Mitchell et al v. Wells Fargo Bank, N.A.

Filing 21

ORDER by Judge Kandis A. Westmore denying 9 Motion to Remand (kawlc1, COURT STAFF) (Filed on 10/10/2013)

1
2

United States District Court
Northern District of California

3
4
5
6

9

ORDER DENYING PLAINTIFFS’ MOTION
TO REMAND

Plaintiffs,

7
8

Case No.: CV 13-04017-KAW

ROBERT J. MITCHELL, et al.,

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

(Dkt. No. 9)

Defendants.

10

United States District Court
Northern District of California

11
12

Plaintiffs Robert and Christine Mitchell filed this case against Defendant Wells Fargo in

13

the Contra Costa County Superior Court on August 1, 2013. Defendant removed the case to this

14

Court on August 28, 2013. On September 5, 2013, Plaintiffs filed a motion to remand the case to

15

state court.

16

Upon review of the moving papers, the Court finds this matter suitable for resolution

17

without oral argument pursuant to Civil Local Rule 7-1(b), and finds that Wells Fargo is not a

18

citizen of California for diversity purposes, and that the amount in controversy at the time of the

19

removal met the jurisdictional requirement, such that Plaintiffs’ motion to remand is DENIED.

20

I. LEGAL STANDARD

21

District courts have jurisdiction in civil actions where there is complete diversity of

22

citizenship among the parties and the amount in controversy exceeds $75,000, exclusive of

23

interest and costs. 28 U.S.C. § 1332(a). There is a “strong presumption against removal

24

jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992). This principle dictates that

25

the removal statute be “strictly construed against removal jurisdiction.” Id.

26
27
28

II. DISCUSSION
Plaintiffs maintain that this case should be remanded to state court because Wells Fargo is
a citizen of California, and the amount in controversy is less than $75,000.

1
2

A. Citizenship of Wells Fargo for Diversity Purposes
Plaintiffs argue that Defendant Wells Fargo is a citizen of California, and so this case must

3

be remanded to state court on the basis that there is not complete diversity between the parties.

4

Defendant argues that it is a citizen of South Dakota, where its main office is located, but admits

5

that its principal place of business is in California.

6

District courts in the Ninth Circuit, and other Circuits, are split regarding Wells Fargo’s

7

citizenship for diversity purposes. Specifically, whether Wells Fargo is a citizen of only South

8

Dakota, or is a citizen of both South Dakota and California. Defendant’s citizenship for diversity

9

purposes is governed by 28 U.S.C. § 1348, which provides that national banks “shall...be deemed
citizens of the States in which they are respectively located.” The word “located” has recently

11

United States District Court
Northern District of California

10

been interpreted in two ways. Some courts have held that, under § 1348, a national bank is a

12

citizen solely in the state where its main office is located; others have held that, like other

13

corporations, a national bank is a citizen of both the state where its main office is located, and of

14

the state where it has its principal place of business. For the reasons explained below, this Court

15

holds that Wells Fargo is solely a citizen of South Dakota for the purposes of diversity

16

jurisdiction.

17

In American Surety Co. v. Bank of California, 133 F.2d 160 (9th Cir. 1943)—the only

18

Ninth Circuit case to address the issue—the Court held that, for the purposes of this statute, a

19

national bank is “located” in the state where it maintains its principal place of business. The bank

20

at issue in this case was Bank of California, which maintained its principal place of business—

21

and presumably its main office—in California, but had a branch office in Oregon. The Court

22

rejected the argument that Bank of California should be considered a citizen of Oregon because it

23

had a branch office there. Id. at 162. After noting that no case had defined the word “located,”

24

the Court decided that it was logical to define the word to mean "those states in which [banks']

25

principal places of business are maintained." Accordingly, the Court found that “defendant is a

26

citizen only of the state in which its principal place of business is located, the State of California.”

27

Id. (emphasis added).

28

2

1

More recently, in Wachovia Bank v. Schmidt, the United States Supreme Court held that

2

for purposes of § 1348, a national bank is “located” in the state in which its main office, as

3

designated in its articles of incorporation, is located. 546 U.S. 303, 307 (2006). Like the Court in

4

American Surety, the Supreme Court rejected the argument that a national bank is “located” in

5

each state in which it maintains a branch. Id. The Court noted that the word “located” does not

6

have a “fixed, plain meaning,” but held that under § 1348, “one would sensibly ‘locate’ a national

7

bank for . . . diversity jurisdiction, in the State designated in its articles of association as its main

8

office.” Id. at 318.

9

The Court noted that under § 1332(c)(1), a corporation is considered to be a citizen of the
state of its main office and the state of its principal place of business, and discussed the distinction

11

United States District Court
Northern District of California

10

between § 1348 and § 1332(c)(1):

12
13
14
15
16
17
18

Congress has prescribed that a corporation ‘shall be deemed to be a citizen of any
State by which it has been incorporated and of the State where it has its principal
place of business.’ 28 U.S.C. § 1332(c)(1). The counterpart provision for national
banking associations, § 1348, however, does not refer to ‘principal place of
business'; it simply deems such associations ‘citizens of the States in which they
are respectively located.’ The absence of a ‘principal place of business' reference
in § 1348 may be of scant practical significance for, in almost every case, as in this
one, the location of the national bank's main office and of its principal place of
business coincide.
Id. at 318 n.9.

19

Thus, Schmidt did not hold that a national bank may only be considered a citizen of the

20

state in which its main office is located, and did not expressly address the situation in this case,

21

where the state of a national bank’s principal place of business differs from the state where its

22

main office is located. Schmidt did not foreclose the possibility that a national bank, like other

23

corporations, could be considered a citizen of two states.

24

However, Schmidt did foreclose the possibility that a national bank could only be

25

considered a citizen of the state of its principal place of business. Because American Surety

26

defined “located” to mean only where a national bank maintains its principal place of business,

27

and Schmidt defined “located” to mean, at least, where the bank maintains its main office,

28

3

1

American Surety established an exclusive tests for citizenship that is irreconcilable with Schmidt,

2

and is no longer good law.

3

Because American Surety is abrogated, there is no source of authority that defines

4

“located” in § 1348 to mean the state of a national bank’s principal place of business. Although

5

Schmidt did not squarely address the factual situation of this case, where Wells Fargo’s main

6

office is in a different state than its principal place of business, it did hold that a national bank is a

7

citizen of the state of its main office. The Court therefore finds that Wells Fargo is a citizen of the

8

state where it maintains its main office—South Dakota—and, in the absence of authority

9

establishing that it is also a citizen of the state where it maintains its principal place of business,

10

United States District Court
Northern District of California

11

that it is not a citizen of California.
In so holding, this Court joins a number of other district courts that came to similar

12

conclusions. See, e.g., Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1027–28

13

(N.D. Cal. Oct. 27, 2010); DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1123–24

14

(N.D. Cal. Jun. 9, 2010) (finding that there was no “controlling Ninth Circuit authority” applying

15

the principal place of business test to Wells Fargo); ” Tse v. Wells Fargo Bank, N.A., C10-4441

16

TEH, 2011 WL 175520 (N.D. Cal. Jan. 19, 2011) (finding that “the fairest reading of footnote

17

nine [in Schmidt] is that the Supreme Court expressed skepticism over whether the term ‘located’

18

in § 1348 included a national bank's ‘principal place of business,’ in view of the absence of such

19

term in the statute.”); Flores v. Wells Fargo Bank, 3:11-CV-06619, 2012 WL 832546 (N.D. Cal.

20

Mar. 12, 2012) (interpreting American Surety’s statement that the Bank of California was a

21

citizen only of the state in which its principal place of business was located as a holding that "the

22

principal place of business rule is the exclusive test for citizenship of national banks for diversity

23

jurisdiction purposes").

24
25

B. Amount in Controversy
Plaintiffs also argue that this case should be remanded because Wells Fargo has failed to

26

prove that the amount in controversy requirement has been met. Jurisdictional facts are

27

determined on the basis of a plaintiff’s complaint at the time of removal. 28 U.S.C. § 1441.

28

Defendant must only set forth in the removal petition the underlying facts supporting that the
4

1

threshold requirement is met if the amount of the plaintiff’s damages are unclear from the

2

complaint. Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1028 (N.D. Cal. 2010)

3

(citing Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403–04 (9th Cir.1996). “ Defendant

4

must prove that more likely than not the amount in controversy exceeds $75,000.” Ngoc Nguyen,

5

749 F. Supp. 2d at 1028 (citing Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir.1992); Sanchez,

6

102 F.3d at 404).

7

When a plaintiff seeks injunctive relief, the value of the object of the litigation determines
the amount in controversy. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). Plaintiffs’

9

complaint, which was filed in Contra Costa County Superior Court, sought unspecified damages,

10

including an injunction preventing the transfer of the property, which had an original loan amount

11

United States District Court
Northern District of California

8

of $1,309,000. (Compl., Dkt. No. 1, Ex. A at 26.) Additionally, Plaintiffs attached to their

12

complaint, a letter from Wells Fargo, dated May 18, 2013 and titled “Final decision on Mortgage

13

Assistance Plan Modification” from Wells Fargo. (Compl., Ex. A at 45.) The letter stated that the

14

subject property had a market value of $1,500,000. Id. As this amount exceeds $75,000, the

15

Court finds that Defendant has established that the amount in controversy likely exceeds $75,000.

16

Accordingly, it is hereby ORDERED that Plaintiffs’ motion to remand is DENIED.

17

IT IS SO ORDERED.

18

Dated: October 10, 2013

______________________________
KANDIS A. WESTMORE
United States Magistrate Judge

19
20
21
22
23
24
25
26
27
28

5