Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-10-56068/USCOURTS-ca9-10-56068-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CRYSTAL MONIQUE LIGHTFOOT;

BEVERLY ANN HOLLIS-ARRINGTON,

Plaintiffs-Appellants,

v.

CENDANT MORTGAGE

CORPORATION, doing business as

PHH Mortgage; FANNIE MAE;

ROBERT O. MATTHEWS; ATTORNEYS

EQUITY NATIONAL CORPORATION,

Defendants-Appellees.

No. 10-56068

D.C. No.

2:02-cv-06568-

CBM-AJW

OPINION

Appeal from the United States District Court

for the Central District of California

Consuelo B. Marshall, Senior District Judge, Presiding

Argued and Submitted

June 5, 2013—Pasadena, California

Filed October 2, 2014

Before: Stephen S. Trott and William A. Fletcher, Circuit

Judges, and Sidney H. Stein, District Judge.*

* The Honorable Sidney H. Stein, District Judge for the U.S. District

Court for the Southern District of New York, sitting by designation.

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2 LIGHTFOOT V. CENDANT MORTGAGE CORP.

Opinion by Judge W. Fletcher;

Dissent by Judge Stein

SUMMARY**

Federal Question Jurisdiction

Affirming the district court’s dismissal of claims against

the Federal National Mortgage Association, or “Fannie Mae,”

the panel held that Fannie Mae’s federal corporate charter

confers federal question jurisdiction over claims brought by

or against Fannie Mae.

Agreeing with the D.C. Circuit, the panel held that under

American Red Cross v. S.G., 505 U.S. 247 (1992), the sueand-be-sued clause in the charter confers subject matter

jurisdiction because the clause specifically mentions the

federal courts.

Dissenting, District Judge Stein wrote that under a 1954

charter amendment, Fannie Mae’s charter confers only

corporate capacity to sue and be sued, and that subject matter

jurisdiction must come from some other provision of law.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 3

COUNSEL

Thomas Ogden (argued), Law Offices of Thomas Ogden,

Alhambra,California;Crystal Monique Lightfoot, West Hills,

California, for Plaintiffs-Appellants.

Jonathan Hacker (argued), O’Melveny & Myers LLP,

Washington, D.C.; Jan T. Chilton, Severson & Werson, San

Francisco, California, for Defendants-Appellees.

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 (1992), Fannie Mae’s federal

charter confers federal question jurisidiction 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

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4 LIGHTFOOT V. CENDANT MORTGAGE CORP.

and other defendants. The district court dismissed both suits,

and we affirmed on appeal. Hollis-Arrington v. Cendant

Mortg. Corp., 61 F. App’x 462 (9th Cir. 2003); HollisArrington v. Cendant Mortg. Corp., 61 F. App’x 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 amotion 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 F. App’x 668 (9th

Cir. 2012). We later 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

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 5

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.

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. The Court held that the clause

conferred federal question jurisdiction. Id. at 257. 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 (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 (1824), that made clear that a sue-and-be-sued

clause for a federally chartered corporation confers federal

question jurisdiction if it specificallymentions federal courts. 

Red Cross, 505 U.S. at 252–56. 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 fromBank of the

United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809), in

which the Court had held that the charter of the first Bank of

the United States did not confer federal subject matter

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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 (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. That language had “the same

generality and natural import” as the language in Deveaux

because it did not specifically mention the federal courts. Id.

at 304; see Red Cross, 505 U.S. at 254. Then, in D’Oench,

Duhme & Co. v. FDIC, 315 U.S. 447 (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.

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. 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. As the Court of Appeals for

the D.C. Circuit has already held, that rule resolves this case. 

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 7

See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust

ex rel. Fed. Nat’l Mortg. Ass’n v. Raines, 534 F.3d 779, 784

(D.C. Cir. 2008) (holding, based on Fannie Mae’s charter,

that federal question jurisdiction exists over suits brought by

or against Fannie Mae).

Despite the specific reference to federal courts in Fannie

Mae’s sue-and-be-sued clause, our dissenting colleague

contends that the clause does not confer federal question

jurisdiction. Like Justice Scalia and his fellow dissenters in

Red Cross, the dissent argues that the clause confers only

corporate capacity to sue and be sued, and that subject matter

jurisdiction must come from some other provision of federal

law. Dissent at 23. The dissent relies on the phrase “court of

competent jurisdiction” in the clause. Before 1954, Fannie

Mae, like the Red Cross, had the statutory authority to “sue

and be sued; complain and defend, in any court of law or

equity, State or Federal.” H.R. Rep. No. 83-1429, at 82

(1954) (emphasis added). In 1954, as one of many changes

to Fannie Mae’s charter, Congress amended Fannie Mae’s

sue-and-be-sued clause to authorize it “to sue and to be sued,

and to complain and to defend, in any court of competent

jurisdiction, State or Federal.” Housing Act of 1954, Pub. L.

No. 83-560, § 201, 68 Stat. 590, 620 (codified as amended at

12 U.S.C. § 1723a(a)) (emphasis added).

The dissent acknowledges that Fannie Mae’s pre-1954

charter conferred federal question jurisdiction, but argues that

Congress eliminated that jurisdiction by replacing the phrase

“court of law or equity” with “court of competent

jurisdiction.” Dissent at 23–24. We disagree. Eliminating

the charter’s grant of federal question jurisdiction would have

imposed a severe new restraint on Fannie Mae’s ability to

litigate in federal court. Under the general federal question

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jurisdiction statute, 28 U.S.C. § 1331, Fannie Mae would

have been restricted by the well-pleaded complaint rule. See,

e.g., Franchise Tax Bd. v. Constr. Laborers Vacation Trust

for S. Cal., 463 U.S. 1, 9–10 (1983); Louisville & Nashville

R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908). Given that

Fannie Mae is often sued under state-law causes of action,

§ 1331 would have conferred jurisdiction in a relatively small

number of cases. Diversity jurisdiction under 28 U.S.C.

§ 1332, if it existed at all, would have been unavailable in

many, perhaps most, cases because Fannie Mae suits typically

involve mortgage transactions to which there are multiple

parties, often resulting in a lack of complete diversity. See

Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).

There is no indication that Congress intended to eliminate

federal question jurisdiction in 1954 by replacing the phrase

“court of law or equity” with the phrase “court of competent

jurisdiction.” Neither the House nor the Senate report on

Fannie Mae’s 1954 amendments so much as mentions the

“court of competent jurisdiction” language. See H.R. Rep.

No. 83-1429, at 19–24, 43–50; S. Rep. No. 83-1472, at 33,

74–75 (1954). Given the important practical effect of

eliminating federal question jurisdiction under Fannie Mae’s

sue-and-be-sued clause, we should expect the House or the

Senate to have said something if they intended a change of

that sort. Instead, there was silence.

In our view, the most likely explanation for replacing the

phrase “court of law or equity” with “court of competent

jurisdiction” is that Congress was simplymodernizing Fannie

Mae’s charter. At our founding and for many years

thereafter, the federal court system and most state court

systems had separate law and equity courts. By the middle of

the 20th century, however, the federal courts and almost

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 9

every state had abandoned the law/equity division. See

Leonard J. Emmerglick, A Century of the New Equity,

23 Tex. L. Rev. 244, 244 n.1 (1945). The Federal Rules of

Civil Procedure merged law and equity in the federal courts

in 1938. Id. By 1945, only five states continued to have

separate law and equity courts. Id. At the time of the 1954

amendment, Fannie Mae’s charter’s reference to “court[s] of

law or equity” had become an antiquarian relic with little

relevance to the American legal system.

The change in Fannie Mae’s sue-and-be-sued clause is

best explained as getting rid of this anachronism, as Congress

had recently done in other statutes. In 1948, in response to

the Federal Rules of Civil Procedure’s elimination of the

law/equity distinction, Congress removed a number of

references to “law or equity” in the statutes defining federal

district court jurisdiction. See Act of June 25, 1948, Pub. L.

No. 80-773, §§ 1332, 1343, 1345–46, 62 Stat. 869, 930–33;

H.R. Rep. No. 80-3214, at A115, A121, A123 (1948). In

1954, as we discuss in more detail below, Congress

exchanged “court of law or equity” for “court of competent

jurisdiction” not just in Fannie Mae’s charter, but also in the

charters of the Federal Savings and Loan Insurance

Corporation (“FSLIC”) and the Home Loan Bank Board.

If Congress wanted to eliminate the grant of federal

question jurisdiction from Fannie Mae’s charter, it is highly

unlikely that it would have done so in the way the dissent

suggests. In 1954, Congress had no reason to think that

replacing the phrase “court of law or equity” with the phrase

“court of competent jurisdiction” would eliminate federal

question jurisdiction under Fannie Mae’s sue-and-be-sued

clause. Supreme Court cases from Deveaux to D’Oench had

put Congress on notice that a specific reference to the federal

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courts was “necessary and sufficient to confer jurisdiction.” 

Red Cross, 505 U.S. at 252 (emphasis added). The 1954

amendments, while using the new phrase “court of competent

jurisdiction” in Fannie Mae’s sue-and-be-sued clause,

retained the specific reference to the federal courts. Congress

would not have sought to eliminate federal question

jurisdiction under Fannie Mae’s sue-and-be-sued clause by

retaining the very words the Court had recently held

sufficient to confer such jurisdiction in D’Oench. See Pirelli,

534 F.3d at 786 (“If Congress in 1954 did not want to

continue to confer federal jurisdiction in Fannie Mae cases,

it logically would have omitted the word ‘Federal’ from the

statute, not attempted a bank shot by adding the words ‘of

competent jurisdiction.’”).

Congress’s contemporaneous treatment of the FSLIC

shows that it knew a foolproof method to eliminate federal

question jurisdiction from a sue-and-be-sued clause. That

method was to follow Deveaux and simply to omit the

reference to federal courts. In 1954, the same year Congress

amended Fannie Mae’s charter, Congress eliminated federal

question jurisdiction for the FSLIC bydeleting language in its

charter that had authorized suit “in any court of law or equity,

State or Federal.” Congress replaced it with language

authorizing suit “in any court of competent jurisdiction in the

United States.” See H.R. Rep. No. 83-1429, at 90; S. Rep.

No. 83-1472, at 121. Since eliminating the reference to

federal courts in the FSLIC amendment eliminated federal

question jurisdiction over FSLIC suits brought under its sueand-be-sued clause, Congress had no reason also to insert the

phrase “court of competent jurisdiction” to accomplish the

same thing. See Corley v. United States, 556 U.S. 303, 314

(2009) (“[A] statute should be construed so that effect is

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 11

given to all its provisions, so that no part will be inoperative

or superfluous . . . .” (internal quotation marks omitted)).

The dissent argues that our holding renders superfluous

the phrase “court of competent jurisdiction.” Dissent at 19,

28. We disagree. As we explained above, the phrase served

the purpose of eliminating an anachronistic reference to

courts of law and equity. But if we need an additional

purpose for the phrase, it is not hard to find one. In Osborn,

the purpose of the phrase “in all State Courts having

competent jurisdiction” was to emphasize that the clause did

not authorize or require the exercise of subject matter

jurisdiction by a state court with narrow, specialized

jurisdiction. See 22 U.S. (9 Wheat.) at 817. Fannie Mae’s

sue-and-be-sued clause can easily be read to have the same

purpose. There was a general concern in the 1950s about the

extent of federal authority to require state courts to hear cases

brought pursuant to federal statutes. In Testa v. Katt, 330

U.S. 386 (1947), the World War II-era federal Emergency

Price Control Act required state courts to entertain civil suits

for treble damages against merchants who charged a retail

price exceeding the maximum set by federal law. The Act

specified that federal and state courts had concurrent

jurisdiction. Like Fannie Mae’s charter, the Act authorized

suit “in any court of competent jurisdiction.” Id. at 387 n.1. 

Rhode Island district and superior courts refused to hear a suit

brought under the Act, contending that they were not obliged

to hear a suit under a federal statute authorizing treble

damages. Id. at 388. After determining that the state district

and superior courts were courts “of competent jurisdiction”

with “jurisdiction adequate and appropriate under established

local law” to grant treble damages, the Court held in Testa

that such courts were required to hear suits under the Act. Id.

at 394.

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It was in this historical setting that Congress added the

phrase “court of competent jurisdiction” to Fannie Mae’s

charter. Consistent with Testa, the phrase requires state

courts of general or otherwise competent jurisdiction to hear

claims brought by and against Fannie Mae. The phrase

makes clear that state courts of specialized jurisdiction—such

as family courts and small-claims courts—need not entertain

suits that do not satisfy those courts’ jurisdictional

requirements. Similarly, the phrase also makes clear that the

sue-and-be-sued clause does not require federal courts of

specialized jurisdiction—such as bankruptcy courts—to hear

suits falling outside those courts’ jurisdiction. Accord Pirelli,

534 F.3d at 785.

Finally, the dissent points to several circuit court cases

decided after 1954 that interpret the phrase “court of

competent jurisdiction” the same way the dissent does. 

Dissent at 24 (citing C.H. Sanders Co. v. BHAP Hous. Dev.

Fund Co., 903 F.2d 114, 118 (2d Cir. 1990); Lomas &

Nettleton Co. v. Pierce, 636 F.2d 971, 973 (5th Cir. 1981);

Bor-Son Bldg. Corp. v. Heller, 572 F.2d 174, 181 (8th Cir.

1978); Lindy v. Lynn, 501 F.2d 1367, 1368 (3d Cir. 1974)). 

But all of these cases predate Red Cross. The only post-Red

Cross cases cited by the dissent are district court decisions. 

Dissent at 25 & n.2.

B. Legislative History

Our dissenting colleague makes two arguments based on

legislative history that deserve a focused response. First, the

dissent points to the history of the 1954 amendments. The

House Bill, which used the phrase “court of competent

jurisdiction,” was designed to effectuate a transformation of

Fannie Mae from a government-owned corporation to a

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privately owned, but still federally chartered, corporation. 

The Senate Bill, which retained the old phrase “in any court

of law or equity,” would not have changed the ownership of

Fannie Mae. The House Bill prevailed. The dissent

concludes that the addition of the phrase “court of competent

jurisdiction” in the 1954 amendments, taken from the House

Bill, was designed to help effectuate the privatizing purpose

of the bill.

Second, the dissent points to a 1974 amendment to Fannie

Mae’s charter. The amendment allowed Fannie Mae to

change its principal place of business from the District of

Columbia to the Virginia or Maryland suburbs, but specified

that Fannie Mae would nonetheless remain a District of

Columbia corporation “for purposes of jurisdiction.” 

Housing and Community Development Act of 1974, Pub. L.

No. 93-383, § 806(b), 88 Stat. 633, 727 (codified as amended

at 12 U.S.C. § 1717(a)(2)). The dissent argues that if the

1954 sue-and-be-sued clause confers federal question

jurisdiction, there would have been no need to confer District

of Columbia corporate status on Fannie Mae in 1974, and

thereby to confer diversity jurisdiction over suits to which

Fannie Mae is a party.

1. The 1954 Amendments

The dissent relies heavily on the fact that the 1954

amendments were part of a broad reform reducing the federal

government’s role in Fannie Mae. The change to Fannie

Mae’s sue-and-be-sued clause, the dissent argues, must have

furthered this “overriding purpose.” Dissent at 30.

The dissent is correct that the 1954 amendments sought

to minimize the federal government’s ownership and

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operational role in Fannie Mae. But the 1954 amendments

did not completely privatize Fannie Mae, which remained,

even after 1954, a federally chartered corporation with

specific statutory requirements for its corporate governance. 

Not every part of the 1954 amendment served Congress’s

“overriding purpose” of privatization, and there is no reason

that the phrase “court of competent jurisdiction” must be

understood as serving this purpose, and there is no evidence

showing that the change to Fannie Mae’s sue-and-be-sued

clause was part of the move toward privatization. Whether

federal courts have federal question jurisdiction over Fannie

Mae cases has nothing to do with “[s]ubstituting private

sources of funds for Government expenditures,” the primary

means by which the House sought to privatize Fannie Mae. 

H.R. Rep. No. 83-1429, at 2; see id. at 43–44. The House

Report went into great detail explaining the provisions of the

1954 amendments designed to privatize Fannie Mae. It never

once mentioned the change to Fannie Mae’s sue-and-be-sued

clause.

Even more telling is Congress’s simultaneous use of the

identical phrase, “court of competent jurisdiction,” in

contexts that had nothing to do with either Fannie Mae or

privatization. In the same Act that amended Fannie Mae’s

charter, Congress amended the FSLIC’s charter by replacing

the phrase “court of law and equity” with the phrase “court of

competent jurisdiction.” Housing Act of 1954 § 501(1). Also

in the same Act, Congress added the phrase “court of

competent jurisdiction” to the statute governing the Home

Loan Bank Board (“HLBB”). Housing Act of 1954 § 503(2). 

The change to the FSLIC’s sue-and-be-sued clause was one

of very few changes to the FSLIC’s charter. See H.R. Rep.

No. 83-1429, at 90–91; S. Rep. No. 83-1472, at 121–22. As

we discussed above, Congress did eliminate federal question

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jurisdiction for the FSLIC, but it did so by eliminating any

mention of federal courts. The change to the HLBB’s sueand-be-sued clause was unrelated to privatization. Indeed,

with respect to jurisdiction, Congress made clear that it

wanted to increase the HLBB’s access to federal courts. 

Both the House and Senate explained that they were

providing the HLBB the “means . . . to enforce the laws and

regulations under which Federal savings and loan

associations operate.” H.R. Rep. No. 83-1429, at 27; S. Rep.

No. 83-1472, at 43. The Senate report specifically stated that

HLBB “proceedings could be in the Federal judicial district

in which the association is located.” S. Rep. No. 83-1472, at

43; see also H.R. Rep. No. 83-1429, at 27.

As a postscript to the 1954 amendments, in 1968

Congress split Fannie Mae into two corporations, Fannie Mae

and the Government National MortgageAssociation (“Ginnie

Mae”). Housing and Urban Development Act of 1968, Pub.

L. No. 90-448, § 801, 82 Stat. 476, 536 (1968) (codified as

amended at 12 U.S.C. § 1716b). Both Fannie Mae and

Ginnie Mae remained federally chartered, but Fannie Mae

became entirely privately owned and Ginnie Mae became

entirely federally owned. See id. Yet Fannie Mae and Ginnie

Mae kept precisely the same sue-and-be-sued clause,

authorizing them both “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. If the phrase “court of

competent jurisdiction” had been used in 1954 as part of an

overall plan to privatize Fannie Mae and to limit its access to

federal courts, Congress would not have used that same

phrase in Ginnie Mae’s charter.

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2. The 1974 Amendment

The 1974 amendment to the Housing Act changed the

sentence “[Fannie Mae] shall maintain its principal office in

the District of Columbia and shall be deemed, for purposes of

venue in civil actions, to be a resident thereof” to read,

“[Fannie Mae] shall maintain its principal office in the

District of Columbia or the metropolitan area thereof and

shall be deemed, for purposes of jurisdiction and venue in

civil actions, to be a District of Columbia corporation.” 

Housing and Community Development Act of 1974 § 806(b)

(emphasis added).

The dissent argues that this change shows that Congress,

in light of the elimination of federal question jurisdiction

effectuated by the 1954 amendment to Fannie Mae’s sue-andbe-sued clause, sought to authorize diversity jurisdiction

under 28 U.S.C. § 1332 over suits in which Fannie Mae was

a party. If it were clear that the 1974 amendment was

intended to confer diversity jurisdiction over Fannie Mae

cases, this could suggest that Congress belatedly realized that

it had eliminated federal question jurisdiction by its

amendment to Fannie Mae’s sue-and-be-sued clause, and now

sought, twenty years later, to provide some basis for federal

subject matter jurisdiction. See Dissent at 33–34. But we do

not believe that this was the purpose of the 1974 amendment.

The “jurisdiction” to which the 1974 amendment refers is

almost certainly not subject matter jurisdiction. The

reference is almost certainly to personal jurisdiction. The

purpose of the amendment was almost certainly to allow

Fannie Mae to move its principal place of business out of the

District of Columbia to the Virginia or Maryland suburbs, and

at the same time to make clear that Fannie Mae would be

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subject to general personal jurisdiction only in the District

even if it moved its principal place of business into the

suburbs.

A corporation, like an individual, is subject to specific

jurisdiction in a forum when its activities in that forum have

given rise to the suit. See Goodyear Dunlop Tires

Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853 (2011). A

corporation is subject to general jurisdiction only where it is

“essentially at home.” Id. at 2851; see Daimler AG v.

Bauman, 134 S. Ct. 746, 755–58 (2014). The two places

where a corporation is “essentially at home” and therefore

subject to general jurisdiction are its place of incorporation

and its principal place of business. Daimler, 134 S. Ct. at

760. In the 1974 amendment, Congress specified that Fannie

Mae would be “deemed” a District of Columbia corporation

“for purposes of jurisdiction” and thus subject to general

jurisdiction only in the District, despite the possibility that it

might move its principal place of business to the suburbs. See

12 U.S.C. § 1717(a)(2)(B).

The legislative history of the 1974 amendment is

consistent with this reading. The House subcommittee

summarized the amendment as “provid[ing] that the principal

office of FNMA be located in the District of Columbia

metropolitan area, as well as in the District of Columbia,

though for jurisdiction and venue purposes FNMA would be

considered a District corporation.” Subcomm. on Hous. of

the Comm. on Banking and Currency, 93d Cong.,

Compilation of the Housing and Community Development

Act of 1974, at 277 (Comm. Print 1974); see also id. at 379

(summarizing the amendment as “permit[ing] the principal

office of FNMA to be located in the District of Columbia

metropolitan area, as well as in the District of Columbia,

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though for jurisdiction and venue purposes FNMA is to be

considered a District resident”). The legislative history

contains no mention of the possibility that the amendment

was intended to authorize diversity jurisdiction based on

newly conferred District of Columbia citizenship for Fannie

Mae. Rather, the legislative history strongly suggests that the

amendment was intended to allow Fannie Mae to move its

principal place of business to the suburbs without effecting

any change to the place where it would be subject to general

jurisdiction. That is, Fannie Mae could move to the suburbs,

“though for jurisdiction and venue purposes [it] would be

considered a District corporation.” Id. at 277.

The dissent cites two other statutes as examples of

Congress creating diversity jurisdiction for federally

chartered corporations. Dissent at 34–35. But both statutes

support reading the 1974 Fannie Mae amendment as referring

to personal rather than subject matter jurisdiction. Both

statutes expressly refer to the corporation a “citizen” of the

relevant forum. See 7 U.S.C. § 941(c) (“The telephone

bank . . . shall, for the purposes of jurisdiction and venue, be

deemed a citizen and resident of the District of Columbia.”

(emphasis added)); 28 U.S.C. § 1348 (“All national banking

associations shall, for the purposes of all other actions by or

against them, be deemed citizens of the States in which they

are respectively located.” (emphasis added)). Federal law

defines diversity jurisdiction in terms of citizenship,

28 U.S.C. § 1332(a), so when Congress sought to authorize

diversity jurisdiction in these two statutes, it used the word

“citizen.” Unlike these two statutes, Fannie Mae’s 1974

amendment does not use the word “citizen.” Rather, it

provides only that Fannie Mae is a “District of Columbia

corporation.” 17 U.S.C. § 1717(a)(2)(B).

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Conclusion

We hold that the sue-and-be-sued clause in Fannie Mae’s

federal charter confers federal question jurisdiction over suits

in which Fannie Mae is a party. Accordingly, we hold that

the district court had subject matter jurisdiction over

plaintiffs’ claims. We affirm the district court’s dismissal of

plaintiffs’ claims for the reasons stated in our previous

unpublished disposition. Lightfoot, 465 F. App’x at 669.

AFFIRMED.

STEIN, District Judge, dissenting:

Fannie Mae’s charter gives the company the power “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). Unlike the corporate charter at issue in American

National Red Cross v. S.G., 505 U.S. 247 (1992), Fannie

Mae’s sue-and-be-sued clause contains a proviso—the phrase

“of competent jurisdiction.” The majority offers a few

potential readings of this phrase, but each of these

constructions effectivelyrendersthe proviso superfluous. But

the phrase “of competent jurisdiction” is not a potted plant; it

must mean something. With the proviso included, Fannie

Mae’s sue-and-be-sued clause does not confer automatic

federal subject matter jurisdiction over any action to which

Fannie Mae is a party; jurisdiction must arise from some

other source. I therefore respectfully dissent.

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I. The Red Cross Default Rule

Congress has used the sue-and-be-sued clauses of federal

corporations to achieve multiple goals. Most obviously, these

clauses make clear that the federal entity—as opposed to, for

example, its administrator—has the ability to engage in

litigation. See Fed. Hous. Admin. v. Burr, 309 U.S. 242, 245

(1940). Congress also uses these clauses to confirm that a

federally created entity cannot invoke sovereign immunity. 

See id. at 249. And Congress may also draft a sue-and-besued clause to confer federal jurisdiction upon any suit to

which the federal corporation is a party.

A hoary line of U.S. Supreme Court precedent sets forth

how Congress may achieve this final goal. The Court first

considered this question in Bank of the United States v.

Deveaux, 9 U.S. (5 Cranch) 61 (1809), with Chief Justice

Marshall writing. The corporation in that case was the first

Bank of the United States, and its charter empowered the

Bank “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.” Id. at 85. The Court

concluded that this section merely granted the Bank the

capacity to sue. It did not “enlarge the jurisdiction of any

particular court.” Id.

Two lines of reasoning supported this holding. First, the

Court concluded that automatic access to the federal courts

did not necessarily follow from a generic authorization to sue

and be sued. See id. at 85–86. Second, a different section of

the Bank’s charter explicitly provided for federal jurisdiction

in certain suits against the president and directors of the

Bank. See id. at 86. “This,” the Chief Justice announced,

“evinces the opinion of congress, that the right to sue does not

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imply a right to sue in the courts of the union, unless it be

expressed.” Id.

Congress seeminglyresponded to the Court’s ruling when

it chartered the second Bank of the United States. The

relevant section of the second Bank’s charter gave it the right

“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 anyCircuit Court of the United

States.”1 Osborn v. Bank of the United States, 22 U.S.

(9 Wheat.) 738, 817 (1824). The Osborn Court, once again

through Chief Justice Marshall, determined that unlike the

language at issue in Deveaux, the second Bank’s charter

unambiguously conferred federal subject matter jurisdiction. 

Id. at 817–18.

Deveaux and Osborn together established a default rule

for determining whether a federal corporation’s sue-and-besued clause confers federal subject matter jurisdiction. As the

Supreme Court summarized in American National Red Cross

v. S.G., 505 U.S. 247 (1992): “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.” Id. at 255.

The clause at issue in that case gave the Red Cross the

power “to sue and be sued in courts of law and equity, State

or Federal, within the jurisdiction of the United States.” Id.

1 At the time the second Bank was chartered, the circuit courts had both

original and appellate jurisdiction over certain civil actions. See Am. Nat’l

Red Cross v. S.G., 505 U.S. 247, 256 n.8 (1992); Richard H. Fallon, Jr. et

al., Hart and Wechsler’s The Federal Courts and the Federal System 22,

30 n.65 (6th ed. 2009).

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at 248. This language went beyond the general authorization

of Deveaux. See id. at 256–57. In addition, the Red Cross’s

clause was “in all relevant respects identical” to a charter

provision that the Court held to confer jurisdiction in

D’Oench, Duhme & Co. v. Federal Deposit Insurance Corp.,

315 U.S. 447 (1942). See Red Cross, 505 U.S. at 257. 

Importantly, Congress amended the relevant provision of the

Red Cross’s charter just five years after D’Oench was

decided. See id. at 260. The plain language and statutory

history together compelled the conclusion that the Red

Cross’s charter gave federal courts subject matter jurisdiction

over suits to which the company was a party.

Red Cross provides the Supreme Court’s most recent

pronouncement on the jurisdictional implications of federal

sue-and-be-sued clauses. However, Red Cross did not

announce any new rule of law. See id. at 255–57. Rather, the

Court simply restated the “rule established” in the Court’s

twin decisions of Osborn and Deveaux. Id. at 257. Red

Cross thus did not announce a magic-words test that ends all

inquiry the moment we come across the word “federal”; it

restated a default rule to assist Congress and the courts in

writing and interpreting sue-and-be-sued clauses.

Recognizing that the rule in Red Cross is a default has an

important implication—it means that Congress can draft

exceptions to the rule. When Congress creates corporations,

it “has full authority to make such restrictions on the ‘sue and

be sued’ clause as seem to it appropriate or necessary.” Fed.

Hous. Admin. v. Burr, 309 U.S. 242, 249 (1940); cf. Fed. Sav.

& Loan Ins. Corp. v. Ticktin, 490 U.S. 82, 86–87 & n.5

(1982) (Congress can write provisos that limit “broad grant[s]

of federal jurisdiction.”). Counsel for Fannie Mae nicely

summarized this point at oral argument: “If Congress says

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you can sue or be sued in federal court, that is at least a

profoundly strong default rule . . . and you’d have to find

something else in the statute that says even though we want

you to sue in federal court, we don’t really mean it.” Oral

Arg. Rec. at 28:58.

Red Cross did not tie Congress’ hands, preventing it from

crafting sue-and-be-sued clauses as it deems fit. We cannot

ignore the “of competent jurisdiction” proviso; we must

determine what it means. The Red Cross default rule gives us

the starting point for our analysis of Fannie Mae’s sue-andbe-sued clause. The Supreme Court’s application of the

default rule over the past two centuries defines the

interpretive tools for our analysis. Using this approach,

Fannie Mae’s sue-and-be-sued clause allows for only one

reading—a court must have an independent basis of

jurisdiction to hear a suit involving that company.

II. The Plain Language of Fannie Mae’s Sue-And-BeSued Clause

As noted, Fannie Mae’s charter grants the company the

power “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). Absent the “of competent jurisdiction”

proviso, this clause would clearly confer jurisdiction on the

federal courts. See D’Oench, 315 U.S. at 455. The true

question before this Court, then, is what the proviso means. 

On its face, the phrase “of competent jurisdiction” “look[s] to

outside sources of jurisdictional authority.” Califano v.

Sanders, 430 U.S. 99, 106 n.6 (1977). When “of competent

jurisdiction” modifies “State” courts, the proviso instructs us

to look for a jurisdictional hook in that state’s law. See

Osborn, 22 U.S. (9 Wheat.) at 817. The proviso performs the

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same function when it modifies “Federal” courts. No

court—state or federal—is competent to hear a suit involving

Fannie Mae unless it has subject matter jurisdiction by some

means other than Fannie Mae’s sue-and-be-sued clause.

Congress has utilized substantively identical language in

other sue-and-be-sued clauses, and the courts of appeals have

overwhelmingly agreed that an “of competent jurisdiction”

proviso requires an alternative basis of jurisdiction. Fannie

Mae has directed our attention in particular to the sue-and-besued provision that authorizes the Administrator of the

Federal Housing Administration “to sue and be sued in any

court of competent jurisdiction, State or Federal.” 12 U.S.C.

§ 1702. A long line of cases has held that this statute does

not confer federal jurisdiction. See C.H. Sanders Co. v.

BHAP Hous. Dev. Fund Co., 903 F.2d 114, 118 (2d Cir.

1990); Lomas & Nettleton Co. v. Pierce, 636 F.2d 971, 973

(5th Cir. 1981); Bor-Son Bldg. Corp. v. Heller, 572 F.2d 174,

181 (8th Cir. 1978); Lindy v. Lynn, 501 F.2d 1367, 1368 (3d

Cir. 1974). This very Circuit has followed the nonjurisdictional interpretation of the statute, albeit in dicta. See

Munoz v. Small Business Admin., 644 F.2d 1361, 1365 n.3

(9th Cir. 1981). The majority criticizes my reliance on these

cases because they were handed down prior to Red Cross,

which, as set forth above, announced no new rule of law. But

if the majority seeks post-Red Cross cases that agree with this

dissent that an independent basis is needed to support federal

subject matter jurisdiction for Fannie Mae, we need only look

to the numerous district court opinions in this Circuit that the

majority overrules with its decision. As district judge Dean

Pregerson recently summarized, “courts in this circuit appear

to have uniformly reached the [] conclusion” that Fannie

Mae’s charter does not confer federal subject matter

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jurisdiction. Fed. Nat’l Mortgage Ass’n v. Moreno, No. 14-

CV-2984, 2014 WL1922955, at *2 (C.D. Cal. May 14, 2014)

(collecting cases). Judge Pregerson concurred with that

significant consensus.2 See id.

In sum, when Congress has included “of competent

jurisdiction” provisos in sue-and-be-sued clauses, courts have

honored Congress’ intent and ruled these clauses to not

confer subject matter jurisdiction. Fannie Mae’s sue-and-besued clause should be no different.

2 The district courts in our circuit are not alone in their consensus that

Fannie Mae’s sue-and-be-sued clause does not confer federal subject

matter jurisdiction. Indeed, this appears to be the position of the majority

of those district courts in all circuits that have written on this issue. See

Warren v. Fed. Nat’l Mortg. Ass’n, No. 14-CV-0784, 2014 WL 4548638

(N.D. Tex. Sept. 15, 2014); Kennedy v. Fed. Nat’l Mortg. Ass’n, No.

13-CV-203, 2014 WL 3905593, at *5–6 (E.D.N.C. Aug. 11, 2014); Fed.

Nat’l Mortg. Ass’n v. Davis, 963 F. Supp. 2d 532, 537–43 (E.D. Va.

2013); Carter v. Watkins, No. 12-CV-2813, 2013 WL 2139504, at *3–4

(D. Md. May 14, 2013); Fed. Home Loan Bank of Indianapolis v. Banc of

Am. Mortg. Sec., Inc., No. 10-CV-1463, 2011 WL 2133539, at *1–2 (S.D.

Ind. May 25, 2011) (construing the FHLB’s substantively identical sueand-be-sued clause); Fed. Home Loan Bank of Atlanta v. Countrywide

Sec. Corp., No. 11-CV-489, 2011 WL 1598944, at *3 (N.D. Ga. Apr. 22,

2011) (construing FHLB charter); Fed. Home Loan Bank of Chicago v.

Banc of Am. Funding Corp., 760 F. Supp. 2d 807, 809–10 (N.D. Ill. 2011)

(construing FHLB charter); Rincon Del Sol, LLC v. Lloyd’s of London,

709 F. Supp. 2d 517, 522–25 (S.D. Tex. 2010); Knuckles v. RBMG, Inc.,

481 F. Supp. 2d 559, 562–65 (S.D.W. Va. 2007). Those district courts

that have sided with the majority have done so without an extended

discussion of this question. See Fed. Home Loan Bank of Boston v. Ally

Fin., Inc., No. 11-CV-10952, 2012 WL 769731, at *1–3 (D. Mass. Mar.

9, 2012); In re Fannie Mae 2008 Sec. Litig., No. 08 Civ. 7831, 2009 WL

4067266, at *3 (S.D.N.Y. Nov. 24, 2009); Grun v. Countrywide Home

Loans, Inc., No. 03-CV-0141, 2004 WL 1509088, at *2 (W.D. Tex. July

1, 2004).

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The majority offers two alternative readings for the “of

competent jurisdiction” proviso. Neither is persuasive. First,

the majority suggests that the proviso was part of Congress’

drive to modernize the U.S. Code in the mid-20th century. 

During this period, law and equity were merged in the federal

courts and in a majority of the states. See Fed. R. Civ. P. 2. 

The merger largely rendered references to “courts of law and

equity” into historical curiosities. As the majority correctly

points out, when Congress amended title 28 of the U.S. Code,

it cleaned up these references in the sections that confer

jurisdiction on the district courts. Congress went about its

task expeditiously—it simply deleted references to courts of

law or equity.

3 Congress did not replace these phrases with

new references to “courts of competent jurisdiction” for a

singularly valid reason. As explained above, the phrase “of

competent jurisdiction” signals that the section containing

that phrase will not also harbor a grant of jurisdiction. It

would make no sense to include this proviso in a section

designed to confer jurisdiction.

Next, the majority offers that the “of competent

jurisdiction” proviso could be read to emphasize that state

and federal courts of specialized jurisdiction need not hear

cases involving Fannie Mae purely on the basis of its sueand-be-sued clause. There are two flies in the ointment of

this reading.

3 Compare 28 U.S.C. § 41(1) (1946), with Act ofJune 25, 1948, ch. 646,

§§ 1331, 1332, 1345, 62 Stat. 869, 930, 933 (deleting reference to “suits

of a civil nature, at common law or in equity”); compare 28 U.S.C.

§ 41(7), (14) (1946), with ch. 646, §§ 1338, 1343, 62 Stat. at 931–32

(deleting references to “suits at law or in equity”); and compare 28 U.S.C.

§ 41(20) (1946), with ch. 646, § 1346, 62 Stat. at 933 (deleting reference

to “a court of law, equity, or admiralty”).

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First, the majority relies on the Osborn Court’s

interpretation of the second Bank’s charter, which authorized

the Bank to sue “in all State Courts having competent

jurisdiction.” Osborn, 22 U.S. (9 Wheat.) at 817. According

to the majority, this phrase ensured that “a state court with

narrow, specialized jurisdiction” was not required to hear any

case involving the Bank. Majority Op. at 11. This is an

unduly narrow reading of the clause. In fact, the second

Bank’s charter made clear that no state court was required to

hear a suit involving the Bank, unless that court had a freestanding basis for jurisdiction. This reading accords with the

understood relationship between Congress and the state

courts around the time the second Bank was chartered: “I

hold it to be perfectly clear, that Congress cannot confer

jurisdiction upon any Courts, but such as exist under the

constitution and laws of the United States, although the State

Courts may exercise jurisdiction on cases authorized by the

laws of the State, and not prohibited by the exclusive

jurisdiction of the federal Courts.” Houston v. Moore,

18 U.S. (5 Wheat.) 1, 27–28 (1820) (emphasis added). The

“of competent jurisdiction” proviso serves precisely the same

purpose in Fannie Mae’s charter—the only difference is that

the proviso applies to the courts of the states and the federal

government.

Second, Red Crossforecloses the majority’s construction

of the “of competent jurisdiction” proviso. The Red Cross’s

charter gave that organization the power “to sue and be sued

in courts of law and equity, State or Federal, within the

jurisdiction of the United States.” Red Cross, 505 U.S. at

248. In his dissenting opinion, Justice Scalia argued that if

this sue-and-be-sued clause must confer federal jurisdiction,

it must confer jurisdiction on all the federal courts, including

those of specialized jurisdiction. See id. at 267 (Scalia, J.,

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dissenting). The Court rejected this approach and held that

the Red Cross’s charter confers automatic jurisdiction only in

the district courts—today, the sole federal courts of broad

original jurisdiction. See id. at 256 n.8 (majority opinion). 

Red Cross therefore demonstrates that Congress does not

need an “of competent jurisdiction” proviso to ensure that

Fannie Mae will not foist itself upon federal courts of

specialized jurisdiction. The majority’s reading of the

proviso would render it entirely superfluous.

The majority claims that Testa v. Katt, 330 U.S. 386

(1947), provides an historical backdrop for its interpretation

of the sue-and-be-sued clause. This is an interesting

hypothetical, but one without relevance to the issue presented

in this case. Testa restated the uncontroversial proposition

that state courts cannot refuse to hear federal causes of action

when those courts entertain similar state law causes of action. 

See id. at 394; see also, e.g., Haywood v. Drown, 556 U.S.

729, 735–36 (2009). But Congress did not give Fannie Mae

a proprietary cause of action when it amended the company’s

charter in 1954. When Fannie Mae sues or is sued, the cause

of action must derive from a separate realm of federal law or,

more likely, from state law. See, e.g., Welch v. Burton,

252 S.W.2d 411, 413 (Ark. 1952) (Fannie Mae joined as

defendant in quiet title action); Malcolm MacDowell &

Assocs. v. Ecorse-Lincoln Park Bank, 38 N.W.2d 921,

921–22 (Mich. 1949) (Fannie Mae sued for breach of a

mortgage-related contract). Testa does not evidence a midcentury climate of fear that federal entities would be denied

access to state courts, especially in cases touching on state

property and mortgage law.

The Red Cross default rule does not allow us to ignore the

“of competent jurisdiction” proviso—it must mean

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something. The only natural reading of this phrase instructs

us to look for a source of jurisdiction outside of Fannie Mae’s

sue-and-be-sued clause.

III. The Legislative Context of Fannie Mae’s Sue-AndBe-Sued Clause

Looking beyond the plain language of Fannie Mae’s sueand-be-sued clause, the history of Congress’ amendments to

this statute reinforces the conclusion that the clause does not

confer federal subject matter jurisdiction.

A. The 1954 amendment

Prior to 1954, Fannie Mae’s sue-and-be-sued clause gave

it the power “[t]o sue and be sued, complain and defend, in

any court of law or equity, State or Federal.” Nat’l Housing

Act, ch. 847, § 301(c)(3), 48 Stat. 1246, 1253 (1934). This

clause inarguably gave Fannie Mae access to the federal

courts. See D’Oench, 315 U.S. at 455. But knowing this,

Congress in 1954 struck the language “in any court of law or

equity,” and replaced it with “in any court of competent

jurisdiction.” It is a basic tenet of statutory interpretation that

“[w]hen Congress acts to amend a statute, [courts] presume

it intends its amendment to have real and substantial effect.” 

Stone v. I.N.S., 514 U.S. 386, 397 (1995). Indeed, the

Supreme Court in Red Crossreinforced the importance of this

canon in the context of sue-and-be-sued clauses. See Red

Cross, 505 U.S. at 260. Congress thus emphasized the nonjurisdictional implications of the “of competent jurisdiction”

proviso by adding it to a previously jurisdiction-conferring

statute.

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Congress’ motivation and method in amending Fannie

Mae’s charter have proved obscure to some. See Pirelli

Armstrong Tire Corp. Retiree Med. Benefits Trust ex rel. Fed.

Nat’l Mortg. Ass’n v. Raines, 534 F.3d 779, 786–87 (D.C.

Cir. 2008). It is true that the legislative history behind the

1954 amendment does not expressly discuss the addition of

the “of competent jurisdiction” proviso. But the legislative

history does reveal that Congress intended to reduce the

footprint of the federal government in the national housing

market. Congress’ amendment to Fannie Mae’s sue-and-besued clause was simply one facet of this overriding purpose.

The 1954 Act was prompted by President Eisenhower’s

desire to “develop a new and revitalized housing program

better adapted to current requirements, which would clearly

identify the proper role of the Federal Government in the

housing field and outline more economical and effective

means for improving the housing conditions of our people.” 

H.R. Rep. No. 83-1429, at 1 (1954). As the House

Committee on Banking and Currency put it, one of the Act’s

“basic objectives” was “[s]ubstituting private sources of

funds for Government expenditures whenever possible,

especially in connection with the provision of a secondary

market for home mortgages.” Id. at 2.

The House passed H.R. 7839—a version of the 1954 Act

that would dramatically remake Fannie Mae. Pursuant to

H.R. 7839, Fannie Mae would be dissolved and rechartered

“with substantial changes in its authority and with provision

for the eventual substitution of private capital for

Government investment in its secondary market operations.” 

H.R. Rep. No. 83-1429, at 18. The new Fannie Mae would

issue capital stock to the Secretary of the Treasury and

convertible bonds to private investors. See id. at 18–19. 

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Once the capital stock owned by the Secretary was retired,

the convertible bonds could be exchanged for common stock

and Fannie Mae could issue more common stock directly to

the public. See id. at 18–19, 43–45. Notably for our

purposes, the House bill included the “of competent

jurisdiction” proviso in Fannie Mae’s amended corporate

charter. See id. at 89–90.

The Senate Committee on Banking and Currencystrongly

disagreed with the House’s treatment of Fannie Mae. That

Committee did not believe that “the testimony and facts

presented to it warrant[ed] the sweeping action contained in”

the House bill. S. Rep. No. 83-1472, at 33 (1954). The

Senate proposed only minor changes to Fannie Mae’s thenexisting corporate authority. See id. at 74–75. Importantly,

the Senate version of H.R. 7839 did not include the “of

competent jurisdiction” proviso. See id. at 121.

The conference committee roundly rejected the Senate’s

approach and adopted the House’s version of the Act. See

Conf. Rep. No. 83-2271, at 25–35 (1954). The final version

of the law included the Treasury-to-private capitalization

path. See Housing Act of 1954, Pub. L. No. 83-560, § 201,

68 Stat. 590, 613–15. It also provided that once this capital

conversion was complete,FannieMae’s administrative parent

would request that Congress turn Fannie Mae over entirely to

its private owners. See id., 68 Stat. at 615. It also included,

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as we know, the “of competent jurisdiction” proviso.4See id.

at 620.

In sum, the non-jurisdictional reading of the 1954 sueand-be-sued clause meshes comfortably with Congress’

overall intention when enacting the Housing Act of 1954.

Congress intended to put Fannie Mae on a path that would

eventually take the federal government out of the secondary

mortgage market. As part of this process, Congress removed

Fannie Mae’s jurisdiction-granting sue-and-be-sued clause

and elected the default option for federally chartered

corporations—that they do not automatically gain access to

the federal courts, unless the government owns more than half

of the corporation’s capital stock.5 After Congress passed the

1954 Act, Fannie Mae would still have access to the federal

4 The 1954 Act inserted an “of competent jurisdiction” proviso into the

sue-and-be-sued clauses of two other entities—the Federal Savings and

Loan Insurance Corporation and the Home Loan Bank Board (in the

context of Board actions to enforce its regulations of savings and loan

institutions). See Pub. L. No. 83-560, §§ 501(1), 503(2), 68 Stat. at 633,

635. Congress made the interpretive task concerning these two clauses

easier, since it did not include a specific reference to federal courts. 

Neither of these sue-and-be-sued clauses confers automatic federal

jurisdiction.

 

5 As a consequence of the Supreme Court’s decision in Osborn, “a suit

by or against a corporation of the United States is a suit arising under the

laws of the United States.” Pac. R.R. Removal Cases, 115 U.S. 1, 11

(1885) (citing Osborn, 22 U.S. (9 Wheat.) at 817–28). The district courts

thus have jurisdiction over suits by or against federally chartered

corporations under 28 U.S.C. § 1331, at least in theory. See id. at 14; see

also Red Cross, 505 U.S. at 251. In 1925, Congress limited this ground

of jurisdiction so that only corporations where the government owns more

than half of the capital stock could benefit from it. See Act of Feb. 13,

1925, ch. 229, § 12, 43 Stat. 936, 941 (codified as amended at 28 U.S.C.

§ 1349).

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 33

courts purely on the basis of its federal charter until the

Treasury disentangled itself from the corporation. At that

point, the government would no longer own more than half of

the corporation’s capital stock, Fannie Mae’s administrator

would request that the company be completely turned over to

its private owners, and Fannie Mae would be in the position

of every other federally chartered corporation that does not

receive the special treatment of a jurisdiction-conferring sueand-be-sued clause. See Paul E. Lund, Federally Chartered

Corporations and Federal Jurisdiction, 36 Fla. St. U. L. Rev.

317, 334–35 (2009) (calling the number of corporations with

automatic access to federal courts through their sue-and-besued clauses “a select group” and a “handful”).

Although Congress did not speak specifically to its intent

in amending Fannie Mae’s sue-and-be-sued clause, it did not

have to. Congress’ intent for the Housing Act of 1954—to

place the government and Fannie Mae on paths that would

ultimately diverge—was clear. The amendment to Fannie

Mae’s sue-and-be-sued clause was part and parcel of this

overarching intendment.

B. The 1974 amendment

Congress returned to Fannie Mae’s corporate charter in

1974 to once again amend the company’s ability to gain

access to the federal courts. This amendment did not touch

on the sue-and-be-sued clause, but it affects our interpretation

of that portion of Fannie Mae’s charter. If a separate portion

of Fannie Mae’s charter explicitly speaks to jurisdiction, this

militates against a jurisdictional reading of the sue-and-besued clause. See Deveaux, 9 U.S. (5 Cranch) at 86.

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34 LIGHTFOOT V. CENDANT MORTGAGE CORP.

Prior to 1974, both Fannie Mae and its sister corporation,

Ginnie Mae (formally titled the Government National

Mortgage Corporation), were required to “maintain [their]

principal office in the District of Columbia and shall be

deemed, for purposes of venue in civil actions, to be a

resident thereof.” Housing and Urban Development Act of

1968, Pub. L. No. 90-448, § 802(c)(3), 82 Stat. 476, 536, 537. 

Then, in the Housing and Community Development Act of

1974, Congress amended this clause to provide that Fannie

Mae “shall be deemed, for purposes of jurisdiction and venue

in civil actions, to be a District of Columbia corporation.” 

Pub. L. No. 93-383, tit. VIII, § 806(b), 88 Stat. 633, 727

(codified at 12 U.S.C. § 1717(a)(2)(B)) (emphasis added). 

Congress did not make a parallel amendment to the corporate

charter of Ginnie Mae, which had no capital stock and was

“in the Department of Housing and Urban Development.” 

12 U.S.C. § 1717(a)(2)(A).

By adding the term “jurisdiction,” Congress intended to

allow Fannie Mae to access the federal courts via diversity

jurisdiction pursuant to 28 U.S.C. § 1332. Section 1332

deems a corporation a citizen “of every State . . . by which it

has been incorporated and of the State . . . where it has its

principal place of business.” 28 U.S.C. § 1332(c)(1). But

federally chartered corporations are not “citizens” of any

“State” for the purposes of section 1332. See Wachovia Bank

v. Schmidt, 546 U.S. 303, 306 (2006); Bankers’ Trust Co. v.

Tex. & P. Ry. Co., 241 U.S. 295, 309–10 (1916); Hancock

Fin. Corp. v. Fed. Sav. & Loan Ins. Corp., 492 F.2d 1325,

1329 & n.4 (9th Cir. 1974). Recognizing this fact, Congress

has filled the statutory gap on a few occasions by deeming

specific corporations or classes of corporations to be citizens

of the states in which they are located. See Act of Mar. 3,

1887, ch. 373, § 4, 24 Stat. 552, 554 (codified as amended at

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LIGHTFOOT V. CENDANT MORTGAGE CORP. 35

28 U.S.C. § 1348) (“[A]ll national banking associations

established under the laws of the United States shall, for the

purposes of all actions by or against them . . . be deemed

citizens of the States in which they are respectively located

. . . .”); see also 7 U.S.C. § 941(c) (“The telephone bank . . .

shall, for the purposes of jurisdiction and venue, be deemed

a citizen and resident of the District of Columbia.”). The

1974 amendment to Fannie Mae’s charter is another example

of this type of statute.

Fannie Mae would have no use for diversity jurisdiction

if it could enter the federal courts pursuant to its sue-and-besued clause. The latter basis of jurisdiction does not contain

an amount-in-controversy requirement, a complete-diversity

requirement, or a forum-defendant rule. It is also not limited

by the well-pleaded complaint rule. See Red Cross, 505 U.S.

at 258. If Fannie Mae’s sue-and-be-sued clause confers

subject matter jurisdiction, then Congress amended the

company’s charter in 1974 for no reason whatsoever. See

Hancock, 492 F.2d at 1328–29. The absence of any change

to Ginnie Mae’s charter confirms this interpretation of the

Fannie Mae amendment. Ginnie Mae had no use for diversity

jurisdiction whatsoever—it had plenary access to the federal

courts as an agency of the federal government. See 28 U.S.C.

§§ 1345, 1346.

The majority believes that the word “jurisdiction” in the

1974 amendment refers only to personal jurisdiction, not

subject matter jurisdiction. A natural reading of the statute

does not lead to this result. When Congress dubbed Fannie

Mae “a District of Columbia corporation,” it employed a

phrase with a universally understood meaning. Just as “a

Delaware corporation” is an entity incorporated under the

laws of that state, see, e.g., Eldridge v. Richfield Oil Corp.,

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36 LIGHTFOOT V. CENDANT MORTGAGE CORP.

364 F.2d 909, 909 (9th Cir. 1966), “a District of Columbia

corporation” is one that has been incorporated under the laws

of the District. Section 1332 fills in the rest, making that

District of Columbia corporation a District citizen, and

therefore eligible for diversity jurisdiction. See 28 U.S.C.

§ 1332(c)(1), (e). Congress’ designation of the District as the

effective place of Fannie Mae’s incorporation also makes

Fannie Mae subject to general jurisdiction—that is, personal

jurisdiction—in the District’s courts. See Daimler AG v.

Bauman, 134 S. Ct. 746, 760 (2014). But the 1974

amendment cannot be cabined so that it legislates personal

jurisdiction, and personal jurisdiction alone.

The plain language of the 1974 amendment shows that

Congress intended to give Fannie Mae access to the federal

courts by diversity jurisdiction. Since we cannot presume

that Congress amends statutes with frivolous intent, it follows

that Fannie Mae must have needed this jurisdictional hook. 

Congress’ pronouncement confirms that Fannie Mae’s sueand-be-sued clause does not confer federal jurisdiction.

IV. Conclusion

The Supreme Court’s cases interpreting sue-and-be-sued

clauses, culminating with Red Cross, have defined the tool

box we are to use in examining Fannie Mae’s charter. All of

the interpretive techniques point in a single direction—that

the “of competent jurisdiction” proviso added to Fannie

Mae’s charter demands that the company come up with some

point of entry to the federal courts other than its status as a

federally chartered corporation. I respectfully dissent.

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