Ellis et al v. Wells Fargo Bank, N.A. et al, No. 3:2013cv01279 - Document 13 (S.D. Cal. 2014)
Court Description: ORDER granting Plaintiff's 6 Motion to Remand to State Court and terminating Wells Fargo Bank, N.A.'s 3 Motion to Dismiss. Court remands the case to the San Diego Superior Court. Pla's request for attys' fees is denied. Signed by Judge Thomas J. Whelan on 2/14/2014. (Certified copy sent to State Court via US Mail Service.) (All non-registered users served via U.S. Mail Service) (jah)
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Ellis et al v. Wells Fargo Bank, N.A. et al Doc. 13 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RICHARD E. ELLIS, et al., 12 vs. 13 14 15 CASE NO. 13-CV-1279 W(WVG) Plaintiffs, ORDER GRANTING MOTION TO REMAND CASE TO STATE COURT [DOC. 6] AND TERMINATING MOTION TO DISMISS [DOC. 3] WELLS FARGO BANK, N.A., et al., 16 17 Defendants. Pending before the Court is a motion to remand filed by Plaintiffs Richard E. Ellis 18 and Sharie M. Ellis. Plaintiffs seek to remand this case to the San Diego Superior 19 Court. Defendant Wells Fargo Bank, N.A., opposes. 20 The Court decides the matter on the papers submitted and without oral 21 argument. See Civ.L.R. 7.1(d.1). For the reasons stated below, the Court GRANTS 22 Plaintiffs’ motion [Doc. 6]. 23 24 I. BACKGROUND 25 Plaintiffs reside in La Jolla, California, and are citizens of California. (Compl. 26 [Doc 1-1], ¶ 6.) Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) is a national 27 banking association, with its principal place of business in San Francisco, California and 28 its main office in South Dakota. (Compl., ¶ 7; Opp. [Doc. 9], 2:2-4 .) -1- 13-CV-1279 W Dockets.Justia.com 1 In August 2006, Plaintiffs purchased property located at 5448 La Jolla Blvd., Unit 2 F101, La Jolla, CA 92037 (the “Residence”). (Compl., ¶ 17.) “Plaintiffs executed a 3 series of documents, including but not limited to, a Note and Deed of Trust, securing 4 the Note in the amount of $680,000 on the Residence.” (Id.) Wells Fargo is the 5 original mortgage broker, lender and servicer used to purchase the loan. (Id., ¶ 7.) 6 On March 11, 2013, Plaintiffs filed a Complaint against Defendants in the San 7 Diego Superior Court alleging seven state-based causes of action. On June 3, 2013, 8 Wells Fargo removed the lawsuit to this Court based on diversity jurisdiction. Plaintiffs 9 now seek remand on the basis that Wells Fargo is a California citizen since its principal 10 place of business is in San Francisco. Wells Fargo opposes arguing that as a national 11 bank, it is only a citizen of South Dakota, where its main office is located. 12 13 II. DISCUSSION 14 An action is removable to federal court only if it might have been brought here 15 originally. See 28 U.S.C. §1441(a). The removal statute is “strictly construe[d]... 16 against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 17 1992)(per curiam). “Federal jurisdiction must be rejected if there is any doubt as to the 18 right of removal.” Id. “Th[is] ‘strong presumption’ against removal jurisdiction means 19 that the defendant always has the burden of establishing that removal is proper.” Id. 20 Diversity jurisdiction exists where the amount in controversy exceeds $75,000 21 and the suit is between citizens of different States. 28 U.S.C. §1332(a)(1). For 22 purposes of diversity jurisdiction, corporations are generally considered citizens of the 23 state of incorporation and principal place of business. 28 U.S.C. § 1332(c)(1). 24 However, a national bank’s citizenship for purposes of diversity jurisdiction is governed 25 by 28 U.S.C. § 1348. This section provides: 26 27 All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are receptively located. 28 -2- 13-CV-1279 W 1 28 U.S.C. § 1348. Thus, whether diversity jurisdiction exists in this case depends on 2 if the term “located” includes 28 U.S.C. § 1332(c)(1)’s principal-place-of-business test. 3 If it does, because Wells Fargo’s principal place of business is in California, diversity 4 jurisdiction would not exist. 5 As an initial matter, this Court recognizes that there is considerable disagreement 6 regarding the interpretation of “located” in section 1348. While Wells Fargo argues 7 that most published decisions have interpreted “located” to only include a national 8 bank’s main office, there is also a significant number of cases that have interpreted the 9 term to also include a bank’s principal place of business.1 Moreover, there appears to 10 be a growing number of cases in this district that have found the principal-place-of11 business test applicable to national banks. See Ortiz v. Wells Fargo Bank, N.A. 2013 12 U.S. Dist. LEXIS 5661 (2013); Bickoff v. Wells Fargo Bank, N.A., 2013 U.S. Dist. 13 LEXIS 2293 (S.D. Cal. Jan. 4, 2013); Uriarte v. Wells Fargo Bank, N.A., 2011 U.S. 14 Dist. LEXIS 127497 (S.D. Cal. Nov. 3, 2011); Saberi v. Wells Fargo Home Mortg., 15 2011 U.S. Dist. LEXIS 5286 (S.D. Cal. Jan. 20, 2011). Wells Fargo nevertheless argues 16 that under Wachovia Bank v. Schmidt, 546 U.S. 303 (2006), national banks are only 17 18 19 1 The following is not intended to be an exhaustive list, but simply to illustrate the 20 growing conflict among district courts within the Ninth Circuit. Cases that interpret “located” to include a national bank’s principal place of business include: Inyang v. Resmae Morg. Corp., 21 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, 22 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 23 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. 24 Dist. LEXIS 74521 (C.D. Cal. Mar. 31, 2011); Mount et al. v. Wells Fargo Bank, N.A., 2008 U.S. Dist. LEXIS 98193 (C.D. Cal. Nov. 24, 2008). Cases that interpret “located” to include only a national bank’s main office include: Silva v. Wells Fargo Bank N.A., 2011 U.S. Dist. LEXIS 64636, 2011 WL 2437514 (C.D. Cal. 26 June16, 2011); Tse v. Wells 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. 27 2010); Cal. ex rel. Bates v. Mortg. Elec. Registration Sys., Inc., No., 2010 U.S. Dist. LEXIS 81650 (E.D. Cal. July21, 2010); DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 28 1123-24 (N.D. Cal. 2010);Peralta v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 112387 (N.D. Cal. Nov. 16, 2009). 25 -3- 13-CV-1279 W 1 citizens of the state in which the main office is located and that Schmidt “rejected” 2 application of the principal-place-of-business test to national banks. 3 In Schmidt, a national bank filed a diversity action against several South 4 Carolina citizens. After judgment was entered in favor of the defendants, the Court of 5 Appeal evaluated whether diversity jurisdiction existed. The court found that because 6 the bank had a branch office in South Carolina, the bank was “located” in South 7 Carolina and, therefore, was a South Carolina citizen for purposes of diversity. 8 Accordingly, the Court of Appeal vacated the district court judgment, finding that it 9 lacked subject-matter jurisdiction. 10 The Supreme Court rejected the Court of Appeal’s expansive interpretation of 11 the term “located” and held that a national bank, for purposes of diversity jurisdiction, 12 “is a citizen of the State in which its main office, as set forth in its articles of association, 13 is located.” Id., 546 U.S. at 307. The Court explained: 14 15 16 17 18 Were we to hold, as the Court of Appeal did, that a national bank is additionally a citizen of every State in which it has established a branch, the access of a federally chartered bank to a federal forum would be drastically curtailed in comparison to the access afforded state banks and other state-incorporated entities. Congress, we are satisfied, created no such anomaly. Id. In a footnote, the Court acknowledged that Firstar Bank, N.A. v. Faul, 253 F.3d 19 982 (7th Cir. 2001) and Horton v. Bank One, N.A., 387 F.3d 426 (5th Cir. 2004) had 20 interpreted the term “located” to include a national bank’s main office and principal 21 place of business. Id. at n 8. But the Court refused to express an opinion on the issue 22 because it “is not presented by the parties or necessary to today’s decision.” Id. 23 Given Schmidt’s explicit refusal to decide whether the term “located” includes 24 a bank’s principal place of business, Wells Fargo’s claim that the decision rejected the 25 principal-place-of-business test and “parity between national banks and corporations” 26 (see Opp. [Doc. 9], 4:12–13), lacks merit. And although Schmidt acknowledged that 27 the principal-place-of-business test is not found in section 1348's language, the same is 28 true of the term “main office.” Neither term is found in section 1348. Indeed, Schmidt -4- 13-CV-1279 W 1 recognized that “‘located’ is not a term of enduring rigidity” and instead focused on a 2 discussion of section 1348's predecessor statutes, which the Court found sought to 3 establish parity between national banks and state banks regarding access to federal 4 courts. Schmidt, 546 U.S. at 310–312. For this reason, this Court is persuaded that 5 Firstar and Horton are in harmony with and most accurately reflect Schmidt’s 6 reasoning. 7 In Horton, a national bank filed a diversity lawsuit. Similar to the situation in 8 Schmidt, the district court interpreted “located” in section 1348 to include a bank’s 9 branch offices. Because one of the defendants was a citizen of a state in which the bank 10 had a branch office, the district court found diversity was lacking. The Seventh Circuit 11 reversed, relying in large part on section 1348's predecessor statutes: 12 13 14 15 16 17 18 19 20 21 Congress passed 28 U.S.C. § 1348 against an interpretive background which assumed the national banks were to have the same access to the federal courts as state banks and corporations. No language in the statute indicates a rejection of this existing construction. A useful contrast can be drawn with the 1882 Act, which stated with exceptional clarity that national banks should not be able to resort to federal courts solely by virtue of their status as federal creations. Since Congress did not include any language suggesting that it intended to alter the established background assumption that federal courts have the same jurisdiction over national banks as over any other corporation, we presume that Congress intended for 28 U.S.C. §1348's meaning to comport with the judicial interpretations of its predecessor. Id. at 988–989. See also Horton, 387 F.3d 426. Because the Ninth Circuit has not yet addressed the issue in the wake of 22 Schmidt, and Horton’s reasoning appears consistent with Schmidt’s reasoning, this 23 Court finds that under section 3148, Wells Fargo Bank is “located” in California, and 24 thus diversity jurisdiction is lacking. Finally, Plaintiffs’ also seek to recover attorney’s fees. Given the unsettled state 25 26 of the law within the Ninth Circuit on the issue, Defendant did not lack an objectively 27 reasonable basis for seeking removal. 28 U.S.C. §1447(c); see Martin v. Franklin 28 -5- 13-CV-1279 W 1 Capital Corp., 546 U.S. 132, (2005). Thus, the Court finds Plaintiffs are not entitled 2 the fees and costs incurred as a result of the removal. 3 4 II. CONCLUSION 5 For the reasons stated above, Plaintiffs’ motion to remand is GRANTED 6 [Doc. 6]. This case is hereby REMANDED to the San Diego County Superior Court. 7 Plaintiffs’ request for attorneys’ fees is DENIED. 8 Additionally, in light of this order, Wells Fargo’s motion to dismiss is 9 TERMINATED. 10 11 IT IS SO ORDERED. 12 13 DATED: February 14, 2014 14 Hon. Thomas J. Whelan United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- 13-CV-1279 W
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