Khan v. U.S. Bank National Association et al

Filing 17

ORDER signed by Judge Kimberly J. Mueller on 6/5/2014 GRANTING plaintiff's 16 Request for Reconsideration of Jurisdiction. This action is REINSTATED and REFERRED to Magistrate Judge for further proceedings consistent with this Order. (Marciel, M)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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KHALID N. KHAN,

No. 2:13-CV-02596-KJM-CKD

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Plaintiff,
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v.

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ORDER

U.S. BANK NATIONAL ASSOCIATION
AS BENEFICIARY, et al.,

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Defendants.

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Plaintiff Khalid N. Khan moves for reconsideration of this court’s order

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adopting the magistrate judge’s findings and recommendations and dismissing the action for

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lack of subject-matter jurisdiction. Pl.’s Mot. Recons. at 1–2, ECF No. 16. For the reasons

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below, the court GRANTS the motion and REINSTATES the action.

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I.

BACKGROUND

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In December 2013, plaintiff, pro se, filed suit against defendants U.S. Bank

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National Association, T.D. Service Company, S.A. Challenger and several Doe defendants,

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alleging seventeen state-law claims. Compl. ¶¶ 1–27, ECF No. 1. Thereafter, the magistrate

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judge issued an order to show cause, directing plaintiff to explain why the action need not be

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dismissed for lack of subject-matter jurisdiction. Order to Show Cause at 1–2, ECF No. 4.

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Plaintiff complied with the order and amended his complaint to incorporate various federal-law

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claims. Pl.’s Response to Order to Show Cause at 2, ECF No. 5. Nonetheless, finding neither
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federal question nor diversity jurisdiction properly exercised, the magistrate judge

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recommended dismissal. Findings & Recommendations (“F&R”) at 1, ECF No. 7. Plaintiff

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filed objections, following review of which the court adopted the findings and

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recommendations in full. Order at 2, ECF No. 14. Plaintiff then brought the instant motion.

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II.

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STANDARD
“As long as a district court has jurisdiction over [a] case, then it possesses the

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inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause

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seen by it to be sufficient.” City of L.A., Harbor Div. v. Santa Monica Baykeeper, 254 F.3d

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882, 885 (9th Cir. 2001) (emphasis, citations and internal quotation marks omitted).

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“[J]urisdiction is transferred from a district court to a court of appeals upon the filing of a

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notice of appeal,” id. (citations omitted), and “the trial court thereafter has no power to modify

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its judgment in the case or proceed further except by leave of the Court of Appeals,”

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Visioneering Constr. & Dev. Co. v. U.S. Fid. & Guar., 661 F.2d 119, 124 n.6 (9th Cir. 1981)

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(citations omitted). Here, although judgment was entered and the case closed on April 1, 2014,

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no notice of appeal has been filed. The court may thus reconsider its previous ruling. See City

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of L.A., Harbor Div., 254 F.3d at 885; Visioneering Constr. & Dev. Co., 661 F.2d at 124 n.6.

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A motion for reconsideration is properly granted where “the district court is

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presented with newly discovered evidence, committed clear error, or if there is an intervening

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change in the controlling law.” 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.

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1999) (citing Sch. Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). Clear error

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occurs where “the reviewing court . . . is left with the definite and firm conviction that a

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mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)

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(citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)).

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III.

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ANALYSIS
On April 1, 2014, the court adopted the magistrate judge’s findings and

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recommendations in full, thereby dismissing the action for lack of subject-matter jurisdiction.

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Order at 1–2. In the findings and recommendations, the magistrate judge recommended

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dismissal because plaintiff had not established either federal question or diversity jurisdiction.
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F&R at 1–2. She found there was no federal question because “no allegation of conduct by any

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defendant . . . [could] be fairly characterized as state action,” while there was no diversity

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because plaintiff, a California resident, alleged that defendant U.S. Bank N.A.’s principal place

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of business was also California. Id. at 2.

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On March 27, 2014, days before the court’s order adopting the magistrate

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judge’s findings and recommendations issued, the Ninth Circuit published its opinion in Rouse

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v. Wachovia Mortgage, 747 F.3d 707, 708 (9th Cir. 2014). There, the court held that “a

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national bank is a citizen only of the state in which its main office is located.” Id. at 709 (citing

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28 U.S.C. § 1348). A bank’s main office, which must be “designated in [its] articles of

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association,” id., is the “‘place where its operations of discount and deposit are to be carried

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on,’” Wachovia Bank v. Schmidt, 546 U.S. 303, 307 n.1 (2006) (quoting 12 U.S.C. § 22).

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Having considered defendant U.S. Bank N.A.’s principal place of business for

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citizenship purposes, in light of Rouse, 747 F.3d at 709, the court “is left with the definite and

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firm conviction that a mistake has been committed,” Anderson, 470 U.S. at 573. U.S. Bank

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N.A. is a national banking association, and the Ninth Circuit’s directive is clear: “a national

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bank is a citizen only of the state in which its main office is located.” Rouse, 747 F.3d at 709.

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That U.S. Bank N.A. might have its principal place of business in California is, therefore,

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irrelevant to the diversity analysis. In relying on this basis to find diversity jurisdiction to be

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lacking, the court committed clear error. Plaintiff’s motion to reconsider is granted.

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On the same basis, the court vacates its adoption of the magistrate judge’s

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findings and recommendations insofar as it finds diversity jurisdiction to be lacking. Defendant

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U.S. Bank N.A. is directed to file its articles of association with the court within seven days of

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the date of this order, and the reinstated action is referred back to the magistrate judge for

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further proceedings. These proceedings may, in the magistrate judge’s discretion, take account

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of the documents filed with plaintiff’s objections to the prior findings and recommendations.

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IV.

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CONCLUSION
As set forth above, the court GRANTS the motion to reconsider. The action is

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REINSTATED and REFERRED to the magistrate judge for further proceedings consistent with

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this order.

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IT IS SO ORDERED.
DATED: June 5, 2014.

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UNITED STATES DISTRICT JUDGE

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