Federal Court Dismisses Second Challenge To California City's Eminent Domain Plan

Eminent Domain

On November 6, the U.S. District Court for the Northern District of California dismissed without prejudice as not yet ripe for determination a suit by investors seeking to preempt a California city’s plan to use its eminent domain authority to seize certain mortgages. Bank of N.Y. Mellon v. City of Richmond, No. 13-cv-3664-CRB, slip op. (N.D. Cal. Nov. 6, 2013). The court described the suit as “nearly identical” to one the court dismissed in September. Wells Fargo Bank, N.A. v. City of Richmond, No. 13-3663, slip op. (N.D. Cal. Sept. 16, 2013). The court held that the investors’ claims are not ripe under Article III considerations, explaining that allowing the parties to intervene before the city formally implements the program by actually attempting to use its eminent domain power to seize a loan would stretch the role of the judiciary beyond what is reasonable to maintain judicial efficiency. The court was not persuaded by the investor’s argument that, unlike in the prior dismissed action, the investors here requested and briefed declaratory relief, which should be subject to a relaxed standard. Further, the court held the claims are not ripe under a prudential doctrine, reasoning that (i) the case is not fit for review because an actual dispute has not yet materialized and is dependent on a factual scenario that may never play out, and (ii) the investors face no imminent, irreparable harm.