Here's the latest in one of the federal lawsuits by the mortgage holders challenging Mortgage Resolution Partners and Richmond, California's scheme to seize underwater mortgages by eminent domain.
On August 8, 2013, the plaintiffs filed a motion for a preliminary injunction (scheduled to be heard in San Francisco on September 13, 2013), which asks the District Court to stop MRP/Richmond from "taking any further action to implement their program to seize residential mortgage loans through eminent domain (the "Richmond Seizure Program") with respect to any mortgage loans held in residential mortgage-backed securitization trusts for which Plaintiffs serve as trustees ..." The supporting memorandum of law fleshes out the claims made in the Complaint (summarized here), arguing that the seizure program allows MRP to "hand-select[]" which mortgages to take, that it tries to take property located outside the physical boundaries of Richmond, that any taking would be for private use, that it impermissibly regulates interstate commerce by "rewriting the contracts between local residents and out-of-Richmond and out-of-state creditors," and violates the Contracts Clause.
For their part, MRP and Richmond jointly filed a responsive brief arguing "this case is just harassment" because the plaintiffs' claims are not ripe (Richmond has not adopted a resolution of necessity, "and may never do so"). The plaintiffs' motion also fails the usual four criteria for issuing a preliminary injunction. The MRP/Richmond brief asserts that the takings would be for public use under Midkiff, and responds to each of the plaintiffs' other constitutional arguments.
We won't go into detail about each brief's argument, since it would be much better for you to simply read them yourselves, and we did not download and include the supporting documents, save one: the
Declaration of Robert Hockett in Support of Opposition to Preliminary Injunction. As you are no doubt aware, Professor Hockett is the source of the MRP/Richmond plan, and his declaration defends it, acknowledging he "received a small fee to assist Mortgage Resolution Partners," but claiming "I have no ongoing business relationship with the firm and no investment interest in [MRP] or the outcome of this case."
This is getting interesting.
Plaintiffs' Motion for Preliminary Injunction, Wells Fargo Bank, Nat'l Ass'n v. City of Richmond, No. CV-13...
Defendants' Opposition to Motion for Preliminary Injunction, Wells Fargo Bank, Nat'l Ass'n v. City of Richm...
