Lightfoot v. Cendant Mortg. Corp.
137 S. Ct. 553
| SCOTUS | 2017Background
- Fannie Mae's charter (12 U.S.C. § 1723a(a)) authorizes it "to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal."
- In 1999 Fannie Mae purchased a mortgage on Hollis-Arrington's house; after foreclosure and related proceedings, Hollis-Arrington and Lightfoot sued in state court asserting state-law defects in the refinancing, foreclosure, and sale.
- Fannie Mae removed the action to federal court asserting federal jurisdiction based on its sue-and-be-sued clause; the district court denied remand and later dismissed claims on preclusion grounds.
- The Ninth Circuit affirmed but reconsidered whether the sue-and-be-sued clause itself conferred federal jurisdiction; circuits are split on whether similar clauses supply federal subject-matter jurisdiction.
- The Supreme Court granted certiorari to resolve whether Fannie Mae’s clause converts mere corporate capacity to be sued into an independent grant of federal subject-matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae’s sue-and-be-sued clause independently confers federal subject-matter jurisdiction | Clause expressly mentions federal courts so it authorizes federal jurisdiction | Clause is capacity-conferring only; "court of competent jurisdiction" limits suits to forums that already have subject-matter jurisdiction | Held: clause does not grant federal subject-matter jurisdiction; it permits suit only in courts that already possess jurisdiction |
| Meaning of phrase "court of competent jurisdiction" in the clause | (Plaintiff) phrase is surplus if federal courts are already mentioned; should be read to allow federal fora | (Fannie Mae) phrase refers to venue/personal jurisdiction or otherwise supports federal access | Held: phrase is naturally read to mean a court having an independent source of subject-matter jurisdiction (not a grant of it) |
| Whether American Nat. Red Cross v. S. G. mandates treating any reference to federal courts as jurisdictional | (Plaintiff) reads Red Cross to create a bright-line rule: mention of federal courts suffices | (Defendant) Red Cross is contextual and requires comparing clause language; does not override ordinary meaning | Held: Red Cross does not create an unqualified rule; it supports jurisdiction only where the charter language unambiguously and unqualifiedly authorizes suits in federal courts |
Key Cases Cited
- Bank of United States v. Deveaux, 5 U.S. 61 (1809) (general sue-and-be-sued language does not imply federal-court jurisdiction)
- Osborn v. Bank of United States, 22 U.S. 738 (1824) (charter language expressly naming federal courts conferred federal jurisdiction)
- Bankers Trust Co. v. Texas & Pacific R. Co., 241 U.S. 295 (1916) (general sue-and-be-sued phrase construed as capacity to sue only; federal jurisdiction must come from elsewhere)
- D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942) (sue-and-be-sued clause held to support federal jurisdiction where language unqualifiedly authorized federal courts)
- Am. Natl. Red Cross v. S. G., 505 U.S. 247 (1992) (synthesizes earlier cases: a charter provision may confer federal jurisdiction only if it specifically and unqualifiedly mentions federal courts)