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Lawsuit against Richmond’s eminent domain plan dismissed

on September 16, 2013

Richmond notched a victory in its effort to use eminent domain to seize underwater mortgages on Monday, as a federal court dismissed a lawsuit filed by Wells Fargo and Deutsche Bank against the city.

U.S. District Judge Charles Breyer wrote that the case is not “yet ripe for adjudication.” In other words, the banks can’t sue the city for something it hasn’t done yet.

The lawsuit challenged the constitutionality of using eminent domain to seize more than 600 underwater mortgages from banks and mortgage companies in order to help homeowners refinance. The proposal aims to prevent foreclosures and stabilize neighborhoods, but banks argue that it could set a dangerous precedent.

Judge Breyer chose to dismiss the case instead of granting a stay because it is uncertain that Richmond will ever actually use eminent domain to seize the homes.

“Ripeness of these claims does not rest on contingent future events certain to occur, but rather on future events that may never occur,” Breyer wrote in his decision. “Because there is no point at which it will be determined that Plaintiffs’ claims are not ripe and will never become ripe, the matter could linger in abeyance for an indefinite period of time. Under these circumstances, a stay is not appropriate.”

The ruling did not come as much of a surprise, as Breyer questioned the timing of the suit at a hearing on Friday.

Lawyers representing the city and its financial partner, Mortgage Resolution Partners, characterized the lawsuit as an attempt to intimidate Richmond lawmakers as well as other cities considering similar measures.

“Because it was so clear that this lawsuit was not ripe and could not be filed in federal court, the only purpose would seem to be to intimidate or pressure legislators,” said Stacey Leyton of Altshuler Berzon, the law firm representing Richmond.

In July, Richmond officials sent letters to 32 mortgage companies offering to purchase 624 mortgages for less than their market value. If the banks refuse to sell, the city is threatening to use eminent domain to seize them.

Richmond City Manager Bill Lindsay says he is still hopeful that the mortgage holders will be willing to negotiate and sell the city the loans.

“Any time we prevail in court, we’re happy, and this was no exception,” said Lindsay. “We are still hopeful that we can implement the program without ever using eminent domain through negotiation with the lenders.”


  1. Juan Reardon on September 16, 2013 at 9:07 pm

    Richmond 2, Wall Street 0
    (even though they purchased bates. Booze and Rogers)

  2. Charles Fetters on September 17, 2013 at 1:28 pm

    The Mayor and the city council members are going to put the Richmond into bankruptcy.
    What the city should be doing on behalf of the homeowners, is use their bank of lawyers to sue all 32 mortgage lenders for defrauding the homeowners in the beginning.
    The several years ago invited the major banks to encourage the homeowners to apply for low interest loans, the event was held at the civic center. Then within a few months families were moving into Richmond buying homes with low down payments, low interest rates. I know because our neighborhoods changed drastically. The city of Richmond, like many cities and counties are constantly telling the citizens they are lacking taxes to operate the police departments, schools, and other public services. This because the county recorders offices failed to collect the recording fees each and every time the banks securitized the mortgage notes.
    So the city needs to go to the county recorders and search the records to establish the millions of dollars the banks failed to pay on each and every mortgage note recorded. This is money that was stolen from the taxpayers by the banks. This is what other counties and cities are doing nationwide. Forcing the banks to pay up.
    We have just stopped our 41st foreclosure on our home. I have learned how the complete process the banks have used to steal and defraud all cities, counties, and homeowner over the past five years, and still doing so.
    The Mayor is on the wrong track trying to save the homeowners.
    I must mention the investors the city plans to use to perform this miracle are the same bankster crooks that got the homeowners in this nightmare.

  3. […] crisis in Richmond, California and the debate over “eminent domain”World Socialist Web SiteRichmond Confidential -Kitsap Peninsula Business Journalall 13 news […]

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