Articles Posted in US Court of Appeals for the Sixth Circuit

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Oakes filed a Chapter 7 bankruptcy petition in 2013, including Franklin, Ohio real property, valued at $160,000. PNC holds a mortgage lien on the property, which was filed in 2003. That mortgage lien was not executed in accordance with the Ohio law; Oakes’ signatures were not acknowledged before a notary public. In 2013, Ohio Rev. Code 1301.401(C) was enacted, providing that “Any person contesting the validity or effectiveness of any transaction referred to in a public record is considered to have discovered that public record and any transaction referred to in the record as of the time that the record was first filed with the secretary of state or tendered to a county recorder for recording.” The Chapter 7 Bankruptcy Trustee sought to avoid the PNC mortgage because it was not properly recorded. In the meantime, the Ohio Supreme Court held that O.R.C. 1301.401 applied to all recorded mortgages and acts to provide constructive notice of a recorded mortgage, even if that mortgage was deficiently executed. The bankruptcy court denied PNC’s motion for judgment, finding that the statutory constructive notice had no effect on a trustee’s avoidance powers as a judicial lien creditor. The Bankruptcy Appellate Panel and Sixth Circuit affirmed. A bankruptcy trustee may avoid a deficiently executed mortgage when acting as a judicial lien creditor. View "Harker v. PNC Mortgage Co." on Justia Law

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Saginaw, Michigan requires owners of vacant property to register their property. The registration form says that owners must permit the city to enter their property if it “becomes dangerous as defined by the City of Saginaw Dangerous Building Ordinance.”. Several property owners refused to register. The city imposed a fine. Claiming they had no obligation to consent to unconstitutional searches of their property, the owners filed suit. The Sixth Circuit affirmed the dismissal of the suit. The registration form and the ordinance, as implemented by the city, only ask for something that the Fourth (and Fourteenth) Amendment already allows—a warrantless search of a building found to be dangerous. The court noted the safeguards the ordinance provides before a property is declared dangerous. Because the registration form requires the property owner to allow entrance to his property only after a fair administrative process determines the building is dangerous, it does not require the waiver of any Fourth Amendment rights. View "Benjamin v. Stemple" on Justia Law

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In 2000, Ann Arbor passed an ordinance requiring certain homeowners to undergo structural renovations to their homes to alleviate stormwater drainage problems affecting the city and surrounding areas. The city paid or reimbursed the homeowners for the renovations. In 2014, homeowners affected by the ordinance sued in Michigan state courts, alleging that the city’s actions amounted to a taking without just compensation under the Michigan Constitution; they filed an “England Reservation” in an attempt to preserve federal takings claims for subsequent adjudication. The homeowners lost in state court and then filed suit in federal court, citing the Fifth Amendment and 42 U.S.C. 1983. The district court dismissed the Fifth Amendment claim as issue precluded and the section 1983 action as claim precluded. The Sixth Circuit affirmed. The court did not address whether Michigan law is coextensive with federal law. If the takings jurisprudence of the two constitutions is coextensive, then issue preclusion bars subsequent litigation of the federal takings claims after litigation of the state takings claims. If the takings jurisprudence of the two constitutions is not coextensive, then claim preclusion bars subsequent litigation of the federal takings claim because it should have been brought with the state claim in the first instance in the Michigan court. View "Lumbard v. Ann Arbor" on Justia Law

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Robert died in July 2015, owing a mortgage amount of $113,358.12 on his Detroit home; the monthly mortgage payments. For five months following his death, the mortgage went unpaid. Bayview Loan Servicing sent a delinquency notice to the home in December 2015, showing an unpaid balance of $5,813.95. In November 2016, Bayview foreclosed and purchased the home by sheriff’s deed at public auction. Bayview sold the home to Tran. In May 2017, Robert’s estate filed a complaint, alleging four causes of action against Bayview, including lack of standing to foreclose under the Garn-St. Germain Depository Institutions Act of 1982, 12 U.S.C. 1701j-3 and MICH. COMP. LAWS 445.1626. The district court held that the Garn-St. Germain Act does not authorize a private right of action and did not apply to the’ claims. The Sixth Circuit vacated, concluding that the district court lacked jurisdiction to hear the case because the federal statute does not create a cause of action, and the federal issue nested inside the state law cause of action is not substantial. View "Estate of Cornell v. Bayview Loan Servicing, LLC" on Justia Law

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Evendale property owners who wanted to rent their properties had to obtain a permit by allowing the building commissioner to inspect the property or sign a sworn affirmation that the property complied with the code. The commissioner also could inspect structures if he suspected a violation. If the building was occupied, the commissioner was to present credentials and request entry. For unoccupied structures, the commissioner was to make a reasonable effort to locate the owner and ask to inspect. Should someone refuse entry, the commissioner could use “remedies provided by law.” Vonderhaar owns 13 rental properties, over half of Evendale's rental homes. Vonderhaar filed a purported class action under the Fourth Amendment, claiming the code authorized warrantless searches, and the Fifth Amendment, claiming the code required permit applicants to attest to compliance. The district court granted a preliminary injunction, concluding that the inspection procedures facially violated the Fourth Amendment. Evendale subsequently amended its code to allow owners applying for rental permits to “[p]rovide a written certification” from an architect or engineer attesting that a building meets Village standards and adding that when a commissioner suspects a violation, the commissioner may “seek a search warrant based on probable cause.” The Sixth Circuit vacated the injunction for lack of standing. The Village never relied on the code to conduct a warrantless search and the plaintiffs have no risk of impending injury. View "Vonderhaar v. Village of Evendale" on Justia Law

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Tennessee Valley Authority (TVA) operates the coal-fired electricity-generating Gallatin Fossil Plant on a part of the Cumberland River called Old Hickory Lake, a popular recreation spot. The plant supplies electricity to approximately 565,000 households in the Nashville area but generates waste byproducts, including coal combustion residuals or coal ash. The plant disposes of the coal ash by “sluicing” (mixing with lots of water) and allowing the coal ash solids to settle unlined man-made coal ash ponds adjacent to the river. The plant has a permit to discharge some coal combustion wastewater, which contains heavy metals and other pollutants, into the river through a pipe. Other wastewater is allegedly discharged through leaks from the ponds through the groundwater into the Cumberland River, a waterway protected by the Clean Water Act (CWA), 33 U.S.C. 1251. The district court found that TVA violated the CWA because its coal ash ponds leak pollutants through groundwater that is “hydrologically connected” to the Cumberland River without a permit. The theory is called the “hydrological connection theory” by the federal Environmental Protection Agency (EPA). The Sixth Circuit reversed, finding no support for the hydrological connection theory in either the text or the history of the CWA and related environmental laws. View "Tennessee Clean Water Network v. Tennessee Valley Authority" on Justia Law

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Upper Arlington's Master Plan guides its zoning decisions, emphasizing the need to increase the city’s revenue by attracting business development in the small portion of the city’s land that is devoted to commercial use. To further the Plan’s goals, the Unified Development Ordinance restricts the use of areas zoned "office district" to specific uses that are primarily commercial. The operation of schools, both secular and religious, is prohibited within the office district. Nonetheless, Tree of Life decided to purchase a large office building on a 16-acre tract within the office district for the operation of a pre-K through 12th-grade school. After failing to secure authorization to operate the school, Tree filed suit, citing the “equal terms” provision of the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. 2000cc(b)(1). After two prior appeals, the district court granted Upper Arlington judgment, holding that the Ordinance is no more onerous to Tree than to non-religious entities that generate comparably small amounts of revenue for the city. The Sixth Circuit affirmed. Revenue maximization is a legitimate regulatory purpose. Upper Arlington’s assertion of revenue maximization as the purpose of the Ordinance is not pretextual. Daycares are the only potentially valid comparator put forward by Tree, which presented no evidence suggesting that nonprofit daycares are similarly situated to its proposed school in terms of their capacity to generate revenue. View "Tree of Life Christian Scool. v. City of Upper Arlington" on Justia Law

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Mason, an African-American Ohio resident sued against all 88 Ohio county recorders for violating the Fair Housing Act’s prohibition against making, printing, or publishing “any . . . statement” indicating a racial preference, such as a racially restrictive covenant. Mason’s complaint included copies of land records, recorded in 1922-1957, that contain racially restrictive covenants. There is no allegation that such covenants have been enforced since the 1948 Supreme Court decision prohibiting enforcement of such covenants. Mason maintains that permitting documents with restrictive covenants in the chain of title to be recorded or maintained and making them available to the public violated the Act. Mason alleges that defendants “discouraged the Plaintiff and others from purchasing real estate ... by creating a feeling that they ... do not belong in certain neighborhoods” and that defendants’ actions “damage and cloud the title to property owned by property owners.” Mason’s counsel stated that Mason became aware of the covenants while looking to buy property, a fact not contained in the complaint. The Sixth Circuit affirmed that Mason lacked standing. A plaintiff must show that he suffered a palpable economic injury distinct to himself; any alleged injury was not caused by the county recorders, who are required by Ohio statute to furnish the documents to the public; county recorders cannot redress the alleged harm, as they have no statutory authority to edit the documents. View "Mason v. Adams County Recorder" on Justia Law

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Debtors filed a Chapter 7 bankruptcy petition. They included their interest in Franklin, Ohio real property with three mortgages. PNC held the first two. The home was “underwater.” The Trustee filed an adversary proceeding to avoid PNC’s alleged first mortgage under 11 U.S.C. 544(a)(1) and 544(a)(3) and Ohio law. The bankruptcy court stayed the proceeding pending resolution of questions of law that had been certified to the Ohio Supreme Court in another matter. The Ohio Supreme Court ultimately responded that O.R.C. 1301.401 applies to all recorded Ohio mortgages and acts to provide constructive notice to the world of a recorded mortgage that was deficiently executed under O.R.C. 5301.01. Although the parties agreed that the mortgage's acknowledgment clause was defective and did not substantially comply with section 5301.01, PNC asserted that section 1301.401 vitiates the Trustee’s power to avoid recorded mortgages based on defects in their execution as either a hypothetical bona fide purchaser under 11 U.S.C. 544(a)(3) or hypothetical judicial lien creditor under 11 U.S.C. 544(a)(1). The bankruptcy court denied a motion to dismiss. The Sixth Circuit Bankruptcy Appellate Panel affirmed, finding the Ohio Supreme Court did not address the Trustee’s avoidance powers as a hypothetical judicial lien creditor, and the Ohio Legislature did not make its amendments retroactive. View "In re Oakes" on Justia Law

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The United States charged Hall with unlawful gambling and money laundering and obtained a preliminary criminal forfeiture order for 18 parcels in Knox County. The County determined that Hall owed substantial delinquent real property taxes, giving it a first lien under Tennessee law. Under 21 U.S.C. 853(n)(2), a party asserting an interest in property that is subject to criminal forfeiture may seek a hearing on his alleged interest within 30 days. Knox County filed an untimely claim. The court amended the preliminary forfeiture order to cover three more Knox County properties. Knox County filed a timely second claim and requested an interlocutory sale and delay of forfeiture. The United States stated that accrued taxes and interest would be paid, regardless of whether the taxing authority filed a claim, but argued that Knox County would have no legal interest in accruing taxes once title passes, citing the Supremacy Clause, and objected to delaying a final forfeiture order. The Sixth Circuit vacated the forfeiture order. Knox County has a legal interest in the property (tax lien), so the district court erred in dismissing its claim for lack of standing but it is not necessarily entitled to a hearing. The court may ascertain the scope of Knox County’s interest on summary judgment but must account for that interest before entering a final forfeiture order. The court did not abuse its discretion in denying Knox County’s motion for an interlocutory sale. View "United States v. Hall" on Justia Law