Easthampton Savings Bank v. City of Springfield
736 F.3d 46
1st Cir.2013Background
- Springfield enacted two ordinances in 2011 to address problems from foreclosed or vacant residential properties: a Foreclosure Ordinance imposing property-maintenance duties and a $10,000 cash bond, and a Mediation Ordinance requiring court-eligible mediation before foreclosure.
- The Foreclosure Ordinance defines “owner” to include mortgagees who have initiated foreclosure, and imposes obligations (security, securing openings, removing hazards, insurance, bonding) even when mortgagees are not in possession.
- The Mediation Ordinance requires owner-occupied mortgagees and mortgagors to engage in approved mediation, with mortgagees bearing ~85% of costs and a $300/day penalty for noncompliance during the statutory cure period. Both ordinances apply retroactively to existing mortgages.
- Six banks sued in state court seeking declaratory and injunctive relief, alleging state-law preemption, violation of the Massachusetts Constitution (illegal tax), and federal Contracts Clause and other federal claims; the City removed to federal court.
- The district court upheld the ordinances; the banks appealed. The First Circuit found dispositive state-law questions unsettled and certified two questions to the Massachusetts Supreme Judicial Court (SJC): preemption and whether the Foreclosure Ordinance imposes an unlawful tax. The court retained jurisdiction over the federal Contracts Clause claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ordinances are preempted by Massachusetts law (field or conflict preemption) | Ordinances conflict with and are preempted by comprehensive state foreclosure and property-maintenance statutes, so municipalities cannot impose these duties | State statutes may allow limited local regulation; local response to unique municipal harms is permissible and SJC should interpret scope | First Circuit certified the question to the SJC as dispositive and not governed by controlling state precedent; refused to decide preemption itself |
| Whether the Foreclosure Ordinance imposes an unlawful tax under the Massachusetts Constitution | The $10,000 cash bond functions as a tax (raises revenue, benefits public broadly), not a regulatory fee tied to particularized benefits to payors | The bond is a regulatory fee to cover costs of property maintenance and is designed to compensate the City for services to the properties; benefits may be particularized to mortgagees | First Circuit certified the illegal-tax question to the SJC because Massachusetts law is not reasonably clear on whether the bond is a fee or an unlawful tax |
| Whether certification of state-law questions is appropriate | Banks argued SJC guidance unnecessary for preemption and illegal tax questions; opposed certifying Contracts Clause issue | City and court argued state-law resolution is dispositive and SJC is best suited to interpret home-rule, preemption, and tax/fee distinctions | Court certified the two state-law questions to the SJC (preemption; unlawful tax) and retained federal claim jurisdiction |
| Whether federal Contracts Clause should be decided now | Banks urged resolution; they claimed ordinances impair contracts | City contended state-law resolution could be dispositive and Contracts Clause not appropriate for certification | Court declined to certify federal Contracts Clause (federal law); deferred it pending SJC answers since state-law rulings may be dispositive |
Key Cases Cited
- Real Estate Bar Ass'n for Mass., Inc. v. Nat'l Real Estate Info. Servs., 608 F.3d 110 (1st Cir. 2010) (certification to state court appropriate where state-law questions are dispositive)
- Ropes & Gray LLP v. Jalbert (In re Engage, Inc.), 544 F.3d 50 (1st Cir. 2008) (discussing standard for federal courts certifying questions to state supreme court)
- Bos. Gas Co. v. Century Indem. Co., 529 F.3d 8 (1st Cir. 2008) (factors for certification; federalism considerations)
- St. George Greek Orthodox Cathedral of W. Mass., Inc. v. Fire Dep't of Springfield, 967 N.E.2d 127 (Mass. 2012) (example of state preemption of local ordinance based on statewide building code)
- Silva v. City of Attleboro, 908 N.E.2d 722 (Mass. 2009) (distinguishing regulatory fees from unlawful taxes; particularized benefit test)
- Town of Wendell v. Attorney Gen., 476 N.E.2d 585 (Mass. 1985) (standards for preemption where state law indicates intent to preclude local action)