[Cite as Cleveland v. JP Morgan Chase Bank, N.A., 2013-Ohio-1035.]

Court of Appeals of Ohio

EIGHTH APPELLATE DISTRICT 

COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION 

No. 98656

CITY OF CLEVELAND

PLAINTIFF-APPELLANT 

vs. 

JP MORGAN CHASE BANK, N.A., 

ET AL.

DEFENDANTS-APPELLEES 

JUDGMENT: 

AFFIRMED

Civil Appeal from the 

Cuyahoga County Court of Common Pleas 

Case No. CV-668608 

BEFORE: Celebrezze, J., Boyle, P.J., and Keough, J. 

RELEASED AND JOURNALIZED: March 21, 2013 
ATTORNEYS FOR APPELLANT

Joshua R. Cohen 

Cohen, Rosenthal & Kramer, L.L.P. 

700 West St. Clair Avenue 

Suite 400 

Cleveland, Ohio 44113 

Barbara A. Langhenry 

Interim Director of Law 

Gary S. Singletary 

Assistant Director of Law 

City of Cleveland 

Department of Law 

601 Lakeside Avenue 

Room 106 

Cleveland, Ohio 44114-1077 

Andris G. Nikiforovs 

Community Housing Solutions 

12114 Larchmere Boulevard 

Cleveland, Ohio 44120 

Mark A. Stanton 

Short, Shepherd & Stanton 

1300 Rockefeller Building 

614 Superior Avenue, N.W. 

Cleveland, Ohio 44113 

ATTORNEYS FOR APPELLEES

Michael N. Ungar 

Isaac J. Eddington 

Richik Sarkar 

Isaac Schulz 

Ulmer & Berne, L.L.P. 

1100 Skylight Office Tower 

1660 West 2nd Street 

Cleveland, Ohio 44113-1448 
FRANK D. CELEBREZZE, JR., J.: 

{¶1} Appellant, the city of Cleveland (the “City”), brings this appeal challenging 

the dismissal of its complaint, which sought damages from several financial institutions 

involved in the creation of mortgage-backed securities using subprime mortgages from 

Cleveland, Ohio, real estate. The trial court dismissed the City’s complaint pursuant to 

Civ.R. 12(B)(6), finding that the complaint failed to state a claim and citing three reasons. 

 Here, the City challenges each of those reasons and argues that it has properly pled its 

claims for relief. After a thorough review of the record and discordant case law, we 

affirm the trial court’s determination. 

I. Factual and Procedural History 

{¶2} According to the City’s complaint, the Cleveland housing market remained 

relatively flat at a time when the rest of the country experienced rapid price growth. The 

City alleges that, in an effort to capitalize on this boom in the housing market, several 

financial institutions — including appellees JP Morgan Chase Bank, N.A., Bank One, 

N.A., and J.P. Morgan Chase Securities, Inc. (collectively “Chase”) — engaged in a 

practice of encouraging subprime lending in order to package mortgages together and sell 

them to investors in the form of mortgage-backed securities. The City alleges that these 

financial institutions were not concerned about the quality of the mortgages backing these 

securities because, as long as housing prices continued to rise, even bad loans would be 

covered by assets realized in foreclosures. 
{¶3} The City’s first complaint alleged that Cleveland was a market where these 

types of lending and securitizing practices were inappropriate because Cleveland did not 

experience a steady rise in housing prices. The City claims that the activities of the 

financial institutions, including Chase, caused a foreclosure crisis in Cleveland that 

damaged the City and created a public nuisance. The City asserts that Chase knew or 

should have known the disastrous results these actions would have on Cleveland. 

Specifically, the City alleges that it has incurred increased costs for fire and safety 

services as a result of a glut of vacant and foreclosed homes; that the practices led to 

greatly diminished housing prices, which resulted in huge losses in property taxes; and 

other costs caused by a foreclosure crisis in Cleveland. The City also brought an Ohio 

Corrupt Practices Act (“OCPA”) cause of action alleging that Chase systematically filed 

false or misleading paperwork in foreclosure cases indicating that they were entitled to 

initiate foreclosure actions when they were not.1

{¶4} The litigation initiated by the City spawned several cases with other financial 

institutions removing suits to federal court. See, e.g., Cleveland v. Ameriquest Mtge. 

Sec., Inc., 621 F.Supp.2d 513 (N.D.Ohio 2009). The appellees here are all non-diverse 

for federal jurisdictional purposes and could not successfully seek removal. See 28 

U.S.C. 1332. 

 1

 The City also sought to be reimbursed for demolition costs from Residential Capital L.L.C. 

and GMAC Mortgage Corp., in a third cause of action. This cause was later dismissed with 

prejudice on July 10, 2012. 
{¶5} The City filed an amended complaint incorporating allegations that Chase 

failed to properly review or process loan paperwork prior to initiating foreclosure actions 

— the so-called “robosigning” scandal. Chase then filed for dismissal premised on 

Civ.R. 12(B)(6), citing the same successful arguments raised by other defendants in the 

federal cases. See Ameriquest. The trial court allowed extensive briefing on Chase’s 

motion to dismiss, and on November 23, 2011, granted the motion citing three reasons 

also found by the federal district court for the Northern District of Ohio and affirmed by 

the Sixth Circuit Court of Appeals. See Cleveland v. Ameriquest Mtge. Sec., Inc., 615 

F.3d 496 (6th Cir.2010). Regarding the public nuisance claim, the trial court found: “(1) 

the allegations are insufficient to demonstrate proximate cause, (2) the City’s public 

nuisance claim is preempted by state law, and (3) the economic loss doctrine bars the 

City’s claim.” The trial court also held that the OCPA count failed for lack of sufficient 

proximate cause. The City then timely filed the instant appeal assigning two errors: 

I. The trial court erred in dismissing the City of Cleveland’s claim for 

public nuisance. 

II. The trial court erred in dismissing the claim alleged by the City of 

Cleveland under the Ohio Corrupt Activities Act. 
II. Law and Argument 

A. Standard of Review 

{¶6} The trial court dismissed the City’s complaint pursuant to Civ.R. 12(B)(6). 

A motion to dismiss for failure to state a claim on which relief can be granted is 

procedural and tests the sufficiency of the complaint. State ex rel. Hanson v. Guernsey 

Cty. Bd. of Commrs., 65 Ohio St.3d 545, 1992-Ohio-73, 605 N.E.2d 378. It is well 

settled that “when a party files a motion to dismiss for failure to state a claim, all factual 

allegations of the complaint must be taken as true and all reasonable inferences must be 

drawn in favor of the nonmoving party.” Byrd v. Faber, 57 Ohio St.3d 56, 60, 565 N.E.2d 

584 (1991). 

{¶7} While the factual allegations of the complaint are taken as true, 

“[u]nsupported conclusions of a complaint are not considered admitted * * * and are not 

sufficient to withstand a motion to dismiss.” State ex rel. Hickman v. Capots, 45 Ohio 

St.3d 324, 324, 544 N.E.2d 639 (1989). In light of these guidelines, for a court to grant a 

motion to dismiss for failure to state a claim, it must appear “beyond doubt that the 

plaintiff can prove no set of facts in support of his claim which would entitle him to 

relief.” O’Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 245, 327 

N.E.2d 753 (1975). 

{¶8} Because factual allegations in the complaint are presumed true, only the legal 

issues are presented, and an entry of dismissal on the pleadings will be reviewed de novo. 

Rocky River v. Lakewood, 8th Dist. No. 90908, 2008-Ohio-6484, ¶ 6. A de novo 
standard of review affords no deference to the trial court’s decision, and we 

independently review the record. Gilchrist v. Gonsor, 8th Dist. No. 88609, 

2007-Ohio-3903, ¶ 16. 

B. Public Nuisance 

{¶9} The City’s main claim was that Chase knowingly created a public nuisance 

through its securitizing activities. The Restatement (Second) of Torts, adopted in Ohio 

by Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, 768 N.E.2d 

1136, ¶ 8, defines a public nuisance as “an unreasonable interference with a right 

common to the general public.” 4 Restatement of the Law 2d, Torts, Section 821B(1) 

(1979). The Beretta court went on to define “unreasonable interference” as 

those acts that significantly interfere with public health, safety, peace, 

comfort, or convenience, conduct that is contrary to a statute, ordinance, or 

regulation, or conduct that is of a continuing nature or one which has 

produced a permanent or long-lasting effect upon the public right, an effect 

of which the actor is aware or should be aware. 

 

Beretta at ¶ 8, quoting 4 Restatement, Section 821B(2). At common law, this tort was 

used to vindicate the interference of a general right the public held, often relating to land 

use and brought by the state. Faulk Gray, Alchemy in the Courtroom? The 

Transmutation of Public Nuisance Litigation, 2007 Mich.St.L.Rev. 941, 953-954 (2007). 

Novel public nuisance causes of action have since been attempted against tobacco 

companies, asbestos manufacturers, fire arms manufacturers, and environmental polluters 

with varying degrees of success. Id. Recently, several plaintiffs have used this tool in 

global warming suits. Id. 
{¶10} This tort is further broken down into two distinct types — absolute and 

qualified public nuisance. 

With an absolute nuisance, the wrongful act is either intentional or 

unlawful, and strict liability attaches notwithstanding the absence of fault 

because of the hazards involved (Metzger v. Pennsylvania, Ohio & Detroit 

RR. Co., 146 Ohio St. 406, 66 N.E.2d 203 [(1946)], paragraph one of the 

syllabus), whereas a qualified nuisance involves a lawful act “so negligently 

or carelessly done as to create a potential and unreasonable risk of harm, 

which in due course results in injury to another.” Id. at paragraph two of 

the syllabus. A qualified nuisance hinges on proof of negligence. Id. 

Beretta at fn. 4. Because a qualified nuisance requires negligence, a party must show a 

duty owed and a breach of that duty that proximately results in cognizable injury. Id. at ¶ 

18. 

i. Proximate Cause 

{¶11} The City claims it has adequately pled proximate cause because Ohio law 

generally treats it as a question of fact and an inappropriate reason for dismissal at this 

stage of the litigation. See Strother v. Hutchison, 67 Ohio St.2d 282, 288, 423 N.E.2d 

467 (1981). As the City also points out, proximate cause requires “some reasonable 

connection between the act or omission of the defendants and the damage the plaintiff 

suffered.” Queen City Terminals v. Gen. Am. Transp. Corp., 73 Ohio St.3d 609, 618, 

1995-Ohio-285, 653 N.E.2d 661. However, the tort of public nuisance only reaches so 

far. Ohio remains a notice pleading state, 2

 but the complaint must still advance a 

rational basis for holding a defendant liable. Gallo v. Westfield Natl. Ins. Co., 8th Dist. 

 2

 Civ.R. 8(A)(1) requires only “a short and plain statement of the claim showing that the party 

is entitled to relief.”
No. 91893, 2009-Ohio-1094, ¶ 9, citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 

127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 

Proof of a causal relationship between a defendant’s action and a plaintiff’s 

injury is essential in every tort “because the consequences of an act go 

endlessly forward in time and its causes stretch back to the dawn of human 

history.” Laborers Local 17 Health & Benefit Fund v. Philip Morris, Inc., 

191 F.3d 229, 235 (2d Cir.1999). Thus, the concept of proximate cause 

was developed to limit the liability of a wrongdoer to only those harms with 

a reasonable connection to the wrongdoer’s actions. 

 

Cook Cty. v. Philip Morris, Inc., 353 Ill.App.3d 55, 60, 817 N.E.2d 1039 (1st Dist.2004). 

Where the injury is too remote or tenuous from the alleged breach, no cognizable claim 

exists. 

Remoteness is not an independent legal doctrine but is instead related to the 

issues of proximate causation or standing. White [v. Smith & Wesson, 97 F. 

Supp.2d 816,] 823 [(N.D. Ohio 2000)]; Boston v. Smith & Wesson Corp., 

2000 Mass. Super. LEXIS 352, 12 Mass.L.Rptr. 225, 2000 WL 1473568, at 

* 4, fn. 20. Thus, a complaint will fail on remoteness grounds if the harm 

alleged is the remote consequence of the defendant’s misconduct 

(causation) or is wholly derivative of the harm suffered by a third party 

(standing). 

Beretta, 95 Ohio St.3d 416, at ¶ 35-36. 

{¶12} Here, the City alleges that the creation of a federally-encouraged pool of 

money to stimulate lending resulted in disastrous harm unique to Cleveland. The City 

claims Chase encouraged others to issue subprime loans in order to securitize those loans 

for profit. The City argues Chase knew or should have known that Cleveland was an 

inappropriate market to engage in this sort of subprime securitization process because 

Cleveland did not undergo robust growth in housing prices as experienced in other parts 

of the country. 
{¶13} However, there are several intervening factors necessary for the harm 

suffered by the City to materialize. This leads to the conclusion that the City’s complaint 

alleges an injury too remote to assert a justiciable claim. 

{¶14} First, mortgage originators and brokers offered high-risk mortgage products 

to individuals with questionable credit histories. According to the City’s complaint, 

these originators usually charged more for these types of loans, meaning they had an 

independent profit motive separate from any actions of the defendants. Next, potential 

home buyers were required to apply for, receive, and then fail to repay these home loans. 

The mortgage originators would seem to bear more responsibility than the banks 

purchasing these loans and constituted an intervening break in the causal chain. The City 

argues that Chase directed these originators to offer and acquire subprime loans. 

However, as the Sixth Circuit pointed out, directness of injury “is distinct from 

foreseeability and applies even if the Defendants intentionally caused the alleged course 

of events.” Ameriquest, 615 F.3d 496, 502-503. Further, the directness factors cited by 

the Beretta court indicate the rationale for precluding the City’s suit: 

(1) indirectness adds to the difficulty in determining which of the plaintiff’s 

damages can be attributed to the defendant’s misconduct, (2) recognizing 

the claims of the indirectly injured would complicate the apportionment of 

damages among plaintiffs to avoid multiple recoveries, and (3) these 

complications are unwarranted given the availability of other parties who 

are directly injured and who can remedy the harm without these associated 

problems. 

Beretta, 95 Ohio St.3d 416, at ¶ 37, citing Holmes v. Securities Investor Protection Corp., 

503 U.S. 258, 269-270, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992). 
{¶15} The trial court here found these intervening factors meant that the causal 

connection between the City’s suffered injury and Chase’s actions were not the traceable 

cause under the “direct relation” test set forth in Holmes and adopted in Beretta. The 

Beretta court stated that “there must be some direct relation between the injury asserted 

and the injurious conduct alleged.” Id. at ¶ 37. The trial court properly applied the 

Holmes factors to the present case and arrived at a reasoned conclusion. We agree with 

the trial court. 

{¶16} The first factor recognized by the Beretta court, difficulty of proof, lands 

in favor of dismissal. In this case, some of the damages being asserted, namely increased 

police, fire, and property maintenance expenses, are the City’s alone, but those damages 

are difficult to calculate. The City claims they are no different than the damages the 

Beretta court found sufficiently pled. However, here, there is no way to separate those 

damages suffered from Chase’s actions and those suffered as a result of other 

foreclosures that would have taken place regardless of those actions. Further, the 

reduction in property values and the subsequent loss of tax revenue are more acutely 

suffered by those who lost homes through foreclosure and those living in 

foreclosure-ravaged neighborhoods. A loss in tax revenue from decreasing property 

values is a derivative injury to that suffered by property owners. This implicates the third 

factor, “‘the general interest in deterring injurious conduct’ will be better served by 

requiring that suit be brought by more directly injured victims.” Beretta at ¶ 42, quoting 

Holmes at 269. 
{¶17} Similarly, the Rhode Island Supreme Court rejected a jury verdict holding 

paint manufacturers liable for lead contamination caused by the sale of lead-based paints.

 Rhode Island v. Lead Indus. Assn., Inc., 951 A.2d 428, 2008 R.I. LEXIS 79 (July 1, 

2008). That court found the extension of traditional product liability issues to public 

nuisance causes of action inappropriate where several intervening factors created a 

nuisance for contaminated Rhode Island houses and buildings. 

{¶18} The City argues that the trial court erred in applying the “direct relation” test 

set forth in Holmes and adopted in Beretta and that this test only applies in RICO causes 

because that was the issue in Holmes.

3

 However, as recognized by the U.S. Supreme 

Court, the proximate cause standard applied in federal RICO cases is the common law 

proximate cause test. Associated Gen. Contrs. v. Cal. State Council of Carpenters, 459 

U.S. 519, 531, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983); Holmes, 503 U.S. at 268-269. 

Therefore, this is also true under traditional common law notions of proximate cause. 

Herakovic v. Catholic Diocese, 8th Dist. No. 85467, 2005-Ohio-5985, ¶ 31. This is also 

the reason that the City’s OCPA claim fails. The same proximate cause requirements 

and resultant deficiencies apply to both causes of action. 

{¶19} For support, the City points to Beretta and the Ohio Supreme Court’s 

holding that claims such as the City’s should survive judgment on the pleadings because 

Cincinnati’s claims were held to be well-pled against gun manufacturers. However, 

 3

Holmes dealt with Racketeer Influenced and Corrupt Organizations Act (“RICO”) 

violations, and the OCPA was modeled on the federal RICO statutes. Schlenker Ents., L.P. v. Reese, 

3d Dist. Nos. 2-10-16 and 2-10-19, 2010-Ohio-5308, ¶ 31. 
Beretta has key differences. Cincinnati’s claim in Beretta was that firearm 

manufacturers created or supplied a black market for the illegal sale and distribution of 

firearms. It was alleged that, through the direct action of the gun manufacturers, such a 

market existed. Here, the role of the manufacturers is played by mortgage originators 

and lenders who created the mortgages that would eventually poison Cleveland’s housing 

market. The securitizing institutions, such as Chase, are at least one step removed from 

this process. Chase provided money to these lending institutions by purchasing or 

securitizing these mortgages, but it did not create the cocktail of factors that led to a glut 

of foreclosed homes poisoning the Cleveland housing market. 

{¶20} While Holmes dealt with standing, and the argument here goes more to 

remoteness of injury, the result is the same in that the City has not provided plausible 

arguments in its complaint sufficient to justify holding Chase accountable where so many 

other factors led to the City’s claimed injury. 

ii. Preemption by State Law 

{¶21} The trial court also found that the City’s public nuisance claim was 

preempted by state law, which prohibits municipalities from regulating lending. The City 

argues that it is acting in its proprietary capacity to redress harms it has suffered 

individually and that its suit does not constitute an attempt at regulating lending. 

{¶22} A nuisance action is not a substitute for regulation and may not supplant 

existing regulations for undesirable activity. The mortgage industry is heavily regulated 

by state and federal bodies. However, such extensive regulation does not automatically 
bar a public nuisance claim. See Beretta. Existing regulations in the sphere of alleged 

nuisance is a factor that should be examined to determine if a claim may be brought. In 

some instances, regulations may be so encompassing as to preclude a public nuisance 

action, but the regulatory scheme must be examined to determine its breadth. The 

existence of regulation should not, itself, preclude such a cause of action. This will often 

require more evidentiary development than available when ruling on a motion to dismiss. 

{¶23} In the present case, R.C. 1.63 provides that 

[t]he state solely shall regulate the business of originating, granting, 

servicing, and collecting loans and other forms of credit in the state and the 

manner in which any such business is conducted, and this regulation shall 

be in lieu of all other regulation of such activities by any municipal 

corporation or other political subdivision. 

{¶24} Therefore, if the City’s action constitutes some form of regulation, then its 

suit may be precluded by R.C. 1.63 and the Ohio Supreme Court’s decision in Am. Fin. 

Servs. Assn. v. Cleveland, 112 Ohio St.3d 170, 2006-Ohio-6043, 858 N.E.2d 776. In that 

case, the court determined that the City’s attempt to regulate subprime lending was 

preempted by the “statewide-concern doctrine.”4

 The U.S. Supreme Court has also held 

that the controlling effect of a money judgment stemming from common-law suits may 

constitute regulation in the federal preemption context. Riegel v. Medtronic, Inc., 552 

U.S. 312, 324-325, 128 S.Ct. 999, 169 L.Ed.2d 892 (2008). Further, the Court 

 4

 This doctrine provides that “‘“a municipality may not, in the regulation of local matters, 

infringe on matters of general and statewide concern.”’” Id. at ¶ 28, quoting Reading v. Pub. Util. 

Comm., 109 Ohio St.3d 193, 2006-Ohio-2181,846 N.E.2d 840 ¶ 33, quoting State ex rel. Evans v. 

Moore, 69 Ohio St.2d 88, 89-90, 431 N.E.2d 311 (1982). 
has recognized that the judicial process can be viewed as the extension of a 

government’s regulatory power. As the court explained, “state power may 

be exercised as much by a jury’s application of a state rule of law in a civil 

lawsuit,” as by regulation or ordinance. 

Philadelphia v. Beretta U.S.A., 126 F. Supp.2d 882, 889 (E.D.Pa.2000), quoting BMW of 

N. Am. v. Gore, 517 U.S. 559, 572, 116 S.Ct. 1589, 134 L.Ed.2d 809, (1996), fn. 17. 

{¶25} Chase successfully argued that the City’s suit constitutes an attempt to 

regulate lending activities through the county courts rather than city council. The City 

argues for a plain reading of the meaning of the term “regulation” and claims that a 

lawsuit initiated by a municipal government in its proprietary capacity does not constitute 

regulation. Further, the City argues that the activity alleged, securitization of home 

mortgages, is not included in R.C. 1.63. 

{¶26} The City is partially correct. The purchase, on the secondary market, of 

mortgages to package into securities is not evident in a plain reading of R.C. 1.63 when 

viewing the complaint in the City’s favor. However, because the holding above 

regarding proximate cause is dispositive, it is of no moment. Even if the trial court erred 

in finding that the suit was preempted, the suit still fails to survive. 

iii. Economic Loss Rule 

{¶27} The City has alleged purely economic damages. Economic losses “are 

intangible losses that do not arise from tangible physical harm to persons or property.” 

RWP, Inc. v. Fabrizi Trucking & Paving Co., 8th Dist. No. 87382, 2006-Ohio-5014, ¶ 20, 

citing Columbia Gas of Ohio v. Crestline Paving & Excavating Co., 6th Dist. No. 

L-02-1093, 2003-Ohio-793; Floor Craft Floor Covering, Inc. v. Parma Comm. Gen. 
Hosp., 54 Ohio St.3d 1, 3, 560 N.E.2d 206 (1990), citing Keeton, Prosser and Keeton on 

Torts, Section 92, at 657 (5th Ed.1984). Because the damages sought were purely 

economic in nature, the trial court found that the public nuisance claim was barred by the 

economic loss rule. 

Under the doctrine of “economic loss,” a party cannot recover purely 

economic damages in a tort action against another party based upon the 

breach of contractually created duties. Corporex Dev. & Constr. Mgt., Inc. 

v. Shook, Inc., 106 Ohio St.3d 412, 2005-Ohio-5409, 835 N.E.2d 701, 

syllabus. The reasoning behind the economic loss doctrine is that tort law is 

not intended to compensate parties for monetary losses suffered as a result 

of duties that are owed to them simply as a result of the contract. Floor 

Craft Floor Covering, Inc. v. Parma Community Gen. Hosp. Assn. (1990), 

54 Ohio St.3d 1, 7, 560 N.E.2d 206. This is because of the sense that if the 

tort law was “allowed to progress too far, contract law would drown in a sea 

of tort.” E. River S.S. Corp. v. Transamerica Delaval, Inc. (1986), 476 U.S. 

858, 106 S.Ct. 2295, 90 L.Ed.2d 865, citing G. Gilmore (1974), The Death 

of Contract 87-94. 

Digiknow, Inc. v. PKXL Cards, Inc., 8th Dist. No. 96034, 2011-Ohio-3592, ¶ 2. 

{¶28} The doctrine does not present a strong case for application to the City’s suit 

where the duty alleged to have been breached is not related to a contractual relationship 

and the City has alleged particularized damages associated with decreased tax revenue 

and increased costs of safety services. However, a previous decision of this court clearly 

indicates the economic loss rule applies to qualified public nuisance claims. Fabrizi at ¶ 

24-26. Therefore, the City’s speculative economic damages are insufficient to state a 

claim for relief in this case. 

C. The Ohio Corrupt Practices Act 
{¶29} The City also argues that it suffered damages as a result of Chase’s actions 

in prosecuting foreclosures where they did not have proper records under the City’s 

OCPA claim. The trial court did not err in dismissing this claim because the City’s 

injuries are derivative of the injuries suffered by the individuals whose properties were 

foreclosed upon. 

{¶30} The City asserted a violation of Ohio’s Corrupt Practices Act, R.C. 

2923.32(A)(2). The City alleges that Chase obtained an interest in real property, in 

violation of R.C. 2923.32(A)(2), by systematically submitting false or misleading 

paperwork to courts in foreclosure actions, in violation of R.C. 2921.12(A)(2). R.C. 

2923.31(I)(2)(a). The OCPA is modeled on the federal RICO Act, 18 U.S.C. 1961, and 

its body of federal law is instructive. Schlenker Ents., L.P. v. Reese, 3d Dist. Nos. 

2-10-16 and 2-10-19, 2010-Ohio-5308, ¶ 31. 

{¶31} As alluded to above, this cause of action in the City’s amended complaint 

does not state a valid claim because it fails to conform its allegations to traditional notions 

of proximate cause. However, it also alleges an injury derivative of the injury inflicted 

on others. 

{¶32} The City’s OCPA claim is premised on Chase engaging in a pattern of 

submitting improper, misleading, or fraudulent paperwork in foreclosure actions. In fact, 

the City alleges that JP Morgan Chase had questionable title in 41 percent of the 

foreclosure actions filed in the Cuyahoga County Common Pleas Court between 2002 and 

2007. 
{¶33} However, the damages suffered from these questionable foreclosures were 

suffered by the individual mortgagors, not the City. The City cannot allege that these 

foreclosure actions would not have taken place. In fact, those cases where it was found 

that a plaintiff did not properly have an interest in the note and mortgage at the time a 

foreclosure action was initiated were dismissed without prejudice in order to give the 

plaintiff an opportunity to clear up the ownership issue and refile the foreclosure 

complaint. See, e.g., Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675, 

2009-Ohio-1092. 

{¶34} While the City alleges that it suffered individual specialized damages from 

each foreclosure, as set forth in its public nuisance claim, the same cannot be said of this 

claim. The City does not allege that each such foreclosure would not have occurred. 

Any injury inflicted on the City would have occurred whether the City’s allegations were 

true or not because the mortgagors were in default. The foreclosure process would only 

be delayed, not extinguished. Therefore, the injury inflicted by these actions would 

befall the mortgagors, not the City. In fact, several large banks have recently entered 

into a settlement with the U.S. government specifically addressing these allegations and 

have agreed to compensate mortgagors where foreclosure actions were improperly 

initiated or maintained. Associated Press Business Staff, 10 Banks Agree to Pay $8.5 

Billion for Foreclosure Abuse, Cleveland Plain Dealer (Jan. 7, 2013).5

 JP Morgan Chase 

was a party to this settlement. Id. 

 5

 Available at http://www.cleveland.com/business/index.ssf/2013/01/10_banks_ 
{¶35} This multiplicity of suit and liability demonstrates why the City could not 

recover under its OCPA claim. “‘“[T]he general tendency of the law, in regard to 

damages at least, is not to go beyond the first step.”’” Holmes, 503 U.S. 258, 271-272, 

quoting Associated Gen. Contrs. of Cal., Inc. v. Carpenters, 459 U.S. 519, 534, 103 S.Ct. 

897, 74 L.Ed.2d 723 (1983), quoting S. Pacific Co. v. Darnell-Taenzer Lumber Co., 245 

U.S. 531, 533, 38 S.Ct. 186, 61 L.Ed.2d 451 (1918). 

{¶36} While the causal connection between the City’s injury and the lending and 

securitization activities in its public nuisance claim are less remote and may not be 

derivative, the injuries suffered as a result of a pattern of initiating and maintaining 

foreclosure actions based on false or misleading paperwork are. The City’s injury of 

reduced property value as a result of these improper foreclosure actions is tentative at best 

because the foreclosure actions would have been filed anyway given that mortgagors 

were in default. These actions have caused no damages to the City individually that would 

not have befallen it without any impropriety. 

 

agree_to_pay_85_billi.html (accessed Jan. 14, 2013). 
III. Conclusion 

{¶37} The City’s attempt to address severe economic conditions it alleges were 

created by Chase is novel and laudable, but it ultimately fails to state a valid claim. The 

causal connection between the securitizing institutions and the foreclosure crisis is too far 

removed under traditional notions of proximate cause. Even under the most lenient of 

pleading requirements for public nuisance claims, as set forth in Beretta, the City’s 

amended complaint fails to state a valid claim under public nuisance or the OCPA. 

Therefore, the decision of the trial court dismissing the City’s amended complaint is 

affirmed. 

{¶38} Judgment affirmed. 

It is ordered that appellees recover from appellant costs herein taxed. 

The court finds there were reasonable grounds for this appeal. 

It is ordered that a special mandate be sent to said court to carry this judgment into 

execution. 

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of 

the Rules of Appellate Procedure. 

FRANK D. CELEBREZZE, JR., JUDGE 

MARY J. BOYLE, P.J., and 

KATHLEEN ANN KEOUGH, J., CONCUR