Chrp v. Deutsche Bank Trust Co.

Decision Date26 March 2009
Docket NumberCase No. 1:08-CV-3003.
Citation606 F.Supp.2d 698
PartiesCLEVELAND HOUSING RENEWAL PROJECT, Plaintiff, v. DEUTSCHE BANK TRUST COMPANY, et al., Defendants.
CourtU.S. District Court — Northern District of Ohio

Thomas C. Wagner, Roger W. Van Deusen, Van Deusen & Wagner, Kermit J. Lind, Cleveland, OH, for Plaintiff.

Barbara Friedman Yaksic, Brittany L. Griggs, James S. Wertheim, McGlinchey Stafford, Hugh E. McKay, Tracey L. Turnbull, Tracy A.S. Francis, Porter Wright Morris & Arthur LLP, Michael F. Cosgrove, City of Cleveland, Cleveland, OH, Elizabeth A. Frohlich, Jami Wintz McKeon, Morgan, Lewis & Bockius, San Francisco, CA, for Defendants.

OPINION & ORDER

JAMES S. GWIN, District Judge:

Plaintiff Cleveland Housing Renewal Project ("CHRP") moves this Court to remand this action to state court. [Doc 5-2.] Defendants Deutsche Bank Trust Company, Deutsche Bank National Trust Company, Deutsche Fargo Bank National Trust Company, Deutsche Bank Trust Company Americas (collectively, "Defendants") oppose. [Doc. 12-1.] CHRP named the City of Cleveland as a Defendant in the state-court action. Defendant City of Cleveland does not oppose remand.

To resolve this motion for remand, this Court must decide whether the CHRP could have brought this action in federal court. 28 U.S.C. § 1441(a). CHRP says that it could not have brought this action in federal court because (1) its claim fails to meet the constitutional Article III standing requirements, U.S. CONST. art. III, § 2, cl. 1, and the court-made prudential-standing requirements, see Am. Canoe Ass'n, Inc. v. City of Louisa Water & Sewer Comm'n, 389 F.3d 536, 544 (6th Cir.2004); and (2) its action does not satisfy the requirements for diversity-of-citizenship jurisdiction, 28 U.S.C. § 1332. CHRP has additionally requested that this Court abstain from hearing this action because it involves an important matter of local public concern. See Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943).

To determine whether CHRP has standing, the Court must decide whether CHRP, as an organization, has suffered a sufficiently concrete injury-in-fact. See Am. Canoe, 389 F.3d at 544. To determine whether this Court has diversity-of-citizenship jurisdiction, the Court must decide (1) whether the City of Cleveland's primary purpose in this litigation is aligned with CHRP such that the Court should realign the City as a Plaintiff; and (2) whether CHRP's action more likely than not states a claim for relief for more than $75,000. To decide whether abstention is appropriate, this Court must balance the state and federal interests in these claims bearing in mind that "[t]his balance only rarely favors abstention." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 728, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996).

As will be explained below, this Court holds that CHRP has standing to bring this claim, that this claim satisfies the requirements for diversity-of-citizenship jurisdiction, but that abstention is appropriate. Accordingly, this Court REMANDS this action to state court.

I. Background Facts and Procedure

CHRP is an Ohio nonprofit corporation and its "principal corporate goal [is] the improvement and renewal of housing and economic conditions in the City of Cleveland." [Doc. 1-3 at 4.] CHRP sued the Deutsche Bank Defendants, which "hold[] title . . . to 25 . . . vacant properties . . . located in or near Cleveland." [Doc. 1-3 at 2-3.]1 CHRP also sued the City of Cleveland because it "may have or claim to have some interest" in the 25 properties. [Doc. 1-3 at 5.] In brining this suit, CHRP complained that Defendants activities threaten the progress and improvement of Cleveland area neighborhoods. [Doc. 1-3 at 3.]

In its Complaint, CHRP sought relief under Ohio Revised Code section 3767.41 ("Public Nuisance Statute") and under the common law of nuisance as outlined in Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 768 N.E.2d 1136, 1141-1143 (2002) (holding plaintiff had stated a claim for common-law nuisance against gun-manufacturer defendants for "their ongoing conduct of marketing, distributing, and selling firearms in a manner that facilitated their flow into the illegal market").

In its statutory public nuisance claims, CHRP asked the state court to (1) declare 25 properties owned by Defendants in the Cleveland area a public nuisance as defined in O.R.C. section 3767.41(A)(2); (2) order Defendants to abate the nuisance or demolish the properties; and (3) enjoin the Defendants from conveying title of the properties. [Doc. 1-3 at 4.] CHRP said that the properties were "each in [a] post foreclosure death spiral: vacancy → boarded windows and doors → break-ins and vandalism → theft of the home's assets (copper, aluminum, iron) → haven for criminal activity decrease in neighborhood housing values." [Doc. 1-3 at 4.]

In its common-law public-nuisance claim, CHRP asked the state court to "declare as [p]ublic [n]uisance the business practices" of Defendants. [Doc. 1-3 at 6 (emphasis in original).] The thrust of this business-practices-as-nuisance claim is that (1) Defendants purchase foreclosed homes with (2) no intention to bring the foreclosed homes up to housing codes and (3) sell the homes before bringing the homes into compliance with housing codes. [Doc. 1-3 at 7-9.]

Defendants removed to this Court, saying that the Court had subject-matter jurisdiction based on diversity of citizenship. [Doc. 1-1.] Responding, CHRP said that, (1) it lacks both Article III and prudential standing to bring this action; (2) the Court lacks diversity jurisdiction because the City of Cleveland is nondiverse and the amount in controversy is less than $75,000; and (3) the Court should abstain from hearing the action because the case involves important and local state-law issues and Ohio has expressed a preference to have this case heard in a specialized housing court.

In resolving this motion, this Court will first outline the legal standard governing adjudication of removal and then address each of CHRP's three arguments in turn. Because of CHRP's preference for state court and the Defendants' preference for federal court, the parties are making unusual arguments: CHRP, the plaintiff, is saying that it has not claimed a sufficient injury to satisfy the standing requirements and the Defendants are saying that they have indeed caused a sufficient injury to CHRP.

II. Motion to Remand

While CHRP is technically the moving party in the motion to remand, the "party seeking removal bears the burden of establishing its right thereto." Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989) (citations omitted). Additionally, "[t]he removal petition is to be strictly construed, with all doubts resolved against removal." Id. (citations omitted).

A defendant bears this high burden because of concern for comity and fairness. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-109, 61 S.Ct. 868, 85 L.Ed. 1214 (1941) ("The power reserved to the states under the Constitution to provide for the determination of controversies in their courts, may be restricted only by the action of Congress in conformity to the Judiciary Articles of the Constitution. Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined.") (citations and internal quotation omitted); 14B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, WRIGHT & MILLER § 3721 (noting the risk of "exposing a state-court plaintiff whose case has been removed to the possibility that he will win a final judgment in federal court, only to have it determined that the court lacked a proper basis for removal jurisdiction requiring him to return to state court").

Under this standard, this Court now examines CHRP's three arguments for removal.

III. Standing Analysis

"It is black-letter law that standing requirements come in two flavors: first, . . . the irreducible Article III minimum of an injury in fact, fairly traceable to the conduct of the defendants, and redressible by a favorable judicial decision; and second, prudential requirements-i.e., self-imposed ... limits on the federal judicial power." Am. Canoe, 389 F.3d at 544 (citations omitted).

Before addressing whether CHRP's action meets the Article III or prudential-standing requirements, this Court will first outline the basic principles that underlie these two sets of standing requirements.

III.A. Policy Considerations that Underlie Standing Requirement

Standing requirements prevent courts from overstepping their constitutionally defined role and ensure the efficient functioning of the adversary system.

In addressing courts' proper constitutionally defined role, the Supreme Court has recently said that the Article III "case-or-controversy limitation is crucial in maintaining the tripartite allocation of power set forth in the Constitution." Daimler-Chrysler Corp. v. Charlotte Cuno, 547 U.S. 332, 341, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) (citations and internal quotations omitted). The Sixth Circuit has also recently explained that courts "must be silent in disputes best left to the political arena," Prime Media, Inc. v. City of Brentwood, 485 F.3d 343, 354 (6th Cir. 2007) (citing Luther v. Borden, 48 U.S. (7 How.) 1, 12 L.Ed. 581 (1849)), and that courts "must turn away cases which would result in advisory opinions," id. (citing Plant v. Spendthrift Farm, Inc. 514 U.S. 211, 115 S.Ct. 1447, 131 L.Ed.2d 328 (1995)).

This case does not involve the separation-of-powers concerns the Supreme Court identified in Charlotte Cuno. See 547 U.S. at 341, 126 S.Ct. 1854. This is an action by a private actor seeking to hold another private actor responsible for a public nuisance. This is not a case where a private actor asks this...

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