Crystal Lightfoot v. Cendant Mortgage Corporation

dissenting:

Fannie Mae’s charter gives the company the power “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” 12 U.S.C. § 1723a(a). Unlike the corporate charter at issue in American National Red Cross v. S.G., 505 U.S. 247 , 112 S.Ct. 2465 , 120 L.Ed.2d 201 (1992), Fannie Mae’s sue-and-be-sued clause contains a proviso — the phrase “of competent jurisdiction.” The majority offers a few potential readings of this phrase, but each of these constructions effectively renders the proviso superfluous. But the phrase “of competent jurisdiction” is not a potted plant; it must mean something. With the proviso included, Fannie Mae’s sue-and-be-sued clause does not confer automatic federal subject matter jurisdiction over any action to which Fannie Mae is a party; jurisdiction must arise from some other source. I therefore respectfully dissent.

I. The Red Cross Default Rule

Congress has used the sue-and-be-sued clauses of federal corporations to achieve multiple goals. Most obviously, these clauses make clear that the federal entity — -as opposed to, for example, its administrator — has the ability to engage in litigation.…

Opinion by Judge W. FLETCHER; Dissent by Judge STEIN.

OPINION

Plaintiffs Beverly Ann Hollis-Arrington and Crystal Monique Lightfoot appeal the district court’s judgment dismissing their claims against the Federal National Mortgage Association (“Fannie Mae”). They argue that the district court lacked subject matter jurisdiction over their claims. We disagree. Under the rule announced in American National Red Cross v. S.G., 505 U.S. 247 , 112 S.Ct. 2465 , 120 L.Ed.2d 201 (1992), Fannie Mae’s federal charter confers federal question jurisdiction over claims brought by or against Fannie Mae. We affirm the district court.

I. Background

This case is one of several brought by the plaintiffs following foreclosure proceedings initiated by Fannie Mae against Hollis-Arrington’s home in West Hills, California. Hollis-Arrington first filed two suits in the United States District Court for the Central District of California, alleging numerous state- and federal-law claims against Fannie Mae and other defendants. The district court dismissed both suits, and we affirmed on appeal. Hollis-Arrington v. Cendant Mortg. Corp., 61 Fed.Appx. 462 (9th Cir.2003); Hollis-Arrington v. Cendant Mortg.…

I. Background

This case is one of several brought by the plaintiffs following foreclosure proceedings initiated by Fannie Mae against Hollis-Arrington’s home in West Hills, California. Hollis-Arrington first filed two suits in the United States District Court for the Central District of California, alleging numerous state- and federal-law claims against Fannie Mae and other defendants. The district court dismissed both suits, and we affirmed on appeal. Hollis-Arrington v. Cendant Mortg. Corp., 61 F. App’x 462 (9th Cir. 2003); Hollis- Arrington v. Cendant Mortg. Corp., 61 F. App’x 463 (9th Cir. 2003).

Plaintiffs then filed the present suit in California state court, alleging state-law claims similar or identical to those in the two earlier federal suits. Fannie Mae removed to federal court, arguing that the sue-and-be-sued clause in its federal corporate charter conferred federal question subject matter jurisdiction. Plaintiffs filed a motion to remand, which the district court denied. The district court dismissed all of plaintiffs’ claims as barred by res judicata and collateral estoppel. We initially affirmed in an unpublished disposition. Lightfoot v. Cendant Mortg. Corp., 465…