Rouse v. Wachovia Mortg.
| Decision Date | 27 March 2014 |
| Docket Number | D.C. No. 5:11-cv-00928-DMG-DTB,No. 12-55278,12-55278 |
| Parties | 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. |
| Court | U.S. Court of Appeals — Ninth Circuit |
FOR PUBLICATION
OPINIONAppeal from the United States District Court
for the Central District of California
and Jay S. Bybee, Circuit Judges.
Opinion by Judge McKeown;
SUMMARY**
Diversity Jurisdiction
The panel reversed the district court's order remanding the case to California Superior Court for lack of diversity jurisdiction.
The panel held that under 28 U.S.C. § 1348 a national bank is a citizen only of the state in which its main office is located. The panel concluded that the district court had diversity jurisdiction because there was complete diversity between the plaintiffs, citizens of California, and Wells Fargo Bank, N.A., a citizen of South Dakota.
Judge Gould dissented because he would view Wells Fargo as a citizen of California for diversity purposes, and affirm the district court.
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.
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 (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.
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 Rouse's 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.
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'sarticles 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.
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. § 13322 the citizenship of nationally chartered banks is governed by 28 U.S.C. § 1348, which provides in pertinent part: "All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of theStates in which they are respectively located." 28 U.S.C. § 1348.
The sparse text of the statute offers no definitions. Our analysis focuses on the meaning of the word "located." Where a statute does not define a key term, we look to the word's ordinary meaning. In re HP Inkjet Printer Litig., 716 F.3d 1173, 1181 (9th Cir. 2013). However, the Supreme Court has held, in the context of § 1348, that the word is ambiguous on its face.3 Wachovia Bank, 546 U.S. at 313-14 (). As the Supreme Court noted, "'located,' as its appearance in the banking laws reveal . . . is a chameleon word; its meaning depends on the context in and purpose for which it is used." Id. at 318. The message is clear: we must look beyond the plain text of the statute and the word's ordinary meaning to discern the meaning of the word "located" for purposes of § 1348.
In Wachovia Bank, the Supreme Court addressed a different but related issue: whether a federally charterednational bank is a citizen of every state where it operates a branch in addition to the state where its main office is designated. 546 U.S. at 306. The court 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." Id. at 307. Although this holding appears to be a categorical statement with respect to § 1348, we acknowledge that it was rendered in response to a slightly different question than we face here.
The Court granted certiorari in Wachovia Bank to resolve a circuit split over whether national banks are citizens of every state in which they operate a branch for purposes of diversity jurisdiction. Both the Fifth Circuit and the Seventh Circuit held that national banks are not "located" in every state where the bank has a branch. Horton v. Bank One, N.A., 387 F.3d 426, 431 (5th Cir. 2004); Firstar Bank, N.A. v. Faul, 253 F.3d 982, 993-94 (7th Cir. 2001). Both circuits reasoned that the legislative history of § 1348 and its predecessor statutes revealed Congress's intent to maintain jurisdictional parity between national and state banking associations by placing them on the same jurisdictional footing. Horton, 387 F.3d at 430-31; Firstar, 253 F.3d at 993. Although not referenced in Wachovia Bank, we held 50 years earlier in American Surety Co. v. Bank of California, that the Bank of California was "a citizen only of the state in which its principal place of business is located, the State of California" and that the bank was not a citizen of every state in which it operated a branch. 133 F.2d 160, 161-62 (9th Cir. 1943) (emphasis added). By contrast, the Fourth Circuit in the Wachovia Bank appeal held that a national bank is a citizen of the state in which its main office is located as well as every state in which it has a branch. 388 F.3d 414, 432 (4th Cir. 2004). The Second Circuit recognized the same in dicta. SeeWorld Trade Ctr. Props., LLC v. Hartford Fire Ins. Co., 345 F.3d 154, 161 (2d Cir. 2003).
The Supreme Court's holding in Wachovia Bank was largely reasoned from the conclusion that Congress intended to protect the right of national banks to remove cases to federal courts. See 546 U.S. at 307 (). Wachovia Bank did not address whether a national bank is also a citizen of the state where it has its principal place of business. The Court noted, however, that "one would sensibly 'locate' a national bank for . . . qualification for diversity jurisdiction, in the State designated in its articles of association as its main office." Id. at 318. The Court also stated that the omission of any reference to a national bank's principal place of business in § 1348 "may be of scant practical significance for, in almost every case . . . the location of a national bank's main office and of its principal place of business coincide." Id. at 317 n.9; see Wells Fargo Bank, N.A. v. WMR e-PIN, LLC, 653 F.3d 702, 707-08 (8th Cir. 2011). This acknowledgment and discussion of the principal place of business issue strongly suggest that the Court did not overlook the issue of whether a national bank is a citizen of both the state in which its main office is located and the state where it maintains its principal place of business in crafting its clear and unqualified statement limiting citizenship for diversity jurisdiction...
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