Hennepin County v. Federal National Mortgage Ass'n
742 F.3d 818
8th Cir.2014Background
- Hennepin County filed a putative class action on behalf of 87 Minnesota counties seeking declaratory judgment that Fannie Mae, Freddie Mac, and FHFA are subject to Minnesota's deed transfer tax.
- The district court dismissed for failure to state a claim, holding the tax exemption applied to the agencies.
- The federal agencies argue their charters exempt them from all state taxation, with a real property exception for their own holdings.
- The County alleges back taxes of approximately $5–5.6 million and seeks unjust enrichment and injunctive relief.
- The court analyzes statutory language and precedents to determine whether the exemption covers deed transfers, not mere ownership of real property.
- The court ultimately holds that the agencies are exempt from the Minnesota deed transfer tax under their charters.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the deed transfer tax falls within the agencies' tax exemption | Hennepin County argues all taxation is barred by exemption language | Fannie Mae, Freddie Mac, FHFA contend the tax falls outside the real-estate exception | Exemption applies; tax not applicable to transfers |
| Whether Wells Fargo and related precedents limit 'all taxation' to direct taxes | County relies on Wells Fargo to narrow exemption | Agencies rely on broader exemption | Wells Fargo does not limit to direct taxes; exemption broad and includes transfers |
| Whether unjust enrichment and injunctive relief were properly denied | County alleges unjust enrichment due to nonpayment of tax | No obligation to pay taxes, so no enrichment or injunctive relief | Unjust enrichment and injunctive relief claims properly denied |
Key Cases Cited
- United States v. Wells Fargo Bank, 485 U.S. 351 (1988) (exemption scope discussed in tax context)
- Bismarck Lumber Co. v. Federal Farm Loan Bd., 314 U.S. 95 (1941) ('taxation' includes sales taxes; real estate exception shown)
- Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995) (test for governmental instrumentalities; not private entities")
- County of Oakland v. FHFA, 716 F.3d 935 (6th Cir. 2013) (read exemption language as all taxation; applied to FHFA)
- Rosenow v. State of Ill., Dep’t of Rev., 715 F.2d 277 (7th Cir. 1983) (classification of Minnesota tax as excise-like tax in analysis)
- Sander v. Alexander Richardson Invs., 334 F.3d 712 (8th Cir. 2003) (interpretation of statutory terms and ordinary meaning)
- United States v. Johnson, 529 U.S. 53 (2000) (statutory interpretation principle about text and purpose)