Eleventh Circuit Allows Miami’s Claims under the Fair Housing Act to Move Forward

The Eleventh Circuit Court of Appeals recently reversed a lower court ruling that dismissed discriminatory lending claims against Wells Fargo & Co., Bank of America Corp. and Citigroup Inc., all brought by the City of Miami. The City of Miami alleges in each of the three lawsuits that the companies engaged in a decade of lending discrimination in its residential housing market, which compounded the impact of the economic downturn on the city. Specifically, the city claims that the banks targeted black and Latino customers for predatory loans that carried more risk, steeper fees, and higher costs than those offered to similarly situated white consumers. The city further alleges that the banks created internal incentive programs that encouraged these practices. As a result of the banks’ practices, the City of Miami alleges that minority-owned properties throughout the city were subject to greater rates of foreclosure, which deprived the city of tax revenue and forced the City to make increased expenditures on municipal services, such as police, firefighters, and debris removal to combat the blight resulting from significant foreclosures.

The lower court dismissed the city’s claims with prejudice in 2014 on the grounds that the city lacked standing under the Fair Housing Act, that the harm was too remote from the alleged conduct, and that the statute of limitations on the claim had expired. The Circuit Court disagreed with each of these findings, thus reversing the lower court and allowing the suits to move forward. In its opinion, which did not consider the merits of the city’s claims, the Eleventh Circuit panel found that the banks could have reasonably foreseen the “attendant harm” from alleged discriminatory lending and the harm was not too remote. In its consideration of whether the statute of limitations for the claim had passed and whether the continuing violation doctrine applied, the Eleventh Circuit found that the city “has alleged ‘not just one incident…but an unlawful practice that continues into the limitations period’.”

Similar suits filed by the City of Los Angeles and Cook County, Illinois (which includes the city of Chicago) against Wells Fargo were recently dismissed on grounds similar to those that resulted in the dismissal of the City  of Miami’s original suit. It is foreseeable that the Eleventh Circuit’s decision, while not controlling, may have an impact on any appellate review of similar cases.