Wilson v. PBI Bank, Inc., No. 1:11-CV-19, 2011 WL 1376709 (W.D. Ky. April 12, 2011).
Geez, folks! Read the frickin’ law. Didn’t all law students learn the difference between “residence” and “citizenship” freshmen year in Civil Procedure?
Wilson v. PBI Bank shows the merits of planning beyond the CAFA remand hearing. Here, the plaintiff was unsuccessful in her remand arguments, but got the Court to defer its remand ruling by moving for limited discovery on issues surrounding minimal diversity.
The putative class representative, Shirley Wilson, brought a class action on behalf of commercial loan borrowers that had borrowed from PBI Bank, Inc. The complaint alleged that PBI Bank had impermissibly lured borrowers with one interest rate while intending to charge a higher rate. Wilson, specifically, claimed she had been charged an annual interest rate of 6.3368% instead of the 6.250% rate promised in the Promissory Note entered into by her and PBI Bank. Accordingly, the plaintiff asserted breach of contract claims against the defendant based upon the defendant’s alleged overcharges.
The defendant removed the case to the federal court pursuant to CAFA.
The plaintiff moved to remand the case on the ground that minimal diversity was not present and additionally argued that two exceptions to CAFA applied here. The plaintiff alternatively moved for limited discovery as to the issue of minimal diversity.
The plaintiff argued that minimal diversity did not exist because the class action involved parties who were only citizens and residents of Kentucky. Further, the complaint defined the proposed class as “commercial loan borrowers of the Bank who are also residents of Kentucky,” and excluded from the class, “any person or entity who is not now a resident of the State of Kentucky.”
The defendant argued that, although the plaintiff had excluded all persons or entities who were not residents of Kentucky, the plaintiff failed to exclude persons or entities who were not citizens of Kentucky – and the Court agreed.
The Court noted that citizenship for purposes of diversity jurisdiction is synonymous not with “residence” but with “domicile.” To establish new domicile, an individual must both reside in the new domicile and intend to remain there. Thus, the courts look not only to one’s residence, but also to voter registration, location of property, location of bank accounts, memberships, places of employment, and payment of taxes. Under CAFA, if any member of the plaintiff class is a citizen of a different state, minimal diversity exists. Because the plaintiff had only limited the class to residents, not citizens (i.e., those who are domiciled in Kentucky), a resident of Kentucky that qualified as a domiciliary of another state might fall within the class definition. Accordingly, the Court found that the plaintiff’s complaint, on its face, did not preclude a finding of minimal diversity.
The plaintiff next argued that CAFA’s “home state controversy” and “local controversy” exceptions applied here. The Court stated that for both exceptions to apply, the plaintiff must demonstrate that two-thirds or more of the class members are citizens of the Commonwealth of Kentucky. Again, because the complaint refers to residents, and not citizens, the Court could not determine if the requisite threshold for in-state citizenship was met. Similarly, the Court found that it could not determine whether the “discretionary exception” was applicable to this case.
Nonetheless, it seems apparent that the portion of residents of Kentucky that are, in fact, citizens of another state is probably low, and that discovery might clarify that most “residents” were also “citizens” and, thus, the thresholds for the exceptions would be met. Knowing the Court might disagree with its argument in opposition to remand, the plaintiff moved in the alternative for limited discovery. This gave the Court an alternative to outright denial of the motion to remand and gave the plaintiff a chance to prove her case. Since the limited discovery was directed to citizenship, the denial of the motion to remand was “without prejudice” so the plaintiff could refile it.