TOWN OF JOHNSTON, on behalf of itself and all others similarly situated, Plaintiff, Appellant,
FEDERAL HOUSING FINANCE AGENCY, As Conservator for Federal Mortgage and Federal Home Loan Mortgage, et al., Defendants, Appellees. COMMISSIONERS OF BRISTOL COUNTY, Plaintiffs, Appellants,
FEDERAL HOME LOAN MORTGAGE CORPORATION, a Federal Chartered Corporation, et al., Defendants, Appellees
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND. Hon. Ronald R. Lagueux, U.S. District Judge. APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Nathaniel M. Gorton, U.S. District Judge.
Warren T. Burns, with whom Terrell W. Oxford and Susman Godfrey, LLP were on brief, for appellant Town of Johnston.
John Roddy, Elizabeth Ryan, Baily & Glasser LLP, Steven P. Sabra and Sabra and Aspden, P.A. on brief for appellants Commissioners of Bristol County.
Michael A.F. Johnson, with whom Howard N. Cayne, Asim Varma, Dirk C. Phillips, Arnold & Porter LLP, Michael J. Ciatti, Merritt E. McAlister, King & Spalding LLP, Michael D. Leffel, Jill L. Nicholson and Foley & Lardner LLP were on brief, for appellees.
Patrick J. Urda, Tax Division, Department of Justice, with whom Kathryn Keneally, Assistant Attorney General, Tamara W. Ashford, Principal Deputy Assistant Attorney General, Gilbert S. Rothenberg, Chief, Appellate Section and Jonathan S. Cohen, Attorney, Tax Division, Department of Justice, were on brief for intervenor United States.
Before Howard and Kayatta, Circuit Judges, and McCafferty,[*] District Judge.
HOWARD, Circuit Judge.
The Town of Johnston, Rhode Island and the Commissioners of Bristol County, Massachusetts (" the municipalities" ) brought separate actions against the Federal National Mortgage Association (" Fannie Mae" ), the Federal Home Loan Mortgage Corporation (" Freddie Mac" ), and the Federal Housing Finance Agency (" FHFA" ) (collectively, " the entities" ), alleging that the entities failed to pay taxes on the transfer of property. Federal district courts in Massachusetts and Rhode Island granted the entities' motions to dismiss based on statutory exemptions from taxation. The municipalities appeal the district courts' decisions, claiming that the transfer tax is a tax on " real property" and therefore falls outside the entities' tax exemptions, and that the entities' tax exemptions themselves are unconstitutional. We affirm the dismissals of both complaints for failure to state a claim.
Fannie Mae and Freddie Mac are private, publicly traded corporations that were created by federal charter to support the development of the secondary mortgage market. In September 2008, the two corporations entered conservatorship under the FHFA, an independent federal agency, pursuant to the Housing and Economic Recovery Act of 2008. 12 U.S.C. § 4501. As conservator, the FHFA succeeded to all rights, obligations, and privileges of the two corporations.
The charters of Fannie Mae and Freddie Mac contain similar exemptions concerning taxation (the " Charter Exemptions" ). Both are exempt from " all taxation" imposed by any state, county, or local taxing authority, " except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent . . . as other real property is taxed." See 12 U.S.C. § § 1723a(c)(2) (Fannie Mae), 1452(e) (Freddie Mac). The FHFA has an essentially identical tax exemption. See id. § 4617(j)(2).
Massachusetts and Rhode Island each tax the transfer of real estate. See Mass. Gen. Laws ch. 64D, § § 1-3; R.I. Gen. Laws § 44-25-1. The Massachusetts real property transfer tax is an excise tax " for and in respect of the deeds, instruments and writings" or the materials upon which they are written. Mass. Gen. Laws ch. 64D, § 1. The rate of the tax depends on the county in which the real property is located, and the total tax imposed is a function of the sale price of the property. The Bristol County Commissioners are responsible for collecting this transfer tax within their county, and do so through the Bristol County Register of Deeds. Similarly, the Rhode Island transfer tax is imposed " on each deed, instrument, or writing" used to transfer real ...