City of Cincinnati v. Deutsche Bank National Trust Co.

897 F. Supp. 2d 633, 2012 WL 4829372, 2012 U.S. Dist. LEXIS 146703
CourtDistrict Court, S.D. Ohio
DecidedOctober 10, 2012
DocketCase No. 1:12-cv-104
StatusPublished
Cited by4 cases

This text of 897 F. Supp. 2d 633 (City of Cincinnati v. Deutsche Bank National Trust Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Cincinnati v. Deutsche Bank National Trust Co., 897 F. Supp. 2d 633, 2012 WL 4829372, 2012 U.S. Dist. LEXIS 146703 (S.D. Ohio 2012).

Opinion

ORDER

SANDRA S. BECKWITH, Senior District Judge.

Before the Court are motions to dismiss filed, respectively, by Defendants Deutsche Bank National Trust Company, Deutsche Bank Trust Company Americas, and Deutsche Bank AG (Doc. 40); Deutsche Bank National Trust Company as Trustee, and Deutsche Bank Trust Company Americas as Trustee (Doc. 41); and by Wells Fargo Bank, N.A. and Wells Fargo Bank, N.A. as Trustee (Doc. 38). Plaintiff, the City of Cincinnati, has filed its opposition memoranda (Docs. 53, 54, 55), and the Defendants have filed replies (Docs. 57, 58, 56).

For the following reasons, the Court will grant in part and deny in part the motions.

FACTUAL BACKGROUND

The City of Cincinnati originally filed a complaint against the Deutsche Bank enti[636]*636ties, 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, after Defendants removed the case to this Court, filed a second amended complaint. (Doc. 29) That operative complaint generally seeks injunctive and declaratory relief and damages against the Defendant banks, alleging that as owners of residential properties, they have engaged in “unlawful public nuisance property maintenance business practices” within the City. The complaint preliminarily asserts that the 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 further alleges that the Defendants own properties as trustees of various residential mortgage-backed trusts. Exhibits B and C to the complaint contain a list of these “nuisance properties” that the City alleges were owned by the Deutsche Bank entities and Wells Fargo, respectively, when the complaint was filed. These exhibits identify the property address, some purchase and sale date information, the type of code violation citations, and unpaid amounts assessed under several City ordinances. The City asserts that it cannot identify other noncompliant properties that the Defendants may have acquired after it filed its complaint, but alleges that those properties are also “... within the scope of this Amended Complaint because they implicate [Defendants’] public nuisance business practices that proximately cause the creation and perpetuation of public nuisance properties.” (Doc. 29, ¶ 19) These properties are vacant “problem buildings” that have been the subject of orders, citations, and violation notices from the City because they fail to meet minimum required property standards. Despite being notified of these deficiencies and summoned to appear in enforcement actions, Defendants have failed to respond. The City notes that in City of Cleveland v. Wash. Mut. Bank, 125 Ohio St.3d 541, 929 N.E.2d 1039 (2010), the Ohio Supreme Court held that corporate defendants, against whom the City of Cleveland filed misdemeanor complaints based on housing code violations, may not be tried in absentia by local courts even if the defendants fail or refuse to appear to answer the complaints. This ruling limits the Cincinnati’s options in pursuing its claims against these Defendants. Moreover, due to the extremely fluid nature of the property market and the role of mortgage servicers with respect to the individual properties, the City (and even the Defendants, in some instances described in the complaint) cannot identify the actual owner of some of these properties on any given day.

The City further alleges that it has attempted to communicate with Defendants regarding the nuisance properties to no avail. Eighty-one of the identified Deutsche Bank-owned properties, and 54 [637]*637of the Wells Fargo-owned properties, are vacant but Defendants have not obtained the required Vacated Building Maintenance License from the City. Several of the properties became so dilapidated that the City paid to demolish them. As part of their ongoing business practices, Defendants have sold many of these properties in “as is” condition to investors or speculators, many from out of state, for extremely depressed prices and without disclosing the true condition of and the outstanding violations filed against the properties.

The City’s complaint asserts five claims for damages under several sections of the Cincinnati Municipal Code (Counts 1-5); statutory public nuisance claims that seek a remedial order concerning the properties (Counts 6-7); common law claims alleging that Defendants’ business practices, and the specific properties owned by Defendants, are public nuisances (Counts 8-9); a claim for a declaratory judgment under Ohio law (Count 10); a claim that Defendants have intentionally interfered with the City’s fiduciary public trust duties owed to its citizens (Count 11); and a claim for punitive damages (Count 12).

Defendants removed the case on the basis of diversity jurisdiction. This Court granted Defendants’ motion to realign the Hamilton County Treasurer, finding that its interests were not adverse to the City’s claims. Because complete diversity existed among the realigned parties, this Court denied the City’s motion to remand. (Doc. 51) All of the Defendants now seek dismissal on a variety of grounds.

ANALYSIS

I. Standard of Review

Defendants’ motions are brought under Fed. R. Civ. Proc. 12(b)(6), and argue that the City’s complaint fails to state a claim upon which relief may be granted against any of them. In reviewing a motion to dismiss, the Court accepts the well-pleaded factual allegations of the complaint. The complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2). A claim will survive if the allegations are “... enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true.” Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir.2008), citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). And in Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme Court reaffirmed Twombly and held that a complaint must allege facts that, if accepted as true, state a plausible claim for relief.

II. The Nonr-Trustee Deutsche Bank Entities Motion (Doc. 40)

Deutsche Bank National Trust Company (DBNTC), Deutsche Bank Trust Company Americas (DBTCA), and Deutsche Bank AG (DBAG), all named individually as Defendants, filed a joint motion to dismiss.

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897 F. Supp. 2d 633, 2012 WL 4829372, 2012 U.S. Dist. LEXIS 146703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-cincinnati-v-deutsche-bank-national-trust-co-ohsd-2012.