Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01279/USCOURTS-casd-3_13-cv-01279-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RICHARD E. ELLIS, et al.,

Plaintiffs,

CASE NO. 13-CV-1279 W(WVG)

ORDER GRANTING MOTION

TO REMAND CASE TO STATE

COURT [DOC. 6] AND

TERMINATING MOTION TO

DISMISS [DOC. 3]

vs.

WELLS FARGO BANK, N.A., et al.,

Defendants.

Pending before the Court is a motion to remand filed by Plaintiffs Richard E. Ellis

and Sharie M. Ellis. Plaintiffs seek to remand this case to the San Diego Superior

Court. Defendant Wells Fargo Bank, N.A., opposes. 

The Court decides the matter on the papers submitted and without oral

argument. See Civ.L.R. 7.1(d.1). For the reasons stated below, the Court GRANTS

Plaintiffs’ motion [Doc. 6].

I. BACKGROUND

Plaintiffs reside in La Jolla, California, and are citizens of California. (Compl.

[Doc 1-1], ¶ 6.) Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) is a national

banking association, with its principal place of business in San Francisco, California and

its main office in South Dakota. (Compl., ¶ 7; Opp. [Doc. 9], 2:2-4 .) 

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In August 2006, Plaintiffs purchased property located at 5448 La Jolla Blvd., Unit

F101, La Jolla, CA 92037 (the “Residence”). (Compl., ¶ 17.) “Plaintiffs executed a

series of documents, including but not limited to, a Note and Deed of Trust, securing

the Note in the amount of $680,000 on the Residence.” (Id.) Wells Fargo is the

original mortgage broker, lender and servicer used to purchase the loan. (Id., ¶ 7.) 

On March 11, 2013, Plaintiffs filed a Complaint against Defendants in the San

Diego Superior Court alleging seven state-based causes of action. On June 3, 2013,

Wells Fargo removed the lawsuit to this Court based on diversity jurisdiction. Plaintiffs

now seek remand on the basis that Wells Fargo is a California citizen since its principal

place of business is in San Francisco. Wells Fargo opposes arguing that as a national

bank, it is only a citizen of South Dakota, where its main office is located. 

II. DISCUSSION

An action is removable to federal court only if it might have been brought here

originally. See 28 U.S.C. §1441(a). The removal statute is “strictly construe[d]...

against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.

1992)(per curiam). “Federal jurisdiction must be rejected if there is any doubt as to the

right of removal.” Id. “Th[is] ‘strong presumption’ against removal jurisdiction means

that the defendant always has the burden of establishing that removal is proper.” Id. 

Diversity jurisdiction exists where the amount in controversy exceeds $75,000

and the suit is between citizens of different States. 28 U.S.C. §1332(a)(1). For

purposes of diversity jurisdiction, corporations are generally considered citizens of the

state of incorporation and principal place of business. 28 U.S.C. § 1332(c)(1). 

However, a national bank’s citizenship for purposes of diversity jurisdiction is governed

by 28 U.S.C. § 1348. This section provides:

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. 

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28 U.S.C. § 1348. Thus, whether diversity jurisdiction exists in this case depends on

if the term “located” includes 28 U.S.C. § 1332(c)(1)’s principal-place-of-business test. 

If it does, because Wells Fargo’s principal place of business is in California, diversity

jurisdiction would not exist.

As an initial matter, this Courtrecognizesthat there is considerable disagreement

regarding the interpretation of “located” in section 1348. While Wells Fargo argues

that most published decisions have interpreted “located” to only include a national

bank’s main office, there is also a significant number of cases that have interpreted the

term to also include a bank’s principal place of business. Moreover, there appears to 1

be a growing number of cases in this district that have found the principal-place-ofbusiness test applicable to national banks. See Ortiz v. Wells Fargo Bank, N.A. 2013

U.S. Dist. LEXIS 5661 (2013); Bickoff v. Wells Fargo Bank, N.A., 2013 U.S. Dist.

LEXIS 2293 (S.D. Cal. Jan. 4, 2013); Uriarte v. Wells Fargo Bank, N.A., 2011 U.S.

Dist. LEXIS 127497 (S.D. Cal. Nov. 3, 2011); Saberi v. Wells Fargo Home Mortg.,

2011 U.S. Dist. LEXIS 5286 (S.D. Cal. Jan. 20, 2011). Wells Fargo nevertheless argues

that under Wachovia Bank v. Schmidt, 546 U.S. 303 (2006), national banks are only

The following is not intended to be an exhaustive list, but simply to illustrate the 1

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.,

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,

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

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.

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.

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.

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,

1123-24 (N.D. Cal. 2010);Peralta v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS

112387 (N.D. Cal. Nov. 16, 2009).

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citizens of the state in which the main office is located and that Schmidt “rejected”

application of the principal-place-of-business test to national banks.

In Schmidt, a national bank filed a diversity action against several South

Carolina citizens. After judgment was entered in favor of the defendants, the Court of

Appeal evaluated whether diversity jurisdiction existed. The court found that because

the bank had a branch office in South Carolina, the bank was “located” in South

Carolina and, therefore, was a South Carolina citizen for purposes of diversity. 

Accordingly, the Court of Appeal vacated the district court judgment, finding that it

lacked subject-matter jurisdiction. 

The Supreme Court rejected the Court of Appeal’s expansive interpretation of

the term “located” and held that a national bank, for purposes of diversity jurisdiction,

“is a citizen of the State in which its main office, as set forth in its articles of association,

is located.” Id., 546 U.S. at 307. The Court explained:

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

982 (7th Cir. 2001) and Horton v. Bank One, N.A., 387 F.3d 426 (5th Cir. 2004) had

interpreted the term “located” to include a national bank’s main office and principal

place of business. Id. at n 8. But the Court refused to express an opinion on the issue

because it “is not presented by the parties or necessary to today’s decision.” Id.

Given Schmidt’s explicit refusal to decide whether the term “located” includes

a bank’s principal place of business, Wells Fargo’s claim that the decision rejected the

principal-place-of-business test and “parity between national banks and corporations”

(see Opp. [Doc. 9], 4:12–13), lacks merit. And although Schmidt acknowledged that

the principal-place-of-business test is not found in section 1348's language, the same is

true of the term “main office.” Neither term is found in section 1348. Indeed, Schmidt

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recognized that “‘located’ is not a term of enduring rigidity” and instead focused on a

discussion of section 1348's predecessor statutes, which the Court found sought to

establish parity between national banks and state banks regarding access to federal

courts. Schmidt, 546 U.S. at 310–312. For this reason, this Court is persuaded that

Firstar and Horton are in harmony with and most accurately reflect Schmidt’s

reasoning.

In Horton, a national bank filed a diversity lawsuit. Similar to the situation in

Schmidt, the district court interpreted “located” in section 1348 to include a bank’s

branch offices. Because one of the defendants was a citizen of a state in which the bank

had a branch office, the district court found diversity was lacking. The Seventh Circuit

reversed, relying in large part on section 1348's predecessor statutes:

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 thatfederal 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

Schmidt, and Horton’s reasoning appears consistent with Schmidt’s reasoning, this

Court finds that under section 3148, Wells Fargo Bank is “located” in California, and

thus diversity jurisdiction is lacking.

Finally, Plaintiffs’ also seek to recover attorney’s fees. Given the unsettled state

of the law within the Ninth Circuit on the issue, Defendant did not lack an objectively

reasonable basis for seeking removal. 28 U.S.C. §1447(c); see Martin v. Franklin

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Capital Corp., 546 U.S. 132, (2005). Thus, the Court finds Plaintiffs are not entitled

the fees and costs incurred as a result of the removal. 

II. CONCLUSION

For the reasons stated above, Plaintiffs’ motion to remand is GRANTED

[Doc. 6]. This case is hereby REMANDED to the San Diego County Superior Court. 

Plaintiffs’ request for attorneys’ fees is DENIED.

Additionally, in light of this order, Wells Fargo’s motion to dismiss is

TERMINATED. 

IT IS SO ORDERED.

DATED: February 14, 2014

Hon. Thomas J. Whelan

United States District Judge

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