Federal Home Loan Mortgage Corporation v. Shaffer
MEMORANDUM OPINION Signed by Judge William M Acker, Jr on 12/16/14. (SAC )
2014 Dec-16 PM 03:28
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
Plaintiff and counter}
EVELYN B. SHAFFER,
claimant and third-party }
OCWEN LOAN SERVICING, LLC,
CIVIL ACTION NO.
On November 27, 2012, Federal Home Loan Mortgage Corporation
against Evelyn B. Shaffer (“Shaffer” or “defendant”) in the Circuit
Court of Jefferson County, Alabama.
Freddie Mac sought one simple
remedy available under the law of Alabama, namely, the eviction of
Shaffer from certain real property, the title to which Freddie Mac
had ostensibly acquired at a foreclosure sale.
On September 2,
2014, nearly 22 months later, Freddie Mac removed the case to this
court. For the purposes of this court’s inquiry into Freddie Mac’s
right to remove under these circumstances, there is no significance
to the fact that before the removal, Shaffer filed a counterclaim
against Freddie Mac and a third-party complaint against Ocwen Loan
Servicing, LLC (“Ocwen”), attacking the foreclosure sale, or the
fact that Ocwen did not join in Freddie Mac’s notice of removal.
Indispensable to any removal is a showing that the district
court to which the case is removed has subject matter jurisdiction.
The burden of satisfying the court on this threshold issue is
firmly and always upon the removing party.
Freddie Mac’s notice of removal conspicuously invokes neither
of the two customary bases for federal jurisdiction, namely,
complete diversity of citizenship between the opposing parties (28
U.S.C. § 1332)1 or the existence of a federal question (28 U.S.C.
jurisdiction in this court is 12 U.S.C. § 1452(f), a sui generis
statute, so peculiar, in fact, as to call for its meticulous
examination as it applies or does not apply to the facts of this
The statute reads as follows:
(f) Actions by and against the Corporation [Freddie Mac];
jurisdiction; removal of actions
Notwithstanding section 1349 of Title 28 or any other
provision of law, (1) the Corporation shall be deemed to
be an agency included in sections 1345 and 1442 of such
Title 28; (2) all civil actions to which the Corporation
is a party shall be deemed to arise under the laws of the
Freddie Mac is not a citizen of any state because
federally chartered corporations like Freddie Mac are not
citizens of any state for diversity purposes. Bankers Trust Co.
v. Texas & Pac. Ry., 241 U.S. 295, 309 (1916). Therefore,
diversity cannot serve as a basis for subject matter jurisdiction
in this court.
United States, and the district courts of the United
States shall have original jurisdiction of all such
actions, without regard to amount or value; and (3) any
civil or other action, case or controversy in a court of
a State, or in any court other than a district court of
the United States, to which the Corporation is a party
may at any time before the trial thereof be removed by
the Corporation, without the giving of any bond or
security, to the district court of the United States for
the district and division embracing the place where the
same is pending, or, if there is no such district court,
to the district court of the United States for the
district in which the principal office of the Corporation
is located, by following any procedure for removal of
causes in effect at the time of such removal. (emphasis
In its notice of removal, Freddie Mac expressly relies upon 12
U.S.C. § 1452(f)(1), and even quotes part of it in haec verba: “The
corporation shall be deemed an agency included in sections 1345 and
1442 of such Title 28.”
(Doc. 1). Relying upon § 1452(f)(1),
Freddie Mac not only claims that, as a matter of law, it is an
agency of the United States within the purview of 28 U.S.C. §§ 1345
and 1442, but that by virtue of the subsequent language in §
1452(f)(2) its simple, straight-forward state-law claim, has been
transmogrified into a claim that arose under the laws of the United
States; and that § 1452(f)(3) grants it the unrestrained right,
long after it filed its ejectment action in state court, to remove
Even without a challenge to this court’s subject matter
jurisdiction, the court is obligated, as its first responsibility,
to conduct a sua sponte examination to satisfy itself, if it can do
so, that it has subject matter jurisdiction. See 28 U.S.C. §
1447(c); American Fire & Casualty Co. v. Finn, 341 U.S. 6, 17
(1950); Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 410
(11th Cir. 1999) (“it is well settled that a federal court is
obligated to inquire into subject matter jurisdiction sua sponte
whenever it may be lacking”).
This court will therefore now
undertake its obligatory self-examination of whether or not it has
answered the jurisdictional questions presented here by § 1452(f).
Without any binding precedent, the court is left with (1) the
statutes themselves; (3) a meager number of non-binding court
decisions, only one of which the court finds persuasive; and (4)
the rules of statutory construction.
The single court decision
that this court finds persuasive is Federal Home Loan Mortgage
Corporation v. Amersey, 2014 WL 1400086 (E.D. Mich., April 9,
Amersey is not only the most recent case on point, but it
is a case that shares with the above-styled case all of the
pertinent procedural facts, and in which the Eastern Division of
Michigan remanded Freddie Mac’s state court ejectment action to the
state court from which Freddie Mac had improvidently removed it.
UNDERSTANDING 12 U.S.C. § 1452(f)
Rule of Construction Number One
This court necessarily begins its analysis with the strong
presumption arising from the principle that “‘[f]ederal courts are
authorized by Constitution and statute.’” Gunn v. Minton, 133 S.
Ct. 1059, 1064, (2013), quoting Kokkonen v. Guardian Life Ins. Co.
jurisdiction raises significant federalism concerns, federal courts
are directed to construe removal statutes strictly.”
Univ. Of S.
Alabama v. Am. Tobacco Co., 168 F3d 405, 411 (11th Cir. 1999),
citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09
(1941). This means, inter alia, that any ambiguity in, or doubt
about, a removal, or the basis for jurisdiction, is to be resolved
against the removing party. This court is well-known, if not
notorious, for its adherence to this first principle.
Rule of Construction Number Two
The statutory provisions upon which Freddie Mac relies must be
read in pari materia. “It is a fundamental canon of statutory
construction that the words of a statute must be read in their
context and with a view to their place in the overall statutory
scheme.” Davis v. Michigan Dep't of Treasury, 489 U.S. 803, 809
(1989). In this case, the language of § 1452(f) grafts itself onto
establish federal jurisdiction. They are found in Title 28 of the
United States Code and in the Constitution. Therefore, this court
must view, and must construe, § 1452(f) as part of a “symmetrical
and coherent regulatory scheme.” Food & Drug Admin. v. Brown &
Gustafson v. Alloyd Co., 513 U.S. 561, 569 (1995). “All parts [must
be fitted] into a harmonious whole,” Id., quoting FTC v. Mandel
Bro’s, Inc., 359 US. 385, 389 (1959), that is, of course, if a
“harmonious whole” can be found.
Because § 1452(f) says that Freddie Mac “shall be deemed to be
an agency included in sections 1345 and 1442 of such Title 28"
(emphasis added), a casual read of the statute might lead the
reader to the simplistic conclusion that it is an “agency” for all
inference, that it is the only one of the myriad United States
agencies that enjoys unfettered access to the federal courts in all
litigation in which it finds itself. Without saying so, Freddie Mac
is necessarily arguing that Congress has given it startlingly
government entity. Such a loose and casual reading is woefully
inadequate in light of the presumption against removeability.
A full comprehension of § 1452(f) requires that the statute be
read both as an independent piece of legislation and as a part of
Title 28 as a whole. Furthermore, each paragraph and provision of
§ 1452(f) must be read in relation to its other paragraphs and
provisions, with a view to making sense of the whole.
In 28 U.S.C. § 451, Congress defined governmental “agencies”
for Title 28 purposes, as follows:
The term “agency” includes any department, independent
establishment, commission, administration, authority,
board or bureau of the United States, or any corporation
in which the United States has a proprietary interest,
unless the context shows that such term was intended to
be used in a more limited sense.
If Freddie Mac had met this definition, there would have been no
need for Congress to “deem” it an “agency” for any Title 28 purpose
Congress obviously knew that Freddie Mac did not meet
the criteria in § 451. The central characteristic of an “agency”
for Title 28 purposes is the “proprietary interest” that the United
States has in it. This characteristic is consistent with the
“agency” concept applied to Freddie Mac in other areas of law. For
example, the Seventh Circuit has determined that Freddie Mac is not
a federal agency for the purposes of the Federal Tort Claims Act
because, unlike the Federal Deposit Insurance Corporation, Freddie
Mac “is privately owned, is structured to function independently of
appropriations from Congress.” Mendrala v. Crown Mortg. Co., 955
F.2d 1132, 1139 (1992). Similarly, the Ninth Circuit has held that
constitutional analysis because the government has not retained
sufficient control over it. Am. Bankers Mortgage Corp. v. Fed. Home
Loan Mortgage Corp., 75 F.3d 1401, 1407 (9th Cir. 1996)(“Freddie
Mac's board of directors consists of 18 persons, of whom 13 are
elected annually by the voting common shareholders. 12 U.S.C. §
1452(a)(2)(A). Freddie Mac has apparently issued nearly 60 million
common shares of stock, and its shares are publicly traded on the
New York Stock Exchange”). Freddie Mac’s recent travails have done
nothing to alter its status as a mere quasi-agency.
For the purposes of determining whether federal jurisdiction
exists over suits by or against bonafide federal agencies, 28 U.S.C
§ 1349 outlines the reach of federal courts over controversies in
which corporations created by federal statute are involved. This
The district courts shall NOT have jurisdiction of any
civil action by or against any corporation upon the
ground that it was incorporated by or under an Act of
Congress, unless the United States is the owner of more
than one-half of its capital stock. (emphasis added).
Apparently recognizing that Freddie Mac could not, without special
treatment, obtain access to the federal courts in the face of §
application of § 1349 in certain instances by starting § 1452(f)
with these words: “Notwithstanding section 1349 of Title 28 or any
other provision of law. . .” This prefatory declaration, coupled
with the omission of any reference in § 1452(f) to 28 U.S.C. § 941,
reflects that Congress only intended Freddie Mac to be “deemed” an
“agency” for the very limited and narrow purposes recognized in 12
purposes are those that appear in 28 U.S.C. §§ 1345 and 1442.
Rule of Construction Number Three
The maxim expressio unius est exclusio alterius applies here.
In § 1452(f)(1), Congress admittedly purported to “deem” Freddie
Mac an “agency”, something Freddie Mac clearly is NOT under the
definition found in § 451. It is only “deemed” an “agency” within
the contours and confines of 28 U.S.C. §§ 1345 and 1442, the only
two statutes referred to in § 1452(f)(1).
The fact that only these
statutes that deal with federal jurisdiction over the litigated
matters of “agencies”, whether “deemed” or “real”, do not apply to
Freddie Mac and cannot provide an avenue for it to the federal
jurisdiction over actions commenced in federal court by the agency.
This is not what happened in the instant case. Freddie Mac did not
purported to invoke this court’s original jurisdiction after its
case had proceeded for 22 months in the state forum it chose.
Section 1442 recognizes federal jurisdiction only over claims
brought against a governmental agency, and then only if the claim
arose out of the discharge of some official function. Section 1442
contemplates federal jurisdiction over an agency’s case only when
the agency is a defendant.
Freddie Mac is not here a defendant.
Therefore, § 1442, like § 1345, has no application here. Congress
did not purport to deem Freddie Mac an “agency” for all purposes
listed in § 451, or for any purpose beyond §§ 1345 and 1442. The
maxim “expressio unius est exclusio alterius” is, then, a canon of
statutory construction that applies to 12 U.S.C. § 1452(f)(1), (2),
and (3), and that limits Freddie Mac’s right to remove to cases
that are within the contemplation of § 1345 or § 1442. Congress’s
particular inclusions and exclusions in § 1452(f) have ultimate
significance because they reflect, inter alia, that Congress did
not mean to expand the availability of a federal forum for Freddie
Mac beyond the arguably constitutional confines of Article III or
to take Freddie Mac’s right to remove to absurd lengths.
Another provision in § 1452(f) has great significance to an
understanding of the line being drawn on Freddie Mac’s access to
federal court by removal, in contrast to its access by commencement
of suit. That is the unequivocal requirement in § 1452(f)(3) that
Freddie Mac follow “any procedure for removal of causes in effect
at the time of such removal”. (emphasis added). The only procedure
for removal purportedly made available to Freddie Mac in § 1452(f)
at the time of removal was 28 U.S.C. § 1441, which allows removal
only by “the defendant or defendants”. There is no procedure
anywhere in Title 28 for removal by a plaintiff. In its notice of
removal, Freddie Mac purports to invoke § 1441, the statute that
did not apply to it because it is a plaintiff. (Doc. 1, Notice of
Removal III, A). This proves, again, that Freddie Mac had no right
Rule of Construction Number Four
In Amersey, supra, at 2014 WL 1400086, the Eastern District of
Michigan pointedly held that “allowing Freddie Mac to remove even
(emphasis added). This court agrees. How unreasonable and bizarre
must a proposed statutory interpretation be before it must be
discarded by the courts in favor of a reasonable interpretation?
Freddie Mac’s proffered interpretation of § 1452(f) would render
the statute so “off-the-wall” that the rule against absurdities is
brought to bear.
Where a particular use of words leads to an
absurdity and/or a total irrationality, courts can say, in effect,
“the legislature could not have meant that.” Chickasaw Nation v.
United States, 534 U.S 84 (2001); Public Citizen v. United States
Dept. of Justice, 491 U.S. 440 (1989). Accordingly, courts should
avoid, if at all possible, an interpretation that would result in
an absurdity. 82 Corpus Juris Secundum, Statutes § 380. Justice
Interpretation of Legal Texts” (2012), in section 37, entitled
“Absurdity Doctrines”, points out that while a legislature’s mere
stupidity does not provide a basis for judicial intervention or
correction, courts are responsible for interpreting a statute, if
they can do so, so that it makes sense to a reasonably intelligent
Freddie Mac’s expansive and literalistic reading of the
ridiculous result, and would amount to a legislative circumvention
of universally recognized limitations on federal jurisdiction.
This court cannot reconcile § 1452(f)(1) with § 1452(f)(2) and
(3) by allowing § 1452(f)(2) and (3) to be stretched to the meaning
that Freddie Mac wants to give them. The unequivocal first subsection of § 1452(f) would be rendered entirely meaningless unless
it effectively precludes Freddie Mac’s incongruous interpretations
of the two sub-sections that follow. Congress could not have gone
to the trouble carefully to limit Freddie Mac’s court access to the
immediately wiping out the limitations it had just imposed. It
makes no sense to attribute such an intent to Congress, when it is
not necessary under the rules of grammar and syntax. The separate
language in § 1452(f)(3) that admittingly would extend Freddie
necessarily implied in 28 U.S.C. § 1441.
To reconcile § 1452(f)(1) with § 1452(f)(2) and (3), and with
28 U.S.C. § 1441, requires a recognition that when Congress used
the word “party” instead of the words “plaintiff” or “defendant” in
§ 1452(2) and (3), it was not redefining words or repudiating the
primacy of its preceding language in § 1452(f)(1). It could only
have meant to grant Freddie Mac access to federal court when it is
a “party plaintiff” in the context provided by § 1345, or a “party
defendant” in the context provided by § 1442. By using the word
“party”, Congress did not, and could not, mean to alter the
circumstances for removal set up in §§ 1345, 1442, and 1441.
Rule of Construction Number Five
A mandatory and universal rule of statutory construction is
Construction, Singer and Singer, Seventh Edition, Volume 3, §
57:24, as follows:
When the constitutionality of a statute is in question,
and under one construction it can be upheld, while under
the other it cannot, the court will adopt the
construction supporting constitutionality.
“Federal statutes are to be so construed as to avoid serious doubt
of their constitutionality.” Int’l Ass’n of Machinists v. Street,
367 U.S. 740, 749 (1961). The subject matter jurisdiction of a
federal court is limited both by statute and by the Constitution.
“Congress may not expand the jurisdiction of the federal courts
beyond the bounds established by the Constitution.” Verlinden B.V.
v. Central Bank of Nigeria, 461 U.S. 480, 491 (1983). Freddie Mac’s
interpretation would break through clear constitutional borders.
This, the court cannot allow. Probably because jurisdiction was not
available to Freddie Mac under 28 U.S.C. § 1332 (diversity of
citizenship), Congress, while in the process of creating Freddie
Mac, attempted to “deem” it to be a federal agency for the limited
muster, and, while it was at it, it purported to “deem” all of the
corporation’s litigated matters to “arise under the laws of the
United States”. When Freddie Mac filed this particular ejectment
action, it did not seek a federal remedy, because there was none.
If the § 1452(f) concept of “deeming” a cause of action under state
law to be a federal action can be tolerated, § 1345 gave Freddie
Mac the right to commence its present action in federal court,
something it did not do.
Congress is “deemed” to know that it
cannot amend or ignore the Constitution and cannot give federal
courts jurisdiction over controversies of every kind, and between
all parties. It is constitutionally impermissible for Congress to
“deem” a simple state law ejectment action to have arisen under the
understood by the Founders and by Chief Justice Marshall, the first
arbiter of the concept, stands in the way. Federalist, No. 45
(Madison). If Congress intended in § 1452(f) to accomplish such a
miraculous transformation of state causes of action, and to flood
the federal courts with them, it was pushing the envelope beyond
legerdemain not turn a quasi-agency into a “real” governmental
agency, with all of the rights and privileges enjoyed by the
agencies described in § 451, but it could not “deem” a claim
existing only under state law to have arisen under federal law. Not
only would such a “deemer” be illusory beyond the limits of the
Constitutional scheme of things, but it would be just as absurd as
deeming “up” to be “down”, or “right” to be “left”, or “General
Motors” to be a “federal agency”.
An important consideration in the Constitution’s fundamental
concept of federalism in application to the instant case is that
ejectment implicates a core area of state interest and power.
“[D]ispossessory actions are now, and have always been, primarily
state court matters [where]. . . [s]tate courts are highly familiar
with dispossessory procedure, and federal courts are ill-equipped
to adjudicate these actions.” Fed. Home Loan Mortgage Corp. v.
Matassino, 911 F. Supp. 2d 1276, 1284 (N.D. Ga. 2012). In fact, in
its own pleading in a separate, but related, case, Freddie Mac
federal adjudication of such a core matter of state law. Response
to Court’s Order of April 13, 2012 at 13-15, Fed. Home Loan
Mortgage Corp v. Matassino, 909 F.Supp.2d 1377 (N.D. Ga. Apr. 27,
2012)(No. 1:11-cv-03895-CAP). Astonishingly, Freddie Mac itself
there issued the following warning that the federal courts should
[T]he federal courts would preside over summary
proceedings initiated by an affidavit rather than a
complaint, in direct contravention of Federal Rule of
Civil Procedure 1; the federal courts would be pressed to
reach decisions within two weeks of service of the
dispossesory warrants; federal marshals would be breaking
down doors and removing people from properties; and
appeals of the judgments and writs of possession would be
to the Eleventh Circuit Court of Appeals. . . . The
framers of the Constitution could not have intended to
promote rampant federalism by subjecting a matter, large
or small, summary or plenary, to the jurisdiction of the
federal courts. Id. at 13-14. (emphasis added)
Rule of Construction Number Six
Legislative history can occasionally provide assistance in
ascertaining what a legislative body intended when its enactment
has no clear and plain meaning. This court has not been able to
uncover any statement by a sponsor, or any debate, or any other
historical document, to suggest that while Congress was creating
Freddie Mac, it meant to grant it broad dispensations that it had
never before granted to any other entity created by it.
are federal public policy reasons so important that they demand a
federal forum for Freddie Mac at its option, surely one of the
drafters of § 1452(f) would have tried to explain and to justify
this break-through concept. Some sponsor would have felt compelled
to do so, unless, that is, no persuasive argument could be found.
The conspicuous absence of any legislative history for § 1452(f) is
more telling than evidence would be in the form of a vigorous
impossible, namely, to justify a quasi-agency being treated as a
real agency, and to give it the unbridled right to remove all of
its cases to federal court, even when it is a plaintiff. In his
dissent in Textile Workers Union of Am. v. Lincoln Mills of Ala.,
353 U.S. 448, 483-84 (1957), Justice Frankfurter dealt with a
similar situation, and explained:
If there is in the phrase “arising under the laws of the
United States” leeway for expansion of our concepts of
jurisdiction, the history of Article III suggests that
the area is not great and that it will require the
presence of some substantial federal interest. . .”
Where is the “substantial federal interest” in converting a simple
ejectment action into a case arising under the laws of the United
States? If Chief Justice Marshall today were asked such a farfetched question, he would surely either laugh or recoil in horror.
For the foregoing separate and several reasons, Freddie Mac
erroneously interprets 12 U.S.C. § 1452(f). The court therefore
jurisdiction. Thus, lacking subject matter jurisdiction, the case
will be remanded sua sponte by separate order.
DONE this 17th day of December, 2014.
WILLIAM M. ACKER, JR.
UNITED STATES DISTRICT JUDGE
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