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)

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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 8 REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION 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 9 REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION 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 10 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 21 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 11 REPLY IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION Case No. CV-13-3664-CRB

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