Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 1 of 17
CLOSED,LSS,MEDIATION,REF_DISCOV,STAYED
U.S. District Court Southern District of Florida (Miami) CIVIL DOCKET FOR CASE #: 1:13−cv−24506−WPD

City of Miami v. Bank of America Corporation et al Assigned to: Judge William P. Dimitrouleas Referred to: Magistrate Judge Lurana S. Snow Case in other court: USCA, 14−14543−CC Cause: 42:3601 Fair Housing Act
Plaintiff

Date Filed: 12/13/2013 Date Terminated: 07/13/2016 Jury Demand: Defendant Nature of Suit: 443 Civil Rights: Accommodations Jurisdiction: Federal Question

City of Miami a Florida Municipal Coporation

represented by D. Porpoise Evans Perlman, Bajandas, Yevoli & Albright, P.L. 283 Catalonia Avenue Suite 200 Miami, FL 33131 305−377−0086 Fax: 305−377−0781 Email: eservicemia@pbyalaw.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Daniel E. Seltz Lieff Cabraser Heimann & Bernstein, LLP 250 Hudson Street 8th Floor New York, NY 10013 212−355−9500 Email: dseltz@lchb.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Elaine T. Byszewski Hagens Berman Sobol Shapiro LLP 301 North Lake Avenue, Suite 203 Pasadena, CA 91101 213 330−7150 Email: elaine@hbsslaw.com TERMINATED: 03/11/2016 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Erwin Chemerinsky The University of California 401 East Peltason Drive Irvine, CA 92697 949−824−7722 Email: eChemerinsky@law.uci.edu LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Howard Liberson Trial and Appellate Resources, PC 400 Continental Blvd., 6th Floor El Segundo, CA 90245 300−426−2361 Email: howard@taresources.com LEAD ATTORNEY PRO HAC VICE

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ATTORNEY TO BE NOTICED
Joel Liberson Trial & Appellate Resources, P.C. 400 Continental Blvd., 6th Floor El Segundo, CA 90245 310−426−2361 Email: joel@taresources.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Joshua B. Spector Perlman, Bajandas, Yevoli & Albright, P.L. 1000 Brickell Avenue Suite 600 Miami, FL 33131 305−377−0086 Fax: 377−0781 Email: eservicemia@pbyalaw.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kelly Dermody Lieff Cabraser Heimann & Bernstein Embarcadero Center West 275 Battery Street 29th Floor San Francisco, CA 94111−3339 415−956−1000 Fax: 956−1008 Email: kdermody@lchb.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Lee M. Gordon Hagens Berman Sobol Shapiro LLP 301 North Lake Avenue, Suite 203 Pasadena, CA 91101 213−330−7150 Email: lee@hbsslaw.com TERMINATED: 03/11/2016 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Patrick F. Madden Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103 215−875−3000 Email: pmadden@bm.net LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Rachel Geman Lieff Cabraser Heimann & Bernstein LLP 250 Hudson Street 8th Floor New York, NY 10013 212−355−9500 Fax: 212−355−9592 Email: rgeman@lchb.com LEAD ATTORNEY

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 3 of 17
PRO HAC VICE ATTORNEY TO BE NOTICED
Robert S. Peck Center for Constitutional Litigation, P.C. 7916 Bressingham Drive Fairfax Station, VA 22039 202−277−6006 Fax: 202 965−0920 Email: robert.peck@cclfirm.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Sarah Schalman−Bergen Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103 215−875−3000 Email: SSchalman−Bergen@bm.net LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Sherrie R. Savett Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103−6365 215−875−3071 Fax: 875−4604 Email: ssavett@bm.net LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Steve W. Berman Hagens Berman Sobol Shapiro, LLP 1918 Eighth Avenue Suite 3300 Seattle, WA 98101 (206) 623−7292 Fax: 206−623−0594 Email: steve@hbsslaw.com TERMINATED: 03/11/2016 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Victoria Mendez Office of the City Attorney, City of Miami 444 SW 2nd Avenue, Suite 945 Miami, FL 33130 305−416−1800 Fax: 305−416−1801 Email: vmendez@miamigov.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lance August Harke Harke Law LLP 9699 NE Second Avenue Miami Shores, FL 33138 305−536−8222 Fax: 305−536−8229 Email: lharke@harkelaw.com TERMINATED: 06/08/2016 ATTORNEY TO BE NOTICED

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 4 of 17

V. Defendant Bank of America Corporation

represented by Christopher Stephen Carver Akerman Senterfitt Suntrust International Center 1 SE 3rd Avenue 25th Floor Miami, FL 33131−1714 305−982−5572 Fax: 305−374−5095 Email: christopher.carver@akerman.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
James W. McGarry Goodwin, Procter, LLP 53 State Street Boston, MA 02109 617−570−1000 Email: jmcgarry@goodwinprocter.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Matthew S. Sheldon Goodwin Procter LLP 901 New York Avenue, NW Washington, DC 20001−4432 202−346−4000 Email: Msheldon@goodwinprocter.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Thomas M. Hefferon Goodwin Procter LLP 901 New York Avenue NW Washington, DC 20001 202−346−4000 Email: thefferon@goodwinprocter.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Brendan I Herbert Locke Lord LLP 525 Okeechobee Blvd. Suite 1600 West Palm Beach, FL 33401 561−833−7700 Fax: 561−655−8719 Email: brendan.herbert@lockelord.com TERMINATED: 05/26/2016 ATTORNEY TO BE NOTICED
Marissa Ximena Kaliman Akerman, LLP 1 SE 3rd Ave, Suite 2500 Miami, FL 33131 305−982−5589 Email: marissa.kaliman@akerman.com ATTORNEY TO BE NOTICED

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Defendant Bank of America, N.A.
Defendant Countrywide Financial Corporation

represented by Christopher Stephen Carver (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James W. McGarry (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Keith Levenberg Goodwin Procter, LLP 901 New York Avenue, NW Washington, DC 20001 202−346−4248 Fax: 202−346−4444 Email: KLevenberg@goodwinprocter.com LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Matthew S. Sheldon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Thomas M. Hefferon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Brendan I Herbert (See above for address) TERMINATED: 05/26/2016 ATTORNEY TO BE NOTICED
Marissa Ximena Kaliman (See above for address) ATTORNEY TO BE NOTICED
represented by Christopher Stephen Carver (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Matthew S. Sheldon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Thomas M. Hefferon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Brendan I Herbert

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 6 of 17

(See above for address) TERMINATED: 05/26/2016 ATTORNEY TO BE NOTICED

Marissa Ximena Kaliman (See above for address) ATTORNEY TO BE NOTICED

Defendant Countrywide Home Loans

represented by Christopher Stephen Carver (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Matthew S. Sheldon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Thomas M. Hefferon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Brendan I Herbert (See above for address) TERMINATED: 05/26/2016 ATTORNEY TO BE NOTICED

Marissa Ximena Kaliman (See above for address) ATTORNEY TO BE NOTICED

Defendant Countrywide Bank, FSB

represented by Christopher Stephen Carver (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Keith Levenberg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Matthew S. Sheldon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Thomas M. Hefferon (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Brendan I Herbert (See above for address) TERMINATED: 05/26/2016 ATTORNEY TO BE NOTICED

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 7 of 17

Marissa Ximena Kaliman (See above for address) ATTORNEY TO BE NOTICED

Date Filed 12/13/2013 12/13/2013 12/17/2013 12/17/2013 12/18/2013
12/31/2013 12/31/2013 12/31/2013 12/31/2013 12/31/2013 12/31/2013 12/31/2013 01/06/2014 01/06/2014 01/06/2014

# Docket Text
1 COMPLAINT City of Miami against All Defendants. Filing fees $ 400.00 receipt number 113C−6310671, filed by City of Miami. (Attachments: # 1 Civil Cover Sheet)(Harke, Lance) (Entered: 12/13/2013)
2 Judge Assignment to Judge Joan A. Lenard (jua) (Entered: 12/13/2013)
3 ORDER OF RECUSAL. Judge Joan A. Lenard recused. Case reassigned to Judge Robin S. Rosenbaum for all further proceedings Signed by Judge Joan A. Lenard on 12/17/2013. (jc) (Entered: 12/17/2013)
4 Notice of Pendency of Other Action by City of Miami (Harke, Lance) (Entered: 12/17/2013)
5 WAIVER OF SERVICE Returned Executed by City of Miami. Bank of America Corporation waiver sent on 12/16/2013, answer due 2/14/2014; Bank of America, N.A. waiver sent on 12/16/2013, answer due 2/14/2014; Countrywide Bank, FSB waiver sent on 12/16/2013, answer due 2/14/2014; Countrywide Financial Corporation waiver sent on 12/16/2013, answer due 2/14/2014; Countrywide Home Loans waiver sent on 12/16/2013, answer due 2/14/2014. (Harke, Lance) (Entered: 12/18/2013)
6 MOTION to Appear Pro Hac Vice for Elaine T. Byszewski, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71223. (pt) (Entered: 01/06/2014)
7 MOTION to Appear Pro Hac Vice for Lee M. Gordon, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71222. (pt) (Entered: 01/06/2014)
8 MOTION to Appear Pro Hac Vice for Steve W. Berman, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71221. (pt) (Entered: 01/06/2014)
9 MOTION to Appear Pro Hac Vice for Howard Liberson, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71220. (pt) (Entered: 01/06/2014)
10 MOTION to Appear Pro Hac Vice for Joel Liberson, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71219. (pt) (Entered: 01/06/2014)
11 MOTION to Appear Pro Hac Vice for Erwin Chemerinsky, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71218. (pt) (Entered: 01/06/2014)
12 MOTION to Appear Pro Hac Vice for Robert Peck, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 71217. (pt) (Entered: 01/06/2014)
13 ORDER granting 8 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
14 ORDER granting 6 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
15 ORDER granting 11 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)

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01/06/2014 01/06/2014 01/06/2014 01/06/2014 02/06/2014
02/06/2014 02/06/2014
02/07/2014 02/07/2014 02/07/2014 02/25/2014
02/25/2014 02/26/2014

16 ORDER granting 7 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
17 ORDER granting 10 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
18 ORDER granting 9 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
19 ORDER granting 12 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 1/6/2014. (tpl) (Entered: 01/06/2014)
20 NOTICE of Attorney Appearance by Christopher Stephen Carver on behalf of Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. Attorney Christopher Stephen Carver added to party Bank of America Corporation(pty:dft), Attorney Christopher Stephen Carver added to party Bank of America, N.A.(pty:dft), Attorney Christopher Stephen Carver added to party Countrywide Bank, FSB(pty:dft), Attorney Christopher Stephen Carver added to party Countrywide Financial Corporation(pty:dft), Attorney Christopher Stephen Carver added to party Countrywide Home Loans(pty:dft). (Carver, Christopher) (Entered: 02/06/2014)
21 Corporate Disclosure Statement by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans (Carver, Christopher) (Entered: 02/06/2014)
22 Unopposed MOTION for Extension of Time to File Answer RE: Complaints re 1 Complaint − Defendants' Unopposed Motion for Enlargement of Time to Respond to Complaint by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Attachments: # 1 Exhibit A − [proposed] Order Granting Defendants' Unopposed Motion for Enlargement of Time to Respond to Complaint)(Carver, Christopher) (Entered: 02/06/2014)
23 ORDER REQUIRING DISCOVERY AND SCHEDULING CONFERENCE AND ORDER REFERRING CASE to Magistrate Judge Patrick M. Hunt for Discovery Matters. Please see Order for details. Signed by Judge Robin S. Rosenbaum on 2/7/2014. (kms) (Entered: 02/07/2014)
24 PAPERLESS ORDER granting 22 Defendants' Unopposed Motion for Extension of Time to Respond to the Complaint. Defendants' response to the Complaint is now due 2/28/14. Signed by Judge Robin S. Rosenbaum on 2/7/2014. (kms) (Entered: 02/07/2014)
25 GENERAL ORDER ON DISCOVERY. Signed by Magistrate Judge Patrick M. Hunt on 2/7/2014. (tjs) (Entered: 02/07/2014)
26 MOTION for Leave to File Excess Pages Unopposed Motion for Enlargement of Page Limits by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. Attorney Brendan I Herbert added to party Bank of America Corporation(pty:dft), Attorney Brendan I Herbert added to party Bank of America, N.A.(pty:dft), Attorney Brendan I Herbert added to party Countrywide Bank, FSB(pty:dft), Attorney Brendan I Herbert added to party Countrywide Financial Corporation(pty:dft), Attorney Brendan I Herbert added to party Countrywide Home Loans(pty:dft). (Attachments: # 1 Text of Proposed Order)(Herbert, Brendan) (Entered: 02/25/2014)
27 PAPERLESS ORDER granting 26 Defendants' Unopposed Motion for Leave to File Excess Pages. Defendants may file a motion to dismiss that is 23 pages in length; Plaintiff may file a response to the motion that is 23 pages in length; and Defendants may file a 14−page reply brief. Signed by Judge Robin S. Rosenbaum on 2/25/2014. (kms) (Entered: 02/25/2014)
28 MOTION to Permit James W. McGarry to Appear Pro Hac Vice for Defendants, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 74652. (ksa) (Entered: 02/27/2014)

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02/27/2014 02/27/2014 02/28/2014 02/28/2014 02/28/2014
02/28/2014 03/05/2014 03/05/2014 03/17/2014 03/17/2014

29 ORDER granting 28 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 2/27/2014. (kms) (Entered: 02/27/2014)
30 STRICKEN Unopposed MOTION for Leave to File −− Defendants' Unopposed Motion for Leave to File Declaration of Katherine Cacho under Seal by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Attachments: # 1 Text of Proposed Order Exhibit A − (proposed) Order Granting Motion to File Declaration of Katherine Cacho Under Seal)(Carver, Christopher) Modified to strike per DE 32 on 3/3/2014 (tpl). (Entered: 02/27/2014)
31 Clerks Notice to Filer re 30 Unopposed MOTION for Leave to File −− Defendants' Unopposed Motion for Leave to File Declaration of Katherine Cacho under Seal. Conventional Filing Filed Electronically; CORRECTIVE ACTION REQUIRED − The Filer failed to submit the document in the conventional paper format. The Filer must file a Notice of Striking, then refile the document in the conventional paper format. (tpl) (Entered: 02/28/2014)
32 NOTICE of Striking 30 Unopposed MOTION for Leave to File −− Defendants' Unopposed Motion for Leave to File Declaration of Katherine Cacho under Seal filed by Countrywide Home Loans, Bank of America Corporation, Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A. by Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A., Bank of America Corporation, Countrywide Home Loans (Herbert, Brendan) (Entered: 02/28/2014)
33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint , MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law ( Responses due by 3/17/2014) by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Attachments: # 1 Exhibit 1 − Complaint, United States v. Countrywide Fin. Corp., No. 11−10540 (C.D. Cal. Dec. 21, 2011), # 2 Exhibit 2 − Sealed Declaration of Katherine Cacho, # 3 Exhibit 3 − Report of Timothy J.Riddiough, Ph.D, # 4 Exhibit 4 − Report of Marsha J. Courchane, # 5 Exhibit 5 − City of Miami Meeting Minutes (May 14, 2009), # 6 Exhibit 6 − Complaint, City of Miami v. Citigroup, Inc., No. 13−24510 (S.D. Fla.), # 7 Exhibit 7 − Complaint, City of Miami v. Wells Fargo & Co., No. 13−cv−24508 (S.D. Fla.), # 8 Exhibit 8 − Map showling locations of properties identified in Citi of Miami lawsuits, # 9 Exhibit 9 − City of Miami FY 2009 Annual Budget (excerpts), # 10 Exhibit 10 − City of Miami Legislation Resolution, File No. 09−00492 (May 5, 2009))(Carver, Christopher) (Attachment 2 replaced on 3/5/2014) (nc). Modified docket text on 3/5/2014 (nc). (Entered: 02/28/2014)
34 UNOPPOSED MOTION for Leave to File Declaration of Katherine Cacho Under Seal by Bank of America Corporation, et al. (Attachments: # 1 Text of Proposed Order)(nc) (Entered: 03/03/2014)
35 ORDER granting 34 Motion to File Documents Under Seal. Filings are to remain sealed until one year after the closing of the case. Signed by Judge Robin S. Rosenbaum on 3/5/2014. (tpl) (Entered: 03/05/2014)
36 CLERK'S NOTICE of Compliance by Replacing [33−2] with Sealed Declaration of Katherine Cacho and the attached exhibits pursuant to 35 Order. (nc) (Entered: 03/05/2014)
37 RESPONSE in Opposition re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO DISMISS filed by City of Miami. (Attachments: # 1 Declaration of Elaine T. Byszewski in Support of Plaintiff's Opposition to Defendants' Motion to Dismiss)(Harke, Lance) (Entered: 03/17/2014)
38 AFFIDAVIT in Opposition re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law Declaration of Elaine T. Byszewski in

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03/20/2014 03/25/2014 03/25/2014 03/27/2014
04/01/2014 04/03/2014
04/03/2014 04/07/2014
04/08/2014 04/08/2014 04/21/2014 04/30/2014
05/20/2014

Support of Plaintiff's Opposition to Defendants' Motion to Dismiss filed by City of Miami. (Attachments: # 1 Exhibit Exhibit A to Declaration of Elaine T. Byszewski in Support of Plaintiff's Opposition to Defendants' Motion to Dismiss)(Harke, Lance) (Entered: 03/17/2014)
39 MOTION to Permit Matthew S. Sheldon Appear Pro Hac Vice, for Defendants, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 75870. (pt) (Entered: 03/24/2014)
40 ORDER granting 39 Matthew S. Sheldon's Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 3/25/2014. (kms) (Entered: 03/25/2014)
42 MOTION to Permit Thomas M. Hefferon to Appear Pro Hac Vice for Defendants, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Filing Fee $ 75.00. Receipt # 76077. (ksa) (Entered: 03/28/2014)
41 REPLY to Response to Motion re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law filed by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Carver, Christopher) (Entered: 03/27/2014)
43 ORDER granting 42 Thomas M. Hefferon's Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing. Signed by Judge Robin S. Rosenbaum on 4/1/2014. (kms) (Entered: 04/01/2014)
44 Defendant's MOTION to Stay −− Defendants' Motion to Stay Discovery Pending Resolution of Dispositive Motion to Dismiss by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. Responses due by 4/21/2014 (Carver, Christopher) (Entered: 04/03/2014)
45 JOINT CONFERENCE REPORT and Proposed Scheduling Order− Rule 16.1 by City of Miami (Harke, Lance) Modified text on 4/7/2014 (tp). (Entered: 04/03/2014)
46 Plaintiff's MOTION for Leave to File ONE−PAGE OPPOSITION TO NEW ARGUMENT IN DEFENDANTS' REPLY BRIEF, OR ALTERNATIVELY, FOR THE COURT TO DISREGARD IT by City of Miami. (Attachments: # 1 Exhibit PLAINTIFF'S OPPOSITION TO NEW ARGUMENT IN DEFENDANTS' REPLY IN SUPPORT OF MOTION TO DISMISS, # 2 Text of Proposed Order PROPOSED ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE ONE−PAGE OPPOSITION TO NEW ARGUMENT IN DEFENDANTS' REPLY BRIEF OR, ALTERNATIVELY, FOR THE COURT TO DISREGARD IT)(Harke, Lance) (Entered: 04/07/2014)
47 PAPERLESS ORDER granting 46 Plaintiff's Motion for Leave to File One−Page Opposition to New Argument in Reply Brief. Clerks Notice: Filer must separately re−file the one−page sur−reply pursuant to Local Rule 15.1, unless otherwise ordered by the Judge. Signed by Judge Robin S. Rosenbaum on 4/8/2014. (kms) (Entered: 04/08/2014)
48 RESPONSE/REPLY to 41 Reply to Response to Motion, by City of Miami. (Harke, Lance) (Entered: 04/08/2014)
49 RESPONSE in Opposition re 44 Defendant's MOTION to Stay −− Defendants' Motion to Stay Discovery Pending Resolution of Dispositive Motion to Dismiss filed by City of Miami. (Harke, Lance) (Entered: 04/21/2014)
50 REPLY to Response to Motion re 44 Defendant's MOTION to Stay −− Defendants' Motion to Stay Discovery Pending Resolution of Dispositive Motion to Dismiss −− Reply in Support of Defendants Motion to Stay Discovery and Initial Disclosures Pending Resolution of Dispositive Motion to Dismiss filed by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Carver, Christopher) (Entered: 04/30/2014)
51 CLERKS NOTICE REASSIGNING CASE pursuant to Administrative Order 2014−48. Case reassigned to Judge William P. Dimitrouleas for all further proceedings. Judge Robin S. Rosenbaum no longer assigned to case. (mb) (Entered: 05/20/2014)

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05/22/2014 05/22/2014 05/22/2014
05/27/2014 05/29/2014 06/03/2014
06/04/2014 06/04/2014 06/04/2014 06/06/2014 06/09/2014 06/11/2014
06/13/2014 06/20/2014

52 NOTICE of Disclosure. Signed by Judge William P. Dimitrouleas on 5/22/2014. (ls) (Entered: 05/22/2014)
53 ORDER denying 44 Defendants' Motion to Stay Discovery and Initial Disclosures Pending Resolution of Motion to Dismiss. Signed by Judge William P. Dimitrouleas on 5/22/2014. (tpl) (Entered: 05/23/2014)
54 ORDER Setting Trial Date and Discovery Deadlines, ORDER REFERRING CASE to Mediation, ORDER REFERRING Discovery Motions to Magistrate Judge Lurana S. Snow: (Trial set for 11/23/2015 in Fort Lauderdale Division before Judge William P. Dimitrouleas., Calendar Call set for 11/20/2015 10:00 AM before Judge William P. Dimitrouleas., Amended Pleadings due by 4/30/2015., Discovery due by 7/29/2015., Joinder of Parties due by 4/30/2015., In Limine Motions due by 11/6/2015., Substantive Pretrial Motions due by 8/28/2015., Mandatory Pretrial Stipulation due by 11/6/2015.), Signed by Judge William P. Dimitrouleas on 5/22/2014. (tpl) (Entered: 05/23/2014)
55 General ORDER on Discovery Objections and Procedures. Signed by Magistrate Judge Lurana S. Snow on 5/27/2014. (tpl) (Entered: 05/27/2014)
56 Notice of Supplemental Authority re 37 Response in Opposition to Motion,, by City of Miami (Attachments: # 1 Exhibit A − Order (City of Los Angeles v. Wells Fargo & Co.))(Harke, Lance) (Entered: 05/29/2014)
57 MOTION for Hearing re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM by Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A., Bank of America Corporation, Countrywide Home Loans (Carver, Christopher) Modified to convert document to a motion on 6/4/2014 (tpl). (Entered: 06/03/2014)
58 Clerks Notice to Filer re 57 Notice (Other),,. Wrong Event Selected − Document is a Motion; ERROR − The Filer selected the wrong event. A motion event must always be selected when filing a motion. The correction was made by the Clerk. It is not necessary to refile this document. (tpl) (Entered: 06/04/2014)
59 ORDER granting 57 Motion for Hearing. Hearing is set for 06/20/2014 on 33 Motion to Dismiss. Signed by Judge William P. Dimitrouleas on 6/4/2014. (tpl) (Entered: 06/04/2014)
Set Hearing as to 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint. Motion Hearing set for 6/20/2014 10:30 AM in Fort Lauderdale Division before Judge William P. Dimitrouleas per DE 59 Order. (tpl) (Entered: 06/04/2014)
60 NOTICE of Mediator Selection: Mark Buckstein selected.(Harke, Lance) (Entered: 06/06/2014)
61 Notice of Supplemental Authority re 37 Response in Opposition to Motion,, by City of Miami (Attachments: # 1 Exhibit Exhibit A)(Harke, Lance) (Entered: 06/09/2014)
62 ORDER Rescheduling Hearing (Time Change Only) on Motion 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM : Motion Hearing reset for 6/20/2014 10:00 AM in Fort Lauderdale Division before Judge William P. Dimitrouleas. Signed by Judge William P. Dimitrouleas on 6/11/2014. (ls) (Entered: 06/11/2014)
63 Notice of Supplemental Authority re 37 Response in Opposition to Motion,, by City of Miami (Attachments: # 1 Exhibit Exhibit A)(Harke, Lance) (Entered: 06/13/2014)
65 Minute Entry for proceedings held before Judge William P. Dimitrouleas: Motion Hearing held on 6/20/2014 re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law filed by Countrywide Home Loans, Bank of America Corporation, Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A.. Argument heard. Written Order to enter. Court Reporter: Francine Salopek, 954−769−5657 / Francine_Salopek@flsd.uscourts.gov (kc) (Entered: 06/24/2014)

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 12 of 17

06/24/2014
06/25/2014 06/27/2014 06/27/2014 06/30/2014 07/02/2014
07/08/2014 07/21/2014 07/22/2014
08/07/2014

64 Notice of Supplemental Authority re 33 MOTION to Dismiss for Lack of Jurisdiction 1 Complaint MOTION TO DISMISS 1 Complaint FOR FAILURE TO STATE A CLAIM −− Defendants Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and Supporting Memorandum of Law by Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A., Bank of America Corporation, Countrywide Home Loans (Attachments: # 1 Exhibit A − Hillcrest Property, LLC v. Pasco County, No. 1312383, 2014 WL 2748192 (11th Cir. June 18, 2014))(Carver, Christopher) (Entered: 06/24/2014)
66 MOTION for Leave to File PLAINTIFF'S RESPONSE TO NOTICE OF SUPPLEMENTAL AUTHORITY IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS PURSUANT TO RULE 12(B)(1) AND RULE 12(B)(6) by City of Miami. (Attachments: # 1 Exhibit Plaintiff's Response to Notice of Supplemental Authority in Support of Defendants' Motion to Dismiss Pursuant to Rule 12(b)(1) and Rule 12(b)(6), # 2 Text of Proposed Order)(Harke, Lance) (Entered: 06/25/2014)
67 Notice of Pendency of Other Action by City of Miami (Harke, Lance) (Entered: 06/27/2014)
68 ORDER granting 66 Motion for Leave to File One−Page Response to Notice of Supplemental Authority. Clerks Notice: Filer must separately re−file the amended pleading pursuant to Local Rule 15.1, unless otherwise ordered by the Judge. Signed by Judge William P. Dimitrouleas on 6/27/2014. (tpl) (Entered: 06/30/2014)
69 RESPONSE/REPLY to 64 Notice of Supplemental Authority,, PLAINTIFF'S RESPONSE TO NOTICE OF SUPPLEMENTAL AUTHORITY IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS PURSUANT TO RULE 12(B)(1) AND RULE 12(B)(6) by City of Miami. (Harke, Lance) (Entered: 06/30/2014)
70 TRANSCRIPT of Motion Hearing held on 6−20−14 before Judge William P. Dimitrouleas, 1−43 pages, Court Reporter: Francine Salopek, 954−769−5657 / Francine_Salopek@flsd.uscourts.gov. Transcript may be viewed at the court public terminal or purchased by contacting the Court Reporter Francine Salopek before the deadline for Release of Transcript Restriction. After that date it may be obtained throughthe Court Reporter Francine Salopek or PACER. Redaction Request due 7/28/2014. Redacted Transcript Deadline set for 8/7/2014. Release of Transcript Restriction set for 10/3/2014. (fs) (Entered: 07/02/2014)
71 ORDER granting 33 Motion to Dismiss. Count I is DISMISSED WITH PREJUDICE. Count II is DISMISSED WITHOUT PREJUDICE. Signed by Judge William P. Dimitrouleas on 7/8/2014. (tpl) (Entered: 07/09/2014)
72 MOTION for Reconsideration , MOTION for Leave to File First Amended Complaint by City of Miami. (Attachments: # 1 Exhibit A − First Amended Complaint)(Harke, Lance). Added MOTION for Leave to File on 7/22/2014 (tp). (Entered: 07/21/2014)
73 Clerks Notice to Filer re 72 MOTION for Reconsideration MOTION for Leave to File First Amended Complaint. Motion with Multiple Reliefs Filed as One Relief; ERROR − The Filer selected only one relief event and failed to select the additional corresponding events for each relief requested in the motion. The docket entry was corrected by the Clerk. It is not necessary to refile this document but future filings must comply with the instructions in the CM/ECF Attorney User's Manual.Document Not Linked; ERROR − The filed document was not linked to the related docket entry. The correction was made by the Clerk. It is not necessary to refile this document. (tp) (Entered: 07/22/2014)
74 RESPONSE in Opposition re 72 MOTION for Reconsideration MOTION for Leave to File First Amended Complaint −− Defendants' Opposition to Motion for Reconsideration and Leave to File First Amended Complaint filed by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Attachments: # 1 Exhibit 1 − Redline, # 2 Exhibit 2 − 650 NW 50th St _Redacted, # 3 Exhibit 3 − 4125 NW 10th Ave _Redacted, # 4 Exhibit 4− 748 NW 29th Ter. Unit A _Redacted, # 5 Exhibit 5 − 1869 SW 12th St._Redacted, # 6 Exhibit 6 − 2396 SW 20th St_Redacted, # 7 Exhibit 7 − 800 N. Miami Ave _Redacted, # 8 Exhibit 8 − 2201 SW 23rd Ter., Miami, FL 33145 _Redacted, # 9 Exhibit 9 − Declaration of Edward Cherkezian)(Carver, Christopher) (Entered: 08/07/2014)

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 13 of 17

08/18/2014 09/08/2014 09/16/2014

75 RESPONSE/REPLY to 72 MOTION for Reconsideration MOTION for Leave to File First Amended Complaint by City of Miami. (Harke, Lance) (Entered: 08/18/2014)
76 ORDER denying 72 Motion for Reconsideration ; denying 72 Motion for Leave to File First Amended Complaint. Signed by Judge William P. Dimitrouleas on 9/8/2014. (tpl) (Entered: 09/09/2014)
77 FINAL ORDER OF DISMISSAL. Signed by Judge William P. Dimitrouleas on 9/16/2014. (tpl)

10/07/2014
10/08/2014 10/09/2014 02/10/2015 05/12/2015
11/13/2015 11/16/2015 11/30/2015 12/02/2015 12/14/2015
12/22/2015

NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014−69. (Entered: 09/17/2014)
78 Notice of Appeal as to 77 Order Dismissing Case, by City of Miami. Filing fee $ 505.00 receipt number 113C−7136149. Within fourteen days of the filing date of a Notice of Appeal, the appellant must complete the Eleventh Circuit Transcript Order Form regardless of whether transcripts are being ordered [Pursuant to FRAP 10(b)]. For information go to our FLSD website under Transcript Information. (Harke, Lance) (Entered: 10/07/2014)
Transmission of Notice of Appeal and Docket, Order Sheet to US Court of Appeals re 78 Notice of Appeal. Notice has been electronically mailed. (mc) (Entered: 10/08/2014)
79 Acknowledgment of Receipt of NOA from USCA re 78 Notice of Appeal, filed by City of Miami. Date received by USCA: 10/8/2014. USCA Case Number: 14−14543−CC. (mc) (Entered: 10/09/2014)
80 Pursuant to F.R.A.P. 11(c), the Clerk of the District Court for the Southern District of Florida certifies that the record is complete for purposes of this appeal re: 78 Notice of Appeal, Appeal No. 14−14543−CC. The entire record on appeal is available electronically. (mc) (Entered: 02/10/2015)
81 ORDER of USCA Joint motion to consolidate appeals 14−14543, 14−14544 and 14−14706 for the purposes of oral argument is hereby GRANTED; (55 in 1:13−cv−24508−WPD) Notice of Appeal, filed by City of Miami, (72 in 1:13−cv−24510−WPD) Notice of Appeal, filed by CITY OF MIAMI, (78 in 1:13−cv−24506−WPD) Notice of Appeal, filed by City of Miami. (mc) (Entered: 05/12/2015)
82 MANDATE of USCA the judgment of the district court is AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this opinion; re 78 Notice of Appeal, filed by City of Miami ; Date Issued: 11/13/2015 ; USCA Case Number: 14−14543−CC (mc) (Entered: 11/13/2015)
83 ORDER Setting Deadline to File Amended Complaint. Amended Complaint due by 11/30/2015. Defendants shall then respond to the operative complaint on or before 12/14/2015. Signed by Judge William P. Dimitrouleas on 11/16/2015. (jua) (Entered: 11/16/2015)
84 Second AMENDED COMPLAINT for Violations of the Federal Fair Housing Act against Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans, filed by City of Miami.(Harke, Lance) (Entered: 11/30/2015)
85 NOTICE of Change of Address by Lance August Harke (Harke, Lance) (Entered: 12/02/2015)
86 MOTION TO DISMISS 84 Amended Complaint, FOR FAILURE TO STATE A CLAIM ( Responses due by 12/31/2015), MOTION for Hearing re 84 Amended Complaint, −− Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint and Supporting Memorandum of Law, and Request for Hearing by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Carver, Christopher) (Entered: 12/14/2015)
87 Joint MOTION for Extension of Time to File Response/Reply/Answer −− Joint Motion to Extend Briefing Deadlines for Defendants' Motion to Dismiss Plaintiff's Second

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 14 of 17

12/23/2015
12/24/2015
01/20/2016 02/05/2016 02/11/2016 03/04/2016 03/08/2016 03/10/2016 03/11/2016
03/11/2016

Amended Complaint by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Attachments: # 1 Exhibit A − (proposed) Order Granting Joint Motion to Extend Briefing Deadlines)(Carver, Christopher) (Entered: 12/22/2015)
89 ORDER granting 87 Motion for Extension of Time to File Response/Reply to Motion. Re: 86 MOTION TO DISMISS 84 Amended Complaint, FOR FAILURE TO STATE A CLAIM MOTION for Hearing re 84 Amended Complaint, −− Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint and Supporting Memorandum of Law, and Request for Hearing filed by Countrywide Home Loans, Bank of America Corporation, Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A.. Responses due by 1/20/2016 Replies due by 2/5/2016. Signed by Judge William P. Dimitrouleas on 12/23/2015. (cbr) (Entered: 12/28/2015)
88 NOTICE of Attorney Appearance by Marissa Ximena Kaliman on behalf of Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. Attorney Marissa Ximena Kaliman added to party Bank of America Corporation(pty:dft), Attorney Marissa Ximena Kaliman added to party Bank of America, N.A.(pty:dft), Attorney Marissa Ximena Kaliman added to party Countrywide Bank, FSB(pty:dft), Attorney Marissa Ximena Kaliman added to party Countrywide Financial Corporation(pty:dft), Attorney Marissa Ximena Kaliman added to party Countrywide Home Loans(pty:dft). (Kaliman, Marissa) (Entered: 12/24/2015)
90 RESPONSE in Opposition re 86 MOTION TO DISMISS 84 Amended Complaint, FOR FAILURE TO STATE A CLAIM MOTION for Hearing re 84 Amended Complaint, −− Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint and Supporting Memorandum of Law, and Request for Hearing filed by City of Miami. Replies due by 2/1/2016. (Harke, Lance) (Entered: 01/20/2016)
91 REPLY to Response to Motion re 86 MOTION TO DISMISS 84 Amended Complaint, FOR FAILURE TO STATE A CLAIM MOTION for Hearing re 84 Amended Complaint, −− Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint and Supporting Memorandum of Law, and Request for Hearing filed by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Carver, Christopher) (Entered: 02/05/2016)
92 ORDER granting 86 Motion for Hearing. hearing on Defendants= Motion to Dismiss set for 3/11/2016 10:00 AM in Fort Lauderdale Division before Judge William P. Dimitrouleas. Signed by Judge William P. Dimitrouleas on 2/11/2016. (jas) (Entered: 02/12/2016)
93 MOTION to Withdraw as Attorney by Steve W. Berman, Elaine T. Byszewski, and Lee M. Gordon. Responses due by 3/21/2016 (Attachments: # 1 Text of Proposed Order)(jas) (Entered: 03/04/2016)
94 ORDER Requiring Expedited Response as to 93 MOTION to Withdraw as Attorney by Steve W. Berman, Elaine T. Byszewski, and Lee M. Gordon., (Responses due by 3/10/2016). Signed by Judge William P. Dimitrouleas on 3/8/2016. (jas) (Entered: 03/09/2016)
95 RESPONSE to Motion re 93 MOTION to Withdraw as Attorney by Steve W. Berman, Elaine T. Byszewski, and Lee M. Gordon. filed by City of Miami. Replies due by 3/21/2016. (Harke, Lance) (Entered: 03/10/2016)
96 Minute Entry for proceedings held before Judge William P. Dimitrouleas: Motion Hearing held on 3/11/2016 re 86 MOTION TO DISMISS 84 Amended Complaint, FOR FAILURE TO STATE A CLAIM MOTION for Hearing re 84 Amended Complaint, −− Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint and Supporting Memorandum of Law, and Request for Hearing filed by Countrywide Home Loans, Bank of America Corporation, Countrywide Bank, FSB, Countrywide Financial Corporation, Bank of America, N.A. Oral argument heard. Written Order to enter. Court Reporter: Francine Salopek, 954−769−5657 / Francine_Salopek@flsd.uscourts.gov (kc) (Entered: 03/11/2016)
97 ORDER granting 93 Motion to Withdraw as Attorney. Attorney Lee M. Gordon; Steve W. Berman and Elaine T. Byszewski terminated. Notice of Termination delivered by US

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 15 of 17

03/17/2016 04/07/2016
04/13/2016 04/15/2016 04/29/2016 05/16/2016
05/16/2016
05/20/2016 05/20/2016 05/25/2016 05/26/2016

Mail to Elaine Byszewski, Lee Gordon.. Signed by Judge William P. Dimitrouleas on 3/11/2016. (jas) (Entered: 03/14/2016)
98 ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COMPLAINT re 86 Motion to Dismiss for Failure to State a Claim. Amended Pleadings due by 4/15/2016. Signed by Judge William P. Dimitrouleas on 3/17/2016. (jas) (Entered: 03/17/2016)
99 TRANSCRIPT of Motion Hearing held on 3−11−16 before Judge William P. Dimitrouleas, Volume Number 1 of 1, 1−67 pages, Court Reporter: Francine Salopek, 954−769−5657 / Francine_Salopek@flsd.uscourts.gov. Transcript may be viewed at the court public terminal or purchased by contacting the Court Reporter Francine Salopek before the deadline for Release of Transcript Restriction. After that date it may be obtained through the Court Reporter Francine Salopek or PACER. Redaction Request due 5/2/2016. Redacted Transcript Deadline set for 5/12/2016. Release of Transcript Restriction set for 7/11/2016. (fs) (Entered: 04/07/2016)
100 MOTION for Extension of Time to Amend 98 Order on Motion to Dismiss for Failure to State a Claim to Extend Deadline to File Third Amended Complaint and Retain New Counsel to Replace Hagens Berman by City of Miami. Responses due by 5/2/2016 (Attachments: # 1 Text of Proposed Order)(Harke, Lance) (Entered: 04/13/2016)
101 ORDER Granting 100 Motion for Extension of Time to Amend. The deadline to file a Third Amended Complaint is hereby extended to 4/29/2016. Signed by Judge William P. Dimitrouleas on 4/15/2016. (gp) (Entered: 04/15/2016)
102 Third AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FAIR HOUSING ACT against Bank of America, N.A., Countrywide Bank, FSB filed in response to Order Granting Motion for Leave, filed by City of Miami.(Harke, Lance) (Entered: 04/29/2016)
103 MOTION TO DISMISS and Request for Hearing 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing by Bank of America, N.A., Countrywide Bank, FSB. Responses due by 6/3/2016 (Attachments: # 1 Exhibit Redline of SAC and TAC, # 2 Exhibit Cobb Cty. v. Bank of Am. Corp., No. 15−4081, slip op. (N.D. Ga. May 2, 2016))(Carver, Christopher). Added MOTION for Hearing on 5/17/2016 (cbr). (Entered: 05/16/2016)
104 Clerks Notice to Filer re 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing. Motion with Multiple Reliefs Filed as One Relief; ERROR − The Filer selected only one relief event and failed to select the additional corresponding events for each relief requested in the motion. The docket entry was corrected by the Clerk. It is not necessary to refile this document but future filings must comply with the instructions in the CM/ECF Attorney User's Manual. (cbr) (Entered: 05/17/2016)
105 Unopposed MOTION for Extension of Time to File Response/Reply/Answer as to 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing MOTION for Hearing by City of Miami. (Attachments: # 1 Text of Proposed Order)(Harke, Lance) (Entered: 05/20/2016)
106 ORDER granting 105 Motion for Extension of Time to File Response/Reply to Motion. Re: 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing MOTION for Hearing filed by Countrywide Bank, FSB, Bank of America, N.A.. Responses due by 6/10/2016 Signed by Judge William P. Dimitrouleas on 5/20/2016. (cbr) (Entered: 05/23/2016)
107 MOTION TO REMOVE NAME FROM CM/ECF E−MAIL CONTACT LIST AND AS COUNSEL OF RECORD by Bank of America Corporation, Bank of America, N.A., Countrywide Bank, FSB, Countrywide Financial Corporation, Countrywide Home Loans. (Herbert, Brendan) (Entered: 05/25/2016)
108 ORDER granting 107 Motion to Remove Name from CM/ECF Contact List and as Counsel of Record. Signed by Judge William P. Dimitrouleas on 5/26/16. (cbr) (Entered:

Case: 1:13-cv-24506-WPD As of: 01/23/2019 06:47 PM EST 16 of 17

05/26/2016 06/07/2016 06/08/2016 06/09/2016 06/10/2016
06/13/2016
06/14/2016
06/15/2016 06/15/2016 06/15/2016 06/15/2016 06/15/2016 06/16/2016 06/22/2016

05/27/2016)
Attorney Brendan I Herbert terminated. per DE 108 (cbr) (Entered: 05/27/2016)
109 MOTION to Withdraw as Attorney by Lance August Harke. by City of Miami. Responses due by 6/24/2016 (Attachments: # 1 Text of Proposed Order)(Harke, Lance) (Entered: 06/07/2016)
110 ORDER granting 109 Motion to Withdraw as Attorney. Attorney Lance August Harke terminated. Signed by Judge William P. Dimitrouleas on 6/8/2016. (cbr) (Entered: 06/08/2016)
111 NOTICE of Attorney Appearance by Joshua B. Spector on behalf of City of Miami. Attorney Joshua B. Spector added to party City of Miami(pty:pla). (Spector, Joshua) (Entered: 06/09/2016)
112 RESPONSE in Opposition re 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing MOTION for Hearing filed by City of Miami. Attorney D. Porpoise Evans added to party City of Miami(pty:pla). Replies due by 6/20/2016. (Evans, D.) (Entered: 06/10/2016)
113 Unopposed MOTION for Extension of Time to File Response/Reply/Answer −− Defendants Unopposed Motion for Eight−Day Extension of Time to File Reply in Support of Motion to Dismiss Third Amended Complaint with Prejudice (ECF No. 103) by Bank of America Corporation, Countrywide Bank, FSB. (Carver, Christopher) (Entered: 06/13/2016)
114 ORDER granting 113 Motion for Extension of Time to File Response/Reply to Motion. Re: 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing MOTION for Hearing filed by Countrywide Bank, FSB, Bank of America, N.A.. Replies due by 6/28/2016. Signed by Judge William P. Dimitrouleas on 6/14/2016. (cbr) (Entered: 06/15/2016)
115 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Sherrie Savett. Filing Fee $ 75.00 Receipt # 113C−8828260 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/15/2016)
116 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Patrick Madden. Filing Fee $ 75.00 Receipt # 113C−8828265 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/15/2016)
117 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Daniel Seltz. Filing Fee $ 75.00 Receipt # 113C−8828269 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/15/2016)
118 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Kelly Dermody. Filing Fee $ 75.00 Receipt # 113C−8828273 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/15/2016)
119 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Rachel Geman. Filing Fee $ 75.00 Receipt # 113C−8828274 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/15/2016)
120 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Sarah R. Schalman−Bergen. Filing Fee $ 75.00 Receipt # 113C−8829924 by City of Miami. Responses due by 7/5/2016 (Attachments: # 1 Text of Proposed Order)(Spector, Joshua) (Entered: 06/16/2016)
121 MOTION to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Keith Levenberg. Filing Fee $ 75.00 Receipt # 113C−8849490 by Bank of America Corporation, Countrywide Bank, FSB. Responses

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06/22/2016
06/23/2016 06/28/2016 07/05/2016 07/06/2016 07/06/2016 07/13/2016
07/29/2016 09/09/2016

due by 7/11/2016 (Carver, Christopher) (Entered: 06/22/2016)
122 ORDER GRANTING MOTIONS TO APPEAR PRO HAC VICE CONSENT TO DESIGNATION AND REQUEST TO ELECTRONICALLY RECEIVE NOTICES OF ELECTRONIC FILING re 115 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Sherrie Savett; 116 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Patrick Madden; 117 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Daniel Seltz; 118 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Kelly Dermody; 119 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Rachel Geman; 120 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Sarah R. Schalman−Bergen. Signed by Judge William P. Dimitrouleas on 6/22/2016. (mc) (Entered: 06/23/2016)
123 ORDER granting 121 Motion to Appear Pro Hac Vice, Consent to Designation, and Request to Electronically Receive Notices of Electronic Filing for Attorney(s) Keith Levenberg. Signed by Judge William P. Dimitrouleas on 6/23/2016. (mc) (Entered: 06/23/2016)
124 REPLY to Response to Motion re 103 MOTION TO DISMISS 102 Amended Complaint FOR FAILURE TO STATE A CLAIM −− Defendants' Motion to Dismiss Third Amended Complaint with Prejudice and Request for Hearing MOTION for Hearing filed by Bank of America, N.A., Countrywide Bank, FSB. (Carver, Christopher) (Entered: 06/28/2016)
125 ANSWER and Affirmative Defenses to Amended Complaint with Jury Demand −− Defendant's Answer and Affirmative Defenses to Plaintiffs Third Amended Complaint for Violations of the Federal Fair Housing Act by Bank of America Corporation, Countrywide Bank, FSB. (Carver, Christopher) (Entered: 07/05/2016)
126 ORDER TO SHOW CAUSE WHY THIS CASE SHOULD NOT BE STAYED PENDING THE SUPREME COURTS DISPOSITION OF MATTERS NOW BEFORE THE COURT Show Cause Response due by 7/18/2016. Signed by Judge William P. Dimitrouleas on 7/6/2016. (lrz) (Entered: 07/06/2016)
127 RESPONSE TO ORDER TO SHOW CAUSE re 126 Order to Show Cause by Countrywide Bank, FSB, Bank of America, N.A.. (Carver, Christopher) (Entered: 07/06/2016)
128 ORDER STAYING CASE PENDING THE SUPREME COURT'S DISPOSITION OF MATTERS NOW BEFORE THE COURT. This action is hereby STAYED. The Clerk is DIRECTED to administratively close this case and deny without prejudice as moot any pending motions. Signed by Judge William P. Dimitrouleas on 7/13/2016. (mc)
NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014−69. (Entered: 07/14/2016)
129 NOTICE of Change of Address by Joshua B. Spector (Spector, Joshua) (Entered: 07/29/2016)
130 Pursuant to Rule 12.7 of the Rules of the Supreme Court, the Clerk of the District Court for the Southern District of Florida certifies that the record is complete for purposes of this appeal re: 78 Notice of Appeal, Supreme Court of the United States Appeal No. 15−1111, consolidated with 15−1112. The entire record on appeal is available electronically. (hh) (Entered: 09/09/2016)

 
 Case 1:13-cv-24506-WPD Document 1 Entered on FLSD Docket 12/13/2013 Page 1 of 60

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO: _________________

CITY OF MIAMI, a Florida municipal Corporation,

Plaintiff, v.

BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS; and COUNTRYWIDE BANK, FSB,

DEMAND FOR JURY TRIAL

Defendants.

_________________________________/

COMPLAINT FOR VIOLATIONS OF THE FEDERAL FAIR HOUSING ACT

Case 1:13-cv-24506-WPD Document 1 Entered on FLSD Docket 12/13/2013 Page 2 of 60

TABLE OF CONTENTS

Page

I. NATURE OF THE ACTION .................................................................................................... 1

A. BoA Has Engaged in a Continuing Pattern of Discriminatory Mortgage Lending Practices in Miami Resulting in Foreclosures ............................................................... 1

II. PARTIES ................................................................................................................................. 10

III. REFERRALS FROM BANK REGULATORY AGENCIES ................................................. 13

IV. JURISDICTION AND VENUE..............................................................................................14

V. FACTUAL BACKGROUND ................................................................................................. 14

A. Background Regarding Discriminatory Loan Practices, Reverse Redlining, and Redlining ..................................................................................................................... 14

VI. BOA/COUNTRYWIDE ENGAGED IN DISCRIMINATORY LENDING PRACTICES............................................................................................................................ 18

A. Specific Allegations Regarding BoA’s Countrywide Subsidiary ............................... 18

1. Mortgage loan channels and loan types........................................................... 18

2. Retail Lending Pricing..................................................................................... 18

3. Wholesale Lending Mortgage Broker Fees. .................................................... 21

4. Wholesale Lending Product Placement........................................................... 25

B. BoA/Countrywide’s Conduct Had a Disparate Impact on Minority Borrowers in Violation of the Fair Housing Act ............................................................................... 26

1. Discriminatory lending results in a disproportionate number of foreclosures in minority areas. ............................................................................................. 26

2. Minority neighborhoods are disproportionate recipients of predatory loans. . 28

C. BoA/Countrywide Intentionally Discriminated Against Minority Borrowers in Violation of the Fair Housing Act Throughout the Time Period 2004-2012 as Demonstrated by Former Bank Employees................................................................. 30

1. BoA/Countrywide targets minorities for predatory loan terms. ...................... 31

2. BoA/Countrywide underwrites teaser rate loans that borrowers cannot afford. .............................................................................................................. 32

3. BoA induced foreclosures by failing to offer refinancing or loan modifications to minority customers on fair terms, and otherwise limiting equal access to fair credit. ............................................................................... 33

D. Minorities in Fact Receive Predatory Loan Terms from BoA/Countrywide .............. 34

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E. Minorities in Miami Receive Such Predatory Loan Terms from BoA/Countrywide Regardless of Creditworthiness ................................................................................... 36
F. BoA/Countrywide’s Targeting of Minorities who in fact Receive Predatory Loan Terms Regardless of Creditworthiness Causes Foreclosures ...................................... 39 1. Data shows that BoA/Countrywide’s foreclosures are disproportionately located in minority neighborhoods in Miami. ................................................. 39 2. Data shows that BoA/Countrywide’s loans to minorities result in especially quick foreclosures............................................................................................ 42 3. Data shows that the discriminatory loan terms cause the foreclosures. .......... 43
VII. INJURY TO MIAMI CAUSED BY BOA/COUNTRYWIDE’S DISCRIMINATORY LOAN PRACTICES............................................................................45 A. Miami has been Injured by a Reduction in Property Tax Revenues from Foreclosures Caused by Discriminatory Loans Issued by BoA .................................. 45 1. The decreased value of the properties foreclosed by BoA result in reduced property tax revenues. ..................................................................................... 46 2. The decreased value of properties in the neighborhoods surrounding foreclosed properties results in reduced property tax revenues....................... 46 B. Miami Is Injured Because It Provided and Still Must Provide Costly Municipal Services for Foreclosure Properties in Minority Neighborhoods as a Direct Result of Discriminatory Loans Originated or Purchased by BoA............................................. 49
VIII. SAMPLE FORECLOSURE PROPERTIES IN THE CITY OF MIAMI ............................... 50 IX. STATUTE OF LIMITATIONS AND CONTINUING VIOLATIONS
DOCTRINE ............................................................................................................................. 51 X. CLAIMS FOR RELIEF........................................................................................................... 52 FIRST CLAIM FOR RELIEF (Violation of the Federal Fair Housing Act, 42
U.S.C. §§ 3601, Et Seq.).......................................................................................................... 52
SECOND CLAIM FOR RELIEF (Common Law Claim for Unjust Enrichment Based on Florida Law).................................................................................................................54
DEMAND FOR JURY TRIAL ......................................................................................................... 55 PRAYER FOR RELIEF .................................................................................................................... 55
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I. NATURE OF THE ACTION 1. It is axiomatic that banks should not make discriminatory loans. Banks must extend credit to minorities on equal terms as they do to other similarly situated borrowers. Banks should not target minority neighborhoods for loans that discriminate nor make loans to minorities on terms that are worse than those offered to whites with similar credit characteristics. When Banks engage in such discriminatory conduct, the misconduct has profound financial consequences for the cities in which mortgaged properties exist, and Banks should be responsible for those financial consequences. Banks should reimburse the City for lost tax revenues due to discriminatory lending. And Banks should pay the costs of repairing and maintaining properties that go into foreclosure due to discriminatory lending. This lawsuit arises because BoA breached these legally mandated obligations and foreseeably injured the City of Miami. A. BoA Has Engaged in a Continuing Pattern of Discriminatory Mortgage Lending Practices in Miami Resulting in Foreclosures 2. This suit is brought pursuant to the Fair Housing Act of 1968 (“FHA”), as amended, 42 U.S.C. §§ 3601, et seq., by the City of Miami (“Miami” or “City”) to seek redress for injuries caused by Bank of America’s1 (“BoA/Countrywide,” “BoA” or “the Bank”) pattern or practice of illegal and discriminatory mortgage lending. Specifically, Miami seeks injunctive relief and damages for the injuries caused by foreclosures on BoA’s loans in minority neighborhoods and to minority borrowers that are the result of the Bank’s unlawful and discriminatory lending practices. The unlawful conduct alleged herein consists of both intentional discrimination and disparate impact discrimination.
1 Defendants collectively are referred to as “BoA,” including: Bank of America Corporation, Bank of America, N.A., Countrywide Financial Corporation, Countrywide Home Loans, and Countrywide Bank, FSB. Plaintiff alleges that Defendants are also liable for residential home loans and lending operations acquired from, and/or sold by or through, Countrywide Bank, N.A., First Franklin Corporation, Grand Harbor Mortgage, John Laing Homes, Nexstar Financial Corporation, and Treasury Bank National Association.
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3. The State of Florida in general, and the City of Miami in particular, have been devastated by the foreclosure crisis. As of October 2013, Florida has the country’s highest foreclosure rate, and Miami has the highest foreclosure rate among the 20 largest metropolitan statistical areas in the country.2 Moreover, Florida is by far the leading state in the country with regard to owner-vacated or “Zombie” foreclosures.3
4. The foreclosure crisis in Florida resulted in such drastic consequences that the Florida Supreme Court established a Task Force to recommend “policies, procedures, strategies, and methods for easing the backlog of pending residential mortgage foreclosure cases while protecting the rights of parties.”4
5. BoA has engaged in a continuous pattern and practice of mortgage discrimination in Miami since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis. In order to maximize profits at the expense of the City of Miami and minority borrowers, BoA adapted its unlawful discrimination to changing market conditions. This unlawful pattern and practice is continuing through the present and has not terminated. Therefore, the operative statute of limitations governing actions brought pursuant to the Federal Fair Housing Act has not commenced to run.
2 RealtyTrac, Scheduled Judicial Foreclosure Auctions Increase Annually for 16th SJhutttrmpa:pi/g/swhitnwMwFoL.rn,etIahLl,t,yFCtorOarec,c.(clNoosmouv/rc.eo1n4St,tea2nr0tt/1sf3oU)rep(caMlvoaosiunlartehb-llmye faaortrkeSte-creopnodrtS/torcatiogbhetrM-2o0n1t3h-,uBs-ig foreclosure-market-report-7934).
3 RealtyTrac, Q1 2013 Foreclosure Inventory Update, pg. 5 (available at http://www.realtytrac.com/images/reportimages/RealtyTrac_Foreclosure_Inventory_ Analysis_Q1_2013.pdf).
4 Florida Supreme Court Task Force On Residential Mortgage Foreclosure Cases, Final Report And Recommendations (August 17, 2009) (available at www.floridasupremecourt.org/.../Filed_08-17-2009_Foreclosure_Final_).
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6. The pattern and practice of lending discrimination engaged in by BoA consists of traditional redlining5 and reverse redlining,6 both of which have been deemed to violate the FHA by federal courts throughout the country. BoA engaged in redlining, and continues to engage in said conduct, by refusing to extend mortgage credit to minority borrowers in Miami on equal terms as to non-minority borrowers. BoA engaged in reverse redlining, and continues to engage in said conduct, by extending mortgage credit on predatory terms to minority borrowers in minority neighborhoods in Miami on the basis of the race or ethnicity of its residents. Federal Reserve Chairman Ben Bernanke recently acknowledged these twin evils of mortgage discrimination, and explained that both types of mortgage discrimination “continue to have particular significance to mortgage markets.”7
7. Major banks such as BoA have a long history of engaging in redlining throughout Miami. That practice began to change in the late 1990s, when BoA adapted to changing market conditions, and began to flood historically underserved minority communities with mortgage loans that consisted of a variety of high cost and abusive mortgage loan products with predatory terms as compared to the mortgage loans issued to white borrowers (reverse redlining).
8. BoA’s discriminatory lending practices have the purpose and effect of placing vulnerable, underserved borrowers in loans they cannot afford. Reverse redlining maximizes BoA’s profit without regard to the borrower’s best interest, the borrower’s ability to repay, or the financial health of underserved minority neighborhoods. Moreover, BoA has averted any significant risk to itself by selling
5 Redlining is the practice of denying credit to particular neighborhoods based on race.
6 Reverse redlining is the practice of flooding a minority community with exploitative loan products.
7 Remarks by Federal Reserve Chairman Ben Bernanke at the Operation HOPE Global Financial Dignity Summit, Atlanta, Georgia at pg. 10 (November 15, 2012) (available at www.federalreserve.gov/newsevents/speech/bernanke20121115a.htm).
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the vast majority of mortgage loans it originates or purchases on the secondary market (collectively “BoA Loans”).
9. Between 1996-2006, one category of discriminatory loan products – subprime loans – grew throughout the country from $97 billion to $640 billion. These loans were frequently targeted to minorities. Upon information and belief, the lack of accessible credit resulting from BoA’s previous pattern and practice of redlining in the minority communities in Miami created conditions whereby the Bank could easily target and exploit the underserved minority communities who, due to traditional redlining, had been denied credit.
10. Therefore, following several years of issuing abusive, subprime mortgage loans throughout the minority communities of Miami, commencing in or around 2007, BoA once again adapted to changing market conditions, while continuing its pattern and practice of issuing a variety of discriminatory loan products. Simultaneously, Miami and other communities throughout the country experienced a curtailment of mortgage credit issued to minority borrowers.8 BoA is one of the largest mortgage lenders doing business in Miami and its policies and practices contributed to this problem. In other words, BoA not only refused to extend credit to minority borrowers when compared to white borrowers, but when the Bank did extend credit, it did so on predatory terms. This combination of reverse redlining and redlining and represents a continuing and unbroken pattern and practice of mortgage lending discrimination in Miami that still exists today.
11. BoA’s pattern and practice of reverse redlining has caused an excessive and disproportionately high number of foreclosures on the BoA Loans it has made in the minority neighborhoods of Miami. Foreclosures on loans originated by BoA are concentrated in these neighborhoods. A loan in a predominantly minority
8 Center for Responsible Lending, The State of Lending in America & its Impact on U.S. Households (2012) (available at http://www.responsiblelending.org/state-oflending/State-of-Lending-report-1.pdf); Harvard School of Public Health, Home Purchase Loan Denial Rate By Race/Ethnicity (2010) (available at http://diversity data.sph.harvard.edu/Data/Rankings/Show.aspx?ind=9).
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neighborhood is 5.857 times more likely to result in foreclosure than is a loan in a neighborhood with a majority of white residents.
12. BoA’s pattern and practice of traditional redlining has also caused an excessive and disproportionately high number of foreclosures in the minority neighborhoods of Miami. These foreclosures often occur when a minority borrower who previously received a predatory loan sought to refinance the loan, only to discover that BoA refused to extend credit at all, or on terms equal to those offered when refinancing similar loans issued to white borrowers. The inevitable result of the combination of issuing a predatory loan, and then refusing to refinance the loan, was foreclosure.
13. BoA would have had comparable foreclosure rates in minority and white communities if it was properly and uniformly applying responsible underwriting practices in both areas. BoA possesses sophisticated underwriting technology and data that allows it to predict with precision the likelihood of delinquency, default, or foreclosure. The fact that BoA’s foreclosures are so disproportionately concentrated in minority neighborhoods is not the product of random events. To the contrary, it reflects and is fully consistent with BoA’s practice of targeting minority neighborhoods and customers for discriminatory practices and predatory pricing and products. It also reflects and is consistent with BoA’s practice of failing to underwrite minority borrowers’ applications properly, and of putting these borrowers, into loans which (1) have more onerous terms than loans given to similarly situated white borrowers, and (2) the borrowers cannot afford, leading to foreclosures.
14. The Bank’s predatory and discriminatory lending practices are evidenced by confidential witness statements provided by former employees of BoA (discussed further herein). For example:
a) “They [the less savvy minority borrower] didn’t know anything about it [negative amortization loans]. The white American educated [borrower] knew what those
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loans were and what they were going to do, and they stayed away from them. . . . [The less savvy minority borrower] didn’t realize the negative amortization consequences down the road for them that would make it that much harder to refinance with no equity.” b) Borrowers “couldn’t afford [“interest-only” and “picka-payment” loans]. Half the time they couldn’t even afford the [full] interest on those homes.” c) “There’s no money in [Community Reinvestment Act] loans for [the Bank]” so the Bank didn’t encourage loan officers to make CRA loans. d) Back-end premiums [the difference between the borrower’s loan rate and the rate the bank pays for it] were “non-disclosed”, which often eluded less educated, minority borrowers. 15. The reports of these witnesses are confirmed when Miami data on BoA loans is examined. Such an examination reveals a widespread practice of discrimination. For example, a regression analysis that controls for credit history and other factors demonstrates that an African-American BoA borrower is 1.581 times more likely to receive a predatory loan than is a white borrower and a Latino borrower is 2.087 times more likely to receive such a loan. The regression analysis confirms that African-Americans with FICO scores over 660 are 1.533 times more likely to receive a predatory BoA loan than is a white borrower, and a Latino borrower is 2.137 times more likely to receive such a loan. 16. According to a Justice Department complaint, BoA’s Countrywide subsidiary: (i) had charged upwards of 200,000 minority homeowners higher interest rates and fees than white borrowers who were similarly qualified, with similar credit ratings; (ii) had failed to offer minority homeowners conventional mortgages for which they qualified and which they would have been offered, were they white; and (iii) systematically pushed minority borrowers into exploitative mortgages with higher rates and fees. Many of the victims were in Florida. To settle the complaint, Bank of America agreed to pay $335 million in restitution and penalties to the
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200,000 identified minority victims – without compensation, restitution, or penalties to the City of Miami.
17. In or about June 2011, BoA settled charges with the Federal Trade Commission alleging that Countrywide had charged excessive fees to homeowners for property maintenance when they went into default, and added illegitimate charges to what the homeowners owed. To settle the FTC complaint, Bank of America paid $107 million to the FTC for distribution to homeowner victims (again without compensation to the City of Miami).
18. The past several years have been highly profitable for BoA. The following charts illustrate these results.
Net Income (millions)
$6,000

$4,000

$2,000

$‐ 2011

2012

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Earnings per share

$0.30

$0.25

$0.20

$0.15

$0.10

$0.05

$‐ 2011

2012

19. The Bank’s discriminatory practices and resulting foreclosures in the City’s minority neighborhoods have inflicted significant, direct, and continuing financial harm to the City. Since 2008, banks have foreclosed on approximately 1.8 million homes in Florida, and BoA is responsible for a significant number of these foreclosures.
20. In this action the City seeks damages based on reduced property tax revenues based on (a) the decreased value of the vacant properties themselves, and (b) the decreased value of properties surrounding the vacant properties. In addition, the City seeks damages based on the expenditure of municipal services that will be required to remedy the blight and unsafe and dangerous conditions which exist at vacant properties that were foreclosed as a result of BoA’s illegal lending practices.
21. Because of the multitude of analytic tools available to BoA to determine the likelihood that a particular mortgage loan would result in default by the borrower, as well as the existence of various studies, reports, and other pertinent literature specifically addressing the connection between mortgage loans and foreclosures, it was foreseeable that BoA knew, or should have known, that a predatory or high risk loan issued to an African-American or Hispanic in certain

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neighborhoods in Miami would result in default and subsequent foreclosure. Moreover, because BoA maintains numerous branch offices throughout Miami, and has knowledge of the specific address for each loan it issued, it was foreseeable that BoA knew, or should have known, of the condition of foreclosed properties corresponding to loans that it issued in Miami regardless of whether it serviced the loan or subsequently sold the servicing rights to a third party.
22. According to Federal Reserve Chairman Bernanke, “foreclosures can inflict economic damage beyond the personal suffering and dislocation that accompany them. Foreclosed properties that sit vacant for months (or years) often deteriorate from neglect, adversely affecting not only the value of the individual property but the values of nearby homes as well. Concentrations of foreclosures have been shown to do serious damage to neighborhoods and communities, reducing tax bases and leading to increased vandalism and crime. Thus, the overall effect of the foreclosure wave, especially when concentrated in lower-income and minority areas, is broader than its effects on individual homeowners.9
23. The discriminatory lending practices at issue herein have resulted in what many leading commentators describe as the “greatest loss of wealth for people of color in modern US history.” It is well-established that poverty and unemployment rates for minorities exceed those of whites, and therefore, home equity represents a disproportionately high percentage of the overall wealth for minorities.10 As Federal Reserve Chairman Bernanke recently explained, as a result of the housing crisis, “most or all of the hard-won gains in homeownership made by low-income and minority communities in the past 15 years or so have been reversed.”11 The resulting impact of these practices represents “nothing short of the
9 Bernanke, supra n.7 at pg. 4. 10 Robert Schwemm and Jeffrey Taren, Discretionary Pricing, Mortgage Discrimination, and the Fair Housing Act, 45 HARVARD CIVIL RIGHTS-CIVIL LIBERTIES LAW REV., 375, 382 (2010). 11 Bernanke, supra n.7 at pg. 3.
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preeminent civil rights issue of our time, erasing, as it has, a generation of hard fought wealth accumulation among African-Americans.”12
II. PARTIES 24. Plaintiff City of Miami is a Florida municipal corporation. The City is authorized by the City Commission to institute suit to recover damages suffered by the City as described herein. 25. Bank of America, N.A. is organized as a national banking association under the laws of the United States. Upon information and belief, its corporate headquarters are located in Charlotte, North Carolina. It maintains multiple offices in the State of Florida, including in the City of Miami, for the purposes of soliciting applications for and making residential mortgage loans and engaging in other business activities. 26. During the period of time relevant to the events at issue in this Complaint through July 1, 2008, Defendant Countrywide Financial Corporation (“CFC”) was a Delaware-incorporated financial holding company or savings and loan holding company with its principal business office in Calabasas, California. CFC created, authorized, and/or ratified the lending-related policies and practices at issue in this Complaint that its divisions and subsidiaries implemented. 27. On July 1, 2008, Bank of America Corporation (“BAC”), a Delawareincorporated financial holding company, acquired ownership of CFC, including all of its subsidiary business entities. Since that acquisition, CFC has remained a Delaware-incorporated company with its principal business office in Calabasas, California, as a direct, wholly-owned subsidiary of BAC. 28. Defendant Countrywide Home Loans, Inc. (“CHL”) is a New Yorkincorporated wholly-owned subsidiary of CFC with its principal business office in Calabasas, California. Prior to 2008, CHL funded the majority of CFC’s nationwide 12 Charles Nier III and Maureen St. Cyr, A Racial Financial Crisis: Rethinking the Theory of Reverse Redlining to Combat Predatory Lending Under the Fair Housing Act, 83 TEMPLE LAW REV. 941, 942 (2011).
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residential mortgage loan origination activity. For the loans it funded under the Countrywide name, CHL was the named lender on the promissory notes for those loans. CHL became a wholly-owned indirect subsidiary of BAC on or about July 1, 2008, as a result of BAC’s acquisition of CFC.
29. Countrywide Bank (“CWB”) was originally chartered as a national bank subject to supervision by the Office of the Comptroller of the Currency, and was a subsidiary of financial holding company CFC. CWB was headquartered in Alexandria, Virginia, until February, 2009. As a financial holding company, CFC, together with its subsidiary CHL, was supervised by the Board of Governors of the Federal Reserve System. On or about March 12, 2007, CWB changed its charter to that of a federal savings association, and CFC became a savings and loan holding company. Those changes caused CWB, CFC, and CHL to become subject to supervision by the Office of Thrift Supervision.
30. During 2006, CFC began the process of transitioning the funding of its residential loan originations from CHL to CWB. For those loans funded through CWB under the Countrywide name, CWB was the named lender on the promissory notes for those loans. As of January 1, 2008, CWB funded substantially all nationwide residential loan origination activity using the Countrywide name. For those loans funded by either CHL or CWB, CFC used the same loan origination policies and procedures that it had created, authorized, or ratified, and the same employees and mortgage brokers. Throughout this Complaint, CFC, CWB, and CHL are referred to collectively as “Countrywide.”
31. Even after BAC’s purchase of CFC on July 1, 2008, CWB continued its banking and mortgage lending operations as a direct subsidiary of CFC, using the same loan origination policies and procedures, until approximately November 7, 2008. At that time, BAC engaged in a series of corporate transactions that ended CWB’s status as a subsidiary of CFC and made CWB a direct subsidiary of BAC.
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32. On April 23, 2009, the Office of the Comptroller of the Currency approved CWB’s request to convert its charter back to that of a national bank and the request by Bank of America, N.A. to then immediately acquire CWB by merger. These transactions were executed on April 27, 2009, as a result of which CWB ceased to exist. Bank of America, N.A. was the surviving institution resulting from this merger. Thus, Bank of America, N.A. is the successor in interest to CWB.
33. The Defendants in this action are, or were at all relevant times, subject to Federal laws governing fair lending, including the FHA and the regulations promulgated thereunder. The FHA prohibits financial institutions from discriminating on the basis of, inter alia, race, color, or national origin in their residential real estate-related lending transactions.
34. The Defendants in this action are or were businesses that engage in residential real estate-related transactions in the City of Miami within the meaning of the FHA, 42 U.S.C. § 3605.
35. Based on information reported pursuant to the Home Mortgage Disclosure Act, in addition to loans that Defendants originated directly, Defendants are responsible for residential home loans acquired from, and/or sold by or through, Merrill Lynch Bank & Trust FSB, Merrill Lynch Credit Corp., and First Franklin Financial Corp.
36. Upon information and belief, Plaintiff alleges that each of the Defendants was and is an agent of the other Defendants. Each Defendant, in acting or omitting to act as alleged in this Complaint, was acting in the course and scope of its actual or apparent authority pursuant to such agencies, and/or the alleged acts or omissions of each Defendant as agent were subsequently ratified and adopted by each agent as principal. Each Defendant, in acting or omitting to act as alleged in this Complaint, was acting through its agents, and is liable on the basis of the acts and omissions of its agents.
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III. REFERRALS FROM BANK REGULATORY AGENCIES 37. In 2006, Federal Reserve System Examiners initiated a fair lending review of CHL’s mortgage pricing practices. As a result of that review, the Federal Reserve Board (“FRB”) determined that it had “reason to believe that Countrywide Home Loans engaged in a pattern or practice of discrimination based on race and ethnicity in violation of Section 701(a) of the Equal Credit Opportunity Act and the Fair Housing Act.” 38. Following its determination described in Paragraph 37, and pursuant to 15 U.S.C. § 1691e(g), the FRB referred the matter to the Department of Justice on March 5, 2007. Countrywide agreed that various statutes of limitations for any cause of action that could be brought against Countrywide pursuant to the FRB referral would be tolled from March 22, 2007 through December 22, 2011. 39. In early 2008, the Office of Thrift Supervision (“OTS”) conducted an examination of the operations of Countrywide, including its compliance with applicable fair lending laws and regulations. As a result of that examination, the OTS determined that it had “a ‘reason to believe’ that Countrywide has displayed a ‘pattern or practice’ of discriminating against minority loan applicants in the pricing of home loans and against married couples concerning the terms and condition of home loans.” 40. Following its determination described in Paragraph 39, and pursuant to 15 U.S.C. § 1691e(g), the OTS referred the matter to the Department of Justice on June 27, 2008. Countrywide agreed that various statutes of limitations for any cause of action that could be brought against Countrywide pursuant to the OTS referral would be tolled from July 1, 2009 through December 22, 2011. 41. Based on the FRB and OTS referrals, the Department of Justice engaged in a lengthy investigation of Countrywide’s lending policies, practices, and procedures, including reviewing millions of Countrywide loans originated between 2004 and 2008. The investigation led to the Justice Department’s complaint against
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Countrywide for discriminatory lending practices affecting upwards of 200,000 minority homeowners (saddling them with higher interest rates and fees than white borrowers who were similarly qualified, with similar credit ratings).
IV. JURISDICTION AND VENUE 42. This Court has jurisdiction over this matter pursuant to 42 U.S.C. § 3613 and 28 U.S.C. §§ 1331, 1343, because the claims alleged herein arise under the laws of the United States. 43. Venue is proper in this district under 28 U.S.C. § 1391(b) because Bank of America, N.A., BAC, and Countrywide all conduct business in this district and a substantial part of the events and omissions giving rise to the claims occurred in this district.
V. FACTUAL BACKGROUND A. Background Regarding Discriminatory Loan Practices, Reverse
Redlining, and Redlining 44. Prior to the emergence of subprime lending, most mortgage lenders made only “prime” loans. Prime lending offered uniformly priced loans to borrowers with good credit, but individuals with lower credit were not eligible for prime loans. 45. Subprime lending developed and began growing rapidly in the mid1990s as a result of technological innovations in risk-based pricing and in response to the demand for credit by borrowers who were denied prime credit by traditional lenders. Advances in automated underwriting allowed lenders to predict with improved accuracy the likelihood that a borrower with lower credit will successfully repay a loan. These innovations gave lenders the ability to adjust the price of loans to match the different risks presented by borrowers whose credit records did not meet prime standards. Lenders found that they could now accurately price loans to reflect the risks presented by a particular borrower. When done responsibly, this made credit available much more broadly than had been the case with prime lending.
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46. Responsible subprime lending has opened the door to homeownership to many people, especially low- to moderate-income and minority consumers, who otherwise would have been denied mortgages. At the same time, however, subprime lending has created opportunities for unscrupulous lenders to target minorities and engage in discriminatory, irresponsible lending practices that result in loans that borrowers cannot afford. This, in turn, leads directly to defaults and foreclosures.
47. Enticed by the prospect of profits resulting from exorbitant origination fees, points, and related pricing schemes, some irresponsible subprime lenders took advantage of a rapidly rising real estate market to convince borrowers to enter into discriminatory loans that had unfair terms that they could not afford. Often this was accomplished with the help of deceptive practices and promises to refinance at a later date. These abusive subprime lenders did not worry about the consequences of default or foreclosure to their business because, once made, a significant number of the loans were sold on the secondary market.
48. As the subprime market grew, the opportunities for abusive practices grew with it.13 As a consequence, the federal government has found that abusive and predatory practices “are concentrated in the subprime mortgage market.”14 These practices, which in recent years have become the target of prosecutors, legislators, and regulators, include the following:
a. Placing borrowers in subprime loans even though they qualify for prime or conventional loans on better terms.
13 United States Department of Housing and Urban Development Office of Policy Development and Research, Report to Congress on the Root Causes of the Foreclosure Crisis, (2010) at 52 (“While many factors have undoubtedly contributed to the recent rise in foreclosures, as discussed earlier, no small part of the increase stems from recent increases in abusive forms of subprime lending”) (available at http://www.huduser.org/portal/Publications/PDF/Foreclosure_09.pdf).
14 United States Department of Housing & Urban Development and United States Department of the Treasury, Curbing Predatory Home Mortgage Lending (2000) at 1 (available at http://www.huduser.org/Publications/pdf/treasrpt.pdf) (“HUD/Treasury Report”).
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b. Failing to prudently underwrite hybrid adjustable rate mortgages (ARMs), such as 2/28s and 3/27s.15 After the borrower pays a low “teaser rate” for the first two or three years, the interest rate on these loans resets to a much higher rate that can continue to rise based on market conditions. Subprime lenders often underwrite these loans based only on consideration of whether the borrower can make payments during the initial teaser rate period, without regard to the sharply higher payments that will be required for the remainder of a loan’s 30-year term. Irresponsible lenders aggressively market the low monthly payment that the borrower will pay during the teaser rate period, misleading borrowers into believing that they can afford that same low monthly payment for the entire 30-year term of the loan, or that they can refinance their loan before the teaser rate period expires.
c. Failing to prudently underwrite refinance loans, where borrowers substitute unaffordable mortgage loans for existing mortgages that they are wellsuited for and that allow them to build equity. Such refinanced loans strip much or even all of that equity by charging substantial new fees, often hiding the fact that the high settlement costs of the new loan are also being financed. Lenders that aggressively market the ability of the borrower to pay off existing credit card and other debts by refinancing all of their debt into one mortgage loan mislead borrowers into believing that there is a benefit to debt consolidation, while obscuring the predictable fact that that the borrower will not be able to repay the new loan. The refinanced loans are themselves often refinanced repeatedly with ever-increasing fees and higher interest rates, and with ever-decreasing equity, as borrowers seek to stave off foreclosure.
15 In a 2/28 ARM, the “2” represents the number of years the mortgage will be fixed over the term of the loan, while the “28” represents the number of years the interest rate paid on the mortgage will be variable. Similarly, in a 3/27 ARM, the interest rate is fixed for three years and variable for the remaining 27-year amortization.
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d. Allowing mortgage brokers to charge “yield spread premiums” for qualifying a borrower for an interest rate that is higher than the rate the borrower qualifies for and can actually afford.
e. Failing to underwrite loans based on traditional underwriting criteria such as debt-to-income ratio, loan-to-value ratio, FICO score, and work history. These criteria ensure that a borrower is obtaining a loan that he or she has the resources and assets to repay, and ignoring these criteria results in many loans that bear no relation to borrowers’ ability to repay them. This allows the lender to make a quick profit from the origination, but sets the borrower up for default and foreclosure.
f. Requiring substantial prepayment penalties that prevent borrowers whose credit has improved from refinancing their subprime loan to a prime loan. Prepayment penalties not only preclude borrowers from refinancing to a more affordable loan, but reduce the borrowers’ equity when a subprime lender convinces borrowers to needlessly refinance one subprime loan with another.
g. Charging excessive points and fees that are not associated with any increased benefits for the borrower.
49. The problem of predatory practices in subprime mortgage lending is particularly acute in minority communities because of “reverse redlining.” As used by Congress and the courts, the term “reverse redlining” refers to the practice of targeting residents in certain geographic areas for credit on unfair terms due to the racial or ethnic composition of the area. This is in contrast to “redlining,” which is the practice of denying prime credit to specific geographic areas because of the racial or ethnic composition of the area. Both practices have repeatedly been held to violate the Federal Fair Housing Act.
50. Following the onset of the subprime mortgage crisis, and after years of issuing abusive home loans in minority neighborhoods, the big bank lenders began to limit the issuance of mortgage credit to minority borrowers (i.e., refusing to
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refinance predatory loans). At the same time, when the big banks did extend credit, they continued to do so on predatory terms.
VI. BOA/COUNTRYWIDE ENGAGED IN DISCRIMINATORY LENDING PRACTICES
A. Specific Allegations Regarding BoA’s Countrywide Subsidiary 1. Mortgage loan channels and loan types. 51. Between January 2004 and December 2008, Countrywide originated
residential loans nationwide through both a retail channel and a wholesale channel. 52. Between 2004 and 2008, Countrywide’s retail and wholesale divisions
operated in virtually all geographical markets in the United States, including several hundred metropolitan areas (“MSAs”), including specifically the Miami MSA.
53. Between in at least January 2004 and August 2007, Countrywide originated virtually every type of loan product that was available in the residential lending market, several hundred products in all. Among others, these products included: (a) traditional prime loans (least risky); (b) subprime loans (most risky), typically designed for borrowers with credit scores or other credit characteristics deemed too weak to qualify for prime loans; and (c) “Alt-A” loans (risk level between prime and subprime loans), with application requirements or payment terms less restrictive than traditional prime loan terms or requirements, such as interestonly or negative amortization terms, reduced documentation requirements, or balloon payments. Subsequent to origination, Countrywide sold or securitized for sale the bulk of the loans it originated in the secondary market, either to governmentsponsored entities Fannie Mae and Freddie Mac, or to private investors.
2. Retail Lending Pricing. 54. Between 2004 and 2008, Countrywide charged more than 100,000 Hispanic and African-American borrowers higher fees and costs than non-Hispanic White retail borrowers, not based on their creditworthiness or other objective criteria related to borrower risk, but because of their race or national origin. It was
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Countrywide’s business practice to allow its employees who originated loans through its retail channel to vary a loan’s interest rate and other fees from the price initially set based on a borrower’s objective credit-related factors. As a result of Countrywide’s discriminatory retail pricing practices, a Hispanic or AfricanAmerican borrower paid, on average, hundreds of dollars more for a Countrywide loan.
55. Countrywide’s retail channel consisted of two primary divisions. The larger, the Consumer Markets Division (“CMD”), originated Countrywide’s nonsubprime residential loan products. Countrywide employed retail loan officers and other employees at each CMD branch and call center to solicit applications for, and originate residential loans to, individual loan applicants.
56. Beginning prior to January 2004 and continuing through at least December 2008, Countrywide utilized a two-tier decision-making process to set the interest rates and other terms and conditions of retail loans it originated. The first step involved setting the credit risk-based prices on a daily basis for Countrywide’s various home mortgage loan products, including interest rates, loan origination fees, and discount points. In this step, Countrywide accounted for numerous objective credit-related characteristics of applicants by setting a variety of prices for each of the different loan products that reflected its assessment of individual applicant creditworthiness, as well as the current market rate of interest and the price it could obtain from the sale of such a loan to investors. These prices, referred to as par or base prices, were communicated through rate sheets, which were available electronically to its retail mortgage loan officers and other retail lending employees. Individual loan applicants did not have access to these rate sheets.
57. As the second step in determining the final price it would charge an applicant for a loan, Countrywide allowed its retail mortgage loan officers, and other employees who participated in the loan origination process, to increase the loan price charged to borrowers over the rate sheet prices set by Countrywide, up to certain
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caps; this pricing increase was labeled an overage. Countrywide also allowed these same employees to decrease the loan price charged to borrowers below the stated rate sheet prices; this pricing decrease was labeled a shortage. Countrywide further allowed those employees to alter the standard fees it charged in connection with processing a loan application and the standard allocation of closing costs between Countrywide and the borrower. Employees made these pricing adjustments in a subjective manner, unrelated to factors associated with an individual applicant’s credit risk. Countrywide provided no written guidance to its retail loan officers or other employees about the criteria they should consider in adjusting risk-based prices during the time period at issue. It did not establish an operational system for the documentation and supervisory review of their adjustments prior to loan origination.
58. During the time period at issue, Countrywide loan officer compensation was affected by the loan officers’ decisions with respect to pricing overages and shortages, as well as other factors, such as volume of loans originated. Loan officers could obtain increased compensation for overages, and could have their total compensation potentially decreased for shortages. Countrywide’s compensation policy thus provided an incentive for its loan officers in making pricing adjustments to maximize overages and, when offering shortages, to minimize their amount.
59. Countrywide regularly calculated a Net Pricing Exception (“NPE”) for each retail loan it funded, subsequent to origination. The NPE approximates the amount, positive or negative, by which the total cost of a loan to a borrower differs from the total cost of that loan had it closed at the rate sheet price, with the borrower paying standard fees and with standard allocation of closing costs between the borrower and Countrywide. A positive NPE was an overage, and a negative NPE was a shortage.
60. For each residential loan that Countrywide retail mortgage loan officers originated, information about each borrower’s race and national origin and the
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amount of overage or shortage paid was available to, and was known by, Countrywide.
3. Wholesale Lending Mortgage Broker Fees. 61. Between 2004 and 2008, Countrywide charged more than 100,000 Hispanic and African-American wholesale borrowers higher fees and costs than nonHispanic White wholesale borrowers, not based on their creditworthiness or other objective criteria related to borrower risk, but because of their race or national origin. It was Countrywide’s business practice to allow its mortgage brokers who generated loan applications through its wholesale channel to vary a loan’s interest rate and other fees from the price set based on a borrower’s objective credit-related factors. As a result of Countrywide’s discriminatory practices, a Hispanic or AfricanAmerican borrower paid, on average, hundreds of dollars more for a Countrywide loan. 62. Prior to January 2004, and continuing through at least December 2008, Countrywide originated and funded residential loans of all types, including both subprime and non-subprime loans, through its Wholesale Lending Division (“WLD”). Applications for these loans were brought to Countrywide during those years by mortgage brokers throughout the United States who had entered into contracts with Countrywide for the purpose of bringing loan applications to it for origination and funding. 63. Countrywide’s relationship with the mortgage brokers who brought loans to it was governed throughout the time period at issue by its standard Wholesale Broker Agreement (“WBA”). The WBA, while revised from time to time, consistently contained extensive provisions (a) mandating that a broker act in compliance with all Countrywide policies, (b) requiring submission to Countrywide of the full details of all compensation a broker received for each Countrywide loan, (c) specifying that the decision whether to fund a loan application was
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Countrywide’s alone, and (d) permitting Countrywide to obtain any information with respect to a broker’s business operations.
64. Countrywide was directly and extensively involved in setting the complete, final terms and conditions of wholesale loan applications generated by mortgage brokers that Countrywide approved and originated. Countrywide employed wholesale account executives who worked with mortgage brokers in submitting loan applications to Countrywide, and it employed underwriters to determine whether and on what terms to approve and fund wholesale loan applications. At the time of originating each loan, Countrywide was fully informed of those terms and conditions, including the fees it passed along to brokers, and it incorporated those terms and conditions into the wholesale loans it originated.
65. Prior to January 2004 and until December 2008, Countrywide set terms and conditions, including interest rates, on a daily basis for its various home mortgage loan products available through its wholesale loan channel. Countrywide accounted for numerous applicant credit risk characteristics by setting a range of prices for each of the different loan products it offered that reflected applicant creditworthiness. It communicated these loan product prices to its brokers through rate sheets updated daily. Individual loan applicants did not have access to these rate sheets.
66. Under its WBA, Countrywide authorized brokers to inform prospective borrowers of the terms and conditions under which a Countrywide residential loan product was available. Countrywide did not require the mortgage brokers to inform a prospective borrower of all available loan products for which he or she qualified, of the lowest interest rates and fees for a specific loan product, or of specific loan products best designed to serve the interests expressed by the applicant.
67. Between 2004 and 2008, Countrywide operated between 39 and 52 WLD branch offices and several regional centers, and employed wholesale account executives to work with mortgage brokers in originating loans, which included
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assisting the brokers in setting the terms and conditions of loan applications and approvals.
68. Mortgage brokers who supplied Countrywide with loan applications that Countrywide funded were compensated in two ways. One was through a yield spread premium (“YSP”), an amount paid by Countrywide to the brokers based on the extent to which the interest rate charged on a loan exceeded the base, or par, rate for that loan to a borrower with particular credit risk characteristics fixed by Countrywide and listed on its rate sheets. The YSP is derived from the present dollar value of the difference between the credit risk-determined par interest rate a wholesale lender such as Countrywide would have accepted on a particular loan and the interest rate a mortgage broker actually obtained for Countrywide. Countrywide benefitted financially from the loans it made at interest rates above the par rates set by its rate sheets. For those loans that it sold or securitized, higher interest rates meant sales at prices higher than it otherwise would have obtained; for loans it retained, higher interest rates meant more interest income over time for it. The second way brokers were compensated was through direct fees. Countrywide directed its closing agents to pay these direct fees to brokers out of borrowers’ funds at the loan closing. Taken together, these two forms of compensation are referred to in this Complaint as “total broker fees.”
69. During the time period at issue, Countrywide was fully informed of all broker fees to be charged with respect to each individual residential loan application presented to it. Countrywide included fees from the broker’s application package in the calculations it made to prepare various closing documents, including the HUD-I Form, an itemized statement of receipts and expenditures in connection with a residential loan closing, and the Truth in Lending Act Disclosure Statement. Countrywide also included these fees in its instructions on how to distribute funds at closing. Total broker fees raised the annual percentage rate (“APR”) charged on a loan, and could increase the note interest rate and the total amount borrowed.
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70. Between at least January 2004 and December 2008, Countrywide’s policies and practices established a two-step process for the pricing of wholesale loans that it originated similar to that used in its retail division. The first step was to establish a base or par rate for a particular type of loan for an applicant with specified credit risk characteristics.
71. Countrywide’s second step of pricing wholesale loans permitted mortgage brokers to set the amount of total broker fees charged to individual borrowers, unrelated to an applicant’s credit risk characteristics.
72. Total broker fees for an average subprime loan were notably higher than total broker fees on a similarly-sized non-subprime loan. Other than certain broker fee caps, Countrywide did not establish any objective criteria, or provide guidelines, instructions, or procedures to be followed by brokers (a) in setting the amount of direct fees they should charge or (b) in determining to charge an interest rate for a loan above that set by its rate sheet, which in turn determined the amount of YSP Countrywide would pay the broker. Mortgage brokers exercised this fee pricing discretion Countrywide gave them, untethered to any objective credit characteristics, on every loan they brought to Countrywide for origination and funding. Countrywide affirmed or ratified these discretionary fee pricing decisions for all the brokered loans it originated and funded. Each year during this time period when Countrywide had in place higher fee caps for subprime than prime loans, Countrywide’s mortgage brokers charged higher average total fees for subprime loan applications than for non-subprime loan applications, measured on a nationwide basis.
73. Countrywide’s compensation policy and practice created a financial incentive for mortgage brokers to submit subprime loans to Countrywide for origination rather than other types of residential loan products.
74. For each residential loan application obtained by mortgage brokers and subsequently funded by Countrywide, information about each borrower’s race and
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national origin and the amount and types of broker fees paid was available to, and was known by, Countrywide.
4. Wholesale Lending Product Placement. 75. Between 2004 and 2007, Countrywide placed more than 10,000 Hispanic and African-American wholesale borrowers into subprime loans even though non-Hispanic White wholesale borrowers who had similar credit qualifications were placed into prime loans. As a result of being placed into an illegal discriminatory loan, a Hispanic or African-American borrower paid, on average, thousands of dollars more for a Countrywide loan. It was Countrywide’s business practice to allow its mortgage brokers and employees to place a wholesale loan applicant in a subprime loan even when the applicant qualified for a prime loan according to Countrywide’s underwriting practices. 76. Countrywide also gave mortgage brokers discretion to request exceptions to underwriting guidelines, and Countrywide’s employees had discretion to grant these exceptions. These policies and practices resulted in the placement of Hispanic and African-American borrowers into discriminatory loans (based on criteria other than strict adherence to its published underwriting guidelines), when similarly-situated non-Hispanic White borrowers were placed into prime loans, both on a nationwide basis and in dozens of geographic markets across the country (including Miami), where Countrywide originated a large volume of wholesale loans. Between at least January 2004 and August 2007, Countrywide attempted to implement a system that would “flag” subprime loan applicants eligible to be “uplifted” to a non-subprime loan product. This system flagged thousands of Hispanic and African-American loans. However, this pre-origination “uplift” system only required that notification of potential uplift eligibility be given to brokers, and neither required the brokers to inform applicants of this fact, nor obligated the brokers to take any other specific action with respect to identified applicants. Moreover, this “uplift” system did not accurately correspond to Countrywide’s actual
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underwriting practices for non-subprime loan products that treated published underwriting guidelines as merely advisory, and widely granted exceptions. As a result, the system both failed to identify a large proportion of applicants who received a subprime loan whose qualifications were similar to those of applicants who received non-subprime loan products, and resulted in few “flagged” applicants receiving a non-subprime loan. B. BoA/Countrywide’s Conduct Had a Disparate Impact on Minority
Borrowers in Violation of the Fair Housing Act 1. Discriminatory lending results in a disproportionate number of
foreclosures in minority areas. 77. Foreclosures are on the rise in many of the nation’s most vulnerable neighborhoods, particularly those with substantial concentrations of minority households. The increase appears to stem from the presence of (1) subprime lending in these communities and (2) continuing discriminatory lending practices (e.g., steering minorities into loan products with more onerous terms. 78. A seminal report on foreclosure activity by Mark Duda and William Apgar documents the negative impact that rising foreclosures have on low-income and low-wealth minority communities, using Chicago as a case study. Mr. Apgar is a Senior Scholar at the Joint Center for Housing Studies of Harvard University, and a Lecturer on Public Policy at Harvard’s John F. Kennedy School of Government. He previously served as the Assistant Secretary for Housing/Federal Housing Commissioner at the U.S. Department of Housing and Urban Development, and also Chaired the Federal Housing Finance Board. Mr. Apgar holds a Ph.D. in Economics from Harvard University. Mr. Duda is a Research Fellow at the Joint Center for Housing Studies. The Apgar-Duda report has continually been cited by subsequent governmental, public sector, and private sector reports due to its clarity and
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thoroughness with respect to the negative impact foreclosures have on lower-income and minority neighborhoods.16
79. This significant report highlights the foreseeability of foreclosures arising from predatory lending practices and their attendant harm, demonstrating that such foreclosures impose significant and predictable costs on borrowers, municipal governments, and neighboring homeowners.
80. Another report, by the Center for Responsible Lending, uses a national dataset to show that the foreclosure rate for low- and moderate-income AfricanAmericans is approximately 1.8 times higher than it is for low- and moderate-income non-Hispanic whites. The gap is smaller for Latinos, especially among low-income households, but even among low-income Latinos the foreclosure rate is 1.2 times that of low-income whites. Racial and ethnic disparities in foreclosure rates cannot be explained by income, since disparities persist even among higher-income groups. For example: approximately 10 percent of higher-income African-American borrowers and 15 percent of higher-income Latino borrowers have lost their homes to foreclosure, compared with 4.6 percent of higher income non-Hispanic white borrowers. Overall, low- and moderate-income African-Americans and middle- and higher-income Latinos have experienced the highest foreclosure rates.17
81. Nearly 20 percent of loans in high-minority neighborhoods have been foreclosed upon or are seriously delinquent, with significant implications for the long-term economic viability of these communities.18
16 See W. Apgar, M. Duda & R. Gorey, The Municipal Costs of Foreclosures: A Chicago Case Study (2005) (available at http://www.nw.org/network/neighborworksProgs/foreclosuresolutions/documents/200 5Apgar-DudaStudy- FullVersion.pdf).
17 Center for Responsible Lending, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures (2011) (available at www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf).
18 Id.
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2. Minority neighborhoods are disproportionate recipients of predatory loans.
82. There is a substantial body of empirical evidence demonstrating the prevalence of reverse redlining in the subprime mortgage market. These studies show that, even after controlling for creditworthiness and other legitimate underwriting factors, subprime loans and the predatory practices often associated with subprime lending are disproportionately targeted at minority neighborhoods.19
83. In general, as recently observed by the Federal Reserve in December 2012, both African-American and Hispanic borrowers were far more likely (in fact, nearly twice more likely) to obtain higher priced loans than were white borrowers. These relationships hold both for home-purchase and refinance lending and for nonconventional loans. These differences are reduced, but not eliminated, after controlling for lender and borrower characteristics. “Over the years, analyses of HMDA data have consistently found substantial differences in the incidence of higher-priced lending across racial and ethnic lines, differences that cannot be fully explained by factors included in the HMDA data.”20
84. African-Americans and Hispanics were much more likely to receive subprime loans and loans with features that are associated with higher foreclosures,
19 See Abt Associates, Using Credit Scores to Analyze High-Cost Lending in Central City Neighborhoods (2008); Center for Responsible Lending, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures (2011) (available at www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf ); Center for Responsible Lending, Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages (2006) (available at http://www.responsiblelending.org/mortgage-lending/research-analysis/rr011Unfair_Lending-0506.pdf); Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C, Subprime Mortgages: What, Where, and to Whom? (2008) (available at http://www.nber.org/papers/w14083.pdf?new_window=1 ); C. Reid and E. Laderman, Federal Reserve Bank of San Francisco, The Untold Costs of Subprime LRhteatnpcde:/i/ininagsC:pEa.blxirafaomnrdinneiiains,.gePdtrheues/peLnditfneskd/AsauattmBhooranr/ngrdeHeidiis-ghUenri-vPerriscietyd (L2e0n0d9i)ng(a, vFaoirlaebclloesautres and carolin/The%20Untold%20Costs%20of%20Subprime%20Lending%203.pdf).
20 Federal Reserve Bulletin, The Mortgage Market in 2011: Highlights from the Data Reported under the Home Mortgage Disclosure Act (Dec. 2012) (available at http://www.federalreserve.gov/pubs/bulletin/2012/PDF/2011_HMDA.pdf).
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specifically prepayment penalties and hybrid or option ARMs. These disparities were evident even comparing borrowers within the same credit score ranges. In fact, the disparities were especially pronounced for borrowers with higher credit scores. For example, among borrowers with a FICO score of over 660 (indicating good credit), African-Americans and Latinos received a high interest rate loan more than three times as often as white borrowers.21
85. In addition to receiving a higher proportion of higher-rate loans, African-Americans and Latinos also were much more likely to receive loans with other risky features, such as hybrid and option ARMs and prepayment penalties. Disparities in the incidence of these features are evident across all segments of the credit spectrum.22
86. Since 2008, as the data discussed below makes clear, there has been a shift in the types of loans issued – and not issued – by the Bank. For example, the Bank shifted from offering new subprime loans toward issuing more Home Equity Lines of Credit (HELOCs) and higher cost loans including, but not limited to, FHA/VA loans.23 FHA and VA government loans are characterized as higher risk loans because (a) they are typically more expensive for a borrower than conventional loans and include fees and costs not associated with conventional loans, and (2) several of the government loan programs permit negative amortization.24 At the same time, in the last several years, the Bank tightened lending requirements in a manner that drastically limited the ability of minority borrowers to refinance or otherwise modify the subprime loans previously issued by the Bank.
21 Center for Responsible Lending, Lost Ground, 2011, supra, n.17. 22 Id. 23 While FHA/VA loans are not inherently predatory, these loans have higher risk features such as higher fees and higher interest rates. When banks target minorities for FHA/VA loans and issue more of them to minorities, they are acting in a discriminatory manner. 24 See, e.g., California Reinvestment Coalition, et al., Paying More for the American Dream VI, Racial Disparities in FHA/VA Lending, (July 2012); www.fha.com/fha_loan_types; www.benefits.va.gov/homeloans.
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87. At the same time that conventional credit has contracted over the past five years, FHA lending has expanded dramatically. During the subprime boom, FHA lending fell as subprime lenders targeted minority communities. Now, with little or no subprime lending, and conventional credit restricted, FHA lending has shot up. Overall, the share of loans with government backing went from 5% in 2005 to 26.6% in 2010.25
88. For African-Americans, the share of mortgages used to purchase a home and backed by a government program increased to almost 80% in 2010; for Latinos the share increased to 73%. But for whites, the share increased to only 49%. At present, most minority borrowers cannot gain access to the conventional mortgage market, and instead, are relegated to more expensive FHA loans.26 As discussed above, these government loans often have higher interest, fees, and costs than conventional loans.
C. BoA/Countrywide Intentionally Discriminated Against Minority Borrowers in Violation of the Fair Housing Act Throughout the Time Period 2004-2012 as Demonstrated by Former Bank Employees 89. Confidential Witnesses (“CWs”) are former BoA/Countrywide
employees responsible for making and/or underwriting loans on behalf of the Bank in the greater Miami region. CWs describe how the Bank has targeted minorities and residents of minority neighborhoods in and around Miami for predatory lending practices.
90. CW1 was a mortgage loan officer with BoA from 2008 to 2010; she worked in the Bank’s Miami-Dade County mortgage lending center in 2010.
91. CW2 was a mortgage loan officer for BoA from 2011 to 2013. Part of his time as a BoA loan officer was spent working in a Miami Beach branch. CW2’s
25 Center for Responsible Lending, supra, n.8. 26 Id.
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job involved writing new mortgages, refinancing mortgages, and helping customers obtain loans through the federal Home Affordable Refinance Program.
92. CW3 was a mortgage loan officer for BoA in Florida from 2005 to 2008; he worked on loans throughout the Miami area.
1. BoA/Countrywide targets minorities for predatory loan terms. 93. According to CW2, a large percentage of the people who wanted to refinance because they were struggling to pay the note on a negative amortization loan were minorities who were not savvy financially. “They (the less savvy minority borrower) didn’t know anything about it,” he said. “The white American educated (borrower) knew what those loans were and what they were going to do, and they stayed away from them.” CW2, who has had his mortgage broker’s license for over 25 years, said he believed BoA targeted less savvy minorities for these types of onerous loans. 94. CW2 added that “most people just knew about or wanted to pay that minimum (monthly payment) only. They’re in a house and have a roof over their head and didn’t realize the negative amortization consequences down the road for them that would make it that much harder to refinance with no equity.” 95. CW3 said that most of the borrowers he dealt with in the Miami area were minorities. He explained that “interest-only” and “pick-a-payment” loans were popular in Miami, and he understood that borrowers were approved for such loans based on repayment of interest payments alone – not interest and principal. In CW3’s experience, few of the borrowers were able to pay down the loan principal on these loans along with the interest every month. “After four or five years, that’s how everything went the way it did,” he said. “They couldn’t afford it. Half the time they couldn’t even afford the (full) interest on those homes.” BoA/Countrywide paid its employees more for steering minorities into predatory loans. 96. The confidential witness statements demonstrate that BoA/Countrywide incentivized employees to steer minority borrowers into predatory loans.
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97. According to CW1, the most beneficial type of loan for low-income buyers was the CRA loan, which allowed borrowers to obtain large grants for the down payments and closing costs. CRA loans were designed in part to discourage redlining. But, as CW1 explained, “there’s no money in those loans for [the Bank]” so the Bank didn’t encourage loan officers to make CRA loans.
98. At BoA, the CRA loan process was slow, complicated and laborintensive. Notably, BoA paid loan officers less commissions on CRA loans than it paid on FHA and other government loans, CW1 said. In effect, BoA incentivized loan officers to put low-income borrowers into less advantageous FHA loans over CRA loans. The Bank did so by paying higher commissions for the FHA loans— CW1 said loan officers received an extra 15 percent in commission on FHA loans compared to CRA loans. CW1 added that minorities missed out on opportunities to get into a CRA loan through BoA.
99. CW3 explained that BoA loan officers earned origination fees and backend premiums (the difference between the borrower’s loan rate and the rate the bank pays for it). He said the back-end premiums were not disclosed to borrowers. He added that loan officers were allowed to charge up to 3 points on the front-end at origination plus up to 5 or 6 points on the back-end. According to CW3, this often eluded less educated, minority borrowers.
2. BoA/Countrywide underwrites teaser rate loans that borrowers cannot afford.
100. BoA/Countrywide originated loans with low teaser rates (e.g., “pickyour-payment” loans, negative amortization loans, etc.), marketed to borrowers from predominantly minority neighborhoods in Miami. Unless properly underwritten, such loans are destined to fail.
101. BoA/Countrywide does not properly underwrite these loans when made to minorities and in minority neighborhoods. BoA/Countrywide does not adequately consider the borrowers’ ability to repay these loans, especially after the teaser rate
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expires and the interest rate increases. The fact that these loans would result in delinquency, default, and foreclosure for many borrowers was, or should have been, clearly foreseeable to BoA/Countrywide at the time the loans were made.
102. The confidential witness statements of CW2 and CW3 support that BoA/Countrywide underwrote these loans as if the teaser rate will apply for the full life of the loan instead of considering the borrowers’ ability to repay the loan after the teaser rate expires.
103. The use of negative amortization loans, pick-a-payment notes, and/or other teaser-rate adjustable loans in the manner described above is consistent with the practice of reverse redlining, has subjected minority borrowers to unfair and deceptive loan terms, and has contributed significantly to the high rate of foreclosure found in the minority neighborhoods of Miami.
3. BoA induced foreclosures by failing to offer refinancing or loan modifications to minority customers on fair terms, and otherwise limiting equal access to fair credit.
104. CW2 explained that, in the 2011-2013 timeframe, BoA did not offer regular refinancing to persons with mortgages at over 80% of the value of the house. Consequently, Boa refused to refinance many of the teaser loans (e.g., negative amortization loans) that it previously marketed to borrowers. CW2 said many of the people in this situation were facing the high likelihood of losing their homes, and many of them were minorities in Miami, both Hispanics and African-Americans.
105. In this manner, BoA induced foreclosures by failing to offer refinancing or loan modifications to minority customers on fair terms – which constitutes a particularly egregious form of redlining, given that minority borrowers sought refinancing or loan modifications with respect to bad loans that the Bank previously made to them.
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D. Minorities in Fact Receive Predatory Loan Terms from BoA/Countrywide 106. As discussed herein, BoA/Countrywide’s predatory loans include:
high-cost loans (i.e., loans with an interest rate that was at least three percentage points above a federally-established benchmark), subprime loans, interest-only loans, balloon payment loans, loans with prepayment penalties, negative amortization loans, no documentation loans, and/or ARM loans with teaser rates (i.e., lifetime maximum rate > initial rate + 6%).
107. Data reported by the Bank and available through public databases shows that in 2004-2012, 21.9% of loans made by BoA/Countrywide to African-American and Latino customers in Miami were high-cost, but only 8.9% of loans made to white customers in Miami were high-cost.27 This data demonstrates a pattern of statistically significant differences in the product placement for high cost loans between minority and white borrowers.28
27 As alleged throughout the complaint, all references to the date range 2004-2012 are intended to include the time period up to and including December 31, 2012.
28 Statistical significance is a measure of probability that an observed outcome would not have occurred by chance. As used in this Complaint, an outcome is statistically significant if the probability that it could have occurred by chance is less than 10%.
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108. The following map of BoA/Countrywide predatory loans originated in Miami between 2004-2012 illustrates the geographic distribution of predatory loans in African-American and Latino neighborhoods and white neighborhoods in Miami. This map demonstrates that BoA/Countrywide’s predatory loans are disproportionately located in minority neighborhoods.
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109. The fact that predatory loans involving all of BoA/Countrywide’s loan products are more heavily concentrated in minority neighborhoods in Miami is consistent with the practice of reverse redlining and, upon information and belief, has contributed significantly to the disproportionately high rates of foreclosure in minority communities in Miami. E. Minorities in Miami Receive Such Predatory Loan Terms from
BoA/Countrywide Regardless of Creditworthiness 110. According to Discretionary Pricing, Mortgage Discrimination, and the Fair Housing Act, 45 HARVARD CIVIL RIGHTS-CIVIL LIBERTIES LAW REV. 375, 398 (2010), several studies dating back to 2000 have established that minority borrowers were charged higher interest rates/fees than similar creditworthy white borrowers. 111. Likewise, according to A Racial Financial Crisis, 83 TEMPLE LAW REV. 941, 947, 949 (2011), one study concluded that “even after controlling for underwriting variables, African-American borrowers were 6.1% to 34.3% more likely than whites to receive a higher rate subprime mortgage during the subprime boom.” And another study found that significant loan pricing disparity exists among low risk borrowers – African-American borrowers were 65% more likely to receive a subprime home purchase loan than similar creditworthy white borrowers, and 124% more likely to receive a subprime refinance loan. 112. Similarly, the Center for Responsible Lending’s November 2011 report, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures, stated that “racial and ethnic differences in foreclosure rates persist even after accounting for differences in borrower incomes.” Further, the Center stated it is “particularly troublesome” that minorities received riskier loans “even within [similar] credit ranges.” For example, among borrowers having FICO scores above 660, the incidence of higher rate loans among various groups was as follows: whites – 6.2%;
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African-American – 21.4% (3.5 times white rate); and Latino – 19.3% (3.1 times white rate).
113. Moreover, data reported by the Bank and available through both public and private databases shows that minorities in Miami received predatory loan terms from BoA/Countrywide more frequently than white borrowers, regardless of creditworthiness.
114. A regression analysis of this data controlling for borrower race and objective risk characteristics such as credit history, loan to value ratio, and the ratio of loan amount to income demonstrates that from 2004-2012, an African-American borrower was 1.581 times more likely to receive a predatory loan as was a white borrower possessing similar underwriting and borrower characteristics. The regression analysis further demonstrates that the odds that a Latino borrower would receive a predatory loan were 2.087 times greater than that of a white borrower possessing similar underwriting and borrower characteristics. These odds ratios demonstrate a pattern of statistically significant differences between AfricanAmerican and white borrowers, and between Latino and white borrowers.
115. The regression analysis also shows that these disparities persist when comparing only borrowers with FICO scores above 660. An African-American borrower with a FICO score above 660 was 1.533 times more likely to receive a predatory loan as was a white borrower with similar underwriting and borrower characteristics. A Latino borrower with a FICO score above 660 was 2.137 times more likely to receive a predatory loan as was a white borrower with similar underwriting and borrower characteristics. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
116. A similar regression analysis taking into account the racial makeup of the borrower’s neighborhood rather than the individual borrower’s race shows that borrowers in heavily minority neighborhoods in Miami were more likely to receive
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predatory loans than borrowers in heavily white neighborhoods. For example, a borrower in a heavily minority census tract (census tract consisting of at least 90% African-American or Latino households) was 1.585 times more likely to receive a predatory loan as was a borrower with similar characteristics in a non-minority neighborhood (census tract with at least 50% white households). These odds ratios demonstrate a pattern of statistically significant differences between AfricanAmerican and white borrowers, and between Latino and white borrowers.
117. This data also establishes that BoA/Countrywide disproportionately issued loans with higher risk features including government loans (FHA/VA) and other high cost loans to African-American and Latino borrowers in Miami from 2008-2012. A regression analysis, controlling for borrower race and objective risk characteristics such as ratio of loan amount to income, demonstrates that an AfricanAmerican borrower was 5.388 times more likely to receive one of these loans with higher risk features than was a white borrower possessing similar borrower and underwriting characteristics. The regression analysis further demonstrates that a Latino borrower was 1.685 times more likely to receive one of these loans with higher risk features than was a white borrower possessing similar borrower and underwriting characteristics. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
118. Thus, the disparities are not the result of, or otherwise explained by, legitimate non-racial underwriting criteria.
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F. BoA/Countrywide’s Targeting of Minorities who in fact Receive Predatory Loan Terms Regardless of Creditworthiness Causes Foreclosures 1. Data shows that BoA/Countrywide’s foreclosures are disproportionately located in minority neighborhoods in Miami. 119. BoA/Countrywide has intentionally targeted predatory practices at
African-American and Latino neighborhoods and residents. The predatory practices include charging excessively high interest rates and fees that are not justified by borrowers’ creditworthiness; providing teaser rate loans with bogus refinance opportunities; requiring large prepayment penalties while deliberately misleading borrowers about the penalties; refusing to refinance or modify predatory loans; and more.
120. Far from being a responsible provider of much-needed credit in minority communities, BoA/Countrywide is a leading cause of stagnation and decline in African-American and Latino neighborhoods where its foreclosures are concentrated. Specifically, since at least 2000, its foreclosures have been concentrated in neighborhoods with African-American or Latino populations exceeding 75%.
121. Although 53.3% of BoA/Countrywide’s loan originations in Miami from 2004 to 2012 were in census tracts that are at least 75% African-American or Latino, 62.5% of loan originations that had entered foreclosure by June 2013 were in those census tracts. Similarly, while 84.7% of BoA/Countrywide’s loan originations in Miami from 2004 to 2012 occurred in census tracts that are at least 50% AfricanAmerican or Latino, 95.7% of BoA/Countrywide’s loan originations that had entered foreclosure by June 2013 were in those census tracts. Moreover, while 15.3% of BoA/Countrywide’s loan originations in Miami from 2004 to 2012 occurred in census tracts that were less than 50% African-American or Latino, only 4.3% of BoA/Countrywide’s loan originations that had entered foreclosure by June 2013 were in those census tracts. This data demonstrates a pattern of statistically
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significant differences between African-American and white borrowers, and between Latino and white borrowers.
122. The following map represents the concentration of BoA/Countrywide’s loan originations from 2004 through 2012 that had entered foreclosure by February 2013 in African-American and Latino neighborhoods. In addition to the disproportionate distribution of BoA/Countrywide foreclosures in African-American and Latino neighborhoods, disparate rates of foreclosure based on race further demonstrate BoA/Countrywide’s failure to follow responsible underwriting practices in minority neighborhoods. While 32.8% of BoA/Countrywide’s loans in predominantly (greater than 90%) African-American or Latino neighborhoods result in foreclosure, the same is true for only 7.7% of its loans in non-minority (greater than 50%) neighborhoods. In other words, a BoA/Countrywide loan in a predominantly African-American or Latino neighborhood is 5.857 times more likely to result in foreclosure as is a BoA/Countrywide loan in a non-minority neighborhood. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
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123. Thus, BoA/Countrywide’s discretionary lending policies and pattern or practice of targeting of minorities, who in fact receive predatory loan terms regardless of creditworthiness, have caused and continue to cause foreclosures in Miami.
2. Data shows that BoA/Countrywide’s loans to minorities result in especially quick foreclosures.
124. A comparison of the time from origination to foreclosure of BoA/Countrywide’s loans originated in Miami from 2004 to 2012 shows a marked disparity with respect to the speed with which loans to African-Americans and Latinos and whites move into foreclosure. The average time to foreclosure for African-American borrowers is 3.144 years, and for Latino borrowers is 3.090 years. By comparison, the average time to foreclosure for white borrowers is 3.448 years. These statistically significant disparities demonstrate that BoA/Countrywide aggressively moved minority borrowers into foreclosure as compared with how the Bank handled foreclosures for white borrowers.
125. This disparity in time to foreclosure is further evidence that BoA/Countrywide is engaged in lending practices consistent with reverse redlining. The disparity in time to foreclosure demonstrates that BoA/Countrywide is engaged in irresponsible underwriting in African-American and Latino communities that does not serve the best interests of borrowers. If BoA/Countrywide were applying the same underwriting practices in African-American and Latino neighborhoods and white neighborhoods in Miami, there would not be a significant difference in time to foreclosure. Were BoA/Countrywide underwriting borrowers in both communities with equal care and attention to proper underwriting practices, borrowers in AfricanAmerican and Latino communities would not find themselves in financial straits significantly sooner during the lives of their loans than do borrowers in white communities. The faster time to foreclosure in African-American and Latino neighborhoods is consistent with underwriting practices in minority communities
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that are less concerned with determining a borrower’s ability to pay and qualifications for the loan than they are in maximizing short-term profit.
126. The HUD/Treasury Report confirms that time to foreclosure is an important indicator of predatory practices: “[t]he speed with which the subprime loans in these communities have gone to foreclosure suggests that some lenders may be making mortgage loans to borrowers who did not have the ability to repay those loans at the time of origination.”29
3. Data shows that the discriminatory loan terms cause the foreclosures.
127. BoA/Countrywide’s discriminatory lending practices cause foreclosures and vacancies in minority communities in Miami.
128. Steering borrowers into loans that are less advantageous than loans for which they qualify, including steering borrowers who qualify for prime loans into subprime loans, can cause foreclosures because the borrowers are required to make higher loan payments. The difference between what a borrower who is steered in this manner must pay and the lower amount for which the borrower qualified can cause the borrower to be unable to make payments on the mortgage. In such instances, the borrower would have continued to make payments on the mortgage and remained in possession of the premises had BoA/Countrywide made the loan without improperly steering the borrower into a subprime, or less advantageous loan. Steering borrowers in this manner, therefore, causes foreclosures and vacancies.
129. Giving a loan to an applicant who does not qualify for the loan, especially a refinance or home equity loan, can also cause foreclosures and vacancies. Some homeowners live in properties that he or she owns subject to no mortgage. Other homeowners live in properties with modest mortgages that he or she can comfortably afford to pay. Where a lender, such as BoA/Countrywide, solicits such a homeowner to take out a home equity loan on their property, or
29 HUD/Treasury Report at 25.
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alternatively, to refinance an existing loan into a larger loan without proper underwriting to assure that the borrower can make the monthly payments for the new, larger loan, the result is likely to be that the borrower will be unable to make payments on the mortgage. This is particularly true where the borrower is refinanced from a fixed rate loan into an adjustable rate loan that the lender knows the borrower cannot afford, should interest rates rise. In some instances the lender may refinance the borrower into a new loan that the lender knows the borrower cannot sustain, given the borrower’s present debt obligations and financial resources. In such circumstances, the likely result of such practices is to cause homeowners who are otherwise occupying properties without a mortgage, or comfortably making payments on a modest existing mortgage, to be unable to make payments on a new, unaffordable loan. This, in turn, causes foreclosures and vacancies. If these unaffordable refinance and home equity loans had not been made, the subject properties would not have become vacant.
130. A regression analysis of loans issued BoA/Countrywide in Miami from 2004-2012, controlling for objective risk characteristics such as credit history, loan to value ratio, and the ratio of loan amount to income, demonstrates that a predatory loan is 1.721 times more likely to result in foreclosure than is a non-predatory loan.
131. The regression analysis also demonstrates that a predatory loan made to an African-American borrower was 2.744 times more likely to result in foreclosure than was a non-predatory loan made to a white borrower with similar borrower and underwriting characteristics. A predatory loan made to a Latino borrower was 2.861 times more likely as a non-predatory loan made to a white borrower with similar risk characteristics to result in foreclosure. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
132. A regression analysis of loans with higher risk features including government loans (FHA/VA) and other high cost loans issued by BoA/Countrywide
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in Miami from 2008-2012, controlling for borrower race and objective risk characteristics such as ratio of loan amount to income, demonstrates that these loans are 1.855 times more likely as loans without these risk features to result in foreclosure. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
VII. INJURY TO MIAMI CAUSED BY BOA/COUNTRYWIDE’S DISCRIMINATORY LOAN PRACTICES
133. Miami has suffered financial injuries as a direct result of BoA’s pattern or practice of reverse redlining and the resulting disproportionately high rate of foreclosure on BoA loans to African-Americans and Latinos in minority neighborhoods in Miami. Miami seeks redress for these injuries. The City does not seek redress in this action for injuries resulting from foreclosures on mortgages originated by lenders other than BoA.
134. BoA continues to engage in the discriminatory pattern or practice described herein with similar and continuing deleterious consequences to the City.
135. The City seeks damages based on reduced property tax revenues based on (a) the decreased value of the vacant properties themselves, and (b) the decreased value of properties surrounding the vacant properties. In addition, the City seeks damages based on municipal services that it provided and still must provide to remedy blight and unsafe and dangerous conditions which exist at properties that were foreclosed as a result of BoA’s illegal lending practices. A. Miami has been Injured by a Reduction in Property Tax Revenues from
Foreclosures Caused by Discriminatory Loans Issued by BoA 136. When a home falls into foreclosure, it affects the property value of the foreclosed home as well as the values of other homes in the neighborhood. These decreased property values in turn reduce property tax revenues to the City.
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137. As property values drop, Miami communities could lose millions in property tax revenues from the decreased value of the foreclosed homes themselves and those in the surrounding neighborhoods.
1. The decreased value of the properties foreclosed by BoA result in reduced property tax revenues.
138. Homes in foreclosure tend to experience a substantial decline in value (e.g., 28%).30
139. A portion of this lost home value is attributable to homes foreclosed as a result of BoA’s discriminatory loan practices.
140. The decreased property values of foreclosed homes in turn reduce property tax revenues to the City and constitute damages suffered by Miami.
2. The decreased value of properties in the neighborhoods surrounding foreclosed properties results in reduced property tax revenues.
141. BoA foreclosure properties and the problems associated with them likewise cause especially significant declines in surrounding property values because the neighborhoods become less desirable. This in turn reduces the property tax revenues collected by Miami.
142. Property tax losses suffered by Miami as a result of vacancies resulting from BoA’s foreclosures are fully capable of empirical quantification.
143. Routinely maintained property tax and other data allow for the precise calculation of the property tax revenues lost by the City as a direct result of particular BoA foreclosures. Using a well-established statistical regression technique that focuses on effects on neighboring properties, the City can isolate the lost property value attributable to BoA foreclosures and vacancies from losses attributable to other causes, such as neighborhood conditions. This technique, known as Hedonic regression, when applied to housing markets, isolates the factors that contribute to
30 Campbell, John Y., Stefano Giglio, and Parag Pathak, National Bureau of Economic Research, NBER Working Paper Series, “Forced Sales and House Prices” (2009) (available at http://www.nber.org/papers/w14866.pdf?new_window=1).
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the value of a property by studying thousands of housing transactions. Those factors include the size of a home, the number of bedrooms and bathrooms, whether the neighborhood is safe, whether neighboring properties are well-maintained, and more. Hedonic analysis determines the contribution of each of these house and neighborhood characteristics to the value of a home.
144. The number of foreclosures in a neighborhood is one of the neighborhood traits that Hedonic analysis can examine. Hedonic analysis allows for the calculation of the impact on a property’s value of the first foreclosure in close proximity (e.g., ⅛ or ¼ of a mile), the average impact of subsequent foreclosures, and the impact of the last foreclosure.
145. Foreclosures attributable to BoA in minority neighborhoods in Miami can be analyzed through Hedonic regression to calculate the resulting loss in the property values of nearby homes. This loss can be distinguished from any loss attributable to non-BoA foreclosures or other causes. The loss in property value in minority neighborhoods in Miami attributable to BoA’s unlawful acts and consequent foreclosures can be used to calculate the City’s corresponding loss in property tax revenues.
146. Various studies establish that Hedonic regression can be used for this purpose. A study published by the Fannie Mae Foundation, using Chicago as an example, determined that each foreclosure is responsible for an average decline of
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approximately 1.1% in the value of each single-family home within an eighth of a mile.31
147. Other studies have focused on the impact of abandoned homes on surrounding property values. A study in Philadelphia, for example, found that each home within 150 feet of an abandoned home declined in value by an average of $7,627; homes within 150 to 299 feet declined in value by $6,810; and homes within 300 to 449 feet declined in value by $3,542.32
148. These studies highlight the foreseeability of tax related harm to the City as the result of foreclosures arising from discriminatory loans.
149. And most recently, a Los Angeles study reported, “[i]t is conservatively estimated that each foreclosed property will cause the value of neighboring homes within an eighth of a mile to drop 0.9%.” Thus, “[i]n Los Angeles, impacted homeowners could experience property devaluation of $53 billion.”33 This decreased property value of neighboring homes in turn reduces property tax revenues to the City.
150. Application of such Hedonic regression methodology to data regularly maintained by Miami can be used to quantify precisely the property tax injury to the City caused by BoA’s discriminatory lending practices and resulting foreclosures in minority neighborhoods.
31 See Dan Immergluck & Geoff Smith, The External Costs of Foreclosure: The Impact of Single-Family Mortgage Foreclosures on Property Values, 17 HOUSING POLICY DEBATE 57 (2006) at 69.
32 See Anne B. Shlay & Gordon Whitman, Research for Democracy: Linking Community Organizing and Research to Leverage Blight Policy, at 21 (2004).
33 The Alliance of Californians for Community Empowerment and the California Reinvestment Coalition, The Wall Street Wrecking Ball: What Foreclosures are Costing Los Angeles Neighborhoods, at 3 (2011) (“Cost to Los Angeles Report”).
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B. Miami Is Injured Because It Provided and Still Must Provide Costly Municipal Services for Foreclosure Properties in Minority Neighborhoods as a Direct Result of Discriminatory Loans Originated or Purchased by BoA 151. BoA foreclosure properties cause direct costs to the City because the
City is required to provide increased municipal services at these properties. These services would not have been necessary if the properties had not been foreclosed upon.
152. For example, the City’s Police Department has sent, and will continue to send personnel and police vehicles to BoA foreclosure properties to respond to a variety of problems, including increased vagrancy, criminal activity, and threats to public health and safety that arise at these properties because of their foreclosure status. Because violent crime has generally been found to increase due to foreclosures, the Miami PD must respond to calls reporting suspicious activity at foreclosure properties and perform ongoing investigations involving criminal activity, including gang activity, at these properties.
153. Likewise, the Miami Fire Department has sent, and will continue to send personnel and resources to BoA foreclosure properties to respond to a variety of fire-related problems that arise at these properties because of their foreclosure status.
154. The Miami Building Department and Code Enforcement/Code Compliance Departments have devoted, and will continue to devote personnel time and out-of-pocket funds to perform a number of tasks that arise at these properties because of their foreclosure status. These include, but are not limited to the following: (a) inspect and issue permitting violations in contravention of Florida statutes 553 and the Florida Building Code; (b) inspect and issue violations of the Miami City Code and Florida statutes 162; (c) condemn and demolish vacant structures deemed an imminent hazard to public safety.
155. The City frequently hires independent contractors to perform certain services, including, but not limited to, (i) removing excess vegetation at vacant
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properties, (ii) hauling away trash and debris at vacant properties, (iii) boarding vacant property from casual entry, (iv) putting up fencing to secure vacant properties, (v) painting and removing graffiti at vacant properties. Occasionally, some of these services are performed by the City’s General Services Administration Department. .
156. The Miami City Attorney’s Office has devoted, and will continue to devote personnel time and out-of-pocket resources perform a number of tasks that arise at these properties because of their foreclosure status. These include, but are not limited to the following: (a) prosecuting code enforcement cases; (b) preserving the City’s lien rights at judicial foreclosure proceedings; and (c) pursuing court ordered injunctions involving a myriad of potential problems at foreclosure properties.
157. The City is required to administer and fund the Unsafe Structures Board, which was formerly under the jurisdiction of Miami-Dade County.
158. As described in the Cost to Los Angeles Report, “[l]ocal government agencies have to spend money and staff time on blighted foreclosed properties, providing maintenance, inspections, trash removal, increased public safety calls, and other code enforcement services …. Responding to these needs is a gargantuan task that involves multiple agencies and multiple levels of local government.”34
159. Moreover, as discussed above, the Apgar-Duda report underscores the foreseeability of municipal costs as the result of foreclosures arising from discriminatory loans.
VIII. SAMPLE FORECLOSURE PROPERTIES IN THE CITY OF MIAMI 160. Plaintiff has preliminarily identified three thousand three hundred and
twenty-six (3,326) discriminatory loans issued by BoA in Miami between 2004-2012

34 Id.

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that resulted in foreclosure.35 The City has already incurred, or will incur in the future, damages corresponding to each of these properties. A sample of property addresses corresponding to these foreclosures is set forth below:
1111 NW 65th St., 33150 1073 NW 64th St., 33150 597 NW 69th St., 33127 1557 NW 66th St., 33147 253 NW 73rd St., 33150 7200 SW 5th St., 33144 3635 NW 14th St., 33125 2728 NW 23rd Ct., 33142 1671 NW 36th Ave., 33125 4321 NW 11th Ct., 33127
IX. STATUTE OF LIMITATIONS AND CONTINUING VIOLATIONS DOCTRINE
161. As alleged herein, Defendant BoA/Countrywide has engaged in a continuous pattern and practice of mortgage discrimination in Miami since at least 2004 by imposing different terms or conditions on a discriminatory and legally
35 Plaintiff anticipates that it will be able to identify more foreclosures resulting from the issuance of discriminatory loans during this time period with the benefit of discovery. This conclusion derives from the fact that because of certain reporting limitations, the publicly-available mortgage loan databases utilized by Plaintiff are not as comprehensive as the mortgage loan databases maintained by, and in the possession of, an issuing bank.
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prohibited basis. In order to maximize profits at the expense of the City of Miami and minority borrowers, BoA/Countrywide adapted its unlawful discrimination to changing market conditions. This unlawful pattern and practice conduct is continuing through the present and has not terminated. Therefore, the operative statute of limitations governing actions brought pursuant to the Federal Fair Housing Act has not commenced to run.
X. CLAIMS FOR RELIEF FIRST CLAIM FOR RELIEF (Violation of the Federal Fair Housing Act, 42 U.S.C. §§ 3601, et seq.) 162. Plaintiff repeats and incorporates by reference all allegations contained in the preceding paragraphs as if fully set forth herein. 163. BoA/Countrywide’s acts, policies, and practices as described constitute intentional discrimination on the basis of race. BoA/Countrywide has intentionally targeted residents of predominantly African-American and Latino neighborhoods in Miami for different treatment than residents of predominantly white neighborhoods in Miami with respect to mortgage lending. BoA/Countrywide has intentionally targeted residents of these neighborhoods for high-cost loans without regard to their credit qualifications and without regard to whether they qualify for more advantageous loans, including prime loans. BoA/Countrywide has intentionally targeted residents of these neighborhoods for increased interest rates, points, and fees, and for other disadvantageous loan terms including, but not limited to, adjustable rates, prepayment penalties, and balloon payments. BoA/Countrywide has intentionally targeted residents of these neighborhoods for unfair and deceptive lending practices in connection with marketing and underwriting mortgage loans. 164. BoA/Countrywide’s acts, policies, and practices have had an adverse and disproportionate impact on African-Americans and Latinos and residents of predominantly African-American and Latino neighborhoods in Miami as compared to similarly situated whites and residents of predominantly white neighborhoods in
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Miami. This adverse and disproportionate impact is the direct result of BoA/Countrywide’s policies of providing discretion to loan officers and others responsible for mortgage lending; failing to monitor this discretion to ensure that borrowers were being placed in loan products on a nondiscriminatory basis when BoA/Countrywide had notice of widespread product placement disparities based on race and national origin; giving loan officers and others responsible for mortgage lending large financial incentives to issue loans to African-Americans and Latinos that are costlier than better loans for which they qualify; otherwise encouraging and directing loan officers and others responsible for mortgage lending to steer borrowers into high-cost loans or loans with adjustable rates, prepayment penalties, or balloon payments without regard for whether they qualify for better loans, including but not limited to prime loans; and setting interest rate caps. These policies have caused African-Americans and Latinos and residents of predominantly African-American and Latino neighborhoods in Miami to receive mortgage loans from BoA/Countrywide that have materially less favorable terms than mortgage loans given by BoA/Countrywide to similarly situated whites and residents of predominantly white neighborhoods in Miami, and that are materially more likely to result in foreclosure.
165. BoA/Countrywide’s residential lending-related acts, policies, and practices constitute reverse redlining and violate the Fair Housing Act as:
(a) Discrimination on the basis of race and national origin in making available, or in the terms and conditions of, residential real estate-related transactions, in violation of 42 U.S.C. § 3605(a); and
(b) Discrimination on the basis of race and national origin in the terms, conditions, or privileges of sale of a dwelling, in violation of 42 U.S.C. § 3604(b).
166. BoA/Countrywide’s policies or practices are not justified by business necessity or legitimate business interests.
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167. BoA/Countrywide’s policies and practices are continuing. 168. The City is an aggrieved person as defined by 42 U.S.C. § 3602(i) and has suffered damages as a result of BoA/Countrywide’s conduct. 169. The City’s damages include lost tax revenues and the need to provide increased municipal services. The loss of tax revenues at specific foreclosure sites and at closely neighboring properties in predominantly minority neighborhoods of the City was a foreseeable consequence that was fairly traceable to BoA’s discriminatory lending. Likewise, the need to provide increased municipal services at blighted foreclosure sites in predominantly minority neighborhoods of the City was a foreseeable consequence that was fairly traceable to BoA’s discriminatory lending. 170. BoA/Countrywide’s policies and practices, as described herein, had the purpose and effect of discriminating on the basis of race or national origin. These policies and practices were intentional, willful, or implemented with reckless disregard for the rights of African-American and Latino borrowers.
SECOND CLAIM FOR RELIEF (Common Law Claim For Unjust Enrichment
Based On Florida Law)
171. Plaintiff repeats and incorporates by reference paragraphs 1 - 161 as if fully set forth herein.
172. Defendants have received and utilized benefits derived from a variety of municipal services, including police and fire protection, as well as zoning ordinances, tax laws, and other laws and services that have enabled Defendants to operate and profit within the City of Miami.
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173. Defendants are aware of and have taken advantage of the services and laws provided by the City of Miami to further their businesses.
174. As a direct and proximate result of Defendants’ predatory lending practices, Defendants have been enriched at the City’s expense by utilizing benefits conferred by the City and, rather than engaging in lawful lending practices, practicing unlawful lending practices that have both denied the City revenues it had properly expected through property and other tax payments and by costing the City additional monies for services it would not have had to provide in the neighborhoods affected by foreclosures due to predatory lending, absent the Defendants’ unlawful activities. Defendants have failed to remit those wrongfully obtained benefits or reimburse the City for its costs improperly caused by Defendants, and retention of the benefits by Defendants would be unjust without payment.
175. In addition, to its detriment the City has paid for the Defendants’ externalities, or Defendants’ costs of harm caused by its mortgage lending discrimination, in circumstances where Defendants are and have been aware of this obvious benefit and retention of such benefit would be unjust.
DEMAND FOR JURY TRIAL Pursuant to Fed. R. Civ. P. 38(b), the City demands a trial by jury on all issues so triable.
PRAYER FOR RELIEF WHEREFORE, the City respectfully prays that the Court grant it the following relief: A. Enter a declaratory judgment that the foregoing acts, policies, and practices of BoA/Countrywide violate 42 U.S.C. §§ 3604 and 3605; B. Enter a permanent injunction enjoining BoA/Countrywide and its directors, officers, agents, and employees from continuing the discriminatory
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conduct described herein, and directing BoA/Countrywide and its directors, officers, agents, and employees to take all affirmative steps necessary to remedy the effects of the discriminatory conduct described herein and to prevent additional instances of such conduct or similar conduct from occurring in the future, pursuant to 42 U.S.C. § 3613(c)(1);
C. Award compensatory damages to the City of Miami in an amount to be determined by the jury that would fully compensate the City for its injuries caused by the conduct of BoA/Countrywide alleged herein, pursuant to 42 U.S.C. § 3613(c)(1);
D. Award punitive damages to the City in an amount to be determined by the jury that would punish BoA/Countrywide for the willful, wanton and reckless conduct alleged herein, and that would effectively deter similar conduct in the future, pursuant to 42 U.S.C. § 3613(c)(1);
E. Award the City its reasonable attorneys’ fees and costs, pursuant to 42 U.S.C. § 3613(c)(2);
F. Require payment of pre-judgment interest on monetary damages; and G. Order such other relief as this Court deems just and equitable.

Dated: December 13, 2013

Respectfully submitted,
By: s/ Lance A. Harke, P.A. Lance A. Harke, P.A. Florida Bar No. 863599 HARKE CLASBY & BUSHMAN LLP 9699 N.E. Second Avenue Miami, FL 33138 Telephone: 305-536-8220 lharke@harkeclasby.com

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Victoria Méndez Florida Bar No. 194931 CITY OF MIAMI OFFICE OF THE CITY ATTORNEY 444 S.W. 2nd Avenue, Suite 945 Miami, FL 33130 Telephone: 305-416-1800 vmendez@miamigov.com

Steve W. Berman (pro hac vice forthcoming) HAGENS BERMAN SOBOL SHAPIRO LLP 1918 Eighth Avenue, Suite 3300 Seattle, WA 98101 Telephone: (206) 623-7292 steve@hbsslaw.com

Elaine T. Byszewski forthcoming)

(pro

hac

vice

HLeAeGME.NGSoBrdEoRnM(pAroNhSaOc vBiOceLfoSrHthAcoPmIRinOgL) LP

301 North Lake Avenue, Suite 203

Pasadena, CA 91101

Telephone: (213) 330-7150

elaine@hbsslaw.com

lee@hbsslaw.com

Erwin Chemerinsky (pro hac vice forthcoming) UNIVERSITY OF CALIFORNIA, IRVINE 401 East Peltason Drive, Educ. 1095 Irvine, CA 92697 Telephone: (949) 824-7722 echemerinsky@law.uci.edu

TJHoRoewIlALaLridb&eLrsiAboenPrPs(poErnLo(LphAraoTc EhvaicRceEvfSiocOrethUfcoRortCmhEcinoSgm,)Pin.Cg). 400 Continental Blvd., 6th Floor El Segundo, CA 90245 Telephone: (310) 426-2361 joel@taresources.com howard@taresources.com

Robert Peck (pro hac vice forthcoming) CENTER FOR CONSTITUTIONAL L77IT7I6GthASTtrIeOetNNW, Suite 520 Washington, DC 20001 Telephone: (202) 944-2803 Robert.peck@cclfirm.com

Attorneys for Plaintiff the City of Miami

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 Case 1:13-cv-24506-WPD Document 71 Entered on FLSD Docket 07/09/2014 Page 1 of 14
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-24506-CIV-DIMITROULEAS CITY OF MIAMI, a Florida municipal corporation,
Plaintiff, vs. BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS; and COUNTRYWIDE BANK, FSB,
Defendants. _____________________________________/
ORDER GRANTING MOTION TO DISMISS THIS CAUSE is before the Court upon a Motion to Dismiss (the “Motion”) [DE 33], filed herein on February, 28, 2014 by Defendants Bank of America Corporation (“BoA”), Bank of America, N.A., Countrywide Financial Corporation, Countrywide Home Loans, and Countrywide Bank FSB (“Defendants”). Plaintiff City of Miami (“Plaintiff” or “City”) has filed an Opposition [DE 37]. Both parties also filed supplemental briefing. The Court has carefully considered the Motion [DE 33], the Plaintiff’s Opposition [DE 37], the Defendants’ Reply [DE 41], and the Plaintiff’s Surreply [DE 48], and the oral arguments made at the June 20, 2014, hearing. The Court is otherwise fully advised in the premises.
I. BACKGROUND This suit is brought pursuant to the Fair Housing Act of 1968 (“FHA”), as amended, 42 U.S.C. § 3601, et seq., to seek redress for injuries allegedly caused by Defendants’ pattern or
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practice of illegal and discriminatory mortgage lending. Comp. [DE 1] ¶ 2. Specifically, Plaintiff seeks injunctive relief and damages for financial injuries due to foreclosures on Defendants’ loans in minority neighborhoods and to minority borrowers that are the result of Defendants’ discriminatory lending practices, including both intentional discrimination and disparate impact discrimination. ¶ 2. Plaintiff alleges that beginning in 2004, Defendants began to flood historically under-served minority communities with high cost and other “predatory” loans, allegedly constituting “reverse redlining.” ¶ 7.
Plaintiff alleges that Defendants engaged in both redlining and reverse redlining. ¶ 10. Plaintiff further alleges that Defendants’ pattern and practice of reverse redlining has caused an excessive and disproportionately high number of foreclosures on Defendants’ loans in the minority neighborhoods of Miami. ¶ 11. Plaintiff also alleges that Defendants’ practice of traditional redlining has also caused an excessive and disproportionately high number of foreclosures on Defendants’ loans in the minority neighborhoods of Miami. ¶ 12. The Complaint alleges that, since 2004, Defendants have engaged in a continuing and unbroken pattern and practice of mortgage discrimination in Miami that still exists today. ¶ 10.
The Complaint further alleges that Defendants would have comparable foreclosure rates in minority and white communities if they had properly and uniformly applied underwriting practices in both areas. ¶ 13. The Complaint alleges that Defendants’ practice of failing to underwrite minority borrowers’ applications properly, and of putting these borrowers into loans which: (1) have more onerous terms than loans given to similarly situated white borrowers; and (2) the borrowers cannot afford, leads to foreclosures. ¶ 13.
Plaintiff’s Complaint includes data and statistical analysis, as well as statements from Confidential Witnesses to support its claims. For example, a regression analysis that allegedly
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controls for creditworthiness and other factors is offered to show that an African-American BoA borrower was 1.581 times more likely to receive a predatory loan than a white borrower, and a Latino borrower was 2.807 times more likely to receive such a loan. ¶ 15. Plaintiff alleges that Defendants have intentionally targeted predatory practices at African-American and Latino neighborhoods and residents by targeting these neighborhoods, without regard for credit history, for high-cost loans, for increased interest rates, points, and fees, for disadvantageous loan terms, and for unfair and deceptive lending practices in connection with marketing and underwriting mortgage loans. ¶ 163. Further, the Complaint alleges that the discretionary lending policies and practice of targeting minorities, who received predatory loan terms regardless of creditworthiness, have caused and continue to cause foreclosures in Miami. ¶ 164.
Plaintiff further alleges that the discriminatory practices and resulting foreclosures in the minority neighborhoods have inflicted significant, direct, and continuing financial harm to the City. ¶ 19. Plaintiff seeks damages based on reduced property tax revenues based on: (a) the decreased value of the vacant properties themselves; and (b) the decreased value of properties surrounding the vacant properties. ¶ 20. Plaintiff also seeks damages based on the expenditures of municipal services that have been and will be required to remedy the blight and unsafe and dangerous conditions which exist at vacant properties that were foreclosed as a result of BoA’s illegal lending practices. ¶ 20.
Defendants now move to dismiss the Complaint on the grounds that (1) Plaintiff lacks standing1; (2) Plaintiff’s FHA claim is time-barred by the statute of limitations; and (3) the Complaint fails to state a claim upon which relief can be granted. For the reasons set forth below, the Court grants Defendants’ Motion to Dismiss.
1 In Defendants’ Reply and Plaintiff’s Surreply, the parties briefed the “zone of interests” issue.
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II. LEGAL STANDARD As a threshold matter, the Court must determine if jurisdiction exists before proceeding to the merits of the case. Sinochem Int’l Co. v. Malay Int’l Shipping Corp, 549 U.S 422, 431 (2007) (“Without jurisdiction the court cannot proceed at all in any cause; it may not assume jurisdiction for the purposes of deciding the merits of the case.” (internal quotations omitted)). “The burden for establishing federal subject matter jurisdiction rests with the party bringing the claim.” Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1247 (11th Cir. 2005). Attacks on subject matter jurisdiction under Rule 12(b)(1) are either facial or factual. Garcia v. Copenhaver, Bell & Assocs., M.D.’s, P.A., 104 F. 3d 1256, 1260 (11th Cir. 1997). “Facial attacks on the complaint require the court merely to look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.” Garcia, F. 3d at 1260 (internal quotations omitted). “Factual attacks, on the other hand, challenge the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.” Garcia, F. 3d at 1261 (internal quotations omitted). However, “[w]here the jurisdictional issues are intertwined with the substantive merits, the jurisdictional issues should be referred to the merits.” Eaton v. Dorchester Dev., Inc., 692 F. 2d 727, 733 (11th Cir. 1982). Thus, when “an attack on subject matter jurisdiction also implicates an element of the cause of action,” the court should apply a Rule 12(b)(6) standard. Garcia, 104 F. 3d at 1261. Regardless of the standard, “federal courts cannot exercise jurisdiction over cases where the parties lack standing.” Fla. Wildlife Fed’n, Inc. v. S. Fla. Water Mgmt. Dist., 647 F. 3d 1296, 1302 (11th Cir. 2011). This principle exists because there is “a constitutional limitation of federal-court jurisdiction to actual cases or controversies” and “[o]ne element of the case-or-
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controversy requirement is that plaintiffs must establish that they have standing to sue.” Clapper v. Amnesty Intern. USA, 133 S. Ct. 1138, 1146 (2013) (internal citations and quotations omitted). To establish standing, “a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Fla. Wildlife Fed’n, Inc., 647 F. 3d at 1302 (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–181 (2000)). “If at any point in the litigation the plaintiff ceases to meet all three requirements for constitutional standing, the case no longer presents a live case or controversy, and the federal court must dismiss the case for lack of subject matter jurisdiction.” Id.
Where a plaintiff brings a cause of action pursuant to a federal statute, the plaintiff must establish both Article III standing and statutory standing. See, e.g., United States v. $38,000.00 in U.S. Currency, 816 F.2d 1538, 1544 (11th Cir. 1987). Article III of the United States Constitution requires that a litigant have standing to invoke the power of a federal court. See supra. In contrast, statutory standing requires the plaintiff to establish that he falls within the class of plaintiffs whom Congress has authorized to sue under that statute. Lexmark Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 (2014).
III. DISCUSSION 1. Count I: Violations of the Federal Fair Housing Act
A. Standing under the Fair Housing Act In order to have standing for any statutory cause of action, the zone of interests and
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proximate causation requirements must be met. Lexmark, 134 S. Ct. at 1391. Upon application of the appropriate 12(b)(6) standard, this Court finds that neither requirement is met in this case.
i. Zone of Interests The Supreme Court has made clear that the zone of interests test should be applied to any cause of action being brought under a statute. Courts are to “presume that a statutory cause of action extends only to plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’” Lexmark, 134 S. Ct. at 1388 (citing Allen v. Wright, 468 U.S. 737, 751 (1984)). The Supreme Court has stated that the zone of interests test “applies to all statutorily created causes of action; that it is a ‘requirement of general application’; and that Congress is presumed to ‘legist[e] against the background of’ the zone-of-interests limitation.” Lexmark, 134 S. Ct. at 1388 (citing Bennett v. Spear, 520 U.S. 154, 163 (1977); see also Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 287-288 (Scalia, J., concurring in judgment)). The test bars a plaintiff’s claims when his “’interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that’ Congress authorized that plaintiff to sue.” Lexmark, 134 S. Ct. at 1389 (citing Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S.Ct. 2199, 2210 (2012)). The Fair Housing Act § 812 provides that after the expiration of a period for administrative remedies, the person aggrieved may . . . commence a civil action in any appropriate United States district court, against the respondent named in the complaint, to enforce the rights granted or protected by this subchapter, insofar as such rights relate to the subject of the complaint. In Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 108-09 (1979), the Supreme Court held that § 812 provides “parallel remedies to precisely the same prospective plaintiffs” as does § 810.
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This Court’s2 determination of whether Plaintiff has standing to sue under the FHA is
guided by the Eleventh Circuit’s opinion in Nasser v. City of Homewood, 671 F. 2d 432 (11th
Cir. 1982). In that case, the Eleventh Circuit interpreted the FHA’s zone of interests in light of
the Supreme Court’s decisions regarding the topic. In Nasser, the plaintiffs brought a claim
under the FHA and claimed that they were injured by the diminution in value of their property as
a result of the defendants’ conduct. Nasser, 671 F. 2d at 436.
In deciding Nasser, the Eleventh Circuit considered Trafficante v. Metropolitan Life Ins.
Co., 409 U.S. 205 (1972). In that case, the Supreme Court found that the plaintiffs, a white and a
black resident of an apartment complex who alleged that they had lost the social and professional
benefits of living in an integrated community, had standing and were within the zone of interests
protected by the FHA. The Nasser decision noted that, in Trafficante,
The reference to ‘the person aggrieved’ showed ‘a congressional intention to define standing as broadly as is permitted by Article III of the Constitution’ . . . insofar as tenants of the same housing unit that is charged with discrimination are concerned.
Nasser, 671 F. 2d at 437 (citing Trafficante 409 U.S. at 209).
The Eleventh Circuit also considered Gladstone Realtors v. Village of Bellwood, 441 U.S.
91 (1979). In Nasser, the Eleventh Circuit explained that the Gladstone decision “said that a
showing of injury to the plaintiffs’ community as in Trafficante coupled with economic injury to
the value of the plaintiffs’ homes was sufficient to establish standing under the Fair Housing
2 The district court in City of Los Angeles v. Bank of America Corp., 2014 WL 2770083 (C.D. Cal. Jun. 12, 2014) declined to expand the zone of interests requirement into the analysis of standing under the FHA. See id. at *8 (“To the extent that Defendants argue that post- Thompson and post- Lexmark, a plaintiff needs to meet a separate ‘zone of interests’ requirement in order to have standing to bring a FHA claim, the Supreme Court has not yet applied that requirement to the FHA. Although the Supreme Court may explicitly require a separate ‘zone of interests’ statutory standing analysis under the FHA if presented with the issue in the future, this Court declines to do so here.”). Unlike the district court in City of Los Angeles, this Court is in the Eleventh Circuit so it is bound by the Eleventh Circuit’s opinion in Nasser v. City of Homewood, 671 F. 2d 432 (11th Cir. 1982), which does apply this requirement to the FHA. See infra. If it turns out that the zone of interests for purposes of standing under the FHA is as broad as Article III standing, this court’s ruling may very well be different as to the zone of interests analysis, but that would not change the deficiencies in Plaintiff’s allegations of proximate cause, as discussed in the following section.
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Act.” Nasser, 671 F. 2d at 437 (citing Gladstone, 441 U.S. at 114-15). However, the Eleventh Circuit continued:
There is no indication that the Court intended to extend standing, beyond the facts before it, to plaintiffs who show no more than an economic interest which is not somehow affected by a racial interest. There is no suggestion, either in the Act or its legislative history, that Congress intended to entrust the enforcement of the Fair Housing Act to such plaintiffs. Nasser, 671 F. 2d at 437. Accordingly, the Eleventh Circuit held that the property owner plaintiffs lacked standing under the FHA: “The policy behind the Fair Housing Act emphasizes the prevention of discrimination in the provision of housing on the basis of ‘race, color, religion, sex, or national origin.’ . . . Simply stated, the plaintiffs offered no evidence that they possess ‘rights granted’ by the Fair Housing Act. Their interest in value of the property in no way implicates values protected by the Act.” Nasser, 671 F. 2d at 437. In this case, the Plaintiff alleges merely economic injuries. [DE 1] ¶¶ 133-159. Plaintiff prays for relief for economic injury from the reduction in tax revenue from the decrease in property values. ¶¶ 133-150. The Plaintiff also prays for relief for injury caused by direct expenditures that the City spent due to the foreclosures. ¶¶ 151-159. Neither of these economic injuries is “somehow affected by a racial interest.” In fact, the injury alleged here is very similar to the injury decided to be outside of the FHA’s zone of interests in Nasser: an economic loss from a decrease in property values. The policy and purpose of the Fair Housing Act is to “provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C.A. § 3601. The City’s complaints of decreased tax revenue and increased municipal services are “so marginally related to . . . the purposes implicit in the statute that it cannot reasonably be assumed that Congress
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intended to permit suit.” Thompson v. N. Am. Stainless, LP, 131 S. Ct. 863, 870 (2011). Therefore, this Court finds that the City of Miami’s claims fall outside of the zone of interests protected by the FHA; Plaintiff lacks standing to sue under the statute.
ii. Proximate Causation Courts are also generally to “presume that a statutory cause of action is limited to plaintiffs whose injuries are proximately caused by violations of the statute.” Lexmark, 134 S. Ct. at 1390. “The judicial remedy cannot encompass every conceivable harm that can be traced to alleged wrongdoing.” Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 536 (1983). “Proximate-cause analysis is controlled by the nature of the statutory cause of action. The question it presents is whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.” Lexmark, 134 S. Ct. at 1390. As the Supreme Court explained, “the proximate-cause requirement generally bars suits for alleged harm that is ‘too remote’ from the defendant’s unlawful conduct. That is ordinarily the case if the harm is purely derivative of ‘misfortunes visited upon a third person by the defendant’s acts.’” Id. (citing Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268-269 (1992)). A plaintiff lacks standing where a causal chain is too attenuated and relies on the conduct of third parties. See Wehunt v. Ledbetter, 875 F. 2d 1558, 1566-67 (11th Cir. 1989). In this case, upon consideration of the allegations of the City’s Complaint, the Court holds that proximate causation for standing is not adequately alleged. In order to establish proximate causation, Plaintiff must demonstrate that the Defendants’ alleged redlining and reverse redlining caused the foreclosures to occur. Here, Plaintiff does not allege facts that isolate Defendants’ practices as the cause of any alleged lending disparity. Against the backdrop of a historic drop in home prices and a global recession, the decisions and actions of third parties,
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such as loan services, government entities, competing sellers, and uninterested buyers, thwart the City’s ability to trace a foreclosure to Defendants’ activity. The independent actions of this multitude of non-parties break the causal chain. See Fla. Family Policy Council v. Freeman, 561 F. 3d 1246, 1253 (11th Cir. 2009) (casual chain cannot rely on “independent action of some third party not before the court”).
Even if this first step of proximate causation were shown, Plaintiff would then have to complete the causal connection in its claim by demonstrating that the foreclosures caused the City to be harmed. Instead, the City offers vague and generalized allegations of harm (Comp. ¶¶ 53, 61, 75, 103, 109), statistics and studies that are either not limited to the City of Miami (Comp. ¶¶ 78 (relying on data from Chicago); 84-85 (relying on nationwide data); 16, 37-41, 8081, 87-88, 110-12), not limited to Defendants’ practices (Comp. ¶¶ 11, 19, 22, 80-85, 87-88, 110-11), or do not control for relevant credit factors that undoubtedly affect lending practices (Comp. ¶¶ 119-22; 11, 107-08, 124-25). Although statistical correlations are asserted, they are insufficient to support a causation claim. Moreover, Defendants are not responsible for the actions of intervening actors such as squatters, vandals or criminals that damaged foreclosed properties causing the City’s municipal costs to rise. Plaintiff’s claim is entirely derivative, emphasizing how inextricably linked the possible effect of reverse redlining is with other economic forces acting upon the market.
B. Statute of Limitations While the Court is dismissing this action for lack of standing, see supra, it also holds that the Complaint is subject to dismissal on statute of limitations grounds. A limitations clock begins to run “as soon as facts supportive of the cause of action are or should be apparent to a reasonably prudent person similarly situated.” Telesca v. Vill. of Kings
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Creek Condo. Ass’n, 390 F. App’x 877, 882 (11th Cir. 2010). For purposes of the FHA, “[a]n aggrieved person may commence a civil action in an appropriate United States district court or State court not later than 2 years after the occurrence or termination of an alleged discriminatory . . . housing practice . . . to obtain appropriate relief with respect to such discriminatory housing practice . . . .” 42 U.S.C. § 3613(a)(1)(A). An FHA claim for extending a discriminatory loan begins to run from the date of the loan closing. Id.; Phan v. Accredited Home Lenders Holding Co., 2010 WL 1268013, at *3 (M.D. Fla. Mar. 20, 2010). This suit was filed December 13, 2013. See [DE 1]. However, of the ten specific loans securing the identified properties alleged in the Complaint, Plaintiff fails to allege that any of those loans were made later than 2008. Comp. ¶ 160. There are no allegations of specific loans in the Complaint that are alleged to have closed in the two years leading up to the date the suit was filed. Comp. ¶ 160.
While Plaintiff argues that their claim is not time-barred pursuant to the continuing violation doctrine, Plaintiff has failed to allege sufficient facts to support its conclusory allegation that the specific discriminatory loan practices complained of continued into the statutory period. The Complaint contains no allegations of any loan that was closed within the relevant limitations period. Moreover, the Complaint alleges several different types of discriminatory actions or practices in which Defendants engaged, such as redlining and reverse redlining. However, the City has not alleged facts evidencing that each type of alleged discriminatory practice continued into the limitations period. 3 Rather the Complaint merely alleges a generalized policy of discrimination, which is insufficient to state a FHA claim.
2. Count II: Unjust Enrichment
3 The City does not allege a uniform practice of continuing conduct—that is, a particular form of discrimination by a single actor—that was the type of “discrete unlawful practice” that “continued” and so could be a basis for application of the continuing violations doctrine. Smithers v. Wynne, 319 F. App’x 755, 757 (11th Cir. 2008).
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When one party has conferred a valuable benefit on another in the absence of a contract, either express or implied, the doctrine of unjust enrichment creates a fictional contract, sometimes called a quasi-contract or contract implied in law, to the extent necessary to avoid clear injustice. Adventist Health System/Sunbelt Inc. v. Medical Sav. Ins. Co., 2004 WL 6225293 at *6 (M.D. Fla. Mar. 8, 2004). Under Florida Law, a claim for unjust enrichment has three elements: (1) the plaintiff has conferred a benefit on the defendant; (2) the defendant voluntarily accepted and retained that benefit; and (3) the circumstances are such that it would be inequitable for the defendants to retain it without paying the value thereof. Virgilio v. Ryland Group, Inc., 680 F. 3d 1329, 1337 (11th Cir. 2010) (citing Fla. Power Corp. v. City of Winter Park, 887 So. 2d 1237, 1241 n. 4 (Fla. 2004)). The benefit must be conferred directly. Century Senior Serv. v. Con. Health Benefit Ass., 770 F. Supp. 2d 1261, 1267 (S.D. Fla. 2011). Moreover, the benefit accepted by defendants must be one that defendants were “not legally entitled to receive in the first place.” State Farm Fire Cas. Co. v. Silver Star Health and Rehab, 739 F. 3d 579, 584 (11th Cir. 2013). Finally, the scope of damages is assessed in terms of the value of the benefit conferred upon the recipient, not the cost to the provider of producing that benefit and the fair market value of it. Tooltrend, Inc. v. CMT Utensili, SRL, 198 F.3d 802, 807 n. 5 (11th Cir. 1999).
Here, Plaintiff does not allege sufficient facts to support its unjust enrichment claim. As a preliminary matter, Plaintiff’s unjust enrichment claim fails due to the same insufficient causal allegations that were fatal to Plaintiff’s FHA claim. Plaintiff alleges that the Defendants were enriched at the City’s expense by utilizing benefits conferred by the City “[a]s a direct and proximate result of Defendants’ predatory lending practices.” Comp. ¶ 174. However, Plaintiff
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fails to adequately allege the requisite causal connection between the terms of Defendants’ loans and the City’s decreased tax revenue and increased municipal services. See supra.
Moreover, the City does not allege that it conferred a direct benefit onto Defendants to which they were not otherwise legally entitled. First, Plaintiff fails to allege that the City conferred any direct benefit on the Defendants. “[Den]ying the City revenues it had properly expected through property and other tax payments” is certainly not a direct benefit conferred from the City to Defendants. See Comp. ¶ 174. Additionally, the municipal services allegedly provided in the Complaint benefit property owners and residents of the City of Miami. Comp. ¶ 172. Plaintiff alleges that Defendants were aware of and took advantage of the services and laws provided by the City of Miami in order to further their business. Comp. ¶ 173. However, any benefit received by Defendants in this manner would be derivative and insufficient for an unjust enrichment claim. Century Senior, 770 F. Supp. 2d at 1267. Next, Plaintiff fails to allege sufficient facts that demonstrate that the City conferred any benefit on the Defendants to which they were not legally entitled. Municipal services provided by the City are benefits accruing to the public at large. Plaintiff fails to allege facts to show that the Defendants, to the extent that they owned property in the City of Miami, were not also entitled to the benefit of these municipal services. Although Plaintiff argues that the City paid for Defendants’ externalities and this constitutes unjust enrichment, this Court disagrees with this position. See e.g., Adventist Health Sys., 2004 WL 6225293 at *6 n. 8 (M.D. Fla. March 8, 2004) (dismissing unjust enrichment claim because “[e]quity has never required compensation for positive externalities.”). For the above reasons, this Court dismisses Plaintiff’s Count II: Unjust Enrichment.
IV. CONCLUSION Based upon the foregoing, it is ORDERED AND ADJUDGED as follows:
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1. Defendants’ Motion to Dismiss [DE 33] is hereby GRANTED; 2. Count I – Violation of the FHA is hereby DISMISSED WITH PREJUDICE4; 3. Count II – Unjust enrichment is hereby DISMISSED WITHOUT PREJUDICE.5 DONE AND ORDERED in Chambers at Ft. Lauderdale, Broward County, Florida, this 8th day of July, 2014.
Copies to: Counsel of record
4 While it is possible that an amendment could remedy the statute of limitations problems the Court has identified with Plaintiff’s Complaint, it would not remedy the Plaintiff’s lack of standing to bring this action under the FHA. 5 While it does not appear that Plaintiff can overcome the deficiencies in its claim for unjust enrichment, in an abundance of caution, the Court will dismiss this count without prejudice, with leave to amend in accordance with the analysis set forth this Order. If Plaintiff chooses to file an amended complaint, the deadline to do so is July 21, 2014. As currently pled, Plaintiff’s unjust enrichment claim is pled as a supplemental jurisdiction state law claim. The Court takes no position, at this time, as to whether it would exercise supplemental jurisdiction over a complaint that only contains a state law claim.
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 Case 1:13-cv-24506-WPD Document 76 Entered on FLSD Docket 09/09/2014 Page 1 of 6

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CITY OF MIAMI, a Florida municipal corporation,

CASE NO. 13-24506-CIV-DIMITROULEAS

Plaintiff,

vs.

BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS; and COUNTRYWIDE BANK, FSB,

Defendants. _____________________________________/

ORDER DENYING MOTION FOR RECONSIDERATION

THIS CAUSE is before the Court upon Plaintiff City of Miami (“Plaintiff” or “City”)’s

Motion for Reconsideration and Leave to File First Amended Complaint, filed herein on July 21,

2014. [DE 72]. The Court has carefully considered the Motion [DE 72], Defendants Bank of

America Corporation (“BoA”), Bank of America, N.A., Countrywide Financial Corporation,

Countrywide Home Loans, and Countrywide Bank FSB (“Defendants”)’s Opposition [DE 74],

Plaintiff’s Reply [DE 75], and is otherwise fully advised in the premises.

On December 13, 2013, Plaintiff filed this suit pursuant to the Fair Housing Act of 1968

(“FHA”), as amended, 42 U.S.C. § 3601, et seq., to seek redress for injuries allegedly caused by

Defendants’ pattern or practice of illegal and discriminatory mortgage lending. [DE 1].

Specifically, Plaintiff sought injunctive relief and damages for financial injuries due to

foreclosures on Defendants’ loans in minority neighborhoods and to minority borrowers that

were the result of Defendants’ discriminatory lending practices. Plaintiff sought damages based

1

Case 1:13-cv-24506-WPD Document 76 Entered on FLSD Docket 09/09/2014 Page 2 of 6
on reduced property tax revenues based on: (a) the decreased value of the vacant properties themselves; and (b) the decreased value of properties surrounding the vacant properties. Plaintiff also sought damages based on the expenditures of municipal services that have been and will be required to remedy the blight and unsafe and dangerous conditions which exist at vacant properties that were foreclosed as a result of Defendants’ illegal lending practices.
Defendants moved to dismiss the Complaint on the grounds that Plaintiff lacked standing under the FHA, Plaintiff’s FHA claim was time-barred by the statute of limitations, and the Complaint failed to state a claim upon which relief can be granted. After extensive briefing and oral argument, the Court entered an Order Granting Motion to Dismiss on July 8, 2014. See [DE 71].
Therein, the Court held that the City did not meet the zone of interests nor the proximate causation requirements for standing to sue under the FHA. See Lexmark Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 (2014). In making that ruling, the Court was guided by the Eleventh Circuit’s opinion in Nasser v. City of Homewood, 671 F. 2d 432 (11th Cir. 1982). The policy and purpose of the Fair Housing Act is to “provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C.A. § 3601. After a thorough review of the Complaint, the Court explained that Plaintiff alleged merely economic injuries -- Plaintiff sought relief for economic injury from the reduction in tax revenue from the decrease in property values and for injury caused by direct expenditures that the City spent due to the foreclosures. The Court held that neither of these economic injuries is “somehow affected by a racial interest.” Thus, the Court found that the City of Miami’s claims fell outside of the zone of interests protected by the FHA, as the City’s complaints of decreased tax revenue and increased municipal services are “so marginally related to . . . the purposes implicit in the statute
2

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that it cannot reasonably be assumed that Congress intended to permit suit.” Thompson v. N. Am. Stainless, LP, 131 S. Ct. 863, 870 (2011). Additionally, the Court held that proximate causation for standing was not adequately alleged, as Plaintiff’s allegations failed to demonstrate that the Defendants’ alleged practices of redlining and reverse redlining caused the foreclosures to occur. Further, the Court noted that the independent actions of a multitude of non-parties -- a historic drop in home prices and a global recession, the decisions and actions of third parties, such as loan services, government entities, competing sellers, and uninterested buyers -- break the causal chain, thwarting the City’s ability to trace a foreclosure to Defendants’ activity. See Fla. Family Policy Council v. Freeman, 561 F. 3d 1246, 1253 (11th Cir. 2009) (casual chain cannot rely on “independent action of some third party not before the court”). Moreover, the Court held that Plaintiff’s offered vague and generalized allegations of harm, failing to allege facts demonstrating that the foreclosures caused the City to be harmed. Finally, the Court held that the Complaint was also subject to dismissal on statute of limitations grounds, as the Complaint contained no allegations of any loan that was closed within the relevant limitations period. The Complaint merely alleged a generalized policy of discrimination, failing to allege facts evidencing that each type of alleged discriminatory practice continued into the limitations period. The Court dismissed Count I, violation of the FHA, with prejudice, explaining that, while it is possible that an amendment could remedy the statute of limitations problems the Court identified with Plaintiff’s Complaint, it would not remedy the Plaintiff’s lack of standing to bring this action under the FHA.
The Court’s July 8, 2014 Order Granting Motion to Dismiss also held that Plaintiff failed to allege sufficient facts to support its unjust enrichment claim. That claim suffered the same insufficient causal allegations that were fatal to Plaintiff’s FHA claim. Moreover, the City failed
3

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to allege sufficient facts demonstrating that the City conferred any benefit on the Defendants to which they were not legally entitled. The Court dismissed Count II, unjust enrichment, without prejudice with leave to amend in accordance with the Court’s Order.
Rather than appeal the Court’s July 8, 2014 Order Granting Motion to Dismiss challenging this Court’s application of Lexmark and Nassar to the City’s FHA claim, or file an amended complaint as to Plaintiff’s unjust enrichment claim in accordance with the dismissal Order, Plaintiff has moved for reconsideration.
“[R]econsideration of a previous order is an extraordinary remedy to be employed sparingly.” Burger King Corp. v. Ashland Equities, Inc., 181 F. Supp. 2d 1366, 1370 (S.D. Fla. 2002) (citing Mannings v. School Board of Hillsborough County, 149 F.R.D. 235, 235 (M.D. Fla. 1993)). For a court to reconsider its prior judgment the moving party must present facts or law of a “strongly convincing nature” that would induce a court to reverse its prior decision. Id. (citing Sussman v. Salem Saxon & Nielsen, P.A., 153 F.R.D. 689, 694 (M.D. Fla 1994)). Three major grounds justify reconsideration: “(1) an intervening change in the controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or prevent manifest injustice.” Burger King, 181 F. Supp. 2d at 1369. “A motion for reconsideration cannot be used to relitigate old matters, raise argument or present evidence that could have been raised prior to the entry of judgment.” Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 957 (11th Cir. 2009) (internal quotation marks omitted).
Plaintiff has not presented strongly convincing arguments in the instant reconsideration Motion that would cause the Court to reconsider its prior Order. The arguments in the Motion are ones that the Plaintiff already made or that it could have, but chose not to, in the extensive process of briefing, supplemental briefing, and oral argument related to Defendants’ Motion to
4

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Dismiss. Arguing that this Court’s reasoning was flawed is not enough for a motion for reconsideration. Furthermore, to the extent that the Plaintiff alternatively seeks to amend its FHA claim to assert it has a generalized non-economic interest in having an integrated community and in racial diversity -- claims it never made and amendments it did not previously raise or offer despite ample opportunity -- these new matters are improperly raised as grounds for reconsideration.1
Finally, regarding Plaintiff’s unjust enrichment claim, the Court stated in its July 8, 2014 Order Granting Motion to Dismiss:
While it does not appear that Plaintiff can overcome the deficiencies in its claim for unjust enrichment, in an abundance of caution, the Court will dismiss this count without prejudice, with leave to amend in accordance with the analysis set forth in this Order. If Plaintiff chooses to file an amended complaint, the deadline to do so is July 21, 2014. As currently pled, Plaintiff’s unjust enrichment claim is pled as a supplemental jurisdiction state law claim. The Court takes no position, at this time, as to whether it would exercise supplemental jurisdiction over a complaint that only contains a state law claim. See case no. 13-24506 at [DE 71], p. 14, n. 2. Thus, the Court has already granted Plaintiff permission to file an amended complaint as to its unjust enrichment claim. If Plaintiff chooses to file such an amended complaint, the Court will extend the deadline to do so until September 15, 2014. Any arguments Defendants have raised in the instant briefing regarding the sufficiency of the unjust enrichment claim set forth in Plaintiff’s proposed amended complaint may be reasserted in response to the amended complaint, if one is timely filed. Based upon the foregoing, it is ORDERED AND ADJUDGED that Plaintiff’s Motion
1 Moreover, sprinkling in allegations that the City has a generalized interest in racial integration falls far short of alleging facts sufficient to demonstrate that Defendants’ lending practices adversely affected the racial diversity or integration of the City, nor do those generalized allegations appear to be connected in any meaningful way to the purported loss of tax revenue and increase in municipal expenses allegedly caused by Defendants’ lending practices.
5

Case 1:13-cv-24506-WPD Document 76 Entered on FLSD Docket 09/09/2014 Page 6 of 6 for Reconsideration and Leave to File First Amended Complaint [DE 72] is DENIED. DONE AND ORDERED in Chambers at Ft. Lauderdale, Broward County, Florida, this 8th day of September, 2014.
Copies to: Counsel of record
6

 
 Case 1:13-cv-24506-WPD Document 77 Entered on FLSD Docket 09/17/2014 Page 1 of 3

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CITY OF MIAMI, a Florida municipal corporation,

CASE NO. 13-24506-CIV-DIMITROULEAS

Plaintiff,

vs.

BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS; and COUNTRYWIDE BANK, FSB,

Defendants. _____________________________________/

FINAL ORDER OF DISMISSAL THIS CAUSE is before the Court sua sponte, upon a review of the record. On December 13, 2013, Plaintiff City of Miami filed this suit pursuant to the Fair Housing Act of 1968 (“FHA”), as amended, 42 U.S.C. § 3601, et seq., to seek redress for injuries allegedly caused by Defendants’ pattern or practice of illegal and discriminatory mortgage lending. [DE 1]. Specifically, Plaintiff sought injunctive relief and damages for financial injuries due to foreclosures on Defendants’ loans in minority neighborhoods and to minority borrowers that were the result of Defendants’ discriminatory lending practices. Plaintiff sought damages based on reduced property tax revenues based on: (a) the decreased value of the vacant properties themselves; and (b) the decreased value of properties surrounding the vacant properties. Plaintiff also sought damages based on the expenditures of municipal services that have been and will be required to remedy the blight and unsafe and dangerous conditions which

1

Case 1:13-cv-24506-WPD Document 77 Entered on FLSD Docket 09/17/2014 Page 2 of 3
exist at vacant properties that were foreclosed as a result of Defendants’ illegal lending practices. Plaintiff’s Complaint contained two claims: Count I: Violations of the Federal Fair Housing Act, and Count II: Unjust Enrichment.
After extensive briefing and oral argument, the Court entered an Order Granting Motion to Dismiss on July 8, 2014. Therein, the Court dismissed Count I, violation of the FHA, with prejudice. The Court held, pursuant to its application of Lexmark Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 (2014) and Nasser v. City of Homewood, 671 F. 2d 432 (11th Cir. 1982), that Plaintiff lacked standing to bring this action under the FHA. The Court dismissed Count II, unjust enrichment, without prejudice and with leave to amend on or before July 21, 2014 in accordance with the Court’s dismissal Order.
Plaintiff did not file an amended complaint as to its unjust enrichment claim in accordance with the Court’s dismissal of that claim. Instead, Plaintiff moved for reconsideration of the July 8, 2014 Order Granting Motion to Dismiss. On September 8, 2014, following briefing of the reconsideration motion, the Court entered an Order Denying Motion for Reconsideration.
Regarding Plaintiff’s unjust enrichment claim, the Court stated in its September 8, 2014 Order, that “the Court has already granted Plaintiff permission to file an amended complaint as to its unjust enrichment claim. If Plaintiff chooses to file such an amended complaint, the Court will extend the deadline to do so until September 15, 2014. Any arguments Defendants have raised in the instant briefing regarding the sufficiency of the unjust enrichment claim set forth in Plaintiff’s proposed amended complaint may be reasserted in response to the amended complaint, if one is timely filed.” The September 15, 2014 deadline has passed, and no amended complaint as to Plaintiff’s unjust enrichment claim has been filed.
2

Case 1:13-cv-24506-WPD Document 77 Entered on FLSD Docket 09/17/2014 Page 3 of 3 Based upon the foregoing, it is ORDERED AND ADJUDGED as follows: 1. Count II for unjust enrichment, having been abandoned by Plaintiff by its failure to timely amend that claim in accordance with the Court’s Orders, is DISMISSED WITH PREJUDICE; 2. Both Counts of this action now having been separately dismissed with prejudice, the Clerk is directed to CLOSE this case and DENY AS MOOT any pending motions. DONE AND ORDERED in Chambers at Ft. Lauderdale, Broward County, Florida, this
16th day of September, 2014.
Copies to: Counsel of record
3

 
 Case 1:13-cv-24506-WPD Document 82 Entered on FLSD Docket 11/13/2015 Page 1 of 59 Case: 14-14543 Date Filed: 11/13/2015 Page: 1 of 1

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

Douglas J. Mincher Clerk of Court

ELBERT PARR TUTTLE COURT OF APPEALS BUILDING 56 Forsyth Street, N.W. Atlanta, Georgia 30303
November 13, 2015

Steven M. Larimore U.S. District Court 400 N MIAMI AVE MIAMI, FL 33128-1810

Appeal Number: 14-14543-CC Case Style: City of Miami v. Bank of America Corp., et al District Court Docket No: 1:13-cv-24506-WPD

MC
Nov 13, 2015
MIAMI
For rules and forms visit www.ca11.uscourts.gov

A copy of this letter, and the judgment form if noted above, but not a copy of the court's decision, is also being forwarded to counsel and pro se parties. A copy of the court's decision was previously forwarded to counsel and pro se parties on the date it was issued.

The enclosed copy of the judgment is hereby issued as mandate of the court. The court's opinion was previously provided on the date of issuance.

Sincerely,

AMY C. NERENBERG, Acting Clerk of Court

Reply to: Lois Tunstall Phone #: (404) 335-6191

Enclosure(s)

MDT-1 Letter Issuing Mandate

Case 1:13-cv-24506-WPD Document 82 Entered on FLSD Docket 11/13/2015 Page 2 of 59 Case: 14-14543 Date Filed: 11/13/2015 Page: 1 of 1
UNITED STATES COURT OF APPEALS For the Eleventh Circuit ______________ No. 14-14543 ______________ District Court Docket No. 1:13-cv-24506-WPD
CITY OF MIAMI, a Florida Municipal Corporation,
Plaintiff - Appellant, versus BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., et al.,
Defendants - Appellees. __________________________________________ Appeals from the United States District Court for the
Southern District of Florida __________________________________________
JUDGMENT It is hereby ordered, adjudged, and decreed that the opinion issued on this date in this appeal is entered as the judgment of this Court.
Entered: September 01, 2015 For the Court: AMY C. NERENBERG, Acting Clerk of Court
By: Jeff R. Patch
ISSUED AS MANDATE 11/13/2015

Case 1:13-cv-24506-WPD Document 82 Entered on FLSD Docket 11/13/2015 Page 3 of 59 Case: 14-14543 Date Filed: 09/01/2015 Page: 1 of 57
[PUBLISH] IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 14-14543 ________________________
D.C. Docket No. 1:13-cv-24506-WPD CITY OF MIAMI, a Florida Municipal Corporation,
Plaintiff - Appellant,
versus
BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., et al.,
Defendants - Appellees. ________________________
Appeals from the United States District Court for the Southern District of Florida ________________________ (September 1, 2015)
Before MARCUS and WILSON, Circuit Judges, and SCHLESINGER,* District Judge.
MARCUS, Circuit Judge:
* Honorable Harvey E. Schlesinger, United States District Judge for the Middle District of Florida, sitting by designation.

Case 1:13-cv-24506-WPD Document 82 Entered on FLSD Docket 11/13/2015 Page 4 of 59 Case: 14-14543 Date Filed: 09/01/2015 Page: 2 of 57
The City of Miami has brought an ambitious fair housing lawsuit against Bank of America,1 alleging that it engaged in a decade-long pattern of
discriminatory lending in the residential housing market that caused the City
economic harm. The City claims that the bank targeted black and Latino
customers in Miami for predatory loans that carried more risk, steeper fees, and
higher costs than those offered to identically situated white customers, and created
internal incentive structures that encouraged employees to provide these types of
loans. The predatory loans, as identified by the City, include: high-cost loans (i.e.,
those with an interest rate at least three percentage points above a federally
established benchmark), subprime loans, interest-only loans, balloon payment
loans, loans with prepayment penalties, negative amortization loans, no
documentation loans, and adjustable rate mortgages with teaser rates (i.e., a
lifetime maximum rate greater than the initial rate plus 6%). Complaint for
Violations of the Federal Fair Housing Act at 34, City of Miami v. Bank of
America Corp., No. 13-24506-CIV (S.D. Fla. July 9, 2014) (“Complaint”). The
City alleged that by steering minorities toward these predatory loans, Bank of
America caused minority-owned properties throughout Miami to fall into
1 The City also filed substantially similar complaints against Citigroup and Wells Fargo for the same behavior. The three cases were heard by the same judge in the Southern District of Florida, and resolved in the same way: the reasoning laid out in the district court’s order in this case was adopted and incorporated in the orders dismissing the other two cases. They were each appealed separately. We have resolved the companion cases in separate opinions. See City of Miami v. Citigroup Inc., No. 14-14706; City of Miami v. Wells Fargo & Co., No. 14-14544. This opinion contains the most detailed account of our reasoning.
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unnecessary or premature foreclosure, depriving the City of tax revenue and forcing it to spend more on municipal services (such as police, firefighters, trash and debris removal, etc.) to combat the resulting blight. The City asserts one claim arising under the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., as well as an attendant unjust enrichment claim under Florida law.
The district court dismissed the City’s FHA claim with prejudice on three grounds: the City lacked statutory standing under the FHA because it fell outside the statute’s “zone of interests”; the City had not adequately pled that Bank of America’s conduct proximately caused the harm sustained by the City; and, finally, the City had run afoul of the statute of limitations and could not employ the continuing violation doctrine. We disagree with each of these conclusions.
As a preliminary matter, we find that the City has constitutional standing to pursue its FHA claims. We also conclude that under controlling Supreme Court precedent, the “zone of interests” for the Fair Housing Act extends as broadly as permitted under Article III of the Constitution, and therefore encompasses the City’s claim. While we agree with the district court that the FHA contains a proximate cause requirement, we find that this analysis is based on principles drawn from the law of tort, and that the City has adequately alleged proximate cause. Finally, we conclude that the “continuing violation doctrine” can apply to the City’s claims, if they are adequately pled.
3

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Because the district court imposed too stringent a zone of interests test and
wrongly applied the proximate cause analysis, we conclude that it erred in
dismissing the City’s federal claims with prejudice and in denying the City’s
motion for leave to amend on the grounds of futility. As for the state law claim,
we affirm the dismissal because the benefits the City allegedly conferred on the
defendants were not sufficiently direct to plead an unjust enrichment claim under
Florida law.
I.
On December 13, 2013, the City of Miami brought this complex civil rights
action in the United States District Court for the Southern District of Florida
against Bank of America Corporation, Bank of America N.A., Countrywide
Financial Corporation, Countrywide Home Loans, and Countrywide Bank, FSB
(collectively “Bank of America” or “the Bank”) containing two claims. First, it alleged that the defendants violated sections 3604(b)2 and 3605(a)3 of the Fair
Housing Act, Complaint at 53, by engaging in discriminatory mortgage lending
2 42 U.S.C. § 3604(b) makes it unlawful “[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.” 3 “It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.” 42 U.S.C. § 3605(a). A “residential real estate-related transaction” includes “the making or purchasing of loans . . . for improving, constructing, repairing, or maintaining a dwelling; or secured by residential real estate.” Id. § 3605(b)(1).
4

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practices that resulted in a disproportionate and excessive number of defaults by minority homebuyers and caused financial harm to the City. It also alleged that the Bank unjustly enriched itself by taking advantage of “benefits conferred by the City” while, at the same time, engaging in unlawful lending practices, which “denied the City revenues it had properly expected through property and other tax payments and . . . cost[] the City additional monies for services it would not have had to provide . . . absent [the Bank’s] unlawful activities.”
The complaint accused Bank of America of engaging in both “redlining” and “reverse redlining.” Redlining is the practice of refusing to extend mortgage credit to minority borrowers on equal terms as to non-minority borrowers. Reverse redlining is the practice of extending mortgage credit on exploitative terms to minority borrowers. Complaint at 3. The City alleged that the Bank engaged in a vicious cycle: first it “refused to extend credit to minority borrowers when compared to white borrowers,” then “when the bank did extend credit, it did so on predatory terms.” Id. at 4. When minority borrowers then attempted to refinance their predatory loans, they “discover[ed] that [the Bank] refused to extend credit at all, or on terms equal to those offered . . . to white borrowers.” Id. at 5.
The City claimed that this pattern of providing more onerous loans -- i.e., those containing more risk, carrying steeper fees, and having higher costs -- to black and Latino borrowers (as compared to white borrowers of identical
5

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creditworthiness) manifested itself in the Bank’s retail lending pricing, its wholesale lending broker fees, and its wholesale lending product placement. Id. at 18-25. It also averred that the Bank’s internal loan officer compensation system encouraged its employees to give out these types of loans even when they were not justified by the borrower’s creditworthiness. See id. at 20, 24. The City claimed that Bank of America’s practice of redlining and reverse redlining constituted a “continuing and unbroken pattern” that persists to this day. Id. at 4.
The City said that the Bank’s conduct violated the Fair Housing Act in two ways. First, the City alleged that the Bank intentionally discriminated against minority borrowers by targeting them for loans with burdensome terms. Id. at 3033. Second, the City claimed that the Bank’s conduct had a disparate impact on minority borrowers, resulting in a disproportionate number of foreclosures on minority-owned properties, and a disproportionate number of exploitative loans in minority neighborhoods. Id. at 26-30.
Among other things, the City employed statistical analyses to draw the alleged link between the race of the borrowers, the terms of the loans, and the subsequent foreclosure rate of the underlying properties. Drawing on data reported by the Bank about loans originating in Miami from 2004-2012, the City claimed that a Bank of America loan in a predominantly (greater than 90%) minority neighborhood of Miami was 5.857 times more likely to result in foreclosure than
6

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such a loan in a majority-white neighborhood. Id. at 43. According to the City’s regression analysis (which purported to control for objective risk characteristics such as credit history, loan-to-value ratio, and loan-to-income ratio), id. at 37, a black Bank of America borrower in Miami was 1.581 times more likely to receive a loan with “predatory” features4 than a white borrower, and a Latino borrower was 2.087 times more likely to receive such a loan. Moreover, black Bank of America borrowers with FICO scores over 660 (indicating good credit) in Miami were 1.533 times more likely to receive a predatory loan than white borrowers, while a Latino borrower was 2.137 times more likely to receive such a loan. Id. at 6.
The City’s data also suggested that from 2004-2012, 21.9% of loans made by Bank of America to black and Latino customers in Miami were high-cost, compared to just 8.9% of loans made to white customers. Id. at 34. Data cited in the complaint showed significantly elevated rates of foreclosure for loans in minority neighborhoods. While 53.3% of Bank of America’s Miami loan originations were in “census tracts” that are at least 75% black or Latino, 95.7% of loan originations that had entered foreclosure by June 2013 were from such census
4 As we’ve noted, the City identified as “predatory” those containing features such as high-cost loans (i.e., those with an interest rate that was at least three percentage points above a federally established benchmark), subprime loans, interest-only loans, balloon loan payments, loans with prepayment penalties, negative amortization loans, no documentation loans, and adjustable rate mortgages with teaser rates (i.e., a lifetime maximum rate greater than the initial rate plus 6%). Complaint at 34.
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tracks. Id. at 39. And 32.8% of Bank of America’s loans in predominantly black
or Latino neighborhoods resulted in foreclosure, compared to only 7.7% of its
loans in non-minority (at least 50% white) neighborhoods. Id. at 40. Likewise, a
Bank of America borrower in a predominantly black or Latino census tract was
1.585 times more likely to receive a predatory loan as a borrower with similar
characteristics in a non-minority neighborhood. Id. at 38.
The complaint also alleged that the bank’s loans to minorities resulted in especially quick foreclosures.5 The average time to foreclosure for Bank of
America’s black and Latino borrowers was 3.144 years and 3.090 years,
respectively, while for white borrowers it was 3.448 years. Id. at 42. The
allegations also gathered data from various non-Miami-based studies (some
nationwide, some based on case studies in other cities) to demonstrate the elevated
prevalence of foreclosure, predatory loan practices, and higher interest rates among
black and Latino borrowers, and the foreseeability of foreclosures arising from
predatory lending practices and their attendant harm. See id. at 26-30.
The City’s charges were further amplified by the statements of several
confidential witnesses who claimed that the Bank deliberately targeted black and
5 The complaint quoted a joint report from the Department of Housing and Urban Development and the Department of the Treasury noting that time to foreclosure is an important indicator of predatory practices: “[t]he speed with which the subprime loans in these communities have gone to foreclosure suggests that some lenders may be making mortgage loans to borrowers who did not have the ability to repay those loans at the time of origination.” U.S. Dep’t of Hous. & Urban Dev. & U.S. Dep’t of Treasury, Curbing Predatory Home Mortgage Lending 25 (2000), available at http://www.huduser.org/Publications/pdf/treasrpt.pdf. Complaint at 43.
8

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Latino borrowers for predatory loans. Thus, for example, one mortgage loan officer with Bank of America who worked on loans in the Miami area claimed that the bank targeted less savvy minorities for negative amortization loans. Id. at 31. Another noted that Bank of America paid higher commissions to loan officers for Fair Housing Act loans as opposed to the allegedly more advantageous Community Reinvestment Act (CRA) loans, incentivizing officers to steer borrowers away from the CRA loans. Id. at 32. Still another noted that back-end premiums (a premium earned by the loan officer equal to the difference between the borrower’s loan rate and the rate the bank pays for it) on loans were not disclosed and “often eluded less educated, minority borrowers.” Id. One of the witnesses explained that from 2011-2013, Bank of America did not offer regular refinancing to persons with mortgages at over 80% of the value of the house (including many negative amortization loans), which disproportionately affected minorities in danger of losing their homes. Id. at 33.
Notably, the City sought damages based on reduced property tax revenues. Id. at 45. It claimed that the Bank’s lending policies caused minority-owned property to fall into unnecessary or premature foreclosure. Id. The foreclosedupon properties lost substantial value and, in turn, decreased the value of the surrounding properties, thereby depriving the City of property tax revenue. The City alleged that “Hedonic regression” techniques could be used to quantify the
9

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losses the City suffered that were attributable to the Bank’s conduct. Id. at 46-47. The City also sought damages based on the cost of the increased municipal services it provided to deal with the problems attending the foreclosed and often vacant properties -- including police, firefighters, building inspectors, debris collectors, and others. These increased services, the City claimed, would not have been necessary if the properties had not been foreclosed upon due to the Bank’s discriminatory lending practices. Id. at 49-50. The City also sought a declaratory judgment that the Bank’s conduct violated the FHA, an injunction barring the Bank from engaging in similar conduct, and punitive damages, as well as attorneys’ fees. Id. at 55-56.
On July 9, 2014, the district court granted defendants’ motion to dismiss.6 First, the court found that the City of Miami lacked statutory standing to sue under the FHA. The court determined that, based on this Court’s earlier opinion in Nasser v. City of Homewood, 671 F.2d 432 (11th Cir. 1982), the City’s claim fell outside the FHA’s “zone of interests,” and therefore the City lacked standing to sue under this statute. In particular, the trial court determined that the City had alleged “merely economic injuries” that were not “affected by a racial interest.” Like the plaintiffs in Nasser, the court suggested, the City was seeking redress under the
6 This order was adopted and incorporated in the two companion cases involving Citigroup and Wells Fargo.
10

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FHA for “an economic loss from a decrease in property values,” and as with the plaintiffs in Nasser, this was insufficient. The City’s goal went far beyond the purpose of the FHA, which is to “provide, within constitutional limitations, for fair housing throughout the United States.” City of Miami v. Bank of America Corp., 2014 WL 3362348, at *4 (quoting 42 U.S.C. § 3601).
The court also concluded that the FHA contains a proximate cause requirement, but that the City had not adequately pled proximate cause. The City had not sufficiently traced any foreclosures to the defendants’ conduct, as opposed to confounding background variables such as “a historic drop in home prices and a global recession,” and “the decisions and actions of third parties, such as loan services, government entities, competing sellers, and uninterested buyers.” Id. at *5. The court also determined that the City had not shown that the Bank’s mortgage practices caused the City any harm. It was unimpressed with the “statistics and studies” the City cited, noting that some were not based on data from Miami, some were not limited to the defendants’ practices, and others “d[id] not control for relevant credit factors that undoubtedly affect lending practices.” Id. Moreover, some of the harm to the City stemmed directly from “the actions of intervening actors such as squatters, vandals or criminals that damaged foreclosed properties.” Id.
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The district court also concluded that the City’s federal claim ran afoul of the statute of limitations. It noted that for the FHA, a plaintiff must bring his claim “not later than 2 years after the occurrence” of the discriminatory housing practice, and that for discriminatory loans the statute of limitations begins to run from the date of the loan closing. But the City had not alleged that any loans were made later than 2008, a full five years before its complaint was filed. The court was not persuaded by the City’s invocation of the continuing violation doctrine -- which can allow plaintiffs, under some circumstances, to sue on an otherwise time-barred claim -- since the City had not alleged sufficient facts to support its allegation that the specific practices continued into the statutory period. The district court dismissed the City’s FHA claim with prejudice, reasoning that even if the statute of limitations deficiencies could be cured by an amended pleading, the City’s lack of statutory standing could not be.
Finally, the district court rejected the City’s unjust enrichment claim on several grounds. As a preliminary matter, the City had failed to draw the necessary causal connection between the Bank’s alleged discriminatory practices and its receipt of undeserved municipal services. Moreover, the court found that the City had failed to allege basic elements of an unjust enrichment claim under Florida law. It determined that any benefit the Bank received from municipal services was not direct but “derivative” and, therefore, insufficient to support an unjust
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enrichment claim. It also found that the City had failed to allege that the Bank was not otherwise entitled to those services as a Miami property owner. Finally, it rejected the City’s argument that Miami was forced to pay for the Bank’s externalities (the costs of the harm caused by its mortgage lending), holding that paying for externalities cannot sustain an unjust enrichment claim. The district court dismissed the unjust enrichment claim without prejudice, leaving the City free to amend its complaint.
The City chose not to proceed on its unjust enrichment claim alone “because the two claims are so intimately entwined and based on largely the same underlying misconduct.” Instead, it moved in the district court for reconsideration and for leave to file an amended complaint, arguing that it had standing under the FHA and that the amended complaint would cure any statute of limitations deficiency. The proposed amended complaint alleged that the Bank’s discriminatory lending practices “frustrate[] the City’s longstanding and active interest in promoting fair housing and securing the benefits of an integrated community,” thereby “directly interfer[ing]” with one of the City’s missions. First Amended Complaint for Violations of the Federal Fair Housing Act at 31, City of Miami v. Bank of America Corp., No. 13-24506-CIV (S.D. Fla. Sept. 9, 2014) (“Amended Complaint”). It also made more detailed allegations about properties that had been foreclosed upon after being subject to discriminatory loans.
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Specifically, the proposed amended complaint identified five foreclosed properties that corresponded to predatory loans that originated between 2008 and 2012, and three that originated between 2004 and 2008. It also identified seven properties that corresponded to predatory loans that the Bank had issued after December 13, 2011 (within two years of filing suit) that had not yet been foreclosed upon but were likely to “eventually enter the foreclosure process,” based on expert analysis. Id. at 36-37. The complaint continued to invoke the continuing violation doctrine and claimed that the statute of limitations had not run.
The district court denied the City’s motion for reconsideration and for leave to amend. As for statutory standing, the court explained that “[a]rguing that this Court’s reasoning was flawed is not enough for a motion for reconsideration.” City of Miami v. Bank of America Corp., 2014 WL 4441368, at *2. And the court was unimpressed by the City’s new argument that it “has a generalized noneconomic interest . . . in racial diversity,” ruling that these were “claims [the City] never made and amendments it did not previously raise or offer despite ample opportunity,” and were therefore “improperly raised as grounds for reconsideration.” Id. Finally, the court noted that these “generalized allegations [do not] appear to be connected in any meaningful way to the purported loss of tax revenue and increase in municipal expenses allegedly caused by Defendants’ lending practices.” Id. at *2 n.1.
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The City timely appealed the court’s final order of dismissal. II.
A. Standard of Review We review the district court’s grant of a motion to dismiss with prejudice de novo, “accepting the [factual] allegations in the complaint as true and construing them in the light most favorable to the plaintiff.” Mills v. Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (quotation omitted). We generally review the district court’s decision to deny leave to amend for an abuse of discretion, but we will review de novo an order denying leave to amend on the grounds of futility, because it is a conclusion of law that an amended complaint would necessarily fail. Hollywood Mobile Estates Ltd. v. Seminole Tribe of Fla., 641 F.3d 1259, 1264 (11th Cir. 2011). Finally, we review de novo whether plaintiffs have Article III standing. Ga. Latino Alliance for Human Rights v. Governor of Ga., 691 F.3d 1250, 1257 (11th Cir. 2012).
B. Fair Housing Act Claim 1. Article III Standing
We come then to the first essential question in the case: whether the City of Miami has constitutional standing to bring its Fair Housing Act claim. See Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005) (“[Article III] [s]tanding is a threshold jurisdictional question which must be addressed prior
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to . . . the merits of a party’s claims.” (quoting Dillard v. Baldwin Cnty. Comm’rs, 225 F.3d 1271, 1275 (11th Cir. 2000)). Although the district court addressed only the issue of so-called “statutory standing,” the Bank contests both Article III standing and statutory standing, and we address each in turn.
“[S]tanding is an essential and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). It is by now axiomatic that to establish constitutional standing at the pleading stage, the plaintiff must plausibly allege: (1) an injury in fact that is concrete, particularized, and actual or imminent; (2) “a causal connection between the injury and the conduct complained of,” such that the injury is “fairly traceable to the challenged action of the defendant”; and (3) that a favorable judicial decision will “likely” redress the injury. See Bochese, 405 F.3d at 980 (quotation omitted). The “line of causation” between the alleged conduct and the injury must not be “too attenuated.” Allen v. Wright, 468 U.S. 737, 752 (1984). The party invoking federal jurisdiction bears the burden of establishing these elements. See FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990). At the pleading stage, “general factual allegations of injury resulting from the defendant’s conduct may suffice” to demonstrate standing. Defs. of Wildlife, 504 U.S. at 561.
The district court did not address whether the City had Article III standing because it granted the Bank’s motion to dismiss on other grounds. On appeal, the
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Bank argues that the City lacked Article III standing because it had not adequately alleged the causal connection -- that is, the “traceability” -- between its injury and the Bank’s conduct. We are unpersuaded.
To recap, the City claims that the Bank’s discriminatory lending practices caused minority-owned properties to fall into foreclosure when they otherwise would not have, or earlier than they otherwise would have. This, in turn, decreased the value of the foreclosed properties themselves and the neighboring properties, thereby depriving the City of property tax revenue, and created blight, thereby forcing the City to spend additional money on municipal services. Complaint at 45-50. We have little difficulty in finding, based on controlling Supreme Court caselaw, that the City has said enough to allege an injury in fact for constitutional standing purposes. Our analysis is guided by Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91 (1979). In that case, the Village of Bellwood sued a real estate firm under the FHA for discriminatory renting practices that caused racial segregation. Id. at 94-95. The Supreme Court held that the village had Article III standing to bring its claim partly on the basis of “[a] significant reduction in property values,” because such a reduction “directly injures a municipality by diminishing its tax base, thus threatening its ability to bear the costs of local government and to provide services.” Id. at 110-11. Like the Village of Bellwood, the City of Miami claims that an allegedly discriminatory policy has reduced local
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property values and diminished its tax base. Thus, like the Village of Bellwood, the City of Miami has adequately alleged an injury in fact.
As for Article III causation, the Bank claims that the City’s harm is not fairly traceable to the Bank’s conduct. Specifically, it suggests that a myriad of other factors cause foreclosure and blight -- including the state of the housing market and the actions of third parties like other property owners, competing sellers, vandals, etc. -- thereby breaking the causal chain. While we acknowledge the real possibility of confounding variables, at this stage in the proceeding the City’s alleged chain of causation is perfectly plausible: taking the City’s allegations as true, the Bank’s extensive pattern of discriminatory lending led to substantially more defaults on its predatory loans, leading to a higher rate of foreclosure on minority-owned property and thereby reducing the City’s tax base. See Cnty. of Cook v. Wells Fargo & Co., No. 14 C 9548, 2015 WL 4397842, at *3-4 (N.D. Ill. July 17, 2015) (finding the same causal allegation sufficient for Article III traceability in a materially identical FHA case and citing eight other district court cases finding the same). Moreover, the complaint supports its allegations with regression analyses that link the Bank’s treatment of minority borrowers to predatory loans, predatory loans to foreclosure, and foreclosure to reduced tax revenue. Complaint at 6, 37-38, 44, 46. All told, the City has “allege[d] . . . facts
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essential to show jurisdiction.” FW/PBS, 493 U.S. at 231 (quoting McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).
Of course, the City has limited its claim only to those damages arising from foreclosures caused by the Bank’s lending practices. At a subsequent stage in the litigation it may well be difficult to prove which foreclosures resulted from discriminatory lending, how much tax revenue was actually lost as a result of the Bank’s behavior, etc. But at this early stage, the claim is plausible and sufficient. The City has said enough to establish Article III standing.7
2. “Statutory Standing” The district court dismissed the City’s claim, however, not on the basis of Article III standing, but because it lacked what the court characterized as “statutory standing.” It found that the City fell outside the FHA’s “zone of interests,” and that its harm was not proximately caused by the Bank’s actions. Ultimately, we disagree with the district court’s legal conclusions. As for the zone of interests, we conclude that we are bound by Supreme Court precedent stating that so-called statutory standing under the FHA extends as broadly as Article III will permit, and find that this includes the City. As for proximate cause, we agree that it must be
7 The third Lujan factor, redressability, is not at issue in this appeal. The City has “allege[d] a monetary injury and an award of compensatory damages would redress that injury.” Resnick v. AvMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012).
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pled for a damages claim under the FHA, but find that the City has adequately done so here.
Notably, the Supreme Court recently clarified in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014), that the longstanding doctrinal label of “statutory standing” (sometimes also called “prudential standing”) is misleading. The proper inquiry is whether the plaintiff “has a cause of action under the statute.” Id. at 1387. But that inquiry isn’t a matter of standing, because “the absence of a valid . . . cause of action does not implicate subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the case.” Id. at 1387 n.4 (quoting Verizon Md. Inc. v. Public Serv. Comm’n of Md., 535 U.S. 635, 642-643 (2002)). Instead, it is “a straightforward question of statutory interpretation.” Id. at 1388.
This issue comes before the Court on a motion to dismiss for failure to state a claim, and the City’s pleadings are evaluated for plausibility using the standard set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). “The complaint must contain enough facts to make a claim for relief plausible on its face; a party must plead ‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’” Resnick v. AvMed, Inc., 693 F.3d 1317, 1324-25 (11th Cir. 2012) (quoting Iqbal, 556 U.S. at 678). Of course, in evaluating the plausibility of
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the claim we must take all of the plaintiff’s factual allegations as true. See Iqbal, 556 U.S. at 678.
a. Zone of Interests In general, a statutory cause of action “extends only to those plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’” Lexmark, 134 S. Ct. at 1388 (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). The Supreme Court has instructed us that this test “applies to all statutorily created causes of action,” but its application is not uniform: “certain statutes . . . protect a more-than-usually ‘expansive’ range of interests.” Id. (quoting Bennett v. Spear, 520 U.S. 154, 164 (1997)) (alteration adopted). The FHA provides that [a]n aggrieved person may commence a civil action in an appropriate United States district court or State court not later than 2 years after the occurrence or the termination of an alleged discriminatory housing practice . . . to obtain appropriate relief with respect to such discriminatory housing practice or breach. 42 U.S.C. § 3613(a)(1)(A). It defines an “aggrieved person” as anyone who “claims to have been injured by a discriminatory housing practice,” or “believes that such person will be injured by a discriminatory housing practice that is about to occur.” Id. at § 3602(i). The Bank claims that the City is not an “aggrieved person,” and, therefore, falls outside the statute’s zone of interests and cannot state a cause of action under
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the FHA. The City argues, however, that “FHA statutory standing is as broad as the Constitution permits under Article III,” and therefore it is within the statute’s zone of interests. Older Supreme Court cases appear to support the City’s view, while certain more recent cases -- as well as an older decision of this Court -- have cast some doubt on the viability of those holdings. The answer requires carefully parsing both Supreme Court and Eleventh Circuit precedent, and a review of the relevant cases is instructive.
i. Early Supreme Court cases The first major FHA case explicated by the Supreme Court is Trafficante v. Metropolitan Life Insurance, 409 U.S. 205 (1972). Two tenants of an apartment complex -- one black, one white -- alleged that the landlord discriminated against minorities on the basis of race when renting units, in violation of the FHA. Id. at 206-07. The Court held that standing under the Act was defined “as broadly as is permitted by Article III of the Constitution . . . insofar as tenants of the same housing unit that is charged with discrimination are concerned.” Id. at 209 (quotation omitted). “The language of the Act is broad and inclusive,” the Court wrote, and “the alleged injury to existing tenants by exclusion of minority persons from the apartment complex is the loss of important benefits from interracial associations.” Id. at 209-10.
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Seven years later, in Gladstone, the Village of Bellwood brought suit under the FHA against two real estate firms for “steering” black and white homeowners into targeted, race-specific neighborhoods, thereby “manipulat[ing] the housing market,” “affecting the village’s racial composition,” and causing “[a] significant reduction in property values.” 441 U.S. at 109-10. The Court concluded that the village had stated a cause of action under the FHA and reaffirmed, based on the legislative history and purpose of the statute, that statutory standing under the FHA “is as broad as is permitted by Article III of the Constitution.” Id. at 109 (quotation omitted and alteration adopted).
Next came Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982), in which -- along with other plaintiffs -- a nonprofit corporation whose purpose was “to make equal opportunity in housing a reality in the Richmond Metropolitan Area” brought an FHA claim against a realty firm for racial steering (i.e., fostering racial segregation by guiding prospective buyers towards or away from certain apartments based on the buyer’s race). In the clearest and most unambiguous terms, the Supreme Court reiterated the holding of Gladstone: “Congress intended standing under [the FHA] to extend to the full limits of Art. III and . . . the courts accordingly lack the authority to create prudential barriers to standing in suits brought under [the FHA].” Id. at 372 (quotation omitted). As the Court explained, “the sole requirement for standing to sue under [the FHA] is the Art. III minima of
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injury in fact: that the plaintiff allege that as a result of the defendant’s actions he has suffered ‘a distinct and palpable injury.’” Id. (quoting Warth v. Seldin, 422 U.S. 490, 501 (1975)). The organization’s allegation that the racial steering “perceptibly impaired [its] ability to provide counseling and referral services for low- and moderate-income homeseekers” was sufficient to constitute injury in fact for purposes of Article III (and statutory) standing. Id. at 379.
ii. Nasser Less than a month after Havens, the Eleventh Circuit issued an opinion in Nasser, 671 F.2d 432, on which the district court and the Bank principally rely. In Nasser, property owners challenged a zoning ordinance that rezoned their property from multi-family residential to single-family residential, alleging, inter alia, that the ordinance violated the FHA. Id. at 434. In 1976, the plaintiffs entered into an agreement with a developer for the construction of a multi-family housing complex on their property. The developer had looked into the possibility of making some units of this complex available for low- and moderate-income families via rent subsidies, and had inquired with the Department of Housing and Urban Development. But the development never materialized. A detailed affidavit from a member of the county planning commission stated that the plaintiffs had never suggested that their purpose “was to build a multi-family project for the use and benefit of low income or minority groups.” Id. at 435. Instead, the affidavit
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claimed that the plaintiffs had represented their project as “an exclusive-high rent apartment complex.” Id. The Court found that there was no “evidence that the 1976 project was in any way affected by or related to racial or other minority interests.” Id.
Three years later, the land was re-zoned. Id. at 434. The plaintiffs claimed that the re-zoning had reduced the value of their property by more than 50% (from $285,000 to $135,000). See id. at 435. A panel of this Court concluded that the plaintiffs lacked statutory standing under the FHA despite this purported economic injury. In making this determination, the Court considered Trafficante and Gladstone, and concluded: “There is no indication that the [Supreme] Court intended to extend standing, beyond the facts before it, to plaintiffs who show no more than an economic interest which is not somehow affected by a racial interest.” Id. at 437. The Nasser Court found that the property owners lacked an economic interest affected by a racial interest, and therefore lacked standing to sue under the FHA. Id. at 438.
iii. Newer Supreme Court cases on statutory standing Two recent Supreme Court cases have cast some doubt on the broad interpretation of FHA statutory standing in Trafficante, Gladstone, and Havens. In Thompson v. North American Stainless, LP., 562 U.S. 170 (2011), the Court considered whether an employee had a cause of action under Title VII, which uses
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nearly identical statutory language to the FHA. See 42 U.S.C. § 2000e-5(f)(1) (“[A] civil action may be brought . . . by the person claiming to be aggrieved.”). The Court rejected the argument that this language expanded statutory standing to the limits of Article III. Id. at 177. Instead, it drew an analogy to the Administrative Procedure Act (which contains similar language) and held that plaintiffs must “fall[] within the ‘zone of interests’ sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.” Id. at 177-78 (quoting Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 883 (1990)).
The Court acknowledged that this analysis was in some tension with Trafficante and Gladstone. But in glossing Trafficante, the Thompson Court focused on language in the opinion that arguably limited the holding to its facts: the Trafficante Court stated that standing under the FHA was coextensive with Article III only “insofar as tenants of the same housing unit that is charged with discrimination are concerned.” Id. at 176 (quoting Trafficante, 409 U.S. at 209). The Thompson Court acknowledged that later cases (such as Gladstone) reiterated that standing under the FHA “reaches as far as Article III permits” without any limiting language, but it stated that “the holdings of those cases are compatible with the ‘zone of interests’ limitation” that the Court went on to read into Title VII. Id. at 177.
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Finally, the Supreme Court’s recent opinion in Lexmark (interpreting the Lanham Act) discarded the labels “prudential standing” and “statutory standing,” and clarified that the inquiry was really a question of statutory interpretation, and not standing at all. 134 S. Ct. at 1386-87 & n.4. One aspect of this interpretation, the Court explained, was a zone of interests analysis, which “requires [the court] to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.” Id. at 1387. The Court went on to say that this zone of interests test “applies to all statutorily created causes of action.” Id. at 1388. Lexmark did not mention the FHA or any of the Court’s FHA cases.
iv. Analysis The scope and role of the zone of interests analysis in the FHA context is a difficult issue, and one that has sharply divided the courts that have considered it. Compare, e.g., Cnty. of Cook, 2015 WL 4397842, at *5-6 (holding that Thompson and Lexmark effectively overruled the Supreme Court’s interpretation of FHA statutory standing as being coextensive with Article III standing), with, e.g., City of Los Angeles v. JPMorgan Chase & Co., No. 2:14-CV-04168-ODW, 2014 WL 6453808, at *6 (C.D. Cal. Nov. 14, 2014) (finding that the Supreme Court’s original interpretation of FHA statutory standing remained good law after Thompson and Lexmark). Ultimately, we disagree with the district court, and hold
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that the phrase “aggrieved person” in the FHA extends as broadly as is constitutionally permissible under Article III.
Simply put, Trafficante, Gladstone, and Havens have never been overruled, and the law of those cases is clear as a bell: “[statutory] standing under [the FHA] extends ‘as broadly as is permitted by Article III of the Constitution.’” Gladstone, 441 U.S. at 98 (quoting Trafficante, 409 U.S. at 209); accord Havens, 455 U.S. at 372. While Thompson has gestured in the direction of rejecting that interpretation, a gesture is not enough. The rule governing these situations is clear: “if a precedent of the Supreme Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to the Supreme Court[] the prerogative of overruling its own decisions.” Evans v. Sec’y, Fla. Dep’t of Corr., 699 F.3d 1249, 1263 (11th Cir. 2012) (quotation omitted and alterations adopted); accord Tenet v. Doe, 544 U.S. 1, 10-11 (2005). In other words, “the Supreme Court has insisted on reserving to itself the task of burying its own decisions.” Evans, 699 F.3d at 1263 (quotation omitted).
Notably, Thompson itself was a Title VII case, not a Fair Housing Act case. Thompson surveyed Trafficante and Gladstone, but did not explicitly overrule them -- nor could it, given the different statutory context in which it arose. Instead, the Court held that any suggestion drawn from the FHA cases that Title VII’s
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cause of action is similarly broad was “ill-considered” dictum. Thompson, 562 U.S. at 176. It’s true that Title VII contains nearly identical statutory language to the FHA, and therefore the Thompson Court’s interpretation of Title VII may signal that the Supreme Court is prepared to narrow its interpretation of the FHA in the future. (The dicta in Thompson indicating that its Title VII interpretation is “compatible” with the Court’s previous FHA holdings suggests as much. See 562 U.S. at 176-77.) But that day has not yet arrived, and until it does, our role as an inferior court is to apply the law as it stands, not to read tea leaves. The stillundisturbed holding of the Supreme Court’s FHA cases is that the definition of an “aggrieved person” under the FHA extends as broadly as permitted under Article III.
This Court’s binding precedent in Nasser is not to the contrary. Nasser stands for the unremarkable proposition that a plaintiff has no cause of action under the FHA if he makes no allegation of discrimination (or disparate impact) on the basis of race (or one of the FHA’s other protected characteristics: color, religion, sex, handicap, familial status, and national origin). The allegation of discrimination provides the “racial interest” Nasser requires to bring an economic injury within the scope of the statute. 671 F.2d at 437. The Nasser plaintiffs’ claim was unrelated to race (or any protected FHA characteristic) altogether; they simply objected to the rezoning of their property because it cost them money. As
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the Nasser Court put it, the plaintiffs’ “interest in [the] value of the property in no way implicate[d] [the] values protected by the Act.” Id.
Indeed, this is exactly how subsequent Eleventh Circuit caselaw has treated Nasser. In Baytree of Inverrary Realty Partners v. City of Lauderhill, 873 F.2d 1407 (11th Cir. 1989) -- the only case of this Court to revisit or reference Nasser’s treatment of the FHA -- we held that a non-minority real estate developer, Baytree, stated a claim under the FHA when it challenged the city’s decision to rezone its property, alleging that the decision was racially motivated and rendered the property worthless. Id. at 1408. We distinguished Nasser as a case “in which plaintiffs alleged only an economic injury unaffected by any racial interest,” and found it inapposite because Baytree had properly alleged that its injury “result[ed] from racial animus.” Id. at 1409. The same is true of the City of Miami’s claim. Like Baytree, the City claims to have suffered an economic injury resulting from a racially discriminatory housing policy; in neither case does Nasser prevent the plaintiff from stating a claim under the FHA.
In sum, we agree with the City that the term “aggrieved person” in the FHA sweeps as broadly as allowed under Article III; thus, to the extent a zone of interests analysis applies to the FHA, it encompasses the City’s allegations in this case. The City’s claim does not suffer from the same flaw as the Nasser plaintiffs’, because the City has specifically alleged that its injury is the result of a Bank
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policy either expressly motivated by racial discrimination or resulting in a disparate impact on minorities.
b. Proximate Cause The district court also concluded that the City’s pleadings did not sufficiently allege that the Bank’s lending practices were a proximate cause of the City’s injury. It determined that the City had not “allege[d] facts that isolate Defendants’ practices as the cause of any alleged lending disparity” compared to the background factors of a cratering economy and the actions of independent actors such as “loan services, government entities, competing sellers, and uninterested buyers.” City of Miami v. Bank of America Corp., 2014 WL 3362348, at *5. It also found that the City’s statistical analyses indicating that foreclosures caused economic harm were “insufficient to support a causation claim,” because some of the studies were not limited to Miami, some were not limited to the defendants’ practices, and some did not control for relevant credit factors. Id. The plaintiffs disagree, arguing that they need not plead proximate causation at all, only the lesser “traceability” required by Article III. In the alternative, they say that their pleadings were sufficient under either standard. Although we agree with the Bank and the district court that proximate cause is a required element of a damages claim under the FHA, we find that the City has pled it adequately.
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In Lexmark, the Supreme Court illuminated the doctrine of proximate cause as it relates to statutory causes of action. “[W]e generally presume that a statutory cause of action is limited to plaintiffs whose injuries are proximately caused by violations of the statute.” 134 S. Ct. at 1390. This principle reflects “the reality that the judicial remedy cannot encompass every conceivable harm that can be traced to alleged wrongdoing,” as well as the Court’s assumption that Congress is familiar with the traditional common-law rule and “does not mean to displace it sub silentio.” Id. (quotation omitted). The Court made clear that proximate causation is not a requirement of Article III, but rather an element of the cause of action under a statute, and it “must be adequately alleged at the pleading stage in order for the case to proceed.” Id. at 1391 n.6. The Supreme Court has read a variety of federal statutory causes of action to contain a proximate cause requirement. See, e.g., Lexmark, 134 S. Ct. at 1390-93 (Lanham Act); Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 346 (2005) (securities fraud); Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 265-68 (1992) (RICO); Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 529-35 (1983) (Clayton Act).
Although proximate cause “is not easy to define,” the basic inquiry is “whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.” Lexmark, 134 S. Ct. at 1390. The requirement is “more
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restrictive than a requirement of factual cause alone,” Paroline v. United States, 134 S. Ct. 1710, 1720 (2014), and we have said that it demands “something [more]” than Article III traceability, Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1273 (11th Cir. 2003); see also Lexmark, 134 S. Ct. at 1391 n.6. But the nature of the proximate cause requirement differs statute by statute: it is “controlled by the nature of the statutory cause of action,” so the scope of liability depends on the statutory context. Lexmark, 134 S. Ct. at 1390.
No case of the Supreme Court or this Court has ever dealt directly with the existence or application of a proximate cause requirement in the FHA context. But certain statements by the Supreme Court suggest that proximate cause must exist for a damages action brought under the FHA. First, the Lexmark Court characterized proximate cause as a “general[] presum[ption]” in statutory interpretation. Id. at 1390. Moreover, the Supreme Court has observed that an FHA damages claim is “in effect, a tort action,” governed by general tort rules, Meyer v. Holley, 537 U.S. 280, 285 (2003); Curtis v. Loether, 415 U.S. 189, 195 (1974) (“A damages action under the [FHA] sounds basically in tort -- the statute merely defines a new legal duty, and authorizes the courts to compensate a plaintiff for the injury caused by the defendant’s wrongful breach.”), and proximate cause is a classic element of a tort claim, see Dan B. Dobbs, Paul T. Hayden & Ellen M. Bublick, The Law of Torts § 198 (2d ed. 2011). If the City’s claim is functionally
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a tort action, then presumably the City must adequately plead proximate cause, just
like any other plaintiff raising any tort claim. At least two of our sister circuits
appear to have reached the same conclusion. See Pac. Shores Props., LLC v. City
of Newport Beach, 730 F.3d 1142, 1167-68 & n.32 (9th Cir. 2013) (noting that a
damages action under the FHA “sounds basically in tort” and applying a proximate
cause requirement), cert. denied sub nom. City of Newport Beach v. Pac. Shores
Props., LLC, 135 S. Ct. 436 (2014); Samaritan Inns, Inc. v. Dist. of Columbia, 114
F.3d 1227, 1234-35 (D.C. Cir. 1997) (same); see also Miami Valley Fair Hous.
Ctr., Inc. v. Connor Grp., No. 3:10-CV-83, 2015 WL 853193, at *4-5 (S.D. Ohio
Feb. 26, 2015) (holding that a fair housing organization must establish proximate
cause because it is “one step removed from the discrimination,” so its claimed
damages must be “t[ied] . . . to the defendant’s alleged wrongdoing”).8
8 We recognize that our conclusion that a private cause of action under the FHA contains a proximate cause requirement may be in some tension with the Supreme Court’s general holding that statutory standing under the FHA extends as broadly as permitted under Article III. As we’ve explained, Article III’s only causation requirement is that the plaintiff’s injury be “fairly traceable” to the defendant’s unlawful conduct. Defs. of Wildlife, 504 U.S. at 590 (quoting Allen, 468 U.S. at 751). Plainly, proximate cause is not an element of constitutional standing. See Lexmark, 134 S. Ct. at 1391 n.6. Nonetheless, we do not interpret Trafficante, Gladstone, or Havens to have read a proximate cause requirement out of the statute. Nothing in those cases decided, or even asked, whether some kind of proximate cause requirement is an element of an FHA claim.
To the extent those cases addressed Article III standing, they were concerned with what we call today the first Lujan factor: injury in fact -- an injury that is “concrete and particularized,” and “actual or imminent.” Defs. of Wildlife, 504 U.S. at 560. In Trafficante, the plaintiffs were two tenants, one black, one white, who had lost the benefit of interracial associations; causation was not discussed. 409 U.S. at 206; see Gladstone, 441 U.S. at 112-13 (characterizing Trafficante’s holding as turning on Article III’s injury-in-fact requirement). In Gladstone, causation was again not considered, except for a suggestion in dicta that evidence of
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The Bank argues that proximate cause creates a “directness requirement”
within the FHA, and that the City’s pleadings, therefore, fail because they do not
allege that the Bank’s actions directly harmed the City. The City does not accuse
the Bank of discriminating against the City itself in its lending practices; instead, it
claims that the Bank’s discriminatory practices led the City to lose tax revenue and
spend money combating the resulting blight. This harm, the Bank claims, is too
indirect to have been proximately caused by the Bank’s conduct.
We disagree. The Bank proposes to draw its proximate cause test from other
statutory contexts, primarily from the Supreme Court’s interpretation of the
Racketeer Influenced and Corrupt Organizations Act (RICO) in Holmes, 503 U.S.
258. In that case, the Court read a proximate cause requirement into RICO,
reasoning that its statutory language (granting a cause of action to anyone injured
the defendant’s business practices might “be relevant to the establishment of the necessary causal connection between the alleged conduct and the asserted injury” in later stages of litigation. Id. at 114 n.29. Finally, in Havens, the Court did not discuss causation; “the question before [the Court] . . . [was] whether injury in fact ha[d] been sufficiently alleged.” 455 U.S. at 376 (emphasis added). Nothing in the holdings of these cases speaks to the existence of a proximate cause requirement, let alone bars us from interpreting the FHA to require a showing of proximate cause for damages actions.
Moreover, it seems inconceivable that the FHA would not contain a proximate cause requirement of some sort, because the alternative would produce seemingly absurd results. Requiring nothing but Article III traceability for FHA damages actions would create an openended fount of liability, particularly for plaintiffs (like the City of Miami) who are at least one step removed from the defendant’s discriminatory conduct. This, of course, is why proximate cause is a classic element of a tort action -- and, as we have said, the Supreme Court has observed that damages claims under the FHA are essentially tort actions. Indeed, this statutory interpretation, rooted in the nature of the cause of action, has now been embraced by all three circuit courts of appeals to have addressed the issue.
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“by reason of” a violation of 18 U.S.C. § 1692, see 18 U.S.C. § 1964(c)) mirrored language used in the antitrust statutes, which had long been interpreted to contain such a requirement. See Holmes, 503 U.S. at 267-68. One of the “central elements” of proximate cause in the RICO and antitrust context, the Court explained, is “a demand for some direct relation between the injury asserted and the injurious conduct alleged.” Id. at 268-69; see, e.g., Simpson v. Sanderson Farms, Inc., 744 F.3d 702, 712 (11th Cir. 2014) (applying the Holmes directness requirement in a civil RICO case); cf. Lexmark, 134 S. Ct. at 1390 (appearing to endorse a directness requirement by noting that a claim “ordinarily” fails to allege proximate cause when “the harm [to the plaintiff] is purely derivative of ‘misfortunes visited upon a third person by the defendant’s acts’” (quoting Holmes, 503 U.S. at 268)). The Bank argues that proximate cause in the FHA context must be the same.
But the Supreme Court in Lexmark made clear that proximate cause is not a one-size-fits-all analysis: it can differ statute by statute. Thus, for example, Lexmark involved an allegation of false advertising under the Lanham Act brought by one company against a rival. As the Court noted, all such injuries “are derivative of those suffered by consumers who are deceived by the advertising.” 134 S. Ct. at 1391. A claim based on such a derivative injury might not satisfy proximate cause under a statute that strictly requires a direct connection between
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the plaintiff’s harm and the defendant’s conduct. Nevertheless, the Court found that the claim satisfied proximate causation under the Lanham Act: because the statute authorized suit “only for commercial injuries,” the derivative nature of the plaintiff’s claim could not be “fatal” to the plaintiff’s cause of action. Id. In other words, the statutory context shaped the proximate cause analysis. So, too, in this case.
The FHA’s proximate cause requirement cannot take the shape of the strict directness requirement that the Bank now urges on us: indeed, such a restriction would run afoul of Supreme Court and Eleventh Circuit caselaw allowing entities who have suffered indirect injuries -- that is, parties who have not themselves been directly discriminated against -- to bring a claim under the FHA. Notably, the Village of Bellwood in Gladstone was permitted to bring an FHA claim even though it was not directly discriminated against. 441 U.S. at 109-11. So, too, was the non-profit corporation in Havens, which alleged impairment of its organizational mission and a drain on its resources, not direct discrimination. 455 U.S. at 378-79. And in our own Circuit, the same is true of the plaintiff in Baytree, a non-minority developer who challenged a city’s zoning decision as racially discriminatory. 873 F.2d at 1408-09. Indeed, the Supreme Court in Havens instructed that the distinction between direct and indirect harms -- or, as the Havens Court characterized it, the difference “between ‘third-party’ and ‘first-
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party’ standing” -- was “of little significance in deciding” whether a plaintiff had a cause of action under the FHA. 455 U.S. at 375; see Pac. Shores Props., 730 F.3d at 1168 n.32 (“The fact that FHA plaintiffs’ injuries must be proximately caused by the defendants’ discriminatory acts does not, of course, mean that defendants are not liable for foreseeable, but indirect, effects of discrimination.”).
In examining RICO and the antitrust statutes, the Supreme Court has looked to the statutory text and legislative history to determine the scope and meaning of the proximate cause requirement. See Holmes, 503 U.S. at 265-68. Neither party has presented any argument based on these considerations. However, the Supreme Court has observed that the language of the FHA is “broad and inclusive,” Trafficante, 409 U.S. at 209, and must be given “a generous construction,” id. at 212. What’s more, while the Supreme Court has cautioned that “[t]he legislative history of the [the FHA] is not too helpful” in determining the scope of its cause of action, it observed that the FHA’s proponents “emphasized that those who were not the direct objects of discrimination had an interest in ensuring fair housing, as they too suffered.” Id. at 210. In short, nothing in the text or legislative history of the FHA supports the Bank’s cramped interpretation.
As we’ve noted, damages claims arising under the FHA have long been analogized to tort claims. Thus, we look to the law of torts to guide our proximate cause analysis in this context. We agree with the City that the proper standard,
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drawing on the law of tort, is based on foreseeability.9 See Dobbs, Hayden & Bublick, supra, § 199, at 686 (“Professional usage almost always reduces proximate cause issues to the question of foreseeability. The defendant must have been reasonably able to foresee the kind of harm that was actually suffered by the plaintiff . . .”); see also Pac. Shores Props., 730 F.3d at 1168 & n.32 (noting in the FHA context that “the doctrine of proximate cause serves merely to protect defendants from unforeseeable results” of their unlawful conduct, and that defendants are “liable for foreseeable . . . effects of discrimination.”).
Under this standard, the City has made an adequate showing. The complaint alleges that the Bank had access to analytical tools as well as published reports drawing the link between predatory lending practices “and their attendant harm,” such as premature foreclosure and the resulting costs to the City, including, most notably, a reduction in property tax revenues. Complaint at 8-9, 26-27, 32-33, 4748, 50. The district court rejected the plaintiffs’ claim partly because it failed to “allege facts that isolate Defendants’ practices as the cause of any alleged lending disparity.” City of Miami v. Bank of America Corp., 2014 WL 3362348, at *5. But as we have said even in the more restrictive RICO context, proximate cause “is not . . . the same thing as . . . sole cause.” Cox v. Adm’r U.S. Steel & Carnegie, 17
9 We acknowledge that the Supreme Court has rejected foreseeability as the touchstone of proximate cause “in the RICO context,” Hemi Grp., LLC v. City of New York, 559 U.S. 1, 12 (2010), but we have already explained why that statutory context does not govern our analysis today.
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F.3d 1386, 1399 (11th Cir.), opinion modified on reh’g, 30 F.3d 1347 (11th Cir. 1994); see Dobbs, Hayden & Bublick, supra, § 198, at 683 (“[The proximate cause requirement] does not mean that the defendant’s conduct must be the only proximate cause of the plaintiff’s injury.”). Instead, a proximate cause is “a substantial factor in the sequence of responsible causation.” Cox, 17 F.3d at 1389 (quotation omitted). The City has surely alleged that much: it claims that the Bank’s discriminatory lending caused property owned by minorities to enter premature foreclosure, costing the City tax revenue and municipal expenditures. Although there are several links in that causal chain, none are unforeseeable. See Dobbs, Hayden & Bublick, supra, § 204, at 705 (explaining that intervening causes become “superseding” only if they are unforeseeable). And, as we noted in the context of Article III traceability, the City has provided the results of regression analyses that purport to draw the connection between the Bank’s conduct toward minority borrowers, foreclosure, and lost tax revenue. This empirical data is sufficient to “raise the pleadings above the speculative level.” Dekalb Cnty. v. HSBC N. Am. Holdings, Inc., No. 1:12-CV-03640-SCJ, 2013 WL 7874104, at *7 (N.D. Ga. Sept. 25, 2013); see Twombly, 550 U.S. at 555; cf. Maya v. Centex Corp., 658 F.3d 1060, 1073 (9th Cir. 2011) (“Expert testimony can be used to
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explain the causal connection between defendants’ actions and plaintiffs’ injuries,
even in the context of other market forces.”).10
In the face of longstanding caselaw drawn from the Supreme Court and this
Court permitting FHA claims by so-called third party plaintiffs who are injured by
a defendant’s discrimination against another person, it is clear that the harm the
City claims to have suffered has “a sufficiently close connection to the conduct the
statute prohibits.” Lexmark, 134 S. Ct. at 1390. Of course, whether the City will
be able to actually prove its causal claims is another matter altogether. At this
stage, it is enough to say that the City has adequately pled proximate case, as
required by the FHA.
3. Statute of Limitations
10 The Bank also makes much of City of Cleveland v. Ameriquest Mortgage Sec., Inc., 615 F.3d 496 (6th Cir. 2010), a Sixth Circuit case brought by the City of Cleveland against various financial entities that it claimed were responsible for a large portion of the Cleveland subprime lending market and a foreclosure crisis that devastated local neighborhoods. Id. at 498-99. The Sixth Circuit held that the city’s claims did not adequately plead proximate cause, in part because “the cause of the alleged harms is a set of actions (neglect of property, starting fires, looting, and dealing drugs) that is completely distinct from the asserted misconduct (financing subprime loans).” Id. at 504. The defendants insist that the same analysis applies here. But City of Cleveland is readily distinguishable. Most glaringly, the city in that case brought a state-law public nuisance claim, not an FHA claim. Id. at 498. Ohio law had adopted its proximate cause test from Holmes, which we have already explained is inapposite, and the court in no way suggested that an identical proximate cause requirement existed in the FHA. Id. at 503. Moreover, the defendants in that case “did not originate the subprime mortgages at issue” -rather, they “finance[ed], purchas[ed], and pool[ed] . . . vast amounts of these loans,” creating mortgage-backed securities that were then sold to the public. Id. at 499. It was this financial activity that Cleveland challenged as a public nuisance, not the original issuance of the loans. Thus, the Cleveland defendants’ activity was one step further removed than the activity of the Bank in this case, which issued the allegedly predatory loans in the first instance.
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The FHA also requires that claims be filed “not later than 2 years after the occurrence or the termination of an alleged discriminatory housing practice.” 42 U.S.C. § 3613(a)(1)(A). The district court concluded, and the parties do not contest, that an FHA claim for issuing a discriminatory loan begins to run from the date that the loan closes. City of Miami v. Bank of America Corp., 2014 WL 3362348, at *6; see Estate of Davis v. Wells Fargo Bank, 633 F.3d 529, 532 (7th Cir. 2011) (calculating FHA statute of limitations for a predatory loan beginning with the date the loan was issued).
This lawsuit was filed on December 13, 2013. Thus, in a traditional statute of limitations analysis, the complained-of loans must have closed after December 13, 2011. The City maintains that it has alleged a pattern and practice of discriminatory lending by the Bank, and its claims, therefore, qualify for the application of the “continuing violation doctrine.” The district court disagreed, finding that the City had not alleged facts sufficient to support its allegation that the specific practices continued into the statutory period. We remain unpersuaded.
The complaint alleged that the City had identified 3,326 discriminatory loans issued by the Bank in Miami between 2004 and 2012 that had resulted in foreclosure. Complaint at 50-51. It then listed ten specific property addresses that it claimed “corresponded to these foreclosures,” but provided no specific information (e.g., the type of loan, the characteristics that made it predatory or
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discriminatory, when the loan closed, when the property went into foreclosure, etc.) for each address. Id. at 51. (The City also claimed that “with the benefit of discovery,” it “anticipate[d] . . . be[ing] able to identify more foreclosures resulting from the issuance of discriminatory loans.” Id. at 51 n.35.) As the district court noted, however, the City failed to allege that any of the loans closed within the limitations period (between December 13, 2011, and December 13, 2013).
On appeal, the City does not contend that its original complaint was adequate; rather, it argues that it could readily cure the statute of limitations flaws if given the opportunity. In support, the City points to the proposed amended complaint that it provided along with its motion for reconsideration and motion to amend. The district court acknowledged that the City might indeed be able to remedy its statute of limitations deficiencies with an amendment, but the court never considered whether the City’s proposed amended complaint was sufficient, because it concluded that the City remained outside the statute’s zone of interests and had not adequately pled proximate cause. Because the district court erred both as to the zone of interests and proximate cause, we are obliged to remand the cause of action in the first instance to determine whether or not the City could remedy any statute of limitations deficiency. We decline to evaluate the City’s proposed amended complaint before the district court has had the opportunity to do so. See Adinolfe v. United Techs. Corp., 768 F.3d 1161, 1172 (11th Cir. 2014) (“[A]s an
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appellate tribunal, we are generally limited to reviewing arguments and issues that have been raised and decided in the district court.”).
In order to provide guidance on remand, we offer this discussion of the application of the continuing violation doctrine to this case. In addition to noting that the City never alleged that any particular loan closed within the limitations period (a deficiency that may well be cured in an amended pleading), the district court also seemingly held that the City’s claim could not qualify for the application of the continuing violation doctrine because the complaint did not identify a singular and uniform practice of continuing conduct.
The continuing violation doctrine applies to “the continued enforcement of a discriminatory policy,” and allows a plaintiff to “sue on otherwise time-barred claims as long as one act of discrimination has occurred . . . during the statutory period.” Hipp v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1221 (11th Cir. 2001) (per curiam). The governing law on the continuing violation doctrine in the FHA context is drawn from the Supreme Court’s decision in Havens. In that case, three plaintiffs11 -- a black individual looking to rent an apartment, a black “tester,” and a white “tester”12 -- brought FHA claims. Havens, 455 U.S. at 368. Their lawsuit was filed on January 9, 1979. Coles v. Havens Realty Corp., 633 F.2d 384, 386
11 As discussed earlier, there was also a fourth plaintiff: a non-profit corporation. Havens, 455 U.S. at 367. Its claim is not relevant to the discussion of the statute of limitations. 12 The testers posed as renters for the purpose of collecting evidence of unlawful racial steering practices.
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(4th Cir. 1980), aff’d in part, rev’d in part sub nom. Havens, 455 U.S. 363. At the time, the limitations period under the FHA was 180 days. The plaintiffs identified five separate incidents of discrimination: on March 14, March 21, March 23, July 6, and July 13 of 1978. Only the incident on July 13 was within the limitations period. See Havens, 455 U.S. at 380.
On March 14, March 21, and March 23, the two testers asked Havens about available apartments. Each time, the black tester was told that nothing was available, while the white tester was told that there were vacancies. Id. at 368. On July 6, the black tester made a further inquiry and was told that there were no vacancies, while another white tester (not a party to the suit) was told that there were openings. Id. Finally, on July 13 -- the only incident within the limitations period -- the black plaintiff who was genuinely looking to rent asked Havens about availability and was falsely told that there was nothing. Id.
All three plaintiffs alleged that Havens’s practices deprived them of the benefits of living in an integrated community. Id. at 369. The Supreme Court held that the claims were not time-barred for any of the plaintiffs because they alleged a “continuing violation” of the FHA, despite the fact that only one discriminatory incident was within the limitations window, and that incident involved only one of the three plaintiffs. Id. at 380-81. “[A] ‘continuing violation’ of the Fair Housing Act should be treated differently from one discrete act of discrimination,” the
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Court explained. Id. at 380. The Court reasoned that “[w]here the challenged violation is a continuing one,” there is no concern about the staleness of the plaintiff’s claims. Id. Moreover, the Court emphasized “the broad remedial intent of Congress embodied in the [Fair Housing] Act” in rejecting the defendants’ “wooden application” of the statute of limitations. Id. The Court concluded: “where a plaintiff, pursuant to the Fair Housing Act, challenges not just one incident of conduct violative of the Act, but an unlawful practice that continues into the limitations period, the complaint is timely when it is filed within [the limitations period, starting at] the last asserted occurrence of that practice.” Id. at 380-81.
The case before us -- if the City is able to identify FHA violations within the limitations period -- is on all fours with Havens. The City has alleged “not just one incident . . . but an unlawful practice that continues into the limitations period.” Id. at 381. The City alleges that the Bank has engaged in a longstanding practice of discriminatory lending in which it extends loans to minority borrowers only on more unfavorable terms than those offered to white borrowers. The predatory qualities of the loans have taken slightly different forms over time (e.g., higher interest rates, undisclosed back-end premiums, higher fees, etc.), but the essential discriminatory practice has remained the same: predatory lending targeted at minorities in the City of Miami. The fact that the burdensome terms have not
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remained perfectly uniform does not make the allegedly unlawful practice any less “continuing.” The various instances of discriminatory lending comprise the practice, which continues into the limitations period. At least at the pleading stage, this is enough to plausibly invoke the continuing violation doctrine. See City of Los Angeles, 2014 WL 6453808, at *7 (“The City’s allegations of discrimination under the FHA relate to Chase’s lending practices overall, not a specific type of loan issued. The Court finds the allegations sufficient to apply the continuing violations doctrine.”); City of Los Angeles v. Citigroup Inc., 24 F. Supp. 3d 940, 952 (C.D. Cal. 2014) (“In this case, [the plaintiff] is alleging a pattern and practice of ‘discriminatory lending’ on the part of Defendants over at least an eight-year period. While the types of loans that Defendants allegedly issued to minority borrowers may have changed during the relevant time period, [the plaintiff] alleges that they remained high-risk and discriminatory. This is sufficient to apply the continuing-violation doctrine.”); accord City of Los Angeles v. Bank of Am. Corp., No. CV 13-9046 PA (AGRx), 2014 WL 2770083, at *10 (C.D. Cal. June 12, 2014); City of Los Angeles v. Wells Fargo & Co., 22 F. Supp. 3d 1047, 105859 (C.D. Cal. 2014); see also Hargraves v. Capital City Mortg. Corp., 140 F. Supp. 2d 7, 17-19 (D.D.C. 2000) (applying the continuing violation doctrine to an FHA claim challenging a mortgage company’s practice of predatory and discriminatory lending, where that practice took various forms, including charging exorbitant
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interest rates, fraudulent fees and penalties, inadequate risk assessment, and elevated rates of foreclosure).
4. Remand Resolving a plaintiff’s motion to amend is “committed to the sound discretion of the district court,” but that discretion “is strictly circumscribed” by Rule 15(a)(2) of the Federal Rules of Civil Procedure, which instructs that leave to amend should be “freely give[n] when justice so requires.” Gramegna v. Johnson, 846 F.2d 675, 678 (11th Cir. 1988); see also Shipner v. E. Air Lines, Inc., 868 F.2d 401, 407 (11th Cir. 1989) (“[U]nless a substantial reason exists to deny leave to amend, the discretion of the district court is not broad enough to permit denial”). As we have explained, we find that the City is within the FHA’s zone of interests and has sufficiently alleged proximate causation between its injury and the Bank’s conduct. The district court’s refusal to allow the City to amend, and its conclusion that any amended complaint would be futile, was legal error and therefore an abuse of discretion. On remand, the City should be granted leave to amend its complaint. We also note that while this appeal was pending, the Supreme Court handed down a decision that may materially affect the resolution of this case. In Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015), a non-profit organization brought a Fair Housing Act
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claim against the Texas Department of Housing and Community Affairs, alleging that the Department’s allocation of low-income housing tax credits caused racial segregation by “granting too many credits for housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.” Id. at 2514. The claim was brought on a disparate-impact theory, alleging not that the Department’s practice was driven by a discriminatory intent, but rather that it had a “‘disproportionately adverse effect on minorities’ and [was] otherwise unjustified by a legitimate rationale.” Id. at 2513 (quoting Ricci v. DeStefano, 557 U.S. 557, 577 (2009)). The question before the Court was whether disparate-impact claims are cognizable under the FHA. The Court held that they are. Id. at 2525.
However, in dicta, the Court announced the “proper[] limit[s]” on disparate impact liability under the FHA, needed both to avoid serious constitutional issues and to protect potential defendants from abusive disparate-impact claims. Id. at 2522; see id. at 2522-24. Specifically, the Court noted that defendants must be allowed to “explain the valid interest served by their [challenged] policies,” id. at 2522, and that courts should insist on a “robust causality requirement” at the “prima facie stage” linking the defendant’s conduct to the racial disparity, id. at 2523. The Court emphasized that disparate-impact claims must be aimed at “removing artificial, arbitrary, and unnecessary barriers,” rather than “displac[ing] valid governmental and private priorities.” Id. at 2524 (quoting Griggs v. Duke
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Power Co., 401 U.S. 424, 431 (1971)) (alterations adopted). Any newly pled complaint must take into account the evolving law on disparate impact in the FHA context. Without the new pleadings before us, we have no occasion to pass judgment on how Inclusive Communities will impact this case, but we flag the issue both for the parties and for the district court on remand.
C. Unjust Enrichment Claim As for the City’s state law unjust enrichment claim, we agree with the district court and affirm its ruling. In deciding this claim, we are obliged to apply Florida’s substantive law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). Where the highest state court has not provided the definitive answer to a question of state law, “we must predict how the highest court would decide this case,” looking to the decisions of the lower state courts for guidance. See Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1348 (11th Cir. 2011). Under Florida law, the doctrine of unjust enrichment (sometimes called a “contract implied in law,” “quasi-contract,” and various other terms) governs the situation in which one party has conferred a valuable benefit on another in the absence of a contract, but “under circumstances that ma[ke] it unjust to retain it without giving compensation.” See Magwood v. Tate, 835 So. 2d 1241, 1243 (Fla. Dist. Ct. App. 2003) (quoting Commerce P’ship 8098 Ltd. P’ship v. Equity Contracting Co., 695 So. 2d 383, 386 (Fla. Dist. Ct. App. 1997)). There are three elements of an unjust
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enrichment claim under Florida law: first, the plaintiff has conferred a benefit on the defendant; second, the defendant voluntarily accepted and retained that benefit; and, finally, the circumstances are such that it would be inequitable for the defendants to retain the benefit without paying for it. Virgilio v. Ryland Grp., Inc., 680 F.3d 1329, 1337 (11th Cir. 2012) (citing Fla. Power Corp. v. City of Winter Park, 887 So. 2d 1237, 1241 n.4 (Fla. 2004)). As for the first element, the benefit must be conferred directly from the plaintiff to the defendant. Century Senior Servs. v. Consumer Health Ben. Ass’n, Inc., 770 F. Supp. 2d 1261, 1267 (S.D. Fla. 2011) (citing Peoples Nat’l Bank of Commerce v. First Union Nat’l Bank of Fla., N.A., 667 So. 2d 876, 879 (Fla. Dist. Ct. App. 1996)). “At the core of the law of restitution and unjust enrichment is the principle that a party who has been unjustly enriched at the expense of another is required to make restitution to the other.” Gonzalez v. Eagle Ins. Co., 948 So. 2d 1, 3 (Fla. Dist. Ct. App. 2006).
The City alleged that the Bank “received and utilized benefits derived from a variety of municipal services, including police and fire protection, as well as zoning ordinances, tax laws, and other laws and services that have enabled [the Bank] to operate and profit within the City of Miami.” Complaint at 54. It went on to allege that “[a]s a direct and proximate result of [the Bank’s] predatory lending practices, [the Bank] ha[s] been enriched at the City’s expense” by utilizing those benefits while denying the City tax revenue and costing it in
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additional municipal expenditures required to address foreclosed properties. The Bank “failed to remit those wrongfully obtained benefits,” the complaint claimed. The City also alleged that it had paid for the Bank’s externalities (the costs of the harm caused by the discriminatory lending patterns), that the Bank was aware of this benefit, and that its retention would be unjust. Id. at 55.
The district court dismissed the claim without prejudice, in part because the City had not alleged that it had conferred a direct benefit onto the Bank to which they were not otherwise legally entitled, as required under Florida law. As for the denied tax revenues, the district court noted that such a denial is not a direct benefit conferred on the Bank by the City. As for the municipal services, the district court found that they did not create an unjust enrichment claim for two reasons. First, the municipal services were not benefits conferred directly on the Bank -- the services were provided to the residents of Miami, not to the Bank, and any benefit the Bank received was merely derivative. Second, the City had not adequately alleged that the Bank, as a Miami property owner, was not legally entitled to those services. We agree.
The City maintains that its complaint states a cause of action under Florida law, but it has not cited to a single Florida case. The City relies primarily on White v. Smith & Wesson Corp., 97 F. Supp. 2d 816 (N.D. Ohio 2000), where the mayor and City of Cleveland sued various gun manufacturers and dealers alleging, inter
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alia, unjust enrichment on the ground that the city had conferred a benefit on the defendants by paying for their “externalities”: “the costs of the harm caused by Defendants’ failure to incorporate safety devices into their handguns and negligent marketing practices.” Id. at 829. The Ohio law of unjust enrichment essentially tracks Florida law. See id. (“In order to maintain a cause of action for unjust enrichment under Ohio law, a plaintiff must allege: (1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and, (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment.”). Without citing to a single Ohio state court case in its unjust enrichment analysis, the district court determined that plaintiffs had stated such a claim under Ohio law.
The City cites only two other cases, neither of which were from Florida. See City of Boston v. Smith & Wesson Corp., No. 199902590, 2000 WL 1473568, at *18 (Mass. Super. Ct. July 13, 2000) (allowing an unjust enrichment claim against gun manufacturers under Massachusetts law on the same reasoning as was employed in White); City of New York v. Lead Indus. Ass’n, Inc., 190 A.D.2d 173, 177 (N.Y. App. Div. 1993) (permitting the City of New York’s claim for restitution against manufacturers of lead-based paint for the City’s expenditures in abating the hazard of lead-based paint and treating the victims). None of these cases, obviously, governs our application of Florida law.
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We have not found any case -- and the City has provided none -- supporting an unjust enrichment claim of this type under Florida law. First, the City alleges that the Bank must pay the City for the tax revenue the City has been denied due to the Bank’s unlawful lending practices. Although a deprivation of tax revenue may create an injury in fact under Article III, such an injury does not fit within the unjust enrichment framework. The missing tax revenue is in no way a benefit that the City has conferred on the Bank. The City has provided no explanation for this incongruity on appeal.
Instead, the City focuses on the municipal services -- including police, firefighters, zoning ordinances, and tax laws -- that it claims it would not have had to provide if not for the Bank’s predatory lending. But this version of the unjust enrichment claim fares no better, for three independent reasons. For starters, it’s not clear that municipal expenditures are among the types of benefits that can be recovered by unjust enrichment under Florida law. We have found no Florida case in which a municipality recovered its expenditures on an unjust enrichment theory. Indeed, at least one case suggests that a municipality cannot recover such expenditures without express statutory authorization, which the City has never alleged. See Penelas v. Arms Tech., Inc., No. 99-1941 CA-06, 1999 WL 1204353, at *2 (Fla. Cir. Ct. Dec. 13, 1999) (“[T]he County’s claim for damages, based on the costs to provide 911, police, fire and emergency services effectively seeks
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reimbursement for expenditures made in its performance of governmental functions. Costs of such services are not, without express legislative authorization, recoverable by governmental entities.”), aff’d, 778 So. 2d 1042 (Fla. Dist. Ct. App. 2001).
Moreover, the benefits provided by these municipal services were not directly conferred on the Bank, as is required for an unjust enrichment claim under Florida law. See, e.g., Virgilio, 680 F.3d at 1337 (affirming the dismissal of an unjust enrichment claim under Florida law because the plaintiffs only “‘indirectly’ conferred a benefit on Defendants”); Extraordinary Title Servs. v. Fla. Power & Light Co., 1 So. 3d 400, 404 (Fla. Dist. Ct. App. 2009) (affirming the dismissal of an unjust enrichment claim because the plaintiff “ha[d] not conferred a direct benefit” on the defendant). As the district court correctly noted, municipal police and fire services directly benefit the residents and owners of homes in the City of Miami, not the financial institution that holds the loans on those properties. And tax laws and zoning ordinances are quite clearly not direct benefits conferred on Bank of America: they are laws of general applicability that, indeed, apply to all residents of Miami. No Florida caselaw suggests that these benefits are direct enough to sustain an unjust enrichment claim.
Finally, the City has failed to allege facts to show that circumstances are such that it would be inequitable for the Bank to retain such benefits without
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compensation. Even assuming that these municipal services did confer a cognizable benefit on the Bank as the owner of foreclosed property, the City does not challenge the district court’s determination that the Bank was legally entitled to those services. Cf. State Farm Fire & Cas. Co. v. Silver Star Health & Rehab, 739 F.3d 579, 584 (11th Cir. 2013) (“If an entity accepts and retains benefits that it is not legally entitled to receive in the first place, Florida law provides for a claim of unjust enrichment.”). The City has provided no arguments and cited no Florida caselaw explaining why the Bank would not be entitled to police and fire protection like any other property owner.
The Florida Supreme Court has not ruled on whether an unjust enrichment claim exists under these circumstances. But given the complete lack of supporting Florida caselaw, we decline to invent a novel basis for unjust enrichment under Florida law today. Accordingly, we affirm the district court’s order dismissing the City’s unjust enrichment claim.
IV. Conclusion Nothing we have said in this opinion should be taken to pass judgment on the ultimate success of the City’s claims. We hold only that the City has constitutional standing to bring its FHA claims, and that the district court erred in dismissing those claims with prejudice on the basis of a zone of interests analysis,
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a proximate cause analysis, or the inapplicability of the continuing violation doctrine.
The judgment of the district court is AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this opinion.
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 Case 1:13-cv-24506-WPD Document 98 Entered on FLSD Docket 03/17/2016 Page 1 of 10
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-24506-CIV-DIMITROULEAS CITY OF MIAMI, a Florida municipal corporation,
Plaintiff, vs. BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS; and COUNTRYWIDE BANK, FSB,
Defendants. _____________________________________/
ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COMPLAINT THIS CAUSE is before the Court upon the Motion to Dismiss Second Amended
Complaint (the “Motion”) [DE 86], filed herein on December 14, 2015 by Defendants Bank of America Corporation (“BoA”), Bank of America, N.A., Countrywide Financial Corporation, Countrywide Home Loans, and Countrywide Bank FSB (“Defendants”). The Court has carefully considered the Motion [DE 86], the Plaintiff City of Miami (“Plaintiff” or “City”)’s Response [DE 90], the Defendants’ Reply [DE 91], and the oral arguments made by counsel at the March 11, 2016, hearing. The Court is otherwise fully advised in the premises.
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I. BACKGROUND This suit is brought pursuant to the Fair Housing Act of 1968 (“FHA”), as amended, 42 U.S.C. § 3601, et seq., to seek redress against Defendants for the economic impact of its longstanding, unbroken policy and practice of steering minority borrowers in Miami into “predatory” mortgage loans (defined herein as loans that have higher costs and risk features than more favorable and less expensive loans issued to similarly situated white borrowers) and for its policy of refusing to extend credit to minority borrowers who desired to refinance the more expensive loans they previously received when such credit was extended to white borrowers. Sec. Am. Comp. [DE 84] at ¶ 1. The Court dismissed Plaintiff’s prior iteration of its complaint on July 8, 2014. See [DE 71]. Therein, the Court held the City lacked statutory standing to sue under the FHA1, that the City’s FHA claim was barred by the statute of limitations, and that the City’s claim for unjust enrichment failed to state a claim. See id. Although the Court held that it was “possible that an amendment could remedy the statute of limitations problems the Court [] identified with Plaintiff’s Complaint,” the Court ruled that an attempted amendment would be futile because of the City’s lack of standing under the FHA to bring the action. See [DE 71] at p. 14, n. 4. On September 1, 2015, the Eleventh Circuit entered an Order affirming the Court’s dismissal of the City’s unjust enrichment claim for failure to state a claim, reversing the Court’s dismissal as to statutory standing under the FHA, and remanding the case to allow the City the opportunity to replead in attempt to cure the time-bar problem. See City of Miami v. Bank of America Corp., 800 F.3d 1262, 1284, 1286-87 (11th Cir. 2015) (“Appeal Op.”).
1 The Court held that the City lacked statutory standing because its claims fell outside of the zone of interests protected by the FHA and because the City’s allegations were insufficient to demonstrate proximate causation between Defendants’ allegedly discriminatory lending practices and the foreclosures on Defendants’ loans in minority neighborhoods and to minority borrowers that the City claimed caused it economic harm.
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The Eleventh Circuit’s opinion also provided guidance to the parties and the Court on remand. For the City to avoid a second dismissal, it must plead a timely FHA claim by alleging sufficient facts to demonstrate discriminatory loans that were a continuation of Defendants’ alleged practices closed within the limitations period (between December 13, 2011, and December 13, 2013). See Appeal Op., 800 F.3d at 1283-84. However, if the City could plead sufficient facts to show that such discriminatory loans closed within the limitations period, the City could “plausibly invoke the continuing violation doctrine” “at least at the pleading stage,” despite the alleged changes over the years in the burdensome terms of the Defendants’ mortgage loans. Appeal Op., 800 F.3d at 1284-86.
Additionally, regarding the pleading requirements for a disparate impact claim under the FHA, the Eleventh Circuit guided the parties and the Court that the Supreme Court’s recent decision in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S.Ct. 2507, (2015) (“Inclusive Communities”) “may materially affect the resolution of this case.” Appeal Op. at 1286. Thus, it instructed that:
Any newly pled complaint must take into account the evolving law on disparate impact in the FHA context. Without the new pleadings before us, we have no occasion to pass judgment on how Inclusive Communities will impact this case, but we flag the issue both for the parties and for the district court on remand. Appeal Op. at 1287. On November 30, 2015, the City filed its Second Amended Complaint. [DE 84] (“SAC”). Defendants now move to dismiss the SAC on the grounds that (1) the City fails to allege a timely violation of the FHA; (2) the City fails to plead a disparate impact claim under Inclusive Communities; and (3) three of the five Defendants should be dismissed because none of them are alleged to have made any loans since December 13, 2011. For the reasons set forth below, the Court grants Defendants’ Motion to Dismiss.
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II. DISCUSSION A. Motion to Dismiss Standard Under Rule 12(b)(6), a motion to dismiss should be granted if the plaintiff is unable to articulate “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). When determining whether a claim has facial plausibility, “a court must view a complaint in the light most favorable to the plaintiff and accept all of the plaintiff’s well-pleaded facts as true.” Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir. 2007). However, the court need not take allegations as true if they are merely “threadbare recitals of a cause of action’s elements, supported by mere conclusory statements.” Iqbal, 129 S. Ct. at 1949. “Mere labels and conclusions or a formulaic recitation of the elements of a cause of action will not do, and a plaintiff cannot rely on naked assertions devoid of further factual enhancement.” Franklin v. Curry, 738 F.3d 1246, 1251 (11th Cir. 2013). “[I]f allegations are indeed more conclusory than factual, then the court does not have to assume their truth.” Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012). B. Statute of Limitations As set forth in the Court’s prior Order, for purposes of the FHA, “[a]n aggrieved person may commence a civil action in an appropriate United States district court or State court not later than 2 years after the occurrence or termination of an alleged discriminatory . . . housing practice . . . to obtain appropriate relief with respect to such discriminatory housing practice . . . .” 42 U.S.C. § 3613(a)(1)(A). An FHA claim for extending a discriminatory loan begins to run from
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the date of the loan closing. Id.; Phan v. Accredited Home Lenders Holding Co., 2010 WL 1268013, at *3 (M.D. Fla. Mar. 20, 2010); Appeal Op. at 1283.
This suit was filed December 13, 2013. See [DE 1]. Thus, the 2-year limitations period covers allegedly discriminatory loans which closed between December 13, 2011, and December 13, 2013. The City’s invocation of the “continuing violation” doctrine is meaningless unless the City can plead a cognizable claim of an FHA violation within that limitations period. See MTD Order at 11; Appeal Op., 800 F.3d at 1285. With that in mind, the Court turns to the allegations of the SAC.
The SAC alleges the existence of 4 (four) property addresses that had discriminatory mortgage loans which closed during the 2-year limitations period (between December 13, 2011, and December 13, 2013). See SAC at ¶ 124. Regarding these purported FHA violations, Plaintiff merely alleges as follows:
124. Bank of America has continued to issue discriminatory loans in Miami subsequent to December 13, 2011. A sample of property addresses corresponding to the issuance of these loans is set forth below. 1350 NW 8th Ct., Unit C-3, 33136 701 Brickell Key Blvd., Unit 2408, 33131 1350 NW 8th Ct., Unit B3-5, 33136 800 N. Miami Ave., Unit E-1005, 33136 SAC at ¶ 124. The SAC’s sole new paragraph attempting to identify a timely FHA violation within the two-year limitations period is too conclusory to meet the Twombly/Iqbal pleading standard. In particular, the amendment suffers from the same lack of specifics that the Eleventh Circuit noted infected a similar property list contained in the initial Complaint—it “provide[s] no specific information (e.g., the type of loan, the characteristics that made it predatory or discriminatory, when the loan closed, when [and if] the property went into foreclosure, etc.) for each address.”
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Appeal Op., 800 F.3d at 1283-84. Further, it would be impossible to conclude that Plaintiff plausibly alleged that Defendants violated the FHA within the limitations period with regard to these four asserted mortgage loans, as Plaintiff does not even allege that these loans were made to minority borrowers, let alone (a) any borrower’s specific minority status, i.e., Hispanic, African-American, etc., (b) what type of loan was made, (c) how that loan was supposedly discriminatory, (d) when the loan closed, or (e) what basis the City has to claim the loan will default or enter foreclosure (and thus plausibly injure the City at some point).
The allegations in Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) – a case upon which the City heavily relies – highlight the infirmity in the SAC’s factual allegations. In Havens, the anchoring “timely” act of discrimination was alleged with the utmost specificity: “The complaint identified Paul Coles as a black ‘renter plaintiff’ who, attempting to rent an apartment from Havens, inquired on July 13, 1978, about the availability of an apartment at the Camelot complex, and was falsely told that no apartments were available.” 455 U.S. at 368. The Havens plaintiffs’ identification of the affected individual, exact nature and location of the discrimination, and specific date on which it occurred starkly contrast the City’s reliance on four property addresses that are, in some not-alleged fashion, allegedly associated with “discriminatory” loans given to unidentified persons on unidentified dates.
The City contends that the Court should decline to examine the characteristics of the four allegedly discriminatory loans alleged in the SAC, as they are immaterial to the pleadings and inconsistent with the Eleventh Circuit’s analysis. The Court disagrees. The Eleventh Circuit held that the City’s claims could be viable under the continuing violation doctrine if and only if the City could cure its failure to allege an FHA violation within the limitations period. See Appeal Op., 800 F.3d at 1283-86. The Eleventh Circuit specifically stated that it was not ruling
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on the timeliness of the City’s lawsuit. Appeal Op., 800 F.3d at 1284 (remanding so this Court could evaluate any proposed complaint as to the “limitations deficiency”).
Thus, the issue here is not whether the continuing violation doctrine may apply, but whether the City has established the prerequisite to that doctrine: the identification of at least one timely and actionable claim of discrimination which serves as an anchoring FHA claim to which earlier, untimely claims might be tethered. See Appeal Op., 800 F.3d at 1283-84. Here, the City does not plead plausibly that Defendants violated the FHA within the limitations period. The City has added no factual detail to the SAC other than four property addresses which allegedly “correspond[] to the issuance of [discriminatory] loans.” See SAC ¶ 124. Thus, the City’s claim of a continuing violation fails for want of an anchor FHA violation within the limitations period.
Further, the City does not allege that it suffered any injury from the four discriminatory loans it identified as having been made since 2011, nor does the City allege that it will suffer or even that it will likely suffer injury in the future because of these four loans. See SAC. Under City’s own theory, not all discriminatory loans result in harm to the City for which it seeks redress; instead, only those loans that both end up in foreclosure and either reduce property tax values or require additional city services cause the City any harm. See SAC ¶ 132 (“The City’s damages include lost tax revenues and the need to provide increased municipal services” resulting from increased foreclosures.).2 The plain statutory language of the FHA provides that a plaintiff has no FHA cause of action unless the person is “aggrieved” by the alleged discrimination. Even those cases that entertain an FHA suit on the basis of a future injury
2 Although City also alleges that the Defendants’ conduct has “adversely affected” the City’s interest in “promoting fair housing and securing the benefits of an integrated community” see SAC at ¶ 94, City does not seek recovery for anything other than the alleged economic losses to its treasury due to the effect of these loans on property taxes and municipal service expenditures.
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require that the injury must be “imminent” and “certainly impending.” See, e.g. Paraquad, Inc. v. St. Louis Hous. Auth., 259 F.3d 956, 959 (8th Cir. 2001). However, in the instant action, the SAC fails to allege that any supposed future injury related to the four discriminatory loans alleged to have violated the FHA during the limitations is imminent or about to occur.
Based upon the foregoing, the SAC, like the earlier complaint, is again subject to dismissal on statute of limitations grounds.
C. Disparate impact theory under the FHA As set forth supra, the Eleventh Circuit instructed the parties and the Court that the Supreme Court’s recent decision in Inclusive Communities “may materially affect the resolution of this case.” Appeal Op. at 1286. Specifically, on remand, “[a]ny newly pled complaint must take into account the evolving law on disparate impact in the FHA context.” Appeal Op. at 1287. Inclusive Communities requires that an FHA disparate impact complaint (1) show statistically-imbalanced lending patterns which adversely impact a minority group; (2) identify a facially-neutral policy used by Defendants; (3) allege that such policy was “artificial, arbitrary, and unnecessary;” and (4) provide factual allegations that meet the “robust causality requirement” linking the challenged neutral policy to a specific adverse racial or ethnic disparity. See Inclusive Communities, 135 S. Ct. at 2522-24. While the SAC meets the first of these pleading requirements, it fails to meet the second, third, and fourth. First, the policies alleged in the SAC are not facially neutral. Rather, the City’s contentions that minority borrowers were “targeted” are comprised of allegations that minorities were intentionally discriminated against, not allegations that a neutral policy or policies produced a statistical imbalance. In fact, the SAC alleges a pattern of steering minority borrowers into disadvantageous loans. See SAC ¶¶ 1, 6, 41, 48, 58, 74, 82, 126, 127, 133. This
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is alleged intentional conduct, which is not a basis for a disparate impact FHA claim under the pleading standards set forth in Inclusive Communities. See also Appeal Op., 800 F.3d at 1275 (explaining “steering” as “guiding prospective buyers . . . based on the buyer’s race”); Bellwood v. Dwivedi, 895 F.2d 1521 (7th Cir. 1990) (addressing at length “whether there is such an animal” as “unintentional racial steering,” and finding concept an oxymoron). The City also fails to allege facts demonstrating that the Defendants’ alleged policies constituted “artificial, arbitrary, and unnecessary barriers.” See 135 S. Ct. at 2523-24.
Finally, the City fails to meet Inclusive Communities’ “robust causality requirement,” which requires the City to “allege facts at the pleading stage . . . demonstrating a causal connection” between the challenged policy and the alleged statistical disparity. See 135 S. Ct. at 2523.3 The City argues that that it need not meet this requirement because the Eleventh Circuit’s determination that the City “has made an adequate showing” of proximate cause governs, citing Appeal Op. at 1282. The Court disagrees. The proximate cause issue before the Eleventh Circuit was whether the alleged disparate impact was properly pleaded as the proximate cause of the City’s damages, while the causation question at issue here is whether Defendants’ alleged policies were properly pleaded as the cause of the alleged discriminatory impact. See Appeal Op. at 1283.
D. Dismissal of certain Defendants Defendants argue that three of the five Defendants in this case -- Bank of America Corporation, Countrywide Financial, Corporation, and Countrywide Home Loans, Inc. -- should
3 Moreover, the SAC fails to demonstrate that there was any disparate impact during the two year limitations period. Lumping together eight years of data (2004-2012) to allege a disparity does not make out a plausible claim that a disparity tied to Defendants’ policies resulted in a single year (2012) within that data set. The City’s aggregation is particularly deficient given that the 8-year period includes conduct of Defendants who made no loans at all in the only relevant year, 2012, and given that the City alleges that Defendants’ policies changed over time.
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be dismissed from this action because the SAC does not allege that these Defendants made any mortgage loans during the 2-year limitations period. The Court agrees. Defendants Bank of America Corporation, Countrywide Financial, Corporation, and Countrywide Home Loans, Inc. are hereby dismissed from this action based on the City’s failure to state a timely FHA claim against them.
III. CONCLUSION Based upon the foregoing, it is ORDERED AND ADJUDGED as follows: 1. Defendants’ Motion to Dismiss Second Amended Complaint [DE 86] is hereby
GRANTED; 2. The Second Amended Complaint [DE 84] is DISMISSED in accordance with this
Order; 3. The City is granted leave to file an amended complaint, consistent with this Order, on
or before April 15, 2016; a failure to do so shall result in the Court closing this case. DONE AND ORDERED in Chambers at Ft. Lauderdale, Broward County, Florida, this 17th day of March, 2014.
Copies to: Counsel of record
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 Case 1:13-cv-24506-WPD Document 102 Entered on FLSD Docket 04/29/2016 Page 1 of 40

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO: 13-cv-24506-DIMITROULEAS

CITY OF MIAMI, a Florida municipal corporation, Plaintiff,

v.
BANK OF AMERICA, N.A.; and COUNTRYWIDE BANK, FSB,
Defendants. ________________________________________/

DEMAND FOR JURY TRIAL

THIRD AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FAIR HOUSING ACT

1302981.1

Case 1:13-cv-24506-WPD Document 102 Entered on FLSD Docket 04/29/2016 Page 2 of 40
TABLE OF CONTENTS Page
I. NATURE OF THE ACTION ..................................................................................1
A. Bank of America Has Engaged in a Continuing Pattern of Discriminatory Mortgage Lending Practices in Miami Resulting in Foreclosures...............1
II. PARTIES .................................................................................................................6
III. REFERRALS FROM BANK REGULATORY AGENCIES .................................8
IV. JURISDICTION AND VENUE ..............................................................................9
V. BANK OF AMERICA ENGAGED IN DISCRIMINATORY LENDING PRACTICES ............................................................................................................9
A. Facially neutral business policies and practices that created an “artificial, arbitrary, and unnecessary” barrier to fair housing opportunities for minority home purchasers and owners. .......................................................9
B. Bank of America Intentionally Discriminated Against Minority Borrowers in Violation of the Fair Housing Act, as Demonstrated by Former Bank Employees. .................................................................................................11
1. BoA targets minorities for discriminatory loan terms. ..................11
C. Minorities in Miami Receive Discriminatory Loan Terms from Bank of America Regardless of Creditworthiness...................................................14
D. Miami’s Data Analysis Is Corroborated by Additional Studies/Reports...17
E. Bank of America’s Discriminatory Lending Practices Cause Foreclosures. ..............................................................................................19
1. Data shows that Bank of America’s foreclosures are disproportionately located in minority neighborhoods in Miami. .19
2. Data shows that Bank of America’s loans to minorities result in especially quick foreclosures in Miami. ........................................22
3. Data shows that the discriminatory lending practices cause the foreclosures in Miami. ...................................................................23
VI. INJURY TO MIAMI CAUSED BY BANK OF AMERICA’S DISCRIMINATORY LOAN PRACTICES ..........................................................25
A. Non-Economic Injuries ..............................................................................26 i
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B. Economic Injuries ......................................................................................26 1. Miami has been injured by a reduction in property tax revenues from foreclosures caused by Bank of America’s discriminatory lending practices. ...........................................................................27 2. Miami is injured because it provided and still must provide costly municipal services for foreclosure properties in minority neighborhoods as a direct result of Bank of America’s discriminatory lending practices. ...................................................29
VII. SAMPLE PROPERTIES IN THE CITY OF MIAMI ...........................................31 A. Foreclosures ...............................................................................................31 B. Discriminatory Loans Issued Subsequent to December 13, 2011. ............32
VIII. CLAIM FOR RELIEF ...........................................................................................33 DEMAND FOR JURY TRIAL .........................................................................................35 PRAYER FOR RELIEF ....................................................................................................36
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I. NATURE OF THE ACTION
1. Plaintiff City of Miami (“Miami” or the “City”) brings this action against Bank of America (hereafter “BoA” or the “Bank”) for the economic impact of its longstanding, unbroken policy and practice of both intentionally steering minority borrowers in Miami into “discriminatory” mortgage loans (defined herein as loans that have higher costs and risk features than more favorable and less expensive loans issued to similarly situated white borrowers) and engaging in facially neutral business policies and practices that created an “artificial, arbitrary, and unnecessary” barrier to fair housing opportunities for minority home purchasers and owners. Additionally, BoA maintained a policy of refusing to extend credit to minority borrowers who desired to refinance the more expensive loans they previously received when such credit was extended to white borrowers.
2. The adverse impact that the Bank’s mortgage lending policies and practices would cause in terms of widespread economic and non-economic damages throughout the City were entirely foreseeable through a variety of analytical tools and published reports available to the Bank.
A. Bank of America Has Engaged in a Continuing Pattern of Discriminatory Mortgage Lending Practices in Miami Resulting in Foreclosures.
3. This suit is brought pursuant to the Fair Housing Act of 1968 (“FHA”), as amended, 42 U.S.C. §§ 3601, et seq., by the City of Miami to seek redress for injuries caused by Bank of America’s1 pattern or practice of illegal and discriminatory mortgage lending. Specifically, Miami seeks injunctive relief and damages for the injuries caused by (1) the origination of discriminatory mortgage loans in minority neighborhoods and to minority borrowers that are the result of BoA’s unlawful and discriminatory lending practices, and (2) the Bank’s subsequent refusal to extend credit to minority borrowers seeking to refinance previously issued discriminatory loans. The unlawful conduct alleged herein consists of both intentional discrimination and disparate impact discrimination. BoA’s policies and practices identified herein were not justified by business
1 Defendants collectively are referred to as “BoA,” including: Bank of America, N.A., and Countrywide Bank, FSB. Plaintiff alleges that Defendants are also liable for residential home loans and lending operations acquired from, and/or sold by or through, Countrywide Bank, N.A., First Franklin Corporation, Grand Harbor Mortgage, John Laing Homes, Nexstar Financial Corporation, and Treasury Bank National Association.
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necessity or legitimate business interests. There were less costly and thus less discriminatory alternatives available to BoA that would have achieved the same business goals as were achieved by these policies and practices.
4. The State of Florida in general, and the City of Miami in particular, have been devastated by the foreclosure crisis. As recently as the year ending 2014, Florida had the country’s highest foreclosure rate, and Miami had the second highest foreclosure rate among metropolitan statistical areas with a population of at least 200,000 residents.2 Moreover, Florida is by far the leading state in the country with regard to owner-vacated or “Zombie” foreclosures.3 Since 2008, banks have foreclosed on approximately 1.8 million homes in Florida, and BoA’s discriminatory conduct is responsible for a significant number of these foreclosures.
5. The foreclosure crisis in Florida resulted in such drastic consequences that the Florida Supreme Court established a Task Force to recommend “policies, procedures, strategies, and methods for easing the backlog of pending residential mortgage foreclosure cases while protecting the rights of parties.”4
6. While Bank of America has adapted to changing market conditions necessitated by enhanced public scrutiny of its mortgage lending practices, one issue has remained constant since at least 2004—the Bank has systematically engaged in a continuous and unbroken pattern and practice of issuing discriminatory mortgage loans to minority borrowers in Miami when more favorable and less expensive loans were being offered to similarly situated non-minority borrowers. Upon information and belief this unlawful pattern and practice continues through the present and has not terminated. Therefore, the operative statute of limitations governing actions brought pursuant to the FHA has not commenced to run.
2 RealtyTrac, Year-End 2014 U.S. Foreclosure Market Report (Jan. 15, 2015), available at http://www.realtytrac.com/news/foreclosure-trends/1-1-million-u-s-properties-withforeclosure-filings-in-2014-down-18-percent-from-2013-to-lowest-level-since-2006/.
3 RealtyTrac, Q1 2013 Foreclosure Inventory Update, at 5, available at http://www.realtytrac.com/images/reportimages/RealtyTrac_Foreclosure_Inventory_Analysis_Q 1_2013.pdf.
4 Florida Supreme Court Task Force on Residential Mortgage Foreclosure Cases, Final Report and Recommendations on Residential Mortgage Foreclosure Cases (Aug. 17, 2009), available at http://www.floridasupremecourt.org/pub_info/documents/Filed_08-17-2009_ Foreclosure_Final_Report.pdf.
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7. The pattern and practice of lending discrimination engaged in by Bank of America includes traditional redlining5 and reverse redlining,6 both of which have been deemed to violate the FHA by federal courts throughout the country. BoA engaged in redlining, and upon information and belief continues to engage in said conduct, by refusing to extend mortgage credit to minority borrowers in Miami on equal terms as to non-minority borrowers. BoA engaged in reverse redlining, and continues to engage in said conduct, by extending mortgage credit on discriminatory terms to minority borrowers in minority neighborhoods in Miami on the basis of the race or ethnicity of its residents. As former Federal Reserve Chairman Ben Bernanke acknowledged, these twin evils of mortgage discrimination “continue to have particular significance to mortgage markets.”7
8. Major banks such as Bank of America have a long history of engaging in redlining throughout Miami. That practice began to change in the late 1990s, when BoA adapted to changing market conditions and began to flood historically underserved minority communities with mortgage loans that consisted of a variety of high cost and abusive mortgage loan products as compared to the mortgage loans issued to similarly-situated white borrowers (reverse redlining).
9. BoA’s discriminatory lending practices knowingly place vulnerable, underserved borrowers in loans they cannot afford. This practice maximizes BoA’s profit without regard to the borrower’s best interest, the borrower’s ability to repay, or the financial health of underserved minority neighborhoods, resulting in an excessively high number of more expensive loans in Miami. Moreover, Bank of America has averted any significant risk to itself by selling the vast majority of mortgage loans it originates or purchases on the secondary market.
10. Bank of America’s discriminatory misconduct has also caused an excessive and disproportionately high number of foreclosures in the minority neighborhoods of Miami. These foreclosures often occur when a minority borrower who previously received a discriminatory loan sought to refinance the loan, only to discover that Bank of America refused to extend credit at all,
5 Redlining is the practice of denying credit to particular neighborhoods based on race. 6 Reverse redlining is the practice of flooding a minority community with exploitative loan products. 7 Remarks by Federal Reserve Chairman Ben Bernanke at the Operation HOPE Global Financial Dignity Summit, Atlanta, Georgia, Challenges in Housing and Mortgage Markets, at 10 (Nov. 15, 2012), available at www.federalreserve.gov/newsevents/speech/bernanke 20121115a.htm.
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or on equal terms as refinancing similar loans issued to white borrowers. The inevitable result of the combination of issuing unnecessarily expensive or inappropriate loans, and then refusing to refinance the loans, was foreclosure.
11. Bank of America’s pattern and practice of reverse redlining has caused an excessive and disproportionately high number of foreclosures on the loans it has made in the minority neighborhoods of Miami. Foreclosures on loans originated by Bank of America are concentrated in these neighborhoods. A loan in a predominantly minority neighborhood is 5.857
times more likely to result in foreclosure than is a loan in a neighborhood with a majority of white residents.
12. Bank of America would have had comparable foreclosure rates in minority and white communities if it was properly and uniformly applying responsible underwriting practices in both communities. Bank of America possesses sophisticated underwriting technology, analytic tools, data, and access to reports that allow it to foreseeably predict with precision the likelihood that it had issued an improperly more expensive loan, as well as the likelihood the loan would result in delinquency, default, or foreclosure.8 And if that was not sufficient, the Bank had branch offices located in Miami and knew, or certainly should have known, of the adverse consequences of its lending misconduct to minority borrowers and the City regardless of whether the Bank subsequently sold the loan or servicing rights to a third party. Consequently, the Bank’s issuance of improperly more expensive loans to minority borrowers was not the result of random events.
13. While Bank of America purports to be a good corporate and community citizen, the reality is exactly the opposite. The Bank was putting its financial interests ahead of its customers and the City of Miami in order to maximize profits.
14. The Bank’s discriminatory lending practices are evidenced by information from confidential witness statements provided by former employees of Bank of America (discussed further herein). For example:
a) “They [the less savvy minority borrower] didn’t know anything about it [negative amortization loans]. The white American educated [borrower] knew what those loans were and what they were going to do, and they stayed away from them. . . . [The less savvy minority borrower] didn’t realize the negative
8 The scope of Bank of America’s risk analysis policies and practices is set forth in detail throughout the Bank’s 2014 Annual Report, available at http://media.corporateir.net/media_files/IROL/71/71595/AR2014.pdf.
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amortization consequences down the road for them that would make it that much harder to refinance with no equity.” b) Borrowers “couldn’t afford [“interest-only” and “pick-apayment” loans]. Half the time they couldn’t even afford the [full] interest on those homes.” c) “There’s no money in [Community Reinvestment Act] loans for [the Bank]” so the Bank didn’t encourage loan officers to make CRA loans. d) Back-end premiums [the difference between the borrower’s loan rate and the rate the bank pays for it] were “non-disclosed,” which often eluded less educated, minority borrowers. 15. The reports of these witnesses are confirmed when the Miami data on Bank of America loans is examined. Such an examination reveals a widespread practice of discrimination. For example, a regression analysis that controls for credit history and other factors demonstrates that an African-American Bank of America borrower was 1.581 times more likely to receive a discriminatory loan as a white borrower and a Latino borrower 2.087 times more likely. The regression analysis confirms that African-Americans with FICO scores over 660 are 1.533 times more likely to receive a discriminatory Bank of America loan as a white borrower, and a Latino borrower 2.137 times more likely. 16. According to a Justice Department complaint, BoA’s Countrywide subsidiary: (i) had charged upwards of 200,000 minority homeowners higher interest rates and fees than white borrowers who were similarly qualified, with similar credit ratings; (ii) had failed to offer minority homeowners conventional mortgages for which they qualified and which they would have been offered, were they white; and (iii) systematically pushed minority borrowers into exploitative mortgages with higher rates and fees. Many of the victims were in Florida. To settle the complaint, Bank of America agreed to pay $335 million in restitution and penalties to the 200,000 identified minority victims—without compensation, restitution, or penalties to the City of Miami. 17. In or about June 2011, BoA settled charges with the Federal Trade Commission alleging that Countrywide had charged excessive fees to homeowners for property maintenance when they went into default, and added illegitimate charges to what the homeowners owed. To settle the FTC complaint, Bank of America paid $107 million to the FTC for distribution to homeowner victims—again without compensation to the City of Miami. 18. According to former Federal Reserve Chairman Bernanke, “foreclosures can inflict economic damage beyond the personal suffering and dislocation that accompany them. Foreclosed
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properties that sit vacant for months (or years) often deteriorate from neglect, adversely affecting not only the value of the individual property but the values of nearby homes as well. Concentrations of foreclosures have been shown to do serious damage to neighborhoods and communities, reducing tax bases and leading to increased vandalism and crime. Thus, the overall effect of the foreclosure wave, especially when concentrated in lower-income and minority areas, is broader than its effects on individual homeowners.”9
19. The discriminatory lending practices at issue herein have resulted in what many leading commentators describe as the “greatest loss of wealth for people of color in modern US history.” It is well-established that poverty and unemployment rates for minorities exceed those of whites, and therefore, home equity represents a disproportionately high percentage of the overall wealth for minorities.10 As Chairman Bernanke recently explained, as a result of the housing crisis, “most or all of the hard-won gains in homeownership made by low-income and minority communities in the past 15 years or so have been reversed.”11 The resulting impact of these practices represents “nothing short of the preeminent civil rights issue of our time, erasing, as it has, a generation of hard fought wealth accumulation among African-Americans.”12
II. PARTIES
20. Plaintiff City of Miami is a Florida municipal corporation. The City has maintained an active and longstanding interest in the quality of life and the professional opportunities that attend an integrated community. One way that the City has furthered these interests is through its Department of Community and Economic Development, which is charged with responsibility for operating the City’s fair housing program, reducing illegal housing discrimination, monitoring and investigating fair housing complaints, supporting fair housing litigation, and conducting research and studies to identify and address fair housing impediments as a means of improving the overall
9 Bernanke, supra n.7. 10 Robert Schwemm & Jeffrey Taren, Discretionary Pricing, Mortgage Discrimination, and the Fair Housing Act, 45 Harv. C.R.-C.L. L. Rev. 375, 382 (2010). 11 Bernanke, supra n.7. 12 Charles Nier III & Maureen St. Cyr, A Racial Financial Crisis: Rethinking the Theory of Reverse Redlining to Combat Predatory Lending Under the Fair Housing Act, 83 Temple L. Rev. 941, 942 (2011).
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quality of life in the city. The City is authorized by the City Commission to institute suit to recover damages suffered by the City as described herein.
21. Bank of America, N.A. is organized as a national banking association under the laws of the United States. Upon information and belief, its corporate headquarters are located in Charlotte, North Carolina. It maintains multiple offices in the State of Florida, including in the City of Miami, for the purposes of soliciting applications for and making residential mortgage loans and engaging in other business activities.
22. Countrywide Bank (“CWB”) was originally chartered as a national bank subject to supervision by the Office of the Comptroller of the Currency, and was a subsidiary of financial holding company Countrywide Financial Corporation (“CFC”). CWB was headquartered in Alexandria, Virginia, until February, 2009. As a financial holding company, CFC, together with its subsidiary Countrywide Home Loans, Inc., (“CHL”) was supervised by the Board of Governors of the Federal Reserve System. On or about March 12, 2007, CWB changed its charter to that of a federal savings association, and CFC became a savings and loan holding company. Those changes caused CWB, CFC, and CHL to become subject to supervision by the Office of Thrift Supervision.
23. During 2006, CFC began the process of transitioning the funding of its residential loan originations from CHL to CWB. For those loans funded through CWB under the Countrywide name, CWB was the named lender on the promissory notes for those loans. As of January 1, 2008, CWB funded substantially all nationwide residential loan origination activity using the Countrywide name. For those loans funded by either CHL or CWB, CFC used the same loan origination policies and procedures that it had created, authorized, or ratified, and the same employees and mortgage brokers. Throughout this Complaint, CFC, CWB, and CHL are referred to collectively as “Countrywide.”
24. Even after BAC’s purchase of CFC on July 1, 2008, CWB continued its banking and mortgage lending operations as a direct subsidiary of CFC, using the same loan origination policies and procedures, until approximately November 7, 2008. At that time, Bank of America Corporation (“BAC”) engaged in a series of corporate transactions that ended CWB’s status as a subsidiary of CFC and made CWB a direct subsidiary of BAC.
25. On April 23, 2009, the Office of the Comptroller of the Currency approved CWB’s request to convert its charter back to that of a national bank and the request by Bank of America, N.A. to then immediately acquire CWB by merger. These transactions were executed on April 27,
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2009, as a result of which CWB ceased to exist. Bank of America, N.A. was the surviving institution resulting from this merger. Thus, Bank of America, N.A. is the successor in interest to CWB.
26. The Defendants in this action are, or were at all relevant times, subject to Federal laws governing fair lending, including the FHA and the regulations promulgated thereunder. The FHA prohibits financial institutions from discriminating on the basis of, inter alia, race, color, or national origin in their residential real estate-related lending transactions.
27. The Defendants in this action are or were businesses that engage in residential real estate-related transactions in the City of Miami within the meaning of the FHA, 42 U.S.C. § 3605.
28. Based on information reported pursuant to the Home Mortgage Disclosure Act, in addition to loans that Defendants originated directly, Defendants are responsible for residential home loans acquired from, and/or sold by or through, Merrill Lynch Bank & Trust FSB, Merrill Lynch Credit Corp., and First Franklin Financial Corp.
29. Upon information and belief, Plaintiff alleges that each of the Defendants was and is an agent of the other Defendants. Each Defendant, in acting or omitting to act as alleged in this Complaint, was acting in the course and scope of its actual or apparent authority pursuant to such agencies, and/or the alleged acts or omissions of each Defendant as agent were subsequently ratified and adopted by each agent as principal. Each Defendant, in acting or omitting to act as alleged in this Complaint, was acting through its agents, and is liable on the basis of the acts and omissions of its agents.
III. REFERRALS FROM BANK REGULATORY AGENCIES
30. In 2006, Federal Reserve System Examiners initiated a fair lending review of CHL’s mortgage pricing practices. As a result of that review, the Federal Reserve Board (“FRB”) determined that it had “reason to believe that Countrywide Home Loans engaged in a pattern or practice of discrimination based on race and ethnicity in violation of Section 701(a) of the Equal Credit Opportunity Act and the Fair Housing Act.”
31. Subsequently, pursuant to 15 U.S.C. § 1691e(g), the FRB referred the matter to the Department of Justice on March 5, 2007. Countrywide agreed that various statutes of limitations for any cause of action that could be brought against Countrywide pursuant to the FRB referral would be tolled from March 22, 2007 through December 22, 2011.
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32. In early 2008, the Office of Thrift Supervision (“OTS”) conducted an examination of the operations of Countrywide, including its compliance with applicable fair lending laws and regulations. As a result of that examination, the OTS determined that it had “a ‘reason to believe’ that Countrywide has displayed a ‘pattern or practice’ of discriminating against minority loan applicants in the pricing of home loans and against married couples concerning the terms and condition of home loans.”
33. Subsequently, pursuant to 15 U.S.C. § 1691e(g), the OTS referred the matter to the Department of Justice on June 27, 2008. Countrywide agreed that various statutes of limitations for any cause of action that could be brought against Countrywide pursuant to the OTS referral would be tolled from July 1, 2009 through December 22, 2011.
34. Based on the FRB and OTS referrals, the Department of Justice engaged in a lengthy investigation of Countrywide’s lending policies, practices, and procedures, including reviewing millions of Countrywide loans originated between 2004 and 2008. The investigation led to the Justice Department’s complaint against Countrywide for discriminatory lending practices affecting upwards of 200,000 minority homeowners (saddling them with higher interest rates and fees than white borrowers who were similarly qualified, with similar credit ratings).
IV. JURISDICTION AND VENUE
35. This Court has jurisdiction over this matter pursuant to 42 U.S.C. § 3613 and 28 U.S.C. §§ 1331, 1343, because the claims alleged herein arise under the laws of the United States.
36. Venue is proper in this district under 28 U.S.C. § 1391(b) because Bank of America conducts business in this district and a substantial part of the events and omissions giving rise to the claims occurred in this district.
V. BANK OF AMERICA ENGAGED IN DISCRIMINATORY LENDING PRACTICES
A. Facially neutral business policies and practices that created an “artificial, arbitrary, and unnecessary” barrier to fair housing opportunities for minority home purchasers and owners.
37. Bank of America engaged in numerous facially neutral lending practices resulting in the disparate impact statistical analysis during the time periods at issue herein. These practices are united because they represent manifestations of the same continuous and unbroken practice of engaging in facially neutral business policies and practices that created an “artificial, arbitrary, and
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unnecessary” barrier to fair housing opportunities for minority home purchasers and owners.. A partial list of these practices include, but is not limited to, the following:
a. knowing about lending practices that either risked or resulted in failing to adequately monitor the Bank’s practices regarding mortgage loans, including but not limited to originations, marketing, sales, and risk management;
b. failing to underwrite loans based on traditional underwriting criteria such as debt-to-income ratio, loan-to-value ratio, FICO score, and work history;
c. placing borrowers in more expensive, riskier loans they qualified for;
d. failing to prudently underwrite hybrid adjustable-rate mortgages (“ARMs”), such as 2/28s and 3/27s;13
e. failing to prudently underwrite refinance loans, where borrowers substitute unaffordable mortgage loans for existing mortgages that they are well-suited for and that allow them to build equity;
f. allowing mortgage brokers to charge “yield spread premiums” for qualifying a borrower for an interest rate that is higher than the rate the borrower qualifies for and can actually afford;
g. marketing certain more expensive or riskier loan products to residents in predominantly minority neighborhoods;
h. requiring substantial prepayment penalties that prevent borrowers whose credit has improved from refinancing their discriminatory loan to a prime loan;
i. charging excessive points and fees that are not associated with any increased benefits for the borrower;
j. creating a compensation scheme incentivizing employees to issue discriminatory loans; and
k. failing to .monitor and ensure compliance with federal fair lending laws.
13 In a 2/28 ARM, the “2” represents the number of years the mortgage will be fixed over the term of the loan, while the “28” represents the number of years the interest rate paid on the mortgage will be variable. Similarly, in a 3/27 ARM, the interest rate is fixed for three years and variable for the remaining 27-year amortization.
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B. Bank of America Intentionally Discriminated Against Minority Borrowers in Violation of the Fair Housing Act, as Demonstrated by Former Bank Employees.
38. Confidential Witnesses (“CWs”) are former Bank of America employees responsible for making and/or underwriting loans on behalf of Bank of America in the greater Miami region. CWs describe how Bank of America has targeted minorities and residents of minority neighborhoods in and around Miami for discriminatory lending practices.
39. CW1 was a mortgage loan officer with BoA from 2008 to 2010; she worked in the Bank’s Miami-Dade County mortgage lending center in 2010.
40. CW2 was a mortgage loan officer for BoA from 2011 to 2013. Part of his time as a BoA loan officer was spent working in a Miami Beach branch. CW2’s job involved writing new mortgages, refinancing mortgages, and helping customers obtain loans through the federal Home Affordable Refinance Program.
41. CW3 was a mortgage loan officer for BoA in Florida from 2005 to 2008; he worked on loans throughout the Miami area.
1. BoA targets minorities for discriminatory loan terms.
42. According to CW2, a large percentage of the people who wanted to refinance because they were struggling to pay the note on a negative amortization loan were minorities who were not savvy financially. “They (the less savvy minority borrower) didn’t know anything about it,” he said. “The white American educated (borrower) knew what those loans were and what they were going to do, and they stayed away from them.” CW2, who has had his mortgage broker’s license for over 25 years, said he believed BoA targeted less savvy minorities for these types of onerous loans.
43. CW2 added that “most people just knew about or wanted to pay that minimum (monthly payment) only. They’re in a house and have a roof over their head and didn’t realize the negative amortization consequences down the road for them that would make it that much harder to refinance with no equity.”
44. CW3 said that most of the borrowers he dealt with in the Miami area were minorities. He explained that “interest-only” and “pick-a-payment” loans were popular in Miami, and he understood that borrowers were approved for such loans based on repayment of interest payments alone – not interest and principal. In CW3’s experience, few of the borrowers were able
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to pay down the loan principal on these loans along with the interest every month. “After four or five years, that’s how everything went the way it did,” he said. “They couldn’t afford it. Half the time they couldn’t even afford the (full) interest on those homes.” BoA paid its employees more for steering minorities into discriminatory loans.
45. Upon information and belief, the practices and problems described by these confidential witnesses have continued into the present.
2. BoA incentivized employees to steer minority borrowers into discriminatory loans.
46. According to CW1, the most beneficial type of loan for low-income buyers was the CRA loan, which allowed borrowers to obtain large grants for the down payments and closing costs. CRA loans were designed in part to discourage redlining. But, as CW1 explained, “there’s no money in those loans for [the Bank]” so the Bank didn’t encourage loan officers to make CRA loans.
47. At BoA, the CRA loan process was slow, complicated and labor-intensive. Notably, BoA paid loan officers less commissions on CRA loans than it paid on FHA and other government loans, CW1 said. In effect, BoA incentivized loan officers to put low-income borrowers into less advantageous FHA loans over CRA loans. The Bank did so by paying higher commissions for the FHA loans—CW1 said loan officers received an extra 15 percent in commission on FHA loans compared to CRA loans. CW1 added that minorities missed out on opportunities to get into a CRA loan through BoA.
48. CW3 explained that BoA loan officers earned origination fees and back-end premiums (the difference between the borrower’s loan rate and the rate the bank pays for it). He said the back-end premiums were not disclosed to borrowers. He added that loan officers were allowed to charge up to 3 points on the front-end at origination plus up to 5 or 6 points on the backend. According to CW3, this often eluded less educated, minority borrowers.
49. Upon information and belief, the practices and problems described by these confidential witnesses have continued into the present.
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3. BoA underwrites teaser rate loans that borrowers cannot afford.
50. BoA originated loans with low teaser rates (e.g., “pick-your-payment” loans, negative amortization loans, etc.), marketed to borrowers from predominantly minority neighborhoods in Miami. Unless properly underwritten, such loans are destined to fail.
51. BoA does not properly underwrite these loans when made to minorities and in minority neighborhoods. BoA does not adequately consider the borrowers’ ability to repay these loans, especially after the teaser rate expires and the interest rate increases. The fact that these loans would result in delinquency, default, and foreclosure for many borrowers was, or should have been, clearly foreseeable to BoA at the time the loans were made.
52. The confidential witness statements of CW2 and CW3 support that BoA underwrote these loans as if the teaser rate will apply for the full life of the loan instead of considering the borrowers’ ability to repay the loan after the teaser rate expires.
53. The use of negative amortization loans, pick-a-payment notes, and/or other teaserrate adjustable loans in the manner described above is consistent with the practice of reverse redlining, has subjected minority borrowers to unfair and deceptive loan terms, and has contributed significantly to the high rate of foreclosure found in the minority neighborhoods of Miami.
54. Upon information and belief, the practices and problems described by these confidential witnesses have continued into the present.
4. BoA induced foreclosures by failing to offer refinancing or loan modifications to minority customers on fair terms, and otherwise limiting equal access to fair credit.
55. CW2 explained that, in the 2011-2013 timeframe, BoA did not offer regular refinancing to persons with mortgages at over 80% of the value of the house. Consequently, BoA refused to refinance many of the teaser loans (e.g., negative amortization loans) that it previously marketed to borrowers. CW2 said many of the people in this situation were facing the high likelihood of losing their homes, and many of them were minorities in Miami, both Latinos and African-Americans.
56. In this manner, BoA induced foreclosures by failing to offer refinancing or loan modifications to minority customers on fair terms—which constitutes a particularly egregious form of redlining, given that minority borrowers sought refinancing or loan modifications with respect to bad loans that the Bank previously made to them.
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57. Upon information and belief, the practices and problems described by these confidential witnesses have continued into the present.
C. Minorities in Miami Receive Discriminatory Loan Terms from Bank of America Regardless of Creditworthiness.
58. As discussed herein, a non-exhaustive list of the types of loans that Bank of America issued to minorities when they otherwise qualified for less expensive and less risky loans include the following: high-cost loans (i.e., loans with an interest rate that was at least 3% above the Treasury rate prior to 2010 and 1.5% above the prime mortgage rate thereafter),14 subprime loans, interest-only loans, balloon payment loans, loans with prepayment penalties, negative amortization loans, no documentation loans, higher cost government loans, including FHA15 and VA16 loans, and HELOCs, and/or ARM loans with teaser rates (i.e., lifetime maximum rate greater than initial rate + 6%).
59. Data reported by the Bank and available through both public and private databases shows that minorities in Miami received unfavorable loan terms from Bank of America more frequently than white borrowers regardless of creditworthiness.
60. A regression analysis of this data controlling for borrower race and objective risk characteristics such as credit history, loan-to-value ratio, and the ratio of loan amount to income demonstrates that, from 2004 to 2012, an African-American borrower was 1.581 times more likely to receive a discriminatory loan as a white borrower possessing similar underwriting and borrower characteristics.17 The regression analysis further demonstrates that the odds that a Latino borrower would receive a discriminatory loan was 2.087 times the odds that a white borrower possessing similar underwriting and borrower characteristics would receive a discriminatory loan. These odds
14 This definition applies to first lien loans. 15 FHA loans are insured by the Federal Housing Administration and require borrowers to pay for mortgage insurance and may entail other costs. People with credit scores under 500 generally are ineligible for FHA loans. 16 VA loans are guaranteed by the U.S. Department of Veterans Affairs, available to veterans or surviving spouses who do not remarry, and generally do not require a down payment on the property. 17 As alleged throughout the Complaint, all references to the date range 2004-2012 are intended to include the time period up to and including December 31, 2012.
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ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers and between Latino and white borrowers.18
61. The regression analysis also shows that these disparities persist when comparing only borrowers with FICO scores above 660. An African-American borrower with a FICO score above 660 was 1.533 times more likely to receive a discriminatory loan as a white borrower with similar underwriting and borrower characteristics. A Latino borrower with a FICO score above 660 was 2.137 times more likely to receive a discriminatory loan as a white borrower with similar underwriting and borrower characteristics. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers and between Latino and white borrowers.
62. A similar regression analysis taking into account the racial makeup of the borrower’s neighborhood rather than the individual borrower’s race shows that borrowers in heavily minority neighborhoods in Miami were more likely to receive discriminatory loans than borrowers in heavily white neighborhoods. For example, a borrower in a heavily minority census tract (census tract consisting of at least 90% African-American or Latino households) was 1.585 times more likely as a borrower with similar characteristics in a non-minority neighborhood (census tract with at least 50% white households) to receive a discriminatory loan. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers and between Latino and white borrowers.
63. Additionally, data reported by the Bank and available through public databases shows that in 2004-2012, 21.9% of loans made by Bank of America to African-American and Latino customers in Miami were high cost, but only 8.9% of loans made to white customers in Miami were high cost. This data demonstrates a pattern of statistically significant differences in the product placement for high cost loans between minority and white borrowers.
64. Thus, the disparities in Miami are not the result of, or otherwise explained by, legitimate non-racial underwriting criteria.
18 Statistical significance is a measure of probability that an observed outcome would not have occurred by chance. As used in this Complaint, an outcome is statistically significant if the probability that it could have occurred by chance is less than 10%.
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Case 1:13-cv-24506-WPD Document 102 Entered on FLSD Docket 04/29/2016 Page 19 of 40 65. The following map (page 17) of Bank of America loans originated in Miami
between 2004 and 2012 illustrates the geographic distribution of the Bank’s discriminatory lending practices and the resulting consequences in minority neighborhoods.
66. The fact that loans issued pursuant to Bank of America’s discriminatory lending practices are more heavily concentrated in minority neighborhoods in Miami has, based upon information and belief, contributed significantly to the disproportionately high rates of foreclosure in the City’s minority communities.
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D. Miami’s Data Analysis Is Corroborated by Additional Studies/Reports. 67. According to Discretionary Pricing, Mortgage Discrimination, and the Fair Housing Act, 45 Harv. C.R.-C.L. L. Rev. 375, 398 (2010), several studies dating back to 2000 have established that minority borrowers were charged higher interest rates/fees than similar creditworthy white borrowers.
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68. Likewise, according to A Racial Financial Crisis, 83 Temple L. Rev. 941, 947, 949 (2011), one study concluded that “even after controlling for underwriting variables, AfricanAmerican borrowers were 6.1% to 34.3% more likely than whites to receive a higher rate subprime mortgage during the subprime boom.” And another study found that significant loan pricing disparity exists among low risk borrowers—African-American borrowers were 65% more likely to receive a subprime home purchase loan than similar creditworthy white borrowers, and 124% more likely to receive a subprime refinance loan.
69. Similarly, the Center for Responsible Lending’s November 2011 report, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures, stated that “racial and ethnic differences in foreclosure rates persist even after accounting for differences in borrower incomes.” Further, the Center stated it is “particularly troublesome” that minorities received riskier loans “even within [similar] credit ranges.” For example, among borrowers having FICO scores above 660, the incidence of higher rate loans among various groups was as follows: whites–6.2%; African-American–21.4%; and Latino–19.3%.19
70. The Miami high-cost analysis is similar to national trends as confirmed by an analysis of the HMDA data for the period 2012-2014. According to a report prepared by the Center for Responsible Lending, “[t]he percentage of African-Americans with high cost loans rose from 5.3% in 2012 to 14.2% in 2013 to 25.5% in 2014. Similarly, the rate rose from 5.9% in 2012 to 16.8% in 2013 to 28.3% in 2014 for Latino borrowers.”20
71. In general, as recently observed by the Federal Reserve in December 2012, both African-American and Latino borrowers were far more likely (in fact, nearly twice more likely) to obtain higher-priced loans than were white borrowers. These relationships hold both for homepurchase and refinance lending and for non-conventional loans. These differences are reduced, but not eliminated, after controlling for lender and borrower characteristics. “Over the years, analyses of HMDA data have consistently found substantial differences in the incidence of higher-priced
19 Center for Responsible Lending, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures (Nov. 2011), at 5, 21, available at http://www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf.
20 Center for Responsible Lending Issue Brief, Mortgage Lending Continues Under Dodd-Frank, at 5 (Sept. 22, 2015), available at http://www.responsiblelending.org/mortgagelending/policy-legislation/2014-hmda.html.
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lending across racial and ethnic lines, differences that cannot be fully explained by factors included in the HMDA data.”21
72. African-Americans and Latinos were much more likely to receive discriminatory loans and loans with features that are associated with higher foreclosures, specifically prepayment penalties and hybrid or option ARMs. These disparities were evident even comparing borrowers within the same credit score ranges. In fact, the disparities were especially pronounced for borrowers with higher credit scores. For example, among borrowers with a FICO score of over 660 (indicating good credit), African-Americans and Latinos received a high interest rate loan more than three times as often as white borrowers.22
73. In addition to receiving a higher proportion of higher-rate loans, AfricanAmericans and Latinos also were much more likely to receive loans with other risky features, such as hybrid and option ARMs and prepayment penalties. Disparities in the incidence of these features are evident across all segments of the credit spectrum.
E. Bank of America’s Discriminatory Lending Practices Cause Foreclosures.
1. Data shows that Bank of America’s foreclosures are disproportionately located in minority neighborhoods in Miami.
74. Far from being a responsible provider of much-needed credit in minority communities, BoA’s discriminatory lending practices are a leading cause of stagnation and decline in African-American and Latino neighborhoods where its foreclosures are concentrated. Specifically, since at least 2000, its foreclosures have been concentrated in neighborhoods with African-American or Latino populations exceeding 75%.
75. Although 53.3% of BoA’s loan originations in Miami from 2004 to 2012 were in census tracts that are at least 75% African-American or Latino, 62.5% of loan originations that had entered foreclosure by June 2013 were in those census tracts. Similarly, while 84.7% of BoA’s loan originations in Miami from 2004 to 2012 occurred in census tracts that are at least 50% African-American or Latino, 95.7% of BoA’s loan originations that had entered foreclosure by June 2013 were in those census tracts. Moreover, while 15.3% of BoA’s loan originations in Miami
21 Federal Reserve Bulletin, The Mortgage Market in 2011: Highlights from the Data Reported under the Home Mortgage Disclosure Act (Dec. 2012), available at http://www.federalreserve.gov/pubs/bulletin/2012/PDF/2011_HMDA.pdf.
22 Center for Responsible Lending, Lost Ground, 2011, supra n.19. 19
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from 2004 to 2012 occurred in census tracts that were less than 50% African-American or Latino, only 4.3% of BoA’s loan originations that had entered foreclosure by June 2013 were in those census tracts. This data demonstrates a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers. Upon information and belief, a similar pattern of foreclosures will take place with more recent unfavorable loans.
76. The following map (page 21) represents the concentration of BoA’s loan originations from 2004 through 2012 that had entered foreclosure by February 2013 in AfricanAmerican and Latino neighborhoods. In addition to the disproportionate distribution of BoA foreclosures in African-American and Latino neighborhoods, disparate rates of foreclosure based on race further demonstrate BoA’s failure to follow responsible underwriting practices in minority neighborhoods. While 32.8% of BoA’s loans in predominantly (greater than 90%) AfricanAmerican or Latino neighborhoods result in foreclosure, the same is true for only 7.7% of its loans in non-minority (greater than 50%) neighborhoods. In other words, a BoA loan in a predominantly African-American or Latino neighborhood is 5.857 times more likely to result in foreclosure as is a BoA loan in a non-minority neighborhood. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers, and between Latino and white borrowers.
77. Thus, Bank of America’s discriminatory lending practices have caused and continue to cause foreclosures in Miami.
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2. Data shows that Bank of America’s loans to minorities result in especially quick foreclosures in Miami.
78. A comparison of the time from origination to foreclosure of Bank of America’s loans originated in Miami from 2004 to 2012 shows a marked disparity with respect to the speed with which loans to African-Americans and Latinos and whites move into foreclosure. The average time to foreclosure for African-American borrowers is 3.144 years, and for Latino borrowers is 3.090 years. By comparison, the average time to foreclosure for white borrowers is 3.448 years. These statistically significant disparities demonstrate that Bank of America aggressively moved minority borrowers into foreclosure as compared with how the Bank handled foreclosures for white borrowers.
79. This disparity in time to foreclosure is further evidence that Bank of America is engaged in discriminatory lending practices. The disparity in time to foreclosure demonstrates that Bank of America is engaged in irresponsible underwriting in African-American and Latino communities that does not serve the best interests of borrowers. If Bank of America were applying the same underwriting practices in African-American and Latino neighborhoods and white neighborhoods in Miami, there would not be a significant difference in time to foreclosure. Were Bank of America underwriting borrowers in both communities with equal care and attention to proper underwriting practices, borrowers in African-American and Latino communities would not find themselves in financial straits significantly sooner during the lives of their loans than borrowers in white communities. The faster time to foreclosure in African-American and Latino neighborhoods is consistent with underwriting practices in minority communities that are less concerned with determining a borrower’s ability to pay and qualifications for the loan than they are in maximizing short-term profit.
80. The HUD/Treasury Report confirms that time to foreclosure is an important indicator of discriminatory practices: “[t]he speed with which the subprime loans in these communities have gone to foreclosure suggests that some lenders may be making mortgage loans to borrowers who did not have the ability to repay those loans at the time of origination.”23
23 U.S. Dep’t of Housing & Urban Development and U.S. Dep’t of the Treasury, Curbing Predatory Home Mortgage Lending, at 25 (2000) (“HUD/Treasury Report”), available at http://www.huduser.org/Publications/pdf/treasrpt.pdf.
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3. Data shows that the discriminatory lending practices cause the foreclosures in Miami.
81. Bank of America’s discriminatory lending practices cause foreclosures and vacancies in minority communities in Miami.
82. Issuing more expensive and riskier loans to minority borrowers than the loans for which they qualify and are issued to similarly situated white borrowers can cause foreclosures because the borrowers are required to make higher loan payments. The difference between what a borrower who receives a more expensive loan must pay and the lower amount for which the borrower qualified can cause the borrower to be unable to make payments on the mortgage. In such instances, the borrower would have continued to make payments on the mortgage and remained in possession of the premises had Bank of America not issued a more expensive loan in violation of the Fair Housing Act. The Bank’s discriminatory lending conduct therefore casues foreclosures and vacancies.
83. Giving a loan to an applicant who does not qualify for the loan, especially a refinance or home equity loan, can also cause foreclosures and vacancies. Some homeowners live in properties that they own subject to no mortgage. Other homeowners live in properties with modest mortgages that they can comfortably afford to pay. Where a lender such as Bank of America solicits such a homeowner to take out a home equity loan on their property, or alternatively, to refinance their existing loan into a larger loan without properly underwriting them to assure that they can make the monthly payments for the new, larger loan, the result is likely to be that the borrower will be unable to make payments on the mortgage. This is particularly true where the borrower is refinanced from a fixed-rate loan into an adjustable rate loan that the lender knows the borrower cannot afford should interest rates rise. In some instances the lender may refinance the borrower into a new loan that the lender knows the borrower cannot sustain given the borrower’s present debt obligations and financial resources. In such circumstances, the likely result of such practices is to cause homeowners who are otherwise occupying properties without a mortgage, or comfortably making payments on a modest existing mortgage, to be unable to make payment on a new, unaffordable loan. This, in turn, causes foreclosures and vacancies. If these unaffordable refinance and home equity loans had not been made, the subject properties would not have become vacant.
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84. A regression analysis of loans issued by Bank of America in Miami from 2004 to 2012 controlling for objective risk characteristics such as credit history, loan to value ratio, and the ratio of loan amount to income demonstrates that a discriminatory loan is 1.721 times more likely to result in foreclosure than a non-discriminatory loan.
85. The regression analysis also demonstrates that a discriminatory loan made to an African-American borrower was 2.744 times more likely as a non-discriminatory loan made to a white borrower with similar borrower and underwriting characteristics to result in foreclosure. A discriminatory loan made to a Latino borrower was 2.861 times more likely as a nondiscriminatory loan made to a white borrower with similar risk characteristics to result in foreclosure. These odds ratios demonstrate a pattern of statistically significant differences between African-American and white borrowers and between Latino and white borrowers.
86. A seminal report on foreclosure activity by Mark Duda and William Apgar documents the negative impact that rising foreclosures have on low-income and low-wealth minority communities, using Chicago as a case study. Mr. Apgar is a Senior Scholar at the Joint Center for Housing Studies of Harvard University, and a Lecturer on Public Policy at Harvard’s John F. Kennedy School of Government. He previously served as the Assistant Secretary for Housing/Federal Housing Commissioner at the U.S. Department of Housing and Urban Development, and also Chaired the Federal Housing Finance Board. Mr. Apgar holds a Ph.D. in Economics from Harvard University. Mr. Duda is a Research Fellow at the Joint Center for Housing Studies. The Apgar-Duda report has continually been cited by subsequent governmental, public sector, and private sector reports due to its clarity and thoroughness with respect to the negative impact foreclosures have on lower-income and minority neighborhoods.24
87. This significant report highlights the foreseeability of foreclosures arising from discriminatory lending practices and their attendant harm, demonstrating that such foreclosures impose significant and predictable costs on borrowers, municipal governments, and neighboring homeowners.
88. Another report, by the Center for Responsible Lending, uses a national dataset to show that the foreclosure rate for low- and moderate-income African-Americans is approximately
24 See W. Apgar, M. Duda & R. Gorey, The Municipal Costs of Foreclosures: A Chicago Case Study (2005), available at http://neighborworks.issuelab.org/resource/municipal_ cost_of_foreclosure_a_chicago_case_study.
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1.8 times higher than it is for low- and moderate-income non-Hispanic whites. The gap is smaller for Latinos, especially among low-income households, but even among low-income Latinos the foreclosure rate is 1.2 times that of low-income whites. Racial and ethnic disparities in foreclosure rates cannot be explained by income, since disparities persist even among higher-income groups. For example: approximately 10 percent of higher-income African-American borrowers and 15 percent of higher-income Latino borrowers have lost their home to foreclosure, compared with 4.6 percent of higher income non-Hispanic white borrowers. Overall, low- and moderate-income African-Americans and middle- and higher-income Latinos have experienced the highest foreclosure rates.25
89. Nearly 20 percent of loans in high-minority neighborhoods have been foreclosed upon or are seriously delinquent, with significant implications for the long-term economic viability of these communities.26 VI. INJURY TO MIAMI CAUSED BY BANK OF AMERICA’S DISCRIMINATORY
LOAN PRACTICES 90. Miami has suffered both non-economic and economic injuries as a direct result of Bank of America’s longstanding, unbroken policy and practice of both intentionally steering minority borrowers in Miami into mortgage loans that have higher costs and risk features than more favorable and less expensive loans issued to similarly situated white borrowers, and engaging in facially neutral business policies and practices that created an “artificial, arbitrary, and unnecessary” barrier to fair housing opportunities for minority home purchasers and owners. These practices resulted in the disproportionately high rate of foreclosure on Bank of America loans to African-Americans and Latinos in minority neighborhoods in Miami. Miami seeks redress for these injuries. The City does not seek redress in this action for injuries resulting from foreclosures on mortgages originated by lenders other than Bank of America. 91. Bank of America continues to engage in the discriminatory pattern or practice described herein with similar and continuing deleterious consequences to the City.
25 Center for Responsible Lending, Lost Ground, 2011, supra, n.19. 26 Id. at 6.
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92. Through the use of expert evidence and analytic tools such as Hedonic regression, Miami is capable of establishing that the Bank’s discriminatory lending practices were the cause of the resulting injuries alleged herein in a manner that excludes other potential causes.
A. Non-Economic Injuries 93. Bank of America’s conduct has adversely impacted the ability of minority residents to remain in their chosen neighborhood of the City and impaired the City’s goals to assure that racial factors do not adversely affect the ability of any person to choose where to live in the City or to detract from the social and professional benefits of living in an integrated society. 94. The Bank’s discriminatory lending practices have adversely affected the City’s longstanding and active interest in promoting fair housing and securing the benefits of an integrated community, which is the purpose and mission of the Miami’s Department of Community & Economic Development. The Department, which has responsibility for operating the City’s fair housing program, is designed to “affirmatively further fair housing objectives of Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, as amended, and other relevant federal, state, and local housing laws.” In discharging that responsibility, the Department “actively works to reduce illegal housing discrimination. The City promotes equal housing opportunity through education and training, monitoring and investigating fair housing complaints utilizing techniques to support fair housing litigation, and conducts research and studies to identify and address fair housing impediments.”27 The Bank’s discriminatory lending practices directly interfere with the City’s ability to achieve these important objectives.
B. Economic Injuries 95. The City has suffered economic injury based upon reduced property tax revenues resulting from (a) the decreased value of the vacant properties themselves, and (b) the decreased value of properties surrounding the vacant properties. In addition, the City has suffered economic injury resulting from the cost of municipal services that it provided and still must provide to remedy blight and unsafe and dangerous conditions which exist at properties that were foreclosed as a result of Bank of America’s illegal lending practices.
27 City of Miami, Community & Economic Development Department, Fair Housing, http://www.miamigov.com/communitydevelopment/pages/housing/FairHousing.asp.
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1. Miami has been injured by a reduction in property tax revenues from foreclosures caused by Bank of America’s discriminatory lending practices.
96. When a home falls into foreclosure, it affects the property value of the foreclosed home as well as the values of other homes in the neighborhood. These decreased property values in turn reduce property tax revenues to the City.
97. As property values drop, Miami communities could lose many millions in property tax revenues from the decreased value of the foreclosed homes themselves and those in the surrounding neighborhoods.
98. Homes in foreclosure tend to experience a substantial decline in value relative to those that are not in foreclosure (e.g., 28%).28 The relative decline in property values can be measured by a number of objective criteria, including the well-established Case-Shiller Home Price Index for the Miami Metropolitan Statistical Area.
99. A portion of this lost home value is attributable to homes foreclosed as a result of Bank of America’s discriminatory loan practices.
100. The decreased property values of foreclosed homes in turn reduce property tax revenues to the City and constitute damages suffered by Miami.
101. Bank of America’s foreclosure properties and the problems associated with them likewise cause especially significant declines in surrounding property values because the neighborhoods become less desirable. This in turn reduces the property tax revenues collected by Miami.
102. Property tax losses suffered by Miami as a result of vacancies resulting from Bank of America’s foreclosures are fully capable of empirical quantification.
103. Routinely maintained property tax and other data allow for the precise calculation of the property tax revenues lost by the City as a direct result of particular Bank of America foreclosures. Using a well-established statistical regression technique that focuses on effects on neighboring properties, the City can isolate the lost property value attributable to Bank of America foreclosures and vacancies from losses attributable to other causes, such as neighborhood conditions. This technique, known as Hedonic regression, when applied to housing markets,
28 Campbell, John Y., Stefano Giglio & Parag Pathak, National Bureau of Economic Research, NBER Working Paper Series, “Forced Sales and House Prices” (Apr. 2009), available at http://www.nber.org/papers/w14866.pdf?new_window=1.
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isolates the factors that contribute to the value of a property by studying thousands of housing transactions. Those factors include the size of a home, the number of bedrooms and bathrooms, whether the neighborhood is safe, whether neighboring properties are well-maintained, and more. Hedonic analysis determines the contribution of each of these house and neighborhood characteristics to the value of a home.
104. The number of foreclosures in a neighborhood is one of the neighborhood traits that Hedonic analysis can examine. Hedonic analysis allows for the calculation of the impact on a property’s value of the first foreclosure in close proximity (e.g., ⅛ or ¼ of a mile), the average impact of subsequent foreclosures, and the impact of the last foreclosure.
105. Foreclosures attributable to Bank of America in minority neighborhoods in Miami can be analyzed through Hedonic regression to calculate the resulting loss in the property values of nearby homes. This loss can be distinguished from any loss attributable to non-Bank of America foreclosures or other causes. The loss in property value in minority neighborhoods in Miami attributable to Bank of America’s unlawful acts and consequent foreclosures can be used to calculate the City’s corresponding loss in property tax revenues.
106. Various studies establish that Hedonic regression can be used for this purpose. A study published by the Fannie Mae Foundation, using Chicago as an example, determined that each foreclosure is responsible for an average decline of approximately 1.1% in the value of each single-family home within an eighth of a mile.29
107. Other studies have focused on the impact of abandoned homes on surrounding property values. A study in Philadelphia, for example, found that each home within 150 feet of an abandoned home declined in value by an average of $7,627; homes within 150 to 299 feet declined in value by $6,810; and homes within 300 to 449 feet declined in value by $3,542.30
108. These studies highlight the foreseeability of tax related harm to the City as the result of foreclosures arising from discriminatory loans.
29 See Dan Immergluck & Geoff Smith, The External Costs of Foreclosure: The Impact of Single-Family Mortgage Foreclosures on Property Values, 17 Housing Policy Debate 57, 69 (2006).
30 See Anne B. Shlay & Gordon Whitman, Research for Democracy: Linking Community Organizing and Research to Leverage Blight Policy, at 21 (2004).
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109. And most recently, a Los Angeles study reported, “[i]t is conservatively estimated that each foreclosed property will cause the value of neighboring homes within an eighth of a mile to drop 0.9%.” Thus, “[i]n Los Angeles impacted homeowners could experience property devaluation of $53 billion.”31 This decreased property value of neighboring homes in turn reduces property tax revenues to the City.
110. Application of such Hedonic regression methodology to data regularly maintained by Miami can be used to quantify precisely the property tax injury to the City caused by Bank of America’s discriminatory lending practices and resulting foreclosures in minority neighborhoods.
2. Miami is injured because it provided and still must provide costly municipal services for foreclosure properties in minority neighborhoods as a direct result of Bank of America’s discriminatory lending practices.
111. Bank of America foreclosure properties cause direct costs to the City because the City is required to provide increased municipal services at these properties. Even prior to completion of the foreclosure process, data shows that 20% of homes are vacated.32 These services would not have been necessary if the properties had not been foreclosed upon. Moreover, these foreclosures resulting from Bank of America’s unlawful conduct have contributed to the necessity for the City to divert essential municipal services that would have been utilized for other purposes to promote the health, welfare, and safety of its residents.
112. Bank of America’s discriminatory lending and the subsequent foreclosures have put a strain on the resources of the City’s Police Department and negatively impacted the ability to police a wide assortment of communities within the City of Miami over the last several years.
113. For example, abandoned foreclosed properties required the Police Department to dedicate countless man-hours to respond administratively to issues which required it to deploy, in numbers and frequency otherwise unusual, uniformed officers and plain-clothed detectives, and to seek the assistance of Code Enforcement Officers and other resources from other Departments
31 The Alliance of Californians for Community Empowerment and the California Reinvestment Coalition, The Wall Street Wrecking Ball: What Foreclosures are Costing Los Angeles Neighborhoods, at 3 (2011) (“Cost to Los Angeles Report”).
32 See RealtyTrac, Owner-Vacated Properties Represent 20 Percent of All Foreclosures Nationwide (June 2013), available at http://www.realtytrac.com/content/foreclosure-marketreport/owner-vacated-foreclosure-update-7771.
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within the City of Miami. This response was caused in part by the increased level of crime plaguing the neighborhoods as a result of foreclosed and abandoned homes. The crimes generating these additional resource requirements include burglaries to the properties, and the surrounding homes, drug sales, vagrancy, home squatters, and an increased level of prostitution and lewd conduct.
114. Additionally, abandoned homes were magnets for individuals who repeatedly burglarized unoccupied and abandoned homes to rip copper tubing and wiring from the interior of the homes. This often left water spewing out of the homes, causing thousands of dollars’ worth of damage to the homes. This occurrence had a negative impact on the property value of not just that home, but the remaining residences of the neighborhoods, all the while creating an increased fear of crime and victimization among residents. Though many of these problem areas were identified by beat officers on regular patrol, many of the abandoned properties prompted individual homeowners, homeowners’ associations, and neighborhood watch groups to contact the Miami Police Department. These complaints came in the form of emails, phone calls, and personal complaints that were directly received by the Police Department, as well as through other City Departments, such as Code Enforcement, Public Works, the City Manager’s office, as well as City Council members’ and the Mayor’s office.
115. These complaints required officers to consistently check on these properties through special watches, directed patrol, and Problem Oriented Policing (“POP”) projects. They sometimes resulted in arrests, but regardless of the outcome, they required a disproportionate amount of resources to manage the problem.
116. Likewise, the Miami Fire Department has sent, and will continue to send personnel and resources to Bank of America foreclosure properties to respond to a variety of fire-related problems that arise at these properties because of their foreclosure status.
117. The Miami Building Department and Code Enforcement/Code Compliance Departments have devoted, and will continue to devote personnel time and out-of-pocket funds to perform a number of tasks that arise at these properties because of their foreclosure status. These include, but are not limited to the following: (a) inspect and issue permitting violations in contravention of Florida statutes 553 and the Florida Building Code; (b) inspect and issue violations of the Miami City Code and Florida statutes 162; (c) condemn and demolish vacant structures deemed an imminent hazard to public safety.
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118. The City frequently hires independent contractors to perform certain services, including, but not limited to, (i) removing excess vegetation at vacant properties, (ii) hauling away trash and debris at vacant properties, (iii) boarding vacant property from casual entry, (iv) putting up fencing to secure vacant properties, (v) painting and removing graffiti at vacant properties. Occasionally, some of these services are performed by the City’s General Services Administration Department.
119. The Miami City Attorney’s Office has devoted, and will continue to devote personnel time and out-of-pocket resources to perform a number of tasks that arise at these properties because of their foreclosure status. These include, but are not limited to the following: (a) prosecuting code enforcement cases; (b) preserving the City’s lien rights at judicial foreclosure proceedings; and (c) pursuing court ordered injunctions involving a myriad of potential problems at foreclosure properties.
120. The City is required to administer and fund the Unsafe Structures Board, which was formerly under the jurisdiction of Miami-Dade County.
121. As stated by the Cost to Los Angeles Report, “[l]ocal government agencies have to spend money and staff time on blighted foreclosed properties, providing maintenance, inspections, trash removal, increased public safety calls, and other code enforcement services. . . . Responding to these needs is a gargantuan task that involves multiple agencies and multiple levels of local government.”33
122. Moreover, as discussed above, the Apgar-Duda report underscores the foreseeability of municipal costs as the result of foreclosures arising from discriminatory loans.
VII. SAMPLE PROPERTIES IN THE CITY OF MIAMI
A. Foreclosures
123. Plaintiff has preliminarily identified three thousand three hundred and twenty-six (3,326) discriminatory loans issued to minority borrowers by Bank of America in Miami between 2004 and 2012 that resulted in foreclosure or demonstrate characteristics likely to result in foreclosure.34 These loans are deemed to violate the FHA and are discriminatory because they
33 Cost to Los Angeles Report, supra, n.31. 34 Plaintiff anticipates that it will be able to identify more foreclosures resulting from the issuance of discriminatory loans during this time period with the benefit of discovery. This
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were issued to minority borrowers and were more expensive than the loans issued to similarly situated white borrowers based upon the regression analysis described earlier. These loans issued by Bank of America are continuing to enter the foreclosure process. The City has already incurred, or will incur in the future, damages corresponding to each of these properties. A sample of property addresses corresponding to these foreclosures is set forth below:
572 NE 67th St. Unit 4, 33138 35 3050 NW 21st Ave. Unit 5, 3314236 4550 NW 9th St. Unit E918, 3312637 1690 SW 27th Ave. Unit 708, 3314538
B. Discriminatory Loans Issued Subsequent to December 13, 2011.
124. Bank of America has continued to issue discriminatory loans to minority borrowers in Miami subsequent to December 13, 2011. These loans are deemed to violate the FHA and are discriminatory because they were issued to minority borrowers and were more expensive than the loans issued to similarly situated white borrowers during the limitations period based upon the regression analysis described earlier. Upon information and belief, as well as historic experience, a significant number of the properties corresponding to issuance of discriminatory loans subsequent to December 13, 2011 will result in foreclosures or other adverse events that will cost
the City a loss of tax revenues and significant remediation costs. A sample of property addresses
conclusion derives from the fact that because of certain reporting limitations, the publicly available mortgage loan databases utilized by Plaintiff are not as comprehensive as the mortgage loan databases maintained by and in the possession of an issuing bank. For these reasons, Plaintiff will also be able to provide additional specific property addresses corresponding to foreclosures with the benefit of discovery.
35 This borrower is Hispanic and received a conventional loan. Plaintiff has the name for
this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
36 This borrower is Hispanic and received a conventional loan. Plaintiff has the name for
this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
37 This borrower is Hispanic and received a conventional loan. Plaintiff has the name for
this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
38 This borrower is Hispanic and received a conventional loan. Plaintiff has the name for
this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
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corresponding to the issuance of these loans to minority borrowers all of which closed (i.e. “originated”) during the limitations period is set forth below:
1350 NW 8th Ct., Unit C-3, 3313639 701 Brickell Key Blvd., Unit 2408, 3313140 1350 NW 8th Ct., Unit B3-5, 3313641 800 N. Miami Ave., Unit E-1005, 3313642 125. An examination of publicly available information on loans issued during the limitations period strongly supports the conclusion that a greater number of more expensive and/or riskier loans were issued to minority borrowers than to non-minority borrowers during the two years preceding the filing this complaint. The data available to the City prior to discovery demonstrate significant differences in the treatment of those categories. However, the small size of the available sample does not lend itself adequately to statistical analysis in isolation. Upon information and belief, the disparity exemplified by the examination of the earlier loans persists. Still, the City maintains that, because it has pleaded a continuing violation, the continuance of the same lending practices that result in a discriminatory disparate impact melds the timely instances of that practice into the pre-limitations period instances of that practice to constitute a single claim, requiring but a single evaluation of the overall disparate impact.
VIII. CLAIM FOR RELIEF
(Violation of the Federal Fair Housing Act, 42 U.S.C. §§ 3601, et seq.)
39 This borrower is Hispanic and received a conventional loan with a loan origination date of April 17, 2013. Plaintiff has the name for this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
40 This borrower is Hispanic and received a conventional loan with a loan origination date of March 5, 2013. Plaintiff has the name for this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
41 This borrower is African-American and received a conventional loan with a loan origination date of June 8, 2012. Plaintiff has the name for this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
42 This borrower is Hispanic and received a conventional loan with a loan origination date of February 3, 2012. Plaintiff has the name for this borrower but has omitted it for privacy reasons. In the event this Court requires inclusion of the borrower names Plaintiff will file a complaint under seal with this information.
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126. Plaintiff repeats and incorporates by reference all allegations contained in the preceding paragraphs as if fully set forth herein.
127. Bank of America’s acts, policies, and practices as described constitute intentional discrimination on the basis of race. Bank of America has intentionally targeted residents of predominantly African-American and Latino neighborhoods in Miami for different treatment than residents of predominantly white neighborhoods in Miami with respect to mortgage lending. Bank of America has intentionally targeted residents of these neighborhoods for high-cost loans without regard to their credit qualifications and without regard to whether they qualify for more advantageous loans, including prime loans. Bank of America has intentionally targeted residents of these neighborhoods for increased interest rates, points, and fees, and for other disadvantageous loan terms including, but not limited to, adjustable rates, prepayment penalties, and balloon payments. Bank of America has intentionally targeted residents of these neighborhoods for unfair and deceptive lending practices in connection with marketing and underwriting mortgage loans.
128. Bank of America’s acts, policies, and practices have had an adverse and disproportionate impact on African-Americans and Latinos and residents of predominantly African-American and Latino neighborhoods in Miami as compared to similarly situated whites and residents of predominantly white neighborhoods in Miami. This adverse and disproportionate impact is the direct result of numerous factors, including, but not limited to: knowing about lending practices that either risked or resulted in failing to adequately monitor the Bank’s practices regarding mortgage originations, purchasing, marketing, sales, and risk management functions; failing to underwrite loans based on traditional underwriting criteria such as debt-to-income ratio, loan-to-value ratio, FICO score, and work history; placing borrowers in more expensive, riskier loans they qualified for; failing to properly underwrite refinance and hybrid adjustable-rate loans; allowing mortgage brokers to charge “yield spread premiums” for qualifying a borrower for an interest rate that is higher than the rate the borrower qualifies for and can actually afford; marketing certain more expensive or riskier loan products to residents in predominantly minority neighborhoods; requiring substantial prepayment penalties that prevent borrowers whose credit has improved from refinancing their discriminatory loan to a prime loan; charging excessive points and fees that are not associated with any increased benefits for the borrower; creating a compensation scheme incentivizing employees to issue discriminatory loans; failing to .monitor and ensure compliance with federal fair lending laws. These practices, which are united because
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they represent manifestations of the same continuous and unbroken practice of engaging in facially neutral business policies and practices that created an “artificial, arbitrary, and unnecessary” barrier to fair housing opportunities for minority home purchasers and owners, have caused African-Americans and Latinos and residents of predominantly African-American and Latino neighborhoods in Miami to receive mortgage loans from Bank of America that have materially less favorable terms than mortgage loans given by Bank of America to similarly situated whites and residents of predominantly white neighborhoods in Miami, and that are materially more likely to result in foreclosure.
129. Bank of America’s residential lending-related acts, policies, and practices violate the Fair Housing Act as:
(a) Discrimination on the basis of race and national origin in making available, or in the terms and conditions of, residential real estate-related transactions, in violation of 42 U.S.C. § 3605(a); and
(b) Discrimination on the basis of race and national origin in the terms, conditions, or privileges of sale of a dwelling, in violation of 42 U.S.C. § 3604(b). 130. Bank of America’s policies or practices are not justified by business necessity or legitimate business interests. 131. Bank of America’s policies and practices are continuing. 132. The City is an aggrieved person as defined by 42 U.S.C. § 3602(i) and has suffered damages as a result of Bank of America’s conduct. 133. The City’s damages include lost tax revenues and the need to provide increased municipal services. The loss of tax revenues at specific foreclosure sites and at closely neighboring properties in predominantly minority neighborhoods of the City was a foreseeable consequence that was fairly traceable to Bank of America’s discriminatory lending. Likewise, the need to provide increased municipal services at blighted foreclosure sites in predominantly minority neighborhoods of the City was a foreseeable consequence that was fairly traceable to Bank of America’s discriminatory lending. 134. Bank of America’s policies and practices, as described herein, had the effect and/or purpose of discriminating on the basis of race or national origin.
DEMAND FOR JURY TRIAL
Pursuant to Fed. R. Civ. P. 38(b), the City demands a trial by jury on all issues so triable. 35
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PRAYER FOR RELIEF
WHEREFORE, the City respectfully prays that the Court grant it the following relief: A. Enter a declaratory judgment that the foregoing acts, policies, and practices of Bank of America violate 42 U.S.C. §§ 3604 and 3605; B. Enter a permanent injunction enjoining Bank of America and its directors, officers, agents, and employees from continuing the discriminatory conduct described herein, and directing Bank of America and its directors, officers, agents, and employees to take all affirmative steps necessary to remedy the effects of the discriminatory conduct described herein, and to prevent additional instances of such conduct or similar conduct from occurring in the future, pursuant to 42 U.S.C. § 3613(c)(1); C. Award compensatory damages to the City in an amount to be determined by the jury that would fully compensate the City of Miami for its injuries caused by the conduct of Bank of America alleged herein, pursuant to 42 U.S.C. § 3613(c)(1); D. Award punitive damages to the City in an amount to be determined by the jury that would punish Bank of America for the willful, wanton, and reckless conduct alleged herein, and that would effectively deter similar conduct in the future, pursuant to 42 U.S.C. § 3613(c)(1); E. Award the City its reasonable attorneys’ fees and costs, pursuant to 42 U.S.C. § 3613(c)(2); F. Require payment of pre-judgment interest on monetary damages; and G. Order such other relief as this Court deems just and equitable.

Date: April 29, 2016

Respectfully submitted,
/s/Lance A. Harke Lance A. Harke (Florida Bar No. 863599) lharke@harkeclasby.com HARKE CLASBY & BUSHMAN LLP 9699 N.E. Second Avenue Miami, FL 33138 Telephone: (305) 536-8220
Robert Peck (pro hac vice) robert.peck@cclfirm.com CENTER FOR CONSTITUTIONAL LITIGATION, P.C. 777 6th Street N.W., Suite 520 Washington, DC 20001 Telephone: (202) 944-2803

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Victoria Méndez (Florida Bar No. 194931) vmendez@miamigov.com CITY OF MIAMI OFFICE OF THE CITY ATTORNEY 444 S.W. 2nd Avenue, Suite 945 Miami, FL 33130 Telephone: (305) 416-1800 Erwin Chemerinsky (pro hac vice) echemerinsky@law.uci.edu UNIVERSITY OF CALIFORNIA, IRVINE 401 East Peltason Drive, Educ. 1095 Irvine, CA 92697 Telephone: (949) 824-7722 Joel Liberson (pro hac vice) joel@taresources.com Howard Liberson (pro hac vice) howard@taresources.com TRIAL & APPELLATE RESOURCES, P.C. 400 Continental Blvd., 6th Floor El Segundo, CA 90245 Telephone: (310) 426-2361 Attorneys for Plaintiff
CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing was filed on April 29, 2016 with the Clerk by using the CM/ECF system, which will send notification of such filing to all attorneys of record.
s/ Lance A. Harke
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Court, however, that a voluntary indemnity undertaking does not convert a suit against a tribal employee, in the employee’s individual capacity, into a suit against the tribe. I therefore concur in the Court’s judgment.
,
BANK OF AMERICA CORP. et al., Petitioners
v. CITY OF MIAMI, FLORIDA.
Wells Fargo & Co., et al., Petitioners
v. City of Miami, Florida. Nos. 15–1111, 15–1112.
Argued Nov. 8, 2016. Decided May 1, 2017. Background: City brought action against mortgage lender under Fair Housing Act (FHA), claiming that lender engaged in decade-long pattern of racially discriminatory lending in the residential housing market that caused city economic harm. The United States District Court for the Southern District of Florida, William P. Dimitrouleas, J., 2014 WL 3362348, dismissed for failure to state a claim and denied reconsideration, 2014 WL 4441368. City appealed. The United States Court of Appeals for the Eleventh Circuit, Marcus, Circuit Judge, 800 F.3d 1262, affirmed in part, reversed in part, and remanded. On remand, the District Court, William P. Dimitrouleas, J., 171 F.Supp.3d 1314, granted lender’s motion to dismiss. In second action, city brought similar claims against another mortgage lender. The

United States District Court for the Southern District of Florida, William P. Dimitrouleas, J., dismissed for failure to state a claim. City appealed. The Court of Appeals, Marcus, Circuit Judge, 801 F.3d 1258, affirmed in part, reversed in part, and remanded. Certiorari was granted in both cases. Holdings: The Supreme Court, Justice Breyer, held that: (1) city was an ‘‘aggrieved person,’’ as ba-
sis for statutory standing to sue for damages under the FHA, but (2) to establish proximate cause, as required for recovery of damages for violation of FHA, a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory violation. Vacated and remanded.
Justice Thomas filed an opinion concurring in part and dissenting in part, in which Justices Kennedy and Alito joined.
Justice Gorsuch took no part in the consideration or decision of the cases.
1. Federal Courts O3132 To satisfy the Constitution’s restric-
tion of the Supreme Court’s jurisdiction to ‘‘Cases’’ and ‘‘Controversies,’’ a plaintiff must demonstrate constitutional standing, and to do so, the plaintiff must show an injury in fact that is fairly traceable to the defendant’s conduct and that is likely to be redressed by a favorable judicial decision. U.S.C.A. Const. Art. 3, § 2, cl. 1.
2. Federal Civil Procedure O103.2 The question regarding prudential
standing or statutory standing is whether the statute grants the plaintiff the cause of action that he asserts, and in answering that question, the court presumes that a statute ordinarily provides a cause of action only to plaintiffs whose interests fall

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within the zone of interests protected by the law invoked.
3. Federal Civil Procedure O103.2 Whether a plaintiff comes within the
zone of interests protected by a statute, as required for prudential standing or statutory standing, is an issue that requires the court to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.
4. Civil Rights O1331(3) City was an ‘‘aggrieved person,’’ as
basis for statutory standing to sue home mortgage lenders for damages under Fair Housing Act (FHA), based on lenders’ allegedly discriminatory lending to African– American and Latino mortgagors, because city’s claimed financial injuries from lost tax revenue and extra municipal expenses fell within the zone of interests that the FHA arguably protected. Fair Housing Act, §§ 802(i), 804(b), 805(a), 42 U.S.C.A. §§ 3602(i), 3604(b), 3605(a); Fair Housing Amendments Act of 1988, § 8(2), 42 U.S.C.A. § 3613(a)(1)(A), (c)(1).
See publication Words and Phrases for other judicial constructions and definitions.
5. Civil Rights O1331(3) The Fair Housing Act’s (FHA) defini-
tion of ‘‘aggrieved person,’’ as basis for prudential standing or statutory standing to sue for damages for housing discrimination, reflects a congressional intent to confer standing broadly. Fair Housing Act, §§ 802(i), 804(b), 805(a), 42 U.S.C.A. §§ 3602(i), 3604(b), 3605(a); Fair Housing Amendments Act of 1988, § 8(2), 42 U.S.C.A. § 3613(a)(1)(A), (c)(1).
6. Civil Rights O1075 To establish proximate cause, as re-
quired for recovery of damages for violation of the Fair Housing Act (FHA), a plaintiff must do more than show that its

injuries foreseeably flowed from the alleged statutory violation, by showing some direct relation between the injury asserted and the injurious conduct alleged. Fair Housing Act, §§ 804(b), 805(a), 42 U.S.C.A. §§ 3604(b), 3605(a).
7. Negligence O373, 383 Torts O119 It is a well-established principle of the
common law that in all cases of loss, courts are to attribute it to the proximate cause, and not to any remote cause.
8. Negligence O373, 383 Torts O119 Courts assume that Congress is famil-
iar with, and does not mean to displace sub silentio in federal causes of action, the common-law rule that in all cases of loss, courts are to attribute it to the proximate cause and not to any remote cause.
9. Negligence O409 Torts O119 Proximate-cause analysis is controlled
by the nature of the statutory cause of action, and the question it presents is whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.
10. Federal Courts O3216(2) Upon determining that to establish
proximate cause, as required for recovery of damages for violation of Fair Housing Act (FHA), a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory violation, the Supreme Court would not draw the precise boundaries of proximate cause under the FHA and determine on which side of the line the city’s financial injuries fell, with respect to home mortgage lenders’ allegedly discriminatory lending to African–American and Latino mortgagors, and instead would vacate and remand; the Court of

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Appeals had grounded its decision on the theory that proximate cause under the FHA was based on foreseeability alone, so the Supreme Court lacked the benefit of the Court of Appeals’ judgment on how the contrary principles the Supreme Court had just stated applied to the FHA, and no other Court of Appeals had weighed in on the issue. Fair Housing Act, §§ 804(b), 805(a), 42 U.S.C.A. §§ 3604(b), 3605(a).
Syllabus *
The City of Miami filed suit against Bank of America and Wells Fargo (Banks), alleging violations of the Fair Housing Act (FHA or Act). The FHA prohibits, among other things, racial discrimination in connection with real-estate transactions, 42 U.S.C. §§ 3604(b), 3605(a), and permits any ‘‘aggrieved person’’ to file a civil damages action for a violation of the Act, §§ 3613(a)(1)(A), (c)(1). The City’s complaints charge that the Banks intentionally targeted predatory practices at African– American and Latino neighborhoods and residents, lending to minority borrowers on worse terms than equally creditworthy nonminority borrowers and inducing defaults by failing to extend refinancing and loan modifications to minority borrowers on fair terms. The City alleges that the Banks’ discriminatory conduct led to a disproportionate number of foreclosures and vacancies in majority-minority neighborhoods, which impaired the City’s effort to assure racial integration, diminished the City’s property-tax revenue, and increased demand for police, fire, and other municipal services. The District Court dismissed the complaints on the grounds that (1) the harms alleged fell outside the zone of interests the FHA protects and (2) the complaints failed to show a sufficient causal

connection between the City’s injuries and the Banks’ discriminatory conduct. The Eleventh Circuit reversed.
Held :
1. The City is an ‘‘aggrieved person’’ authorized to bring suit under the FHA. In addition to satisfying constitutional standing requirements, see Spokeo, Inc. v. Robins, 578 U.S. ––––, ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 a plaintiff must show that the statute grants the plaintiff the cause of action he or she asserts. It is presumed that a statute ordinarily provides a cause of action ‘‘only to plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’ ’’ Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. ––––, ––––, 134 S.Ct. 1377, 1388, 188 L.Ed.2d 392.
The City’s claims of financial injury are, at the least, ‘‘arguably within the zone of interests’’ the FHA protects. Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184. The FHA defines an ‘‘aggrieved person’’ as ‘‘any person who’’ either ‘‘claims to have been injured by a discriminatory housing practice’’ or believes that such an injury ‘‘is about to occur,’’ 42 U.S.C. § 3602(i). This Court has said that the definition of ‘‘person aggrieved’’ in the original version of the FHA ‘‘showed ‘a congressional intention to define standing as broadly as is permitted by Article III of the Constitution,’ ’’ Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 93 S.Ct. 364, 34 L.Ed.2d 415; and has held that the Act permits suit by parties similarly situated to the City, see, e.g., Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (village alleging that it lost tax revenue and had the racial balance of its

* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of

the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

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community undermined by racial-steering practices). Against the backdrop of those decisions, Congress did not materially alter the definition of person ‘‘aggrieved’’ when it reenacted the current version of the Act.
The Banks nonetheless contend that the definition sets boundaries that fall short of those the Constitution sets. Even assuming that some form of their argument is valid, this Court concludes that the City’s financial injuries fall within the zone of interests that the FHA protects. The City’s claims are similar in kind to those of the Village of Bellwood, which the Court held in Gladstone, supra, could bring suit under the FHA. The Court explained that the defendants’ discriminatory conduct adversely affected the village by, among other things, producing a ‘‘significant reduction in property values [that] directly injures a municipality by diminishing its tax base, thus threatening its ability to bear the costs of local government and to provide services.’’ Id., at 110–111, 99 S.Ct. 1601. The City’s alleged economic injuries thus arguably fall within the FHA’s zone of interests, as this Court has previously interpreted that statute. Stare decisis principles compel the Court’s adherence to those precedents, and principles of statutory interpretation demand that the Court respect Congress’ decision to ratify those precedents when it reenacted the relevant statutory text. Pp. 1303 – 1304.
2. The Eleventh Circuit erred in concluding that the complaints met the FHA’s proximate-cause requirement based solely on the finding that the City’s alleged financial injuries were foreseeable results of the Banks’ misconduct. A claim for damages under the FHA is akin to a ‘‘tort action,’’ Meyer v. Holley, 537 U.S. 280, 285, 123 S.Ct. 824, 154 L.Ed.2d 753, and is thus subject to the common-law requirement that loss is attributable ‘‘ ‘to the proximate

cause, and not to any remote cause,’ ’’ Lexmark, 572 U.S., at ––––, 134 S.Ct., at 1390. The proximate-cause analysis asks ‘‘whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.’’ Id., at ––––, 134 S.Ct., at 1390. With respect to the FHA, foreseeability alone does not ensure the required close connection. Nothing in the statute suggests that Congress intended to provide a remedy for any foreseeable result of an FHA violation, which may ‘‘ ‘cause ripples of harm to flow’ ’’ far beyond the defendant’s misconduct, Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 534, 103 S.Ct. 897, 74 L.Ed.2d 723; and doing so would risk ‘‘massive and complex damages litigation,’’ id., at 545, 103 S.Ct. 897. Rather, proximate cause under the FHA requires ‘‘some direct relation between the injury asserted and the injurious conduct alleged.’’ Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532. The Court has repeatedly applied directness principles to statutes with ‘‘common-law foundations.’’ Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457, 126 S.Ct. 1991, 164 L.Ed.2d 720. ‘‘ ‘The general tendency’ ’’ in these cases, ‘‘ ‘in regard to damages at least, is not to go beyond the first step.’ ’’ Hemi Group, LLC v. City of New York, 559 U.S. 1, 10, 130 S.Ct. 983, 175 L.Ed.2d 943. What falls within that step depends in part on the ‘‘nature of the statutory cause of action,’’ Lexmark, supra, at ––––, 134 S.Ct., at 1390 and an assessment ‘‘ ‘of what is administratively possible and convenient,’ ’’ Holmes, supra, at 268, 112 S.Ct. 1311.
The Court declines to draw the precise boundaries of proximate cause under the FHA, particularly where neither the Eleventh Circuit nor other courts of appeals have weighed in on the issue. Instead, the lower courts should define, in

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the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the City’s claims for lost property-tax revenue and increased municipal expenses. Pp. 1305 – 1306.
800 F.3d 1262, and 801 F.3d 1258, vacated and remanded.
BREYER, J., delivered the opinion of the Court, in which ROBERTS, C.J., and GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined. THOMAS, J., filed an opinion concurring in part and dissenting in part, in which KENNEDY and ALITO, JJ., joined. GORSUCH, J., took no part in the consideration or decision of the cases.

Paul F. Hancock, Olivia Kelman, K&L Gates LLP, Miami, FL, Andrew C. Glass, K&L Gates LLP, Boston, MA, Neal Kumar Katyal, Frederick Liu, Colleen E. Roh Sinzdak, Morgan L. Goodspeed, Daniel J.T. Schuker, Hogan Lovells US LLP, Washington, DC, Carol A. Licko, John F. O’Sullivan, Hogan Lovells US LLP, Miami, FL, for Petitioners.
For U.S. Supreme Court briefs, see: 2016 WL 6406400 (Reply.Brief) 2016 WL 5800272 (Resp.Brief) 2016 WL 4473463 (Pet.Brief) 2016 WL 6216127 (Reply.Brief) 2016 WL 4446486 (Pet.Brief) 2016 WL 5800273 (Resp.Brief)

Neal K. Katyal, Washington, DC, for Petitioners.
Robert S. Peck, for Respondents.
Curtis E. Gannon, for the United States as amicus curiae, by special leave of the Court, supporting the respondents.
David J. Zimmer, Goodwin Procter LLP, San Francisco, CA, William M. Jay, Thomas M. Hefferon, Matthew S. Sheldon, Andrew Kim, David S. Norris, Goodwin Procter LLP, Washington, DC, for Petitioners.
Victoria M´endez, Henry J. Hunnefeld, City of Miami, Office of the City Attorney, Miami, FL, Robert S. Peck, Center for Constitutional Litigation, P.C., Fairfax Station, VA, Erwin Chemerinsky, University of California, Irvine, CA, Rachel Geman, Daniel E. Seltz, Lieff Cabraser Heimann & Bernstein, L.L.P., New York, NY, Joel Liberson, Howard Liberson, Trial & Appellate Resources, P.C., El Segundo, CA, Sherrie R. Savett, Sarah R. Schalman–Bergen, Patrick F. Madden, Berger & Montague, P.C., Philadelphia, PA, for Respondent.

Justice BREYER delivered the opinion of the Court.
The Fair Housing Act (FHA or Act) forbids
‘‘discriminat[ing] against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of raceTTTT’’ 42 U.S.C. § 3604(b).
It further makes it unlawful for
‘‘any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of raceTTTT’’ § 3605(a).
The statute allows any ‘‘aggrieved person’’ to file a civil action seeking damages for a violation of the statute. §§ 3613(a)(1)(A), 3613(c)(1). And it defines an ‘‘aggrieved person’’ to include ‘‘any person who TTT claims to have been injured by a discriminatory housing practice.’’ § 3602(i).
The City of Miami claims that two banks, Bank of America and Wells Fargo,

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intentionally issued riskier mortgages on less favorable terms to African–American and Latino customers than they issued to similarly situated white, non-Latino customers, in violation of §§ 3604(b) and 3605(a). App. 185–197, 244–245, 350–362, 428. The City, in amended complaints, alleges that these discriminatory practices have (1) ‘‘adversely impacted the racial composition of the City,’’ id., at 232, 416; (2) ‘‘impaired the City’s goals to assure racial integration and desegregation,’’ ibid.; (3) ‘‘frustrate[d] the City’s longstanding and active interest in promoting fair housing and securing the benefits of an integrated community,’’ id., at 232–233, 416–417; and (4) disproportionately ‘‘cause[d] foreclosures and vacancies in minority communities in Miami,’’ id., at 229, 413. Those foreclosures and vacancies have harmed the City by decreasing ‘‘the property value of the foreclosed home as well as the values of other homes in the neighborhood,’’ thereby (a) ‘‘reduc[ing] property tax revenues to the City,’’ id., at 234, 418, and (b) forcing the City to spend more on ‘‘municipal services that it provided and still must provide to remedy blight and unsafe and dangerous conditions which exist at properties that were foreclosed as a result of [the Banks’] illegal lending practices,’’ id., at 233–234, 417. The City claims that those practices violate the FHA and that it is entitled to damages for the listed injuries.
The Banks respond that the complaints do not set forth a cause of action for two basic reasons. First, they contend that the City’s claimed harms do not ‘‘arguably’’ fall within the ‘‘zone of interests’’ that the statute seeks to protect, Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); hence, the City is not an ‘‘aggrieved person’’ entitled to sue under the Act, § 3602(i). Second, they say that the complaint fails to

draw a ‘‘proximate-cause’’ connection between the violation claimed and the harm allegedly suffered. In their view, even if the City proves the violations it charges, the distance between those violations and the harms the City claims to have suffered is simply too great to entitle the City to collect damages.
We hold that the City’s claimed injuries fall within the zone of interests that the FHA arguably protects. Hence, the City is an ‘‘aggrieved person’’ able to bring suit under the statute. We also hold that, to establish proximate cause under the FHA, a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory violation. The lower court decided these cases on the theory that foreseeability is all that the statute requires, so we vacate and remand for further proceedings.
I
In 2013, the City of Miami brought lawsuits in federal court against two banks, Bank of America and Wells Fargo. The City’s complaints charge that the Banks discriminatorily imposed more onerous, and indeed ‘‘predatory,’’ conditions on loans made to minority borrowers than to similarly situated nonminority borrowers. App. 185–197, 350–362. Those ‘‘predatory’’ practices included, among others, excessively high interest rates, unjustified fees, teaser low-rate loans that overstated refinancing opportunities, large prepayment penalties, and—when default loomed—unjustified refusals to refinance or modify the loans. Id., at 225, 402. Due to the discriminatory nature of the Banks’ practices, default and foreclosure rates among minority borrowers were higher than among otherwise similar white borrowers and were concentrated in minority neighborhoods. Id., at 225–232, 408–415. Higher foreclosure rates lowered property

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values and diminished property-tax revenue. Id., at 234, 418. Higher foreclosure rates—especially when accompanied by vacancies—also increased demand for municipal services, such as police, fire, and building and code enforcement services, all needed ‘‘to remedy blight and unsafe and dangerous conditions’’ that the foreclosures and vacancies generate. Id., at 238– 240, 421–423. The complaints describe statistical analyses that trace the City’s financial losses to the Banks’ discriminatory practices. Id., at 235–237; 419–420.
The District Court dismissed the complaints on the grounds that (1) the harms alleged, being economic and not discriminatory, fell outside the zone of interests the FHA protects; (2) the complaints fail to show a sufficient causal connection between the City’s injuries and the Banks’ discriminatory conduct; and (3) the complaints fail to allege unlawful activity occurring within the Act’s 2–year statute of limitations. The City then filed amended complaints (the complaints now before us) and sought reconsideration. The District Court held that the amended complaints could solve only the statute of limitations problem. It consequently declined to reconsider the dismissals.
The Court of Appeals reversed the District Court. 800 F.3d 1262 (C.A.11 2015); 801 F.3d 1258 (C.A.11 2015). It held that the City’s injuries fall within the ‘‘zone of interests,’’ Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. ––––, ––––, 134 S.Ct. 1377, 1388, 188 L.Ed.2d 392 (2014), that the FHA protects. 800 F.3d, at 1274–1275, 1277 (relying on Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972); Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979); and Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982)); 801 F.3d, at 1266–

1267 (similar). It added that the complaints adequately allege proximate cause. 800 F.3d, at 1278, 801 F.3d, at 1267. And it remanded the cases while ordering the District Court to accept the City’s complaints as amended. 800 F.3d, at 1286, 801 F.3d, at 1267.
The Banks filed petitions for certiorari, asking us to decide whether, as the Court of Appeals had in effect held, the amended complaints satisfied the FHA’s zone-of-interests and proximate-cause requirements. We agreed to do so.
II
[1–3] To satisfy the Constitution’s restriction of this Court’s jurisdiction to ‘‘Cases’’ and ‘‘Controversies,’’ Art. III, § 2, a plaintiff must demonstrate constitutional standing. To do so, the plaintiff must show an ‘‘injury in fact’’ that is ‘‘fairly traceable’’ to the defendant’s conduct and ‘‘that is likely to be redressed by a favorable judicial decision.’’ Spokeo, Inc. v. Robins, 578 U.S. ––––, ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). This Court has also referred to a plaintiff’s need to satisfy ‘‘prudential’’ or ‘‘statutory’’ standing requirements. See Lexmark, 572 U.S., at –––– – ––––, and n. 4, 134 S.Ct., at 1387, and n. 4. In Lexmark, we said that the label ‘‘ ‘prudential standing’ ’’ was misleading, for the requirement at issue is in reality tied to a particular statute. Ibid. The question is whether the statute grants the plaintiff the cause of action that he asserts. In answering that question, we presume that a statute ordinarily provides a cause of action ‘‘only to plaintiffs whose interests fall within the zone of interests protected by the law invoked.’’ Id., at ––––, 134 S.Ct., at 1388 (internal quotation marks omitted). We have added that ‘‘[w]hether a plaintiff

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comes within ‘the zone of interests’ is an issue that requires us to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.’’ Id., at ––––, 134 S.Ct., at 1387 (some internal quotation marks omitted).
[4] Here, we conclude that the City’s claims of financial injury in their amended complaints—specifically, lost tax revenue and extra municipal expenses—satisfy the ‘‘cause-of-action’’ (or ‘‘prudential standing’’) requirement. To use the language of Data Processing, the City’s claims of injury it suffered as a result of the statutory violations are, at the least, ‘‘arguably within the zone of interests’’ that the FHA protects. 397 U.S., at 153, 90 S.Ct. 827 (emphasis added).
The FHA permits any ‘‘aggrieved person’’ to bring a housing-discrimination lawsuit. 42 U.S.C. § 3613(a). The statute defines ‘‘aggrieved person’’ as ‘‘any person who’’ either ‘‘claims to have been injured by a discriminatory housing practice’’ or believes that such an injury ‘‘is about to occur.’’ § 3602(i).
[5] This Court has repeatedly written that the FHA’s definition of person ‘‘aggrieved’’ reflects a congressional intent to confer standing broadly. We have said that the definition of ‘‘person aggrieved’’ in the original version of the FHA, § 810(a), 82 Stat. 85, ‘‘showed ‘a congressional intention to define standing as broadly as is permitted by Article III of the Constitution.’ ’’ Trafficante, supra, at 209, 93 S.Ct. 364 (quoting Hackett v. McGuire Brothers, Inc., 445 F.2d 442, 446 (C.A.3 1971)); see Gladstone, supra, at 109, 99 S.Ct. 1601 (similar); Havens Realty, supra, at 372, 375–376, 102 S.Ct. 1114 (similar); see also Thompson v. North American Stainless, LP, 562 U.S. 170, 176, 131 S.Ct. 863, 178 L.Ed.2d 694 (2011) (‘‘Later opinions, we

must acknowledge, reiterate that the term ‘aggrieved’ [in the FHA] reaches as far as Article III permits’’); Bennett v. Spear, 520 U.S. 154, 165–166, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (‘‘[Trafficante ] held that standing was expanded to the full extent permitted under Article III by § 810(a) of the Civil Rights Act of 1968’’).
Thus, we have held that the Act allows suits by white tenants claiming that they were deprived benefits from interracial associations when discriminatory rental practices kept minorities out of their apartment complex, Trafficante, 409 U.S., at 209–212, 93 S.Ct. 364; a village alleging that it lost tax revenue and had the racial balance of its community undermined by racial-steering practices, Gladstone, 441 U.S., at 110–111, 99 S.Ct. 1601; and a nonprofit organization that spent money to combat housing discrimination, Havens Realty, 455 U.S., at 379, 102 S.Ct. 1114. Contrary to the dissent’s view, those cases did more than ‘‘sugges[t]’’ that plaintiffs similarly situated to the City have a cause of action under the FHA. Post, at 1308. They held as much. And the dissent is wrong to say that we characterized those cases as resting on ‘‘ill-considered dictum.’’ Post, at 1308 (quoting Thompson, supra, at 176, 131 S.Ct. 863). The ‘‘dictum’’ we cast doubt on in Thompson addressed who may sue under Title VII, the employment discrimination statute, not under the FHA.
Finally, in 1988, when Congress amended the FHA, it retained without significant change the definition of ‘‘person aggrieved’’ that this Court had broadly construed. Compare § 810(a), 82 Stat. 85, with § 5(b), 102 Stat. 1619–1620 (codified at 42 U.S.C. § 3602(i)) (changing ‘‘person aggrieved’’ to ‘‘aggrieved person’’ and making other minor changes to the definition). Indeed, Congress ‘‘was aware of’’ our precedent and ‘‘made a considered judgment to retain the relevant statutory

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text,’’ Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. ––––, ––––, 135 S.Ct. 2507, 2519, 192 L.Ed.2d 514 (2015). See H.R. Rep. No. 100–711, p. 23 (1988) (stating that the ‘‘bill adopts as its definition language similar to that contained in Section 810 of existing law, as modified to reaffirm the broad holdings of these cases’’ and discussing Gladstone and Havens Realty ); cf. Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978) (Congress normally adopts our interpretations of statutes when it reenacts those statute without change).
The Banks do not deny the broad reach of the words ‘‘aggrieved person’’ as defined in the FHA. But they do contend that those words nonetheless set boundaries that fall short of those the Constitution sets. Brief for Petitioners in No. 15–1112, p. 12 (Brief for Wells Fargo); Brief for Petitioners in No. 15–1111, pp. 19–20 (Brief for Bank of America). The Court’s language in Trafficante, Gladstone, and Havens Realty, they argue, was exaggerated and unnecessary to decide the cases then before the Court. See Brief for Wells Fargo 19–23; Brief for Bank of America 27–33. Moreover, they warn that taking the Court’s words literally—providing everyone with constitutional standing a cause of action under the FHA—would produce a legal anomaly. After all, in Thompson, 562 U.S., at 175–177, 131 S.Ct. 863 we held that the words ‘‘ ‘person claiming to be aggrieved’ ’’ in Title VII of the Civil Rights Act of 1964, the employment discrimination statute, did not stretch that statute’s zone of interest to the limits of Article III. We reasoned that such an interpretation would produce farfetched results, for example, a shareholder in a company could bring a Title VII suit against the company for discriminatorily firing an employee. Ibid. The Banks say it would be similarly farfetched if restaurants,

plumbers, utility companies, or any other participant in the local economy could sue the Banks to recover business they lost when people had to give up their homes and leave the neighborhood as a result of the Banks’ discriminatory lending practices. Brief for Wells Fargo 18–19; Brief for Bank of America 22, 24–25. That, they believe, cannot have been the intent of the Congress that enacted or amended the FHA.
We need not discuss the Banks’ argument at length, for even if we assume for argument’s sake that some form of it is valid, we nonetheless conclude that the City’s financial injuries fall within the zone of interests that the FHA protects. Our case law with respect to the FHA drives that conclusion. The City’s complaints allege that the Banks ‘‘intentionally targeted predatory practices at African–American and Latino neighborhoods and residents,’’ App. 225; id., at 409 (similar). That unlawful conduct led to a ‘‘concentration’’ of ‘‘foreclosures and vacancies’’ in those neighborhoods. Id., at 226, 229, 410, 413. Those concentrated ‘‘foreclosures and vacancies’’ caused ‘‘stagnation and decline in African–American and Latino neighborhoods.’’ Id., at 225, 409. They hindered the City’s efforts to create integrated, stable neighborhoods. Id., at 186, 351. And, highly relevant here, they reduced property values, diminishing the City’s propertytax revenue and increasing demand for municipal services. Id., at 233–234, 417.
Those claims are similar in kind to the claims the Village of Bellwood raised in Gladstone. There, the plaintiff village had alleged that it was ‘‘ ‘injured by having [its] housing market TTT wrongfully and illegally manipulated to the economic and social detriment of the citizens of [the] village.’ ’’ 441 U.S., at 95, 99 S.Ct. 1601 (quoting the complaint; alterations in original). We held that the village could bring

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suit. We wrote that the complaint in effect alleged that the defendant-realtors’ racial steering ‘‘affect[ed] the village’s racial composition,’’ ‘‘reduce[d] the total number of buyers in the Bellwood housing market,’’ ‘‘precipitate[d] an exodus of white residents,’’ and caused ‘‘prices [to] be deflected downward.’’ Id., at 110, 99 S.Ct. 1601. Those circumstances adversely affected the village by, among other things, producing a ‘‘significant reduction in property values [that] directly injures a municipality by diminishing its tax base, thus threatening its ability to bear the costs of local government and to provide services.’’ Id., at 110–111, 99 S.Ct. 1601 (emphasis added).
The upshot is that the City alleges economic injuries that arguably fall within the FHA’s zone of interests, as we have previously interpreted that statute. Principles of stare decisis compel our adherence to those precedents in this context. And principles of statutory interpretation require us to respect Congress’ decision to ratify those precedents when it reenacted the relevant statutory text. See supra, at 1302 – 1305.
III
[6] The remaining question is one of causation: Did the Banks’ allegedly discriminatory lending practices proximately cause the City to lose property-tax revenue and spend more on municipal services? The Eleventh Circuit concluded that the answer is ‘‘yes’’ because the City plausibly alleged that its financial injuries were foreseeable results of the Banks’ misconduct. We conclude that foreseeability alone is not sufficient to establish proximate cause under the FHA, and therefore vacate the judgment below.
[7–9] It is a ‘‘ ‘well established principle of [the common] law that in all cases of loss, we are to attribute it to the proximate

cause, and not to any remote cause.’ ’’ Lexmark, 572 U.S., at ––––, 134 S.Ct., at 1390. We assume Congress ‘‘is familiar with the common-law rule and does not mean to displace it sub silentio ’’ in federal causes of action. Ibid. A claim for damages under the FHA—which is akin to a ‘‘tort action,’’ Meyer v. Holley, 537 U.S. 280, 285, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003)—is no exception to this traditional requirement. ‘‘Proximate-cause analysis is controlled by the nature of the statutory cause of action. The question it presents is whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.’’ Lexmark, supra, at ––––, 134 S.Ct., at 1390.
In these cases, the ‘‘conduct the statute prohibits’’ consists of intentionally lending to minority borrowers on worse terms than equally creditworthy nonminority borrowers and inducing defaults by failing to extend refinancing and loan modifications to minority borrowers on fair terms. The City alleges that the Banks’ misconduct led to a disproportionate number of foreclosures and vacancies in specific Miami neighborhoods. These foreclosures and vacancies purportedly harmed the City, which lost property-tax revenue when the value of the properties in those neighborhoods fell and was forced to spend more on municipal services in the affected areas.
The Eleventh Circuit concluded that the City adequately pleaded that the Banks’ misconduct proximately caused these financial injuries. 800 F.3d, at 1282. The court held that in the context of the FHA ‘‘the proper standard’’ for proximate cause ‘‘is based on foreseeability.’’ Id., at 1279, 1282. The City, it continued, satisfied that element: Although there are ‘‘several links in the causal chain’’ between the charged discriminatory lending practices and the claimed losses, the City plausibly alleged

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that ‘‘none are unforeseeable.’’ Id., at 1282.
We conclude that the Eleventh Circuit erred in holding that foreseeability is sufficient to establish proximate cause under the FHA. As we have explained, proximate cause ‘‘generally bars suits for alleged harm that is ‘too remote’ from the defendant’s unlawful conduct.’’ Lexmark, supra, at ––––, 134 S.Ct., at 1390. In the context of the FHA, foreseeability alone does not ensure the close connection that proximate cause requires. The housing market is interconnected with economic and social life. A violation of the FHA may, therefore, ‘‘ ‘be expected to cause ripples of harm to flow’ ’’ far beyond the defendant’s misconduct. Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 534, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). Nothing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel. And entertaining suits to recover damages for any foreseeable result of an FHA violation would risk ‘‘massive and complex damages litigation.’’ Id., at 545, 103 S.Ct. 897.
Rather, proximate cause under the FHA requires ‘‘some direct relation between the injury asserted and the injurious conduct alleged.’’ Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992). A damages claim under the statute ‘‘is analogous to a number of tort actions recognized at common law,’’ Curtis v. Loether, 415 U.S. 189, 195, 94 S.Ct. 1005, 39 L.Ed.2d 260 (1974), and we have repeatedly applied directness principles to statutes with ‘‘common-law foundations,’’ Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006). ‘‘ ‘The general tendency’ ’’ in these cases, ‘‘ ‘in regard to damages at least, is not to go beyond the first step.’ ’’ Hemi Group, LLC v. City of New York, 559 U.S.

1, 10, 130 S.Ct. 983, 175 L.Ed.2d 943 (2010). What falls within that ‘‘first step’’ depends in part on the ‘‘nature of the statutory cause of action,’’ Lexmark, supra, at ––––, 134 S.Ct., at 1390, and an assessment ‘‘ ‘of what is administratively possible and convenient,’ ’’ Holmes, supra, at 268, 112 S.Ct. 1311.
[10] The parties have asked us to draw the precise boundaries of proximate cause under the FHA and to determine on which side of the line the City’s financial injuries fall. We decline to do so. The Eleventh Circuit grounded its decision on the theory that proximate cause under the FHA is ‘‘based on foreseeability’’ alone. 800 F.3d, at 1282. We therefore lack the benefit of its judgment on how the contrary principles we have just stated apply to the FHA. Nor has any other court of appeals weighed in on the issue. The lower courts should define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the City’s claims for lost property-tax revenue and increased municipal expenses.
IV The judgments of the Court of Appeals for the Eleventh Circuit are vacated, and the cases are remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice GORSUCH took no part in the consideration or decision of these cases.
Justice THOMAS, with whom Justice KENNEDY and Justice ALITO join, concurring in part and dissenting in part.
These cases arise from lawsuits filed by the city of Miami alleging that residential mortgage lenders engaged in discriminatory lending practices in violation of the Fair Housing Act (FHA). The FHA prohibits ‘‘discrimination’’ against ‘‘any person’’ be-

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cause of ‘‘race, color, religion, sex, handicap, familial status, or national origin’’ with respect to the ‘‘sale or rental’’ of ‘‘a dwelling.’’ 42 U.S.C. § 3604; accord, § 3605(a); § 3606. Miami’s complaints do not allege that any defendant discriminated against it within the meaning of the FHA. Neither is Miami attempting to bring a lawsuit on behalf of its residents against whom petitioners allegedly discriminated. Rather, Miami’s theory is that, between 2004 and 2012, petitioners’ allegedly discriminatory mortgage-lending practices led to defaulted loans, which led to foreclosures, which led to vacant houses, which led to decreased property values, which led to reduced property taxes and urban blight. See 800 F.3d 1262, 1268 (C.A.11 2015); 801 F.3d 1258, 1266 (C.A.11 2015). Miami seeks damages from the lenders for reduced property tax revenues and for the cost of increased municipal services—‘‘police, firefighters, building inspectors, debris collectors, and others’’—deployed to attend to the blighted areas. 800 F.3d, at 1269, 801 F.3d, at 1263.
The Court today holds that Congress intended to remedy those kinds of injuries when it enacted the FHA, but leaves open the question whether Miami sufficiently alleged that the discriminatory lending practices caused its injuries. For the reasons explained below, I would hold that Miami’s injuries fall outside the FHA’s zone of interests. I would also hold that, in any event, Miami’s alleged injuries are too remote to satisfy the FHA’s proximate-cause requirement.
I
A plaintiff seeking to bring suit under a federal statute must show not only that he has standing under Article III, ante, at 1302, but also that his ‘‘complaint fall[s] within the zone of interests protected by the law’’ he invokes, Lexmark Int’l, Inc. v.

Static Control Components, Inc., 572 U.S. ––––, ––––, 134 S.Ct. 1377, 1386, 188 L.Ed.2d 392 (2014) (internal quotation marks omitted). The zone-of-interests requirement is ‘‘root[ed]’’ in the ‘‘commonlaw rule’’ providing that a plaintiff may ‘‘recover under the law of negligence for injuries caused by violation of a statute’’ only if ‘‘the statute ‘is interpreted as designed to protect the class of persons in which the plaintiff is included, against the risk of the type of harm which has in fact occurred as a result of its violation.’ ’’ Id., at ––––, n. 5, 134 S.Ct., at 1389, n. 5 (quoting W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 36, pp. 229–230 (5th ed. 1984)).
We have ‘‘made clear’’ that ‘‘Congress is presumed to legislate against the background’’ of that common-law rule. Lexmark, 572 U.S., at ––––, 134 S.Ct., at 1388 (internal quotation marks omitted). We thus apply it ‘‘to all statutorily created causes of action TTT unless it is expressly negated.’’ Ibid. (emphasis added; internal quotation marks omitted). ‘‘Whether a plaintiff comes within the zone of interests is an issue that requires us to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.’’ Id., at ––––, 134 S.Ct., at 1387 (internal quotation marks omitted).
A
Nothing in the text of the FHA suggests that Congress intended to deviate from the zone-of-interests limitation. The statute’s private-enforcement mechanism provides that only an ‘‘aggrieved person’’ may sue, § 3613(a)(1)(A), and the statute defines ‘‘aggrieved person’’ to mean someone who ‘‘claims to have been injured by a discriminatory housing practice’’ or who believes he ‘‘will be injured by a discriminatory housing practice that is about to occur,’’

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§§ 3602(i)(1), (2). That language does not hint—much less expressly provide—that Congress sought to depart from the common-law rule.
We have considered similar language in other statutes and reached the same conclusion. In Thompson v. North American Stainless, LP, 562 U.S. 170, 131 S.Ct. 863, 178 L.Ed.2d 694 (2011), for example, we considered Title VII’s private-enforcement provision, which provides that ‘‘ ‘a person claiming to be aggrieved’ ’’ may file an employment discrimination charge with the Equal Employment Opportunity Commission. Id., at 173, 131 S.Ct. 863 (quoting § 2000e–5(b)). We unanimously concluded that Congress did not depart from the zone-of-interests limitation in Title VII by using that language. Id., at 175–178, 131 S.Ct. 863. And in Lexmark, we interpreted a provision of the Lanham Act that permitted ‘‘any person who believes that he or she is likely to be damaged by a defendant’s false advertising’’ to sue. 572 U.S., at ––––, 134 S.Ct., at 1388 (internal quotation marks omitted). Even when faced with the broader ‘‘any person’’ language, we expressly rejected the argument that the statute conferred a cause of action upon anyone claiming an Article III injury in fact. We observed that it was unlikely that ‘‘Congress meant to allow all factually injured plaintiffs to recover,’’ and we concluded that the zone-of-interests test was the ‘‘appropriate tool for determining who may invoke the cause of action’’ under the statute. Id., at ––––, ––––, 134 S.Ct., at 1388, 1388–1389 (internal quotation marks omitted).
To be sure, some language in our older precedents suggests that the FHA’s zone of interests extends to the limits of Article III. See Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972); Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 109, 99

S.Ct. 1601, 60 L.Ed.2d 66 (1979); Havens Realty Corp. v. Coleman, 455 U.S. 363, 372, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982). But we have since described that language as ‘‘ill-considered’’ dictum leading to ‘‘absurd consequences.’’ Thompson, 562 U.S., at 176, 131 S.Ct. 863. And we have observed that the ‘‘holdings of those cases are compatible with the ‘zone of interests’ limitation’’ described in Thompson. Ibid. That limitation provides that a plaintiff may not sue when his ‘‘interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot be assumed that Congress intended to permit the suit.’’ Id., at 178, 131 S.Ct. 863 (internal quotation marks omitted). It thus ‘‘exclud[es] plaintiffs who might technically be injured in an Article III sense but whose interests are unrelated to the statutory prohibitions.’’ Ibid.
B
In my view, Miami’s asserted injuries are ‘‘so marginally related to or inconsistent with the purposes’’ of the FHA that they fall outside the zone of interests. Here, as in any other case, the text of the FHA defines the zone of interests that the statute protects. See Lexmark, supra, at ––––, 134 S.Ct., at 1389. The FHA permits ‘‘[a]n aggrieved person’’ to sue, § 3613(a)(1)(A), if he ‘‘claims to have been injured by a discriminatory housing practice ’’ or believes that he ‘‘will be injured by a discriminatory housing practice that is about to occur,’’ §§ 3602(i)(1), (2) (emphasis added). Specifically, the FHA makes it unlawful to do any of the following on the basis of ‘‘race, color, religion, sex, handicap, familial status, or national origin’’: ‘‘refuse to sell or rent TTT a dwelling,’’ § 3604(a); discriminate in the ‘‘terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith,’’ § 3604(b); ‘‘make, print, or publish

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TTT any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination,’’ § 3604(c); ‘‘represent to any person TTT that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available,’’ § 3604(d); ‘‘induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of’’ certain characteristics, § 3604(e); or discriminate in the provision of real estate or brokerage services, §§ 3605, 3606. The quintessential ‘‘aggrieved person’’ in cases involving violations of the FHA is a prospective home buyer or lessee discriminated against during the home-buying or leasing process. Our cases have also suggested that the interests of a person who lives in a neighborhood or apartment complex that remains segregated (or that risks becoming segregated) as a result of a discriminatory housing practice may be arguably within the outer limit of the interests the FHA protects. See Trafficante, supra, at 211, 93 S.Ct. 364 (concluding that one purpose of the FHA was to promote ‘‘truly integrated and balanced living patterns’’ (internal quotation marks omitted)).
Miami’s asserted injuries are not arguably related to the interests the statute protects. Miami asserts that it received ‘‘reduced property tax revenues,’’ App. 233, 417, and that it was forced to spend more money on ‘‘municipal services that it provided and still must provide to remedy blight and unsafe and dangerous conditions,’’ id., at 417; see also ante, at 1301. The city blames these expenditures on the falling property values and vacant homes that resulted from foreclosures. But nothing in the text of the FHA suggests that Congress was concerned about decreased property values, foreclosures, and urban

blight, much less about strains on municipal budgets that might follow.
Miami’s interests are markedly distinct from the interests this Court confronted in Trafficante, Gladstone, and Havens. In Trafficante, one white and one black tenant of an apartment complex sued on the ground that the complex discriminated against nonwhite rental applicants. 409 U.S., at 206–208, 93 S.Ct. 364. They argued that this discrimination deprived them of the social and economic benefits of living in an integrated community. Id., at 208, 93 S.Ct. 364. In Gladstone, residents in a village sued based on alleged discrimination in the home-buying process. 441 U.S., at 93–95, 99 S.Ct. 1601. They contended that white home buyers were steered away from a racially integrated neighborhood and toward an all-white neighborhood, whereas black home buyers were steered away from the all-white neighborhood and toward the integrated neighborhood. Id., at 95, 99 S.Ct. 1601. The plaintiffs thus alleged that they were ‘‘denied their right to select housing without regard to race.’’ Ibid. (internal quotation marks omitted). The village also sued, alleging that the FHA violations were affecting its ‘‘racial composition, replacing what is presently an integrated neighborhood with a segregated one’’ and that its budget was strained from resulting lost tax revenues. Id., at 110, 99 S.Ct. 1601. Finally, in Havens, one white and one black plaintiff sued after having posed as ‘‘testers,’’ for the purpose of ‘‘collecting evidence of unlawful steering practices.’’ 455 U.S., at 373, 102 S.Ct. 1114. According to their complaint, the owner of an apartment complex had told the white plaintiff that apartments were available, but had told the black plaintiff that apartments were not. Id., at 368, 102 S.Ct. 1114. The Court held that the white plaintiff could not sue, because he had been provided truthful information, but that the

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black plaintiff could sue, because the FHA requires truthful information about housing without regard to race. Id., at 374– 375, 102 S.Ct. 1114. In all three of these cases, the plaintiffs claimed injuries based on racial steering and segregation—interests that, under this Court’s precedents, at least arguably fall within the zone of interests that the FHA protects.
Miami’s asserted injuries implicate none of those interests. Miami does not assert that it was injured based on efforts by the lenders to steer certain residents into one neighborhood rather than another. Miami does not even assert that it was injured because its neighborhoods were segregated. Miami therefore is not, as the majority describes, ‘‘similarly situated’’ to the plaintiffs in Trafficante, Gladstone, and Havens. Ante, at 1303. Rather, Miami asserts injuries allegedly resulting from foreclosed-upon and then vacant homes. The FHA’s zone of interests is not so expansive as to include those kinds of injuries.
C
The Court today reaches the opposite conclusion, resting entirely on the brief mention in Gladstone of the village’s asserted injury of reduced tax revenues, and on principles of stare decisis. See ante, at 1304. I do not think Gladstone compels the conclusion the majority reaches. Unlike these cases, Gladstone involved injuries to interests in ‘‘racial balance and stability,’’ 441 U.S., at 111, 99 S.Ct. 1601 which, our cases have suggested, arguably fall within the zone of interests protected by the FHA, see supra, at 1303. The fact that the village plaintiff asserted a budget-related injury in addition to its racial-steering injury does not mean that a city alleging only a budget-related injury is authorized to sue. A budget-related injury might be necessary to establish a sufficiently con-

crete and particularized injury for purposes of Article III, but it is not sufficient to satisfy the FHA’s zone-of-interests limitation.
Although the Court’s reliance on Gladstone is misplaced, its opinion today is notable primarily for what it does not say. First, the Court conspicuously does not reaffirm the broad language from Trafficante, Gladstone, and Havens suggesting that Congress intended to permit any person with Article III standing to sue under the FHA. The Court of Appeals felt bound by that language, see 800 F.3d, at 1277, 801 F.3d, at 1266, and we granted review, despite the absence of a circuit conflict, to decide whether the language survived Thompson and Lexmark, see Brief for Petitioner in No. 15–1111, p. i (‘‘By limiting suit to ‘aggrieved person[s],’ did Congress require that an FHA plaintiff plead more than just Article III injury-in-fact?’’); Brief for Petitioner in No. 15–1112, p. i (‘‘Whether the term ‘aggrieved’ in the Fair Housing Act imposes a zone-of-interests requirement more stringent than the injury-in-fact requirement of Article III’’). Today’s opinion avoids those questions presented and thus cannot be read as retreating from our more recent precedents on the zone-of-interests limitation.
Second, the Court does not reject the lenders’ arguments about many other kinds of injuries that fall outside of the FHA’s zone of interests. We explained in Thompson that an expansive reading of Title VII’s zone of interests would allow a shareholder ‘‘to sue a company for firing a valuable employee for racially discriminatory reasons, so long as he could show that the value of his stock decreased as a consequence.’’ 562 U.S., at 177, 131 S.Ct. 863. Petitioners similarly argue that, if Miami can sue for lost tax revenues under the FHA, then ‘‘plumbers, utility companies, or any other participant in the local econo-

BANK OF AMERICA v. CITY OF MIAMI, FLA.
Cite as 137 S.Ct. 1296 (2017)

1311

my could sue the Banks to recover business they lost when people had to give up their homes and leave the neighborhood as a result of the Banks’ discriminatory lending practices.’’ Ante, at 1304 (citing petitioners’ briefs). The Court today decides that it ‘‘need not discuss’’ this argument because Gladstone and stare decisis compel the conclusion that Miami can sue. Ante, at 1304. That conclusion is wrong, but at least it is narrow. Accordingly, it should not be read to authorize suits by local businesses alleging the same injuries that Miami alleges here.
II
Although I disagree with its zone-ofinterests holding, I agree with the Court’s conclusions about proximate cause, as far as they go. The Court correctly holds that ‘‘foreseeability alone is not sufficient to establish proximate cause under the FHA.’’ Ante, at 1305. Instead, the statute requires ‘‘ ‘some direct relation between the injury asserted and the injurious conduct alleged.’ ’’ Ante, at 1305 (quoting Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992)).
After articulating this test for proximate cause, the Court remands to the Court of Appeals because it ‘‘decline[s]’’ to ‘‘draw the precise boundaries of proximate cause under the FHA’’ or to ‘‘determine on which side of the line the City’s financial injuries fall.’’ Ante, at 1306. But these cases come to the Court on a motion to dismiss, and the Court of Appeals has no advantage over us in evaluating the complaint’s proximate-cause theory. Moreover, the majority opinion leaves little doubt that neither Miami nor any similarly situated plaintiff can satisfy the rigorous standard for proximate cause that the Court adopts and leaves to the Court of Appeals to apply. See ante, at 1305 (‘‘The

general tendency in these cases, in regard to damages at least, is not to go beyond the first step’’ (internal quotation marks omitted)).
Miami’s own account of causation shows that the link between the alleged FHA violation and its asserted injuries is exceedingly attenuated. According to Miami, the lenders’ injurious conduct was ‘‘target[ing] black and Latino customers in Miami for predatory loans.’’ Brief for Respondent in No. 15–1111, p. 4 (internal quotation marks omitted). And according to Miami, the injuries asserted are its ‘‘loss of tax revenues’’ and its expenditure of ‘‘additional monies on municipal services to address’’ the consequences of urban blight. Id., at 6.
As Miami describes it, the chain of causation between the injurious conduct and its asserted injuries proceeds as follows: As a result of the lenders’ discriminatory loan practices, borrowers from predominantly minority neighborhoods were likely to default on their home loans, leading to foreclosures. Id., at 5–6. The foreclosures led to vacant houses. Id., at 6. The vacant houses, in turn, led to decreased property values for the surrounding homes. Ibid. Finally, those decreased property values resulted in homeowners paying lower property taxes to the city government. Ibid. Also, Miami explains, the foreclosed-upon, vacant homes eventually led to ‘‘vagrancy, criminal activity, and threats to public health and safety,’’ which the city had to address through the expenditures of municipal resources. Ibid. And all this occurred, according to Miami, between 2004 and 2012. See ibid. The Court of Appeals will not need to look far to discern other, independent events that might well have caused the injuries Miami alleges in these cases.
In light of this attenuated chain of causation, Miami’s asserted injuries are too

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137 SUPREME COURT REPORTER

remote from the injurious conduct it has alleged. See Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 532, n. 25, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). Indeed, any other conclusion would lead to disquieting consequences. Under Miami’s own theory of causation, its injuries are one step further removed from the allegedly discriminatory lending practices than the injuries suffered by the neighboring homeowners whose houses declined in value. No one suggests that those homeowners could sue under the FHA, and I think it is clear that they cannot. Accordingly, I would hold that Miami has failed to sufficiently plead proximate cause under the FHA.
III
For the foregoing reasons, I would reverse the Court of Appeals.

spect to plaintiffs’ drilling rigs and related items. The United States District Court for the District of Columbia, Robert L. Wilkins, J., 971 F.Supp.2d 49, granted defendants’ motion to dismiss in part, and the parties appealed. The United States Court of Appeals for the District of Columbia Circuit, Tatel, Circuit Judge, 784 F.3d 804, affirmed in part and reversed in part, and certiorari was granted.
Holding: The Supreme Court, Justice Breyer, held that a party’s nonfrivolous, but ultimately incorrect, argument that property was taken in violation of international law is insufficient to confer jurisdiction under the FSIA’s expropriation exception.
Vacated and remanded.
Justice Gorsuch took no part in the consideration of decision of the case.

,
BOLIVARIAN REPUBLIC OF VENEZUELA, et al., Petitioners v.
HELMERICH & PAYNE INTERNATIONAL DRILLING CO., et al. No. 15–423. Argued Nov. 2, 2016. Decided May 1, 2017.
Background: American parent company and its Venezuelan subsidiary brought action against Venezuelan Government and two government-owned entities under expropriation exception of Foreign Sovereign Immunities Act (FSIA), alleging a taking in violation of international law with re-

1. International Law O10.33
A party’s nonfrivolous, but ultimately incorrect, argument that property was taken in violation of international law is insufficient to confer jurisdiction under the Foreign Sovereign Immunities Act’s (FSIA) expropriation exception; rather, state and federal courts can maintain jurisdiction to hear the merits of a case only if they find that the property in which the party claims to hold rights was indeed ‘‘property taken in violation of international law’’ within meaning of the exception. 28 U.S.C.A. § 1605(a)(3).
2. International Law O10.33
To confer jurisdiction under the Foreign Sovereign Immunities Act’s (FSIA) expropriation exception, the relevant factual allegations must make out a legally valid claim that a certain kind of right is at issue (property rights) and that the relevant property was taken in a certain way (in violation of international law); a good argu-