Evergreen Forest Products of Ga. v. Bank of Amer.

• Decision Date: 13 May 2003
• Docket Number: NO. CIV.A.03-1-10-N.,CIV.A.03-1-10-N.
• Citation: 262 F.Supp.2d 1297
• Parties: EVERGREEN FOREST PRODUCTS OF GEORGIA, LLC, ET AL. PLAINTIFFS, V. BANK OF AMERICA, N.A. DEFENDANT.
• Court: U.S. District Court — Middle District of Alabama

262 F.Supp.2d 1297

EVERGREEN FOREST PRODUCTS OF GEORGIA, LLC, ET AL. PLAINTIFFS,

V.

BANK OF AMERICA, N.A. DEFENDANT.

NO. CIV.A.03-1-10-N.

UNITED STATES DISTRICT COURT, M.D. ALABAMA, NORTHERN DIVISION.

May 13, 2003.

Walter B. Calton, Calton & Rutland LLC, Eufaula, for Evergreen Forest Products of Georgia, LLC, Lanier J. Edwards, Charles H. Thomas, Jr., plaintiffs.

James C. Huckaby, Jr., John W. Scott, L. Jackson Young, Jr., Kimberly W. Geisler, Huckaby Scott & Dukes, PC, Birmingham, for Bank of America, NA, defendant.

MEMORANDUM OPINION AND ORDER

ALBRITTON, Chief Judge.

I. INTRODUCTION

This cause is before the court on a Motion to Remand (Doc. # 7) filed by Plaintiff Lanier J. Edwards.¹

The Plaintiff originally filed his Complaint in the Circuit Court of Barbour County, Alabama on December 3, .2002, In the Complaint, the Plaintiff asks the court to vacate an arbitration award entered in favor of the Defendant, Bank of America, N.A., and to enjoin the Defendant from executing liens upon the Plaintiff tiffs real and personal property located in, Alabama.

The Defendant filed its Notice-of. Removal on January 3, 2003, stating that this court has jurisdiction over the case based upon diversity of citizenship (Doc. # 1). On January 13, 2003, the Defendant filed its Answer, Affirmative Defenses, and Counterclaims (Doc. # 2). With regard to the counterclaims against the Plaintiff, the Defendant seeks confirmation of the arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, and raises a state law breach of guaranty claim based on the Plaintiffs alleged failure to pay the amounts due under two promissory notes.²

The Plaintiff responded to the Defendant's Notice of Removal by filing the Motion to Remand presently before the court. For the reasons to be discussed, the Plaintiffs Motion to Remand is due to be DENIED.

II. MOTION TO REMAND STANDARD

Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) 4 Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994); Wymbs v. Republican State. Executive Comm., 719 F.2d 1072, 1076 (11th Cir.1983). As such federal courts only have the power, to hear cases that they have been authorized to hear by the Constitution or the Congress of the United States. See Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673. Because federal court jurisdiction is limited, the Eleventh Circuit favors remand of removed cases when federal jurisdiction is not absolutely clear. See Burns, 31 F.3d at 1095.

III. FACTS

This suit arises out of a failed loan agreement between the Plaintiff, Lanier J. Edwards, and the Defendant, Bank of America, N.A. Edwards, a citizen of Georgia,³ and Charles H. Thomas, a citizen of Mississippi, are the owners of Evergreen Forest Products of Georgia, LLC, a limited liability company organized under the laws of Georgia. In connection with a $12 million loan, Evergreen executed two promissory notes⁴ on May 11, 19.98, in favor of Bank of America, a national "bank, organized under the. Laws of the United States with its principal place of business in North Carolina and branch offices in over twenty.states.⁵ As additional security for the loan, both Edwards and Thomas; executed personal guaranty agreements on this same date.

In 2001 Evergreen defaulted on its obligations under the'.promissory notes. In response, Bank of America accelerated the indebtedess' on the loans and demanded arbitration against Evergreen, Edwards, and Thonias pursuant to the arbitration provisions in the promissory notes and guaranty agreements. Following a Hearingin Atlanta on July 10, 2002, the arbitrator issued a formal award in favor of Bank of America on September 5, 2002, for a sum in excess of $9.5 million.

On November 3, 2002, the Plaintiff filed suit against Bank of America in the Superior Court of Fulton County, Georgia, seeking an abrogation of the arbitration award as well as injunctive and declaratory relief (Civil Action No.2002 CV 59841). The Plaintiff also filed a second action in the Superior Court of Quitman County, Georgia, seeking identical relief (Civil Action No.2002 CV 102). After initiating those two actions,⁶ the Plaintiff filed this suit in the Circuit Court of Barbour County, Alabama, on December 3, 2002. Therefore, three cases are currently pending regarding the validity of the arbitration award.⁷

XV. DISCUSSION

Removal of a case from state to federal court is. proper if the case could have been brought originally in federal court. See 28 § 1441(a). Bank of America argues that rernoval was proper because the court Alias jurisdiction over this case due to diversity of citizenship. See Diaz v. Sheppard, 85 F'.3d 1502, 1505 (11th Cir.1996) (stating that the party seeking removal to federal court, has the burden of establishing federal jurisdiction).

The diversity statute confers jurisdiction on the federal courts in civil actions 'between citizens of different states, in which the jurisdictional amount of greater than $75,000, exclusive of interest and costs, is met. See 28 U.S.C. § 1332(a)(1). According to the rule of "complete diversity," no plaintiff may share the same state citizenship with any defendant. See Riley v. Merrill Lynch, Pierce, Fenner & Smith Inc., 292 F.3d 1334, 1337 (11th Cir.2002). In this action, the Plaintiff contests the existence of both complete diversity and the amount-in-controversy requirement. Consequently, the court will evaluate each of these arguments in turn.

A. Diversity of Citizenship

The Plaintiff contends that diversity is absent because he is a citizen of Georgia and the Defendant is also a citizen of Georgia because it has branch offices in that state. The Defendant contends that diversity exists because it is a citizen only of North Carolina, where its main office is located, and not of any state where it maintains branches. The Defendant also. contends that the Plaintiff is a citizen of Alabama, not Georgia, and that the Defendant does not even maintain branches in. Alabama. . .".

This case presents an issue of first, impression in this district and circuit: how to determine the citizenship of a national bank for purposes of diversity jurisdiction? Ordinarily, a corporation is a citizen of its state of incorporation and the state where it maintains its principal place of business See 28 U.S.C. § 1332(c)(1). A national bank, however, does not have a state of incorporation because it is organized under federal law pursuant to the National Banking Act. See 12 U.S.C. § 22-24. As a result of this unique organizational structure, Congress enacted a separate jurisdictional statute that addresses the citizenship of national banks. According to 28 U.S.C. § 1348:

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.

Unfortunately, this statute fails: to clearly resolve the citizenship of a national ham\ in a diversity action. According to the sec ond paragraph, national banks involved" in diversity suits are deemed citizens of the states in which they are "located." Not surprisingly, both the parties in this case and the federal courts are divided over the ;meaning of this ambiguous term.

The United States Court of Appeals for the Ninth Circuit was the first court to address this issue. In American Surety Co. v. Bank of California, 133 F.2d 160, 161-62 (9th Cir. 1943), the court held that national banks are "located" for purposes of diversity jurisdiction in the state where they maintain their principal place of business.⁸ Beginning with Connecticut National Bank v. Lacono, 785 F.Supp. 30 (D.R.I.1992), however, the overwhelming majority of federal courts interpreted "located" in section 1348 to mean that national banks are citizens of every state in which they maintain a branch office. See id. at 33-34; First Union Corp. v. Am. Cas. Co., 222 F.Supp.2d 767, 770 (W.D.N.C.2001); Roozenbloom v. U.S. Bank, 2000 WL 249403, at *3 (D.Or. Feb.22, 2000); Frontier Ins. Go. v. MTN Owner Trust, 111 F.Supp.2d 376, 376-81 (S.D.N.Y.2000); Ferraiolo Const., Inc. v. Keybank, NA., 978 F.Supp. 23, 25-27 (D.Me.1997); Norwest Bank Minn., N.A. v. Patton, 924 F.Supp. 114, 115 (D.Colo. 1996); Silver v. Bank Midwest) N.A., 1996 WL 328737, at *2 (D.Kan. May 15, 1996); Signet Bank v. Hitachi Credit Am. Corp., 1996 U.S. Dist. LEXIS 19358, at *7-13'' (E.D.Va. Oct. 4, 1996). But See Fin, Software Sys., Inc. v. First Union Nat'l Bank, 84 F.Supp.2d 594, 602 (E.D.Pa.1999) (holding that a'national bank is a citizen "only "of the state in which it maintains its principal place, of business"); Baker v. First Am. Nat'l Bank, ill F.Supp.2d 799, 800-01 (W.D.La.2000) (same). These courts declined to follow the rule announced in American Surety because of the Supreme Court's subsequent decision in Citizens & Southern National Bank v. Bougas, 434 U.S. 35, 98 S.Ct. 88, 54 L.Ed.2d 218 (1977).⁹ Iacono, 785 F.Supp. at 32. The Plaintiff urges this court to adopt Iacono's interpretation of section 1348. According to this view, remand to state court is appropriate in this case because Bank of America, by virtue of its numerous branch offices in Georgia, is not diverse from Edwards, a citizen of Georgia.

In 2001, the United States Court of Appeals for the Seventh Circuit introduced a third interpretation of section 1348. See Firstar Bank, N.A. v. Faul, 253 F.3d...