Wells Fargo, BofA Seek Court Edge for Miami’s Loan Bias Claims

By Chris Bruce

Bank of America and Wells Fargo Oct. 26 asked a federal appeals court to send Miami’s lending bias claims back to a trial court that ruled in favor of both banks in 2014.

In separate but related lawsuits, Miami sued Bank of America and Wells Fargo under the Fair Housing Act, alleging lending discrimination that Miami says is to blame for a host of economic woes, including lower tax revenues and higher property-related city expenditures ( Miami v. Bank of Am. Corp. , 11th Cir., 14-cv-14543, motion for remand 10/26/17 ; Miami v. Wells Fargo Bank & Co. , 11th Cir., 14-cv-14544, motion for remand 10/26/17 ).

A federal district court rejected Miami’s suits at an early stage, saying the suit didn’t meet pleading requirements, but the U.S. Court of Appeals for the Eleventh Circuit reinstated both actions in 2015. Wells Fargo and Bank of America appealed to the U.S. Supreme Court, which in May said cities may file such suits but must allege a causal connection between the claims of bias and the injuries they assert.

The question now is where consideration of that question will be addressed — either in the Eleventh Circuit, or in the U.S. District Court for the Southern District of Florida, which oversaw the original cases.

In separate filings Oct. 26, Bank of America and Wells Fargo asked the Eleventh Circuit to allow the district court to handle the case and apply the Supreme Court’s ruling to it. “Consistent with its usual practice, this Court should remand so that the district court can apply the Supreme Court’s City of Miami decision in the first instance,” Bank of America’s filing said in language identical to that in the Wells Fargo filing.

It’s not known when the Eleventh Circuit will rule on the motion. However, resolution of the cause question — whichever court ends up deciding it — could affect similar cases involving JP Morgan, Citigroup, and HSBC in lawsuits brought by cities that include Philadelphia, Chicago, Atlanta, and others.

Philadelphia Suit

In separate action Oct. 26, Wells Fargo asked a federal judge in Pennsylvania to throw out Philadelphia’s Fair Housing Act lawsuit against the bank, saying the city’s claims don’t pass muster under the Supreme Court’s May decision ( Philadelphia v. Wells Fargo & Co. , E.D. Pa., 17-cv-02203, motion to dismiss 10/26/17 ).

The bank said the city, while alleging that Wells Fargo “caused” its economic injury, hasn’t alleged the specific proximate cause mandated for such claims.

According to Wells Fargo, Philadelphia can’t make the required connection between the bias it alleges and the injuries it claims.

“The City’s motive is obvious: The property tax and municipal service cost injuries alleged are far `too remote’ and too many `ripples’ removed from the challenged loans to ever satisfy the City of Miami proximate cause requirement,” Wells Fargo said, quoting from portions of the U.S. Supreme Court’s decision in May.

To contact the reporter on this story: Chris Bruce in Washington at cbruce@bna.com

To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.