Hennepin Cnty. v. Fed. Nat'l Mortg. Ass'n, 13–1821.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: MURPHY
• Citation: 742 F.3d 818
• Parties: HENNEPIN COUNTY, on behalf of itself and all others similarly situated, Plaintiff–Appellant v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, a federally chartered corporation; Federal Home Loan Mortgage Corporation, a federally chartered corporation; Federal Housing Finance Agency, as Conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, Defendants–Appellees United States of America, Amicus on Behalf of Appellee.
• Docket Number: No. 13–1821.,13–1821.
• Decision Date: 05 February 2014

742 F.3d 818

HENNEPIN COUNTY, on behalf of itself and all others similarly situated, Plaintiff–Appellant
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, a federally chartered corporation; Federal Home Loan Mortgage Corporation, a federally chartered corporation; Federal Housing Finance Agency, as Conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, Defendants–Appellees
United States of America, Amicus on Behalf of Appellee.

No. 13–1821.

United States Court of Appeals,
Eighth Circuit.

Submitted: Dec. 19, 2013.
Filed: Feb. 5, 2014.

Limited on Preemption Grounds

M.S.A. § 287.21(1)(a)

[742 F.3d 820]

Michael Orville Freeman, I, argued, Minneapolis, MN (Paul Robert Hannah, Jane Nora Bowman Holzer, on the brief), for Plaintiff–Appellant.

Michael A. Johnson, argued, Washington, DC (Dirk C. Phillips, Michael Joseph Ciatti, Asim Varma, Howard N. Cayne, Merritt E. McAlister, Michael Leffel, Madison, WI, Jill L. Nicholson, Chicago, IL, on the briefs), for Defendants–Appellees.

Gilbert Steven Rothenberg, Jonathan S. Cohen, USDOJ, Civil Division, Patrick J. Urda, USDOJ, on the briefs, Washington, DC, for Amicus on Behalf of Appellee.

Before MURPHY, BYE, and SMITH, Circuit Judges.

MURPHY, Circuit Judge.

Hennepin County brought this putative class action on behalf of similarly situated Minnesota counties seeking a declaratory judgment that the Federal National Mortgage Association (Fannie Mae), the Federal

[742 F.3d 821]

Home Loan Mortgage Company (Freddie Mac), and the Federal Housing Finance Agency (FHFA) (the federal agencies) violated state law by failing to pay a tax on transfers of deeds to real property. The County seeks recovery for unjust enrichment as well as injunctive relief. The district court ¹ granted the federal agencies' motion to dismiss for failure to state a claim. Hennepin County appeals, and we affirm.

Fannie Mae and Freddie Mac are privately owned and publicly traded for profit entities created by Congress to generate financial stability in the secondary market for residential mortgages. Given responsibility by Congress for “promot [ing] access to mortgage credit ... by increasing the liquidity of mortgage investments,” 12 U.S.C. § 1716(1), Fannie Mae and Freddie Mac buy mortgages originated by third party lenders, gather them into bundles, and sell them as securities. Following the 2008 financial crisis, which was caused in part by a collapse in the value of these securities, Congress made the FHFA the conservator for Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac have acquired and sold mortgages on thousands of real properties in Minnesota, including in Hennepin County. Minnesota imposes a tax on “each deed or instrument by which any real property in this state is granted, assigned, transferred, or otherwise conveyed,” Minn.Stat. § 287.21, subd. 1(a). The federal agencies have not paid state taxes on the deed transfers related to their real property transactions. Hennepin County alleges that the agencies owe the state an estimated $5,000,000 to $5,600,000 in back taxes on these transfers. Fannie Mae, Freddie Mac, and the FHFA assert that their federal charters exempt them from such taxes.

Hennepin County filed this putative class action on behalf of itself and 86 other Minnesota counties seeking a declaratory judgment under Minn.Stat. § 287.21 that the federal agencies are subject to Minnesota's deed transfer tax. It seeks payment of back taxes, recovery for unjust enrichment, and injunctive relief. The federal district court concluded that the Minnesota deed transfer tax fell within the broad tax exemption established by the charters establishing the federal agencies. It declined to grant the requested declaratory judgment in favor of Hennepin County, dismissed its case for failure to state claims under either § 287.21 or unjust enrichment, and denied injunctive relief. Hennepin County appeals.

Our review is de novo on a challenge to a dismissal for failure to state a claim, and we take the facts alleged in the complaint as true. Bradley Timberland Resources v. Bradley Lumber Co., 712 F.3d 401, 406 (8th Cir.2013). When interpreting a statute, we look to its plain language, Owner–Operator Indep. Drivers Ass'n, Inc. v. Supervalu, Inc., 651 F.3d 857, 862 (8th Cir.2011), and give words their “ordinary, contemporary, common meaning” unless they are otherwise defined in the statute itself. United States v. Friedrich, 402 F.3d 842, 845 (8th Cir.2005). Unambiguous statutory language is generally enforced as written and may be departed from only on “the most extraordinary showing of contrary intentions in the legislative history.” United States v. Sabri, 326 F.3d 937, 943 (8th Cir.2003) (internal quotation marks omitted). The existence of statutory exceptions indicates that Congress considered whether there was need for any exception and “limited the statute to the ones set forth.”

[742 F.3d 822]

United States v. Johnson, 529 U.S. 53, 58, 120 S.Ct. 1114, 146 L.Ed.2d 39 (2000).

The federal agency charters state that they “shall be exempt from all taxation ... imposed by any State,” and identify their real property as the sole exception to the general rule. 12 U.S.C. §§ 1723a(c)(2); 1452(e); 4617(j)(2). We have determined that the use of “shall” in a statute makes what follows mandatory, LeMay v. U.S. Postal Serv., 450 F.3d 797, 799 (8th Cir.2006), and that “ ‘all’ means all.” Sander v. Alexander Richardson Invs., 334 F.3d 712, 716 (8th Cir.2003). Application of these interpretive rules indicates that the federal agencies are exempt from all state taxation other than taxes on their own real estate holdings.

The Sixth Circuit has previously addressed an attempted imposition on the FHFA of a Michigan real estate transfer tax similar to the Minnesota deed transfer tax. In County of Oakland v. Federal Housing Finance Agency, that court reasoned that ...