Federal National Mortgage Ass'n v. Davis
963 F. Supp. 2d 532
E.D. Va.2013Background
- FNMA moved to remand after removal of an unlawful detainer action arising from a Virginia foreclosure sale.
- OneWest foreclosed on the Davises’ property, then FNMA purchased the property and the Davises refused to vacate.
- The Davises removed the state unlawful detainer action to federal court and FNMA challenged jurisdiction.
- The court examined diversity, federal question, FNMA charter, and practical concerns as bases for jurisdiction.
- The court held removal improper and granted remand to Goochland General District Court.
- The decision rejects reliance on the “practical and procedural concerns” and on non-federal defenses as jurisdictional bases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there federal subject matter jurisdiction based on diversity under § 1332? | Davises claim diversity since they are VA citizens and FNMA is DC/foreign. | FNMA argues removal barred because both parties are Virginia citizens under § 1441(b)(2). | No jurisdiction; diversity not proper. |
| Is there federal question jurisdiction based on statutes alleged by Davises? | Davises allege federal questions via TILA, RICO, PTFA, etc. | Federal defenses or counterclaims cannot create jurisdiction. | No federal question jurisdiction; defenses/counterclaims do not qualify. |
| Does FNMA’s charter confer independent federal jurisdiction under § 1723a(a)? | Charter’s sue-and-be-sued clause with “of competent jurisdiction” suggests federal jurisdiction. | Red Cross rule would apply; no independent basis required. | DN; § 1723a(a) requires independent jurisdiction, not automatic Red Cross jurisdiction. |
| Can federal jurisdiction be based on practical/procedural concerns about state courts? | State court irregularities justify federal oversight. | Removals cannot be grounded in fear of state court actions; remedies lie in appeal. | No; jurisdiction cannot rest on practical concerns. |
Key Cases Cited
- Red Cross v. S.G., 505 U.S. 247 (U.S. 1992) (sue-and-be-sued clause may confer jurisdiction if it specifically mentions federal courts)
- D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (U.S. 1942) (FDIC clause supported federal jurisdiction)
- Osborn v. Bank of United States, 22 U.S. (9 Wheat.) 738 (U.S. 1824) (text supports express right to sue/be sued in federal courts)
- Ferguson v. Union Nat’l Bank, 126 F.2d 753 (4th Cir. 1942) (discussion of sue-and-be-sued and independent jurisdiction)
- FNMA v. Sealed, 457 F. Supp. 2d 41 (D.D.C. 2006) (advocates independent basis requirement for §1723a(a))
- Pirelli Armstrong Tire Corp. ex rel. Fed. Nat’l Mortgage Ass’n v. Retiree Med Benefits Trust, 534 F.3d 779 (D.C. Cir. 2008) (interprets ‘of competent jurisdiction’ as requiring independent jurisdiction)