The opinion of the court was delivered by: District Judge Susan J. Dlott
ORDER GRANTING IN PART AND DENYING IN PART THE CITY OF CINCINNATI'S MOTION TO DISMISS
This matter comes before the Court on Defendant City of Cincinnati's Motion to Dismiss Second Amended Complaint (doc. 43) and the Court's Order Granting Motions to Dismiss and Ordering Additional Briefing on Motion to Dismiss ("Dismissal Order") (doc. 68).
This suit arises from the closure of Huntington Meadows, formerly the City of Cincinnati's ("City") largest affordable housing complex, the eviction of the tenants therefrom, and plans to redevelop the property as single-family housing. Plaintiffs Donna Farmer, Juanita Mitchell, Jackie Gaines, and Annie Davis (collectively, the "Individual Plaintiffs") are former residents of Huntington Meadows. Plaintiff Budget Real Estate ("Budget R.E.") is a private entity that sought to purchase Huntington Meadows after it was foreclosed upon with the intent to maintain the property as low-income housing. Plaintiffs' allegations and the procedural history of this action were set forth in detail in the Dismissal Order and are incorporated herein as if fully restated.
In the Dismissal Order, the Court dismissed the allegations against two original defendants, Allen Temple-Tryed Stone Development, Ltd. ("ATTSD") and RCM Cincinnati Estate LLC ("RCM"). The Court also ordered additional briefing by the City and Plaintiffs on the City's dismissal motion as to recent judicial pronouncements on the Rooker-Feldman doctrine as applied to this case in light of the prior state court proceedings. Briefing is now complete.
The legal standards for resolving a motion to dismiss under Federal Rule of Civil Procedure 12(b) were set forth in the Dismissal Order and are incorporated herein as if fully restated.
A. Rooker-Feldman and Preclusion
The City contends that the Court lacks jurisdiction over the claims against it pursuant to the Rooker-Feldman doctrine. The Rooker-Feldman doctrine takes its name from two Supreme Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), through which the Supreme Court instructed that federal district courts lack subject-matter jurisdiction to review and reverse unfavorable state court judgments. Exxon Mobile Corp. v. Saudi Basic Industs. Corp., 544 U.S. 280, 283 (2005). The Supreme Court recently endeavored to clarify the contours of the Rooker-Feldman doctrine and held that it is "confined to cases . . . brought by state court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Id. at 284. The Supreme Court also stated that a district court is not precluded "from exercising subject-matter jurisdiction simply because a party attempts to litigate in federal court a matter previously litigated in state court." Id. at 293. Where jurisdiction otherwise exists in such cases, "state law determines whether the defendant prevails under principles of preclusion." Id.
The Court first must determine if Plaintiffs were "state court losers" in the state foreclosure suit. The Plaintiffs' claims are not barred by the Rooker-Feldman doctrine if they were not "state court losers." The Sixth Circuit has interpreted the "state court losers" language broadly to include not only the state court losing party, but also those in privity with the state court losing party. See McCormick v. Braverman, 451 F.3d 382, 396 (6th Cir. 2006). Budget R.E. was not a party, nor was it a privity to a party, in the state court action. Plaintiff Mitchell and the Huntington Meadows Tenants Association ("Tenants Association") were intervening parties in the foreclosure action. See Federal Natl. Mortg. Assoc. v.. Huntington Meadows Ltd., No. A0103458 (Hamilton Cty. Ohio C.P.). Plaintiff Mitchell and the Tenants Association signed the Agreed Order terminating the tenant leases at Huntington Meadows and authorizing the voluntary relocation package offers. Id., slip op. (Hamilton Cty. Ohio C.P. July 31, 2002).
The City's argument on Rooker-Feldman is based on an assumption that the Huntington Meadows tenants, including Plaintiffs Farmer, Gaines, and Davis, were in privity with the Tenants Association. The City presents no legal arguments regarding the contours of the privity doctrine in Ohio or the Sixth Circuit to support that position. The limited evidence presented indicates that only a small portion of the tenants at Huntington Meadows actively participated in the Tenants Association and/or the lawsuit enacted on its behalf. In fact, the Legal Aid Society contract to represent the Tenants Association is signed by only five individuals, including Plaintiff Mitchell, but not Plaintiffs Farmer, Gaines or Davis. The Tenants Association state court filing quoted by the City states that only approximately 100 tenants attended its meetings. As such, the Court has no basis to conclude that Plaintiffs Farmer, Gaines, or Davis were parties or privities to parties in the state foreclosure action. The Court cannot dismiss the claims of Budget R.E., Farmer, Gaines, or Davis based on the Rooker-Feldman doctrine. The Court retains the right to reconsider this issue as warranted.
The contours of Rooker-Feldman must be examined in more detail to determine if the Court has jurisdiction over Plaintiff Mitchell's claims. The Sixth Circuit has stated that Exxon Mobile clarified that Rooker-Feldman only applies to preclude subject-matter jurisdiction where the federal court issues are "inextricably intertwined" with the state court judgment such that the "claim asserts an injury whose source is the state court judgment." McCormick, 451 F.3d at 394-95. Rooker-Feldman does not act as a bar to jurisdiction where the source of the injury is the defendant's or a third party's actions independent of the state court judgment. See id. at 393. Nor does it act as a bar simply because the federal claim might ask the federal court to deny a legal conclusion reached by the state court. See id. at 394. The Sixth Circuit instructed that in such situations, there is federal court jurisdiction, but the claim may fail under state preclusion law. See id. at 393 (citing Exxon Mobile, 125 S.Ct. at 1527).
The claims presented by Plaintiff Mitchell here are analogous to those presented by the plaintiff in McCormick for purposes of the Rooker-Feldman analysis. Mitchell alleges that the source of her injuries were actions taken by the City to plan for and assure the closure of Huntington Meadows and redevelopment of the land for use other than low-income housing. Her claims implicitly may deny the legal conclusions reached by the state court that foreclosure was proper and that the land use restriction would be terminated. Federal Nat'l Mortg. Assoc., (Hamilton Cty. Ohio C.P. July 31, 2002); id. slip op. (Hamilton Cty. Ohio C.P. Apr. 4, 2003). However, that fact does not preclude this Court's jurisdiction; rather, the Court must apply Ohio state law to determine if her claims should be precluded. McCormick, 451 F.3d at 393.
The City also moves for dismissal on the related grounds of preclusion. Generally, claim preclusion, or res judicata, refers to the effect of a judgment in foreclosing litigation of a claim that has not been litigated, but should have been advanced in an earlier suit, while issue preclusion refers to the effect of a judgment in foreclosing relitigation of a matter that has been actually litigated and decided. In re Fordu, 201 F.3d 693, 703 (6th Cir. 1999) (citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n. 1 (1984)). In Ohio, claims are not precluded under the doctrine of claim preclusion unless those claims were or could have been litigated in a prior action. Hapgood v. City of Warren, 127 F.3d 490, 493 (6th Cir. 1997). Under the doctrine of issue preclusion, "if an issue of fact or law actually is litigated and determined by a valid and final judgment, such determination being essential to that judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." Hicks v. De La Cruz, 52 Ohio St.2d 71, 74, 369 N.E.2d 776, 777 (Ohio 1977).
Further, in Ohio, "in order for the principle of res judicata to be applicable, the parties to the subsequent action must be identical to those of the former action or be in privity with them." Johnson's Island, Inc. v. Board of Tp. Trustees of Danbury Tp., 69 Ohio St.2d 241, 244, 431 N.E. 2d 672, 674-75 (1982). Again, only Plaintiff Mitchell, among the Plaintiffs, was a party to the state court action. Contrary to Plaintiffs' arguments, the Court finds that the City of Cincinnati was a party too. Fannie Mae moved to amend their complaint and add the City, a secured creditor, as a party to the state court action. Federal Nat'l Mortg. Assoc., slip op. (Hamilton Cty. Ohio C.P. Jan. 9, 2002). The Court granted the motion to amend on February 12, 2002. Id. slip op. (Hamilton Cty. Ohio C.P. Feb. 12, 2002). Additionally, the City is listed as a defendant on the Hamilton County Clerk of Court's docket sheet for the case.
Nonetheless, the Court finds that Plaintiff Mitchell's claims are not barred by issue or claim preclusion. In the following section, the Court grants the dismissal motion, in part, for mootness and failure to state a claim upon which relief can be granted. The claims that survive the dismissal motion, as discussed below, are based at least in part on events and actions that occurred separate from state foreclosure action. These claims were not fully ripened at the time that the state court terminated Plaintiff Mitchell's lease or at the ...