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?

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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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Think

Submitted by lmcshane on Sun, 01/13/2008 - 05:28.

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!

Submitted by Jeff Buster on Sat, 08/29/2009 - 16:16.

 

Cleveland Foreclosure, vacant houses, and eventual abandonment and demolition  – doing what Cleveland knows won’t work while turning down doing what Cleveland knows will work.

 

 
Numerous news organzations reported in late May, 2009 that Federal Judge Sara Lioi dismissed the City of Cleveland lawsuit discussed in the Realneo report above.
 
Judge Lioi , in her 3 page decision, listed 4 reasons why the suit was dismissed (with prejudice).
One of the four reasons Lioi dismissed the suit is because Cleveland did not make any allegation of any specific law (city or state) which the defendant sub-prime handling banks had violated.  
 
Although I applaud Cohen Rosenthal & Kramer for providing their services (in what the City has stated is a no-fee-unless-successful venture - on the other hand boy I'll bet the defendant banks' defense attornys love Mr. Cohen), it seems to me that what the City is doing in pursuing this suit is quite stupid.   
 
For years the City has known that a remedy to houses being abandoned and destroyed in Cleveland was to pass a Point of Sale inspection law.  The City Council discussed passing just such a law in the late 1990’s.   Council, in it’s usual dysfunctional manner (in terms of representing Cleveland’s citizen’s interests) listened to banks, developers, and real estate types and did not pass Point of Sale legislation.  
 
I believe Judge Lioi - a Bush appointee - in her comments that the City had not cited any law being broken - was suggesting that legislation like Point of Sale - wasn't on the books in Cleveland.
 
Now,10 years and 15,000+ vacant/’demolished houses later, Cleveland still won’t do what they know they need to do:   Pass Point of Sale Legislation.  
 
Instead, like someone perverse and demented, the City Law Department, though its spokesperson Robert Triozzi, announced that the City will press on with the law suit, and appeal Judge Lioi to the 6th Circuit.  
 
In a statement to the Litigation Daily, Robert Triozzi, law director for the City of Cleveland, vowed the city would fight on. “Our lawsuit has been about holding those responsible for the damages caused to our neighborhoods accountable for their actions,” he wrote. “That the court chose to absolve these firms  conduct by dismissing our claims is a setback, but just a temporary setback. As we have always stated, we are in this for the long haul. We will continue this fight to the Sixth Circuit Court of Appeals where we believe our legal cause will be vindicated. The City of Cleveland deserves its day in court and we will pursue and defend our rights for as long as it takes.”
 
Cleveland knows the way to stop the pain, yet the City fails to act like an adult.  The City Council has been so direct in their avoidance of doing the right thing for the people of Cleveland, you might almost think there is an intentional plan afoot.   
 
PS:  thanks Judge for reading Realneo!  (just kidding - but then who knows?)