Fugedi ‘Bout It

Fugedi v. Initram, Inc., addresses whether a litigant can create diversity jurisdiction by purporting to convey title to property in an out-of-state trustee. The Fifth Circuit concluded that 28 U.S.C. § 1359 bars this maneuver, holding that the statute’s prohibition on parties “improperly or collusively made or joined to invoke the jurisdiction of such court” applies with equal force to trusts.

The panel emphasized that limiting language—“by assignment or otherwise”—sweeps broadly enough to reach trusteeship arrangement. “Nothing in those words excludes the use of a trust,” observed the Court, and permitting such a tactic would sanction precisely the “manufacture of Federal jurisdiction” Congress meant to foreclose.

Applying that reading, the Court held that this trustee was a “sham” selected solely because his non-Texas citizenship would create complete diversity in a purely local real-property dispute. The record showed that the trustee had no meaningful role beyond litigation, lacked relevant expertise, and was installed mere weeks before suit. No. 24-40283, Sept. 9, 2025.