concern is that we're going to go back to the district court and say

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Hello, we were substituted before the Circuit Court under Rule 43.

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Therefore, all of your capacity arguments are wiped out, your nullity argument are wiped out.

[00:03:41] Speaker 02:
I'm not making that argument.

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I am sure my adversaries will raise that argument again, as they have a number of times.

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And we'll continue to make that argument.

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Do you agree that the substitution doesn't change anything legally?

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No, I don't think that it does.

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For purposes of this appeal, I think the substitution is what we're asking for.

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And I think that those arguments are reserved for them to make below.

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Turning to the issue that was actually the focus of our appeal, beyond their so-called motion to dismiss, I think that this now is a very simple issue in light of the Merkel holding on March 7th of 2016.

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Because prior to Merkel, there was a split between the circuits.

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This circuit had not ruled on this particular issue.

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That is, how to assess the citizenship of a trust for purposes of diversity.

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The district court looked at the authorities, said that it was a close call, and applied carding to the facts of this case, found that the trust, the defendant here, New Mighty US Trust, was an artificial entity.

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That's an error.

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It's not an artificial entity under Merrick Gold.

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and found that you need to look to all the members of the mighty U.S.

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Trust to determine its citizenship.

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And in this particular case, there are two beneficiaries that are British Virgin Island entities, and it concluded that there was not diversity.

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However, in light of AmeriCold, that analysis is incorrect, because AmeriCold states very clearly that you need to look at the type of trusted issue.

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And the court was very clear in going through the issues before AmeriCold, which involved a real estate investment trust that was a trust that was a creature of Maryland law.

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It could sue and be sued.

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It had effectively members that were akin to shareholders.

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And the court went through the analysis and found that you have to parse out traditional trusts, which are fiduciary relationships on the one hand.

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and artificial entities.

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It's a numerical exception.

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I just want to make sure I have

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Is it traditional trust?

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Is it expressed trust?

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What is the changes from state to state?

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And that's correct.

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It is a functional title.

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In the District of Columbia, it's a common law trust under the DC Code.

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That's what they're considered.

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And under the DC Code, a common law trust is a fiduciary relationship.

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It is not a person under the statute.

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It's excluded from the definition of person.

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It cannot sue or be sued.

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A trustee must defend claims against a trust.

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obligated under the code to defend claims against a trust and must take all steps to protect and preserve the assets of a trust.

[00:06:21] Speaker 05:
So what are the factors for recognizing that something is a common law traditional express trust as opposed to the type of trust that's going to be regulated by Merigold?

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Is it just sue and be sued?

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Is it whether they're defined

[00:06:47] Speaker 02:
I don't think it's a labeling issue.

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I think the court was careful.

[00:06:50] Speaker 02:
That's not don't worry about the labeling issue Just because you were used to slap the word trust on something doesn't make it Yeah, I think I think what you're looking at is is it is it is it a trust but there's a rich history of what of what a traditional trust is it may have been called a common law trust or conventional trust what you're talking about is

[00:07:11] Speaker 02:
It's more like a contract.

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It's where a party can sit down and declare a trust for the benefit of beneficiaries and appoint a trustee.

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The state is not involved in this.

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There's no statutory filing that's required as it is in the District of Columbia.

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You cannot sue or be sued.

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That is an important characteristic.

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Trust cannot bring claims.

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That's the law in this particular, in the District of Columbia.

[00:07:34] Speaker 02:
The 2011 case in Matagee, which we cite, which came out after the complaint was filed, makes it very clear that when a plaintiff asks a court to impose judgment against a trust, they are really seeking judgment against the trustee, because a trust is merely a description of a relationship between the legal and equitable owners of property.

[00:07:53] Speaker 05:
The trust cannot own anything.

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What about that contract that parties created?

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separate and apart from any statue, they said, let's create this trust, let's have this relationship, but let's also say that this trust can be sued or be sued.

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I don't think that would be a valid trust under the D.C.

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Code.

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I think you have to follow the requirements of the Trust Act.

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There's the Uniform Trust Act and the Statutory Trust Act.

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If you're going to try to create an entity that can sue or be sued that has those attributes, then you need to follow the D.C.

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Code.

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And there's no claim here that that's what was done with this trust.

[00:08:27] Speaker 05:
This was a simple lawyer sitting in office writing out a declaration of trust.

[00:08:34] Speaker 02:
Well, the Uniform Trust Act is – has been adopted in D.C.

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and then in 2000 – How many states have adopted it?

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I don't know how many states have adopted the Uniform Trust Act.

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But the Statutory Trust Act is a 2010 statute that was passed in D.C.

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So you've got to look at both of those.

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And if you really step back for a moment,

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If you step back for a moment, what the appellees are saying is that this court should engage in an artificial exercise of trying to determine the citizenship of something that doesn't exist.

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If this was a contract case and the plaintiffs had sued the counterparty of the contract,

[00:09:12] Speaker 02:
and had also sued the contract dated January 1, 1985, we wouldn't all be sitting here trying to figure out what is the citizenship of a contract.

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Because a contract is not a legal entity.

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A contract defines a relationship between the parties, and there's all sorts of law about what a contract is and what it means.

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But it's not an entity.

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We don't, just because something is sued, we don't then have to engage on some sort of artificial exercise to determine what its citizenship might be.

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And that's exactly why the Supreme Court made the distinction that it made between traditional trusts, which are fiduciary relationships, and artificial entities that exist under state law.

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And frankly, that's why the Cardinal rule does apply to artificial entities, because they are akin to LLCs, or limited partnerships.

[00:09:58] Speaker 05:
I'm just curious as to why, I mean, this is,

[00:10:01] Speaker 05:
Yes, certainly.

[00:10:13] Speaker 02:
That opportunity hasn't happened and we can fix it today by simply dismissing them as a dispensable party.

[00:10:23] Speaker 02:
In retrospect, sure, we wouldn't have sued the trust.

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Was the Matajou case in 2011 available in 2010?

[00:10:30] Speaker 02:
No.

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Had the Statutory Trust Act, was that available in 2010?

[00:10:33] Speaker 02:
I don't believe so.

[00:10:38] Speaker 05:
For New Mighty U.S.

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Trust.

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Is the foundation a distinct legal entity?

[00:10:53] Speaker 05:
Yes, it is.

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The diversity was destroyed by the BVI members of New Mighty U.S.

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Trust.

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So just to conclude, because I see I'm running out of time, I reserve some time for a bottle.

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There are other cases that have looked at this issue.

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It's been a very short period of time since AmeriColf came out.

[00:11:16] Speaker 02:
But there are at least two cases from the, both in Texas.

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Texas is somewhat of an anomaly because in Texas, a trust must be a defendant for whatever reason.

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So I'm sure there'll be more cases along those lines.

[00:11:34] Speaker 02:
And the case is Juarez versus DHI Mortgage Company, 2016 Westlaw 3906296.

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That's from the Southern District of Texas on July 19, 2016.

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And in Juarez, the district court adopted precisely the analysis that I'm advocating for, which is that you first have to look to the type of trust being sued,

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suing or being sued, then further analysis is required to determine whether the trust is a traditional trust where one can only look to the trustee for citizenship or a business entity where one must look to all the members.

[00:12:06] Speaker 02:
That's a miracle.

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And similarly Wells Fargo Bank versus Transcontinental Realty 2016.

[00:12:17] Speaker 05:
Yeah, it's an anomaly of Texas law.

[00:12:19] Speaker 05:
Does that mean that Texas law means that such trusts can soon be sued?

[00:12:24] Speaker 02:
They can't.

[00:12:25] Speaker 05:
In fact, in this particular case... It's a question of Texas law.

[00:12:30] Speaker 05:
If Texas law says you must be a defendant, then isn't that a statement by Texas law that you can be sued?

[00:12:36] Speaker 02:
No.

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And the court goes through and says, in fact, you need to look.

[00:12:40] Speaker 02:
And from a jurisdictional analysis, you have to figure out.

[00:12:43] Speaker 02:
I mean, obviously, if they're required to be a defendant, they can be sued, right?

[00:12:46] Speaker 02:
But it's not an artificial entity.

[00:12:47] Speaker 02:
And they say, you still have to look to see, is it an artificial entity?

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Is it a traditional trust?

[00:12:52] Speaker 02:
Again, it doesn't fit perfectly, obviously, with the DC code, with the regime we have here.

[00:12:57] Speaker 02:
But it's at least some indication that two courts have adopted precisely the analysis that we say Merrifold requires for what they're worth.

[00:13:05] Speaker 06:
Can I ask you about what a miracle requires, this sentence that is so awkwardly worded?

[00:13:13] Speaker 06:
Yes.

[00:13:14] Speaker 06:
I can read it for you.

[00:13:18] Speaker 06:
Do you consider that a holding or dicta?

[00:13:21] Speaker 02:
I consider it a holding, because I think what they're trying to do is they're trying to contrast traditional trust.

[00:13:26] Speaker 02:
And Judge Sotomayor was trying to clean up all of the cases that are all over the place.

[00:13:30] Speaker 06:
But the only trust before that court was the read.

[00:13:35] Speaker 02:
That's correct.

[00:13:37] Speaker 02:
But I think it's not dictated because I think the court was trying to reconcile those cases that frankly hadn't considered whether the trusted issue was an artificial entity or was a traditional trust.

[00:13:48] Speaker 02:
And she's trying to kind of clean up the authorities that are all over the place on this, frankly.

[00:13:52] Speaker 02:
You could find an authority for any proposition and say, you really have to figure out

[00:13:57] Speaker 02:
Is this an entity that has the attributes of citizenship for purposes of diversity, or is it not?

[00:14:02] Speaker 02:
And if this is dicta, I mean, then she goes into precisely why AmeriCold is an artificial entity and why it matters.

[00:14:09] Speaker 02:
So I think it sets up the whole analysis for why artificial entities like AmeriCold, you need to look at them.

[00:14:15] Speaker 02:
Believe it is dicta.

[00:14:15] Speaker 02:
We can use it.

[00:14:16] Speaker 02:
We follow it.

[00:14:17] Speaker 02:
There you go.

[00:14:18] Speaker 06:
All right, thanks.

[00:14:18] Speaker 06:
I'll give you some time in reply.

[00:14:20] Speaker 06:
Mr. Sloan?

[00:14:28] Speaker 01:
Good morning.

[00:14:29] Speaker 03:
May it please the court and Clifford Sloan for Appellees.

[00:14:33] Speaker 03:
I'd like to make four very brief points at the outset and then address some of the points that my colleague raised.

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First, it is well established that plaintiff is responsible for his or her complaint and that plaintiff has the burden of pleading and establishing jurisdiction.

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Second, in the district court, from beginning to end,

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Plaintiff adamantly maintained that New Mighty US Trust was an important and appropriate defendant and never suggested that it was unimportant, nominal, or dispensable, or that it lacked legal capacity or legal existence.

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Third, Judge Boasberg, on the basis of the pleadings and submissions before him, appropriately and correctly determined that plaintiff had not carried his burden of establishing jurisdiction.

[00:15:28] Speaker 03:
And fourth, if this court decides to entertain plaintiff's new theory of jurisdiction, which he never raised below and which is fundamentally inconsistent with his submissions in the district court,

[00:15:44] Speaker 05:
On page 6, the district court says, Plaintiff's allegation that the trust is a citizen of Virginia DC now appears to assume that the citizenship of the sole trustee, Clearbridge, a citizen of Virginia DC, determines the citizenship of the trust.

[00:16:01] Speaker 05:
Indeed, she argues as much in her opposition to the instant motion.

[00:16:06] Speaker 05:
How can you say she didn't argue in the

[00:16:15] Speaker 03:
trustee that counts.

[00:16:16] Speaker 03:
A very important question, Your Honor, because there's no question that that's what plaintiffs argue, but on very, very different grounds.

[00:16:24] Speaker 03:
And let me go through this.

[00:16:26] Speaker 05:
Well, I think different grounds because the Supreme Court came in and started chopping up the lines.

[00:16:30] Speaker 03:
No.

[00:16:31] Speaker 05:
People do that.

[00:16:32] Speaker 05:
The argument that you look to the trustee for purposes of determining diversity jurisdiction is right here.

[00:16:37] Speaker 03:
And plainest argument on this and the entirety of their argument is that joint appendix 318 to 322 that's their opposition to the motion to dismiss was that there is a broad rule with trusts that whenever a trust is the entity

[00:16:55] Speaker 03:
you follow Navarro and the citizenship of the trustee.

[00:16:59] Speaker 03:
And defendants said, no, when the trust is the entity, you look at Cardin and all the members' rule.

[00:17:05] Speaker 03:
And Judge Bosberg carefully considered the cases on both sides and said, when the trust is the entity, Cardin controls.

[00:17:12] Speaker 05:
And the Supreme Court... Both of you had to refine your positions opposed to miracles.

[00:17:20] Speaker 05:
Well, I'm happy to address the argument on this term, Your Honor, but I do think

[00:17:32] Speaker 03:
Let's step back for a second.

[00:17:34] Speaker 03:
The new argument that plaintiff is raising is essentially that new maybe US trust lacked legal capacity and legal existence.

[00:17:45] Speaker 03:
You heard the core of his argument.

[00:17:47] Speaker 05:
He said it's like... The core of his argument is that we have diversity jurisdiction because the trust has that status, we must look to the trustee.

[00:17:55] Speaker 05:
And this is a jurisdictional argument, and they said from beginning to end, let's look at the trustee.

[00:18:01] Speaker 05:
And the fact they've refined their arguments is what anyone... You've refined your supposed to marigold.

[00:18:06] Speaker 03:
Well, your honor.

[00:18:07] Speaker 05:
Should we just get to the merits here, the way everything does?

[00:18:10] Speaker 04:
Right?

[00:18:10] Speaker 03:
Should we just?

[00:18:11] Speaker 01:
OK, well, let me.

[00:18:11] Speaker 01:
What was your fourth point?

[00:18:14] Speaker 03:
My fourth point was that if we get to the merits, that plaintiff's new theory of jurisdiction, as we see it, but their argument here in any case, is deeply wrong.

[00:18:25] Speaker 03:
And that in contrast to plaintiff's theory and plaintiff's reading of a miracle,

[00:18:32] Speaker 03:
we would submit that as the Supreme Court confirmed in Amerikold, there is a very clear, bright line across the board rule, namely that it is the named party that controls.

[00:18:50] Speaker 03:
And so if a trust is named, then the

[00:18:54] Speaker 03:
all the members' rule of cardinal applies.

[00:18:57] Speaker 03:
And if a trustee is named, then the citizenship of the trustee rule of Navarro applies.

[00:19:04] Speaker 03:
That is very clear and readily ascertainable.

[00:19:07] Speaker 03:
Lines up perfectly with AmeriCorps and with the Supreme Court principle in cases like Hertz Corporation versus Friend, that jurisdictional determinations should be, as the Supreme Court said there, as simple as possible, as clear as possible.

[00:19:21] Speaker 03:
All you have to do is look at the named party.

[00:19:23] Speaker 03:
And of course, the plaintiff is responsible for the complaint.

[00:19:25] Speaker 03:
Now plaintiff's theory, in contrast, although he says, oh, it would be a simple test, it would plunge courts into chaos.

[00:19:34] Speaker 03:
Because it would require not simply looking at the caption, as our test would do, and as we think is confirmed in the miracle, but instead it would require courts to undertake an independent inquiry in terms of,

[00:19:49] Speaker 03:
categorizing trusts above and beyond whether they're in the complaint.

[00:19:53] Speaker 03:
And he suggests that, well, it's a very simple sort of binary test of whether it's a statutory trust or what he calls a traditional trust.

[00:20:04] Speaker 03:
In fact, it is an extremely complex undertaking of categorization.

[00:20:08] Speaker 03:
Your Honor's questions, we're getting at that in terms of what are the different characteristics.

[00:20:15] Speaker 03:
In this very case,

[00:20:16] Speaker 03:
illustrates the complexity.

[00:20:18] Speaker 03:
In contrast to what my friend was saying, he was emphasizing Title 29 of the D.C.

[00:20:25] Speaker 03:
Code, which is the Uniform Statutory Trust Entity Act adopted in 2011.

[00:20:31] Speaker 03:
He's entirely overlooking the significance of Title 19 of the D.C.

[00:20:36] Speaker 03:
Code, which is the Uniform Trust Code with significant D.C.

[00:20:40] Speaker 03:
variations.

[00:20:41] Speaker 03:
It was enacted in 2004, shortly before this trust was created in 2005.

[00:20:49] Speaker 03:
In Title 19,

[00:20:50] Speaker 03:
has provisions that completely belie and contradict his suggestion that it's some easy sorting of traditional trusts and statutory trusts.

[00:21:01] Speaker 03:
Let me give the court two examples of this.

[00:21:04] Speaker 03:
One is that under Title 19, under the definition of person,

[00:21:08] Speaker 03:
A trust is defined as a person.

[00:21:11] Speaker 03:
He said, oh, a characteristic of a common law trust.

[00:21:13] Speaker 03:
It's not a person.

[00:21:14] Speaker 03:
Well, in the code section 19-1301.03, parenthesis 11, and there's no dispute that Title 19 applies to this trust, the definition of person includes a trust.

[00:21:29] Speaker 03:
Here's another provision, which completely belies the point that he was making.

[00:21:34] Speaker 03:
And this is a provision which reflects a very significant DC variation from the uniform trust code.

[00:21:42] Speaker 03:
Very few jurisdictions have this.

[00:21:44] Speaker 03:
Under Title 19, a trust can hold property.

[00:21:47] Speaker 03:
That's Section 19-1304.18.

[00:21:50] Speaker 03:
He says it's like suing a contract.

[00:21:54] Speaker 03:
Well, the fact that it can hold property, and that is a significant decision by the district that is somewhat unique to the district,

[00:22:03] Speaker 03:
completely belies this sort of simple sorting that he's making.

[00:22:08] Speaker 03:
Now one point I want to emphasize is that these characteristics under Title 19 and those different characteristics, those don't matter for our theory because our theory

[00:22:21] Speaker 03:
is, again, you simply look at the caption of the case, and you don't have to get into, for purposes of diversity, you don't have to get into some complicated, attempted categorization of trusts, and there are thousands of different trusts.

[00:22:36] Speaker 03:
States treat them very differently.

[00:22:38] Speaker 03:
But under his theory... So I get that.

[00:22:42] Speaker 05:
I get that there's complexity.

[00:22:43] Speaker 05:
It would be nice to have a simple rule.

[00:22:45] Speaker 05:
But there are complexities on the other side as well.

[00:22:49] Speaker 05:
I do not...

[00:22:57] Speaker 05:
and they just said, hey, we're going to have to deal with it.

[00:23:00] Speaker 05:
But how would we decide who the members of, particularly a charitable trust, when we make a rolling donation?

[00:23:09] Speaker 03:
Two answers, Your Honor.

[00:23:10] Speaker 03:
First of all, in this case, it's very easy, because there are three named beneficiaries, as Judge Bozer suggests.

[00:23:16] Speaker 04:
Is it class or more intended?

[00:23:19] Speaker 03:
Well, there could be more who get distribution.

[00:23:21] Speaker 03:
But for purposes of resolving the diversity here, there are three that are named in the trust instrument.

[00:23:30] Speaker 03:
They're in paragraphs 122 and 123 of the complaint.

[00:23:35] Speaker 05:
Your argument was about the legal rule.

[00:23:37] Speaker 05:
Yes, yes, your honor.

[00:23:51] Speaker 05:
hundreds, thousands, millions, probably, of members.

[00:23:55] Speaker 03:
And that was explicitly raised in a miracle by the petitioner and emphasized at the oral argument.

[00:24:00] Speaker 03:
And the Supreme Court said in the oral argument and said in the opinion, that's the rule.

[00:24:06] Speaker 03:
That's the consequences of the rule, of all the members' rule of Cardin.

[00:24:12] Speaker 03:
And if Congress wants to address it, as it did with corporations, it can't.

[00:24:16] Speaker 03:
And again, this also takes the place against a backdrop where there's a presumption against diversity jurisdiction, and for reasons of limited jurisdiction, for reasons of federalism, a presumption against expansive rules of diversity.

[00:24:28] Speaker 03:
But let me also point out that in the Third Circuit, which is the leading case on this, Emerald Investors, and it's one that Judge Boesberg relied on, but in Emerald Investors, the court said that the test should be trustee plus beneficiary.

[00:24:45] Speaker 03:
It's both.

[00:24:45] Speaker 03:
for a trust.

[00:24:47] Speaker 03:
And so in that situation, Plaintiff raises in his brief the specter of, oh, how would you know if there were unknown ones?

[00:24:57] Speaker 03:
You can always look at the trustee and if the other beneficiaries are unknown.

[00:25:00] Speaker 03:
And as Judge Boesberg also points out, jurisdiction is determined on the day the complaint is filed.

[00:25:06] Speaker 03:
So there's a finite time of the jurisdiction there.

[00:25:10] Speaker 03:
But it was pointed out in the oral argument in AmeriCold in response to questions from Justice Scalia that there are REITs that have millions of kind of issues.

[00:25:18] Speaker 03:
And the Supreme Court and the Talaquis said, well, that's the consequence of all the members' rule.

[00:25:25] Speaker 03:
But the important point is that it's the determination of what entity you're looking at, what entity you're counting for purposes of diversity and the rule that flows for that under our test and the Supreme Court's test in a miracle.

[00:25:39] Speaker 03:
And I want to explain a little more about that in a moment.

[00:25:42] Speaker 03:
But it's very clearly, all you have to do is look at the caption.

[00:25:47] Speaker 03:
And so that lines up perfectly.

[00:25:48] Speaker 01:
The Supreme Court says,

[00:25:52] Speaker 01:
For a traditional trust, therefore, there is no need to determine its membership, and then, comma, as would be true if the trust as an entity were sued.

[00:26:03] Speaker 01:
The first part of that sentence, that for a traditional trust, if you fall within the category of a traditional trust, there is no need to determine its membership.

[00:26:12] Speaker 03:
So, and I think it's important to look at this discussion in context.

[00:26:17] Speaker 03:
There's part three of the opinion, the four paragraphs of the opinion.

[00:26:20] Speaker 03:
So first of all, that sentence, I mean, even just the sentence, as your honor was mentioning, the syntax that

[00:26:27] Speaker 03:
We've all looked at, but it does say, as would be true, if the trust as an entity were sued.

[00:26:33] Speaker 03:
So again, it's pointing to the entity that were sued.

[00:26:35] Speaker 03:
But more to the point of your question, Your Honor, it's coming right after a discussion about the fact that traditionally, historically, it's talking about a classic sort of early 19th century trust where

[00:26:46] Speaker 03:
Person A gives property to person B for the benefit of person C. And it's explaining that traditionally, the trustee was the entity, was the person that was sued, not the trust.

[00:26:59] Speaker 03:
It's giving that historical explanation.

[00:27:01] Speaker 03:
But this is also part of a broader discussion in part three.

[00:27:05] Speaker 03:
And in that discussion, no fewer than six times

[00:27:09] Speaker 03:
does the Supreme Court emphasize the entity that is named?

[00:27:13] Speaker 03:
That's really the thrust of that section.

[00:27:15] Speaker 03:
And the discussion about the traditional trust is in the context of explaining why it was traditionally the trustee that was sued.

[00:27:21] Speaker 03:
And indeed, the penultimate sentence of that section, which is on page 1017, 136 S Court, the court says, we therefore decline to apply the same rule

[00:27:32] Speaker 03:
to an unincorporated entity sued in its organizational name that applies to a human trustee sued in her personal name.

[00:27:43] Speaker 03:
Again, the key distinction that the court is making and the part that that sentence is part of is this distinction between

[00:27:54] Speaker 03:
whether a trust is named or a trustee is named.

[00:27:58] Speaker 03:
And plaintiff's suggestion about lack of legal capacity and lack of legal existence would import into the diversity analysis wholly separate concerns, which are very complicated in their own right.

[00:28:13] Speaker 03:
And for example, Rule 9A,

[00:28:16] Speaker 03:
requires that if a party is challenging a lack of legal existence or a lack of legal capacity, it must be specifically pleaded and denied.

[00:28:26] Speaker 03:
And so, to our earlier point, Your Honor, that's something they never did under Rule 9A.

[00:28:31] Speaker 03:
I mean, that's the point we were making, that if there's an issue about legal capacity and legal existence, which is the heart of their argument now, it's pages 32 to 42 of their opening brief,

[00:28:39] Speaker 03:
If there's an issue about lack of legal capacity or legal existence, first of all, we don't think that's not the diversity analysis.

[00:28:45] Speaker 03:
They're trying to glom it on and say, aha, Merkel means that a diversity inquiry, that the interpretation of the diversity statute now requires some analysis of lack of legal capacity and lack of legal existence.

[00:28:59] Speaker 03:
No, and the plaintiff has control over the complaint.

[00:29:03] Speaker 03:
But there is a process for that under the federal rules, and it's 9A.

[00:29:07] Speaker 03:
And that's where it's very, very telling that they never made that objection about legal capacity or legal existence under Rule 9A in the district court.

[00:29:16] Speaker 03:
And yet, that's the heart of their theory in this case.

[00:29:19] Speaker 03:
And there's no intervening Supreme Court case that justifies that.

[00:29:23] Speaker 03:
A miracle does not justify that.

[00:29:25] Speaker 03:
And Your Honor, this idea that a miracle played some significant role that would justify a difference or a refinement in their theory.

[00:29:36] Speaker 03:
A plaintiff in their brief

[00:29:37] Speaker 03:
emphasize their amicus brief to the Supreme Court in the miracle.

[00:29:42] Speaker 03:
Well, if they wanted those arguments, which are all about traditional trust and lack of legal capacity and lack of legal existence, if they wanted those arguments to have a bearing on this case, they should have made them to Judge Boesberg.

[00:29:55] Speaker 03:
They were fully available to him.

[00:29:56] Speaker 03:
They made them to the Supreme Court in the miracle of the amicus brief.

[00:29:59] Speaker 03:
And I would ask the court to compare their amicus brief

[00:30:03] Speaker 03:
in in America hold to their submission at joint appendix three eighteen to to the three twenty two.

[00:30:11] Speaker 03:
I just.

[00:30:12] Speaker 01:
And we've covered this but a miracle clears up what the court itself describes the confusion that was in the law beforehand so.

[00:30:20] Speaker 03:
But not on this issue, Your Honor.

[00:30:23] Speaker 03:
But in any case, I don't want to belabor the point and the Court.

[00:30:27] Speaker 03:
I just wanted to make sure the Court understood our argument, particularly.

[00:30:30] Speaker 01:
Yeah, I understand the argument, but it is also true.

[00:30:33] Speaker 01:
I think that Amerikold arguably resets some of this and in the midst of a paragraph tries to clean it up now.

[00:30:42] Speaker 01:
We wouldn't be discussing this, but yeah.

[00:30:46] Speaker 01:
Right.

[00:30:46] Speaker 03:
And as I was saying, we do strongly disagree with their reading of the miracle.

[00:30:51] Speaker 03:
But I'd like to also just address a couple of other points.

[00:30:57] Speaker 06:
All right.

[00:30:57] Speaker 06:
Do so quickly.

[00:30:58] Speaker 03:
Okay, I'll do it very quickly.

[00:31:01] Speaker 03:
First of all, the plaintiff emphasized the case of Ntishku, the 2011 case that he was talking about, a DC Superior Court case.

[00:31:09] Speaker 03:
I think it speaks volumes that that is the only authority that he has.

[00:31:13] Speaker 03:
Not only is it a single DC Superior Court case,

[00:31:16] Speaker 03:
If you read the case, it's about Delaware trusts, and it does not consider the provisions of Title 19 of the D.C.

[00:31:24] Speaker 03:
Code, such as the fact that a trust is a person or that a trust can hold property.

[00:31:30] Speaker 03:
And secondly, just very briefly, Your Honor,

[00:31:32] Speaker 03:
plaintiffs suggested, as he suggested in the brief, that this court could simply say that the trust is a dispensable party and order it dismissed.

[00:31:44] Speaker 03:
We strongly disagree with that.

[00:31:46] Speaker 03:
In Newman Green, the Supreme Court said that

[00:31:49] Speaker 03:
that's a sparing authority for appellate courts, we think this would be an exceptionally inappropriate case for the use of that sparing authority, both because of the procedural history and posture of the case, because we think it would lead to substantial prejudice, and finally, because we strongly disagree

[00:32:07] Speaker 03:
that New Lady U.S.

[00:32:08] Speaker 03:
Trust is, in fact, a dispensable party.

[00:32:12] Speaker 03:
And in conclusion, Your Honor, respectfully submit that Judge Boasberg's adjudication on the basis...

[00:32:22] Speaker 05:
I assume you agree with him that even if an substitution were made, it wouldn't affect in any way your ability to make all your capacity arguments.

[00:32:29] Speaker 03:
Well, we will, and we certainly think it would be important that we would be able to make all of those arguments.

[00:32:35] Speaker 03:
Now, as we've said in the briefs, we believe there are cases that there can't be substitution when the case was a nullity in the first place.

[00:32:43] Speaker 05:
If the court affirms... That's right, a nullity because the plaintiff was dead before the suit was filed, which isn't the problem here.

[00:32:48] Speaker 03:
Well, but there are also cases, Your Honor, where the court has said in the Meredith case, for example, from the Second Circuit, that because there wasn't authority to file it in the first place, it was a nullity, not only from death, but went directly to authority.

[00:33:07] Speaker 03:
And so as a result, if the court were to affirm that there's no jurisdiction, there's no need to reach that issue.

[00:33:13] Speaker 03:
However, if the court were to take an action other than affirmance, then the court would have to reach this, and our position would be that there should not be the substitution because there was an authority in the first place and it was a nullity.

[00:33:28] Speaker 03:
But at the very least, we would think it should be very, very clear that if the court were inclined to grant the motion for substitution, that it does not affect any of the other issues.

[00:33:38] Speaker 03:
Thank you, Your Honor.

[00:33:39] Speaker 06:
Thank you.

[00:33:40] Speaker 06:
Does Mr. Soutenberg have – he has no time.

[00:33:48] Speaker 02:
I can be brief on that on the.

[00:33:52] Speaker 02:
The waiver point, I think it's important to look at what the district court wrote.

[00:33:57] Speaker 02:
This is a JA663.

[00:33:59] Speaker 02:
First of all, he talks about our argument about open versus closed class beneficiaries.

[00:34:03] Speaker 02:
And he goes on to say, in addition, plaintiff cites no authority in support of a broader argument that in applying pardon, the court should distinguish among different kinds of trusts.

[00:34:15] Speaker 02:
Judge Boasberg cited to Emerald Investors footnote 10.

[00:34:19] Speaker 02:
If you look at note 10 of Emerald Investors, the court wrote, our research has not led us to conclude that the type of trust calls for a difference in treatment when determining a trust citizenship for diversity of citizenship jurisdictional purposes.

[00:34:46] Speaker 02:
He goes on to say, the cases cited by defendants do not support its contention, calling for different treatment based on different type of trust.

[00:34:53] Speaker 02:
This precise argument was considered by the district court.

[00:34:58] Speaker 02:
Of course, we refined our arguments and expanded them.

[00:35:00] Speaker 02:
We have a lot more pages to do so and a motion to dismiss when you're dealing with all sorts of issues and you have to focus your arguments.

[00:35:07] Speaker 02:
And here, we were able to spend a lot of time on a particular issue.

[00:35:10] Speaker 02:
And of course, we have a miracle, which does change the landscape and does change the analysis.

[00:35:14] Speaker 02:
This footnote is wrong.

[00:35:15] Speaker 02:
now.

[00:35:16] Speaker 02:
It's completely it's incorrect.

[00:35:18] Speaker 02:
And Judge Boasworth was incorrect to rely on.

[00:35:20] Speaker 01:
As a matter of procedure, what should happen now in future cases when a traditional trust is named as a defendant?

[00:35:27] Speaker 02:
Well, I think in that scenario, if someone makes a mistake based on precedent and now decides to do that, I think you simply it's a look through your look to the trusted because they are a nominal party and they don't alter the jurisdictional analysis.

[00:35:41] Speaker 02:
Um,

[00:35:42] Speaker 02:
I listened very closely to my colleague's arguments.

[00:35:46] Speaker 05:
Just to be clear, so you're saying the trustee would be the real party in interest?

[00:35:51] Speaker 02:
Is that how you would look at it?

[00:35:52] Speaker 02:
Yes, absolutely.

[00:35:52] Speaker 02:
The trustee is what matters.

[00:35:53] Speaker 02:
And you might have a problem if you sue a trustee and you don't sue the trustee.

[00:35:56] Speaker 02:
I can see there being real difficulties in that scenario.

[00:35:59] Speaker 02:
But if you have the trustee as a defendant, I think you look through the trust.

[00:36:02] Speaker 01:
And if you sue the trustee and the trustee, you're saying?

[00:36:04] Speaker 01:
Yeah, absolutely.

[00:36:06] Speaker 01:
But if you just name the trust and it's a traditional trust.

[00:36:10] Speaker 01:
I think you've got a problem.

[00:36:11] Speaker 02:
I think you've had a serious problem as a plaintiff.

[00:36:13] Speaker 01:
But it's easily fixed.

[00:36:16] Speaker 01:
I mean, depending on the timing of when you fix it, to name the trustee.

[00:36:20] Speaker 02:
And that happens all the time, where parties mistakenly sue a trust and the trustee appears and says, is substituted in.

[00:36:28] Speaker 02:
I listen very closely to my colleagues' arguments about the new mighty US trust, which is the trust at issue here.

[00:36:33] Speaker 02:
I didn't hear him contend that it's an artificial entity or a statutory trust.

[00:36:37] Speaker 02:
So Cardin doesn't apply.

[00:36:39] Speaker 02:
So we're left back in a situation where, if you're not an artificial entity,

[00:36:42] Speaker 02:
You're back in this other category of traditional trust.

[00:36:45] Speaker 02:
And I recognize that the Supreme Court wasn't trying to define what a traditional trust was across all the states and across all the jurisdictions.

[00:36:52] Speaker 02:
But the trust here is very simple.

[00:36:56] Speaker 02:
And it doesn't rise to the level of something that requires us to engage in that kind of jurisdictional analysis.

[00:37:02] Speaker 01:
You read the miracle, I think, to say a traditional trust may not be sued.

[00:37:11] Speaker 02:
I read it to say, I read it yes, because I read it to say the court's saying.

[00:37:15] Speaker 02:
It would have been nice if they said that, though.

[00:37:18] Speaker 02:
It's all about the trustee.

[00:37:19] Speaker 02:
Yes, I agree.

[00:37:20] Speaker 02:
But I also read it.

[00:37:21] Speaker 01:
And you're getting that out of that sentence, right?

[00:37:23] Speaker 02:
I'm getting it out of that sentence and the entire paragraph before, where the court is trying to say, what does it say?

[00:37:32] Speaker 02:
It can't be sued.

[00:37:33] Speaker 02:
It's not a distinct legal entity.

[00:37:34] Speaker 02:
It could not be hailed into court.

[00:37:37] Speaker 02:
legal proceedings involving a trust buyer against a trustee in their own name?

[00:37:41] Speaker 02:
Well, not always.

[00:37:43] Speaker 02:
But then the sentence that you were discussing earlier, where it says for a traditional trust, that's the sentence at issue.

[00:37:49] Speaker 02:
The word entity there does not refer to a traditional trust.

[00:37:52] Speaker 02:
It doesn't.

[00:37:53] Speaker 02:
Everywhere the word entity is used in this opinion, it is referring to a distinct legal entity.

[00:37:58] Speaker 01:
I mean, it should say as would be true if the trust as an entity could be sued.

[00:38:02] Speaker 02:
Right.

[00:38:03] Speaker 02:
Exactly, or she's now segwaying into the next paragraph.

[00:38:07] Speaker 02:
There's a big difference between were and could be.

[00:38:09] Speaker 02:
I actually don't think it makes a difference, because I think if you read this sentence going into the next paragraph, she's now saying, now let's look at artificial entities that happen to call themselves trusts.

[00:38:22] Speaker 02:
So just calling it a trust doesn't make it a traditional trust.

[00:38:26] Speaker 06:
What is your position on whether it's a Title 19 trust under the D.C.

[00:38:30] Speaker 06:
Code?

[00:38:31] Speaker 02:
Well, it's definitely not a statutory trust.

[00:38:34] Speaker 02:
So it is a Title XIX trust.

[00:38:38] Speaker 02:
Unless there are any further questions.

[00:38:39] Speaker 02:
Thank you.