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ATTNY COHEN AND CLEVELAND SUE WALL STREET BANKS - WAS SUB-PRIME DISASTER PREDICTABLE?Submitted by Jeff Buster on Sat, 01/12/2008 - 20:49.
On Friday January 11, 2008 Cleveland, Ohio Mayor Frank Jackson announced that the City was filing suit against 21 banks/financial firms. The suit alleges that the defendants created a public nuisance in Cleveland. The alleged nuisance was created through issuances of thousands of “sub-prime” loans which are alleged by the City to have caused the abandonment, vacancy, and subsequent demolition of thousands of Cleveland residential buildings.
There is no doubt that the City of Cleveland is self destructing, but is Cleveland's plight legally the fault of the for-profit, sub-prime pushing corporate banks? . The suit was brought by Joshua Cohen, a partner with Cohen Rosenthal & Kramer LLP. The firm will not recover any fees from the City unless/until they are successful. (this could be another problem - if Cohen Rosenthal & Kramer did prevail, what is the contingency fee they would recover? 1/3rd? Hourly? How does this offer of pro-bono services (pending success) fit with the public bidding laws?
Now I am all for holding the financial firms/banks responsible for property they own/have foreclosed on in Cleveland. But I don’t think that the lawsuit, as filed, will prevail.
Here’s why I believe the suit will fail - and I post this not to trash the City’s chances, but to improve the claim against the banks. Forewarned is forearmed.
Self help, is a legal doctrine.
One of the doctrines’ tenants is that no one can recover damages from a harm which they are/were aware of but made no effort to avoid.
If you see a trench which isn’t barricaded in the sidewalk and you intentionally/ knowingly walk into the trench and break your clavicle when you could have walked around the trench - you have not exercised self help. As a reasonable consequence, a suit to recover damages would be rejected.
The upshot is if you know there is a hazard, and you take no steps to avoid the hazard -and, in fact - allow yourself to be injured by the hazard, you have no claim to damages.
That is the situation with the City of Cleveland and the alleged sub-prime mortgage damage to the City. Cleveland, about 1999, discussed establishing point of sale building code inspections - with escrow accounts held to cover the cost of building code violations. That’s how it is done today in Shaker Heights (and was done in Shaker in 1999).
But the Cleveland City Council, with pressure from builders and developers in Cleveland, rejected “point of sale” legislation, and the ensuing residential building foreclosure dilapidation disaster took over in Cleveland. For the sake of comparison with Cleveland, you can ask the City of Shaker Heights how many homes they will be demolishing this year. Instead of demolition, Shaker repairs “nuisance’ properties. This year Shaker will address 44 “nuisance” homes, using State provided bond money, and putting the cost of the repairs back on the property as a tax lien, and avoiding the demolition which is pervading Cleveland.
So how can Cleveland prevail in it’s just-filed “nuisance” sub-prime suit when the defendant banks can point out that Cleveland knew there was a danger to it’s housing stock from that stock deteriorating as they were flipped from bank to sub-prime borrower and back to foreclosing bank - and instead of passing “point of sale” legislation, the City of Cleveland gave into builders and developer’s lobbying.
Atty. Cohen, you need to anticipate this defense by the banks. Perhaps you can amend your suit.
What amendments and different claims would strengthen this suit?
Best of luck!
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For the sake of comparison with Cleveland, you can ask the City of Shaker Heights how many homes they will be demolishing this year. Instead of demolition, Shaker repairs “nuisance’ properties.
Thank you Jeff--There is an underlying scam going on here with the push for demolitions. It needs to be investigated and no one is touching it.How can Cleveland prevail in it’s just-filed “nuisance” sub-prime suit when the defendant banks can point out that Cleveland knew there was a danger to it’s housing stock from that stock deteriorating as they were flipped from bank to sub-prime borrower and back to foreclosing bank - and instead of passing “point of sale” legislation, the City of Cleveland gave into builders and developer’s lobbying.
--How many of those now empty lots have for sale signs on them as investment firms move in to sell the land cleared at the taxpayer's expense?
--How is the city pursuing remibursement for these taxpayer paid demolitions?
--How many demolitions have been reimbursed?
--Who is benefitting here?
--Where do these people live?
Cleveland Foreclosure /bandonment – doing what won’t work!