Hennepin County v. Federal National Mortgage Ass'n
933 F. Supp. 2d 1173
D. Minnesota2013Background
- Enterprises: Fannie Mae, Freddie Mac, and FHFA are federally chartered instrumentalities; FHFA acts as conservator for Fannie Mae and Freddie Mac after 2008 crisis.
- Enterprises are exempt from taxation under the Exemption Statute, with a real-property tax exception, aiming to stabilize the mortgage market.
- Minnesota deed transfer tax applies to conveyances of real property; an environmental surcharge applies in Hennepin and Ramsey counties; the statute provides an exemption when the US or an agency is the grantor.
- Hennepin County filed a putative class action seeking declaratory relief for alleged violations of Minnesota deed transfer tax and environmental surcharge statutes; unjust enrichment claim also asserted.
- Enterprises moved to dismiss; the court denied consolidation of related case and granted the motion to dismiss the complaint.
- Court holds the Exemption Statute exempts the Enterprises from the deed transfer tax; unjust enrichment claim fails; declaratory judgment on the tax claim denied; consolidation denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Exemption Statute exempts the Enterprises from deed transfer tax | Hennepin County argues exemption covers only direct taxes and not the transfer tax | Enterprises argue exemption covers all taxation of the corporations and their property | Exemption Statute exempts the Enterprises from the deed transfer tax |
| Whether Wells Fargo controls interpretation of ‘all taxation’ | Wells Fargo limits exemption to direct taxes for tax-exempt property | Wells Fargo is distinguished; this case concerns entity exemption, not property exemption | Wells Fargo does not control; Bismarck Lumber controls for entity exemption |
| Whether unjust enrichment claim survives given exemption | If taxed, they unjustly enrich defendants | Exemption precludes tax benefit to be unjust enrichment | Unjust enrichment claim fails; dismissal warranted |
| Whether Minnesota environment surcharge claims survive | Surcharge statutes applicable to non-exempt entities | Exemption may extend to surcharge context | Claims under §383A.80 and §383B.80 fail under reasoning on exemption |
Key Cases Cited
- United States v. Wells Fargo Bank, 485 U.S. 351 (1988) (all taxation interpreted as direct taxation for tax-exempt property)
- Bismarck Lumber Co. v. Federal Land Bank of St. Paul, 314 U.S. 95 (1941) (unqualified ‘taxation’ includes sales/transfer taxes on entity operations)
- Nicolai v. Fed. Housing Fin. Agency, 928 F.Supp.2d 1331 (M.D. Fla. 2013) (exemption language interpreted to exempt entities from taxation)
- Federal Farm Loan Act, Federal Land Bank cases, (referenced as supporting Bismarck Lumber) (—) (exemption of federal instrumentality from state taxes includes transfer taxes in Bismarck Lumber)
- United States v. Johnson, 529 U.S. 53 (2000) (expressio unius not limited to exclusive list; exclusions not read to create new ones)