Lightfoot v. Cendant Mortgage Corporation

137 S. Ct. 553 (2017)

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Nature of the Case

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Facts

Fannie Mae (D) was rechartered in 1954. In doing so, it revised the sue-and-be-sued clause to give D the power “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” Beverly Ann Hollis-Arrington (P) refinanced her mortgage with Cendant Mortgage Corporation (D) in the summer of 1999. D then bought the mortgage, while Cendant (D) continued to service it. Unable to make her payments, Hollis-Arrington (P) pursued a forbearance arrangement with Cendant (D). No agreement materialized, and the home entered foreclosure. D repurchased the mortgage from D because it did not meet D’s credit standards. Hollis-Arrington (P) and her daughter, Crystal Lightfoot (Ps) pursued bankruptcy and transferred the property between themselves. These efforts failed, and the home was sold at a trustee’s sale in 2001. Ps then took to the courts to try to undo the foreclosure and sale. After two unsuccessful federal suits, Ps filed this suit in state court. They alleged that deficiencies in the refinancing, foreclosure, and sale of their home entitled them to relief against D. D removed the case to federal court under §1441(a), which permits a defendant to remove from state to federal court “any civil action” over which the federal district courts “have original jurisdiction.” D relied on its sue-and-be-sued clause as the basis for jurisdiction. The District Court denied a motion to remand. The District Court dismissed the claims against D on claim preclusion grounds. Ps immediately moved to set aside the judgment under Federal Rule of Civil Procedure 60(b), alleging “fraud upon the court.” The District Court denied the motion. The Ninth Circuit affirmed the dismissal of the case and the denial of the Rule 60(b) motion. The Ninth Circuit withdrew its opinion and ordered a briefing on the question of whether the District Court had jurisdiction over the case under D’s sue-and-be-sued clause. A divided panel affirmed the District Court’s judgment. When a sue-and-be-sued clause in a federal charter expressly authorizes suit in federal courts, it confers jurisdiction on the federal courts. Ps appealed.