Comments on: The threshold question for MBS trustees’ new eminent domain suits http://blogs.reuters.com/alison-frankel/2013/08/08/the-threshold-question-for-mbs-trustees-new-eminent-domain-suits/ On the Case Fri, 15 Jul 2016 20:42:45 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: griinincat http://blogs.reuters.com/alison-frankel/2013/08/08/the-threshold-question-for-mbs-trustees-new-eminent-domain-suits/#comment-2288 Wed, 21 Aug 2013 21:50:47 +0000 http://blogs.reuters.com/alison-frankel/?p=2239#comment-2288 onthelake …

Perhaps you need a legal refresher having been retired a while:

“(1) put the jurisdiction of the Federal Ct in conflict with the state courts which would be hearing the eminent domain case” Conflicts between state laws and Federal laws are common bases of actions. If it is a Constitutional issue, the federal court ruling prevails. If the MBS holders lose in state court, they can appeal in federal court if they can show a federal issue. However, I would see them filing their suit in federal court based on the Constitutional issue they seem to raise. In the state court, they would be respondents and in that court only to avoid a default judgment (and to establish points of appeal).

“(2) force the plaintiffs to litigate 624 cases (as of now) vs one — a huge burden on the plaintiffs.” Several US Supreme Court rulings say that is not germane regarding whether it is one case or 624. The criteria to sort that out based on Supreme Court rulings are the same as with the rulings regarding requirements for class action status … is each situation sufficiently the same so as to constitute in total a single issue or is each mortgage/property sufficiently unique as to raise different resolutions (e.g., amount of damages). The former argues for a unified case; the latter argues for 624 cases. The practicality of litigating 624 cases or their cost is not a relevant factor per the Supreme Court.

The Supreme Court already has ruled that eminent domain can be used where the “public purpose” primarily benefits a private party and the government/public benefits only indirectly.

I’m not saying the case suggested by Hockett would prevail … I gave up long ago predicting court rulings … but it has enough merit to go to trial if the MBS holders want to fight the action. I’d be surprised if the federal district court granted a declaratory judgment at this stage. Clearly there is more to come in this matter; I doubt the city and the MRP were bluffing in their threat to use eminent domain if their offer were not accepted or some other resolution attained (I’d counter with the outstanding mortgage balances with a settlement goal of not less than 100% of the fair market value of the properties).

The tax effect on the investors is not germane (and one could argue that the offer includes a notional gross-up for any tax effects). Most of these funds pass on gains/losses to the investors for personal income tax reporting. If the properties are seized, the investors likely have a tax loss that can offset other income.

You may disagree with Hockett (and the idea of using eminent domain in this circumstance), but the arguments on both sides are based on law and precedent and, should eminent domain action occur, are appropriate for trial. They are not on either side spurious as this will probably be a case of first impression; I am not aware of this situation being litigated previously.

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By: onthelake http://blogs.reuters.com/alison-frankel/2013/08/08/the-threshold-question-for-mbs-trustees-new-eminent-domain-suits/#comment-2286 Fri, 09 Aug 2013 20:53:14 +0000 http://blogs.reuters.com/alison-frankel/?p=2239#comment-2286 This is easily a declaratory judgement case looking for a permanent injunction.

Once the city sent the letters making the demand – and setting a very short deadline for response and made the threat of eminent domain, the threatened harm is imminent enough for the declaratory judgment. To tell the plaintiffs to wait until the city tries to seize the loans under the ‘quick take’ provision of CA law would

(1) put the jurisdiction of the Federal Ct in conflict with the state courts which would be hearing the eminent domain case; and

(2) force the plaintiffs to litigate 624 cases (as of now) vs one — a huge burden on the plaintiffs.

And the city’s legal theory is based upon the drivel from Hockett as Cornell (the guy really needs to go to some small town and jsut do divorce law – he is embarassing as a legal scholar.)

8:42 pm UTCI read Hockett’s articles.

Now I’m a retired litigator – specialized in fed lit and am very well-versed in land use law and con law.

Hockett’s work relies upon some string citations that do NOT in anyway support his theory. Every case he cites claiming that eminent domain was used to solely seize some personal property has NOTHING to do with what he claims it does.

NOT one case he cites has anything to do with solely seizing personal property through eminent domain. The cases all involve (a) stockholder and corporate law or (b) the interpetation of a contract and whether mechanics liens remained in place or (c) changing a statue underwhich bondholders or policy holders purcashe a bond or policy from the government or (d) the seizure (temporary or permanent) of land and extinguishing any collateral claims on the land (easements.)

If a young associate lawyer had handed me such a bogus piece of work, he/she would have been put to merely filling in standard document forms for transactions. Piece of total incompetency – the kind of thing that lands one with sanctions from the court and the other side’s attorney fees.

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