BANK OF AMERICA LP BAC LP v. 9060 (2021)

United States Court of Appeals, Ninth Circuit.2021-02-12No. No. 19-16802

Summary · law.co

Holding. The district court's judgment is vacated and the case is remanded for the district court to determine whether complete diversity of citizenship existed when the complaint was filed; if diversity cannot be established, the action shall be dismissed.

Bank of America filed a diversity jurisdiction case against Boston Springs Trust and other defendants in federal district court. The district court granted summary judgment in favor of Bank of America, but the appellate court identified a critical problem: the complaint's allegations about the citizenship of all parties were insufficient or unclear. Bank of America, as the party invoking federal jurisdiction, failed to adequately allege the citizenship facts necessary to establish complete diversity—a requirement for diversity jurisdiction under federal law.

The court noted specific deficiencies: Bank of America confused a national bank's citizenship (determined by main office location) with principal place of business; the Nevada corporation defendant's principal place of business was unidentified; and the citizenship of the LLC members and trust trustee were unknown. Without clear evidence that all plaintiffs and defendants are diverse in citizenship, the federal court lacked subject matter jurisdiction to hear the case. Accordingly, the court could not reach the merits of the appeal.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether Bank of America adequately alleged its citizenship under diversity jurisdiction rules
Whether the defendants' citizenship was sufficiently pleaded to establish complete diversity
Citizenship requirements for national banks, corporations, LLCs, and trusts under 28 U.S.C. § 1332

Procedural posture

Boston Springs Trust appealed from the district court's summary judgment in favor of Bank of America in a diversity jurisdiction case.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

ORDER

9060 Boston Springs Trust (“Boston Springs”) appeals from the district courts summary judgment in favor of Bank of America, N.A. Because we cannot ascertain from the record whether the district court properly exercised subject matter jurisdiction, we vacate the district courts judgment and remand for the district court to determine whether there was complete diversity of citizenship when the case was filed.

“[W]e are obliged to raise sua sponte issues concerning district courts’ subject matter jurisdiction.” Animal Legal Def. Fund v. U.S. Dept of Agric., 933 F.3d 1088, 1092 (9th Cir. 2019). “If the district court lacked subject matter jurisdiction ․, ‘we would have jurisdiction to correct the jurisdictional error, but not to entertain the merits of an appeal.’ ” Id. (quoting Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003)).

Bank of America filed this case in the district court on the basis of diversity jurisdiction under 28 U.S.C. § 1332. Diversity jurisdiction “requires ‘complete diversity’ of citizenship, meaning that ‘the citizenship of each plaintiff is diverse from the citizenship of each defendant.’ ” Demarest v. HSBC Bank USA, N.A., 920 F.3d 1223, 1226 (9th Cir. 2019) (quoting Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996)).

In the complaint, Bank of America alleges that it is a citizen of North Carolina because it “is a national bank with its principal place of business in Charlotte.” But “a national bank is a citizen only of the state in which its main office is located.” Rouse v. Wachovia Mortg., FSB, 747 F.3d 707, 709 (9th Cir. 2014). Frequently, “the location of a national banks main office and of its principal place of business coincide,” id. at 711 (quoting Wachovia Bank v. Schmidt, 546 U.S. 303, 317 n.9, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006))—but not always. See id. at 709 (“Wells Fargos main office is in South Dakota and its principal place of business is in California․”). Therefore, Bank of Americas allegations are insufficient to establish its own citizenship.

The allegations of defendants’ citizenship are also indeterminate. Bank of America alleges that Remington Place Homeowners’ Association “is a Nevada non-profit corporation,” but a corporation is a citizen of both its state of incorporation “and ․ the State where it has its principal place of business.” Hertz Corp. v. Friend, 559 U.S. 77, 80, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010) (quoting 28 U.S.C. § 1332(c)(1)). Absolute Collection Services, LLC, a Nevada limited liability corporation, is “a citizen of every state of which its owners/members are citizens,” Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006), but Bank of America “cannot determine the citizenship of the members.” Boston Springs, a Nevada trust, “has the citizenship of its trustee or trustees,” id., but Bank of America “cannot determine the citizenship of the trustee.” As the party invoking federal jurisdiction, Bank of America had the burden to “allege ․ the facts essential to show jurisdiction.” McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936).

“We cannot consider the merits of the appeal before assuring ourselves that the district court had jurisdiction.” Matheson, 319 F.3d at 1091. Therefore, we vacate the district courts judgment and remand for the district court to ascertain the citizenship of all the parties. “Further discovery on this issue might well demonstrate facts sufficient to constitute a basis for jurisdiction, and in the past we have remanded in just such a situation.” Harris Rutsky & Co. Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003) (citation omitted). If the district court determines that there was not complete diversity at the time the complaint was filed, it shall dismiss the action. If the district court determines that the parties were diverse, it may (but need not) reconsider its summary judgment ruling in light of subsequent developments in Nevada law. See, e.g., 7510 Perla Del Mar Ave Tr. v. Bank of Am., N.A., 136 Nev. 62, 458 P.3d 348 (2020) (en banc). Neither side shall recover costs.

VACATED AND REMANDED WITH INSTRUCTIONS.