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holding that national bank was "a citizen of both the state in which it has designated its main office and the state where it has its principal place of business"
Summary of this case from Johnson v. Wells Fargo Home Mortg.Opinion
CASE NO. 10CV1985 DMS (BGS).
January 20, 2011
ORDER GRANTING PLAINTIFFS' AMENDED MOTION TO REMAND TO STATE COURT AND DENYING AS MOOT DEFENDANT'S MOTION TO DISMISS
Pending before this Court are Defendant Wells Fargo Bank, N.A.'s motion to dismiss Plaintiffs' complaint and Plaintiffs' amended motion to remand to state court. For the following reasons, the amended motion to remand is granted. Because the action is to be remanded to state court, the Court denies the motion to dismiss as moot.
I. BACKGROUND
On August 18, 2010, Plaintiffs filed a Complaint against Wells Fargo Home Mortgage and Wells Fargo Company in San Diego Superior Court. On September 22, 2010, Defendants removed the action to this Court. (Doc. 1.) They subsequently filed a motion to drop Wells Fargo Company as a dispensable, non-diverse Defendant and claimed Wells Fargo Bank, N.A. is the proper Defendant to the action. (Doc. 4.) Plaintiffs did not oppose the motion to drop and acknowledged Wells Fargo Bank is the proper Defendant. (Mot. to Remand at 2.) Defendants filed a motion to dismiss the Complaint on October 26, 2010. (Doc. 7.) The following week, Plaintiffs filed a motion to remand and an amended motion to remand the action to state court. (Docs. 9, 11.) An opposition and a reply were filed to both the motion to dismiss and the amended motion to remand. (Docs. 13, 15, 16, 17.)
II. DISCUSSION
A. Motion to Remand
"Except as otherwise expressly provided byAct of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "If at any time before final judgment, it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). Thus, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. (citation omitted). "The `strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id.; see also Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006). Removal jurisdiction may be based on diversity of citizenship or on the existence of a federal question. 28 U.S.C. § 1441.
Defendants here removed the action on the basis of diversity jurisdiction. It is undisputed that Plaintiffs are citizens of California. Defendant Wells Fargo Bank, N.A., a national banking association, claims that it is a citizen only of South Dakota, where it has designated its main office. Plaintiffs do not contest that Wells Fargo Bank is a citizen of South Dakota. Rather, they argue it is also a citizen of California, which they claim, and Wells Fargo Bank does not contest, is its principal place of business.
"All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located." 28 U.S.C. § 1348. At issue here is where a national banking association is to be deemed "located" pursuant to § 1348. Defendant contends the Supreme Court resolved that issue in Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006), and determined, for purposes of diversity jurisdiction, a national banking association is a citizen only of the state in which it has designated its main office in its articles of incorporation. In contrast, Plaintiffs assert the holding in Schmidt was limited to rejecting the approach of considering a national banking association a citizen of every state in which it maintains a branch. Plaintiffs argue the Supreme Court in Schmidt did not express a view as to, let alone reject, the approach adopted in several circuits of considering a national banking association to be a citizen of both the state in which it has designated its main office and the state in which it maintains its principal place of business. See Horton v. Bank One, N.A., 387 F.3d 426 (5th Circuit 2004); Firstar Bank, N.A. v. Faul, 253 F.3d 982 (7th Cir. 2001). Although both of these decisions predate the Supreme Court's decision in Schmidt, the Court agrees with Plaintiffs that the approach of considering a national banking association to be a citizen of both the state in which it has designated its main office and the state where it has its principal place of business is not precluded by the holding in Schmidt.
The Court in Schmidt declined to reach the issue of whether the word "established" in the first sentence of § 1348 should be read to include a national banking association's principal place of business as a state of citizenship, citing the opinions in Horton and Firstar. 546 U.S. at 315 n. 8. The Court did note the distinction between the statutes governing citizenship of a corporation and citizenship of a national banking association, stating:
To achieve complete parity with state banks and other state-incorporated entities, a national banking association would have to be deemed a citizen of both the State of its main office and the State of its principal place of business. See Horton, 387 F.3d, at 431, and n. 26; Firstar Bank, N.A., 253 F.3d at 993-994. Congress has prescribed that a corporation "shall be deemed to be a citizen of any State by which is has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1) (emphasis added). The counterpart provision for national banking associations, § 1348, however, does not refer to "principal place of business"; it simply deems such associations "citizens of the States in which they are respectively located." The absence of a "principal place of business" reference in § 1348 may be of scant practical significance for, in almost every case, as in this one, the location of a national bank's main office and of its principal place of business coincide.Schmidt, 546 U.S. at 317 n. 9. However, in referencing the statutory distinction, the Supreme Court did not go so far as to prohibit the interpretation set forth in Horton and Firstar, but rather merely noted that the difference in statutory language "may be of scant practical significance." Id.
The Court recognizes, as Defendant points out, that other courts have interpreted the Supreme Court's holding in Schmidt to be that a national banking association is a citizen only of the state in which it has designated its main office in its articles of association. See Nguyen v. Wells Fargo Bank, N.A., No. C 10-4081 (EDL), 2010 WL 4348127, at *4-5 (N.D. Cal. Oct. 27, 2010); DeLeon v. Wells Fargo Bank, N.A., No. CV 10-1390 (JF) (HRL), 2010 WL 2382404, at *2-4 (N.D. Cal. June 9, 2010); Excelsior Funds, Inc. v. JP Morgan Chase Bank, N.A., 470 F. Supp. 2d 312, 314-22 (S.D.N.Y. 2006). However, the Court is not persuaded by the reasoning of these cases.
Having determined the Supreme Court's decision in Schmidt not to have precluded the approach of considering a national banking association to be a citizen of both the state in which it has designated its main office and the state where it has its principal place of business, the Court must look to the proper approach to be applied in this case. Since the Ninth Circuit has not spoken directly on this issue, the Court looks to the decisions of the Fifth and Seventh Circuits. The Court is persuaded by the reasoning of the opinions in Horton and Firstar and follows such reasoning in this case. See also Mount v. Wells Fargo Bank, N.A., No. CV 08-6298 GAF (MANx), 2008 WL 5046286, at *1-2 (C.D. Cal. Nov. 24, 2008); Wells Fargo Bank, N.A. v. Langa Air, Inc., No. 10-cv-480 MJR (PMF), at *2 (S.D. Ill. Oct. 25, 2010); King v. Union Planters Bank, N.A., Nos. 01-cv-186Wsu, 04-cv-853LN, at *2-3 (S.D. Miss. Aug. 15, 2006). Accordingly, for purposes of diversity jurisdiction, Wells Fargo Bank is both a citizen of South Dakota, where it has designated its main office, and California, where it has its principal place of business. Mount, 2008 WL 5046286, at *1; see also Jojola v. Wells Fargo Bank, N.A., No. C71-900 (SAW), 1973 WL 158166, at *1 (N.D. Cal. May 2, 1973); Wells Fargo Bank, N.A. v. Siegel, No. 05 C 5635, 2005 WL 3482236, at *2 (N.D. Ill. Dec. 15, 2005); Answer to Complaint in Miles v. Wells Fargo Mortgage Co., No. 06-cv-1991 (MHP) (N.D. Cal. July 31, 2006). As both Plaintiffs and Defendant Wells Fargo Bank are citizens of California, no diversity jurisdiction exists and the case is remanded to State Court.
B. Motion to Dismiss
Because the Court finds there is not complete diversity among the parties and grants Plaintiffs' motion to remand the action to state court, Defendant's motion to dismiss is denied as moot.
III. CONCLUSION
For the foregoing reasons, Plaintiffs' amended motion to remand is granted. Because the action is to be remanded to state court, Defendant's motion to dismiss is denied as moot.IT IS SO ORDERED.
DATED: January 20, 2011