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Flores, et al v. Wells Fargo Bank

March 12, 2012

FLORES, ET AL., PLAINTIFFS,
v.
WELLS FARGO BANK, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jacqueline Scott Corley United States Magistrate Judge

United States District Court Northern District of California

ORDER RE: SUBJECT MATTER JURISDICTION

Defendant Wells Fargo Bank removed this purported diversity action to this Court. (Dkt. No. 1.) Now pending before the Court are Defendant‟s motions to dismiss and to 21 strike portions of Plaintiffs‟ complaint. (Dkt. Nos. 5, 7.) As explained at oral argument on 22 February 16, 2012, the Court has taken the motions under submission pending the parties‟ 23 participation in a settlement conference. (Dkt. No. 20.) However, as a preliminary matter, 24 the Court must address whether it has subject matter jurisdiction over this case. See Valdez 25 v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004) (noting that district courts are 26 "obligated to consider sua sponte whether [they] have subject matter jurisdiction"). Because 27 the amount in controversy and diversity of citizenship requirements are met, the Court 28 maintains subject matter jurisdiction.

DISCUSSION

The federal diversity jurisdiction statute provides that the "district courts.have 3 original jurisdiction of all civil actions where the matter in controversy exceeds the sum or 4 value of $75,000" and where all parties to the action are "citizens of different states." 28 5 U.S.C. § 1332(a). Courts are to "[s]trictly construe the removal statute against removal 6 jurisdiction" such that "[f]ederal jurisdiction must be rejected if there is any doubt as to the 7 right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 8 1992).

This case arises from Plaintiffs‟ default on a $767,505.00 loan. (Dkt. No. 1, p. 16.)

The $75,000 amount in controversy requirement is therefore satisfied. See Hunt v. Wash.

State Apple Adver. Comm‟n, 432 U.S. 333, 347 (1977) (noting that in actions that seek 12 declaratory or injunctive relief, the amount in controversy is measured by the value of the object of the litigation). Accordingly, federal jurisdiction hinges on the parties‟ citizenship. 14

Fargo, however, is less straightforward.*fn1 Wells Fargo‟s articles of incorporation state that its 16 main office is in South Dakota (Dkt. No. 1, Ex. C), therefore it is a citizen of South Dakota. 17

See Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006) (concluding that a national bank 18 "is a citizen of the State in which its main office, as set forth in its articles of association, is 19 located"). Wells Fargo‟s principal place of business, however, is in California. (Dkt. No. 1, 20 p. 3.) The question presented is whether a national bank such as Wells Fargo is a citizen of 21 both the state in which its principal place of business is located and the state of its main 22 office, when the two differ. If so, the parties are not diverse and the Court may not decide 23 the case. 24

Plaintiffs are citizens of California. (Dkt. No. 1, Ex. A.) The citizenship of Wells 15

For federal diversity purposes, national banks are "deemed citizens of the States in 2 which they are respectively located." 28 U.S.C. § 1348. In Schmidt, the Supreme Court 3 held that "a national bank, for § 1348 purposes, is a citizen of the state in which its main 4 office, as set forth in its articles of association, is located." 546 U.S. 303, 307 (2006). In 5 doing so, the Court resolved disagreement among the courts of appeals regarding whether 6 national banks are "located" in every state in which they maintain branch offices. Id. at 306. 7

After recognizing that "located" is not a word of enduring rigidity but rather gains its 8 meaning from context, the Court rejected the notion that national banks are located in every 9 state in which they operate branches. Id. 10

The Court did not, however, resolve the question presented here: whether a national bank is also "located" in, and therefore a citizen of, the state of its principal place of 12 business. Instead, the Court alluded to, but did not decide, the issue:

To achieve complete parity with state banks and other state-incorporated entities, 14 a national banking association would have to be deemed a citizen of both the 15 State of its main office and the State of its principal place of business. Congress has prescribed that a corporation "shall be deemed to be a citizen of any State by 16 which it has been incorporated and of the state where it has its principal place of 17 business." 28 U.S.C. § 1332(c)(1). The counterpart provision for national banking associations, § 1348, however, does not refer to "principal place of 18 business"; it simply deems such associations "citizens of the States in which they 19 are respectively located." The absence of a "principal place of business" reference in § 1348 may be of scant practical significance for, in almost every 20 case, as in this one, the location of a national bank‟s main office and of its 21 principal place of business coincide. 22 23

Schmidt, 546 U.S. at 317 n. 9. Because the location of Wells Fargo‟s principal place of 24 business and main office differ, this case presents a question the Schmidt Court had no 25 occasion to resolve. For the following reasons, the Court concludes that section 1348 makes 26 national banks citizens only of the state of ...


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