Radatz v. Federal National Mortgage Ass'n
50 N.E.3d 527
Ohio2016Background
- Radatz filed a class action (2003) alleging Fannie Mae failed to record mortgage satisfactions in Ohio within 90 days as required by R.C. 5301.36(B), seeking $250 per violation under R.C. 5301.36(C).
- The class was certified; proceedings continued while FHFA placed Fannie Mae into conservatorship (2008).
- FHFA issued a 2013 consent cease-and-desist order directing Fannie Mae to cease paying any amounts under R.C. 5301.36 or any judgment in the Radatz suit, citing 12 U.S.C. §4617(j)(4).
- Fannie Mae moved to dismiss for lack of subject-matter jurisdiction, invoking 12 U.S.C. §4635(b) (bar on courts affecting FHFA orders); the trial court dismissed; the Eighth District reversed.
- The Ohio Supreme Court held §4635(b) did not strip the trial court of jurisdiction to adjudicate the R.C. 5301.36 claim, but concluded §4617(j)(4) bars assessing statutory $250 penalties against Fannie Mae while under FHFA conservatorship; judgment of the court of appeals affirmed on different grounds and remanded.
Issues
| Issue | Plaintiff's Argument (Radatz) | Defendant's Argument (Fannie Mae/FHFA) | Held |
|---|---|---|---|
| Does 12 U.S.C. §4635(b) deprive the state trial court of jurisdiction to adjudicate the class action? | §4635(b) should not prevent the court from adjudicating state-law claims; consent order does not bar adjudication. | §4635(b) bars any court action that would affect or impede enforcement of FHFA cease-and-desist orders. | Court: §4635(b) does not bar adjudication of the claim because the consent order forbids payment but does not forbid a court from making determinations or entering judgment. |
| Do statutory $250 awards under Ohio R.C. 5301.36(C) constitute liabilities "in the nature of penalties or fines" under 12 U.S.C. §4617(j)(4), thus precluded while FHFA conservator? | R.C. 5301.36(C) awards remedial/compensatory damages (Rosette) and therefore are not barred. | FHFA: §4617(j)(4) immunizes Fannie Mae from penalties/fines; $250 statutory awards are punitive in nature and barred. | Court: Applying federal three-factor test, R.C. 5301.36(C) is "in the nature of penalties" (arbitrary statutory sum, not tied to actual loss); §4617(j)(4) bars imposing such payments while under conservatorship. |
| Due-process challenge to dismissing claims because FHFA order prevents recovery | Radatz contends dismissal (or denial of relief) without ability to challenge FHFA order violates due process. | FHFA/Fannie Mae did not brief procedural due-process denial in context accepted issues. | Court: Did not reach Radatz’s due-process argument (Eighth District declined to address; issue not accepted for review). |
Key Cases Cited
- Fed. Reserve Sys. Bd. of Governors v. MCorp Fin., Inc., 502 U.S. 32 (Sup. Ct.) (§1818(i)(1) interpreted as showing Congress intended to deny district courts jurisdiction to enjoin ongoing agency administrative proceedings)
- Rosette v. Countrywide Home Loans, Inc., 105 Ohio St.3d 296 (Ohio 2005) (held R.C. 5301.36(C) remedial for statute-of-limitations purposes)
- United States v. Witherspoon, 211 F.2d 858 (6th Cir.) (statutory per-offense fixed sum characterized as a penalty when unrelated to actual loss)
- Am. Fair Credit Assn. v. United Credit Natl. Bank, 132 F. Supp. 2d 1304 (D. Colo. 2001) (§1818(i)(1) can divest jurisdiction over claims that would require payment contrary to a consent order)
- Huntington v. Attrill, 146 U.S. 657 (U.S. 1892) (framework for distinguishing penal from remedial statutory provisions)