Bank of New York Mellon v. City of Richmond, California et al

Filing 35

RESPONSE (re 28 MOTION to Dismiss for Lack of Jurisdiction ) CORRECTION OF DOCKET # 34 filed byBank of New York Mellon, Bank of New York Mellon Trust Company, N.A.. (Pollock, Bronwyn) (Filed on 10/8/2013)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 MAYER BROWN LLP DONALD M. FALK (SBN 150256) dfalk@mayerbrown.com Two Palo Alto Square, Suite 300 3000 El Camino Real Palo Alto, CA 94306-2112 Tel: 650-331-2000 Fax: 650-331-2060 MAYER BROWN LLP BRONWYN F. POLLOCK (SBN 210912) bpollock@mayerbrown.com NOAH B. STEINSAPIR (SBN 252715) nsteinsapir@mayerbrown.com MICHAEL D. SHAPIRO (SBN 271912) mshapiro@mayerbrown.com 350 S. Grand Ave., 25th Floor Los Angeles, CA 90071-1503 Tel: 213-229-9500 Fax: 213-625-0248 Attorneys for Plaintiffs THE BANK OF NEW YORK MELLON (f/k/a The Bank of New York) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (f/k/a The Bank of New York Trust Company, N.A.), as Trustees for the trusts listed on Exhibit A of the Second Amended Complaint [Additional counsel listed on signature page] 17 UNITED STATES DISTRICT COURT 18 NORTHERN DISTRICT OF CALIFORNIA 19 20 THE BANK OF NEW YORK MELLON (f/k/a The Bank of New York), et al. 21 22 23 24 25 26 27 Plaintiffs, v. CITY OF RICHMOND, CALIFORNIA, a municipality; RICHMOND CITY COUNCIL; MORTGAGE RESOLUTION PARTNERS L.L.C., a Delaware limited liability company; and GORDIAN SWORD LLC, a Delaware limited liability company, Case No. 13-cv-3664-CRB PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS Date: Time: Ctrm: Judge: November 1, 2013 10:00 a.m. 6, 17th Floor Honorable Charles R. Breyer Defendants. 28 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB TABLE OF CONTENTS 1 Page 2 INTRODUCTION AND SUMMARY OF ARGUMENT ............................................................................i 3 STATEMENT OF ISSUE TO BE DECIDED..............................................................................................1 4 STATEMENT OF FACTS ...........................................................................................................................1 5 ARGUMENT................................................................................................................................................3 I. 6 A. 9 11 II. The Trustees’ Principal Claims Are Prudentially Ripe.......................................................10 C. 8 The Trustees’ Claims Are Ripe Under Article III ................................................................4 B. 7 10 THE TRUSTEES HAVE PRESENTED RIPE CLAIMS ................................................................3 If The Court Finds That The Trustees’ Claims Are Not Prudentially Ripe For An Immediate Declaration, It Should Defer Decision Or Hold The Case In Abeyance ..........14 IF THE COMPLAINT IS DISMISSED, THE TRUSTEES SHOULD BE GRANTED LEAVE TO AMEND .....................................................................................................................14 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 TABLE OF AUTHORITIES 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Page(s) CASES 99 Cents Only Stores v Lancaster Redevelopment Agency 237 F. Supp. 2d 1123 (C.D. Cal. 2001) ..............................................................................................8 99 Cents Only Stores v. Lancaster Redevelopment Agency 60 Fed. Appx. 123 (9th Cir. 2003)......................................................................................................8 AE v. Cnty. of Tulare 666 F.3d 631 (9th Cir. 2012) ............................................................................................................14 Aetna Life Ins. Co. v. Haworth 300 U.S. 227 (1937)........................................................................................................................4, 7 Am. Petroleum Inst. v. EPA 683 F.3d 382 (D.C. Cir. 2012)..........................................................................................................14 Associated General Contractors of America v. City of Columbus 172 F.3d 411 (6th Cir. 1999) ..............................................................................................................9 Autery v. United States 424 F.3d 944 (9th Cir. 2005) ..............................................................................................................3 City of Houston, Tex. v. Dep’t of Housing and Urban Dev. 24 F.3d 1421 (D.C. Cir. 1994)..........................................................................................................11 Colorado River Water Conservation Dist. v. United States 424 U.S. 800 (1976)..........................................................................................................................13 Electronics for Imaging v. Coyle 394 F.3d 1341 (Fed. Cir. 2005).........................................................................................................12 Fina Research, S.A. v. Baroid Ltd. 141 F.3d 1479 (Fed. Cir. 1998).........................................................................................................12 Franczak v. Suntrust Mortg., Inc. No. 5:12-cv-01453 EJD, 2013 WL 843912 (N.D. Cal. Mar. 6, 2013) .............................................14 Freedom to Travel Campaign v. Newcomb 82 F.3d 1431 (9th Cir. 1996) ..............................................................................................................9 Golden West Baseball Co. v. City of Anaheim 25 Cal. App. 4th 11 (1994) .................................................................................................................6 Hal Roach Studios, Inc. v. Richard Feiner and Co. 896 F.2d 1542 (9th Cir. 1990) ....................................................................................................... ii, 4 ii PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Hewlett-Packard Co. v. Acceleron LLC 587 F.3d 1358 (Fed. Cir. 2009).........................................................................................................12 Horne v. Dep’t of Ag. 133 S. Ct. 2053 (2013)....................................................................................................................... 10 Hunt v. Anderson 794 F. Supp. 1551 (M.D. Ala. 1991) ................................................................................................... 8 In re Coleman 560 F.3d 1000 (9th Cir. 2009) ....................................................................................................passim Koontz v. St. Johns River Water Mgmt. Dist. 133 S. Ct. 2586 (2013)....................................................................................................................... 14 Littlejohn v. United States 321 F.3d 915 (9th Cir.2003) ............................................................................................................ 4, 5 Maryland Casualty Co. v. Pacific Coal & Oil Co. 312 U.S. 270 (1941)............................................................................................................................. 7 McChord v. Cincinnati 183 U.S. 483 (1902)............................................................................................................................. 9 McClung v. City of Sumner 548 F.3d 1219 (9th Cir. 2008) ........................................................................................................... 14 McInnis-Misenor v. Maine Medical Center 319 F.3d 63 (1st Cir. 2003).................................................................................................................. 8 MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118 (2007)..........................................................................................................................i, 4 Nat’l Audubon Soc. v. Davis 307 F.3d 835 (9th Cir. 2002) ....................................................................................................... 11, 12 Nat’l Park Hospitality Ass’n v. Dep’t of Interior 538 U.S. 803 (2003)........................................................................................................................... 10 Neil Bros. Ltd. v. World Wide Lines 396 F. Supp. 2d 340 (E.D.N.Y. 2005) ............................................................................................... 12 New Orleans Co. v. City of New Orleans 164 U.S. 471 (1896)............................................................................................................................. 9 Oklevueha Native Am. Church of Hawaii v. Holder 676 F.3d 829 (9th Cir. 2012) ............................................................................................................. 10 Portland Police Ass’n v. City of Portland 658 F.2d 1272 (9th Cir. 1981) ............................................................................................................. 7 iii PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Rolfe v. California Transportation Comm’n 104 Cal. App. 4th 239 (2002) .......................................................................................................iii, 10 Rosales v. United States 824 F.2d 799 (9th Cir. 1987) ............................................................................................................... 3 Scott v. Pasadena Unified School Dist. 306 F.3d 646 (9th Cir. 2002) .........................................................................................................ii, 11 Sherwin Williams Co. v. Holmes Cnty. 343 F.3d 383 (5th Cir. 2003) ............................................................................................................. 12 Steffel v. Thompson 415 U.S. 452 (1974)............................................................................................................................. 8 Sturge v. Diversified Transport Corp. 772 F. Supp. 183 (S.D.N.Y. 1991) .................................................................................................. 6, 8 Texas v. United States 523 U.S. 296 (1998).................................................................................................................... ii, 3, 11 Thomas v. Anchorage Equal Rights Comm'n 220 F.3d 1134 (9th Cir. 2000) ...................................................................................................4, 10, 14 Weizmann Institute of Science v. Neschis 229 F. Supp. 2d 234 (S.D.N.Y. 2002)....................................................................................................5 Yahoo! v. La Ligue Contre Le Racisme Et L’Antisemitisme 433 F.3d 1199 (9th Cir. 2006) ...............................................................................................................7 STATUTES Cal. Code Civ. Proc. § 1255.410 .................................................................................................................1 Cal. Gov. Code § 7267.2(a)(2).....................................................................................................................2 RULES Federal Rule of Evidence 201......................................................................................................................4 OTHER AUTHORITIES 24 BORCHARD, DECLARATORY JUDGMENTS 280 (2nd ed. 1941) ......................................................................6 25 Richmond City Charter, art. II, § 1, cl. 19 ...................................................................................................1 26 27 28 iv PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION AND SUMMARY OF ARGUMENT 3 The City of Richmond has issued a concrete threat to exercise eminent domain to seize hundreds 4 of mortgage loans from several residential mortgage-backed securities trusts for which the plaintiffs here 5 are trustees (the “Trusts” and “Trustees,” respectively). Acting in concert with Mortgage Resolution 6 Partners LLC (“MRP”), a private investment firm that stands to make a windfall profit, the City 7 currently is using the threat of this facially unconstitutional taking to pressure the Trustees to accept 8 low-ball offers for the loans. And the City’s words and conduct make clear that, if the Trustees do not 9 accept the offers, it will seize the loans by exercise of eminent domain. The City is moving forward 10 with its plan, for which MRP has already raised $46 million in private financing. This is not a seizure 11 program that may never occur, but one that is in progress and having current effects. 12 We recognize that this Court dismissed as unripe a complaint filed by Wells Fargo Bank and 13 other trustees in an action challenging the same seizure program. But the factual allegations and legal 14 claims in this lawsuit, however, are not identical to those in Wells Fargo. More important, neither the 15 briefing nor the Court’s opinion in the Wells Fargo case addressed the standards for ripeness applicable 16 to a claim for a declaratory judgment. And neither addressed the need for prompt adjudication because 17 of the City’s current and continuing effort to use the threat of an unlawful takings program as leverage to 18 induce the Trustees to negotiate the sale of performing mortgage loans below face value. When 19 measured against the proper standards, the complaint here is ripe both under Article III and as a 20 prudential matter. The constitutional challenge presented here should proceed toward disposition in the 21 normal course. 22 A complaint for declaratory judgment is ripe for adjudication under Article III if “the facts 23 alleged, under all the circumstances, show that there is a substantial controversy between parties having 24 adverse legal interests of sufficient immediacy and reality to warrant issuance of a declaratory 25 judgment.” In re Coleman, 560 F.3d 1000, 1005 (9th Cir. 2009); MedImmune, Inc. v. Genentech, Inc., 26 549 U.S. 118, 127 (2007). Under that standard, the Trustees have presented a ripe challenge to 27 Defendants’ seizure program on the ground that it exceeds constitutional and statutory restrictions 28 forbidding the seizure of extraterritorial property and seizure for a private rather than a public purpose. i PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 Seeking to coerce the Trustees to sell mortgage loans to Defendants at bargain-basement prices, 2 Defendants are openly threatening to seize trust property if the Trustees do not accede to Defendants’ 3 demands. Under Article III, that present threat is sufficient to trigger the Court’s subject matter 4 jurisdiction. That the City must decide to sue before eminent domain litigation actually begins does not 5 distinguish this case from any other claim for declaratory relief in the face of a letter threatening 6 litigation and making commercial demands. That is especially apparent because, in its September 10, 7 2013 city council meeting, the City decided not to withdraw its offers or its open threats. In short, the 8 parties are adverse, their dispute is real, and the City’s and MRP’s continuing conduct confirms that 9 there is a live controversy meeting Article III standards. 10 Defendants’ motion to dismiss primarily rests on an overextension of the prudential principle 11 that “[a] claim is not ripe for adjudication if it rests upon contingent future events.” Texas v. United 12 States, 523 U.S. 296, 300 (1998). Defendants contend that, because the City has not issued a resolution 13 of necessity, this Court lacks subject matter jurisdiction. On the contrary, declaratory judgments 14 routinely address open or tacit threats of litigation precisely “to relieve potential defendants from the 15 ‘Damoclean threat’ of impending litigation which a harassing adversary might brandish, while initiating 16 suit at his leisure—or never.” Hal Roach Studios, Inc. v. Richard Feiner and Co., 896 F.2d 1542, 1555 17 (9th Cir. 1990). If Defendants were correct that the presence of any contingent future event between a 18 concrete threat and the commencement of litigation defeats subject matter jurisdiction, the Declaratory 19 Judgment Act would be a dead letter. But it is not, and this controversy is sufficiently definite and 20 concrete for resolution by declaration. 21 As the Ninth Circuit has explained, the presence of “contingent future events,” standing alone, is 22 relevant to prudential rather than Article III ripeness. Scott v. Pasadena Unified School Dist., 306 F.3d 23 646, 662 (9th Cir. 2002). But prudential considerations as well point toward prompt resolution of the 24 Trustees’ challenge to Defendants’ seizure program. Waiting for the City to pass a resolution of 25 necessity will not sharpen the concrete legal issues here. The pertinent facts and legal principles are 26 known and not subject to change, even if some minor particulars were altered. In contrast, there are 27 very powerful reasons to maintain jurisdiction and proceed toward a declaration in due course. If on 28 prudential grounds the Court rejects jurisdiction until after the City issues a resolution of necessity, ii PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 Defendants are certain to file an eminent domain action and then contend that it is too late for this Court 2 to issue a declaration. Defendants are likely to sue immediately after a resolution of necessity—before 3 this Court would have the opportunity to pass on the constitutionality of the takings in a newly filed 4 case—using California’s prejudgment “quick take” procedure that could permit the City to take the 5 target loans before judgment. Against this backdrop, it comes as no surprise that the only appellate 6 court to address the issue has held that a legal challenge to a taking under California eminent domain 7 law is ripe before a resolution of necessity issues. See Rolfe v. California Transportation Comm’n, 104 8 Cal. App. 4th 239 (2002). 9 Having loaded and leveled the eminent domain weapon at these loans, Defendants claim that 10 jurisdiction is lacking until they pull the trigger. This Court need not and should not wait so long to 11 adjudicate this dispute. The motion to dismiss should be denied. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB STATEMENT OF ISSUE TO BE DECIDED 1 2 Whether the complaint presents a controversy that is ripe for declaratory relief. 3 STATEMENT OF FACTS 4 The City’s charter provides it with the power to use “eminent domain” to acquire “real and 5 personal property” for any “public use.” Richmond City Charter, art. II, § 1, cl. 19. The City has entered 6 into an agreement with MRP under which MRP will identify the loans for seizure and advise the City on 7 exercising its eminent domain power to seize residential mortgage loans. Declaration of Bronwyn 8 Pollock (“Pollock Decl.”) ¶¶ 2-3, Ex. 1 at 7-8, Ex. 2. MRP is a private, for-profit organization that 9 engages in just one kind of investment: municipal mortgage seizure programs. Id. ¶ 11, Ex. 8 at 27 10 (“MRP clients are state, county, and city governments that purchase underwater PLS mortgages,” “MRP 11 Receives Fee of $4,500,” MRP “[a]dvise[s] community in filing eminent domain motion”). On its 12 website, MRP describes itself as “a community advisory firm that will assist communities that choose to 13 use eminent domain to purchase underwater mortgages.” Id. ¶ 4, Ex. 3 at 3. MRP acknowledges that it 14 “earn[s] a government approved flat fee [for each] mortgage” that its municipal partners seize and that the 15 fee is paid by the funder that provides the government with financing to seize the loans. Id. ¶¶ 4-5, Ex. 3 16 at 3, Ex. 4 at 3. 17 While the loans are secured by property within the City, the loans themselves are held outside of 18 the City in out-of-state trusts. E.g., Declaration of Loretta A. Lundberg (“Lundberg Decl.”) ¶¶ 7-8. The 19 City plans to resell the loans at a substantial mark-up, splitting the profit with MRP. Pollock Decl. ¶ 11, 20 Ex. 8 at 26. The detailed acquisition program approved by the City targets a specific borrower and loan 21 profile; the City has identified over 600 loans to include in the program. See id. ¶ 6, Ex. 5 at 9 (loan 22 profile); Lundberg Decl. ¶ 10, Ex. C (trustee exhibit C, identifying all loans). 23 MRP has indicated that California’s “quick take” procedure is an essential component of its 24 scheme. Pollock Decl. ¶ 7, Ex. 6 at 3. At the outset of the condemnation action, the City can move (on 25 60 days’ notice) for immediate, prejudgment possession of the target property in a procedure known as a 26 “quick take.” See Cal. Code Civ. Proc. § 1255.410. To secure the quick take, the government must 27 deposit the property’s appraised value with the state treasury. Id. MRP boasts that it has $46 million of 28 1 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 financing on hand to implement the seizure program and has assured the City that more funds are 2 forthcoming. Pollock Decl. ¶ 12, Ex. 9 at 2. 3 In approving the agreement with MRP, the city council (in the city manager’s words) “gave 4 approval for the program to start.” Id. ¶ 13, Ex. 10 at 2. And it has started. Defendant MRP took the first 5 step in a June 28, 2013 warning letter sent to every major financial institution in the country, stating that 6 “underwater” mortgage “loans would be acquired as part of a public program.” E.g., Lundberg Decl. ¶ 9, 7 Ex. B; Declaration of Brian D. Hershman (“Hershman Decl.”) ¶ 2, Ex. A. 8 The City quickly followed by making its intentions unmistakably clear. In letters dated July 31, 9 2013, the City (through its city manager) offered to purchase specifically identified target loans, held in 10 specifically identified trusts, at specifically identified prices, including trusts administered by the plaintiff 11 Trustees here.1 Lundberg Decl. ¶ 10, Ex C (“By way of this letter, the City hereby offers to acquire all 12 rights to the mortgage loans listed in Attachment A.”); Declaration of Joseph L. Nardi (“Nardi Decl.”) 13 ¶¶ 4-5, Ex. B; Hershman Decl. ¶¶ 4-7, Exs. C, F. The letters informed the Trustees that the City had hired 14 a third party to appraise the loans and that the offers were based on the fair market value as determined in 15 the appraisals. E.g., Lundberg Decl. ¶ 10, Ex C. The letters demanded a response by August 13, 2013 16 and warned that, if the Trustees refused the offers, the City could “proceed with the acquisition of the 17 Loans through eminent domain.” Id. As MRP and the City well knew, that next step was largely 18 foreordained, as the “[s]ecuritization agreements and tax laws prohibit the sale of PLS mortgages.” 19 Pollock Decl. ¶ 11, Ex. 8 at 22. In compliance with section 7267.2(a)(2) of the California Government Code, the letters contained 20 21 an informative pamphlet about the eminent domain process in California. E.g., Lundberg Decl. ¶ 10, Ex 22 C. The pamphlet observed that if the City and Trustees were unable to negotiate a mutually acceptable 23 sale, the City would “either file an eminent domain action in a court” or “promptly notify” the Trustees of 24 its intent to “abandon its intention to acquire the property.” Id. The Trustees did not accept the offers. 25 Pollock Decl. ¶ 15, Ex. 12; Hershman Decl. ¶ 6, Ex. E; Nardi Decl. ¶ 6, Ex. C. 26 27 28 1 The Trustees are The Bank of New York Mellon (f/k/a The Bank of New York), The Bank of New York Mellon Trust Co., N.A. (f/k/a The Bank of New York Trust Co., N.A.), U.S. Bank National Association, Wilmington Trust Co., and Wilmington Trust, National Association. 2 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 The City has not advised the Trustees that the City is abandoning its intention to acquire the loans. 2 Lundberg Decl. ¶ 13; Hershman Decl. ¶ 8. On the contrary, on September 10, 2013, the city council—by 3 supermajority vote—decided not to withdraw the city manager’s offer letter, leaving intact the City’s 4 open expression of intent to use eminent domain to seize the loans. Pollock Decl. ¶¶ 16-17. Defendants 5 failed to disclose this fact in their Supplemental Memorandum in the Wells Fargo case filed the day 6 before the September 12 hearing, and instead mischaracterized the impact of a resolution to seek to enter 7 into Joint Powers Authority (“JPA”) as somehow shutting off the City’s own loan seizure program. 8 Declaration of Eric Brown (“Brown Decl.”) Ex. C, at 1, ECF No. 29-4, Sept. 20, 2013. The potential JPA 9 would provide an additional tool available to the City, but the resolution does not limit the City’s ability 10 to exercise eminent domain on its own. See Pollock Decl. ¶¶ 16-17, Ex. 13 at 7-9. ARGUMENT 11 The well-developed factual setting here—pleaded and otherwise—should foreclose dismissal. 12 13 “With a 12(b)(1) motion” to dismiss for want of jurisdiction, “a court may weigh the evidence to 14 determine whether it has jurisdiction.” Autery v. United States, 424 F.3d 944, 956 (9th Cir. 2005). When 15 it takes evidence on the jurisdictional question, “the district court should employ the standard applicable 16 to a motion for summary judgment and grant the motion to dismiss for lack of jurisdiction only if the 17 material jurisdictional facts are not in dispute.” Rosales v. United States, 824 F.2d 799, 803 (9th Cir. 18 1987). Here, the complaint itself—together with uncontested evidence concerning events that have 19 20 occurred since this action began—make clear that this Court has subject matter jurisdiction. It can, and 21 should, adjudicate this case. 22 I. 23 THE TRUSTEES HAVE PRESENTED RIPE CLAIMS. Defendants contend that the request for declaratory judgment is not yet ripe. Before the City “may 24 exercise eminent domain power,” they explain, the city council must “authorize that exercise of power by 25 adopting, by supermajority vote, a resolution of necessity.” Mot. at 3. And because “the City Council has 26 not yet taken this action,” Defendants observe, the request for declaratory judgment “rests upon 27 contingent future events that may not occur as anticipated, or indeed may not occur at all.” Mot. at 3, 4 28 (quoting Texas v. United States, 523 U.S. 296, 300 (1999)). That is not enough to preclude subject matter 3 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 jurisdiction here. This case is ripe under Article III for the declarations that the Trustees seek, and it is 2 prudentially ripe for decision as well. 3 A. 4 In declaratory judgment cases like this one, the Article III ripeness inquiry asks “whether the facts The Trustees’ Claims Are Ripe Under Article III. 5 alleged, under all the circumstances, show that there is a substantial controversy, between parties having 6 adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory 7 judgment.” In re Coleman, 560 F.3d 1000, 1005 (9th Cir. 2009); MedImmune, Inc. v. Genentech, Inc., 8 549 U.S. 118, 127 (2007). “The issues presented must be ‘definite and concrete, not hypothetical or 9 abstract.’” Coleman, 560 F.3d at 1004 (quoting Thomas v. Anchorage Equal Rights Comm'n, 220 F.3d 10 1134, 1139 (9th Cir. 2000) (en banc)). No showing of irreparable harm is necessary, however. See Aetna 11 Life Ins. Co. v. Haworth, 300 U.S. 227, 242 (1937). As a consequence, that a current threat of future 12 litigation may be contingent on the declaratory-judgment defendants’ later decision to sue does not 13 foreclose jurisdiction. On the contrary, the entire purpose of the Declaratory Judgment Act is “to relieve 14 potential defendants from the ‘Damoclean threat’ of impending litigation which a harassing adversary 15 might brandish, while initiating suit at his leisure—or never.” Hal Roach Studios, Inc. v. Richard Feiner 16 and Co., 896 F.2d 1542, 1555 (9th Cir. 1990). Here, an active controversy has arisen from Defendants’ 17 active threat of an unconstitutional exercise of the City’s eminent domain power, and the City’s recent 18 decision to maintain the threat and keep the seizure program in place. 1. Defendants contend that the dispute between the parties here is indefinite and hypothetical 19 20 because “the legislative action authorizing eminent domain has not yet occurred.” Mot. at 4. But 21 Defendants have presented no evidence that the same supermajority that voted against withdrawing the 22 letters with their active threat of eminent domain will suddenly change course and decide to abandon the 23 program they have repeatedly approved. Rather, Defendants—who try to incorporate 15 or more pages of 24 their briefing in Wells Fargo through an improper request for judicial notice—proceed as if the judgment 25 in Wells Fargo collaterally estopped the Trustees here.2 But it does not. See Littlejohn v. United States, 26 2 27 28 The Trustees object in part to Defendants’ request for judicial notice of Exhibits A through H to the Declaration of Eric P. Brown, ECF No. 29. While the Court may properly take judicial notice of the existence of these documents and of the representations made in them, Defendants improperly offer them for the truth of the matters asserted and ask the Court to rely on the legal arguments made in those documents. Both uses are improper under Federal Rule of Evidence 201 and have been squarely rejected 4 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 321 F.3d 915, 920 (9th Cir. 2003) (claim preclusion requires both “the same parties” and “the same 2 cause[s] of action”). 3 In this case, Defendants’ actions have made the dispute definite, concrete, and ripe for a 4 declaration. Through its conduct, the city council has repeatedly confirmed its clear and present intent to 5 seize the mortgage loans in accord with its seizure program. In connection with a well-documented 6 scheme to use the City’s eminent domain power, the council voted to enter into an agreement with MRP 7 and thus “gave approval for the program to start.” Pollock Decl. ¶ 13, Ex. 10 at 2. The City then sent 8 offer letters expressly stating its intent to seize the targeted loans by eminent domain unless the Trustees 9 accepted the offers or the City gave notice of its intention to abandon the scheme, neither of which has 10 occurred. E.g., Lundberg Decl. ¶¶ 10, 13, Ex C. Closing the loop, the council—by the same 11 supermajority needed to enact a resolution of necessity—voted against withdrawing the letters and 12 abandoning the City’s efforts to acquire the loans. Pollock Decl. ¶¶ 16-17. And MRP, knowing that 13 voluntary purchases were unlikely, has raised a $46 million war chest to finance the first quick take 14 seizures. Id. ¶ 12, Ex. 9 at 2. 15 This factual backdrop makes the dispute far from hypothetical. It presents “definite and concrete” 16 (Coleman, 560 F.3d at 1005) questions whether the federal and state constitutional and statutory 17 provisions would permit the City to seize the loans in the first place, and thus whether the seizure (or its 18 threat) tortiously interferes with the loan agreements at issue. The question is especially concrete because 19 the City’s active and continuing threat to exercise eminent domain is being used—actually and 20 presently—to exert improper pressure to induce the Trustees to accede to the City’s demands. By 21 premising that pressure on the expectation that eminent domain will be exercised, Defendants have placed 22 squarely at issue whether the City can use its eminent domain power to seize mortgage loans located 23 outside of its jurisdiction and then refinance the properties at reduced loan values to benefit a private 24 investment firm and select private individual homeowners. 25 26 27 28 ___________________________ by numerous courts. See e.g., Weizmann Institute of Science v. Neschis, 229 F. Supp. 2d 234, 246, 247 n.21(S.D.N.Y. 2002) (stating that a court may not consider court records for “the truth of the matters asserted in the other litigation” and rejecting an “attempt to introduce evidence or legal arguments presented to the courts in the prior related actions”). 5 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 This declaratory judgment action is therefore ripe under Article III. The parties unquestionably 2 are adverse, and the controversy between them unquestionably is real and immediate. And it is precisely 3 this sort of circumstance—when a party “is challenged, threatened, or endangered in the enjoyment of 4 what he claims to be his rights”—in which Article III and the Declaratory Judgment Act authorize the 5 aggrieved party “to initiate . . . proceedings against his tormentor and [obtain] an authoritative 6 determination of [his] legal right . . . and the defendant’s absence of right.” Sturge v. Diversified 7 Transport Corp., 772 F. Supp. 183, 186 (S.D.N.Y. 1991) (citing BORCHARD, DECLARATORY JUDGMENTS 8 280 (2nd ed. 1941)). 9 2. To deflect attention from the definite controversy at issue here, Defendants trot out a series of 10 “what ifs” to suggest that this matter is not ripe. They say that a resolution of necessity may “never be 11 proposed,” may “be rejected,” or may be presented “in substantially different form.” Brown Decl. Ex. A, 12 at 3:15-27, ECF No. 29-2, Sept. 20, 2013. None of these conjectures—which lack evidentiary support— 13 changes the City’s concrete threat to use an unconstitutional exercise of eminent domain; its express 14 agreement with MRP to pursue the MRP scheme; its open explanation of the nature of the scheme; or its 15 recent decision to continue with its seizure program. Defendants are using the threat of an unlawful 16 exercise of eminent domain right now to try to bully the Trustees into selling performing loans at a 17 discount, which would allow Defendants to avoid the risk that an eminent domain court would ultimately 18 value the loans at face value or otherwise too high for Defendants to profit from their scheme. And the 19 threat to seize the loans through unlawful means amounts to tortious interference by making “enjoyment” 20 of the loan contracts more “burdensome” right now. Golden West Baseball Co. v. City of Anaheim, 25 21 Cal. App. 4th 11, 51 (1994). Moreover, the Richmond Mayor’s office already is communicating with 22 homeowners who seek to have their loans included in the seizure program. Pollock Decl. ¶ 14, Ex. 11. 23 That further demonstrates that the program—including its interference aspect—is under way rather than 24 in limbo. Even if Defendants made some cosmetic changes to the seizure program, it still would entail 25 seizure of mortgage loans located outside the territory of Richmond, for the purely private use and private 26 benefit of a private investment firm and select private individual homeowners. 27 28 Nor does the City’s expressed interest in expanding the scope of the seizure program by pursuing a JPA with other municipalities make this dispute any less concrete and immediate. The city council 6 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 resolution authorizing negotiations for a JPA did not withdraw the existing authorization to go forward 2 with the seizure plan; indeed, a supermajority declined to withdraw the offer letters and their open threats 3 of eminent domain by the City and the City alone. Pollock Decl., ¶¶ 16-17. Whether the City enters into 4 a JPA has no bearing on the merits of the Trustees’ constitutional and statutory challenges to the City’s 5 program as reflected in the City’s current actions and its current threats. 6 To be sure, Defendants are correct that the City cannot exercise eminent domain until it passes a 7 resolution of necessity. But they are wrong that this Court lacks jurisdiction simply because the council 8 has yet to take the final step of authorizing a lawsuit. On the contrary, it is well settled that “a single 9 factual contingency” does not render a claim for declaratory judgment “‘impermissibly speculative.’” 10 Coleman, 560 F.3d at 1005 (citing Portland Police Ass’n v. City of Portland, 658 F.2d 1272, 1273-74 (9th 11 Cir. 1981)). See, e.g., Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941) 12 (insurance company could seek declaration that it need not pay claim against insured automobile driver 13 who was in an accident even though the driver had not yet been found liable for the accident); Aetna Life, 14 300 U.S. at 239-244 (insurance company could seek declaration that it need not pay plaintiff for disability 15 although plaintiff had not yet sought disability payments). 16 In Coleman, for example—a bankruptcy case in which the individual debtor sought a declaration 17 that her student loan debt was dischargeable—the Ninth Circuit held that the “controversy” was 18 sufficiently “definite and concrete” for Article III purposes, even though it was uncertain whether the 19 debtor would meet the prerequisites for discharge in the first place. 560 F.3d at 1005. The suit for a 20 declaratory judgment was ripe, the Ninth Circuit held, because the parties were presently and concretely 21 adverse: the plaintiff sought “discharge of her student loans,” which the defendant sought “to prevent.” 22 Id. Similarly, in Yahoo! v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 23 2006), the Ninth Circuit “concluded that a challenge to the enforceability of a French court injunction was 24 constitutionally ripe even though enforcement of that injunction had yet to be sought.” Coleman, 560 25 F.3d at 1005 (discussing Yahoo!). 26 Coleman and Yahoo! leave no doubt that the mere presence of a future contingency does not 27 defeat Article III jurisdiction. “Just as Coleman could [have failed] to complete” the prerequisites for 28 discharge, and the “parties to the Yahoo! dispute . . . could have decided not to seek the enforcement of its 7 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 injunction in the United States” (id.), the city council here could change the course it has adopted and 2 recently confirmed, and decline to pass a resolution of necessity. But that single factual contingency does 3 not mean that the dispute here is impermissibly “hypothetical or abstract.” Id. 4 In the face of an active and confirmed threat of an unconstitutional exercise of eminent domain, 5 the fact that a lawsuit has not yet been initiated no more deprives this action of ripeness for declaratory 6 relief than the lack of a pending prosecution precludes declaratory relief against a particular application of 7 a statute. See Steffel v. Thompson, 415 U.S. 452, 475 (1974) (“[R]egardless of whether injunctive relief 8 may be appropriate, federal declaratory relief is not precluded when no state prosecution is pending and a 9 federal plaintiff demonstrates a genuine threat of enforcement of a disputed state criminal statute, whether 10 an attack is made on the constitutionality of the statute on its face or as applied.”). There is as much a 11 “genuine threat” here as there was in Steffel, id. See also Hunt v. Anderson, 794 F. Supp. 1551, 1554 12 (M.D. Ala. 1991) (adjudicating declaratory relief action against probable-cause finding of state ethics 13 commission despite contention that “case involves merely the possibility of a factual situation that may 14 never develop, because the Attorney General may never present the case to a grand jury and an indictment 15 may never be returned”). That is why, applying principles of mootness that parallel the ripeness analysis for the present 16 17 case, see McInnis-Misenor v. Maine Medical Center, 319 F.3d 63, 69–70 (1st Cir. 2003) (ripeness and 18 mootness address similar issues at different times), a court addressing a nearly identical effort to treat a 19 resolution of necessity as a jurisdictional prerequisite held that the rescission of a resolution of necessity 20 did not deprive the court of jurisdiction over a challenge to an exercise of eminent domain. See 99 Cents 21 Only Stores v Lancaster Redevelopment Agency, 237 F. Supp. 2d 1123, 1128 (C.D. Cal. 2001), appeal 22 dismissed on different mootness grounds due to changed facts, 60 Fed. Appx. 123 (9th Cir. 2003). Facing the City’s offers to purchase mortgage loans—backed by threats to seize them—at prices 23 24 that would inflict significant losses on the Trusts’ beneficiaries, the Trustees seek to clear the real and 25 immediate “cloud” of the City’s threat to use eminent domain to seize the mortgage loans (Sturge, 772 F. 26 Supp. at 186), and Defendants “seek[] to prevent this” (Coleman, 560 F.3d at 1005). In short, the parties 27 are adverse, and their dispute is real. The request for a declaratory judgment is therefore constitutionally 28 ripe. 8 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 3. We acknowledge that, in dismissing the Wells Fargo case challenging the City’s seizure 2 program, this Court’s September 16 order cites Freedom to Travel Campaign v. Newcomb, 82 F.3d 1431 3 (9th Cir. 1996), for the proposition that the “mere possibility that [an official] may act in an arguably 4 unconstitutional manner . . . is insufficient to establish the real and substantial controversy required to 5 render a case justiciable under Article III.” Id. at 1441. But Freedom to Travel—which, we submit, in 6 fact applied a prudential ripeness analysis addressing fitness and hardship, see id. at 1434-35 & n.3, 7 1441—involved a vague statute that had never been applied and gave officials great discretion in how it 8 would be applied. By contrast, this case presents no “mere possibility” of “arguably unconstitutional” 9 action. In concert with MRP, the City has embarked on a specific and concrete plan to pursue facially 10 unconstitutional exercises of its eminent domain power and is openly and directly using the present threat 11 of that adopted plan to intimidate the Trustees into relinquishing the mortgage loans for the commercial 12 advantage of MRP and the private benefit of selected borrowers. Defendants have identified the specific 13 property they intend to seize, the value they ascribe to each loan to be seized, and the purported public use 14 grounds for the seizure. The concrete and uncontested factual setting here presents “pure questions of law 15 that require no factual development” and therefore are ripe for review. Id. at 1435. 16 4. Defendants raise a red herring by citing New Orleans Co. v. City of New Orleans, 164 U.S. 17 471 (1896), McChord v. Cincinnati, 183 U.S. 483 (1902), and Associated General Contractors of 18 America v. City of Columbus, 172 F.3d 411 (6th Cir. 1999), for the proposition that this Court cannot 19 interfere with the city council’s exercise of its legislative power. See Mot. at 3-4. This action seeks 20 nothing of the sort. A declaration in favor of the Trustees would not prevent the council from voting on 21 and approving a resolution of necessity. Rather, the Trustees seek a declaration clarifying their rights in 22 connection with the threatened exercise of eminent domain power against the mortgage loans that 23 Defendants have identified for seizure. If a declaration were issued, the City would remain free to engage 24 in unenforceable legislative conduct (much like the many foreign policy pronouncements by California 25 localities). The declaration as a practical matter would prevent implementation of the program, however, 26 and would remove the threat of seizure as a source of leverage in negotiations. 27 28 5. So far as we are aware, only one appellate court has considered whether a challenge to a specific, expressly contemplated exercise of eminent domain under California law is ripe for review 9 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 before the government adopts a resolution of necessity. That court held that the challenge was ripe. Rolfe 2 v. California Transportation Comm’n, 104 Cal. App. 4th 239 (2002). The plaintiff in Rolfe sought to 3 enjoin Caltrans from taking a strip of state park land for a toll road, asserting that Caltrans had to obtain 4 legislative approval first. Even though Caltrans had not adopted a resolution of necessity in connection 5 with the toll road, the court reached the merits of the plaintiff’s challenge. Applying standards similar to 6 those of Article III, see id. at 245-46, the court rejected the defendant’s contention that the questions 7 presented were not “ripe” for decision in the absence of a resolution of necessity invoking it. Id. at 246. 8 “[A]n actual controversy exists between the parties,” the court explained, and “whether [the government] 9 has adopted a resolution [of necessity] at this point is [simply] immaterial.” Id. That is the case here. Defendants have revealed the structure and purpose of the seizure plan, 10 11 identified the loans to be seized and the legal prerequisites for seizure—valuation and the supposed public 12 use rationale. And they have taken all material steps to pursue the seizure apart from the resolution of 13 necessity—the formal decision to sue—and the lawsuit that will immediately follow. That is enough 14 under Article III. 15 B. 16 “The ripeness doctrine is drawn both from Article III limitations on judicial power and from The Trustees’ Principal Claims Are Prudentially Ripe. 17 prudential reasons for refusing to exercise jurisdiction.” Oklevueha Native Am. Church of Hawaii v. 18 Holder, 676 F.3d 829, 837 (9th Cir. 2012) (quoting Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 19 U.S. 803, 808 (2003)). Thus “[r]ipeness has two components: constitutional ripeness and prudential 20 ripeness.” Coleman, 560 F.3d at 1004 (citing Thomas, 220 F.3d at 1138). And whereas Article III 21 ripeness is jurisdictional, prudential ripeness is not. See Horne v. Dep’t of Ag., 133 S. Ct. 2053, 2062 22 (2013). This Court’s decision in the Wells Fargo case—which, like the briefing, did not squarely address 23 the unique declaratory judgment setting—found a lack of subject matter jurisdiction. We have explained 24 above why the Court has subject matter jurisdiction over the declaratory judgment claims when the 25 question is properly viewed through the lens of Article III analysis in light of the Declaratory Judgment 26 Act. 27 28 Prudential ripeness concerns “the fitness of the issues for judicial review” and “the hardship to the parties of withholding court consideration.” Oklevueha, 679 F.3d at 837. Defendants’ briefing in Wells 10 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 Fargo and this case focuses on their assertion that the case is not yet “fit” for review (the prudential 2 question). Indeed, Defendants’ motion here relies entirely on a principle of prudential standing: “[a] 3 claim is not ripe for adjudication if it rests upon future events.” Mot. at 4:5-13 (citing Texas v. United 4 States, 523 U.S. 296, 300 (1998)).3 As the Ninth Circuit has explained, it is a “matter” of “prudential” 5 standing that a claim may not “be ripe for judicial resolution ‘if it rests upon contingent future events that 6 may not occur as anticipated, or indeed may not occur at all.’” Scott v. Pasadena Unified School Dist., 7 306 F.3d 646, 662 (9th Cir. 2002) (quoting Texas, 523 U.S. at 300). Pointing again to the fact that the 8 city council has not yet passed a resolution of necessity, Defendants say the case is not yet fit for 9 immediate adjudication. But prudential considerations weigh strongly in favor of, not against, reaching 10 the merits of the Trustees’ claims. 11 The fitness question asks whether awaiting further factual development will “aid resolution” of the 12 plaintiff’s challenge by resolving uncertainties that would have a bearing on the legality of the challenged 13 conduct, or instead whether “the legal arguments are [already] as clear as they are likely to become.” 14 Nat’l Audubon Soc. v. Davis, 307 F.3d 835, 850 (9th Cir. 2002). And the hardship question asks whether, 15 without the benefit of a declaratory judgment, the plaintiff will suffer an avoidable injury. Id. These two 16 prongs are “not . . . independent requirement[s],” however. City of Houston, Tex. v. Dep’t of Housing and 17 Urban Dev., 24 F.3d 1421, 1430 n.9 (D.C. Cir. 1994). “Thus, where there are no institutional interests 18 favoring postponement of review, a petitioner need not satisfy the hardship prong.” Id. Rather, when 19 “there are strong interests militating in favor of postponement,” the “potential hardship of delay” may 20 nevertheless overcome those interests to justify immediate review. Id. Here, both the fitness and 21 hardship factors weigh decisively in favor of the Trustees. 22 23 24 25 26 27 28 3 This case is a far cry from Texas v. United States, where Texas—the declaratory judgment plaintiff — would have had to take several specific actions with respect to a school district in order to present the legal question (about the preclearance provisions of the Voting Rights Act) on which it sought a declaratory judgment. See 523 U.S. at 300. None of the necessary steps had occurred, and Texas could not identify a school district in which they were “currently foreseen or even likely” to occur. Id. In contrast, the City and MRP have identified particular loans, sent out offers backed by threats to seize the loans if the offers are not accepted (they have not been), sought to expand and further the seizure program to include other California municipalities through their JPA effort, and approved the course of action leading to seizure. 11 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB To begin with, passage of a resolution of necessity would not shed any new light on the question 1 2 whether the proposed takings at issue here are constitutionally permissible. The City already has 3 identified the precise loans it intends to take, and there is no question that the loans are held outside 4 Richmond. E.g. Lundberg Decl. ¶¶ 7-8. There also is no question concerning the supposed “public use” 5 for the taking, which the City identified in its July 31 letter as allowing private individuals with 6 underwater loans to “modify” their loans for personal financial benefit—namely, to “reduce principal and 7 avoid foreclosure[].” Id. ¶ 10, Ex. C; see also Pollock Decl. ¶ 4, Ex. 3. And the transfer of the loans to 8 the City has the additional purpose of permitting the City and MRP to profit directly at the expense of the 9 Trusts’ beneficiaries. A resolution of necessity will not further focus this well-defined dispute. Without specifically explaining what might change, Defendants maintain (without evidentiary 10 11 support) that, “[a]bsent a resolution of necessity,” it would be impossible to determine with certainty how 12 the takings will be executed, and what specific “public use” the City will expressly cite for the takings. 13 Brown Dec. Ex. A, at 6, ECF No. 29-2, Sept. 20, 2013. On the contrary, the contemplated takings and 14 their private beneficiaries “are as clear as they are likely to become” (Nat’l Audubon Soc., 307 F.3d at 15 850), however, and Defendants’ insistence on perfect certainty proves too much. If courts applied that 16 approach in every case, the Declaratory Judgment Act would be a dead letter. Declaratory judgments 17 necessarily address contingencies and uncertainties, because the Declaratory Judgment Act “allow[s] 18 potential defendants to resolve a dispute without waiting to be sued.” Sherwin Williams Co. v. Holmes 19 Cnty., 343 F.3d 383, 397 (5th Cir. 2003). It is settled, therefore, that “[t]he mere fact that a declaratory judgment action is brought in 20 21 anticipation of other suits does not require dismissal of the declaratory judgment action by the federal 22 court.” Id. Courts routinely apply that rationale to intellectual property cases, where the settled rule is 23 that a demand letter that threatens an intellectual property holder’s legal interest, and nothing more, 24 creates a prudentially ripe controversy for declaratory judgment purposes.4 That the City is a public body 25 4 26 27 28 E.g., Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358 (Fed. Cir. 2009) (jurisdiction over declaratory claim based on defendant sending two letters to plaintiff seeking “to discuss” a patent); Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479 (Fed. Cir. 1998) (jurisdiction over declaratory claim based on two letters giving manufacturer a reasonable apprehension that it would be sued for inducing infringement); Neil Bros. Ltd. v. World Wide Lines, 396 F. Supp. 2d 340 (E.D.N.Y. 2005) (jurisdiction over declaratory claim based on letter to the manufacturer threatening to use “every resource available” to stop the manufacturer's “wrongdoing”); Electronics for Imaging v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005) 12 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 that has to vote to continue a course it already has endorsed changes nothing in the ripeness analysis. A 2 public university that sends a letter threatening to enforce a patent could not avoid a declaratory judgment 3 action merely because the university’s governing body has to vote before suing. 4 Even if awaiting a resolution of necessity might make the issues marginally more fit for review, 5 the hardship resulting from postponement outweighs those gains. The pressure exerted on the Trustees is 6 a current and continuing harm. The loans in the Trusts remain in jeopardy after the city council 7 reaffirmed its offers to buy at deep discounts (coupled with explicit threats of eminent domain if the 8 Trustees refuse). Dismissal of this action would leave the Trustees without any guidance as to the 9 whether the City’s threats are real. If the Court waits for the city council to pass a resolution of necessity, 10 moreover, the chance for declaratory relief may well be irretrievably lost. A condemnation action almost 11 certainly would follow immediately after the council adopted a resolution, and the City-MRP plan calls 12 for use of the “quick take” procedure that would allow the City to seize the loans before judgment (but 13 after 60 days’ notice) by depositing collateral in escrow. See Pollock Decl., ¶ 7 Ex. 6 at 3. Indeed, MRP 14 has raised $46 million for this purpose. Id. ¶ 12, Ex. 9 at 2. 15 The upshot is that, without a prompt declaratory judgment from this Court, the condemnation 16 actions will commence (and trust property will be taken) before this Court has a chance to pass on the 17 very serious federal constitutional challenges at issue here. Treating the resolution of necessity as a 18 precondition also would encourage gamesmanship on the part of Defendants, who acknowledged at the 19 Wells Fargo hearing that they would make every effort to use parallel state-court litigation to prevent the 20 Trustees from obtaining relief from this Court. Brown Decl. Ex. D, at 20-21, ECF No. 29-5, Sept. 20, 21 2013. See generally Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). 22 Prudential considerations thus weigh strongly in favor of ripeness and a decision on the merits. 23 This case could be positioned for a declaration after relatively limited briefing; the factual issues 24 are not complex, and the Court (if satisfied of its jurisdiction and prudential ripeness) could issue a 25 declaration at whatever time the Court found appropriate. That would most effectively accommodate any 26 lingering prudential concerns. 27 ___________________________ (that the patentee had stated a deadline for the conclusion of negotiations, and the deadline had not yet passed, did not render the plaintiff’s declaratory claim unripe). 28 13 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB C. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 If The Court Finds That The Trustees’ Claims Are Not Prudentially Ripe For An Immediate Declaration, It Should Defer Decision Or Hold The Case In Abeyance. At a minimum, the Court should hold the case in abeyance—or simply defer decision— pending the city council’s adoption of a resolution of necessity. “Prudential ripeness is discretionary, not jurisdictional.” McClung v. City of Sumner, 548 F.3d 1219, 1224 (9th Cir. 2008), abrogated on other grounds, Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (2013); see also Thomas, 220 F.3d at 1142. Thus, to the extent that the Court determines as a discretionary matter not to proceed with the case at this time, it may simply hold this action in abeyance. See, e.g., Am. Petroleum Inst. v. EPA, 683 F.3d 382, 389 (D.C. Cir. 2012) (holding a challenge to an EPA rule prudentially unripe because EPA subsequently issued notice of a proposed rule change, but holding case in abeyance subject to regular status reports by EPA). If the Court is inclined to hold the case in abeyance, it could proceed with briefing on the merits of the declaration. Because the City would act almost immediately after adoption of a resolution of necessity, timely judicial intervention by this Court would be materially assisted by completion of briefing now, with the decision alone held in abeyance. II. IF THE COMPLAINT IS DISMISSED, THE TRUSTEES SHOULD BE GRANTED LEAVE TO AMEND. 17 If the Court nonetheless dismisses the complaint, it should do so without prejudice and with leave 18 to amend. “A district court abuses its discretion by denying leave to amend unless amendment would be 19 futile or the plaintiff has failed to cure the complaint’s deficiencies despite repeated opportunities.” AE v. 20 Cnty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012). The Trustees have not yet substantively amended the 21 Complaint;5 leave to amend is routinely granted in such circumstances, as is leave to amend unripe 22 claims. See, e.g., Franczak v. Suntrust Mortg., Inc., No. 5:12-cv-01453 EJD, 2013 WL 843912, at *4 23 (N.D. Cal. Mar. 6, 2013) (granting leave to amend unripe wrongful foreclosure claim). And amendment 24 would not be futile. The Trustees will address any perceived ripeness deficiencies by alleging facts 25 26 27 28 5 The previous two amended complaints merely named additional trustees as plaintiffs and updated certain factual allegations to account for events occurring after the filing of the previous complaints. Compare Docket No. 1 with Docket No. 6; see also Docket No. 17 at 1 (stipulation between the parties stating that Second Amended Complaint added additional trustees as plaintiffs “and contains other minor revisions”). 14 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 establishing additional effects of Defendants’ activities, including the persisting and confirmed threat of 2 eminent domain, while the authorizing legislation remains in force and the City and MRP take further 3 steps to institute the seizure program. CONCLUSION 4 5 The motion to dismiss should be denied. Respectfully submitted, 6 7 Dated: October 8, 2013 8 9 10 By: /s/ Bronwyn F. Pollock _____ Bronwyn F. Pollock Attorneys for Plaintiffs THE BANK OF NEW YORK Mellon (f/k/a The Bank of New York) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (f/k/a The Bank of New York Trust Company, N.A.), as Trustees for the Trusts listed on Exhibit A of the Second Amended Complaint 11 12 13 14 15 16 17 18 MAYER BROWN LLP DONALD M. FALK BRONWYN F. POLLOCK NOAH B. STEINSAPIR MICHAEL D. SHAPIRO Dated: October 8, 2013 ALSTON & BIRD LLP KURT OSENBAUGH (SBN 106132) kurt.osenbaugh@alston.com WHITNEY CHELGREN (SBN 285362) whitney.chelgren@alston.com 333 South Hope Street, Sixteenth Floor Los Angeles, CA 90071 Tel: 213-576-1000 Fax: 213-576-1100 19 20 21 22 23 24 25 26 27 By: /s/ Kurt Osenbaugh Kurt Osenbaugh Attorneys for Plaintiffs WILMINGTON TRUST COMPANY and WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustees for the Trusts listed in Exhibit C to the Second Amended Complaint JONES DAY BRIAN D. HERSHMAN (SBN 168175) bhershman@jonesday.com 555 South Flower Street, 50th Floor Los Angeles, CA 90071-2300 Tel: 213-489-3939 Fax: 213-243-2539 28 15 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB 1 2 3 4 5 6 7 8 9 Dated: October 8, 2013 JONES DAY MATTHEW A. MARTEL (pro hac vice) mmartel@jonesday.com JOSEPH B. SCONYERS (pro hac vice) jsconyers@jonesday.com 100 High Street, 21st Floor Boston, MA 02110 Telephone: 617-960-3939 Facsimile: 617-449-6999 By: /s/ Brian D. Hershman Brian D. Hershman Attorneys for Plaintiff U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Trusts listed in Exhibit B to the Second Amended Complaint 10 11 12 13 14 15 16 17 18 SIGNATURE ATTESTATION I, Bronwyn F. Pollock, attest that the concurrence in the filing of this Plaintiff’s Opposition to Motion to Dismiss has been obtained from Kurt Osenbaugh and Brian D. Hershman. By: /s/ Bronwyn F. Pollock Bronwyn F. Pollock Attorneys for Plaintiffs THE BANK OF NEW YORK MELLON (f/k/a The Bank of New York) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (f/k/a The Bank of New York Trust Company, N.A.), as Trustees 19 20 21 22 23 24 25 26 27 28 16 PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS; CASE NO. 13-cv-3664-CRB

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