Wachovia Bank v. Schmidt

• Citation: 388 F.3d 414
• Decision Date: 01 November 2004
• Docket Number: No. 03-2061.,03-2061.
• Parties: WACHOVIA BANK, NATIONAL ASSOCIATION, Plaintiff-Appellant, v. Daniel G. SCHMIDT III; Priag LLC; DGS Investments, INC., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

388 F.3d 414

WACHOVIA BANK, NATIONAL ASSOCIATION, Plaintiff-Appellant, v. Daniel G. SCHMIDT III; Priag LLC; DGS Investments, INC., Defendants-Appellees.

No. 03-2061.

United States Court of Appeals, Fourth Circuit.

Argued: June 3, 2004.

Decided: November 1, 2004.

Appeal from the United States District Court for the District of South Carolina, Henry M. Herlong, Jr., J ARGUED: Stephen Montgomery Cox, Robinson, Bradshaw & Hinson, P.A., Rock Hill, South Carolina, for Appellant. T. English McCutchen, III, L. Susan Foxworth, McCutchen, Blanton, Johnson & Barnette, L.L.P., Columbia, South Carolina, for Appellees. ON BRIEF: Robert W. Fuller, III, Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina, for Appellant. James R. Gilreath, The Gilreath Law Firm, Greenville, South Carolina; John P. Freeman, Columbia, South Carolina, for Appellees.

Before LUTTIG and KING, Circuit Judges, and Robert R. BEEZER, Senior Circuit Judge of the United States Court of Appeals for the Ninth Circuit, sitting by designation.

Vacated and remanded by published opinion. Judge LUTTIG wrote the opinion, in which Senior Judge BEEZER joined. Judge KING wrote a dissenting opinion.

OPINION

LUTTIG, Circuit Judge:

Appellant Wachovia Bank, a national banking association with its principal place of business in North Carolina, appeals from the district court's denial of its petition to compel arbitration of claims that appellee Daniel G. Schmidt III brought against Wachovia in state court. On appeal, Schmidt argues for the first time that the district court lacked diversity jurisdiction to entertain Wachovia's petition because Wachovia operates branch offices in South Carolina, the state of which Schmidt is a resident. We must therefore decide whether a national banking association is, within the meaning of 28 U.S.C. § 1348, "located" in a state in which the banking association operates branch offices, and therefore a citizen of that state for purposes of diversity jurisdiction. Because we conclude that a national bank is located where it operates branch offices, we vacate the judgment of the district court and remand with instructions to dismiss for lack of jurisdiction.

I.

Appellant Wachovia Bank ("Wachovia") is a national banking association with its principal place of business in Charlotte, North Carolina. Appellant's Supp. Br. at 1. Wachovia operates branch offices in a number of other states, including South Carolina. Id. Appellee Daniel G. Schmidt III ("Schmidt") is a citizen of South Carolina. J.A. 114.

On April 10, 2003, Schmidt and other plaintiffs filed a complaint in South Carolina state court, naming Wachovia and others as defendants. J.A. 117. The complaint alleged, inter alia, that the defendants fraudulently induced the plaintiffs to engage in a risky tax-motivated investment scheme. J.A. 146-48. On June 18, Wachovia filed a petition in the United States District Court in South Carolina seeking an order compelling arbitration and a motion to compel arbitration of the state claims, naming Schmidt and related business entities as defendants. J.A. 113. As the sole basis of jurisdiction, Wachovia's petition invoked the diversity jurisdiction of the district court under 28 U.S.C. § 1332. J.A. 114.

The district court denied Wachovia's petition and motion, without addressing its subject matter jurisdiction, J.A. 380-90, and Wachovia appealed. For the first time, Schmidt argues before us that diversity is lacking because Wachovia is "located" in South Carolina, within the meaning of 28 U.S.C. § 1348.

II.

Section 1348 of title 28 of the United States Code provides in full:

The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to wind up the affairs of any such association, and any action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by such chapter.

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 (emphases added).

Schmidt contends that Wachovia, which operates branch offices in South Carolina, is "located" in that state, and that the district court therefore lacked jurisdiction. We agree. Three traditional tools of statutory interpretation in combination —the ordinary meaning of "located," its use in juxtaposition with the contrasting term "established" in the immediately preceding sentence in section 1348, and the Supreme Court's construction of "located" in a parallel venue statute in Citizens and Southern National Bank v. Bougas, 434 U.S. 35, 98 S.Ct. 88, 54 L.Ed.2d 218 (1977)—confirm that "located" should be construed so as to render banking associations citizens of the states in which they operate branch offices.

A.

It is an axiom of statutory interpretation that the plain meaning of an unambiguous statute governs, barring exceptional circumstances. See, e.g., Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 66 L.Ed.2d 633 (1981). Where, as here, the statute does not provide an express definition for the term in question, "we construe [the] statutory term in accordance with its ordinary or natural meaning." FDIC v. Meyer, 510 U.S. 471, 476, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994).

In ordinary parlance, the word "located" is a general term referring to physical presence in a place. See, e.g., Webster's Third New International Dictionary 1327 (1993) (defining "locate" as "to set or establish in a particular spot or position," and "location" as "a position or site occupied or available for occupancy"); Black's Law Dictionary 958 (8th ed.2004) (defining "location" as [t]he specific place or position of a person or thing"). This was equally true in 1948, when section 1348 was enacted, and in 1887, when the phrase "citizens of the States in which they are respectively located" was first added to the predecessor statute to section 1348, see Act of Mar. 3, 1887, ch. 373, § 4, 24 Stat. 552, 554-55 ("the 1887 Act"). See, e.g., Black's Law Dictionary 1089 (4th ed.1968) (defining "location" as "site or place"); 8 Oxford English Dictionary 1081 (2d ed.1989) (defining "locate" as "[t]o fix or establish in a place; to settle; pass. to be settled, stationed, or situated," and providing examples of usage from 1807 through 1896 that universally involve physical presence in a place). Moreover, the sixth edition of Black's Law Dictionary, one of the few sources to consider the past participle "located" separately as a general legal term, emphasized the connotation of physical presence. See Black's Law Dictionary 940 (6th ed.1990) (defining "located" separately as "[h]aving physical presence or existence in a place" (emphasis added)). Accordingly, the ordinary meaning of "located" suggests that a national bank is "located" wherever it has physical presence.

It is indisputable that a national banking association becomes physically present in a state when it opens branch offices in that state and conducts business there. See, e.g., 12 U.S.C. § 92 (authorizing any national bank "located and doing business in any place the population of which does not exceed five thousand inhabitants" to operate as an insurance agent (emphasis added)). It follows that, within the ordinary meaning of "located," a national banking association is "located" wherever it operates branch offices. Indeed, the ordinary meaning of "located" so naturally includes branch offices that a unanimous panel of the Second Circuit commented that section 1348 includes branch offices, without seeing any need for further analysis. See World Trade Center Properties, LLC v. Hartford Fire Ins. Co., 345 F.3d 154, 161 (2d Cir.2003) ("Defendant Wells Fargo is a national bank ... and by statute is deemed to be a citizen of every state in which it has offices." (emphasis added) (citing 28 U.S.C. § 1348)); see also United Republic Ins. Co. v. Chase Manhattan Bank, 315 F.3d 168, 169-70 (2d Cir.2003) (per curiam) (remanding to the district court to determine whether diversity jurisdiction existed in light of the fact that the defendant bank operated offices in the plaintiff's state).

The Seventh Circuit has come to a contrary conclusion, holding that "located" in section 1348 refers only to a bank's principal office and the office listed in its organization certificate. See Firstar Bank v. Faul, 253 F.3d 982, 993-94 (7th Cir. 2001); see also Horton v. Bank One, 387 F.3d 426, 2004 WL 2224867 (5th Cir.2004) (adopting the same result on similar reasoning). While the Seventh Circuit's holding rests largely upon a purposive, historical analysis of the statute, which we address below, see infra, it also suggests that the word "located" is ambiguous as between any physical presence and a single, unique physical presence. See id. at 987 ("[W]hat we are trying to determine is the number or scope of places where a national bank is fixed or established. Some definitions do suggest that `locate' refers to a particular or specific location."). But this supposed ambiguity is not found in the ordinary meaning of "located." Although the definitions cited by the Seventh Circuit (and us) do refer to a "particular or specific location," see id. (quoting Webster's Third at 1327), they do not include any requirement that the "particular or specific location" be unique or exclude other distinct locations. Nothing in these definitions suggests that an extended entity like a national banking association cannot occupy, and thus be "located," in multiple "particular or specific locations" at once. In fact, given that "locate" referred to tracts of land in one of its original applications, see 8 Oxford English Dictionary at 1081 (defining "locate" as [t]o...