A federal court has remanded a case involving Members Choice Credit Union (MCCU) and Truist Bank back to state court due to a lack of jurisdiction. The decision affects how the parties can proceed with their claims and highlights the complexities of jurisdictional issues in federal and state courts.
The case, Members Choice Credit Union v. Truist Bank, was originally filed in Lawrence County Circuit Court on August 29, 2025. MCCU sought declaratory relief and other remedies against Truist Bank and the United States, represented by the Secretary of Housing and Urban Development (HUD). However, on April 2, 2026, the United States removed the case to federal court, citing several statutes as grounds for removal.
After the case was removed, the United States moved to dismiss itself from the action, which MCCU did not oppose. Subsequently, MCCU filed an amended complaint that dropped the United States as a defendant, leaving only a single claim against Truist for negligent misrepresentation under Kentucky law. This change raised questions about the federal court's jurisdiction to hear the case.
The court analyzed whether any basis for federal jurisdiction remained after MCCU amended its complaint. The court noted that the removal statutes invoked by the United States were not tied to the district court's original jurisdiction. It cited a precedent stating, "[S]ubject matter jurisdiction may be raised sua sponte at any juncture because a federal court lacks authority to hear a case without subject matter jurisdiction."
The court found that the removal of the United States as a party eliminated the basis for federal jurisdiction. The amended complaint only asserted a state law claim against Truist, and there were no federal claims involved. Additionally, the court determined that diversity jurisdiction did not apply, as the amount in controversy was less than the required $75,000. The court stated, "the amount in controversy is the balance owed to the United States of America on the note secured by the unreleased mortgage which, upon information and belief, was $29,054.39 as of January 30, 2026."
As a result, the court concluded that it lacked jurisdiction to hear the case and ordered it to be remanded back to Lawrence County Circuit Court. The court ruled, "[W]ith no federal anchor remaining here, neither does supplemental jurisdiction over MCCU’s negligent-misrepresentation claim." The judge presiding over the case was Chief United States District Judge David L. Bunning.
This ruling has implications for both MCCU and Truist Bank. It means that MCCU must now pursue its claim in state court, where the legal standards and procedures may differ from those in federal court. The remand also underscores the importance of ensuring that all necessary parties are included in a case to maintain federal jurisdiction.
Moving forward, the parties will need to prepare for litigation in the state court system, where they will have the opportunity to present their arguments and evidence regarding the negligent misrepresentation claim. The case may serve as a reminder to other litigants about the potential pitfalls of jurisdictional issues when amending complaints.
As for what’s next, it remains unclear whether either party will appeal the decision to remand the case back to state court. The court filing did not indicate any related cases pending at this time. However, the outcome of this case may influence future litigation involving similar jurisdictional questions.