Jurisdiction – Diversity – Nominal parties

Where plaintiffs have moved for a remand following removal, that motion should be denied because parties named as reach-and-apply defendants are merely nominal parties, so their citizenship thus does not affect the diversity-jurisdiction analysis.

“Plaintiffs … bring this action against … the ‘Fay Defendants,’ seeking to recover payment that Plaintiffs allege they were due for brokering a real estate transaction on the Fay Defendants’ behalf. … In addition to seeking damages directly from the Fay Defendants, … Plaintiffs also seek to intercept future payments made to the Fay Defendants by … the ‘Reach-and-Apply Defendants,’ pursuant to a lease between the Reach-and-Apply Defendants and the Fay Defendants. …  Now before the Court is Plaintiffs’ motion to remand. … For the following reasons, the motion is denied. …

“Because the Reach-and-Apply Defendants, like Plaintiffs, are Massachusetts citizens, whether the Court has diversity jurisdiction depends on whether the Reach-and-Apply Defendants are real and substantial parties or merely nominal parties. If they are real parties, then Massachusetts citizens are on both sides of this action and the Court lacks jurisdiction. If they are nominal parties, by contrast, their citizenship is irrelevant, and the action is between diverse parties: Plaintiffs (Massachusetts citizens) and the Fay Defendants (Florida citizens). After considering the parties’ arguments, the Court concludes that the Reach-and-Apply Defendants are merely nominal parties and that it may therefore exercise diversity jurisdiction.

“The Court begins with the Reach-and-Apply Defendants’ relationship to the underlying controversy. Plaintiffs do not allege that the Reach-and-Apply Defendants were a party to the agreement between Plaintiffs and the Fay Defendants or otherwise assert that the Reach-and-Apply Defendants are liable. … Rather, the Reach-and-Apply Defendants are simply tenants of the Fay Defendants that make and will continue to make regular payments to the Fay Defendants pursuant to the terms of a lease. … Plaintiffs seek to intercept those payments to satisfy the judgment they expect to obtain against the Fay Defendants. … As such, even assuming Plaintiffs will prevail in the lawsuit, the Reach-and-Apply Defendants’ financial liabilities will not change; at most, the lease payments that they would have made to Fay Defendants will instead be directed to Plaintiffs.

“This relationship to the underlying controversy contrasts with the posture of the purported reach-and-apply defendants in BFT Advisors, LLC v. Long, No. 21-cv-10994, 2022 WL 1912871 (D. Mass. June 3, 2022), where a real-estate finance and consulting firm sued an individual defendant and several entities owned or partially owned by the individual defendant, naming the entity defendants as reach-and-apply defendants. … That court noted that if the ‘reach and apply’ defendants had been ‘properly named as such, [it] would exempt consideration of their citizenship for the purposes of establishing diversity jurisdiction,’ but concluded that they were in fact real parties to the controversy, because the plaintiff asserted an ownership interest in one of the entities, sought ‘extraordinary injunctive relief’ against others, and four of the five entity defendants had made or joined filings opposed to the plaintiff. … Here, by contrast, the Reach-and-Apply Defendants — who have not appeared in the action — are simply contractual counterparties of the Fay Defendants. Neither the property that the Reach-and-Apply Defendants are leasing nor any other asset of theirs will be affected by the outcome of the dispute between Plaintiffs and the Fay Defendants. The Reach-and-Apply Defendants’ relationship to the underlying dispute thus does not support treating them as real parties. …

“Nor does the specific remedy sought against the Reach-and-Apply Defendants change the analysis. Plaintiffs seek an injunction preventing the Reach-and-Apply Defendants ‘from paying, lending, encumbering or otherwise transferring to any party, other than to the Plaintiff herein, all sums owed by the Reach and Apply Defendants, to [Fay] Defendants pursuant to any Lease, or otherwise.’ … Rather than pay those sums to the Fay Defendants, the injunction Plaintiffs seek would require the Reach-and-Apply Defendants to ‘hold said sums up to the [amount in controversy in this case] for the benefit of the Plaintiff.’ … If Plaintiffs were to ultimately prevail on this claim, the result would be limited to the redirection of outbound payments that the Reach-and-Apply Defendants were already going to make. The effect of such a remedy on the interests of the Reach-and-Apply Defendants would be minimal and does not support treating them as real parties to the dispute. …

“For the foregoing reasons, the Reach-and-Apply Defendants are nominal parties, as opposed to real parties, and their citizenship thus does not affect the diversity-jurisdiction analysis. This action was properly removed, and the Court will retain jurisdiction. Plaintiffs’ motion to remand, [ECF No. 10], is denied.”

Hartel, et al. v. Fay’s Realty Trust, et al. (Lawyers Weekly No. 02-363-26) (8 pages) (Burroughs, J.) (Civil Action No. 26-cv-11645-ADB) (July 20, 2026).

Click here to read the full text of the opinion.