The opinion of the court was delivered by: Yohn, District Judge.
In 1997, Financial Software Systems contracted with First Union
National Bank to develop and customize banking software for First
Union. Within months, defendant stopped making payments due under
the contract. Plaintiff filed this suit, alleging numerous
violations of state law.
Defendant has filed a motion to dismiss the complaint for lack
of subject matter jurisdiction, alleging that there is no
diversity of citizenship between plaintiff and defendant.
Plaintiff is a citizen of Pennsylvania by both incorporation
and principal place of business. Defendant is a national banking
association with its principal place of business in North
Carolina and branches in Pennsylvania. Defendant's motion to
dismiss argues that as a national banking association with
branches in Pennsylvania, defendant is also a citizen of
Pennsylvania and the parties are not of diverse citizenship.
Resolution of the motion requires a construction of a provision
of the National Bank Act, which makes national banking
associations "citizens of the states in which they are
respectively located." Because I find that a national banking
association is not a citizen of each state in which it maintains
a branch, I will deny the motion to dismiss.
Plaintiff filed its complaint followed by an amended complaint
to which defendant responded with a motion to dismiss. Because
all of the claims in the action are for violations of state
law,*fn2 no federal question was raised. Instead, plaintiff
premised jurisdiction on diversity of citizenship under
28 U.S.C. § 1332. See Amend. Compl. ¶ 3; see also
28 U.S.C. § 1332(a)(1) (1994 & Supp. 1999). Plaintiff is a corporate citizen
of Pennsylvania, by incorporation and principal place of
business. See Amend. Compl. ¶ 1. Defendant is a national
banking association ("national bank") with its principal place of
business in North Carolina and branch banks in Pennsylvania.*fn3
See Amend. Compl. ¶ 2; Aff. of Ronald I. Nagel in Support of
Defs. Mot. to Dismiss for Lack of Subject Matter Juris. ¶ 2 (Doc.
No. 12 filed Oct. 4, 1999) [hereafter "Nagel Aff."]. Defendant
argues that it is a Pennsylvania citizen because it is a national
bank with branch banks in Pennsylvania. See Mem. of Law in
Support of Defs. Mot. to Dismiss at 3-4 (Doc. 12) [hereafter
"Defs. Mot."]. Defendant has filed a motion to dismiss the
complaint for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1). See Fed.R.Civ.P. 12(b)(1).
A motion to dismiss under Rule 12(b)(1) challenges the
existence of subject matter jurisdiction. Plaintiff bears the
burden to prove that the relevant jurisdictional requirements are
met. See Development Fin. Corp. v. Alpha Housing & Health Care,
54 F.3d 156, 158 (3d Cir. 1995); Mellon Bank (East) PSFS v.
Farino, 960 F.2d 1217, 1223 (3d Cir. 1992).
A motion to dismiss under Rule 12(b)(1) may present either a
facial or a factual challenge to subject matter jurisdiction.
See Mortensen v. First Federal Savings and Loan Ass'n,
549 F.2d 884, 891 (3d Cir. 1977). A facial challenge contests the
existence of subject matter jurisdiction on the face of a
complaint, while a factual challenge contests the existence of
subject matter jurisdiction in fact. Id.
"[W]hen there is a factual question about whether a court has
jurisdiction, the trial court may examine facts outside the
pleadings. . . . [b]ecause at issue in a factual 12(b)(1) motion
is the trial court's jurisdiction-its very power to hear the
case.'" See Robinson v. Dalton, 107 F.3d 1018, 1021 (3d Cir.
1997) (citing Mortensen, 549 F.2d at 891). Plaintiff's factual
allegations need not be accepted as true. See Robinson v.
Dalton, 107 F.3d at 1021. The court is free to consider and
weigh evidence outside the pleadings to resolve factual issues
bearing on the jurisdictional
issue. See Gotha v. United States, 115 F.3d 176, 179 (3d Cir.
1997). Consequently, plaintiff must present "affidavits or other
competent evidence that jurisdiction is proper." See Dayhoff,
Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996). Where
the complaint and affidavits are relied upon to satisfy its
burden, the plaintiff succeeds by making a prima facie showing
that jurisdiction exists. See Friedman v. Israel Labour Party,
957 F. Supp. 701, 706 (E.D.Pa. 1997). "Factual discrepancies
created by affidavits are generally resolved in favor of the
nonmoving party." Id.; see also Carteret Savings Bank v.
Shushan, 954 F.2d 141, 142 n. 1 (3d Cir. 1992).
All factual and legal issues must be addressed as
jurisdictional issues, rather than on their merits. See White v.
United States Gov't Dep't of Treasury, 969 F. Supp. 321, 323
(E.D.Pa. 1997) (citing Growth Horizons, Inc. v. Delaware
County, 983 F.2d 1277 (3d Cir. 1993)). Under Rule 12(b)(1),
dismissal is proper only if "the claim clearly appears to be
immaterial and made solely for the purpose of obtaining
jurisdiction or . . . is wholly insubstantial and frivolous."
Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d
Cir. 1991) (quoting Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct.
773, 90 L.Ed. 939 (1946)).
Plaintiff alleges that defendant is a citizen of North Carolina,
the state in which it is located by organization certificate*fn4
and in which it maintains its principal place of business. See
Amend. Compl. ¶ 2. Defendant counters that it is a citizen of
each state in which it operates a branch bank, which would
include Pennsylvania. See Defs. Mot. at 9. The argument turns
on the meaning of the word "located" under 28 U.S.C. § 1348
(1994), which provides that national banks are "deemed citizens
of the States in which they are respectively located." See id.
I. DIVERSITY OF CITIZENSHIP MUST BE COMPLETE.
"[F]ederal courts are courts of limited jurisdiction." See
Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375,
377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Federal courts have
"diversity" jurisdiction over cases and controversies between
citizens of different states for a necessary amount in
controversy. See 28 U.S.C. § 1332(a)(1); Brown v. Francis,
75 F.3d 860, 865 (3d Cir. 1996). The rule means that no plaintiff
may be a citizen of the same state as any defendant. See
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267, 2 L.Ed. 435
(1806), overruled on other grounds by, Louisville, Cincinnati &
Charleston R.R. Co. v. Letson, 43 U.S. 497, 555-56, 2 How. 497,
11 L.Ed. 353 (1844) (regarding corporate citizenship); Mennen
Co. v. Atlantic Mut. Ins. Co., 147 F.3d 287, 290 (3d Cir. 1998).
Thus, diversity jurisdiction does not exist if plaintiff and
defendant each are citizens of Pennsylvania. See Mennen, 147
F.3d at 290; Kelly v. United States Steel Corp., 284 F.2d 850,
854 (3d Cir. 1960).
A. Citizenship of Plaintiff and State Corporations.
Ordinarily, corporate citizenship is defined by
28 U.S.C. § 1332, which makes corporations citizens of states in which they
are incorporated and also of the state in which they maintain
their principal place of business. See § 1332(c)(1). Plaintiff
is incorporated in Pennsylvania and maintains its principal place
of business in Pennsylvania. See Amend. Compl. ¶ 1.
Consequently, plaintiff is a Pennsylvania citizen.
B. Citizenship of Defendant and National Banks.
The citizenship of a national bank is addressed specially in
28 U.S.C. § 348, which provides that national banks are "citizens of
the States in which they are respectively located." See
28 U.S.C. § 1348 (1994). A national bank has no state of
incorporation. See Berkowitz v. Midlantic Corp., No.
90-CV-1811, 1997 WL 452206, *4 (D.N.J. July 18, 1997). Rather, a
national bank is incorporated by the federal government. See
12 U.S.C. § 24 (1994 & Supp. 1999). To incorporate, a national bank
must file an organization certificate stating, among other
things, the place where the bank's "operations of deposit and
discount are to be carried on." See 12 U.S.C. § 22 & 24
(1994). Once so incorporated, a national bank may now establish
both intra-state and interstate branches, subject to limitation.
See 12 U.S.C. § 36 (1994 & Supp. 1999).
At the time of suit, defendant had branches in Pennsylvania.
See Defs. Ans. ¶ 7; Nagel Aff. ¶ 3. Based on the following
analysis, I conclude that those branches do not make defendant a
citizen of Pennsylvania.
II. UNDER § 1348, A NATIONAL BANKING ASSOCIATION IS A CITIZEN OF
THE STATE OF ITS PRINCIPAL PLACE OF BUSINESS.
Resolution of defendant's motion requires construction of
statutory law. Jurisdiction in suits by or against a national
bank is provided in § 1348 as follows:
The district courts shall have original jurisdiction
of any civil action commenced by the United States,
or by direction of any officer thereof, against any
national banking association, any civil action to
wind up the affairs of any such association, and any
action by a banking association established in the
district for which the court is held, under chapter 2
of Title 12, to enjoin the Comptroller of the
Currency, or any receiver acting under his direction,
as provided by such chapter.
All national banking associations shall, for the
purposes of all other actions by or against them, be
deemed citizens of the States in ...