Argued: May 3, 2017
from the United States District Court for the Southern
District of Ohio at Cincinnati. No. 1:12-cv-00104-Sandra S.
Beckwith, District Judge.
Jessica L. Powell, CITY OF CINCINNATI, Cincinnati, Ohio, for
Dunn, HOGAN LOVELLS U.S. LLP, New York, New York, for
Jessica L. Powell, Jacklyn Martin, CITY OF CINCINNATI,
Cincinnati, Ohio, for Appellant.
Dunn, HOGAN LOVELLS U.S. LLP, New York, New York, Sean
Marotta, HOGAN LOVELLS U.S. LLP, Washington, D.C., James E.
Burke, KEATING MUETHING & KLEKAMP PLL, Cincinnati, Ohio,
Before: COLE, Chief Judge; SUTTON and KETHLEDGE, Circuit
SUTTON, Circuit Judge.
customarily has the right to take title to a property if the
borrower fails to repay the loan used to purchase it. After
the 2008 financial crisis, many banks foreclosed on many
properties used to secure the underlying loans. According to
the City of Cincinnati, one financial institution based out
of State (Wells Fargo) and one based out of the country
(Deutsche Bank) 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 policy, says the City, had two
consequences. One was to violate local and state
public-safety laws that require owners to maintain their
properties. The other was to create a common law public
nuisance that lowered property tax revenues, increased police
and fire expenses, and added other administrative costs.
case comes to us, the parties have resolved all claims
arising from any individual code violations and associated
fines attached to properties named in the City's
complaint. The City also has resolved the common law nuisance
claims against Deutsche Bank. That leaves the common law
nuisance claims against Wells Fargo, which the district court
eventually rejected as a matter of law. The City appeals that
ruling, and we affirm.
City's complaint, several complaints in truth, alleged
that the banks' policy created a common law absolute and
qualified public nuisance, statutory public nuisance,
interference with fiduciary duty, and municipal code
violations. It sought punitive and compensatory damages as
well as declaratory relief. By the time it filed the third
amended complaint, the one pertinent here, the City had
dropped the interference and punitive damage claims as well
as the claims against some of the Deutsche Bank entities. But
it still maintained claims for municipal code violations
(Claims 1-4), statutory public nuisance (Claim 5), common law
public nuisance (Claim 6), and declaratory relief (Claim 8)
against Wells Fargo and its affiliates and some of the
Deutsche Bank entities. Though the second amended complaint
contained separate claims for common law public nuisance and
common law absolute public nuisance, the third amended
complaint contained only the former (which apparently
explains the absence of a seventh claim). In addition to
challenging Wells Fargo's practice of non-compliance, the
City attached a series of exhibits naming several properties
as common law and statutory nuisances as well as a number of
properties with outstanding code violations.
since the City filed its third amended complaint have
narrowed the dispute still further. In connection with a
settlement agreement, the City stipulated to the dismissal of
the rest of the Deutsche Bank entities and dismissed the
claims arising from several Wells Fargo properties. Both
sides agreed to dismiss the statutory nuisance claim with
prejudice (Claim 5) and to stipulate to final judgment in
favor of the City on the municipal code violations (Claims
1-4). The City has since disavowed any claims for injunctive
and declaratory relief on appeal (Claim 8).
leaves Claim 6: the damages claim for common law public
nuisance against Wells Fargo. In rejecting this claim, the
district court held that (1) the economic-loss doctrine
foreclosed recovery and (2) the City's alleged
damages―increased police and fire expenses, a decrease
in the City's tax base, and an increase in the City's
administrative costs―were too attenuated to establish
proximate cause. The City appealed this ruling.
Ohio law, a common law public nuisance is "an
unreasonable interference with a right common to the general
public." Kramer v. Angel's Path, L.L.C.,
882 N.E.2d 46, 51 (Ohio 2007). Examples of such rights, from
Ohio and elsewhere, include: a right of public passage
(e.g., obstruction of highways); a right to use
public space (e.g., pollution of fisheries); a right
to navigable waterways (e.g., obstruction of public
streams); a right to public health (e.g., exposure
to diseased animals); a right to public safety
(e.g., negligent marketing/sale of dangerous
weapons); a right to public morality (e.g., houses
of ill-repute); a right to public peace (e.g.,
excessive noise); and a right to public ...