Comm'rs of Bristol Cnty. v. Fed. Nat'l Mortg. Ass'n, Fed. Home Loan Mortg. Corp.
| Decision Date | 09 August 2013 |
| Docket Number | Civil Case No.12–11525–NMG. |
| Citation | 978 F.Supp.2d 69 |
| Parties | COMMISSIONERS OF BRISTOL COUNTY, Plaintiff, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, Federal Home Loan Mortgage Corporation, Federal Housing Finance Agency, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
OPINION TEXT STARTS HERE
Elizabeth A. Ryan, John J. Roddy, Bailey & Glasser LLP, Boston, MA, for Plaintiff.
Jill L. Nicholson, Foley & Lardner LLP, Chicago, IL, Geoffrey M. Raux, Lawrence M. Kraus, Foley & Lardner, LLP, Boston, MA, Michael J. Ciatti, King and Spalding, LLP, Washington, DC, Douglas S. Brooks, Libbyhoopes, P.C., Boston, MA, Asim Varma, Michael A. Johnson, Sarah M.B. Arni, Arnold & Porter LLP, Washington, DC, for Defendants.
Plaintiff Commissioners of Bristol County, Massachusetts (“plaintiff”) brings this action against the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), together referred to as “the Enterprises”, and the Federal Housing and Finance Agency (“the Agency”). Plaintiff seeks to collect real estate transfer taxes that it claims are owed for real estate property transfers made by defendants.
The Massachusetts Excise on Deeds, Instruments and Writings, M.G.L. c. 64D, § 1, imposes a tax whenever a deed or other instrument of conveyance is recorded during the transfer of real property (“the Transfer Tax”). The Transfer Tax is imposed upon sellers of real property, unless the purchase and sale agreement specifies that the buyer will pay the tax. SeeM.G.L. c. 64D, § 2. The amount of the tax depends upon both the sale price and the county in which the property is located. Plaintiff is a county in Massachusetts and is required to collect the Transfer Tax at the County Registry of Deeds.
Defendant Fannie Mae is a corporation chartered by Congress to establish secondary market facilities for residential mortgages. 12 U.S.C. § 1716. Defendant Freddie Mac is a corporation chartered by Congress for substantially the same purpose as Fannie Mae. Id. § 1451. Defendant Federal Housing Finance Agency is an independent federal agency created under the Housing and Economic Recovery Act of 2008. In September, 2008 the Director of the Agency placed Fannie Mae and Freddie Mac into conservatorships “for the purpose of reorganizing, rehabilitating, or winding up [their] affairs.” Id. § 4617(a)(2). As Conservator, the Agency succeeds to all of the “rights, titles, powers, and privileges” of Fannie Mae and Freddie Mac, and also has the power to “operate” them, “conduct all [of their] business,” and “preserve and conserve” their “assets and property.” Id. § 4617(b)(2).
When Congress created the defendants, it expressly exempted them from “all” state and local taxes with the exception of taxes on real property. The charters of each of the Enterprises provide that:
The corporation ... shall be exempt from all taxation now or hereafter imposed by any State, ... county, municipality, or local taxing authority, except that any real property of the corporation shall be subject to State, ... county, municipal, or local taxation to the same extent as other real property is taxed.
12 U.S.C. §§ 1723a(c)(2), 1452(e). Congress granted the Agency a similar exemption:
The Agency [as Conservator] ... shall be exempt from all taxation imposed by any State, county, municipality, or local taxing authority, except that any property of the Agency [as Conservator] 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.
As a result of widespread foreclosures, the Enterprises have become the owners of a multitude of properties throughout the United States, including many in Bristol County. Plaintiff alleges that the Enterprises have subsequently sold a significant number of those foreclosed properties in Bristol County but have not paid the Transfer Taxes on those transfers as required by M.G.L. c. 64D, § 1.
Plaintiff contends that the Enterprises, and the Agency as conservator, are not exempt from paying the Transfer Tax, and brings a four-count Complaint for: 1) Non–Payment of Deed Excise Taxes (Count 1), 2) Unjust Enrichment (Count 2), 3) Quantum Meruit (Count 3) and 4) Declaratory Judgment as to whether defendants are exempt from payment of deed excise taxes.
Plaintiff filed its Complaint in August, 2012. In November, 2012, defendants moved to dismiss. A month later, plaintiff filed a motion to amend its complaint to add an additional count. In April, 2013, before the Court decided either of the pending motions, plaintiff filed a motion for summary judgment as to liability. All three motions are currently before the Court.
Defendants move to dismiss all of plaintiff's claims on the ground that they are statutorily exempt from the deed excise tax.
To survive a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a complaint must contain “sufficient factual matter” to state a claim for relief that is actionable as a matter of law and “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 667, 129 S.Ct. 1937, 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)). A claim is facially plausible if, after accepting as true all non-conclusory factual allegations, the court can draw the reasonable inference that the defendant is liable for the misconduct alleged. Ocasio–Hernandez v. Fortuno–Burset, 640 F.3d 1, 12 (1st Cir.2011). A court may not disregard properly pled factual allegations even if actual proof of those facts is improbable. Id. Rather, the relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw. Id. at 13. When rendering that determination, a court may not look beyond the facts alleged in the complaint, documents incorporated by reference therein and facts susceptible to judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir.2011).
All four counts of plaintiff's Complaint arise out of defendants' alleged failure to pay the Transfer Tax. Defendants move to dismiss on the ground that under their charters they are exempt from all taxation imposed by any “State, county, municipality, or local taxing authority,” 12 U.S.C. §§ 1452(e), 1723a(c)(2), 4617(j)(2), and therefore are exempt from the Transfer Tax. In response, plaintiff proffers two theories to assert that defendants are obligatedto pay the Transfer Tax: 1) that the statutory provision exempting defendants from “all taxation” in their charters does not provide immunity from the Transfer Tax and 2) even if “all taxation” does include the Transfer Tax, the Transfer Tax falls under the real property exception to that exemption.
Relying on Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1, 86 L.Ed. 65 (1941), defendants argue that under the plain language of their charters they are statutorily exempt from paying the Transfer Tax. Plaintiff responds that in United States v. Wells Fargo Bank, 485 U.S. 351, 108 S.Ct. 1179, 99 L.Ed.2d 368 (1988), the Supreme Court made clear that the phrase “all taxation” included in the charters does not include taxes such as the Transfer Tax and instead only applies to direct taxes. This Court, however, agrees with defendants that Wells Fargo, which established the meaning of “all taxation” for statutes that exempt a particular kind of property from taxation, is not controlling in cases such as this one where the Court is called upon to interpret statutes that exempt a specific entity from taxation.
Rather, the Court concludes that this case is controlled by the Supreme Court's decision in Bismarck. In Bismarck, a bank created pursuant to the Federal Farm Loan Act of 1916 (“Farm Loan Act”) acquired property to which it then made repairs and improvements. The bank relied upon the Farm Loan Act in refusing to pay sales taxes on the materials used in those renovations. That Act provided in relevant part, that
every Federal land bank and every national farm loan association, including the capital and reserve or surplus therein and the income derived therefrom, shall be exempt from Federal, State, municipal, and local taxation, except taxes upon real estate held, purchased, or taken by said bank or association.
Bismarck, 314 U.S. at 97 n. 1, 62 S.Ct. 1 (internal quotation omitted). Determining that the statute exempted the bank from paying the sales tax, the Supreme Court rejected the lumber company's argument that Congress could not exempt a bank performing nongovernmental functions from taxation because “Congress has the power to protect the instrumentalities which it has constitutionally created.” Id. at 102–03, 62 S.Ct. 1 (citing Pittman v. Home Owners' Loan Corp., 308 U.S. 21, 60 S.Ct. 15, 84 L.Ed. 11 (1939)).
The plaintiff in this case asks this Court to ignore Bismarck and adopt the reasoning of Oakland County v. Federal Housing Finance Agency, 871 F.Supp.2d 662 (E.D.Mich.2012), a recent case in which a district court found Wells Fargo dispositive and concluded that “all taxation” did not include transfer taxes and thus a county was obligated to pay such taxes. Since plaintiff filed this case, however, the Sixth Circuit Court of Appeals vacated the Oakland County decision and remanded with instructions to enter summary judgment for defendants. Cnty. of Oakland v. Fed. Hous. Fin. Agency, 716 F.3d 935 (6th Cir.2013). The Sixth Circuit held that defendants' statutory charters plainly state that they are exempt from “all taxation,” which includes excise taxes, and thus the county's argument was without merit. Id.
Over the past two years, numerous lawsuits against the same three defendants in this case based on claims nearly identical to those made by the plaintiff...
To continue reading
Request your trial