Crystal Lightfoot v. Cendant Mortgage Corporation

769 F.3d 681, 2014 U.S. App. LEXIS 18977, 2014 WL 4922246
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 2, 2014
Docket10-56068
StatusPublished
Cited by7 cases

This text of 769 F.3d 681 (Crystal Lightfoot v. Cendant Mortgage Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crystal Lightfoot v. Cendant Mortgage Corporation, 769 F.3d 681, 2014 U.S. App. LEXIS 18977, 2014 WL 4922246 (9th Cir. 2014).

Opinions

Opinion by Judge W. FLETCHER; Dissent by Judge STEIN.

OPINION

W. FLETCHER, Circuit Judge:

Plaintiffs Beverly Ann Hollis-Arrington and Crystal Monique Lightfoot appeal the district court’s judgment dismissing their claims against the Federal National Mortgage Association (“Fannie Mae”). They argue that the district court lacked subject matter jurisdiction over their claims. We disagree. Under the rule announced in American National Red Cross v. S.G., 505 U.S. 247, 112 S.Ct. 2465, 120 L.Ed.2d 201 (1992), Fannie Mae’s federal charter confers federal question jurisdiction over claims brought by or against Fannie Mae. We affirm the district court.

I. Background

This case is one of several brought by the plaintiffs following foreclosure proceedings initiated by Fannie Mae against Hollis-Arrington’s home in West Hills, California. Hollis-Arrington first filed two suits in the United States District Court for the Central District of California, alleging numerous state- and federal-law claims against Fannie Mae and other defendants. The district court dismissed both suits, and we affirmed on appeal. Hollis-Arrington v. Cendant Mortg. Corp., 61 Fed.Appx. 462 (9th Cir.2003); Hollis-Arrington v. Cendant Mortg. Corp., 61 Fed.Appx. 463 (9th Cir.2003).

Plaintiffs then filed the present suit in California state court, alleging state-law claims similar or identical to those in the two earlier federal suits. Fannie Mae removed to federal court, arguing that the sue-and-be-sued clause in its federal corporate charter conferred federal question subject matter jurisdiction. Plaintiffs filed a motion to remand, which the district court denied. The district court dismissed all of plaintiffs’ claims as barred by res judicata and collateral estoppel. We initially affirmed in an unpublished disposition. Lightfoot v. Cendant Mortg. Corp., 465 Fed.Appx. 668 (9th Cir.2012). We la[683]*683ter withdrew that disposition, appointed pro bono counsel, and ordered the parties to brief whether Fannie Mae’s federal charter granted the district court subject matter jurisdiction. Lightfoot v. Cendant Mortg. Corp., No. 10-56068 (Apr. 13, 2012) (order withdrawing disposition).

II. Discussion

A. Fannie Mae’s Charter

The sue-and-be-sued clause in Fannie Mae’s charter authorizes Fannie Mae “to sue and be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” 12 U.S.C. § 1723a(a). We hold that this language confers federal question jurisdiction over claims brought by or against Fannie Mae. In so holding, we do not write on a clean slate. In Red Cross, the Supreme Court gave us a clear rule for construing sue- and-be-sued clauses for federally chartered corporations. The Court held that “a congressional charter’s ‘sue and be sued’ provision may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts.” 505 U.S. at 255, 112 S.Ct. 2465.

The question in Red Cross was whether the American National Red Cross’s federal charter conferred federal question jurisdiction over suits brought by or against the Red Cross. The sue-and-be-sued clause in the Red Cross’s charter authorized the Red Cross “to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States.” Id. at 248, 112 S.Ct. 2465. The Court held that the clause conferred federal question jurisdiction. Id. at 257, 112 S.Ct. 2465. Justice Scalia dissented for himself and three others. He and his fellow dissenters would have held that the clause conferred only corporate capacity to sue and be sued, and that subject matter jurisdiction had to be conferred by some other provision of federal law. Id. at 265, 112 S.Ct. 2465 (Scalia, J., dissenting).

The Court based its holding on a line of cases, stretching back to Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 6 L.Ed. 204 (1824), that made clear that a sue-and-be-sued clause for a federally chartered corporation confers federal question jurisdiction if it specifically mentions federal courts. Red Cross, 505 U.S. at 252-56, 112 S.Ct. 2465. The Court in Osborn held, in an opinion by Chief Justice Marshall, that a clause authorizing the second Bank of the United States “to sue and be sued ... in all state courts having competent jurisdiction and in any circuit court of the United States” conferred federal question jurisdiction. 22 U.S. (9 Wheat.) at 817-18. Chief Justice Marshall distinguished Osborn from Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61, 3 L.Ed. 38 (1809), in which the Court had held that the charter of the first Bank of the United States did not confer federal subject matter jurisdiction because that bank’s charter authorized the bank to “sue and be sued ... in Courts of record,” without specifying the federal courts. Osborn, 22 U.S. (9 Wheat.) at 817-18; Deveaux, 9 U.S. (5 Cranch) at 85. Chief Justice Marshall wrote that, in contrast to the first bank’s charter, the second bank’s charter could not have been “more direct and appropriate” in conferring federal question jurisdiction. Osborn, 22 U.S. (9 Wheat.) at 817.

Almost a century later, the Court held in Bankers’ Trust Co. v. Texas & Pacific Railway, 241 U.S. 295, 36 S.Ct. 569, 60 L.Ed. 1010 (1916), that a federal corporate charter did not confer federal question jurisdiction when it authorized a railroad “to sue and be sued ... in all courts of law and equity within the United States.” Id. at 304-05, 36 S.Ct. 569. That language had “the same generality and natural im[684]*684port” as the language in Deveaux because it did not specifically mention the federal courts. Id. at 304, 36 S.Ct. 569; see Red Cross, 505 U.S. at 254, 112 S.Ct. 2465. Then, in D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), the Court upheld federal question jurisdiction based on a federal charter authorizing the Federal Deposit Insurance Corporation to sue or be sued “in any court of law or equity, State or Federal.” Id. at 455, 62 S.Ct. 676.

The Court wrote in Red Cross that these cases established a “rule” that would have been known to Congress at least as far back as 1942, when D’Oench was decided. Red Cross, 505 U.S. at 255-57, 259-60, 112 S.Ct. 2465. When federal charters, like those of the Red Cross and of Fannie Mae, “expressly authoriz[e] the organization to sue and be sued in federal courts ... the provision extends beyond a mere grant of general corporate capacity to sue, and suffices to confer federal jurisdiction.” Id. at 257, 112 S.Ct. 2465. As the Court of Appeals for the D.C. Circuit has already held, that rule resolves this case. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust ex rel. Fed. Nat’l Mortg. Ass’n v. Raines,

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161 F. Supp. 3d 981 (D. New Mexico, 2016)
Henok v. JPMorgan Chase Bank, N.A.
106 F. Supp. 3d 1 (District of Columbia, 2015)
James Cole v. Crst Van Expedited
599 F. App'x 755 (Ninth Circuit, 2015)

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Bluebook (online)
769 F.3d 681, 2014 U.S. App. LEXIS 18977, 2014 WL 4922246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crystal-lightfoot-v-cendant-mortgage-corporation-ca9-2014.