Wilson v. PBI Bank, Inc., No. 1:11-CV-19, 2011 WL 3501815 (W.D. Ky. Aug. 10, 2011).
Although a mailing address is not conclusive for purposes of determining citizenship, a District Court in Kentucky found that this data provided support for the plaintiff’s position, especially in light of the class definition, which was limited to the residents of Kentucky.
The plaintiff, who has a history of borrowing money from PBI Bank, Inc, brought a class action on behalf of commercial loan borrowers, who were subjected to PBI Bank’s alleged “common scheme of luring borrowers into commercial loans by quoting and agreeing to charge interest at a yearly rate while intending to charge interest at a higher rate.”
For instance, the plaintiff stated that she was charged a per annum interest rate of 6.3368% instead of the per annum rate of 6.250% promised in the Promissory Note entered into by the plaintiff and PBI Bank, Inc. Accordingly, the plaintiff asserted breach of contract claims against the defendant based upon the defendant’s alleged conduct of overcharging interest.
The defendant removed the case to the federal court pursuant to CAFA.
The plaintiff moved to remand the case, and also for limited discovery as to the issue of minimal diversity.
The District Court granted the plaintiff’s motion for jurisdictional discovery with leave to re-file. After completing limited discovery, the plaintiff re-filed her motion to remand.
The Court granted the plaintiff’s motion.
First, regarding minimal diversity, the plaintiff argued that the defendant had failed to establish that at least one plaintiff and one defendant were citizens of different states. Here, both the defendant and named plaintiff, Shirley Wilson, were citizens of Kentucky. The defendant argued, however, that at least one of its commercial loan borrowers was a citizen of Oklahoma, and presented the affidavit of its Senior Vice President and Assistant General Counsel for support. This affidavit indicated that of the 3,748 current commercial loans booked as “365/360” loans, 3,465 were booked as having mailing addresses in Kentucky. The affidavit also stated that one such borrower conducts business in Kentucky and Oklahoma. The borrower has an Oklahoma mailing address on the books for its loan and the Oklahoma Secretary of State’s website indicates the borrower is organized in Oklahoma.
The Court noted that the proposed class was limited to Kentucky residents. If the corporation identified by the defendant was incorporated in Oklahoma, it is traditionally not considered a resident of Kentucky. Alternatively, if the Oklahoma borrower was considered a resident of Kentucky, the plaintiff argued that the defendant had still failed to establish minimal diversity because a corporation is a citizen of both the state in which it is incorporated and the state where it has its principal place of business. The plaintiff argued that because the defendant had only addressed where the Oklahoma borrower was incorporated, without addressing the borrower’s principal place of business, the defendant had failed to establish minimal diversity.
The Court observed that the defendant had failed to address whether the Oklahoma borrower was a resident of Kentucky, and thus a member of the class. Further, the defendant had not addressed where the Oklahoma borrower had its principal place of business. Because of these omissions, the Court concluded that the defendant failed to establish that minimal diversity existed.
Next, even if the defendant had established minimal diversity by a preponderance of the evidence, the Court believed the ‘home state controversy’ exception would apply. The only point of contention regarding the application of this exception was whether two-thirds or more of the class members were citizens of Kentucky. As noted by the defendant, 3,465 of the 3,748 current commercial loans booked as ‘365/360’ loans were booked as having mailing addresses in Kentucky; thus, 92.4% of the loans were issued to borrowers with mailing addresses in Kentucky. Although a mailing address is not conclusive for purposes of determining citizenship, the Court remarked that this data certainly provided support for the plaintiff’s position, especially in light of the class definition, which was limited to those borrowers who were residents of Kentucky. The loans were therefore entered into by Kentucky residents with the defendant, a Kentucky citizen, and presumably the alleged injuries occurred in Kentucky, the Court observed.
Accordingly, the Court found that the plaintiff presented enough evidence to find that it was more likely than not that at least two-thirds of the borrowers in the proposed class were Kentucky citizens, and remanded the action to state court.