Lightfoot v. Cendant Mortgage Corporation

PETITIONER: Crystal Monique Lightfoot, et al.
RESPONDENT: Cendant Mortgage Corporation, et al.
LOCATION: U.S. District Court for the Central District of California, Western Division

DOCKET NO.: 14-1055
DECIDED BY: Roberts Court (2016- )
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: US ()
GRANTED: Jun 28, 2016
ARGUED: Nov 08, 2016
DECIDED: Jan 18, 2017

ADVOCATES:
Ann O'Connell - for United States, as amicus curiae
E. Joshua Rosenkranz - for petitioners
Brian P. Brooks - for respondents

Facts of the case

Crystal Monique Lightfoot and Beverly Ann Hollis-Arlington sued the Federal National Mortgage Association (Fannie Mae) in federal district court and alleged numerous state and federal law claims arising out of the foreclosure proceedings Fannie Mae initiated against Hollis-Arlington’s home. The district court dismissed and held that the plaintiffs had failed to show the existence of a genuine issue of material fact regarding their claims. The U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal.

The plaintiffs then sued in California state court and alleged the state law equivalents of the claims in the earlier federal suit. Fannie Mae removed the case to federal court and argued that its federal corporate charter contained language that granted federal courts subject matter jurisdiction over cases in which it was involved as a plaintiff or defendant. The plaintiffs in this case moved for a remand back to state court, but the district court denied the remand and then dismissed all the claims as having already been litigated in the earlier case in federal court. The appellate court determined that the language in Fannie Mae’s federal charter conferred subject matter jurisdiction to federal courts and affirmed the dismissal.

Question

  1. Does language “to sue or and be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal" in the federal charter of the Federal National Mortgage Association (Fannie Mae) confer subject matter jurisdiction to federal court in every case in which Fannie Mae is a plaintiff or defendant?
  2. Should the court’s decision in American National Red Cross v. S.G. -- which held that, when language in a federal charter expressly authorizes an organization to sue and be sued in federal courts, that language grants federal courts subject matter jurisdiction -- be overruled?

Media for Lightfoot v. Cendant Mortgage Corporation

Audio Transcription for Oral Argument - November 08, 2016 in Lightfoot v. Cendant Mortgage Corporation

John G. Roberts, Jr.:

We will hear argument next in Case No. 14-1055, Lightfoot v. Cendant Mortgage Corporation. Mr. Rosenkranz.

E. Joshua Rosenkranz:

Thank you, Mr. Chief Justice, and may it please the Court: There is only one natural way to read the language at issue here.

A "court of competent jurisdiction" is a court that has an independent source of subject-matter jurisdiction.

That is what this Court has held five times those words mean.

So let's start with the plain language. The statute grants Freddie, quote, "The power in its corporate name to sue and be sued in any 'court of competent jurisdiction,' State or Federal." The only reference to jurisdiction in that passage is to say that you don't get to go to any Federal court or any State court, but rather, you have to choose a court, State or Federal, that must be a "court of competent jurisdiction." And the only way to find out whether a court is a "court of competent jurisdiction" is to examine the statutes creating that court and granting it jurisdiction.

Ruth Bader Ginsburg:

Does that include -- you -- you said subject-matter jurisdiction, but "is this court competent to hear this controversy" would include personal jurisdiction as well, or are you limiting it to subject-matter jurisdiction?

E. Joshua Rosenkranz:

I -- I am not limiting it to subject-matter jurisdiction over an original action. It has appellate -- it has cert jurisdiction.

But no, a court of competent jurisdiction at a minimum has subject-matter jurisdiction, but I think it also has personal jurisdiction. And the -- the cases that my friends rely upon at Fannie that talk about personal jurisdiction are cases in which there was already subject-matter jurisdiction.

And this Court held, hold on.

Wait a minute.

It's not enough just to have subject-matter jurisdiction, which everyone agreed there was in those cases.

It needs to be personal jurisdiction. Now, five times this Court has interpreted the words "competent jurisdiction" to mean, quote, "outside" -- "outside sources of jurisdictional authority." That's from Phoenix.

Or from Shoshone; this Court held that any reference to competent jurisdiction -- excuse me -- that a reference to competent jurisdiction means, and I quote, "it unquestionably meant that the competency of the court should be determined by rules theretofore prescribed in respect to the jurisdiction of the Federal courts." And Fannie's interpretation simply does not map onto the statutory language that Congress wrote. Look at the sentence.

Fannie's interpretation would require the Court to read the phrase "competent jurisdiction" to mean different things depending upon which word modifies it. So Fannie concedes that the clause referring to any "court of competent jurisdiction" State cannot be read as a grant of jurisdiction to every State court.

A State court can't take jurisdiction unless you point to a statutory authority for the State.

Ruth Bader Ginsburg:

What did you do -- what does Justice Souter's statement in Red Cross do to your argument? I'm talking about the statement on page 257 of Red Cross, "In expressly authorizing suit in Federal court, a provision extends beyond a grant of corporate capacity to sue and suffices to confer a Federal jurisdiction." That seems to say if you authorize suit in Federal court, then that's it.

Specifically mentioning Federal court suffices to confer Federal jurisdiction.

E. Joshua Rosenkranz:

Understood, Justice Ginsburg.

And I think the way to look at Red Cross is to look at what Red Cross referred to as the rule that Justice Souter was describing.

The rule is, and I quote, "A congressional charter's sue-and-be-sued provision may be read to confer Federal jurisdiction if, but only if, it specifically mentions the Federal courts." So you need a mention of Federal courts in order to even have a conversation about whether the "may" is in play.

But a reference to Federal courts is not sufficient. And so another way to think about it is, sure, if a clause says, sue or be sued in any court, State or Federal, Red Cross tells us, that, without more, is a grant of Federal jurisdiction.

Stephen G. Breyer:

It's tough.

I mean, I find this pretty tough.

I think that there are five major cases: Three are against you; two are for you.

Deveaux is for you.

Osborn uses the word "incompetent jurisdiction"; it's against you.

Not surprising, the Bankers' one comes up the same way as Deveaux, but the D'Oench, Duhme is weaker for you than here.

E. Joshua Rosenkranz:

Well, Your Honor --

Stephen G. Breyer:

It comes out the other way. And the Red Cross is weaker for you than here, and it comes out the other way.

And so what I see going for you is one page of legislative history which says, explicitly, you're right.

Sarah from Law Aspect

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