Federal Nat. Mortg. Ass'n v. Sealed, Civil Action No. 06-1839 (RBW).

• Decision Date: 31 October 2006
• Docket Number: Civil Action No. 06-1839 (RBW).
• Citation: 457 F.Supp.2d 41
• Parties: FEDERAL NATIONAL MORTGAGE ASSOCIATION (FANNIE MAE), Plaintiff, v. SEALED, Defendant.
• Court: U.S. District Court — District of Columbia

Page 41

457 F.Supp.2d 41

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FANNIE MAE), Plaintiff, v. SEALED, Defendant.

Civil Action No. 06-1839 (RBW).

United States District Court, District of Columbia.

October 31, 2006.

MEMORANDUM OPINION

WALTON, District Judge.

The Federal National Mortgage Association ("Fannie Mae"), a federally chartered corporation located in the District of Columbia, brings this action against a resident of New York, articulating several state and common law claims and seeking, inter alia, preliminary and permanent injunctive relief as well as no less than $75,000 in monetary damages. Complaint ("Compl.") at 1, 15. In its complaint, Fannie Mae premises this Court's subject-matter jurisdiction over its claims solely on the "sue and be sued" clause of its federal corporate charter, 12 U.S.C. § 1723a(a) (2000) ("Section 1723a(a)"). Compl. ¶5. This clause provides that Fannie Mae "shall have power ... 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." 12 U.S.C. § 1723a(a).

On October 27, 2006, the Court directed Fannie Mae to "detail with greater specificity the statutory provision which vests subject matter jurisdiction over this matter in the United States District Court for the District of Columbia." October 27, 2006 Order at 1; see Arbaugh v. Y & H Corp., 546 U.S. 500, 126 S.Ct. 1235, 1240, 163 L.Ed.2d 1097 (2006) (observing that "[t]he objection that a federal court lacks subject-matter jurisdiction may be raised ... by a court on its own initiativet ] at any stage in the litigation") (citation omitted). In its response, Fannie Mae contends that Section 1723a(a) acts as "a direct grant of original jurisdiction by Congress" over any actions in which Fannie Mae is a party. Response to Order of Court ("PL's Resp.") at 1. As detailed below, however, it is this Court's view that the language of Section 1723a(a) does not confer jurisdiction upon the federal courts where no independent grounds for such jurisdiction otherwise exist. The Court accordingly holds that it lacks jurisdiction to consider Fannie Mae's complaint under Section 1723a(a). But, because it appears from the face of Fannie Mae's complaint that the prerequisites for diversity jurisdiction exist, although they have not been specifically pled, see Compl. at 1-2, 15, the Court will afford Fannie Mae leave to amend its complaint to assert an independent basis, other than the "sue and be sued" clause of Section 1723a(a), as grounds for the Court to exercise jurisdiction over this matter.

In support of its proposition that Section 1723a(a) acts as a grant of original federal jurisdiction in actions in which it is a party, Fannie Mae relies on American National Red Cross v. S.G., 505 U.S. 247, 112 S.Ct. 2465, 120 L.Ed.2d 201 (1992). PL's Resp. at 1. In that case, the Supreme Court held that a similar, but not identical, "sue and be sued" provision in the Red Cross congressional charter conferred original federal jurisdiction over all actions involving that organization, rather than acting as "a mere grant of general corporate capacity to sue" and a waiver of sovereign immunity from suit. Am. Nat'l Red Cross, 505 U.S. at 257, 112 S.Ct. 2465. The Red Cross charter authorizes that organization, in relevant part, to "sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States." 36 U.S.C. § 300105(a)(5) (2000); see also Am, Nat'l Red Cross, 505 U.S. at 251-52, 112 S.Ct. 2465 (discussing the enactment of the Red Cross "sue and be sued" clause in its present form). In concluding that this language constituted a grant of original federal jurisdiction, the Supreme Court noted that its past cases "consider[ing] whether the `sue and be sued' provision of a particular federal corporate charter conferred original federal jurisdiction over cases to which that corporation was a party ... [had] placed Congress on prospective notice of the language necessary and sufficient to confer jurisdiction." Am. Nat'l Red Cross, 505 U.S. at 252, 112 S.Ct. 2465 (citations omitted) (emphasis added). The Court therefore placed great weight on the fact that the clause in the Red Cross charter had been amended in 1947 to include the term "State or Federal," id. at 251-52, 112 S.Ct. 2465, given that previous Supreme Court cases had indicated that original federal jurisdiction was not conferred when the federal corporate charter at issue did not expressly authorize litigation in federal courts. Id. at 252-57, 112 S.Ct. 2465 (discussing cases). Examining those past cases, the American National Red Cross Court fashioned a "rule" which states that a "sue and be sued" provision of a federal corporate charter "may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts." Id. at 255, 112 S.Ct. 2465 (emphasis added). Applying this rule, and "presuming congressional knowledge of [the] interpretation of [a] similarly worded earlier statute," id. at 252, 112 S.Ct. 2465 (citation omitted), the Supreme Court concluded that the Red Cross charter "suffice[d] to confer federal jurisdiction" because it "expressly authorized] the organization to sue and be sued in federal courts, using language resulting in a `sue and be sued' provision in all relevant respects identical to one on which [the Court] had based a holding of federal jurisdiction just five years before," id. at 257, 112 S.Ct. 2465.

To the extent that Fannie Mae believes that American National Red Cross has conclusively resolved the question whether Section 1723a(a) confers original federal jurisdiction, see PL's Resp. at 1-2, it is mistaken. As noted above, the American National Red Cross Court held that a "sue and be sued" provision "may be read to confer federal jurisdiction if ... it specifically mentions the federal courts." 505 U.S. at 255, 112 S.Ct. 2465 (emphasis added). Because the Fannie Mae charter does contain express language "authorizing the organization to sue and be sued in federal courts," Am. Nat'l Red Cross, 505 U.S. at 257, 112 S.Ct. 2465; see 12 U.S.C. § 1723a(a), it is clear that American National Red Cross does not categorically foreclose a reading of Section 1723a(a) which confers original federal jurisdiction in all actions in which Fannie Mae is a party. However, the Supreme Court nowhere states, nor can it fairly be inferred from American National Red Cross, that the mere presence of this express language in Section 1723a(a) or any other federal corporate charter with similar language is sufficient to compel such an interpretation.¹ Cf. Am. Nat'l Red Cross, 505 U.S. at 264, 112 S.Ct. 2465 (stating that Supreme Court caselaw "simply reflect[s] the fact that the natural reading of some 'sue and be sued' clauses is that they confer both capacity and jurisdiction") (Scalia J., dissenting) (emphasis in original). The American National Red Cross Court premised its conclusion that the Red Cross charter operated as a grant of original jurisdiction not merely on the language "expressly authorizing [that] organization to sue and be sued in federal courts," but on the fact that in enacting the Red Cross charter, Congress "us[ed] language resulting in a `sue and be sued' provision in all relevant respects identical to one on which [the Supreme Court had] based a holding of federal jurisdiction just five years before." Id. at 257, 112 S.Ct. 2465. Here, unlike the provision at issue in American National Red Cross, Section 1723a(a) is not "in all relevant respects identical" to a "sue and be sued" provision previously construed by the Supreme Court, id., and there is accordingly no reason to impute to Congress a belief that, in enacting Fannie Mae's federal corporate charter, it had crafted "language necessary and sufficient to confer jurisdiction" upon the federal courts, id. at 252, 112 S.Ct. 2465 (citations omitted).

Indeed, the language of the "sue and be sued" clause found in Section 1723a(a) of the Fannie Mae charter is substantively different from that of the similar clause contained within the charter examined in American National Red Cross. Compare 12 U.S.C. § 1723a(a) with 36 U.S.C. § 300105(a)(5). While the Red Cross charter authorizes suit "in courts of law and equity, State or Federal, within the jurisdiction of the United States," 36 U.S.C. § 300105(a)(5), Section 1723a(a) allows Fannie Mae "to sue or be sued, and to complain or defend, in any court of competent jurisdiction, State or Federal," 12 U.S.C. § 1723a(a) (emphasis added). This is an important distinction. To accept Fannie Mae's argument that Section 1723a(a) provides a blanket grant of federal jurisdiction to all actions in which Fannie Mae is a party, regardless of whether an independent basis for federal jurisdiction also exists, is to read the term "of competent jurisdiction" entirely out of that "sue and be sued" clause. It is "a cardinal principle of statutory construction ... that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." TRW, Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001) (internal quotation marks and citations omitted); see also Scheidlerv. Nat'l Org. of Women, ___ U.S. ____, ____ 126 S.Ct. 1264, 1273, 164 L.Ed.2d 10 (2006) (noting the "canon of statutory construction that favors interpretations that give a function to each word in a statute, thereby avoiding linguistic superfluity") (citation omitted); United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 99 L.Ed. 615 (1955) (observing the duty of courts "to give effect, if possible, to every clause and word of a statute") (internal quotation marks and citations omitted).

This canon is particularly applicable "when the term [in question] occupies so pivotal a place in the statutory scheme" as does the term "of competent jurisdiction" in Section...