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June 30, 2016

Second Circuit Joins Other Circuits in National Bank Citizenship Determination

Connor Choate

In the case of OneWest v. Melina, (15-3063), the Second Circuit Court of Appeals joins the majority of the other circuit courts in holding that a national bank is a citizen only of the state in which its main office is located.

OneWest Bank filed a foreclosure action on Melina’s property located in New York in the U.S. District Court for the Eastern District of New York, invoking diversity jurisdiction. OneWest Bank moved for summary judgment, and the defendant cross-moved to dismiss for lack of subject matter jurisdiction. The district court granted the plaintiff’s motion for summary judgment and denied the defendant’s motion. The defendant appealed the district court’s holding that “a national bank is a citizen only of the state in which its main office is located” and that OneWest had standing.

Diversity jurisdiction applies only when diversity is “complete” between the parties and no plaintiff and defendant are citizens of the same state. A national bank, according to 28 U.S.C § 1348, are “citizens of the States in which they are respectively located.” In Wachovia Bank v. Schmidt, 546 U.S. 303 (2006), the U.S. Supreme Court left open the question of citizenship for a national bank. Now, the Second Circuit has, like its sister circuits, determined that national banks are “located” in the state included in its articles of association as its main office, and therefore a national bank is only a citizen of that state. Since OneWest’s main office is located in California, the court maintained that OneWest was a citizen of California, not New York, as the defendant argued.

The defendant contended that because OneWest’s parent company was being purchased by a company headquartered in New York, the main office and principal place of business moved to New York. The court disagreed. As the court wrote, “it is well established… that a ‘subsidiary corporation has its own principal place of business for purposes of diversity of citizenship jurisdiction.’”

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Connor Choate

Summer intern, Austin Law Firm, Raleigh, NC