City of Cincinnati v. Deutsche Bank National Trust Co.

After the 2008 financial crisis, many banks foreclosed on many properties used to secure the underlying loans. According to the City of Cincinnati, Wells Fargo adopted a policy of violating local and state property regulations when the cost of compliance outweighed the value that could be recouped through the resale of a foreclosed property. The city claimed the violations created a common law public nuisance that lowered property tax revenues, increased police and fire expenses, and added other administrative costs. The parties resolved claims arising from any individual code violations and associated fines attached to properties named in the complaint. The district court rejected the city’s claim as a matter of law. The Sixth Circuit affirmed. The economic-loss doctrine forecloses the claim for damages for a qualified public nuisance under Ohio law. The doctrine bars tort plaintiffs from recovering purely economic loss that “do[es] not arise from tangible physical injury” to persons or property. Absent allegations of an intentional nuisance or an inherently dangerous context, the city cannot pursue an absolute nuisance claim. The city did not identify specific nuisance properties and offered no evidence that the alleged “policy” of selective non-compliance with health and safety codes will inevitably result in a public nuisance. View "City of Cincinnati v. Deutsche Bank National Trust Co." on Justia Law