DocketNumber: No. 14–1055.
Citation Numbers: 137 S. Ct. 553
Judges: Sotomayor
Filed Date: 1/18/2017
Status: Precedential
Modified Date: 9/9/2022
The corporate charter of the Federal National Mortgage Association, known as Fannie Mae, authorizes Fannie Mae "to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal." 12 U.S.C. § 1723a(a). This case presents the question whether this sue-and-be-sued clause grants federal district courts jurisdiction over cases involving Fannie Mae. We hold that it does not.
I
A
During the Great Depression, the Federal Government worked to stabilize and strengthen the residential mortgage market. Among other things, it took steps to increase liquidity (reasonably available funding) in the mortgage market. These efforts included the creation of the Federal Home Loan Banks, which provide credit to member institutions to finance affordable housing and economic development projects, and the Federal Housing Administration (FHA), which insures residential mortgages. See Dept. of Housing and Urban Development, Background and History of the Federal National Mortgage Association 1-7, A4 (1966).
Also as part of these efforts, Title III of the National Housing Act (1934 Act) authorized the Administrator of the newly created FHA to establish "national mortgage associations" that could "purchase and sell [certain] first mortgages and such other first liens" and "borrow money for such purposes." § 301(a),
In 1938, the FHA Administrator exercised that authority and chartered the Federal National Mortgage Association. Avoiding a mouthful of an acronym (FNMA), it went by Fannie Mae. See, e.g., *557Washington Post, July 14, 1940, p. P2 (" 'Fanny May' "); N.Y. Times, Mar. 23, 1950, p. 48 (" 'Fannie Mae' "). As originally chartered, Fannie Mae was wholly owned by the Federal Government and had three objectives: to "establish a market for [FHA-insured] first mortgages" covering new housing construction, to "facilitate the construction and financing of economically sound rental housing projects," and to "make [the bonds it issued] available to ... investors." Fed. Nat. Mortgage Assn. Information Regarding the Activities of the Assn. 1 (Circular No. 1, 1938).
Fannie Mae was rechartered in 1954. Housing Act of 1954 (1954 Act), § 201,
In 1968, Fannie Mae became fully privately owned and relinquished part of its portfolio to its new spinoff, the Government National Mortgage Association (known as Ginnie Mae). See Housing and Urban Development Act of 1968 (1968 Act),
This general structure remains in place. Fannie Mae continues to participate in the secondary mortgage market. It purchases mortgages that meet its eligibility criteria, packages them into mortgage-backed securities, and sells those securities to investors, and it invests in mortgage-backed securities itself. One of those mortgage purchases led to Fannie Mae's entanglement in this case.
B
Beverly Ann Hollis-Arrington refinanced her mortgage with Cendant Mortgage Corporation (Cendant) in the summer of 1999. Fannie Mae then bought the mortgage, while Cendant continued to service it. Unable to make her payments, Hollis-Arrington pursued a forbearance arrangement with Cendant. No agreement materialized, and the home entered foreclosure. Around this time, Cendant repurchased the mortgage from Fannie Mae because it did not meet Fannie Mae's credit standards.
To stave off the foreclosure, Hollis-Arrington and her daughter, Crystal Lightfoot, pursued bankruptcy and transferred the property between themselves. These efforts failed, and the home was sold at a trustee's sale in 2001. The two then took to the courts to try to undo the foreclosure and sale.
*558After two unsuccessful federal suits, the pair filed this suit in state court. They alleged that deficiencies in the refinancing, foreclosure, and sale of their home entitled them to relief against Fannie Mae. Their claims against other defendants are not relevant here.
Fannie Mae removed the case to federal court under
The District Court then dismissed the claims against Fannie Mae on claim preclusion grounds. After a series of motions, rulings, and appeals not related to the issue here, the District Court entered final judgment. Hollis-Arrington and Lightfoot immediately moved to set aside the judgment under Federal Rule of Civil Procedure 60(b), alleging "fraud upon the court." App. 95-110. The District Court denied the motion.
The Ninth Circuit affirmed the dismissal of the case and the denial of the Rule 60(b) motion.
A divided panel affirmed the District Court's judgment. The majority relied on American Nat. Red Cross v. S. G.,
Two Circuits have likewise concluded that the language in Fannie Mae's sue-and-be-sued clause grants jurisdiction to federal courts. See Federal Home Loan Bank of Boston v. Moody's Corp.,
We granted certiorari, 579 U.S. ----,
II
Fannie Mae's sue-and-be-sued clause authorizes it "to sue and to be sued, and to *559complain and to defend, in any court of competent jurisdiction, State or Federal." 12 U.S.C. § 1723a(a). As in other federal corporate charters, this language serves the uncontroversial function of clarifying Fannie Mae's capacity to bring suit and to be sued. See Bank of United States v. Deveaux,
A
In answering this question, "we do not face a clean slate." Red Cross,
The first discussion of sue-and-be-sued clauses came in a pair of opinions by Chief Justice Marshall. The charter of the first Bank of the United States allowed it " 'to sue and be sued, plead and be impleaded, answer and be answered, defend and be defended, in courts of record, or any other place whatsoever.' " Deveaux, 5 Cranch, at 85. Another provision allowed suits in federal court against certain bank officials, suggesting "the right to sue does not imply a right to sue in the courts of the union, unless it be expressed." Id., at 86. In light of this language, the Court held that the first Bank of the United States had "no right ... to sue in the federal courts." Ibid. The Court concluded that the second Bank of the United States was not similarly disabled. Its charter allowed it " 'to sue and be sued, plead and be impleaded, answer and be answered, defend and be defended, in all State Courts having competent jurisdiction, and in any Circuit Court of the United States.' " Osborn v. Bank of United States,
A mortgage dispute between a railroad and its creditor led to the next consideration of this issue. The Texas and Pacific Railway Company's federal charter authorized it " 'to sue and be sued, plead and be impleaded, defend and be defended, in all courts of law and equity within the United States.' " Bankers Trust Co. v. Texas & Pacific R. Co.,
Another lending dispute, involving defaulted bonds, led to the next statement on this issue. The Federal Deposit Insurance Corporation's (FDIC) sue-and-be-sued clause authorized it "[t]o sue and be sued, complain and defend, in any court of law or equity, State or Federal."
*560This Court's most recent discussion of a sue-and-be-sued clause came in Red Cross, which involved a state-law tort suit related to a contaminated blood transfusion. It described the previous quartet of decisions as reflecting this Court's "best efforts at divining congressional intent retrospectively," efforts that had put "Congress on prospective notice of the language necessary and sufficient to confer jurisdiction."
Armed with these earlier cases, as synthesized by Red Cross, we turn to the sue-and-be-sued clause at issue here.
B
Fannie Mae's sue-and-be-sued clause resembles the clauses this Court has held confer jurisdiction in one important respect. In authorizing Fannie Mae "to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal," 12 U.S.C. § 1723a(a), it "specifically mentions the federal courts." Red Cross,
But Fannie Mae's clause differs in a material respect from the three clauses the Court has held sufficient to grant federal jurisdiction. Those clauses referred to suits in the federal courts without qualification. In contrast, Fannie Mae's sue-and-be-sued clause refers to "any court of competent jurisdiction, State or Federal." § 1723a(a) (emphasis added). Because this sue-and-be-sued clause is not "in all relevant respects identical" to a clause already held to grant federal jurisdiction, Red Cross,
A court of competent jurisdiction is a court with the power to adjudicate the case before it. See Black's Law Dictionary 431 (10th ed. 2014) ("[a] court that has the power and authority to do a particular act; one recognized by law as possessing the right to adjudicate a controversy"). And a court's subject-matter jurisdiction defines its power to hear cases. See Steel Co. v. Citizens for Better Environment,
As a result, this Court has understood the phrase "court of competent jurisdiction" as a reference to a court with an existing source of subject-matter jurisdiction. Ex parte Phenix Ins. Co.,
On this understanding, Fannie Mae's sue-and-be-sued clause is most naturally read not to grant federal courts subject-matter jurisdiction over all cases involving Fannie Mae. In authorizing Fannie Mae to sue and be sued "in any court of competent jurisdiction, State or Federal," it permits suit in any state or federal court already endowed with subject-matter jurisdiction over the suit.
C
Red Cross does not require a different result. Some, including the lower courts here, have understood it to set out a rule that an express reference to the federal courts suffices to make a sue-and-be-sued clause a grant of federal jurisdiction. Red Cross contains no such rule.
By its own terms, the rule Red Cross restates is "the basic rule" drawn in Deveaux and Osborn that a sue-and-be-sued clause conferring only a general right to sue does not grant jurisdiction to the federal courts. Red Cross,
True enough, the dissent thought *562Red Cross established a broad rule. See
Nothing in Red Cross suggests that courts should ignore "the ordinary sense of the language used,"
III
Fannie Mae, preferring to be in federal court, raises several arguments against reading its sue-and-be-sued clause as merely capacity conferring. None are persuasive.
A
Fannie Mae first offers several alternative readings of "court of competent jurisdiction." It suggests that the phrase might refer to a court with personal jurisdiction over the parties before it, a court of proper venue, or a court of general, rather than specialized, jurisdiction. Brief for Respondents 41-45.
At bottom, Fannie Mae's efforts on this front are premised on the reading of Red Cross rejected above. In its view, an express reference to the federal courts suffices to confer subject-matter jurisdiction on federal courts. It sees its only remaining task as explaining why that would not render "court of competent jurisdiction" superfluous. See Tr. of Oral Arg. 29-30. But the fact that a sue-and-be-sued clause references the federal courts does not resolve the jurisdictional question. Thus, arguments as to why the phrase "court of competent jurisdiction" could still have meaning if it does not carry its ordinary meaning are beside the point.
Moreover, even if the phrase carries additional meaning, that would not further Fannie Mae's argument. Take its suggestion that a "court of competent jurisdiction" is a court with personal jurisdiction. A court must have the power to decide the claim before it (subject-matter jurisdiction) and power over the parties before it (personal jurisdiction) before it can resolve a case. See Ruhrgas AG v. Marathon Oil Co.,
*563B
Fannie Mae next claims that, by the time its sue-and-be-sued clause was enacted in 1954, courts had interpreted provisions containing the phrase "court of competent jurisdiction" to grant jurisdiction and that Congress was entitled to rely on those interpretations. This argument invokes the prior construction canon of statutory interpretation. The canon teaches that if courts have settled the meaning of an existing provision, the enactment of a new provision that mirrors the existing statutory text indicates, as a general matter, that the new provision has that same meaning. See Bragdon v. Abbott,
Fannie Mae points to cases discussing three types of statutory provisions that, in its view, show that the phrase "court of competent jurisdiction" had acquired a settled meaning by 1954.
The first pair addresses the FHA's sue-and-be-sued clause. See
The second set of cases addresses provisions authorizing suit for a violation of a statute. One arose under the Fair Labor Standards Act of 1938, which authorizes employees to sue for violations of the Act in "any ... court of competent jurisdiction." § 6(d)(1),
The third set of cases interpreted provisions making federal jurisdiction over certain causes of action exclusive. Brief for Respondents 36-37. Those cases confirm that the provisions require suit to be brought in federal courts but do not discuss the basis for federal jurisdiction.
In sum, none of the cases on which Fannie Mae relies suggest that Congress in 1954 would have surveyed the jurisprudential landscape and necessarily concluded that the courts had already settled the question whether a sue-and-be-sued clause containing the phrase "court of competent jurisdiction" confers jurisdiction on the federal courts.
C
Fannie Mae ends with an appeal to congressional purpose, or, more accurately, a lack of congressional purpose.
It argues that its original sue-and-be-sued clause, enacted in 1934, granted jurisdiction to federal courts and that there is no indication that Congress wanted to change the status quo in 1954. The addition in 1954 of "court of competent jurisdiction," a phrase that, as discussed, carries a clear meaning, means that the current sue-and-be-sued clause does not confer jurisdiction. An indication whether that meaning was understood as a change from the 1934 Act is not required.
Fannie Mae next points to its sibling rival, the Federal Home Loan Mortgage Corporation, known as Freddie Mac. The two share parallel authority to compete in the secondary mortgage market. Compare
Fannie Mae argues there is no good reason to think that Congress gave Freddie Mac fuller access to the federal courts than it has. Leaving aside the clear textual indications suggesting Congress did just that, a plausible reason does exist. In 1970, when Freddie Mac's sue-and-be-sued clause and related jurisdictional provisions were enacted, Freddie Mac was a Government-owned corporation. See Emergency Home Finance Act of 1970, § 304(a),
IV
The judgment of the Ninth Circuit is reversed.
It is so ordered.
The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co.,
The legislative history of the 1934 Act provides some reason to question Fannie Mae's premise about Congress' view of the status quo under the 1934 Act. During debate on this provision, Senator Logan asked Senator Bulkley, the chair of the subcommittee with authority over the bill, about the original sue-and-be-sued clause. Senator Bulkley explained that it merely conferred a capacity to sue and be sued "and [did] not confe[r] a right to go into a Federal court where it would not otherwise exist." 78 Cong. Rec. 12008 (1934).