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Midlantic Nat. Bank v. Hansen

filed: February 13, 1995.

MIDLANTIC NATIONAL BANK, APPELLEE,
v.
E. F. HANSEN, JR.; G. EILEEN HANSEN; HANSEN BANCORP, INC., APPELLANTS.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. Civil No. 92-02670).

Before: Mansmann, Lewis and Seitz, Circuit Judges.

Author: Lewis

Opinion OF THE COURT

LEWIS, Circuit Judge.

This case presents the jurisdictional question of the citizenship of an inactive corporation under the federal diversity statute. We conclude that an inactive corporation is a citizen of the state of its incorporation only. Having so concluded, and thus having determined that the district court had, and we have, jurisdiction, we are also called upon to address the meaning of the term "joint applicant" under the Equal Credit Opportunity Act. Because we agree with the district court's Conclusion that one of the defendants, Mrs. Eileen Hansen, was a joint applicant for a loan for purposes of the Act, we will affirm.

I.

Midlantic National Bank ("Midlantic") is a national banking association with its principal place of business in Edison, New Jersey. Appellants Elmer and Eileen Hansen are citizens of Pennsylvania and are the joint owners of all the issued and outstanding stock of Hansen Bancorp, Inc. ("HBI"). HBI, now inactive, is a corporation organized under the laws of the state of Delaware. HBI owned the stock of two thrift institutions, the Hansen Savings Bank of Florida and the Hansen Savings Bank, SLA, in New Jersey.*fn1

Beginning in 1985, the Hansens obtained several loans from Midlantic. The Hansens used the first Midlantic loan to finance the purchase of a New Jersey thrift institution, the Raritan Valley Savings and Loan Association located in East Brunswick, New Jersey. As collateral for this loan, the Hansens pledged the Raritan stock to Midlantic. As part of their loan application, the Hansens submitted a Consolidated Statement of Net Worth and a Consolidated Income Statement. The Notes to the Consolidated Statement of Net Worth, which explain the basis of consolidation, report that "E.F., Jr. and G.E. Hansen, his wife, operate their business, Hansen Properties ("Hansen"), as a sole proprietorship." The Notes then list limited partnerships of which the Hansens were the only partners or the only principals. (Plaintiffs/Appellees' Appendix ("Pa.") at 487) In addition, on the Acquisition Agreement between Raritan Valley Financial Corporation and the Hansens, the Hansens are listed as joint purchasers of the Raritan stock.

During 1987 and 1988 the Hansens used an additional Midlantic loan to purchase a controlling interest in a Florida thrift later renamed the Hansen Savings Bank of Florida (HSB of FL). This loan was secured by a pledge of HSB of FL stock. At this time the Hansens consolidated their indebtedness to Midlantic into a single loan in the amount of $13 million.

In February, 1989, the Hansens and Midlantic executed a Second Amended and Restated Loan Agreement, by which terms the Hansens and HBI were jointly and severally liable on a $13,166,666.69 term note payable to Midlantic. At the same time, the Hansens signed a separate One Million Dollar Term Note payable to Midlantic, under which they were also jointly and severally liable. One month later the Hansens signed an additional note for two million dollars. For all these loans the Hansens pledged as security the stock in HBI and its subsidiaries, HSB of FL and the Hansen Savings Bank, SLA.

In March of 1989, the Hansens borrowed an additional two million dollars from Midlantic, and in mid-1990, the Hansens and Midlantic executed two Demand Notes for $100,000 each.

By September of 1990, the Hansens were in default on several of their Midlantic loans. The parties then entered into a Loan Coordination, Security and Intercreditor Agreement, in which Midlantic agreed to postpone acceleration of sums due under the already executed notes until the earlier of either June 30, 1991, or a default under the Intercreditor Agreement. By 1992 the Hansens were in default on the Intercreditor Agreement.

In January, 1992, the Office of Thrift Supervision and the Resolution Trust Corporation seized control of the Hansens' Florida and New Jersey thrifts. HBI was rendered inactive by this seizure.*fn2 Midlantic initiated this collection action six months later, on June 25, 1992, for the recovery of the amounts loaned by Midlantic to the Hansens. Midlantic's complaint bases the existence of subject matter jurisdiction upon 28 U.S.C. § 1332.

The district court denied a motion to dismiss for lack of subject matter jurisdiction filed by the Hansens and, on January 6, 1993, granted Midlantic's motion for summary judgment. On January 26, 1993, the district court entered final judgment in favor of Midlantic. The Hansens filed their notice of appeal on February 25, 1993. In their appeal of the district court's entry of summary judgment, the Hansens challenge the existence of federal diversity jurisdiction as well as the propriety of Midlantic's requiring Mrs. Hansen to sign the loan applications. In turn, Midlantic claims that the Hansens failed to file a timely notice of appeal. Because we find that the Hansens' notice of appeal was timely filed, we will consider the issues raised therein. Because we agree with the district court on all of the issues raised, we will affirm.

II.

First, we must address whether the district court had jurisdiction over the subject matter in this case. We exercise plenary review over issues of jurisdiction. Mellon Bank v. Farino, 960 F.2d 1217, 1220 (3d Cir. 1992).

To satisfy the jurisdictional requirements of 28 U.S.C. § 1332(a)(1), the federal diversity statute, diversity must be complete; that is, no plaintiff can be a citizen of the same state as any of the defendants. Carden v. Arkoma Assocs., 494 U.S. 185, 187, 108 L. Ed. 2d 157, 110 S. Ct. 1015 (1992); Quaker State Dyeing & Finishing Co. v. ITT Terryphone Corp., 461 F.2d 1140, 1142 (3d Cir. 1972). Whether diversity jurisdiction exists is determined by examining the citizenship of the parties at the time the complaint was filed. See Smith v. Sperling, 354 U.S. 91, 93 n.1, 1 L. Ed. 2d 1205, 77 S. Ct. 1112 (1957) (stating that jurisdiction is tested by the facts as they exist when the action is brought). Thus, the question before us is ...


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