Sayre v. United States
| Decision Date | 17 November 1967 |
| Docket Number | Civ. A. C 66-788. |
| Parties | Maurice M. SAYRE, Trustee in Bankruptcy of the Liberty Mortgage Corporation, Plaintiff, v. The UNITED STATES of America and the City of Cleveland, Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
COPYRIGHT MATERIAL OMITTED
Edwin F. Woodle, Cleveland, Ohio, for plaintiff.
Merle M. McCurdy, U. S. Atty., Dominic J. Cimino, Asst. U. S. Atty., Robert Eliot Easton, Dept. of Justice, Washington, D. C., for the United States of America.
Bronis J. Klementowicz, Law Director, Richard J. Marco, James P. Mancino, Asst. Law Directors, Cleveland, Ohio, for City of Cleveland.
Maurice M. Sayre, trustee in bankruptcy of the Liberty Mortgage Corporation, sues the United States of America and the City of Cleveland for $10,000,000 in damages for loss of income, earnings and property of the plaintiff's bankrupt. As a cause of the losses it is claimed that the defendants acted negligently in the conduct of the University-Euclid Urban Renewal Area Project (which plaintiff sometimes designates as the Hough area project); and it is claimed also that acts and omissions of the defendants in carrying out this urban renewal project constituted a taking of the bankrupt's properties without just compensation in violation of the fourteenth and fifth amendments of the United States Constitution.
Defendant City of Cleveland moves to dismiss the plaintiff's complaint filed November 11, 1966, and his supplement to the complaint filed March 24, 1967. Defendant United States of America moves for summary judgment. Defendant City's motion to dismiss will be first considered.
Defendant City of Cleveland urges that the complaint fails to state a claim against the defendant City of Cleveland within the jurisdiction of this court. It is further urged that the complaint does not allege facts sufficient to constitute a claim upon which relief may be granted against defendant City of Cleveland.
The original complaint includes these statements and claims. Plaintiff's bankrupt, Liberty Mortgage Corporation, an Ohio corporation, owned, managed, and operated residential properties in Cleveland in 1961 and prior years. A substantial number of the properties owned by the bankrupt were in the Hough project area.
In accordance with the Housing Act of 1949 the United States Government made available many millions of dollars for the purpose of aiding municipalities in the intended physical improvement of large areas of such municipalities. A federal urban renewal administration was established to administer and supervise the distribution and use of the federal funds.
The City Planning Commission of Cleveland on January 27, 1961 adopted the University-Euclid General Neighborhood Renewal Plan. On June 14, 1961 the Cleveland City Council enacted Ordinance No. 1338-61, declaring the area incorporated in said project to be a slum, blighted, deteriorated, and deteriorating area of the City of Cleveland; and the ordinance stated that it "was necessary for the health and welfare of the residents of the defendant City." The University-Euclid Urban Renewal Plan, designated as Project No. 1 Ohio R-44 comprises approximately 488 acres of land east of East 105th Street on the east side of Cleveland and about the same number of acres lying to the west of East 105th Street.
It is stated that the University-Euclid plan, adopted by the City of Cleveland and approved and supervised by the United States, contemplated the acquisition by the City of Cleveland of a large number of residences, including many of the properties of the Liberty Mortgage Corporation. Said properties were intended to be acquired by negotiation and voluntary sale if possible, and if not possible then by proceedings instituted in the courts for appropriation of such properties by virtue of the exercise by the City of Cleveland of its power of eminent domain.
Plaintiff alleges that the defendants knew and were fully aware:
that if, by their conduct, they should cause properties to be, and to become and to remain, vacant and unoccupied, that in all probability such unoccupied properties would be promptly and thoroughly vandalized and destroyed.
It is alleged:
By reason of the careless and negligent manner in which said Hough area project was carried out, a large number of properties owned by this plaintiff's bankrupt, and previously occupied and previously producing substantial income, were caused to be vacated and abandoned, and were caused to remain vacated and abandoned, and were caused to be vandalized and destroyed.
It is stated that on July 14, 1961 the defendant City commenced the execution of the Hough project. In furtherance thereof:
said defendant forthwith sent, or caused to be sent, to hundreds of residents and occupants of the project area, including scores of residents and occupants of properties owned by the plaintiff's bankrupt herein, notices to the effect that the defendant City intended to acquire said properties.
It is said that:
said notices were sent out carelessly, hastily and without regard for the rights of the owners of said properties, including plaintiff's bankrupt, and without any regard whatsoever for the actual time at which the defendant City proposed or intended, or in fact took, any action whatsoever for the purpose of, acquiring or even negotiating to acquire the properties occupied by such persons. The sending of such notices under such circumstances constituted a grossly careless and negligent act.
The complaint continues that:
compounding the effect of the careless and negligent conduct of the defendant City set forth * * * said defendant promptly caused to be made prominent and frequent public announcements and publication through all local media of public communication of its intention to appropriate the properties above referred to within the Hough project area, and of its intention to cause the occupants thereof to be removed therefrom, stating to the public generally that such properties were the subject of imminent governmental action in the form of appropriation and rehabilitation by the defendants.
It is further said that:
the defendants proceeded in a careless, inadequate and incompetent manner to acquire in hit and miss fashion small numbers of properties to whose occupants such notices had been sent.
Following up this point it is contended that:
The conduct of the defendants * * * had a fatal and devastating effect upon the business of plaintiff's bankrupt. Although said bankrupt, at the time of the adoption of the Hough area project and up until the date of bankruptcy, was the owner of scores of properties within the project area, dozens of which the defendant City indicated its intention to appropriate, nevertheless at the time the Liberty Mortgage Company was declared bankrupt on the 2nd day of November, 1964 * * * the defendant City had taken steps to acquire not more than twelve of said properties and had completed acquisition of not more than one or two of them.
Another claim relates to the defendant City's alleged refusals to permit repairs. It is recited that:
plaintiff's bankrupt made numerous attempts from time of the adoption and approval of the Hough area plan until the determination of bankruptcy to maintain, to repair and to improve the properties owned by plaintiff's bankrupt in the Hough project area which had not been so thoroughly vandalized as a result of the defendant's described conduct as to be impossible of maintenance.
However, it is claimed that:
in many instances, the defendant City refused applications made by said bankrupt to repair and to improve said properties * * * and that * * the defendant, by such refusal, caused these properties to be further, and in a number of instances entirely, deteriorated.
The complaint charges both defendants with lack of cooperation in the execution of the Hough area project, with failure to maintain streets, sidewalks, disposal of garbage and rubbish, removal of accumulated and deposited litter and debris, adequate and sufficient health, safety, and sanitation of the residents of the project area. It is said that the defendants caused and permitted said project area to remain without adequate and sufficient police protection; and that this negligent conduct directly and proximately caused and contributed to cause vandalism of plaintiff's bankrupt's property within the project area.
Finally, the complaint states that by reason of the defendants' conduct the plaintiff's bankrupt was prevented from and unable to maintain in repair and in good condition its properties within the Hough project area and was deprived of thousands of dollars of income from the properties within the project area, was caused to lose by vandalism, destruction, and decay, a large number of properties in said area, and, resulting directly and proximately from defendants' conduct, was forced into bankruptcy. It is claimed that plaintiff's bankrupt was deprived of all of its assets, of maintaining its income and in fact entirely prevented from earning any income whatsoever, that if said event had not been caused to occur, said bankrupt would have continued to earn hundreds of thousands of dollars annually thereafter as it had earned prior to said bankruptcy, and plaintiff's bankrupt has been damaged in the amount of $10,000,000.
The nature and effect of the supplement to complaint will be considered later.
Plaintiff's original complaint, its fifteen pages here extracted and condensed, undertakes to frame a claim in negligence against the defendant City of Cleveland. It is charged that the sufficiency of the complaint fails. Defendant City urges that the establishment and execution of an urban renewal program even if negligently carried on is a governmental function not actionable under Ohio's rule of sovereign immunity.
Plaintiff, on the contrary, emphasizes that there was no obligation on the...
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