Lightfoot v. Cendant Mortgage Corp.

A sue-and-be-sued provision in a congressional charter may be read to confer federal court jurisdiction if the charter specifically addresses federal courts.

Beverly Ann Hollis-Arrington and Crystal Monique Lightfoot brought several claims against the Federal National Mortgage Association (“Fannie Mae”). The plaintiffs alleged a variety of state and federal claims against the federal institution. The district court denied the suits and the Ninth Circuit affirmed the dismissals. The plaintiffs then filed almost identical claims in California state court. Fannie Mae removed to federal court, claiming that the “sue-and-be-sued” clause in its charter conferred federal question subject matter jurisdiction. On appeal, the Ninth Circuit had to again determine whether the “sue-and-be-sued” clause in the charter granted subject matter jurisdiction to the district court. The panel looked to a long history of case precedent on this issue and found that the United States Supreme Court has held that a sue-and-be-sued provision in a congressional charter may be read to confer federal court jurisdiction if the charter specifically addresses federal courts. In this case, the charter authorized Fannie Mae “to sue and be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” Therefore, the language in the charter is sufficiently specific to satisfy the precedential rule, and consequently, the language of the charter confers federal question jurisdiction over any claims regarding Fannie Mae. AFFIRMED.