Bank of New York Mellon v. City of Richmond, California et al
Filing
42
REPLY (re 28 MOTION to Dismiss for Lack of Jurisdiction ) Defendants' Reply Memorandum in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction filed byCity of Richmond, California, Gordian Sword LLC, Mortgage Resolution Partners L.L.C., Richmond City Council. (Brown, Eric) (Filed on 10/11/2013)
1 STEPHEN P. BERZON (SBN 46540)
SCOTT A. KRONLAND (SBN 171693)
2 STACEY M. LEYTON (SBN 203827)
ERIC P. BROWN (SBN 284245)
3
Altshuler Berzon LLP
4 177 Post Street, Suite 300
San Francisco, CA 94108
5 Tel: (415) 421-7151
Fax: (415) 362-8064
6 E-mail: sberzon@altber.com
Attorneys for Defendants City of Richmond, Richmond
7
City Council, Mortgage Resolution Partners LLC and
8 Gordian Sword LLC
WILLIAM A. FALIK (SBN 53499)
9 BRUCE REED GOODMILLER (SBN 121491)
City Attorney
100 Tunnel Rd
10 CARLOS A. PRIVAT (SBN 197534)
Berkeley, CA 94705
Assistant City Attorney
Tel: (510) 540-5960
11 CITY OF RICHMOND
Fax: (510) 704-8803
450 Civic Center Plaza
E-mail: billfalik@gmail.com
12
Richmond, CA 94804
Attorney for Defendants
Mortgage Resolution Partners LLC
13 Telephone: (510) 620-6509
Facsimile: (510) 620-6518
and Gordian Sword LLC
14 E-mail: bruce_goodmiller@ci.richmond.ca.us
Attorneys for Defendants City of Richmond and
15
Richmond City Council
16
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
17
18 THE BANK OF NEW YORK MELLON (f/k/a The
Bank of New York) and THE BANK OF NEW
19 YORK MELLON TRUST COMPANY, N.A. (f/k/a
The Bank of New York Trust Company, N.A.), as
20 Trustees; U.S. BANK NATIONAL ASSOCIATION,
21 as Trustee; and WILMINGTON TRUST COMPANY
and WILMINGTON TRUST, NATIONAL
22 ASSOCIATION, as Trustees,
23
24
Plaintiffs,
Case No. CV-13-3664-CRB
REPLY IN SUPPORT OF MOTION TO
DISMISS FOR LACK OF SUBJECT
MATTER JURISDICTION
Date: Friday, November 1, 2013
Time: 10:00 a.m.
Judge: Honorable Charles R. Breyer
Courtroom 6, 17th Floor
v.
CITY OF RICHMOND, CALIFORNIA, a
25 municipality; RICHMOND CITY COUNCIL;
26 MORTGAGE RESOLUTION PARTNERS LLC, a
Delaware limited liability company; and
27 GORDIAN SWORD LLC, a Delaware limited
liability company,
28
Defendants.
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
TABLE OF CONTENTS
2
3
TABLE OF AUTHORITIES...........................................................................................................ii
4 ARGUMENT ..................................................................................................................................1
5
I.
Article III Requirements Apply To Declaratory Judgment Actions .......................1
6
II.
Exercising Jurisdiction Would Be Inconsistent With Separation of
Powers .....................................................................................................................3
III.
8
The Offer Letters Do Not Render the Banks’ Claims Ripe or Confer
Standing...................................................................................................................6
9
A.
The Banks Mischaracterize the Offer Letters..............................................6
10
B.
The City Council Did Not Vote to Exercise Eminent Domain
Power...........................................................................................................7
C.
The Banks’ Uncertainty Does Not Confer Standing ...................................7
7
11
12
IV.
13
The Banks’ Claims Are Also Prudentially Unripe ..................................................8
A.
Additional Factual Development is Necessary to Resolve the
Claims .........................................................................................................8
B.
The Claims Can Be Decided Later, If Necessary......................................10
14
15
16
V.
The Banks Should Not Be Granted Leave to Amend............................................11
17 CONCLUSION .............................................................................................................................11
18
19
20
21
22
23
24
25
26
27
28
i
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
2 Cases
TABLE OF AUTHORITIES
Page(s)
3 99 Cents Only Stores v. Lancaster Redevelopment Agency,
237 F. Supp. 2d 1123 (C.D. Cal. 2001).................................................................................5, 6
4
Aetna Life Ins. Co. v. Haworth,
5
300 U.S. 227 (1937) ..............................................................................................................1, 4
6 Anaheim Redevelopment Agency v. Dusek,
193 Cal.App.3d 249 (1987) .......................................................................................................3
7
8 ASARCO Inc. v. Kadish,
490 U.S. 605 (1989) ..................................................................................................................5
9
Associated General Contractors of America v. City of Columbus,
10
172 F.3d 411 (6th Cir. 1999) .....................................................................................................4
11 City of Mesquite v. Aladdin’s Castle, Inc.,
455 U.S. 283 (1982) ..................................................................................................................6
12
13 In re Coleman,
560 F.3d 1000 (9th Cir. 2009) ...............................................................................................1, 4
14
Flast v. Cohen,
15
392 U.S. 83 (1968) ....................................................................................................................3
16 Freedom to Travel Campaign v. Newcomb,
82 F.3d 1431 (9th Cir. 1996) .....................................................................................................2
17
18 FrontierVision Operating Partners, L.P. v. Town of Naples, Maine,
No. 01-16-P-DMC, 2001 WL 220192 (D. Me. Mar. 7, 2001) ..................................................4
19
Gator.com Corp. v. L.L. Bean, Inc.,
398 F.3d 1125 (9th Cir. 2005) ...................................................................................................1
20
21 Gilbertson v. Albright,
381 F.3d 965 (9th Cir. 2004) ...................................................................................................11
22
Grosset v. Wenaas,
23
42 Cal.4th 1100 (2008)..............................................................................................................5
24
Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc.,
896 F.2d 1542 (9th Cir. 1989) ...................................................................................................2
25
26 Jean v. Nelson,
472 U.S. 846 (1985) ..................................................................................................................9
27
Lujan v. Defenders of Wildlife,
28
504 U.S. 555 (1992) ..................................................................................................................2
ii
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
M&A Gabaee v. Community Redevelopment Agency of City of L.A.,
419 F.3d 1036 (9th Cir. 2005) .................................................................................................10
2
Maryland Casualty Co. v. Pacific Coal & Oil Co.,
312 U.S. 270 (1941) ..................................................................................................................4
3
4 McChord v. Cincinnati, N.O. & Texas Pacific Railway Co.,
183 U.S. 483 (1902) ..............................................................................................................4, 7
5
MedImmune, Inc. v. Genentech, Inc.,
6
549 U.S. 118 (2007) ..................................................................................................................1
7
Middlesex County Ethics Commission v. Garden State Bar Association,
457 U.S. 423 (1982) ................................................................................................................10
8
9 National Audubon Society, Inc. v. Davis,
307 F.3d 835 (9th Cir. 2002) .....................................................................................................8
10
New Orleans Water Works Co. v. City of New Orleans,
11
164 U.S. 471 (1896) ..........................................................................................................3, 4, 7
12 Raines v. Byrd,
521 U.S. 811 (1997) ..................................................................................................................8
13
14 Rolfe v. California Transportation Commission,
104 Cal.App.4th 239 (2002)..................................................................................................4, 5
15
Santa Cruz County Redevelopment Agency v. Izant,
16
37 Cal.App.4th 141 (1995)....................................................................................................3, 7
17 Scott v. Pasadena Unified School District,
306 F.3d 646 (9th Cir. 2002) ...........................................................................................2, 9, 10
18
19 Texas v. United States,
523 U.S. 296 (1998) ..................................................................................................................2
20
Yahoo! v. La Ligue Contre Le Racisme Et L’Antisemitisme,
21
433 F.3d 1199 (9th Cir. 2006) ...................................................................................................4
22 Statutes
23 Cal. Code Civ. Proc. § 1255.410(b) ..............................................................................................10
24
25
26
Cal. Pub. Res. Code § 5096.27........................................................................................................5
Cal. Sts. & High. Code § 103.5 .......................................................................................................5
Other Authorities
27
United States Constitution, Art. III..................................................................................................5
28
iii
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
2
ARGUMENT
3
The Banks identify no meaningful grounds on which to distinguish this case from the
4 related case of Wells Fargo Bank v. City of Richmond, Case No. 13-03663-CRB, which the Court
5 already dismissed for lack of subject matter jurisdiction. The Banks concede that the government
6 action they challenge – the City of Richmond’s use of eminent domain authority – cannot occur
7 unless the Richmond City Council adopts a resolution of necessity. Opposition to Motion to
8 Dismiss (“Opp.”) at 7. The Banks concede that no such resolution has been adopted. Opp. at 9
9 (asserting that there are no contested facts). As such, there is no Article III “case or controversy,”
10 so this case must also be dismissed.
11
I.
12
The Banks argue that their claim for declaratory relief somehow renders their suit ripe and
Article III Requirements Apply To Declaratory Judgment Actions
13 confers standing. But the Wells Fargo plaintiffs sought declaratory relief, see Complaint, Doc. 1,
14 filed Aug. 7, 2013, in Wells Fargo, Case No. 13-03663-CRB, and the Wells Fargo plaintiffs
15 pointed this out in opposition to the motion to dismiss their lawsuit, see id., Doc. 46, at 9. The
16 Declaratory Judgment Act is not an exception to Article III. See MedImmune, Inc. v. Genentech,
17 Inc., 549 U.S. 118, 126-27 (2007) (“[T]he phrase ‘case of actual controversy’ in the [Declaratory
18 Judgment] Act refers to the type of ‘Cases’ and ‘Controversies’ that are justiciable under Article
19 III.” (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)); Gator.com Corp. v. L.L.
20 Bean, Inc., 398 F.3d 1125, 1129 (9th Cir. 2005) (“The limitations that Article III imposes upon
21 federal court jurisdiction are not relaxed in the declaratory judgment context.”).
22
The Banks rely on In re Coleman, 560 F.3d 1000 (9th Cir. 2009), Opp. at 4, for the general
23 authority of courts to issue declaratory judgments, but the Banks omit the relevant sentence in the
24 Ninth Circuit’s opinion: “Where a dispute hangs on ‘future contingencies that may or may not
25 occur,’ . . . it may be too ‘impermissibly speculative’ to present a justiciable controversy.”
26 Colman, 560 F.3d at 1005 (quoting Clinton v. Acequia, Inc., 94 F.3d 568, 572 (9th Cir. 1996), and
27 Portland Police Ass’n v. City of Portland, 658 F.2d 1272, 1273 (9th Cir. 1981)).
28
1
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
As Defendants explained in their motion, the Court relied upon that principle in dismissing
2 the Wells Fargo case: “Ripeness of these claims does not rest on contingent future events certain
3 to occur, but rather on future events that may never occur.” Mot. at 4 (quoting Brown Decl. Exh. G
4 (Order) at 1:22-23); see also Texas v. United States, 523 U.S. 296, 300 (1998) (“A claim is not ripe
5 for adjudication if it rests upon ‘contingent future events that may not occur as anticipated, or
6 indeed may not occur at all.’” (quoting Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568,
7 580-81 (1985))); Freedom to Travel Campaign v. Newcomb, 82 F.3d 1431, 1441 (9th Cir. 1996)
8 (“The mere possibility that [an official] may act in an arguably unconstitutional manner . . . is
9 insufficient to establish the real and substantial controversy required to render a case justiciable
10 under Article III.” (quoting W. Mining Council v. Watt, 643 F.2d 618, 627 (9th Cir. 1981)).
11
The Banks’ suggestion that the Article III requirements of ripeness and standing somehow
12 carry less force in declaratory judgment actions has long since been put to rest by the Supreme
13 Court. In Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the Supreme Court held that a
14 plaintiff seeking a declaratory judgment lacked standing when the alleged injury might never
15 occur, observing that, if not “actual,” an injury must be at least “imminent” to confer standing, id.
16 at 560, and that, “[a]lthough ‘imminence’ is concededly a somewhat elastic concept, it cannot be
17 stretched beyond its purpose, which is to ensure that the alleged injury is not too speculative for
18 Article III purposes – that the injury is ‘certainly impending.’” Id. at 564 n.2 (emphasis in original)
19 (quoting Whitmore v. Arkansas, 495 U.S. 149, 158 (1990)); see also Scott v. Pasadena Unified
20 School District, 306 F.3d 646, 658 (9th Cir. 2002) (same). If the alleged injury depends upon the
21 outcome of a legislative process, then it is not “certainly” impending.
22
The Banks cite Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542 (9th
23 Cir. 1989), for the proposition that one purpose of the Declaratory Judgment Act is to “relieve
24 potential defendants from the ‘Damoclean threat’ of impending litigation . . . ,” Opp. at 4 (quoting
25 Hal Roach Studios, 896 F.2d at 1555). But, in that case, the Ninth Circuit was absolutely clear
26 that, “[n]evertheless, the party seeking relief must still satisfy the ‘case or controversy’
27 requirement.” 896 F.2d at 1555. Here, no litigation is “impending” because the occurrence of
28 litigation depends on legislative action that may never occur.
2
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1
II.
2
A. Like the Wells Fargo plaintiffs, the Banks fail to confront the fundamental separation-
Exercising Jurisdiction Would Be Inconsistent With Separation of Powers
3 of-powers problem with their claims. Article III’s limitations on jurisdiction are not based merely
4 on a policy interest in avoiding potentially unnecessary work for the federal courts – such that the
5 courts might make occasional exceptions and review the constitutionality of legislative proposals
6 that seem likely to become law. Rather, limitations on jurisdiction also “define the role assigned
7 to the judiciary in a tripartite allocation of power to assure that the federal courts will not intrude
8 into areas committed to the other branches of government.” Flast v. Cohen, 392 U.S. 83, 95
9 (1968). The federal courts cannot treat the legislative process as a meaningless formality. Rather,
10 the courts must respect the legislative process as likely to separate good proposals from bad
11 proposals and legal proposals from illegal proposals. Judicial review by unelected judges is a last
12 resort that may occur only when a proposal becomes law. Otherwise, “the courts will pass the line
13 that separates judicial from legislative authority.” New Orleans Water Works Co. v. City of New
14 Orleans, 164 U.S. 471, 481 (1896); see also Flast v. Cohen, 392 U.S. at 96 (“[T]he rule against
15 advisory opinions implements the separation of powers prescribed by the Constitution and confines
16 federal courts to the role assigned them by Article III.”).
17
Contrary to the Banks’ assertion, see Opp. at 9, entertaining their claims now certainly
18 would interfere with the City Council’s exercise of its legislative power, as this Court already
19 recognized in dismissing the Wells Fargo case. See Santa Cruz Cnty. Redevelopment Agency v.
20 Izant, 37 Cal.App.4th 141, 150 (1995) (“[T]he resolution of necessity is a legislative act.”);
21 Anaheim Redevelopment Agency v. Dusek, 193 Cal.App.3d 249, 260 (1987) (“[T]he decision to
22 condemn . . . property [presents] ‘a fundamental political question’”; “These considerations are
23 inherently legislative.”). City Council members take oaths of office just like judges and the
24 decision whether a legislative proposal would be consistent with the law is, in the first instance, a
25 decision for legislators to make. Thus, the Supreme Court has held unequivocally that the federal
26 courts may not interfere “by any order, or in any mode” before a city council acts in a legislative
27 capacity. New Orleans Water Works, 164 U.S. at 481. The Supreme Court in New Orleans Water
28 Works held not only that federal courts cannot issue an order directly precluding a city council
3
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 from taking legislative action, but also that federal courts lack jurisdiction until “when the city
2 council shall pass an ordinance.” Id. at 482; see also id. at 481 (“If an ordinance be passed . . . the
3 jurisdiction of the courts may then be invoked.” (emphasis supplied)). The claim in New Orleans
4 was exactly like the claim here in that the plaintiff alleged it would suffer injury from an allegedly
5 unconstitutional ordinance that had not yet been passed; the Supreme Court held dismissal of the
6 case was required.1
7
The Banks do not cite a single case in which a federal court entertained a challenge to the
8 legality of a legislative act prior to that act being adopted. The cases cited by the Banks all concern
9 contingencies other than legislative action. See Opp. at 7-8 (citing Steffel v. Thompson, 415 U.S.
10 452 (1974) (challenge to criminal statute prior to prosecution); Maryland Cas. Co. v. Pac. Coal &
11 Oil Co., 312 U.S. 270 (1941) (insurance company seeking declaration of potential liability prior to
12 insured being found liable for accident); Aetna Life Ins., 300 U.S. 227 (insurance company seeking
13 declaration of potential liability prior to insured seeking disability payments); Coleman, 560 F.3d
14 1000 (individual seeking declaration of whether student loan was dischargeable prior to discharge);
15 Yahoo! v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006)
16 (challenge to enforceability of injunction issued by foreign court prior to party seeking
17 enforcement). As the Court observed at the September 12 hearing on Defendants’ motion to
18 dismiss the Wells Fargo case, the formulation and potential passage of a resolution of necessity is a
19 function of the democratic process. The requirements of Article III ensure that the democratic
20 process is permitted to play out before the federal courts step in.
21
B.
The Banks offer Rolfe v. California Transportation Commission, 104 Cal.App.4th 239
22 (2002), for the proposition that courts can consider challenges to the exercise of eminent domain
23 ___________________________________
1
Other cases make the same point. See, e.g., McChord v. Cincinnati, N.O. & Tex. P. Ry. Co., 183
U.S. 483, 496-97 (1902) (federal courts lack jurisdiction before the legislative action has occurred;
24
“[t]he fact that . . . the legislative action threatened may be in disregard of constitutional constraints
25 . . . does not affect the question” (citation, internal quotation marks omitted)); Associated Gen.
Contractors of Am. v. City of Columbus, 172 F.3d 411, 415 (6th Cir. 1999) (“The New Orleans
26 Court made clear that the role of the court is to intervene, if at all, only after a legislative enactment
has been passed.”); FrontierVision Operating Partners, L.P. v. Town of Naples, Maine, No. 01-1627 P-DMC, 2001 WL 220192, at *7 (D. Me. Mar. 7, 2001) (“Unless and until the defendant enacts an
ordinance . . . this court may not consider an application for injunctive relief . . . concerning such
28 an ordinance.”).
4
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 authority prior to adoption of a resolution of necessity. Opp. at 9-10. Reliance on that case is
2 misplaced for two obvious reasons.
3
First, the Article III requirements of ripeness and standing did not apply to the state court in
4 Rolfe, rendering the decision meaningless here. See ASARCO Inc. v. Kadish, 490 U.S. 605, 617
5 (1989) (“We have recognized often that the constraints of Article III do not apply to state courts,
6 and accordingly the state courts are not bound by the limitations of a case or controversy or other
7 federal rules of justiciability . . . .”), Grosset v. Wenaas, 42 Cal.4th 1100, 1117 (2008) (“[A]rticle
8 III of the federal Constitution does not apply in state courts.”).
9
Second, the word “ripeness” was used in Rolfe not in the context of whether the plaintiffs’
10 claim was justiciable but only colloquially in referring to whether the court should consider a
11 particular legal argument raised by the defendant. The case involved a dispute about the proper
12 interpretation of a state statute providing that property acquired through use of State grant funds be
13 used “only for the purpose for which the state grant funds were requested and that no other use of
14 the area shall be permitted except by specific act of the Legislature.” Cal. Pub. Res. Code
15 § 5096.27. The plaintiff argued that the defendant agency could not move forward with a project
16 that required it to condemn park land acquired with State grant funds for the purpose of converting
17 that land to a non-park use. One of the arguments the defendant agency raised in response was that
18 another state statute provided that, “‘[s]ubject to [California eminent domain law], the real property
19 which [the agency] may acquire by eminent domain, or otherwise, includes any property dedicated
20 to park purposes, however it may have been dedicated.’” Rolfe, 104 Cal.App.4th at 245 (emphasis
21 omitted) (quoting Cal. Sts. & High. Code § 103.5). It was in that context that the plaintiff
22 contended that the defendant’s argument was not “ripe” for consideration because no resolution of
23 necessity had been adopted, and so the court should not have considered the argument; in that
24 context, the court rejected the plaintiff’s creative “ripeness” argument, putting the word “ripe” in
25 quotes to show that it was being used in a colloquial sense. Id. at 245-46. In sum, the decision had
26 nothing to do with justiciability of the plaintiff’s claim.
27
C. Like the plaintiffs in the Wells Fargo case, the Banks also rely on 99 Cents Only
28 Stores v. Lancaster Redevelopment Agency, 237 F. Supp. 2d 1123 (C.D. Cal. 2001). But, as
5
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 Defendants already demonstrated in their briefing in Wells Fargo, the defendant public agency in
2 99 Cents Only had passed two resolutions of necessity authorizing condemnation of the property.
3 Id. at 1126-27. The issue in 99 Cents Only was not ripeness but mootness, because the resolutions
4 were rescinded in response to litigation. Id. at 1127. The district court reasoned that a defendant
5 arguing mootness must demonstrate that “the allegedly wrongful behavior cannot reasonably be
6 expected to recur,” id. (quoting FTC v. Affordable Media LLC, 179 F.3d 1228, 1238 (9th Cir.
7 1999)), and thus repeal of a law does not necessarily render a pending challenge to the law moot,
8 id. at 1128. In this case, by contrast, no resolution of necessity ever has been adopted, or may ever
9 be adopted, and thus the question is not whether “allegedly wrongful behavior” will recur because
10 no “allegedly wrongful behavior” occurred in the first place.2
11
III.
12
The Banks point to offer letters sent by the City offering to purchase certain mortgage loans
The Offer Letters Do Not Render the Banks’ Claims Ripe or Confer Standing
13 as creating an Article III “case or controversy,” Opp. at 5, but the letters are identical to those
14 received by the plaintiffs in the Wells Fargo action. Further, the letters are clear that the City has
15 not decided whether to exercise eminent domain power if a voluntary sale cannot be negotiated.
16 Lundberg Decl. Exh. C (Letter) (“. . . in the event that . . . the City decides to proceed with the
17 acquisition of the Loans through eminent domain . . .”).
18
A.
19
The Banks Mischaracterize the Offer Letters
The Banks do not accurately describe the offer letters and attached generic eminent domain
20 pamphlet. The Banks assert that these materials indicate that “the City would ‘either file an
21 eminent domain action in a court’ or ‘promptly notify’ the Trustees of its intent to ‘abandon its
22 intention to acquire the property.’” Opp. at 2. In fact, the pamphlet states, “the City of Richmond
23 may . . . file an eminent domain action . . . or it may decide to abandon its intention to acquire the
24 property. If the City of Richmond abandons its intention to acquire, it will promptly notify you.”
25
___________________________________
26
27
2
The mootness inquiry is very different from the standing/ripeness inquiry because standing and
ripeness are assessed at the outset of the case and, once a court has jurisdiction, a defendant
ordinarily cannot moot the case by voluntary cessation of its actions. City of Mesquite v.
Aladdin’s Castle, Inc., 455 U.S. 283, 288-89 (1982).
28
6
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 Lundberg Decl. Exh. C (Pamphlet) (emphases added). That the City has not notified the Banks
2 that the City has abandoned its intent to acquire the mortgage loans does not mean that eminent
3 domain authority will be exercised; it means that no decision has been made.
4
5
B.
The City Council Did Not Vote to Exercise Eminent Domain Power
The Banks also try to make something out of the failure of a recent motion made at a City
6 Council meeting to rescind the offer letters. See Opp. at 3, 4, 5, 6 and 7. But a legislative proposal
7 that does not pass is no act at all. The Banks cite no authority for the proposition that a
8 legislature’s rejection of a proposal is tantamount to an affirmative endorsement of its converse.
9 Nor does the proposition make sense, because motions fail for many reasons. The bottom line is
10 that the City Council has not voted to authorize an eminent domain action or even scheduled a
11 public hearing about whether to adopt a resolution of necessity; any attempt to predict what may
12 happen in the future is simply reading tea leaves. In fact, it would be a “gross abuse of discretion”
13 for the City Council to “irrevocably commit[] itself to the taking of the property regardless of the
14 evidence presented” at a public hearing, Izant, 37 Cal.App.4th at 149, so the City Council cannot
15 possibly make a decision about the use of eminent domain power prior to such a hearing. The most
16 recent action by the City Council on the underwater mortgages issue was to approve a motion to
17 move forward with the formation of a Joint Powers Authority with other cities to address the issue,
18 see Doc. 68, Wells Fargo, Case No. 13-03663-CRB; Exh. 1, Sept. 12, 2013 Hearing, Wells Fargo,
19 Case No. 13-03663-CRB, so even a reader of tea leaves would likely conclude that future work on
20 this issue may be done by a not-yet-formed JPA, not by the City the Banks have sued.
21
22
C.
The Banks’ Uncertainty Does Not Confer Standing
Although the Banks claim that they are suffering “harm” from the uncertainty about what
23 the City may do in the future, that does not confer the court with jurisdiction over the Banks’
24 claims. There are always proposals being considered in legislatures that may have an impact upon
25 particular business interests, and it makes no difference for purposes of the Court’s jurisdiction that
26 a plaintiff contends that a particular proposal would be unconstitutional. See New Orleans Water
27 Works, 164 U.S. at 481 (“If an ordinance be passed . . . the jurisdiction of the courts may then be
28 invoked.” (emphasis added)); McChord, 183 U.S. at 496-97 (federal courts lack jurisdiction before
7
REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 the legislative action has occurred; “[t]he fact that . . . the legislative action threatened may be in
2 disregard of constitutional constraints . . . does not affect the question” (citation, internal quotation
3 marks omitted)).
4
Uncertainty as to whether a prospective legislative action would be consistent with the
5 Constitution is not a cognizable injury sufficient to confer standing; otherwise every individual
6 potentially affected by as yet undefined legislation (i.e., everyone) would have standing and the
7 requirement would be rendered meaningless. To establish standing “[a] plaintiff must allege
8 personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be
9 redressed by the requested relief.” Raines v. Byrd, 521 U.S. 811, 818 (1997) (quoting Allen v.
10 Wright, 468 U.S. 737, 751 (1984) (internal quotation marks omitted)). The Banks do not argue that
11 the offer letters themselves are illegal or that any “allegedly unlawful conduct” has yet occurred,
12 nor do they allege any injury other than inevitable and universal uncertainty as to the outcome of
13 an incomplete legislative process. Accordingly, the Banks fail to meet either the ripeness or
14 standing requirements of Article III.
15
IV.
16
The Banks claims would have to be dismissed for prudential ripeness reasons even if the
The Banks’ Claims Are Also Prudentially Unripe
17 claims satisfied the requirements of Article III. Prudential ripeness requires consideration of two
18 factors: “(1) whether the issues are fit for judicial resolution and (2) the potential hardship to the
19 parties if judicial resolution is postponed.” Nat’l Audubon Soc., Inc. v. Davis, 307 F.3d 835, 850
20 (9th Cir. 2002). Neither factor weighs in favor of review.
21
22
A.
Additional Factual Development is Necessary to Resolve the Claims
Additional factual development will not only “aid resolution” of the Banks’ claims, but is
23 absolutely necessary to the Court’s full consideration of the issues presented. Unlike in National
24 Nat’l Audubon Society, the legal arguments are not “as clear as they are likely to become,” id. at
25 850, 857. The Banks falsely assert that “[t]he City already has identified the precise loans it
26 intends to take.” Opp. at 12. But the Richmond City Manager has made absolutely clear that no
27 final decision has been made whether to initiate a condemnation proceeding, or if all of the loans
28 for which the City made offers would be included in such an action. Doc. 33, Wells Fargo, Case
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Case No. CV-13-3664-CRB
1 No. 13-03663-CRB (Lindsay Decl. ¶22) (“If the City were to determine that no public purpose
2 would be served by condemning certain loans identified in the offer letters, no such action will be
3 taken with respect to those loans.”). The Court cannot assess the Banks’ claims until the City
4 identifies which loans (if any) it intends to acquire by means of its eminent domain power. For
5 example, many of the Banks’ merits arguments are premised on the speculation that the City will
6 condemn performing loans. See Second Amended Complaint ¶¶2, 5, 6, 42-48, 59, 63, 66, 86-87,
7 110, 127, 139-40. But the Banks acknowledge that some of the loans which the City offered to
8 purchase are non-performing. Id. ¶43.
9
Moreover, the Banks falsely assert that “[t]here also is no question concerning the supposed
10 ‘public use’ for the taking,” and characterize the supposed “public use” as benefiting individual
11 homeowners. Opp. at 12. In fact, the Richmond City Manager is exploring the acquisition of
12 underwater loans to write down principal, and therefore avoid foreclosures, as one potential tool to
13 address the numerous economic and social ills plaguing the City as a result of the mortgage
14 foreclosure crisis, not to benefit individual homeowners. Doc. 33, Wells Fargo, Case No. 1315 03663-CRB (Lindsay Declaration ¶¶5-18). The City Council, if it considers a resolution of
16 necessity, might take a different view from the Banks on the issue of “public use.” At this point all
17 the Banks or anyone else can do is speculate. The Banks ask this Court to speculate as to what
18 public use could be served by such a program, and to pass judgment on the hypothetical rationale
19 they propose, rather than let the legislative process play out and then, should it be necessary,
20 address the public use actually identified by the City Council.
21
The Banks also overlook the strong policy interest in avoiding unnecessary constitutional
22 adjudications. See Jean v. Nelson, 472 U.S. 846, 854 (1985) (“Prior to reaching any constitutional
23 questions, federal courts must consider nonconstitutional grounds for decision.” (quoting Gulf Oil
24 Co. v. Bernard, 452 U.S. 89, 99 (1981)). Any resolution of necessity would be subject to challenge
25 on state law grounds, such as those the Banks themselves raise in their Seventh Cause of Action,
26 and those arguments would logically be considered first, before reaching constitutional issues. Yet
27 such state-law grounds cannot be considered in the absence of a resolution of necessity.
28
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Case No. CV-13-3664-CRB
1
In fact, the Ninth Circuit’s decision in Scott, which Banks cite, shows the inadequacy of the
2 Banks’ prudential ripeness argument. In that case, parents brought state and federal constitutional
3 claims challenging aspects of a school district’s admissions lottery. The Ninth Circuit reasoned
4 that “[t]he prudential considerations of ripeness are amplified where constitutional issues are
5 concerned,” 306 F.3d at 662, and observed that “[t]he Supreme Court has neatly instructed that the
6 jurisdiction of the federal courts to hear constitutional challenges should be exercised only when
7 ‘the underlying constitutional issues [are tendered] in clean-cut and concrete form,’” id. (quoting
8 Rescue Army v. Mun. Ct. of L.A., 331 U.S. 549, 584 (1947)). The Ninth Circuit went on to explain
9 that the case before it was “woefully unfit for adjudication” because the challenged aspects of the
10 policy had not yet been implemented. Id. at 662-64. Thus, in Scott the Ninth Circuit held that the
11 claims were unripe even though the challenged policy had been articulated. By contrast, in this
12 case the challenged action has not been defined, much less put into practice.
13
14
B.
The Claims Can Be Decided Later, If Necessary
The Banks’ plea of hardship if the Court dismisses their case makes no sense. The Banks
15 argue that “without a prompt declaratory judgment from this Court, the condemnation actions will
16 commence (and trust property will be taken) before this Court has a chance to pass on the very
17 serious federal constitutional challenges at issue here.” Opp. at 13. To the contrary, there would
18 be months between the adoption of a resolution of necessity and an order granting the City
19 possession of property. Even a so-called “quick take” requires a motion with at least 60 days
20 notice. Cal. Code Civ. Proc. § 1255.410(b).
21
The Banks’ real argument is that, while they would have ample time to sue in federal court
22 after adoption of a resolution of necessity, the federal court might abstain in deference to state
23 court proceedings. That is not a hardship. The Supreme Court has rejected the proposition that
24 there is any hardship associated with litigating federal claims in state court. See Middlesex Cnty.
25 Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 431 (1982) (“Minimal respect for the state
26 processes, of course, precludes any presumption that the state courts will not safeguard federal
27 constitutional rights.”); see also M&A Gabaee v. Comm. Redevelopment Agency of City of L.A.,
28 419 F.3d 1036, 1039 n.2 (9th Cir. 2005) (“[Plaintiff] will have an opportunity to litigate its
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REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
1 constitutional claims in state court. California law permits [plaintiff] to challenge the taking based
2 not only on California state standards, but also on ‘[a]ny other ground provided by law.’” (citing
3 Cal. Civ. P. Code § 1250.360(h)). Moreover, federal courts do not abstain if the plaintiff can show
4 that abstention would cause hardship. See Gilbertson v. Albright, 381 F.3d 965, 975 (9th Cir.
5 2004) (abstention is appropriate only when the state forum “afford[s] the federal plaintiff an
6 adequate opportunity to present his federal constitutional challenges.”).
7
V.
8
The Court concluded in dismissing the Wells Fargo case without leave to amend that the
The Banks Should Not Be Granted Leave To Amend
9 plaintiffs could not allege any facts that would make their case Article III justiciable. The same is
10 true here, so dismissal should be without leave to amend.
11
12
CONCLUSION
For the foregoing reasons, the Court should dismiss this action.
13 Dated: October 11, 2013
14
15
16
17
18
19
20
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Respectfully submitted,
/s/ Eric P. Brown
Eric P. Brown
Stephen P. Berzon
Scott A. Kronland
Stacey M. Leyton
Eric P. Brown
Altshuler Berzon LLP
Attorneys for Defendants
City of Richmond and
Mortgage Resolution Partners LLC
23
Bruce Reed Goodmiller
Carlos A. Privat
City of Richmond
24
Attorneys for Defendant City of Richmond
25
William A. Falik
22
26
27
Attorney for Defendant
Mortgage Resolution Partners LLC
28
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REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Case No. CV-13-3664-CRB
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