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Lightfoot v. Cendant Mortgage Group

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Supreme Court of the United States
Lightfoot v. Cendant Mortgage Group
Reference: 14-1055
Term: 2016
Important Dates
Argued: November 8, 2016
Decided: January 18, 2017
Outcome
Ninth Circuit Court of Appeals reversed
Vote
8-0 to reverse
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan
Concurring
None
Dissenting
None


Lightfoot v. Cendant Mortgage Group is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on November 8, 2016. The case came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit. On January 18, 2017, in an opinion by Justice Sonia Sotomayor, the court unanimously reversed the judgment of the Ninth Circuit.

HIGHLIGHTS
  • The case: Lightfoot sought to bring a legal action against Fannie Mae in state court after two lawsuits filed in federal court were dismissed. The Ninth Circuit held that Fannie Mae's charter conveyed original jurisdiction to federal courts and affirmed a district court decision dismissing her lawsuit that was initiated in state court.
  • The issue: Does Fannie Mae's charter convey original, subject matter jurisdiction to federal courts for all cases to which Fannie Mae is a party?
  • The outcome: The judgment of the Ninth Circuit was reversed.


    • In brief: After two cases against Fannie Mae and its authorized subsidiaries were dismissed in federal court, Beverly Ann Hollis-Arrington and Crystal Monique Lightfoot filed a lawsuit in a California court bringing many of the same allegations presented in their federal filings. Fannie Mae remanded to federal court, arguing that their charter conveyed subject matter jurisdiction to federal courts. The district court agreed and dismissed Hollis-Arrington and Lightfoot's lawsuit. The Ninth Circuit affirmed initially, but withdrew that disposition for briefing on the jurisdiction question. After holding that Fannie Mae's charter conveyed original subject matter jurisdiction exclusively to federal courts, the Ninth Circuit again affirmed the district court's dismissal. Oral argument before the U.S. Supreme Court was held on November 8, 2016. On January 18, 2017, in an opinion by Justice Sonia Sotomayor, the court unanimously reversed the judgment of the Ninth Circuit.

    You can review the Ninth Circuit's opinion here.[1]

    Click on the tabs below to learn more about this Supreme Court case.

    Case


    Background

    Beginning in 2003, Beverly Ann Hollis-Arrington and Crystal Monique Lightfoot filed two lawsuits in federal court against the Federal National Mortgage Association (Fannie Mae) after Fannie Mae initiated foreclosure proceedings against Hollis-Arrington's West Hills, California, home. Both suits were dismissed by the district court and those dismissals were affirmed on appeal by the United States Court of Appeals for the 9th Circuit. Hollis-Arrington and Lightfoot then filed a lawsuit in a California state court. Fannie Mae removed to federal court arguing that a clause in Fannie Mae's charter, the sue-and-be-sued clause, conferred subject matter jurisdiction to federal courts. Hollis-Arrington and Lightfoot filed a motion to remand the case back to state court but the district court denied the motion. The district court then dismissed all of Hollis-Arrington and Lightfoot's claims finding the claims were barred by res judicata and collateral estoppel. The Ninth Circuit affirmed the district court initially, but later withdrew their disposition and ordered the parties to submit arguments "whether Fannie Mae's charter granted the district court subject matter jurisdiction."[1]

    The sue-and-be-sued clause in Fannie Mae's charter is codified as 12 U.S.C. §1723a, which reads (emphasis added),[2]

    “

    Each of the bodies corporate named in section 1717(a)(2) of this title shall have power to adopt, alter, and use a corporate seal, which shall be judicially noticed; to enter into and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any State, Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with any person, firm, association, or corporation; to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers; 'in its corporate name, to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal,' but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the Association or against the Association with respect to its property; to conduct its business without regard to any qualification or similar statute in any State of the United States, including the District of Columbia, the Commonwealth of Puerto Rico, and the Territories and possessions of the United States; to lease, purchase, or acquire any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate; to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted; to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes; and to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business. [3]

    		”

    In the panel opinion for the Ninth Circuit, Judge William Fletcher held that the sue-and-be-sued clause here was substantively reached by the U.S. Supreme Court's 1992 opinion in American Red Cross v. S.G., which 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." Similarly, the Ninth Circuit panel opinion referred to a rule of the United States Court of Appeals for the District of Columbia Circuit which held "when federal charters, like those of the Red Cross and 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." In the panel's view, "that rule resolves this case."[1]

    In consideration of the holding that the sue-and-be-sued clause of Fannie Mae's charter specifically referenced federal courts and, by extension, conferred original jurisdiction in federal courts over suits in which Fannie Mae is a party, the Ninth Circuit affirmed the district court's dismissal of Hollis-Arrington and Lightfoot's lawsuit.

    Petitioner's challenge

    Lightfoot, the named petitioner, challenged the Ninth Circuit's interpretation that the sue-and-be-sued clause confers original jurisdiction to federal courts for all lawsuits to which Fannie Mae is a party. Lightfoot contended that the words "in any court of competent jurisdiction, State or Federal" from the clause conveys that there are cases implicating state court jurisdiction. In presenting such an argument, Lightfoot asked the U.S. Supreme Court to review whether that court's opinion in American Red Cross v. S.G. should be reversed.[4][5]

    Certiorari granted

    On February 17, 2015, petitioner Crystal Monique Lightfoot initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 9th Circuit. The U.S. Supreme Court granted Lightfoot's certiorari request on June 28, 2016. Oral argument before the Supreme Court was held on November 8, 2016. On January 18, 2017, in an opinion by Justice Sonia Sotomayor, the court unanimously reversed the judgment of the Ninth Circuit.

    Arguments


    Question presented

    Questions presented:

    "The questions presented are:

    • (1) whether the phrase "to sue and be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal" in Fannie Mae's charter confers original jurisdiction over every case brought by or against Fannie Mae to the federal courts; and
    • (2) whether the majority's decision in Am. Nat'l Red Cross v. S.G., 505 U.S. 247 (1992) (5-4 decision), should be reversed."[4]


    Audio

    • Audio of oral argument:[6]



    Transcript

    • Transcript of oral argument:[7]

    Outcome

    Decision

    In a unanimous decision, the Supreme Court reversed the judgment of the United States Court of Appeals for the 9th Circuit. Justice Sonia Sotomayor delivered the opinion of the court.[8]

    Opinion

    In writing for the court, Justice Sotomayor sought to bring clarity to a clause in Fannie Mae's charter known as the sue-and-be-sued clause. The Ninth Circuit panel opinion from which this appeal arose held that the U.S. Supreme Court's 1992 ruling in American Red Cross v. S.G. governed. The Ninth Circuit held that when a sue-and-be-sued clause in a federal charter authorized, in express terms, lawsuits in federal courts, the clause conferred exclusive jurisdiction to federal courts alone. Justice Sotomayor noted that two other circuit courts have ruled that the clause conferred exclusive jurisdiction to federal courts, but that four other circuits have held that the language does not confer such jurisdiction.[8]

    Justice Sotomayor noted that the court has addressed sue-and-be-sued clauses in five different federal charters, with three held to grant exclusive jurisdiction and two that did not. After a review of the history of the court's holding in those cases, Justice Sotomayor noted that Fannie Mae's charter does specifically mention the federal courts, but she noted that the sue-and-be-sued clause in Fannie Mae's charter differed in one significant respect from the three other charters in which the court held that the clause conferred exclusive jurisdiction. In her words, "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.' Because this sue-and-be-sued clause is not 'in all relevant respects identical' to a clause already held to grant federal jurisdiction ... the outcome ... turns on the meaning of 'court of competent jurisdiction' in Fannie Mae’s sue-and-be-sued clause."[8]

    Justice Sotomayor proceeded to review the meaning of the term court of competent jurisdiction in Fannie Mae's charter. Justice Sotomayor wrote,[8]

    “

    A court of competent jurisdiction is a court with the power to adjudicate the case before it ... and a court’s subject-matter jurisdiction defines its power to hear cases ... It follows that a court of competent jurisdiction is a court with a grant of subject-matter jurisdiction covering the case before it ... 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. 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 ... Nothing in Red Cross suggests that courts should ignore 'the ordinary sense of the language used,' ... when confronted with a federal charter’s sue-and-be-sued clause that expressly references the federal courts, but only those that are courts 'of competent jurisdiction.' [3]

    		”

    In construing the term court of competent jurisdiction in Fannie Mae's charter to confer jurisdiction to both federal and state courts possessing subject-matter authority to hear the issue, the court reversed the holding of the Ninth Circuit to the contrary.[8]

    Concurring opinions

    There were no concurring opinions filed.

    Dissenting opinions

    There were no dissenting opinions filed.


    The opinion


    Filings

    The court granted Lightfoot's certiorari request on June 28, 2016.

    Merits filings

    Parties' filings

    • Crystal Monique Lightfoot et al., the petitioners, filed a merits brief on August 16, 2016.
    • Cendant Mortgage Group, a subsidiary of Fannie Mae, the respondent, filed a merits brief on September 19, 2016.
    • Lightfoot filed a reply brief on the merits on October 19, 2016.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of the petitioners, Crystal Monique Lightfoot et al.

    • Brief of the American Association for Justice
    • Brief of the United States of America


    The following group filed an amicus curiae brief in support of neither party.

    • Brief of the American Red Cross

    Certiorari filings

    Parties' filings

    • Crystal Monique Lightfoot et al., the petitioners, filed a petition for certiorari on February 17, 2015.
    • Cendant Mortgage Group et al., the respondents, filed a brief in opposition to certiorari on June 22, 2015, after an order extending time to file was granted by the court.

    Amicus curiae

    The following groups filed amicus curiae briefs in support of granting certiorari.

    • Brief of the American Association for Justice
    • Brief of the United States of America


    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 U.S. Court of Appeals for the Ninth Circuit, Crystal Monique Lightfoot et al. v. Cendant Mortgage Group et al., decided October 2, 2014
    2. ↑ Cornell University's Legal Information Institute, "12 U.S. Code § 1723a - General powers of Government National Mortgage Association and Federal National Mortgage Association," accessed September 22, 2016
    3. ↑ 3.0 3.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    4. ↑ 4.0 4.1 Supreme Court of the United States, Lightfoot v. Cendant Mortgage Group, June 28, 2016
    5. ↑ Supreme Court of the United States (via Findlaw), American Red Cross v. S.G., decided June 19, 1992
    6. ↑ Supreme Court of the United States, Lightfoot v. Cendant Mortgage Group, argued November 8, 2016
    7. ↑ Supreme Court of the United States, Lightfoot v. Cendant Mortgage, argued November 8, 2016
    8. ↑ 8.0 8.1 8.2 8.3 8.4 Supreme Court of the United States, Lightfoot v. Cendant Mortgage Group, decided January 18, 2017
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