In the Matter of: HarborView Mortgage Loan Trust 2005-10.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0043

In the Matter of:
HarborView Mortgage Loan Trust 2005-10.

Filed September 4, 2018
Affirmed
Peterson, Judge

Hennepin County District Court
File No. 27-TR-CV-17-32

Gregg M. Fishbein, Kate M. Baxter-Kauf, Lockridge Grindal Nauen P.L.L.P.,
Minneapolis, Minnesota; and

Peter W. Tomlinson (pro hac vice), Patterson Belknap Webb & Tyler LLP, New York,
New York (for appellants Ambac Assurance Corporation, et al.)

Michael C. McCarthy, James F. Killian, Ana Chilingarishvili, Jesse D. Mondry, Michael
Sheran, Maslon LLP, Minneapolis, Minnesota (for respondent U.S. Bank National
Association)

Considered and decided by Florey, Presiding Judge; Peterson, Judge; and
Rodenberg, Judge.
U N P U B L I S H E D O P I N I O N
PETERSON, Judge
In this proceeding brought under the Minnesota Trust Code, Minn. Stat.
§§ 501C.0201-.0208 (2016), appellant trust insurers challenge the district court’s exercis e
of jurisdiction over the trust. We affirm.
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FACTS
Respondent U.S. Bank National Association (the bank) is the trustee for the
HarborView Mortgage Loan Trust 2005-10 (the trust). The bank is a national banking
association incorporated under the National Bank Act, 12 U.S.C. §§ 1 et seq. The bank’s
articles of association state that the main office of the bank shall be in Cincinnati, Ohio.
The bank’s principal place of business is in Minnesota.
In 2003, Countrywide Home Loans, Inc., a mortgage lender, originated more than
4,000 residential mortgage loans with a total principal balance of approximately $1.75
billion. Countrywide sold the loans to Greenwich Capital Financial Products, Inc. (GCFP),
which sold the loans to Greenwich Capital Acceptance, Inc. (GCA). GCFP, GCA, and the
bank aggregated the loans into a securitization trust through a pooling and servicing
agreement, with the bank serving as trustee. On the date that the pooling and servicing
agreement was executed, the bank’s principal corporate trust office at which trust business
in connection with the pooling agreement was administered was in Boston, Massachusetts.
The pooling agreement designated The Bank of New York as the custodian of the original
documents for individual mortgage loans and provided that the agreement woul d be
governed by New York law.
Certificates were created based on the trust assets and then sold to investors.
Appellants Ambac Assurance Corporation and the Segregated Account of Ambac
Assurance Corporation (collectively, Ambac) insured some of the trust certificates by
guaranteeing payment if the cash flow from the mortgage-loan payments was inadequate.
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Eventually, it became clear that the underlying mortgage loans would not support
the represented income. In 2011, the bank sued Countrywide and its successor, Bank of
America Corporation, in the New York Supreme Court, alleging breaches of contract and
seeking to enforce Countrywide’s obligation under the pooling and servicing agreement to
repurchase defective loans. In December 2016, the bank received a settlement offer of
$56,961,881 and up to $10,000,000 to cover litigation expenses. Some certificate holders
notified the bank that they viewed the settlement offer as inadequate. Ambac and a
certificate holder, Bonitas LLC, sued the bank in federal court in New York, seeking to
block the settlement. The bank filed a petition in Minnesota under the Minnesota Trust
Code seeking instruction from the court regarding interpretation and application of trust
provisions related to the bank’s acceptance or rejection of the proposed settlement and
approval from the court of the bank’s decision to accept or reject the proposed settlement.
The bank asserted that the Minnesota court had in rem jurisdiction.
In April 2017, Ambac moved to dismiss the bank’s petition for lack of subject-
matter and personal jurisdiction. In June 2017, the bank filed an amended petition asserting
that the district court had jurisdiction because the bank’s principal place of business is in
Minneapolis and, therefore, the bank is a trustee located in Minnesota. Because the bank’s
retained experts had advised the bank that the settlement offer was inadequate, the bank
sought an order authorizing and instructing the bank not to accept the offer. Ambac filed
an amended motion to dismiss for lack of subject-matter and personal jurisdiction. After a
hearing on the motion to dismiss, the district court issued an order denying the motion.
Ambac appeals from this order.
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D E C I S I O N
1. Subject-matter jurisdiction under the Minnesota Trust Code

Ambac argues that the district court lacked subject -matter jurisdiction over the
bank’s instruction petition. We review subject-matter jurisdiction as a question of law.
Nelson v. Schlener, 859 N.W.2d 288, 291 (Minn. 2015). “Subject-matter jurisdiction refers
to a court’s authority to hear and determine a particular class of actions and the particular
questions presented to the court for its decision.” Zweber v. Credit River Twp., 882 N.W.2d
605, 608 (Minn. 2016) (quotations omitted). “Whether a court has subject- matter
jurisdiction to hear and determine a particular class of actions and the particular questions
presented generally depends on the scope of the constitutional and statutory grant of
authority to the court.” McCullough & Sons, Inc. v. City of Vadnais Heights, 883 N.W.2d
580, 585 (Minn. 2016) (quotation omitted).
District courts in Minnesota have original jurisdiction over criminal and civil cases,
Minn. Const. art. VI, § 3, but the question of subject- matter jurisdiction extends beyond
general classes or categories of cases. Bode v. Minn. Dep’t of Nat. Res., 594 N.W.2d 257,
259 (Minn. App. 1999), aff’d 612 N.W.2d 862 (Minn. 2000). A court does not have
authority to hear and determine a matter that “exceed[s] statutory authority, contain[s]
procedural irregularities, or [was] entered erroneously after the expiration of a time
period.” Id.
Generally, the Minnesota Trust Code does not apply to corporate trusts. Minn. Stat.
§ 501C.0102(c). But, under an exception from this general rule, Minnesota Statutes,
“sections 501C.0201 to 501C.0208 apply to corporate trusts that are administered by a
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trustee located in this state.” Minn. Stat. § 501C.0208 (emphasis added). For purposes of
applying this exception,
(1) “Corporate trust” means any trust created pursuant to
a corporate trust agreement; and
(2) “Corporate trust agreement” means any indenture,
pooling and servicing agreement, collateral agency agreement,
or other contractual arrangement that establishes an express
trust either before or upon the occurrence of an event of default
and was entered into with a trustee as a part y to facilitate a
commercial transaction for the issuance of debt or equity
securities or for the creation of other similar rights or interests,
whether or not the securities are subject to any securities laws,
including but not limited to the Trust Indenture Act of 1939, as
amended.

Id. It is undisputed that the trust is a “corporate trust.” Therefore, sections 501C.0201 to
501C.0208 apply to the trust if the bank is a trustee located in Minnesota.
The parties dispute whether the bank is a trustee located in Minnesota. The trust
code does not define “located.” Thus, whether the bank is “located” in Minnesota presents
a question of statutory interpretation. This court reviews the interpretation of a statute as
a question of law subject to de novo review. Cocchiarella v. Driggs, 884 N.W.2d 621, 624
(Minn. 2016). Statutory interpretation seeks “ to ascertain and effectuate the intention of
the legislature.” Minn. Stat. § 645.16 (2016). The legislature has instructed:
When the words of a law are not explicit, the intention
of the legislature may be ascertained by considering, among
other matters:
(1) the occasion and necessity for the law;
(2) the circumstances under which it was enacted;
(3) the mischief to be remedied;
(4) the object to be attained;
(5) the former law, if any, including other laws upon the
same or similar subjects;
(6) the consequences of a particular interpretation;
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(7) the contemporaneous legislative history; and
(8) legislative and administrative interpretations of the
statute.

Id.
The bank argues that, because its principal place of business is in Minnesota, it is a
trustee located in Minnesota. Ambac cites Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303,
126 S. Ct. 941 (2006), and argues that, because the bank’s articles of association state that
the bank’s main office is in Cincinnati, Ohio, the bank is located in Ohio.
In Wachovia, the Supreme Court held that, for federal diversity-jurisdiction
purposes, a national bank “is a citizen of the State in which its main office, as set forth in
its articles of association, is located.” 546 U.S. at 307, 126 S. Ct. at 945. The Supreme
Court explained that “located” “is a chameleon word; its meaning depends on the context
in and purpose for which it is used.” Id . at 318, 126 S. Ct. at 951. The context in and
purpose for which “located” was used in Wachovia was a federal banking law that defined
the citizenship of national banks for federal diversity-jurisdiction purposes. Id. at 306, 126
S. Ct. at 944-45. The statute provided that, for diversity -jurisdiction purposes, “national
banks ‘shall . . . be deemed citizens of the States in which they are respectively located.’”
Id. (omission in original) (quoting 28 U.S.C. § 1348).
The Supreme Court considered the context and purpose of the statute and
concluded:
An individual who resides in more than one State is regarded,
for purposes of federal subject- matter (diversity) jurisdiction,
as a citizen of but one State. Similarly, a corporation’ s
citizenship derives, for diversity jurisdiction purposes, from its
State of incorporation and principal place of business.
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§ 1332(c)(1). It is not deemed a citizen of every State in which
it conducts business or is otherwise amenable to personal juris-
diction. Reading § 1348 in this context, one would sensibly
“locate” a national bank for the very same purpose, i.e.,
qualification for diversity jurisdiction, in the State designated
in its articles of association as its main office.

Id. at 318, 126 S. Ct. at 951-52 (citations omitted).
This rationale for the Supreme Court’s decision in Wachovia demonstrates that
Ambac’s reliance on Wachovia is misplaced. F ederal diversity jurisdiction and the
Minnesota Trust Code do not share either a context or a purpose, and the meaning of
“located” in the diversity-jurisdiction statute at issue in Wachovia provides little guidance
on its meaning in the trust code. Consequently , the Supreme Court’s conclusion in
Wachovia does not aid our analysis. Instead, we will consider the context in and purpose
for which “located” is used in the trust code , which is consistent with the legislat ure’s
instruction that we may consider the occasion and necessity for the law, the circumstances
under which the law was enacted, the mischief to be remedied, and the object to be attained.
Minnesota’s current trust code was adopted in 2015 and replaced an earlier version
of the code. The predecessor trust code, Minn. Stat. ch. 501B, did not refer to corporate
trusts, and only one part of the current code applies to corporate trusts. That part, sections
501C.0201 to 501C.0208, provides a procedure that an interested person, including a
trustee, may use to petition the district court and invoke its jurisdiction for specific matters
involving a trust. See Minn. Stat. § 501C.0201(a) (providing that interested person may
petition district court and invoke its jurisdiction for specific matters involving a trust);
Minn. Stat. § 501C.0201(b) (stating that “interested person” includes, among others, acting
8
trustee, successor trustee, and any person seeking court appointment as trustee). The
matters that the procedure may be used to address include several specifically identified
matters directly related to trust administration. See Minn. Stat. § 501C.0202 (listing
matters to which judicial proceeding under Minn. Stat. §§ 501C.0201 to .0208 may relate).
An apparent purpose of Minn. Stat. §§ 501C.0201-.0208 is to enable a trustee to
obtain judicial rulings on a wide variety of matters related to trust administration. Because
obtaining these judicial rulings is a function of trust administration, we conclude that when
used in Minn. Stat. § 501C.0102(c), the phrase “a trustee located in this state” means a
trustee of a corporate trust that is performing the functions of trust administration in this
state.
The bank claims Minnesota as its principal place of business; although some trust
functions are carried out in other states, the bank’s decision-making officers are located in
Minnesota, and employees in other states seek approval of actions from the officers in
Minnesota. Because the bank performs the functions of administering the trust in this state,
the district court did not err by determining that the bank is a trustee located in Minnesota
and that the district court has subject-matter jurisdiction over the instruction petition.
2. In rem jurisdiction over the trust

Ambac argues that the district court erred by “holding that it may assume in rem
jurisdiction over the Trust consistent with Minnesota law.” “Personal jurisdiction is
commonly thought to encompass jurisdiction in personam and in rem.” Nagel v. Westen,
865 N.W.2d 325, 330 (Minn. App. 2015), review denied (Minn. Sept. 15, 2015). “‘A
judgment in personam imposes a personal liability or obligation on one person in favor of
9
another. A judgment in rem affects the interests of all persons in designated propert y. A
judgment quasi in rem affects the interests of particular persons in designated property .’”
Id. (quoting Hanson v. Denckla, 357 U.S. 235, 246 n.12, 78 S. Ct. 1228, 1235 n.12 (1958)).
The district court found that it has in rem jurisdiction over the trust. This court has
identified seven factors to be considered when determining whether a district court has
jurisdiction over a multi-state trust:
(1) the location of the trust property (the situs of the trust
assets), (2) the domicile of the trust beneficiaries, (3) the
domicile of the trustees, (4) the location of the trust
administrator, (5) the extent to which the litigation has been
resolved, (6) the applicable law, and (7) an analysis of forum
non conveniens principles.
In re Trusteeship Created by City of Sheridan, 593 N.W.2d 702, 705 (Minn. App. 1999)
Considering all of these factors in light of this court’s decision in Sheridan, we agree
with the district court’s conclusion that it has in rem jurisdiction over the trust.
(1) The location of the trust property
In Sheridan, the trust property was primarily real estate in Colorado, and its location
was not an issue. Id. at 706. Here, the trust property is primarily mortgage loans and
contract rights under the trust documents. The settlement offer that is the subject of the
bank’s petition arose in the bank’s action claiming a breach of Countrywide’s contract
obligations under the trust documents. Ambac argues that because the mortgage-loan
documents are not in Minnesota, the trust property is not in Minnesota.
But the property that the trust possesses is not simply physical documents; the trust
also possesses rights created by the language that appears in the documents. These rights
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are intangible property, and the Supreme Court has addressed how the location of
intangible property may be determined in the context of stock certificates and dividends.
The Supreme Court said:
It is true that fiction plays a part in the jurisprudential concept
of control over intangibles. There is no fiction, however, in the
fact that choses in action, stock certificates and dividends held
by the corporation, are property. Whether such property has
its situs with the obligor or the obligee or for some purposes
with both has given rise to diverse views in this Court.

We see no reason to doubt that, where the debtor and
creditor are within the jurisdiction of a court, that court has
constitutional power to deal with the debt. Since choses in
action have no spatial or tangible existence, control over them
can only arise from control or power over the persons whose
relationships are the source of the rights and obligations. Situs
of an intangible is fictional but control over parties whose
judicially coerced action can make effective rights created by
the chose in action enables the court with such control to
dispose of the rights of the parties to the intangible.

Standard Oil Co. v. New Jersey, 341 U.S. 428, 439-40, 71 S. Ct. 822, 829 (1951) (footnotes
omitted) (quotation omitted). Like the intangible property in Standard Oil, control over
the rights and obligations created by the mortgage-loan and trust documents can only arise
from control or power over the persons who acquired rights or obligations under the
documents. Because the parties do not dispute that the parties in the relationships created
by the trust documents are within the jurisdiction of the district court, we conclude that the
intangible property created by the mortgage-loan and trust documents is located in
Minnesota. This factor weighs more strongly in favor of jurisdiction in this case than it did
in Sheridan.

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(2) The domicile of the trust beneficiaries
In Sheridan, Colorado was the domicile of most of the trust beneficiaries. 593
N.W.2d at 706. Here, the domiciles of the certificate holders are generally not known, and
certificate holders could reside in any state or even outside the United States. Although
some certificate holders may live in Minnesota, this case is comparable to Sheridan with
respect to this factor, in that the record does not show that Minnesota is the domicile of the
trust beneficiaries.
(3) The domicile of the trustee
Commentators have stated that “the domicile of a corporate trustee normally refers
to the state in which the trustee has its principal place of business, which, in the case of a
corporate trustee, may or may not be the same as the state of its incorporation.” Norman
M. Abramson, et al., The Law of Trusts and Trustees § 291, at 8 (3rd ed. 2014). As we
stated above, the bank’s principal place of business is in Minnesota. Thus, we conclude
that, as in Sheridan, 593 N.W.2d at 706, the domicile of the trustee is in Minnesota.
(4) The location of the trust administrator
As already discussed, the bank administers the trust in Minnesota, as was the case
in Sheridan. Id.
(5) The extent to which the litigation has been resolved
Unlike Sheridan, where the issues raised regarding the administration of the trust
had, for the most part, been resolved, and the district court had exercised jurisdiction over
the trust for five years, id., the bank’s action in New York has not been resolved, and the
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district court has played no role in the action. Thus, this factor does not favor the district
court’s exercise of jurisdiction as strongly as it did in Sheridan.
(6) The applicable law
The pooling and servicing agreement provides that the agreement is governed by
New York law. This factor provides no basis for distinguishing this case from Sheridan,
where the trust instrument’s choice- of-law provision made Colorado law applicable. Id.
Minnesota courts routinely apply the law of other states. Addressing the bank’s petition
requesting an instruction regarding the bank’s decision not to accept a settlement of fer in
the bank’s New York lawsuit will likely involve analysis of New York law, but it is not
apparent that the petition presents a novel issue for the district court.
(7) Forum non conveniens
“The doctrine of forum non conveniens allows a district court with jurisdiction over
the subject matter and the parties discretion to decline jurisdiction over a cause of action
when another forum would be more convenient for the parties, the witnesses, and the
court.” Paulownia Plantations de Panama Corp. v. Rajamannan, 793 N.W.2d 128, 133
(Minn. 2009). “Generally, a strong presumption exists in favor of the plaintiff’s choice of
forum.” Id. at 137. Ambac do es not identify reasons why this presumption is overcome,
and, although another forum may be available, we find no basis to conclude that another
forum would be more convenient. As in Sheridan, this factor does not disfavor exercise of
jurisdiction by a Minnesota court.
With respect to these seven factors, the most significant difference between
Sheridan and this case is that the trust property in this case is intangible property located
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in Minnesota, instead of real estate located in Colorado. This difference makes this a
stronger case than Sheridan for exercising jurisdiction in Minnesota. The other difference
is that, in Sheridan, the issues were closer to resolution, which weakened the case for
exercising jurisdiction in Minnesota. But, because that difference is less significant than
the location of the trust property, the case for exercising jurisdiction in Minnesota is greater
here than in Sheridan.
3. Due Process
But our analysis does not end here. The United States Supreme Court has explained
that the Due Process Clause of the United States Constitution requires that , in order to
exercise in personam jurisdiction over a defendant that is not within the territory of the
forum, the defendant must have certain minimum contacts with the forum such that
maintaining the suit does not offend traditional notions of fair play and substantial justice.
International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945). The
Supreme Court has extended this principle to all assertions of state-court jurisdiction and
has explained that
in order to justify an exercise of jurisdiction in rem, the basis
for jurisdiction must be sufficient to justify exercising
jurisdiction over the interests of persons in a thing. The
standard for determining whether an exercise of jurisdiction
over the interests of persons is consistent with the Due Process
Clause is the minimum-contacts standard elucidated in
International Shoe.

Shaffer v. Heitner, 433 U.S. 186, 207, 97 S. Ct. 2569, 2581 (1977) (footnote omitted)
(quotation omitted).
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In rem jurisdiction is predicated on the presence of the subject property, either
tangible or intangible, within the forum state. Hanson, 357 U.S. at 246, 78 S. Ct. at 1236.
The district court’s basis for exercising in rem jurisdiction is that the relevant trust property,
the right to pursue litigation against Countrywide, is located in Minnesota where the bank
administers the trust and where decisions regarding the action against Countrywide are
made.
The instruction proceeding was not initiated to provide a basis for the bank to pursue
litigation against Countrywide; the bank brought the action against Countrywide in New
York before it initiated the instruction proceeding. See Shaffer, 433 U.S. at 209, 97 S. Ct.
at 2582 (stating that due process would be compromised if only role played by property
that serves as basis for state-court jurisdiction is to provide basis for bringing defendant
into court). The bank later initiated the instruction proceeding to obtain instructions from
the court regarding the bank’s participation in the New York action.
And the district court did not rely on the presence of the trust property alone as a
basis for jurisdiction. See id. (stating that presence of property alone would not support
state’s jurisdiction). The heart of the district court’s decision is that the trust’s intangible
right to pursue litigation against Countrywide is inextricably connected with the bank’s
decision-making processes, which determine whether the right will be asserted and how it
will be asserted . Tho se decision-making processes occur in Minnesota and potentially
affect any interest a person may have in the New York action . This contact between the
trust property and Minnesota satisfies the minimum -contacts standard in International
Shoe. The inextricable connection between the trust’s right to pursue litigation and the
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bank’s authority as trustee to assert that right is sufficient to justify the district court’s
exercise of jurisdiction over the interests of persons in the litigation. Maintaining the
instruction proceeding and exercising jurisdiction over the trust in the state where the bank
exercises the right to pursue the litigation does not offend traditional notions of fair play
and substantial justice.
Affirmed.