PNC Bank, N.A. v. Welsh Realty, LLC et al

Filing 15

ORDER DENYING 11 Motion to Dismiss for Lack of Jurisdiction, DENYING 11 Motion to Dismiss for Failure to State a Claim, and DENYING 11 Motion to Dismiss for Improper Venue. Signed by US District Judge Terrence W. Boyle on 10/1/2013. Counsel is directed to read Order in its entirety. (Fisher, M.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-203-BO

PNC BANK, N.A., successor to RBC Bank
(USA), formerly known as RBC Centura
Bank,
Plaintiff,

)
)
)
)
)
)
V.
)
WELSH REALTY, LLC, WELSH PAPER )
COMPANY, K. GORDON WELSH, and )
)
PEGGY B. WELSH,
)
Defendants.

ORDER

This cause comes before the Court on defendants' amended motion to dismiss pursuant to
Rules 12(b)(1), (3), and (6) ofthe Federal Rules of Civil Procedure. Plaintiffhas responded,
defendants' have replied, and the matter is ripe for ruling. For the reasons discussed below,
defendants' motion is denied.
BACKGROUND
RBC Centura Bank made a loan to Welsh Realty in November 2006 in the amount of
$3,119,000; the principal of this note was increased to $3,216,691 in September 2007. In
February 2008, RBC Centura made a second loan to Welsh Realty in the amount of$860,000.
Both notes were guaranteed by defendants Welsh Paper Company, K. Gordon Welsh, and Peggy
B. Welsh.

In March 2012, RBC Centura, then renamed RBC Bank, merged into PNC Bank. Both
notes required that all obligations thereunder would be repaid to PNC on or before February 20,
2013. After the obligations under both notes were not timely paid by either the borrower or the

guarantors, PNC filed an action in this Court on the basis of its diversity jurisdiction. 28 U.S.C. §
1332.
DISCUSSION
Defendants moved to dismiss this action for lack of subject matter jurisdiction, improper
venue, and failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)( 1), (3 ),
& (6). In their reply to plaintiffs response to the instant motion, defendants have withdrawn their

motion to dismiss pursuant to Rule 12(b)(6). The Court addresses defendants' remaining bases
for dismissal in turn.
I.

DIVERSITY JURISDICTION EXISTS

Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a claim for lack of
subject matter jurisdiction. When subject matter jurisdiction is challenged, the plaintiff has the
burden of proving jurisdiction to survive the motion. Evans v. B.F Perkins Co., 166 F.3d 642,
647-50 (4th Cir. 1999). "In determining whether jurisdiction exists, the district court is to regard
the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the
pleadings without converting the proceeding to one for summary judgment." Richmond,

Fredericksburg & Potomac R.R Co. v. United States, 945 F.2d 765,768 (4th Cir. 1991). The
movant's motion to dismiss should be granted if the material jurisdictional facts are not in dispute
and the movant is entitled to prevail as a matter of law. Id
Diversity jurisdiction exists in cases between citizens of different states where the amount
in controversy exceeds $ 75,000 exclusive of interests and costs. 28 U.S.C. § 1332. In
determining whether diversity jurisdiction is satisfied, courts have long required that complete
diversity, meaning that no party shares citizenship with any opposing party, exist. Mayes v.

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Rapoport, 198 F.3d 457,461 (4th Cir. 1999). It is undisputed that defendants are citizens ofNorth
Carolina; defendants dispute PNC' s assertion that it is a citizen of another state.
PNC has alleged that it is a national bank chartered under the laws of the United States.
National banking associations are deemed to be citizens of states in which they are located. 28
U.S.C. § 1348. National banks are "located" for diversity jurisdiction purposes "in the State
designated in its articles of association as its main office." Wachovia Bank v. Schmidt, 546 U.S.
303, 318 (2006). PNC has alleged that its home office, as set forth in its articles of association, is
located in the State of Delaware. Although defendants would contend that PNC's denomination
in its complaint of its "home office" as opposed to is "main office" is somehow fatal to
establishing citizenship, the Court finds it to be a distinction without a difference. PNC has
sufficiently plead that it is a citizen of Delaware for purposes of diversity jurisdiction.
Defendants' further contention that, because the loans originated with RBC Centura, a
North Carolina corporation, no diversity of citizenship exists, is also without merit. Citizenship
of the parties to a lawsuit is determined at the time that suit is filed. Grupo Datajlux v. Atlas

Global Grp., L.P., 541 U.S. 567, 57-71 (2004). At the time this lawsuit was filed, RBC Bank
(formerly known as RBC Centura) had been merged with PNC. It is the citizenship of the
surviving entity after merger that controls when determining diversity of citizenship. See e.g.

Wilkins v. Wachovia Corp., No. 5:10-CV-249-D, 2011 WL 902031 *3 (E.D.N.C. Feb. 28, 2011)
(memorandum and recommendation adopted in relevant part by 2011 WL 1134706 (E.D.N.C.
March 24, 2011)); PNC BankNA. v. Gaskill, No. 2:13-CV-30-BR, 2013 WL 5183032 *1
(E.D.N.C. Sept. 12, 2013) (citing Mirales v. Wells Fargo Bank, NA., 845 F. Supp.2d 1034, 1046
n.75 (C.D.Cal. 2012)). The Court has determined that PNC is a citizen of Delaware for purposes

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of diversity, and defendants' motion to dismiss for lack of diversity jurisdiction is therefore
denied.
II.

VENUE IS PROPER

Defendants concede that venue is proper under 28 U.S.C. § 1391, but contend that the
forum selection clause in the loan documents requires that the action be filed in Wake County,
North Carolina. The relevant clause states "Choice of Venue. Ifthere is a lawsuit, Borrower
[Guarantor] agrees upon Lender's request to submit to the jurisdiction of the courts of Wake
County, State ofNorth Carolina." [DE 1 at Ex. A-J].
A plain reading ofthe choice of venue provision reveals that suit must be brought in Wake
County only upon a request of such by the lender. The lender, PNC, has elected to file suit in this
Court as opposed to Wake County, and doing so in no way violates the choice of venue provision.
See e.g. S & D Coffee, Inc. v. GEl Autowrappers, 995 F. Supp. 607, 609 (M.D.N.C. 1997)
(discussing permissive forum selection clauses as merely waivers of objections to personal
jurisdiction in a particular court, to be distinguished from mandatory forum selection clauses
which require suit to be brought only in the designated forum). Defendants' motion to dismiss for
improper venue is therefore denied.
CONCLUSION
Accordingly, for the foregoing reasons, defendants' amended motion to dismiss [DE 11] is
DENIED.
SO ORDERED, this _l_ day of October, 2013.

~MW.~

TE

NCEW.-BOYLE
UNITED STATES DISTRICT JUDGE

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