Commercial Litigation and Arbitration

Diversity of Citizenship — Is a National Bank (N.A.) a Citizen Only of the State Designated in Its Charter or Also “Located” Where It Maintains Its Principal Place of Business? Circuit Split

Taber v. NDEX West, LLC, 2012 U.S. Dist. LEXIS 185642 (C.D. Cal. May 9, 2012):

On March 15, 2012, Plaintiff Robin Taber ("Plaintiff") filed a Second Amended Complaint against Defendants NDEX West, LLC ("NDEX"), Wells Fargo Bank, N.A. ("Wells Fargo"), Federal National Mortgage Associations, a/k/a Fannie Mae ("Fanny Mae"), and Mortgage Electronic Registration Systems ("MERS"). See Notice of Removal ("NOR"), Ex. 1. The Second Amended Complaint brings state-law causes of action related to a wrongful foreclosure. On April 18, 2012, Defendants sought removal to this Court in accordance with 28 U.S.C. § 1441(b) on the ground that the Court had original jurisdiction due to complete diversity of citizenship within the meaning of 12 U.S.C. § 1332. See Dkt. # 1. Plaintiff now moves ex parte for an order remanding the case to state court. See Dkt. ## 11, 12. The application is based on Plaintiff's contention that the notice of removal was procedurally and substantively improper.

Plaintiff's substantive basis for seeking remand rests solely on her argument that because Wells Fargo & Co. is headquartered in San Francisco, complete diversity is lacking. See Dkt. # 11. Plaintiff sued Wells Fargo Bank, N.A., not Wells Fargo & Co. As a national association, Wells Fargo Bank, N.A.'s citizenship for diversity purposes is determined by the state in which it is "located." See 28 U.S.C. § 1348. In Wachovia Bank v. Schmidt, the Supreme Court held that a national bank is "located" for diversity jurisdiction purposes in the state designated in its articles of association as the locus of its main office, and not in every state in which it maintains a branch. See Wachovia Bank v. Schmidt, 546 U.S. 303 (2006). Wells Fargo Bank, N.A. is legally chartered in Sioux Falls, South Dakota, accordingly, it is a citizen of South Dakota. See NOR, 4:15-23.

However, the Supreme Court in Schmidt expressly reserved the question of whether, analogizing to the principles for determining corporate citizenship under 28 U.S.C. § 1332(c)(1), a national bank might also be "located" for the purposes of § 1348 in the state where it maintains its principal place of business. See Schmidt, 546 U.S. at 317 n.9; accord Mireles v. Wells Fargo Bank, N.A., F. Supp. 2d , 2012 WL 84723, at * 16 (C.D. Cal. Jan. 11, 2012). The Ninth Circuit has not spoken on this question, and district courts in this circuit are split. See Mireles, 2012 WL 84723, at *16-17 (citing various cases). The Court finds persuasive the reasoning announced in Mireles v. Wells Fargo Bank, N.A., which largely adopts the Southern District of New York's analysis set forth in Excelsior Funds, Inc. v. JP Morgan Chase Bank, N.A., 470 F. Supp. 2d 312 (S.D.N.Y. 2006), and concludes that as a national association, Wells Fargo is a citizen only of the state designated in its legal charter.

In Mireles, the court first noted that cases holding to the contrary and concluding that Wells Fargo Bank, N.A. is also a citizen of California tend to do so based on language in Schmidt acknowledging that § 1348 was intended to place national banks "on the same footing as the banks of the state where they were located." See 2012 WL 84723, at *18 (quoting Schmidt, 546 U.S. at 310). "Focusing on Congressional intent, [these courts] have concluded that the citizenship of national banks should be coextensive with the citizenship of state banks." Id. However, citing Excelsior Funds approvingly, Mireles recognized that at the time § 1348 was enacted, "a state bank was only a citizen of a single state: the state in which it was incorporated." See id. Therefore, if the goal of § 1348 at the time of its enactment was to achieve jurisdictional parity between state banks and national associations, the fact that state banks could only be sued in the state where they were incorporated suggests that "the concept of jurisdictional parity underlying the statute is more limited." See id. (quoting Excelsior Funds, 470 F. Supp. 2d at 320). Reasoning that while Congress' original intent in adopting § 1348 was ascertainable, one could only speculate as to what its "intent would have been had it known that the citizenship of state banks would be changed decades in the future," Mireles concluded that the "best analog" to the rule applicable at the time of § 1348's enactment is that a national association is a citizen only of the state "designated in [its] articles of association as the location of its main office." See id. at 19.

Accordingly, Wells Fargo Bank, N.A. is a citizen of South Dakota only, and Plaintiff is not entitled to remand on this basis.

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