Federal Home Loan Bank v. Banc of America Funding Corp.
760 F. Supp. 2d 807
N.D. Ill.2011Background
- Bank sued in state court on Illinois securities law and common-law claims; removal filed claiming federal jurisdiction issues; issue is whether Bank is entitled to remand based on lack of federal subject-matter jurisdiction.
- Question presented includes diversity, federal-question under 12 U.S.C. § 1432(a), and related-to bankruptcy jurisdiction.
- Court rejects diversity and federal-question theories under § 1432(a); also finds related-to bankruptcy jurisdiction inadequate to preserve jurisdiction over the entire action.
- Court recognizes competing views in district courts and distinguishes Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines; cites Judge Brown’s concurrence.
- Court concludes § 1447(c) requires remand to state court and orders remand of the case to Cook County Circuit Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether diversity of citizenship exists for removal. | Bank argues federation-wide activities render Bank non-citizen. | Defendants contend Bank is citizen of Illinois under Hukic and related tests. | Diversity lacking; remand appropriate. |
| Whether § 1432(a) 'sue and be sued' grants federal-question jurisdiction. | Bank relies on charter language to confer federal jurisdiction. | D.Cir. reading of § 1432(a) supports jurisdiction. | § 1432(a) does not confer federal-question jurisdiction; remand supported. |
| Whether related-to bankruptcy jurisdiction allows removal of the entire action. | Possible federal-interest claims could render some claims removable. | Cannot sever the action for federal-question treatment. | Insufficient to retain jurisdiction over the whole case; remand justified. |
Key Cases Cited
- Bankers' Trust Co. v. Tex. & Pac. Ry. Co., 241 U.S. 295 (1916) (diversity jurisdiction where federally chartered activities are nonlocalized)
- Hukic v. Aurora Loan Servs., 588 F.3d 420 (7th Cir. 2009) (federal chartered corporations may lack state diversity citizenship)
- American Nat'l Red Cross v. S.G., 505 U.S. 247 (1992) (sue-and-be-sued clause does not automatically grant federal-question jurisdiction)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines, 534 F.3d 779 (D.C.Cir.2008) (majority view on federal jurisdiction; concurrence criticizing approach)