Ortiz et al v. Wells Fargo Bank, N.A. et al
Filing
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ORDER granting 4 Motion to Remand Case to State Court and denying 3 Motion to Dismiss as Moot. The motion hearing set for Friday, April 26, 2013 is hereby vacated. Signed by Judge Gonzalo P. Curiel on 4/19/2013. (Superior Court served via U.S. Mail Service)(sjt)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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ANTONIO ORTIZ,
Plaintiff,
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CASE NO. 13cv0060-GPC-BLM
ORDER REMANDING CASE
TO STATE COURT AND
DENYING AS MOOT
DEFENDANT’S MOTION TO
DISMISS
vs.
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[ECF NOs. 3,4]
WELLS FARGO BANK, N.A., et al. ,
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Defendants.
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On November 29, 2012, Plaintiff filed a complaint in San Diego Superior Court
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regarding the foreclosure of their home against Wells Fargo Bank and Cal Western
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Reconveyance.
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negligence, negligent interference with prospective economic advantage, and violation
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of the business and professions code section 17200. ECF No. 1, Exhibit A. On January
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9, 2013, Defendant Wells Fargo removed the action to federal district court asserting
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diversity jurisdiction. ECF No. 1. January 16, 2013, Defendants filed a motion to
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dismiss. ECF No. 3. On September 18, 2012, Plaintiff filed a motion to remand the
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case to state court. ECF 4. Based on the reasoning below, the Court GRANTS
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Plaintiff’s motion to remand the case to state court and DISMISSES Defendant’s
Plaintiff asserted three causes of action under California law:
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motion to dismiss as moot.
DISCUSSION
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“Except as otherwise expressly provided by Act of Congress, any civil action
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brought in a State court of which the district courts of the United States have
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original jurisdiction, may be removed by the defendant or the defendants, to the
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district court of the United States for the district and division embracing the place
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where such action is pending.” 28 U.S.C. § 1441(a). “District courts...have original
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jurisdiction of all civil actions where the matter in controversy exceeds the sum or
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value of $75,000" and where all parties to the action are “citizens of different
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states.” 28 U.S.C. § 1332(a). “If at any time before final judgment, it appears that
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the district court lacks subject matter jurisdiction, the case shall be remanded.” 28
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U.S.C. § 1447(c). The Ninth Circuit “strictly construe[s] the removal statute against
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removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992)
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(citations omitted). Thus, “[f]ederal jurisdiction must be rejected if there is any
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doubt as to the right of removal in the first instance.” Id. (citation omitted). “The
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‘strong presumption’ against removal jurisdiction means that the defendant always
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has the burden of establishing that removal is proper.” Id.; see also Abrego Abrego
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v. Dow Chemical Co., 443 F.3d 676, 685 (9th Cir.2006). Removal jurisdiction may
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be based on diversity of citizenship or on the existence of a federal question. 28
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U.S.C. § 1441.
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This case arises from the alleged wrongful foreclosure of Plaintiff’s home.
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Defendant Wells Fargo Bank, N.A., removed the action on the basis of diversity
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jurisdiction. For complete diversity to be present, all plaintiffs must have
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citizenship different from all defendants. See Caterpillar Inc. V. Lewis, 519 U.S.
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61, 68 n.3 (1996). It is undisputed that Plaintiff is a citizen of California. It is also
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undisputed that Defendant Wells Fargo Bank, N.A. has its main office in South
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Dakota, and therefore is a citizen of that state. See Wachovia Bank v. Schmidt, 546
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U.S. 303, 307 (2006) (holding that a national bank “is a citizen of the State in which
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its main office, as set forth in its articles of association, is located”). Plaintiff does
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not contest that Wells Fargo Bank is a citizen of South Dakota. In the motion to
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remand, Plaintiff contends that both Plaintiff and Defendant are citizens of
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California and therefore Defendant improperly removed the case on the basis of
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diversity of citizenship. ECF No. 4 at 4. As such, Plaintiff seeks remand to state
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court due to lack of subject matter jurisdiction. Id. Neither Plaintiff nor Defendant
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contest the amount in controversy, which exceeds $75,000.
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The question before the Court is whether, for the purposes of diversity
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jurisdiction, Wells Fargo is also a citizen of California.1 See, e.g., Uriarte v. Wells
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Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 127497 at *9 (S.D. Cal. Nov. 3, 2011)
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(holding that Wells Fargo is also a citizen of California, where it has its principal
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place of business). But see Flores v. Wells Fargo Bank, N.A. 2012 US. Dist. LEXIS
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32648 (N.D. Cal. March 12, 2012) (finding that Wells Fargo is only a citizen of the
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state of their main office, South Dakota, and not also of the state of their principal
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place of business, California.) “All national banking associations shall, for the
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purposes of all other actions by or against them, be deemed citizens of the States in
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which they are respectively located.” 28 U.S.C. § 1348. While the Supreme Court
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held in Schmidt that a national bank is a citizen of the state in which it main office
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is located, it did not answer the question as to whether a bank is also “located” in,
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and therefore a citizen of, the state of principal place of business. Schmidt, 546 U.S.
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303, 307 (2006). The Court addresses that question here.
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Defendant Wells Fargo asks this Court to adopt a narrow interpretation of the
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Supreme Court decision in Wachovia Bank, N.A. v. Schmidt, and find that a
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national banking association is a citizen only of the state in which it has designated
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its main office. Schmidt, 546 U.S. 303, 307 (2006). Wells Fargo relies on the
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Eighth Circuit decision in Wells Fargo Bank, N.A. v. WMR e-PIN, LLC and other
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Wells Fargo does not contest that its principal place of business is in San Francisco,
California.
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district court opinions which reject the principal place of business test for purposes
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of diversity jurisdiction in §1348. Defendant further asserts that American Surety, a
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Ninth Circuit decision that utilized the principal place of business test to interpret §
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1348, is no longer good law and has been held to be inconsistent with the Supreme
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Court decision in Schmidt. See American Surety Co. v. Bank of California, 133 F.2d
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160, 162 (9th Cir.1943). Defendant also attacks previous First and Fifth Circuit
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decisions that have held the principal place of business test may be applied to
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national banks. Horton v. Bank One, N.A., 387 F.3d 426, 436 (5th Cir.2004);
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Firstar Bank, N.A. v. Faul, 253 F.3d 982, 994 (7th Cir.2001).
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In its motion to remand, Plaintiff contests removal based on lack of diversity
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of citizenship. Plaintiff asserts that Defendant Wells Fargo is also a citizen of
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California because the Supreme Court in Schmidt declined to hold that a national
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banking association’s citizenship is limited to the state in which its main office is
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located. ECF No. 4 at 5. As Defendant Wells Fargo’s principal place of business is
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in San Francisco, California, Plaintiff contends that diversity of citizenship is
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destroyed, and the Court lacks subject matter jurisdiction. Id.
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The Supreme Court analysis in Schmidt rejected an approach that would
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consider a national banking association a citizen of every state in which it maintains
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a branch. Schmidt, 546 U.S. 307 (2006). Rather, for the purposes of § 1348, a
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“national bank...is a citizen of the State in which its main office, as set forth in its
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articles of association, is located.” Id. The Supreme Court recognized the
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controlling context of the word “located” in § 1348 as having “no enduring
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rigidity.” Id. at 314 (quoting Citizens & Southern Nat. Bank v. Bougas, 434 U.S. 35
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(1977)). In reaching its’ decision, the Court refused to address the question of
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whether principal place of business applied to § 1348. Id. at 315 n.8 (“Other
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readings mentioned in Court of Appeals opinions are the bank’s principal place of
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business and the place listed in the bank’s organization certificate. Because this
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issue is not presented by the parties or necessary to today’s decision, we express no
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opinion on it”). Furthermore, the Court contemplated the idea that to reconcile 28
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U.S.C. § 1348, governing national banks, and 28 U.S.C. § 1332 (c)(1), governing
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corporations, that a national bank might have to be considered a citizen of the state
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in which its main office is located and the state of its principal place of business.
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Id. at 317 n.9 (“To achieve complete parity with state banks and other state-
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incorporated entities, a national banking association would have to be deemed a
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citizen of both the State of its main office and the state of its principal place of
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business.” (citations omitted)).
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As the Supreme Court did not determine whether a national bank could also
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be a citizen where it has its principal place of business, the appellate and district
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courts have taken two different approaches on the issue. On one hand, the Eighth
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Circuit and other district courts have held that “located” should be read narrowly to
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only include the place where the bank has its’ main office. See, e.g. Wells Fargo
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Bank, N.A. v. WMR e-PIN , LLC, 653 F.3d 702, 710 (8th Cir. Sept. 2, 2011) (“We
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reject appellants’ claim that Wells Fargo is a citizen of both South Dakota and
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California...”); Kasramehr v. Wells Fargo Bank N.A., No. CV 11-0551, 2011 U.S.
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Dist. LEXIS 52930, at *6 (C.D. Cal. May 17, 2011)(concluding that under § 1348,
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“a national banking association is a citizen of the state of its main office as
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designated in its articles of association, and not also a citizen of the state of its
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principal place of business”).2 On the other hand, several district courts continue to
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affirm the decisions made by the Fifth and Seventh Circuits, which concluded that a
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national bank is a citizen of both the state in which its main office is located and the
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state of its principal place of business. See Horton v. Bank One, N.A., 387 F.3d 426,
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436 (5th Cir. 2004) (“We hold that the definition of ‘located’ is limited to the
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A number of district courts in California have embraced this approach post-Schmidt. See, e.g.,
Silva v. Wells Fargo Bank N.A., 2011 U.S. Dist. LEXIS 64636, 2011 WL 2437514 (C.D. Cal. June
16, 2011); Tse v. Welss Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 6796 (N.D. Cal. Jan. 19, 2011);
Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1027-28 (N.D. Cal. 2010); Cal. ex
rel. Bates v. Mortg. Elec. Registration Sys., Inc., No., 2010 U.S. Dist. LEXIS 81650 (E.D. Cal. July
21, 2010); DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1123-24 (N.D. Cal. 2010);
Peralta v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 112387 (N.D. Cal. Nov. 16, 2009).
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national bank’s principal place of business and the state listed in its organization
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certificate and its articles of association”); Firstar Bank, N.A. v. Faul, 253 F.3d 982,
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994 (7th Cir. 2001) (“[W]e hold that for purposes of 28 U.S.C. § 1348 a national
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bank is ‘located’ in, and thus a citizen of, the state of its principal place of business
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and the state listed in its organization certificate.”) Although these decisions were
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made prior to Schmidt, numerous district courts have followed this approach,
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finding Firstar and Horton persuasive. See, e.g., Uriarte v. Wells Fargo Bank, N.A.,
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2011 U.S. Dist. LEXIS 127497 (S.D. Cal. Nov. 3, 2011) at *8 (“the Court believes
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the approach advanced by the Fifth and Seventh Circuits, as well as by Judge
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Murphy’s dissent in WMR, is more consistent with § 1348's legislative history and
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the Supreme Court’s decision in Wachovia v. Schmidt”); Bickoff v. Wells Fargo
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Bank, N.A., et al. 2013 U.S. Dist. LEXIS 2293 (S.D. Cal. January 4, 2013) at *14
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(finding “a national banking association is a citizen of both a state where it has its
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main office and the state of its principal place of business”).3 Wells Fargo argues
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that the some district court judges have recently reversed their own decisions, and
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now hold that the national banks are only citizens of the state in which they have the
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main office. (Citing Kasramehr, 2011 U.S. Dist. LEXIS 52930 (C.D. Cal. May 17,
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2011); Mireles v. Wells Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 3871 (C.D. Cal.
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2012). The Court finds this argument unconvincing. While the Court
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acknowledges there remains a split of opinion on the issue, the fact remains that
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district courts continue to follow the Horton and Firstar approach articulated by the
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Fifth and Seventh Circuit, especially in the Southern District of California where
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judges have recently affirmed the finding that a national bank is also a citizen of the
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See also Inyang v. Resmae Morg. Corp., 2012 U.S. Dist. LEXIS 181975 (C.D. Cal. Dec. 26,
2012); Haqq-Ali v. Wells Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 124502 (C.D. Cal. Aug. 31,
2012); Brew v. Wells Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 6796 (E.D. Cal. Jan. 19, 2012);
Guinto v. Wells Fargo Bank, 2011 U.S. Dist. LEXIS 114986 (E.D. Cal. Oct. 5, 2011); Stewart v.
Wachovia Mortg. Corp., 2011 U.S. Dist. LEXIS 85822 (C.D. Cal. Aug. 2, 2011); Goodman v. Wells
Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 63165 (C.D. Cal. June 1, 2011); Gutterman v. Wachovia
Mortg., 2011 U.S. Dist. LEXIS 74521 (C.D. Cal. Mar. 31, 2011); Saberi v. Wells Fargo Home Mortg.,
2011 U.S. Dist. LEXIS 5286 (S.D. Cal. Jan. 20, 2011); Mount et al. v. Wells Fargo Bank, N.A., 2008
U.S. Dist. LEXIS 98193 (C.D. Cal. Nov. 24, 2008).
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state of its principal place of business. Bickoff, 2013 U.S. Dist. LEXIS 2293; See
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also Taheny v. Wells Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 47195, at *1 n.1
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(E.D. Cal. Apr. 3, 2012) (listing conflicting decisions issued by district courts
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within the Ninth Circuit).
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Wells Fargo’s contention that the Ninth Circuit decision in American Surety
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is contrary to the Supreme Court decision in Schmidt was most recently addressed
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by Judge Karlton in the Eastern District of California. In it’s motion to remove,
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Defendant Wells Fargo Bank argues that “American Surety and Schmidt both held
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for single, but different standards for citizenship. Using the principal place of
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business test to the exclusion of the main office as American Surety did is simply
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irreconcilable with Schmidt.” (Dkt. No. 1 at 7.) As explained by Judge Karlton,
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American Surety identified a different possibility for citizenship, without excluding
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the other possibility as articulated by the Supreme Court in Schmidt, and both
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possibilities for citizenship are not in conflict. Taheny v. Wells Fargo Bank, N.A.,
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878 F. Supp. 2d 1093, 1100 (E.D. Cal. April 3, 2012); See also Guinto v. Wells
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Fargo Bank, 2011 U.S. Dist. LEXIS 114986 (E.D. Cal. Oct. 4, 2011)(finding that
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American Surety is binding, Ninth Circuit authority holding that a national bank is a
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citizen of the state where it has its principal place of business.) This Court agrees
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that the Ninth Circuit decision in American Surety remains binding authority.
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The remainder of Wells Fargo’s arguments have been addressed previously
by other district courts, and are otherwise unconvincing.
CONCLUSION
For the foregoing reasons, the Court finds a national banking association is a
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citizen of both the state where it has its main office and the state of its principal
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place of business. Accordingly, as applied to this case, Wells Fargo is a citizen of
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California. Because complete diversity is lacking the Court hereby REMANDS this
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action to the San Diego County Superior Court and DISMISSES Wells Fargo’s
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motion to dismiss as moot. The motion hearing set for Friday, April 26, 2013 is
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hereby VACATED.
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DATED: April 19, 2013
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HON. GONZALO P. CURIEL
United States District Judge
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