Supreme Court Holds that Sue-and Be-Sued Clause Does Not Create Automatic Federal Jurisdiction in Suits Involving Fannie Mae

Courts Mortgages Fannie Mae U.S. Supreme Court

On January 18, in Lightfoot v. Cendant Mortgage Corp., No. 14-1055, the Supreme Court of the United States unanimously held that Fannie Mae’s sue-and-be sued clause does not grant federal courts jurisdiction over all cases involving Fannie Mae. In reaching its conclusion, the Court found that the clause, which authorizes Fannie Mae “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal,” was distinct from other sue-and-be-sued clauses previously considered to confer jurisdiction. Unlike other clauses, which referred to suit in federal court without qualification, the Fannie Mae clause authorized suit in “any court of competent jurisdiction.” Accordingly, the Court concluded that “[i]n authorizing Fannie Mae to sue-and-be-sued ‘in any court of competent jurisdiction, State or Federal’ it permits suit in any state or federal court already endowed with subject-matter jurisdiction over the suit” and thus a suit involving Fannie Mae does not automatically create federal jurisdiction.