Facts
- Fannie Mae is a federally chartered corporation whose charter authorizes it “to sue and to be sued ... in any court of competent jurisdiction, State or Federal.”
- Beverly Hollis-Arrington refinanced a mortgage with Cendant Mortgage Corporation; the mortgage was later sold to Fannie Mae.
- After default, foreclosure proceedings occurred and the home was sold.
- Petitioners previously sued in federal court alleging wrongdoing related to mortgage lending and foreclosure; that action was dismissed and the dismissal was affirmed on appeal.
- Petitioners later filed a new, state-law lawsuit in California state court concerning the refinancing, foreclosure, and sale.
- Fannie Mae removed the case to federal court, asserting that its charter’s sue-and-be-sued clause supplied federal subject-matter jurisdiction.
Issues
- Whether Fannie Mae’s charter authorization to sue and be sued “in any court of competent jurisdiction, State or Federal” independently grants original federal subject-matter jurisdiction for any case involving Fannie Mae.
- Whether removal to federal court is proper when the only asserted basis for federal jurisdiction is Fannie Mae’s presence as a party under that charter clause.
Decision
- The Supreme Court unanimously reversed the Ninth Circuit.
- The Court held that Fannie Mae’s sue-and-be-sued clause does not itself confer federal subject-matter jurisdiction.
- The phrase “court of competent jurisdiction” presupposes an independent jurisdictional basis (such as federal-question or diversity jurisdiction).
- Because the charter clause was not a standalone ground for jurisdiction, removal could not be sustained on that theory.
Legal Principles
- A sue-and-be-sued clause allowing suit “in any court of competent jurisdiction, State or Federal” is not a grant of federal jurisdiction; it permits suit only in courts that already have subject-matter jurisdiction from another source.
- Statutory language should be read to give effect to all terms; treating “of competent jurisdiction” as meaningless is disfavored.
- Charter wording matters: clauses expressly referencing federal courts may confer federal jurisdiction only when they lack limiting language that requires preexisting jurisdiction.
Conclusion
The Court held that Fannie Mae’s charter permits it to litigate in state or federal courts that already possess subject-matter jurisdiction, but the charter does not itself open a federal forum for every case involving Fannie Mae; removal therefore requires an independent jurisdictional basis.