Athens-Clarke County Unified Government v. Federal Housing Finance Agency
945 F. Supp. 2d 1401
M.D. Ga.2013Background
- This is a putative class action by Georgia counties against Fannie Mae, Freddie Mac, and FHFA alleging nonpayment of Georgia’s Real Estate Transfer Tax.
- Plaintiffs seek to represent 159 Georgia counties claiming tax revenues were unlawfully deprived.
- Defendants argue federal law exempts them from paying the transfer tax under 12 U.S.C. provisions and FHFA provisions.
- The transfer tax is an excise on the privilege of transferring real property, collected by the superior court clerks and distributed to local governments.
- Plaintiffs allege Fannie Mae and Freddie Mac recorded deeds and transferred land in counties without paying or underpaying the tax.
- The court reviews whether the blanket exemption from all taxation includes the transfer tax and whether an exception for real property applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae and Freddie Mac are exempt from the transfer tax | Plaintiffs argue no exemption extends to transfer tax. | Defendants contend their statutes exempt them from all taxation, including the transfer tax. | Yes; federal statutes exempt from all taxation. |
| Whether the real property exception defeats the exemption | Plaintiffs rely on the real property exception to carve out the transfer tax. | Defendants argue the exception does not apply to excise taxes on transfer of property. | No; real property exception does not dissolve immunity. |
| How to interpret 'all taxation' in light of Wells Fargo and Bismarck | Wells Fargo suggests 'all taxation' excludes excise taxes on property transfers. | Bismarck holds entity-based exemption covers excise taxes; Wells Fargo is limited to property exemptions. | Bismarck controls; 'all taxation' includes excise taxes when exempting an entity. |
| Whether FHFA and Fannie/Freddie are protected as federal instrumentalities under Congress | Argues they may not be entitled to immunity as private entities. | Congress expressly exempted them; instrumentality status supports immunity. | Yes; Congress granted immunity to these federally created entities. |
Key Cases Cited
- United States v. Wells Fargo Bank, 485 U.S. 351 (1988) (exemption of property from all taxation; distinguishes property vs. excise taxes)
- Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95 (1941) (entity-based tax exemption applicable to excise taxes; emphasizes plain language)
- First Agricultural National Bank v. State Tax Commission, 392 U.S. 339 (1968) (congressional exemption of federally created entity from state taxes is suficiente)
- Ariz. Dept. of Revenue v. Blaze Const. Co., Inc., 526 U.S. 32 (1999) (recognizing congressional exemption may shield private companies from state taxes)
- United States v. City of Detroit, 355 U.S. 466 (1958) (recognizing congressional immunity or exemption principles)
- Hager v. Fed. Nat'l Mortg. Ass'n, 882 F. Supp. 2d 107 (D.D.C. 2012) (district court recognizing entity-based exemption framework)
- Nicolai v. Fed. Hous. Fin. Agency, 928 F. Supp. 2d 1331 (M.D. Fla. 2013) (rejects Wells Fargo interpretation; supports entity exemption reading)
- Oakland Cnty. v. Fed. Hous. Fin. Agency, 871 F. Supp. 2d 662 (E.D. Mich. 2012) (district court applying Wells Fargo contrary to Bismarck reading)
- Hertel v. Bank of Am., 897 F. Supp. 2d 579 (W.D. Mich. 2012) (discusses scope of 'all taxation' and entity exemption)