City of Cincinnati v. Deutsche Bank Nat'l Trust Co.

Decision Date02 May 2012
Docket NumberCase No. 1:12-cv-104
PartiesCity of Cincinnati, Plaintiff, v. Deutsche Bank National Trust Co., et al, Defendants.
CourtU.S. District Court — Southern District of Ohio
ORDER

Before the Court is Plaintiff's motion to remand this case to state court. (Doc. 27) The Defendants oppose the motion (Doc. 33), and contemporaneously filed a motion to realign the parties. (Doc. 34) Both of these motions are fully briefed and ready for decision. Further briefing on the Defendants' motions to dismiss (Docs. 38, 40 and 41) has been stayed pending the Court's decision on remand. For the following reasons, the Court concludes that the motion to remand will be denied.

FACTUAL BACKGROUND

The City of Cincinnati filed its complaint against Deutsche Bank and several related entities, Wells Fargo Bank, and the Treasurer of Hamilton County, Ohio in the Ohio common pleas court on December 21, 2011. (Doc. 18) The City amended its complaint a few weeks later, and then filed a second amended complaint in this Court on February 17, 2012. (Doc. 29) The City generallyseeks injunctive and declaratory relief and money damages against the Defendant banks, alleging that they have engaged in "unlawful public nuisance property maintenance business practices" within the City. The operative complaint initially alleges that Defendants unlawfully

... decide whether or not to comply with state and local property maintenance laws based solely on the economics associated with the particular property they own. Thus, in some neighborhoods in the City, the banks routinely ignore state and local property maintenance laws because compliance with these laws requires the banks to expend funds they do not expect to recover. If doing so does not provide an economic benefit, Deutsche Bank and Wells Fargo will not comply with the law. This unlawful public nuisance business practice leads directly to blighted public nuisance properties in the City and systematically privatizes economic gain (to the benefit of Deutsche Bank and Wells Fargo) and socializes economic loss (to the detriment of the City and its citizens).

(Doc. 29, paragraph 1) The City brings several claims for damages under sections of the Cincinnati Municipal Code; state law statutory and common law public nuisance claims which also seek remediation orders; a claim for intentional interference with the City's fiduciary responsibilities to its citizens; and a claim for punitive damages.

Defendants timely removed the case, asserting that diversity jurisdiction exists among the City and the non-resident Defendant banks because the County Treasurer should be realigned as a plaintiff, as its interests are fully aligned with those of theCity. Alternatively, Defendants assert that the County Treasurer is a nominal party and/or was fraudulently joined, and his citizenship should be disregarded in determining the propriety of jurisdiction over this action. (Doc. 1)

Defendants concede that this Court remanded a similar case brought by the City against these Defendants. See Cincinnati v. Deutsche Bank Nat. Trust, et al, Case No. 1:08-cv-888, Doc. 23, Order of February 10, 2009 remanding to state court. But Defendants rely on the decision in Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554 (6th Cir. 2010), raising similar claims against several Deutsche Bank entities and which was decided after this Court's prior remand order. The Sixth Circuit affirmed the district court's decision to realign the City of Cleveland, named as a defendant in that case, finding that the City's interests were not adverse to the plaintiff's with respect to the main issue in the lawsuit, whether the defendants were liable under nuisance law for foreclosed and abandoned properties.

In support of removal, Defendants also assert that they were involved in the City's prior state court case from the time it was remanded in February 2009 until August 2011, when the City voluntarily dismissed its claims without prejudice. During that time, the City did not seek any relief against the County Treasurer, and the County did not appear or defend the action inany meaningful way. Defendants note that the City's complaint in this case similarly makes no claim against the County Treasurer, and merely alleges that there may be county tax liens against properties the City contends are nuisances.

Defendants also contend that any "hypothetical" adverse interest that may arise between the City and the County with respect to a nuisance claim could only ripen if the City were successful in prosecuting that claim with respect to any of the identified properties, and if there were in fact delinquent property taxes or county assessments on any of those properties. Defendants submit that at the time of removal, only a few of the 419 properties identified in exhibits to the City's complaint were owned by any of the Deutsche Bank entities or Wells Fargo.1 None of those few properties had any county tax delinquencies, based on information obtained from the county auditor's website. (Doc. 1 at ¶18)

The City has moved to remand, arguing that the Treasurer of Hamilton County is a properly named defendant because the County is a statutory "interested party" to its nuisance claims, and under Ohio law must be joined in this action. It relies on thisCourt's conclusion to that effect in the order remanding its prior lawsuit. It alleges that many of the properties identified in its complaint are in fact delinquent in property taxes, citing the Treasurer's answer to its complaint which generally states that taxes, assessments, and other charges are due against properties identified in the City's complaint. (Doc. 21) The City argues that the Sixth Circuit's decision in CHRP v. Deutsche Bank is distinguishable, because the plaintiff in that case was a non-profit community development corporation operating within the City of Cleveland, and that CHRP and Cleveland shared an interest in blight abatement. That is not the case with respect to the City of Cincinnati and Hamilton County, the City contends, because the county has not enacted legislation targeting property maintenance and is not actively prosecuting remediation efforts in the city. With regard to the handful of properties Defendants claim have no tax liens against them, the City responds that Exhibits B and C to its complaint identify properties at issue, but that the complaint also alleges:

Exhibits B and C necessarily cannot include noncompliant properties hereinafter acquired by Deutsche Bank and Wells Fargo. This information will become available through discovery and the City will supplement its exhibits as necessary. The prospective properties are within the scope of this [complaint] because they implicate Deutsche Bank's and Wells Fargo's public nuisance business practices that proximately cause the creation and perpetuation of public nuisance properties. Other noncompliant propertiescurrently owned by the banks may not yet be known to the City because of the time lag (several weeks to several months) within which new ownership information becomes available from the Hamilton County Auditor.

(Doc. 29, Second Amended Complaint at ¶19) The City essentially argues that the parties are in the same position they were in when this Court remanded the prior lawsuit.

In their combined response and motion to realign the County Treasurer (Docs. 33 and 34), Defendants again contend that the Sixth Circuit's decision in CHRP v. Deutsche Bank requires a different result. They also contend that the undisputed evidence (see Doc. 35, Exhibit C, certified copies of tax statements from the County Auditor's office showing no delinquencies for eight parcels titled in Defendants' names) shows that the County Treasurer is not an "interested party." And unlike the situation before this Court in 2008, when the extent of the County's interests in the City's claims were unsettled, Defendants note many efforts undertaken by the County in the past two years to combat blight, some in conjunction with the City. They alternatively contend that the Court should treat the Treasurer as a nominal party, a dispensable party under Rule 21, or find that the Treasurer was fraudulently joined.

As the parties seeking removal, Defendants have the burden of establishing the existence of federal jurisdiction. "The removal petition is to be strictly construed, with all doubtsresolved against removal." Her Majesty the Queen v. Detroit, 874 F.2d 332, 339 (1989), citing Wilson v. USDA, 584 F.2d 137, 142 (6th Cir. 1978). A "nominal" party is one who has no real and substantial interest in the action or is a mere stakeholder. Its citizenship may be disregarded in determining jurisdiction. See Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461 (1980). To determine if the City's joinder of the County Treasurer is improper or fraudulent, the Court must determine if the City has "at least a colorable cause of action" against the County under Ohio law. Jerome-Duncan, Inc. v. Auto-By-Tel, LLC, 176 F.3d 904, 907 (6th Cir. 1999). Any disputes or ambiguities concerning the applicable state law are resolved in favor of the City as the non-removing party. Alexander v. EDS Corp., 13 F.3d 940, 949 (6th Cir. 1994).

There is no dispute that the City's claims for money damages arising under the Cincinnati Municipal Code, and its claims of intentional interference and for punitive damages, do not seek any relief against the County. The City contends that the heart of its complaint, as was the case with its 2008 lawsuit, is the nuisance claims. As the Court's prior remand order noted, an Ohio nuisance complainant is required to serve all "interested parties," specifically defined as "any owner, mortgagee, lienholder, tenant, or person that possesses an interest of record in any property that becomes subject to the jurisdictionof a court pursuant to this section ...". Ohio Rev. Code §3767.41(A)(4). If the property owner refuses to abate...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT