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Rouse v. Wachovia Mortgage FSB

United States Court of Appeals, Ninth Circuit

March 27, 2014

ROBERT ROUSE, an individual; VICTORIA ROUSE, an individual, Plaintiffs-Appellees,
v.
WACHOVIA MORTGAGE, FSB, a Division of Wells Fargo Bank NA, FKA World Savings Bank, Defendant-Appellant

Submitted, Pasadena, California: November 5, 2013. [*]

Appeal from the United States District Court for the Central District of California. D.C. No. 5:11-cv-00928-DMG-DTB. Dolly M. Gee, District Judge, Presiding.

Mark T. Flewelling, Robert C. Little, and Yaw-Jiun Wu, Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP, Pasadena, California; Robert A. Long, Jr., Covington & Burling LLP, Washington, D.C., for Defendant-Appellant.

No appearance for Plaintiffs-Appellees.

Before: M. Margaret McKeown, Ronald M. Gould, and Jay S. Bybee, Circuit Judges. Opinion by Judge McKeown; Dissent by Judge Gould.

OPINION

Page 708

McKEOWN, Circuit Judge:

One might think that 150 years after Congress established national banks in 1863, the question of their citizenship for purposes of diversity jurisdiction would be well established. Not so. The relevant statute is ambiguous, the courts are split on the question, and the Supreme Court has not squarely decided the issue.

Under 28 U.S.C. § 1348, national banking associations are " citizens of the States in which they are respectively located." Id. The critical word--" located" --is not defined in the statute or elsewhere. Nor does its meaning flow easily from dictionary definitions or interpretive canons. Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 314-17, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006). Looking to the Supreme Court's treatment of the issue and to the history and sequence of the enactment and amendment of the statute, we conclude that, under § 1348, a national bank is " located" only in the state designated as its main office. See id. at 314, 318-19.

Page 709

FACTUAL AND PROCEDURAL BACKGROUND

Robert and Victoria Rouse (collectively, " the Rouses" ) filed suit against Wells Fargo Bank, N.A., its Wachovia Mortgage division (collectively, " Wells Fargo" ), and NDeX West LLC, in the Superior Court of the State of California. The original complaint raised multiple causes of action under state and federal law pertaining to the Rouses' home loan and deed of trust. Wells Fargo removed the action to district court, asserting subject matter jurisdiction on the basis of federal questions and diversity of citizenship. See 28 U.S.C. § § 1331, 1332(a). Wells Fargo filed a motion to dismiss the complaint for failure to state a claim, in which NDeX West joined. The district court granted the motion and dismissed the complaint with leave to amend.

The Rouses filed their first amended complaint, raising only state law claims. Following an order to show cause why the case should not be remanded to state court for lack of diversity jurisdiction, the district court held that national banks are citizens of the state where their principal place of business is located as well as of the state where their main office is located as designated in their articles of association. Because Wells Fargo's main office is in South Dakota and its principal place of business is in California, and the Rouses are citizens of California the district court remanded the case to California Superior Court for lack of jurisdiction.

ANALYSIS

The dispositive issue in this appeal is whether, under 28 U.S.C. § 1348, a national bank is a citizen of both the state in which its principal place of business is located and the state where its main office is located as designated in the bank's articles of association.[1] We review de novo this issue of statutory construction. See United States v. Havelock, 664 F.3d 1284, 1289 (9th Cir. 2012).

We conclude that, under 28 U.S.C. § 1348, a national bank is a citizen only of the state in which its main office is located. Hence, the district court had diversity jurisdiction because there was complete diversity between the Rouses, citizens of California, and Wells Fargo, a citizen of South Dakota. We therefore reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

I. The Citizenship of National Banks: 28 U.S.C. § 1348

Wells Fargo is a national bank, a " corporate entit[y] chartered not by any State, but by the Comptroller of the Currency of the U.S. Treasury." Wachovia Bank, 546 U.S. at 306. Unlike state-chartered banks or other corporations whose citizenship is governed by 28 U.S.C. § 1332[2] the citizenship of nationally chartered banks is governed by 28 U.S.C. ยง 1348, which provides in pertinent part: " All national banking associations shall, for the purposes of all other actions by or ...


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