Robert Rouse v. Wachovia Mortgage, Fsb
2014 U.S. App. LEXIS 5704
9th Cir.2014Background
- Plaintiffs Robert and Victoria Rouse sued Wells Fargo Bank, N.A. and others in California state court over residential loan-related claims; Wells Fargo removed asserting federal-question and diversity jurisdiction.
- District court dismissed plaintiffs’ federal claims; on remand question it found Wells Fargo a citizen of both South Dakota (main office) and California (principal place of business) and remanded for lack of complete diversity.
- Wells Fargo appealed the remand order to the Ninth Circuit, which reviewed de novo the statutory interpretation issue under 28 U.S.C. § 1348.
- § 1348 deems national banking associations to be “citizens of the States in which they are respectively located”; the statute does not define “located.”
- The Ninth Circuit concluded that under § 1348 a national bank is a citizen only of the state designated as its main office in its articles of association, not also the state of its principal place of business.
- The court reversed the district court and held Wells Fargo is a South Dakota citizen for diversity purposes, restoring federal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a national bank is a citizen of both the state of its main office (articles of association) and the state of its principal place of business for § 1348 diversity purposes | Rouses: § 1348’s “located” should cover principal place of business so Wells Fargo is also a California citizen | Wells Fargo: § 1348’s “located” means only the state of the bank’s main office as designated in its articles, not principal place of business | Court: § 1348 confines national-bank citizenship to the state of the main office designated in the articles of association; reversed district court |
| Whether Wachovia v. Schmidt forecloses reading § 1348 to include branches but leaves principal-place issue unresolved | Rouses: Wachovia does not resolve principal-place question and parity with state banks supports including principal place | Wells Fargo: Wachovia’s reasoning and context point to main-office-only rule; practical and historical arguments support that reading | Court: Interprets Wachovia to limit § 1348 citizenship to main office and relies on statutory history to support that reading |
| Whether historical statutes and post-1958 changes to § 1332(c)(1) require reading § 1348 to create parity with state-chartered corporations | Rouses: jurisdictional parity should persist so national banks are treated like state-chartered corporations with principal-place citizenship | Wells Fargo: Congress removed parity and § 1332(c)(1) (1958) postdates § 1348; cannot retroactively infer parity | Court: Historical evolution shows Congress did not preserve parity; § 1348 should be read as main-office-only |
| Whether courts may reinterpret § 1348 to restore parity absent legislative change | Rouses: policy/federalism concerns counsel for parity | Wells Fargo: judicial revision improper; Congress should amend statute if desired | Court: Declines to rewrite statute; leaves change to Congress |
Key Cases Cited
- Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006) (held national bank is a citizen of the state where its main office is located and treated “located” as ambiguous)
- WMR e-PIN, LLC v. Wells Fargo Bank, N.A., 653 F.3d 702 (8th Cir. 2011) (national bank is citizen only of main-office state under § 1348)
- American Surety Co. v. Bank of California, 133 F.2d 160 (9th Cir. 1943) (national bank treated as citizen of state of its principal place of business, earlier precedent addressing branch citizenship)
- Horton v. Bank One, N.A., 387 F.3d 426 (5th Cir. 2004) (national banks not citizens of every state where they operate branches; argued for parity-based analysis)
- Firstar Bank, N.A. v. Faul, 253 F.3d 982 (7th Cir. 2001) (same: national banks not located in every branch state)
- Herrmann v. Edwards, 238 U.S. 107 (1915) (discussed limits on federal jurisdiction over national banks and quoted predecessor statutes)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (explained principal-place-of-business test for corporate citizenship adopted for state-chartered corporations in 1958)