(Adds background, quote from ruling, BofA comment, Miami
officials not immediately available)
By Dena Aubin
July 9 A federal judge has dismissed the city of
Miami's mortgage discrimination lawsuit against Bank of America
Corp, handing the city its first defeat in four suits
that accuse major banks of U.S. Fair Housing Act violations.
In a ruling on Tuesday that could affect similar legal
actions by other localities, U.S. District Judge William
Dimitrouleas said Miami did not have standing to sue under the
1968 law, passed to prevent discrimination and assure fair
Wells Fargo & Co, Citigroup Inc and JPMorgan
Chase & Co are also facing lawsuits by Miami for
allegedly targeting minorities for subprime loans that defaulted
en masse during the last decade's housing crisis.
The ruling could also have implications for at least a dozen
similar suits filed by U.S. cities and counties, including Los
Angeles; Miami Gardens, Florida; and DeKalb County, Georgia.
"We believe the correct determination was made in the Miami
case," Bank of America spokesman Rick Simon said.
"We responded with urgency to rising mortgage defaults that
resulted from the country's severe economic downturn, which the
Miami suit all but ignored," he said.
Lawyers and a spokesman for the city of Miami did not
immediately respond to a request for comment.
Miami had accused the banks of giving minorities loans they
could not afford, which the city said led to foreclosures, lower
property values and neighborhood blight.
The city sued to recover lost property tax revenue and
increased expenses for the city in neighborhoods with vacant
The damages are "so marginally related" to the purpose of
the Fair Housing Act that it cannot be assumed that Congress
intended to permit the city's lawsuit, the judge ruled.
The city's alleged harm was also too remote from the bank's
conduct to bring a suit, the judge said.
"Against the backdrop of a historic drop in home prices and
a global recession," the city had not traced foreclosures to
Bank of America's actions, the judge said.
LEADER IN ZOMBIE FORECLOSURES
Filed in December, the lawsuit accused Bank of America of a
"continuous pattern and practice of mortgage discrimination in
Miami" since at least 2004.
The lawsuit said Florida, and Miami in particular, had been
devastated by the foreclosure crisis. As of October 2013,
Florida had the country's highest foreclosure rate, and Miami
had the highest rate among the 20 largest metropolitan
statistical areas in the country, according to the lawsuit.
Florida was by far the leading state in the country with
owner-vacated, or "zombie," foreclosures, the suit said.
In Tuesday's ruling, Dimitrouleas said Bank of America was
not responsible for the actions of "intervening actors such as
squatters, vandals or criminals that damaged foreclosed
properties" and caused the city's costs to rise.
The case is: City of Miami v Bank of America Corp, U.S.
District Court, Southern District of Florida, No 13-24506.
(Reporting by Dena Aubin in New York; Editing by Kevin
Drawbaugh and Jeffrey Benkoe)