OneWest Bank, N.A. v. Robert W. Melina
2016 U.S. App. LEXIS 11862
| 2d Cir. | 2016Background
- In 2007 Melina borrowed $591,000 secured by a mortgage on Brooklyn property; the note was indorsed to IndyMac, which later failed and whose assets were transferred to IndyMac Federal and managed by the FDIC.
- In March 2009 FDIC (as receiver/conservator) entered a Loan Sale Agreement (LSA) selling IndyMac Federal’s assets, including Melina’s loan, to OneWest; the LSA required a specific endorsement form and contemplated later transfer/closing mechanics.
- OneWest contracted with Deutsche Bank as custodian for the original note and mortgage; physical possession of the original documents moved between Deutsche Bank and OneWest before OneWest’s counsel held them when the foreclosure suit was filed in September 2014.
- Melina defaulted in 2009; OneWest brought a foreclosure action in the Eastern District of New York invoking diversity jurisdiction on Sept. 10, 2014; Melina moved to dismiss for lack of subject-matter jurisdiction and challenged standing.
- The district court granted OneWest summary judgment, holding (1) under 28 U.S.C. § 1348 a national bank’s citizenship is the state of its main office (OneWest’s main office was in California), and (2) OneWest had standing to foreclose as holder and assignee of the note.
- The Second Circuit affirmed, addressing (a) whether national banks are citizens of their principal place of business for diversity, and (b) whether OneWest had standing based on possession/assignment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a national bank is a citizen of the state of its principal place of business for diversity purposes | National banks should be treated like corporations/state banks and be citizens of their principal place of business | National bank citizenship is limited to the state designated as its main office under § 1348 | A national bank is a citizen only of the state of its main office (not separately of its principal place of business) |
| Whether OneWest’s principal place of business was New York (defeating diversity) | Melina: OneWest’s parent was being acquired by New York-headquartered CIT Group and merger restrictions shifted control to New York | OneWest: parent/subsidiary separation preserves OneWest’s own nerve center in California; no alter-ego shown | OneWest’s principal place of business remained in California; parent’s proposed acquisition did not change OneWest’s citizenship |
| Whether OneWest had standing to foreclose by being the holder of the note when suit was filed | OneWest: it had physical possession of the original note at filing, satisfying holder status | Melina: OneWest failed to prove when or how the note was transferred into its possession | Physical possession at commencement (established by affidavits) sufficed under New York law; summary judgment for OneWest affirmed |
| Whether the LSA assignment gave OneWest standing as assignee | OneWest: the LSA conveyed FDIC’s rights in the loan to OneWest | Melina: challenged adequacy/details of assignment proof | The LSA’s language effected an assignment of FDIC’s rights; assignment sufficed to confer standing |
Key Cases Cited
- Wachovia Bank v. Schmidt, 546 U.S. 303 (2006) (national bank is "located" in state of its main office; left open principal-place question)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (defines corporate "principal place of business" as the "nerve center")
- Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355 (2015) ( New York Court of Appeals: physical possession of note is sufficient for standing to foreclose; better practice to explain transfer but not fatal)
- Rouse v. Wachovia Mortg., FSB, 747 F.3d 707 (9th Cir. 2014) (§ 1348 locates national banks only in state of main office)
- Wells Fargo Bank, N.A. v. WMR e-PIN, LLC, 653 F.3d 702 (8th Cir. 2011) (statutory history and § 1348 support main-office-only rule)
- Leather Mfrs.' Nat’l Bank v. Cooper, 120 U.S. 778 (1887) (historical discussion of congressional approaches to bank jurisdiction)