Horton v. Bank One, N.A.

• Decision Date: 05 October 2004
• Docket Number: No. 03-50865.,03-50865.
• Citation: 387 F.3d 426
• Parties: Sarah Jenkins HORTON; George Leon Matassarin, Plaintiffs-Counter Defendants-Appellants, v. BANK ONE, N.A.; Defendant-Counter Claimant-Appellee, Bank One Corporation; Bank One Wisconsin, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

387 F.3d 426

Sarah Jenkins HORTON; George Leon Matassarin, Plaintiffs-Counter Defendants-Appellants, v. BANK ONE, N.A.; Defendant-Counter Claimant-Appellee, Bank One Corporation; Bank One Wisconsin, Defendants-Appellees.

No. 03-50865.

United States Court of Appeals, Fifth Circuit.

October 5, 2004.

Patricia J. Matassarin (argued), San Antonio, TX, for Horton and Matassarin.

Bradley J. Johnson (argued), Bank One, Dallas, TX, Jonathan Standish Massey, Washington, DC, Leonard A. Gail, Bank One Law Dept. Chicago, IL, for all Bank One Defendants.

Larry J. Stein (argued), Office of Comptroller of Currency, Washington, DC, for Office of Comptroller of Currency, Amicus Curiae.

Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD, HIGGINBOTHAM and SMITH, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Sarah Jenkins Horton appeals the district court's rejection of her contention that for purposes of its diversity jurisdiction, a national bank is a citizen of each and every state in which it has a branch. We affirm.

I

The facts underlying this dispute involve a retail installment contract for the purchase of a vehicle by Horton. In 2002, Horton filed suit against Bank One in Texas state court alleging violations of several consumer-protection-type statutes and asserting several common-law claims. In February 2003, Horton sent a settlement offer to Bank One. This offer put Bank One on notice for the first time that the amount in controversy exceeded $75,000. Bank One immediately removed the case to federal district court. Horton moved to remand arguing that there was no federal jurisdiction because complete diversity of citizenship was lacking. Horton reasoned that, because Bank One had branches in Texas, it was "located" in Texas and was thus a citizen of Texas. After rejecting Horton's reasoning and denying Horton's motion to remand, the district court granted her motion to certify the order for interlocutory appeal and we granted leave to appeal. The specific issue certified for this appeal is whether national banking associations are citizens of every state in which they have a branch.

II

We have jurisdiction¹ and we review de novo the district court's finding of jurisdiction.²

28 U.S.C. § 1348 provides that for purposes of diversity jurisdiction, "[a]ll national banking associations shall ... be deemed citizens of the States in which they are respectively located." We must decide the meaning of "located." Horton argues that Bank One is a citizen of Texas because it has branches in Texas, while Bank One claims that it is a citizen only of Illinois—the state of its principal place of business and the state listed in its organization certificate.

Until recently no circuit had addressed the meaning of "located" in section 1348. Prior to 1992, the "unquestioned" and "longstanding interpretation" was that "located" did not include the branches of a national bank.³

From 1992 to 2001, the majority of district courts that addressed this issue concluded that under section 1348, a national bank is a citizen of every state in which it has a branch,⁴ led by the District of Rhode Island's opinion in Connecticut National Bank v. Iacono.⁵ Pointing to a Supreme Court case in 1977 and changes in the law involving national banks, the court in Iacono decided to reexamine the meaning of "located," even though a 1943 case "appear[ed] to have settled the matter."⁶ A minority of district courts, however, remained unpersuaded by Iacono's analysis and conclusion.⁷

In 2001, the Seventh Circuit in Firstar held that "for purposes of 28 U.S.C. § 1348 a national bank is `located' in, and thus a citizen of, the state of its principal place of business and the state listed in its organization certificate."⁸ Firstar analyzed the text, history, and purpose of section 1348 and its predecessors. While no other circuit has yet ruled on this issue, every district court that has since confronted it has agreed with Firstar.⁹

III

We follow Firstar's holding that a national bank is not "located" in, and thus not a citizen of, every state in which it has a branch.

A

In construing another provision containing "located," the Supreme Court recognized that "[t]here is no enduring rigidity about the word `located.'"¹⁰ The language of section 1348 is therefore ambiguous, and this court "will look to legislative history to clarify the purpose" of the statute.¹¹

"When ... judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its ... judicial interpretations as well."¹² Further, "courts presume that Congress will use clear language if it intends to alter an established understanding about what a law means; if Congress fails to do so, courts presume that the new statute has the same effect as the older version."¹³

B

Firstar found that the history of section 1348 and its predecessors makes plain Congress's intent to grant national banks and state banks and corporations equal access to diversity jurisdiction.¹⁴ When national banks were first created in 1863, federal courts had jurisdiction over any suit involving a national bank.¹⁵ In 1864, Congress added that any such case could also be brought in state court.¹⁶

In 1882, however, Congress trimmed federal jurisdiction over cases involving national banks:

[T]he jurisdiction for suits hereafter brought by or against any association established under any law providing for national-banking associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national-banking associations may be doing business when such suits may be begun....¹⁷

The apparent purpose of the 1882 statute was to "eliminate automatic federal question jurisdiction over all cases involving national banks."¹⁸ In 1887, Congress superseded the 1882 Act and first used the phrase that appears today in section 1348. The 1887 Act proclaimed:

[A]ll national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located; and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same State.¹⁹

The Supreme Court has concluded that the objective of the 1882 and 1887 Acts was to create jurisdictional parity between national banks on the one hand and state banks and corporations on the other. Interpreting the 1882 Act, the Supreme Court observed that it "was evidently intended to put national banks on the same footing as the banks of the state where they were located for all the purposes of the jurisdiction of the courts of the United States."²⁰ For jurisdictional purposes, a national bank was placed "before the law... the same as a bank not organized under the laws of the United States."²¹

In the Judicial Code of 1911, Congress changed the structure of the jurisdictional provision of the 1887 Act, but retained its language regarding citizenship.²² The design of the change was merely "to make the purpose of the re-enacted statute clearer" rather than to make a fundamental change.²³ Finally, in 1948 Congress amended the Judicial Code and enacted section 1348 in its present form.²⁴

It is then plain that Congress enacted section 1348 against a backdrop of equal access to the federal courts for national banks, state banks, and corporations. Because section 1348 does not have any language modifying or rejecting the interpretive understanding that came with its predecessors, this court should presume that Congress intended to retain and incorporate the existing interpretive backdrop.²⁵ It follows that we should read section 1348 as retaining its objective of jurisdictional parity for national banks vis-à-vis state banks and corporations.

C

We are persuaded that this goal of jurisdictional parity is best served by interpreting "located" as referring to a national bank's principal place of business as well as the state specified in the bank's articles of association.²⁶ Since a state bank, under 28 U.S.C. § 1332(c)(1), may be a citizen of no more than two states—the state where its principal place of business is located and its state of incorporation—maintaining jurisdictional parity between a national and state bank requires that the national bank have no more than two possible states of citizenship.²⁷

Horton's position—that the national bank would be located in, and therefore a citizen of, each state in which it has a branch—would restrict a national bank's access to federal court under diversity jurisdiction, without similarly restricting a state bank.

D

Horton accepts that parity was intended, but offers a quite different view of what that parity is. Horton argues that Bank One does not seek the parity that Congress intended to achieve with the 1882 and 1887 Acts. Horton points to Mercantile National Bank v. Langdeau, deciding venue in state courts for suits against national banks.²⁸ In determining whether the jurisdictional provisions of the 1882 Act had implicitly repealed an earlier venue provision, the Supreme Court explained that "[s]ection 4 apparently sought to limit, with exceptions, the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks are so limited."²⁹ In coming to this conclusion, the Court quoted from the Congressional Record:

The proviso to § 4 of the 1882 Act first appeared as an amendment offered on the floor of the House by Representative Hammond, pursuant to the order of the...