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Khan v. U.S. Bank National Association

United States District Court, E.D. California

June 5, 2014

KHALID N. KHAN, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION AS BENEFICIARY, et al., Defendants.

ORDER

KIMBERLY J. MUELLER, District Judge.

Plaintiff Khalid N. Khan moves for reconsideration of this court's order adopting the magistrate judge's findings and recommendations and dismissing the action for lack of subject-matter jurisdiction. Pl.'s Mot. Recons. at 1-2, ECF No. 16. For the reasons below, the court GRANTS the motion and REINSTATES the action.

I. BACKGROUND

In December 2013, plaintiff, pro se, filed suit against defendants U.S. Bank National Association, T.D. Service Company, S.A. Challenger and several Doe defendants, alleging seventeen state-law claims. Compl. ¶¶ 1-27, ECF No. 1. Thereafter, the magistrate judge issued an order to show cause, directing plaintiff to explain why the action need not be dismissed for lack of subject-matter jurisdiction. Order to Show Cause at 1-2, ECF No. 4. Plaintiff complied with the order and amended his complaint to incorporate various federal-law claims. Pl.'s Response to Order to Show Cause at 2, ECF No. 5. Nonetheless, finding neither federal question nor diversity jurisdiction properly exercised, the magistrate judge recommended dismissal. Findings & Recommendations ("F&R") at 1, ECF No. 7. Plaintiff filed objections, following review of which the court adopted the findings and recommendations in full. Order at 2, ECF No. 14. Plaintiff then brought the instant motion.

II. STANDARD

"As long as a district court has jurisdiction over [a] case, then it possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient." City of L.A., Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir. 2001) (emphasis, citations and internal quotation marks omitted). "[J]urisdiction is transferred from a district court to a court of appeals upon the filing of a notice of appeal, " id. (citations omitted), and "the trial court thereafter has no power to modify its judgment in the case or proceed further except by leave of the Court of Appeals, " Visioneering Constr. & Dev. Co. v. U.S. Fid. & Guar., 661 F.2d 119, 124 n.6 (9th Cir. 1981) (citations omitted). Here, although judgment was entered and the case closed on April 1, 2014, no notice of appeal has been filed. The court may thus reconsider its previous ruling. See City of L.A., Harbor Div., 254 F.3d at 885; Visioneering Constr. & Dev. Co., 661 F.2d at 124 n.6.

A motion for reconsideration is properly granted where "the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999) (citing Sch. Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). Clear error occurs where "the reviewing court... is left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)).

III. ANALYSIS

On April 1, 2014, the court adopted the magistrate judge's findings and recommendations in full, thereby dismissing the action for lack of subject-matter jurisdiction. Order at 1-2. In the findings and recommendations, the magistrate judge recommended dismissal because plaintiff had not established either federal question or diversity jurisdiction. F&R at 1-2. She found there was no federal question because "no allegation of conduct by any defendant... [could] be fairly characterized as state action, " while there was no diversity because plaintiff, a California resident, alleged that defendant U.S. Bank N.A.'s principal place of business was also California. Id. at 2.

On March 27, 2014, days before the court's order adopting the magistrate judge's findings and recommendations issued, the Ninth Circuit published its opinion in Rouse v. Wachovia Mortgage, 747 F.3d 707, 708 (9th Cir. 2014). There, the court held that "a national bank is a citizen only of the state in which its main office is located." Id. at 709 (citing 28 U.S.C. § 1348). A bank's main office, which must be "designated in [its] articles of association, " id., is the "place where its operations of discount and deposit are to be carried on, '" Wachovia Bank v. Schmidt, 546 U.S. 303, 307 n.1 (2006) (quoting 12 U.S.C. § 22).

Having considered defendant U.S. Bank N.A.'s principal place of business for citizenship purposes, in light of Rouse, 747 F.3d at 709, the court "is left with the definite and firm conviction that a mistake has been committed, " Anderson, 470 U.S. at 573. U.S. Bank N.A. is a national banking association, and the Ninth Circuit's directive is clear: "a national bank is a citizen only of the state in which its main office is located." Rouse, 747 F.3d at 709. That U.S. Bank N.A. might have its principal place of business in California is, therefore, irrelevant to the diversity analysis. In relying on this basis to find diversity jurisdiction to be lacking, the court committed clear error. Plaintiff's motion to reconsider is granted.

On the same basis, the court vacates its adoption of the magistrate judge's findings and recommendations insofar as it finds diversity jurisdiction to be lacking. Defendant U.S. Bank N.A. is directed to file its articles of association with the court within seven days of the date of this order, and the reinstated action is referred back to the magistrate judge for further proceedings. These proceedings may, in the magistrate judge's discretion, take account of the documents filed with plaintiff's objections to the prior findings and recommendations.

IV. CONCLUSION

As set forth above, the court GRANTS the motion to reconsider. The action is REINSTATED and REFERRED to the magistrate judge for further proceedings consistent with this order.

IT IS SO ORDERED.


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