HSBC Bank USA, N.A. v. Curtin et al

Filing 4

WRITTEN Opinion entered by the Honorable John J. Tharp, Jr on 5/13/2013: For the reasons set forth in the Statement section of this Order, the Court determines that it has, and clarifies its basis for, subject matter jurisdiction over this case. [For further details see order.] Electronic notice(jat, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge or
Magistrate Judge

John J. Tharp Jr.

CASE NUMBER

13 C 03467

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

05/13/2013

DATE

HSBC Bank USA, N.A. vs. Curtin, et al.

DOCKET ENTRY TEXT

For the reasons set forth in the Statement section of this Order, the Court determines that it has,
and clarifies its basis for, subject matter jurisdiction over this case.

[ For further details see text below.]

Docketing to mail notices.

STATEMENT
HSBC Bank USA, N.A. (“HSBC”) filed this action against Jeffery C. Curtin, Marianna
Curtin, Household Bank, F.S.B., and the United States, alleging that the Curtins defaulted on
their mortgage and seeking, inter alia, a finding that the United States’ tax liens on the
mortgaged property, as well as any other interests of the named defendants, are junior and
subservient to HSBC’s mortgage lien. Whether there is subject matter jurisdiction “is the first
question in every case,” see State of Ill. v. City of Chi., 137 F.3d 474, 478 (7th Cir. 1998), which
the Court has an independent duty to address and answer. See Sanford v. Giannoulias, No. 10 C
03936, 2010 WL 2696152, at *1 (N.D. Ill. July 6, 2010) (citing Belleville Catering Co. v.
Champaign Mkt. Place, LLC, 350 F.3d 691, 693 (7th Cir. 2003)). For the reasons set forth
below, the Court determines that it has, and clarifies its basis for, subject matter jurisdiction over
this case.
HSBC’s complaint bases the Court’s subject matter jurisdiction over this matter on
diversity of citizenship, see 28 U.S.C. § 1332, on the grounds that HSBC’s principal place of
business and headquarters are in Virginia, while Defendants Jeffery Curtin and Marianna Curtin
are citizens of Illinois and Defendant Household Bank is chartered under the laws of, and
headquartered in, Illinois. But there can be no diversity jurisdiction under § 1332 because the
United States is named as a party. See Frey v. EPA, 270 F.3d 1129, 1136-37 (7th Cir. 2001)
(citing Gen. Ry. Signal Co. v. Corcoran, 921 F.2d 700 (7th Cir. 1991) (federal agency cannot be
sued in diversity)).
That said, HSBC maintains that the Court has subject matter jurisdiction over its priority
claim against the United States under 28 U.S.C. § 1340, which provides that “district courts shall
have original jurisdiction of any civil action arising under any Act of Congress providing for
internal revenue.” See Compl. at ¶ 6. As courts in this and others districts have previously held, a
“suit to determine the validity and priority of [a] federal lien turns on and arises under federal tax

13C03467 HSBC Bank USA, N.A. vs. Curtin, et al.

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laws, namely 26 U.S.C. § 6323.” See U.S. Bank N.A. v. Erakovich, No. 10 C 03843, 2010 WL
4877011, at *1 (N.D. Ill. Nov. 24, 2010) (citing Pac. Mut. Life Ins. Co. v. Am. Nat’l Bank &
Trust Co., 642 F. Supp. 163, 164 (N.D. Ill. 1986); Somers v. Luterbach, No. 06-C-608, 2008 WL
1780936, at *3 (E.D. Wis. Apr. 15, 2008); In re Garcia, No. 01-945-CIV, 2002 WL 31409580,
at *2 (S.D. Fla. Sept. 6 2002); Viva Ltd. v. United States, 490 F. Supp. 1002, 1004 (D. Colo.
1980); City of New York v. Evigo Corp., 121 F. Supp. 748, 750 (S.D.N.Y. 1954)). Accordingly,
HSBC’s claim against the United States falls under § 1340, and, therefore, this Court has federal
question jurisdiction over that claim. See id.
That leaves for consideration HSBC’s state law claims against the Curtins and
Household Bank. Section 1367(a) of Title 28 provides that “in any civil action of which the
district courts have original jurisdiction, the district courts shall have supplemental jurisdiction
over all other claims that are so related to claims in the action…that they form part of the same
case or controversy…includ[ing] claims that involve the joinder…of additional parties.” 28
U.S.C. § 1367(a). As explained above, § 1340 provides this Court with federal question
jurisdiction over HSBC’s claim against the United States, and HSBC’s state law foreclosure
claims are part of the “same case or controversy” as that federal claim. See, e.g, Erakovich, 2010
WL 4877011, at *2 (citing Fritz v. Coffey, No. 1:07-CV-115-TS, 2008 WL 2444552, at *3 (N.D.
Ind. June 16, 2008)). Therefore, the Court has supplemental jurisdiction over HSBC’s state law
claims against the Curtins and Household Bank, and subject matter jurisdiction over this case.
To be clear, however, the Court does not have diversity jurisdiction in this case and
plaintiffs in foreclosure cases are advised to modify their jurisdictional allegations accordingly
when the United States is named as a defendant in the action.

Courtroom Deputy
Initials:

13C03467 HSBC Bank USA, N.A. vs. Curtin, et al.

AIR

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