Wachovia Bank, N. A. v. Schmidt, 546 U.S. 303 (2006)
Primary Holding
A national bank, for purposes of federal diversity jurisdiction under §1348, is deemed to be a citizen of the State in which its main office is located, as designated in its articles of association, and not a citizen of every State in which it maintains a branch.
In the case of Wachovia Bank v. Schmidt, the Supreme Court decided that a national bank is considered a citizen only of the state where its main office is located, not of every state where it has branches. This matters because it helps national banks access federal courts more easily, which can impact how disputes are handled. For consumers, this means that if you have a legal issue involving a national bank, it will be treated based on the laws of the state where the bank's main office is, which can affect where you can file a lawsuit or seek resolution.
AI-generated plain-language summary to help you understand this case
In Wachovia Bank, N.A. v. Schmidt, the underlying dispute arose when Daniel G. Schmidt III and other South Carolina citizens sued Wachovia Bank in a South Carolina state court. The plaintiffs accused Wachovia of fraudulently inducing them to invest in a fraudulent tax shelter. In response, Wachovia sought to compel arbitration of the dispute and filed a petition in the United States District Court for the District of South Carolina, claiming that the parties had diverse citizenship, which would provide a basis for federal jurisdiction. The procedural history of the case began with Wachovia's petition to compel arbitration being denied by the District Court, which did not question the existence of federal subject-matter jurisdiction at that time. However, upon appeal, a divided panel of the Fourth Circuit Court of Appeals determined that the District Court lacked diversity jurisdiction over the case, leading to the vacating of the District Court's decision. This ruling prompted Wachovia to seek a writ of certiorari from the Supreme Court to resolve the jurisdictional issue. The relevant background context centers on the citizenship of national banks for the purposes of federal diversity jurisdiction. National banks, like Wachovia, are chartered by the Comptroller of the Currency and are not incorporated by any state. The case hinged on the interpretation of the term "located" in the context of 28 U.S.C. §1348, which defines the citizenship of national banks. The Supreme Court was tasked with determining whether a national bank is considered a citizen solely of the state where its main office is located, as Wachovia argued, or also of every state in which it maintains a branch, as the respondents contended.
Whether, for purposes of federal-court diversity jurisdiction under 28 U.S.C. §1348, a national bank is deemed a citizen of the State in which its main office is located, or is also a citizen of every State in which it maintains a branch.
The judgment is reversed.
- Court
- Supreme Court
- Decision Date
- November 28, 2005
- Jurisdiction
- federal
- Case Type
- landmark
- Majority Author
- Ginsburg
- Damages Awarded
- N/A
- Data Quality
- high
Lincoln Property Co. v. Roch, 546 U.S. 81 (2005)
Consumer LostDefendants may remove a civil action from state court to federal court based on diversity of citizenship if there is complete diversity between all named plaintiffs and all named defendants, and no defendant is a citizen of the forum State; it is not the responsibility of the named defendants to prove the nonexistence of a potential defendant whose presence would destroy diversity.
Central Va. Community College v. Katz, 546 U.S. 356 (2006)
Consumer WonCongress has the authority to abrogate state sovereign immunity in bankruptcy proceedings, allowing a bankruptcy trustee to pursue actions against state agencies to recover preferential transfers made by a debtor.
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)
Consumer LostThe Federal Arbitration Act (FAA) mandates that arbitration agreements are to be enforced according to their terms, even when a party claims that the entire contract is void for illegality, thereby allowing arbitrators to resolve disputes regarding the contract's legality.
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71 (2006)
Consumer LostTitle I of the Securities Litigation Uniform Standards Act of 1998 (SLUSA) preempts state-law class action claims alleging misrepresentation or omission of material facts in connection with the purchase or sale of covered securities, regardless of whether federal law provides a private remedy for those claims.