Athens-Clarke Cnty. Unified Gov't v. Fed. Hous. Fin. Agency

• Decision Date: 14 May 2013
• Docket Number: Civil Action No. 5:12–CV–355 (MTT).
• Citation: 945 F.Supp.2d 1401
• Parties: ATHENS–CLARKE COUNTY UNIFIED GOVERNMENT, by and through Nancy DENSON, Chair of the Commission and Mayor, Athens–Clarke County Unified Government, Georgia; Augusta, Georgia, by and through Deke Copenhaver, Chair of the Commission and Mayor, Augusta, Georgia; Butts County, by and through Roger McDaniel, Chairman, Board of Commissioners, Butts County, Georgia; Clayton County, by and through Eldrin Bell, Chairman, Board of Commissioners, Clayton County, Georgia; Sumter County, Georgia; Upson County, by and through Maurice Raines, Chairman, Board of Commissioners, Upson County, Georgia; And on behalf of all others similarly situated, Plaintiffs, v. FEDERAL HOUSING FINANCE AGENCY, as Conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation, Defendants.
• Court: U.S. District Court — Middle District of Georgia

945 F.Supp.2d 1401

ATHENS–CLARKE COUNTY UNIFIED GOVERNMENT, by and through Nancy DENSON, Chair of the Commission and Mayor, Athens–Clarke County Unified Government, Georgia; Augusta, Georgia, by and through Deke Copenhaver, Chair of the Commission and Mayor, Augusta, Georgia; Butts County, by and through Roger McDaniel, Chairman, Board of Commissioners, Butts County, Georgia; Clayton County, by and through Eldrin Bell, Chairman, Board of Commissioners, Clayton County, Georgia; Sumter County, Georgia; Upson County, by and through Maurice Raines, Chairman, Board of Commissioners, Upson County, Georgia; And on behalf of all others similarly situated, Plaintiffs,

v.FEDERAL HOUSING FINANCE AGENCY, as Conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation, Defendants.

Civil Action No. 5:12–CV–355 (MTT).

United States District Court,

M.D. Georgia,

Macon Division.

May 14, 2013.

Ellenor Stone, Atlanta, GA, Jacob Rusch, Timothy J. Becker, Minneapolis, MN, Kenneth B. Hodges, III, Ashe, Rafuse & Hill LLP, William Bradley Hill, Jr., Rafuse Hill & Hodges LLP, Atlanta, GA, for Plaintiffs.

Asim Varma, Howard N. Cayne, Michael A. F. Johnson, Stephen E. Hart, Michael J. Ciatti, Washington, DC, Amy Lee Copeland, Savannah, GA, Ann Marie Uetz, Detroit, MI, Jill Nicholson, Chicago, IL, Merritt Ellen McAlister, King & Spalding, Atlanta, GA, for Defendants.

ORDER

MARC T. TREADWELL, District Judge.

This is a putative class-action lawsuit against the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, federally chartered private corporations known more commonly by their nicknames Fannie Mae and Freddie Mac.¹ The Plaintiffs are local governments that wish to represent a class of all 159 Georgia counties. They contend the Defendants' nonpayment of Georgia's Real Estate Transfer Tax ² (“transfer tax”) has unlawfully deprived them of revenue. Fannie Mae and Freddie Mac argue that federal law exempts them from paying the tax.

These are not new accusations. Over the past two years, local government plaintiffs in several states have brought versions of this lawsuit in their respective federal jurisdictions,³ including in the Eastern and Western Districts of Michigan,⁴ the District of Columbia,⁵ the Middle District of Florida,⁶ the Northern District of Illinois,⁷ and the Northern and Southern Districts of Georgia.⁸ So far, the Defendants have moved to dismiss the plaintiffs' complaints in eleven of those cases. Ten of their motions have been granted.⁹ The Defendants have now moved to dismiss this case. (Doc. 22). Their motion is GRANTED.

I. BACKGROUND

The Plaintiffs allege the Defendants have repeatedly ignored obligations under Georgia's transfer tax, which taxes transactions involving real property. ¹⁰ The tax must be paid to the clerk of the superior court in which the property at issue is situated “prior to and as a prerequisite to” the filing and recording of any deed or other related instrument. O.C.G.A. § 48–6–4. The clerk then distributes the tax revenues to the city and county where the property is located, as well as to the state. O.C.G.A. § 48–6–8. Fannie Mae and Freddie Mac have on numerous occasions transferred land and recorded deeds in the plaintiff counties. (Doc. 14, ¶ 17). However, they have either not paid or underpaid the transfer tax. (Doc. 14, ¶ 17). According to their recorded instruments, they have claimed state ¹¹ and federal law ¹² exempts them from paying the tax. (Doc. 14, ¶ 19). The Plaintiffs contend these exemptions are not valid.

II. DISCUSSION

A. Motion to Dismiss Standard

To avoid dismissal pursuant to Fed.R.Civ.P. 12(b)(6), a complaint must contain specific factual matter to “ ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir.2006). However, “[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘shown’—that the pleader is entitled to relief.” Id. at 1950. “[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir.2002). Where there are dispositive issues of law, a court may dismiss a claim regardless of the alleged facts. Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).

B. An Exemption from “All Taxation”

When construing statutes, “the starting point ... is the language of the statute itself. If the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case, and the statutory scheme is coherent and consistent, the inquiry is over.” Warshauer v. Solis, 577 F.3d 1330, 1335 (11th Cir.2009) (internal citations and quotation marks removed).

The Defendants assert that federal statutes exempt them from paying the transfer tax.¹³ In the case of Fannie Mae:

The corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed.

12 U.S.C. § 1723a(c)(2) (emphasis added). Freddie Mac is granted a nearly identical exemption:

The Corporation, including its franchise, activities, capital, reserves, surplus, and income, shall be exempt from all taxation now or hereafter imposed by any territory, dependency, or possession of the United States or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.

12 U.S.C. § 1452(e) (emphasis added). Federal law provides likewise for FHFA:

The Agency, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation imposed by any State, county, municipality, or local taxing authority, except that any real property of the Agency shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, notwithstanding the failure of any person to challenge an assessment under State law of the value of such property, and the tax thereon, shall be determined as of the period for which such tax is imposed.

12 U.S.C. § 4617(j)(2) (emphasis added).

In this case, the question is whether “all taxation” really means all taxation. “All” means, well, “all.” It includes everything and everybody. To the extent it is necessary to cite authority for that proposition, that authority is in the margin.¹⁴Thus, the plain meaning of the statutory text is clear to this Court: Fannie Mae and Freddie Mac are exempt from any and all taxes a state might otherwise apply to them, excluding, according to the exemption's exception, taxes on real property they own. ¹⁵

But the Plaintiffs argue the statutory scheme is rendered inconsistent by language that further addresses FHFA's liability for the actions of Fannie Mae and Freddie Mac:

The Agency shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due.

12 U.S.C. § 4617(j)(4). Sections 4617(j)(2) and (j)(4) were added in 2008 when Congress passed the Housing and Economic Recovery Act (HERA), creating FHFA to operate and safeguard Fannie Mae's and Freddie Mac's assets. Pub. L. No. 110–289, 122 Stat. 2654. Clearly, Congress enacted HERA to protect FHFA from the imploding housing market. The Plaintiffs contend Congress would not have needed to relieve FHFA of liability for Fannie Mae's and Freddie Mac's failure to pay the transfer tax if they were in fact already exempt. But the Defendants note that § 4617(j)(4) precludes the imposition of liability based on the conduct of “any person.” They say Congress acted to protect FHFA not from Fannie Mae's and Freddie Mac's failure to pay recording taxes, but rather from the failure of predecessor owners of property now held by Fannie Mae and Freddie Mac who did not pay the taxes and who were not exempted from payment by federal statute. Nicolai and Hertel applied this same reasoning:

The phrase “any person” is broader than “the Agency” or “the FHFA” or “the Enterprises.” Therefore, it does not apply solely to the FHFA's (or Freddie Mac's or Fannie Mae's) failure to pay taxes on time, but also includes non-exempt previous owners of property who may have failed “to pay taxes on real estate now owned or managed by the FHFA as conservator of Fannie Mae and Freddie Mac.” Hertel, . Accordingly, the provision is not rendered superfluous by the Enterprises' exemption from the Transfer Tax.

Nicolai, 928 F.Supp.2d at 1335, 2013 WL 899967 at *3. This Court agrees with Nicolai,Hertel, and the Defendants, and concludes that § 4617(j)(4) does not render the overall statutory scheme incoherent or inconsistent.

Thus, the plain language of the statutory text unambiguously...