Olson v. Wells Fargo Bank, N.A.

• Decision Date: 01 August 2013
• Docket Number: Case No. CV 13–2906–GHK (AGRx).
• Citation: 961 F.Supp.2d 1149
• Parties: Nancy OLSON, et al., Plaintiffs, v. WELLS FARGO BANK, N.A., et al., Defendants.
• Court: U.S. District Court — Central District of California

961 F.Supp.2d 1149

Nancy OLSON, et al., Plaintiffs,

v.WELLS FARGO BANK, N.A., et al., Defendants.

Case No. CV 13–2906–GHK (AGRx).

United States District Court,

C.D. California.

Aug. 1, 2013.

David S. Olson, Jonathan L. Smoller, Clark and Trevithick, Los Angeles, CA, for Plaintiffs.

Dean A. Reeves, Anglin Flewelling Rasmussen Campbell and Trytten LLP, Pasadena, CA, for Defendants.

MEMORANDUM AND ORDER RE: PLAINTIFFS' MOTION TO REMAND

GEORGE H. KING, Chief Judge.

On March 18, 2013, Plaintiffs Nancy and David Olson (“Plaintiffs”) filed this action in Los Angeles County Superior Court. The Complaint alleges only state law claims. On April 24, 2013, Defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and Bank of America, N.A. (“Bank of America,” and collectively with Wells Fargo, “Bank Defendants”) removed this action to this court.¹ The Notice of Removal (“NOR”) asserts that we have subject matter jurisdiction based on diversity of citizenship. (NOR at 2 [Dkt. No. 1] ).²

This matter is now before us on Plaintiffs' Motion to Remand (“Motion”). We have considered the papers filed in support of and in opposition to the Motion and the Parties' arguments at the June 24, 2013 hearing. As the Parties are familiar with the facts, we will repeat them only as necessary. Accordingly, we rule as follows.

I. Background

Plaintiffs are citizens of California, their state of domicile. (NOR at 2–3). Defendant Wells Fargo is a citizen of South Dakota, where its main office is located. Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006) (holding that “a national bank, for § 1348 purposes, is a citizen of the State in which its main office, as set forth in its articles of association, is located”). Wells Fargo's principal place of business is in San Francisco, California.³ Whether that means Wells Fargo is also a citizen of California (which would defeat complete diversity) is the subject of the dispute on this Motion. Bank of America is a citizen of North Carolina, where its main office is located. (NOR at 8–9).⁴ NDEX is a citizen of Delaware, Texas, Michigan, and Minnesota. (NOR at 9–11).

II. Legal Standard

In general, a defendant may remove a case over which the federal courts have original jurisdiction. 28 U.S.C. § 1441(a). Here, the purported basis for original jurisdiction is diversity of citizenship. 28 U.S.C. § 1332(a). Diversity jurisdiction generally requires “complete diversity,” i.e., “each defendant must be a citizen of a different state from each plaintiff.” In re Digimarc Corp. Derivative Litigation, 549 F.3d 1223, 1234 (9th Cir.2008). The removing party bears the burden of establishing federal subject matter jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992). Further, “[w]e strictly construe the removal statute against removal jurisdiction.... Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Id. (citations omitted).

III. Discussion

The question before us is whether Wells Fargo is a citizen of California. Under § 1348, “[a]ll national banking associations shall ... be deemed citizens of the States in which they are respectively located.” 28 U.S.C. § 1348. The issue is whether Wells Fargo is “located” in California, the state of its principal place of business.

Plaintiffs argue that Ninth Circuit authority, American Surety Co. v. Bank of California, 133 F.2d 160 (9th Cir.1943), requires us to hold that Wells Fargo is a citizen of the state in which its principal place of business is located. In any event, they assert that we should interpret the term “located” to include a national bank's principal place of business because Congress intended that term to give national banks the same access to the federal courts as state banks and corporations, which today have principal place of business citizenship. 28 U.S.C. § 1332(c)(1). Defendants respond that American Surety is not binding because it is clearly irreconcilable with Supreme Court authority, and that Congress meant the term “located” to give national banks the same access to the federal courts as state banks and corporations had in 1948, when Congress last amended § 1348. At that time, state banks and corporations were citizens only of their states of incorporation. Hence, under § 1348, Wells Fargo is a citizen of only a single state, where its main office is located. We address these arguments in turn below.

A. American Surety Co. v. Bank of California

American Surety interpreted the 1911 statute, which contained material language identical to § 1348: national banks shall “be deemed citizens of the States in which they are respectively located.” American Surety, 133 F.2d at 161–62. Unlike here, the issue in that case was whether “located” means that a national bank is a citizen of each state in which the bank has a branch office. Id. The court held that defendant, a national bank, was a “citizen only of the state in which its principal place of business [was] located.” Id. at 162 (emphasis added). The court explained that “[t]here would appear to be a close analogy between such a bank and a corporation national in scope. The citizenship of a corporation is fixed by its principal place of business.” Id. Hence, national banks should be treated the same way. Further, “[i]f the Congress had intended to provide that a national banking institution should be given the privilege and should carry the duties of citizenship in various states upon the basis of branch business offices being established therein, it would be a noteworthy departure from the general rule, and more likely than not Congress would have plainly state[d] such intent.” Id.

Plaintiffs urge a literal reading of the court's use of “principal place of business” to support their argument that our issue is foreclosed by this purportedly binding authority. We disagree. American Surety cannot be read without regard to its context or the authorities cited therein. Given the issue that the court confronted, as well as the authorities it cited in support of its holding, we conclude that the court used “principal 11 place of business” interchangeably with “state of incorporation.” See Rouse v. Wachovia Mortg., FSB, 2012 WL 174206, *8 (C.D.Cal.2012) (explaining that American Surety's “linkage between a corporation's citizenship and its principal place of business, rather than an erroneous exposition of the law, reflected [the court's] failure to consider the case where a corporation's principal place of business was not in its state of incorporation”). This is borne out by the authorities the court cited for its holding, none of which referred to “principal place of business” as the test for corporate citizenship. See St. Louis & S.F. Ry. Co. v. James, 161 U.S. 545, 562, 16 S.Ct. 621, 40 L.Ed. 802 (1896) (explaining that “[t]here is an indisputable 19 legal presumption that a state corporation, when sued or suing in a circuit court of the United States, is composed of citizens of the state which created it”); Southern Ry. Co. v. Allison, 190 U.S. 326, 338, 23 S.Ct. 713, 47 L.Ed. 1078 (1903) (explaining that “it will be conclusively presumed, as a matter of law, that [corporations] are citizens of the state originally chartering it”). In the context of the dispute that it was resolving, American Surety likely conflated the concepts of state of incorporation and principal place of business. Under this reading, American Surety held that national banks are not citizens of every state where a branch office is located because they should have citizenship analogous to a corporation's state of incorporation.

On the other hand, were we to adopt Plaintiffs' literal reading of the court's use of the phrase “principal place of business” as having the meaning now embodied in 28 U.S.C. § 1332(c)(1), American Surety would still not control our decision because it would be clearly irreconcilable with Wachovia Bank v. Schmidt, 546 U.S. 303, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006). In general, “where intervening Supreme Court authority is clearly irreconcilable with ... circuit authority ... district courts should consider themselves bound by the intervening higher authority and reject the prior opinions of [the circuit court] as having been effectively overruled.” Miller v. Gammie, 335 F.3d 889, 900 (9th Cir.2003) (en banc).

While addressing the question of whether a national bank is located in the state of its main office or in every state in which it maintains a branch office, Schmidt held that “a national bank, for § 1348 purposes, is a citizen of the State in which its main office, as set forth in its articles of association, is located.” Schmidt, 546 U.S. at 306, 126 S.Ct. 941. But the court had no occasion to decide whether a national bank is only located in the state of its main office, especially since Wachovia Bank has its main office and its principal place of business in the same state. Id. at 317 n. 9, 126 S.Ct. 941. Thus, American Surety cannot be read to hold literally that a national bank is a citizen only of the state of its principal place of business without being in irreconcilable conflict with Supreme Court authority.

In any event, American Surety does not answer our question. Either it goes no farther than Schmidt, or Schmidt abrogates it. While we know that a national bank is a citizen of at least the state where it has its main office, we must still decide whether a national bank is also a citizen of the state of its principal place of business.

In that regard, American Surety is helpful because it is still good law for the general principle that in analyzing where a national bank is “located,” we draw a “close analogy” between national banks on the one hand, and state banks and corporations, on the other, because all of these entities should have the same access to the federal courts. Martinez v. Wells Fargo Bank, 946 F.Supp.2d 1010, 1018, 2013 WL 2237879, *7 (N.D.Cal.2013) (explaining that...