Eleventh Circuit Allows Miami Housing Discrimination C ase to Proceed

In City of Miami v. Bank of America Corp., No. 14-14543, 2015 WL 5102581 (11th Cir. Sept. 1, 2015), the Eleventh Circuit reversed the Southern District of Florida’s grant of a motion to dismiss the City of Miami’s Fair Housing Act claims against Bank of America, remanding the case back to the district court for further proceedings. Reviewing the case de novo, the Eleventh Circuit disagreed with the district court’s conclusions on statutory standing and proximate cause, and provided guidance for the district court to consider on remand when determining whether the statute of limitations had run. The plaintiff’s complaint also included a Florida state law claim for unjust enrichment, but the Eleventh Circuit upheld the district court’s dismissal of that claim. The same day, the Eleventh Circuit had similar findings in cases the plaintiff brought against CitiGroup and Wells Fargo.

The City of Miami’s complaint alleged that the defendant violated the Fair Housing Act by targeting minorities for predatory housing loans and that these loans led “minority-owned properties to fall into unnecessary or premature foreclosure.” The plaintiff sought declaratory and injunctive relief, as well as damages for reduced property tax revenue, increased costs of municipal services, punitive damages and attorney’s fees. The complaint accused Bank of America of violating the Fair Housing Act by refusing to extend mortgage credit to minorities, and when the bank did extend credit, extending it on predatory terms. The complaint alleged both disparate treatment and disparate impact on minorities. To prove their allegations the plaintiffs presented statistics to show the “link between the race of the borrowers, terms of the loans and the subsequent foreclosure rate.” The district court granted Bank of America’s motion to dismiss because the plaintiff lacked statutory standing, failed to sufficiently plead proximate cause, and had allowed the statute of limitations to run. The plaintiff asked for leave to amend the complaint, but the district court did not allow amendment on the grounds of futility. The plaintiff appealed the dismissal to the Eleventh Circuit.

In its opinion, the Eleventh Circuit first addressed whether the plaintiff had constitutional standing under Article III to bring the Fair Housing Act claim. The district court only addressed statutory standing. The Eleventh Circuit found that the plaintiff sufficiently alleged injury in fact and causation for Article III standing. After reviewing Supreme Court precedent, the court declined to narrowly apply the “zone of interests” test for statutory standing and concluded that statutory standing extended to the full reach of Article III standing. The court did note that the trend may be for the Supreme Court not to find standing in such a case, but left it up to the Supreme Court to overrule its own contrary precedent.

Next, the court held that the plaintiffs were required to plead proximate cause for a Fair Housing Act claim. Bank of America asked the court to apply a “directness” test for proximate cause, but the court applied a less strict “foreseeability” test instead. Under the foreseeability test, the court held that the plaintiff adequately plead proximate cause. The court then addressed the statute of limitations. The Fair Housing Act has a two year statute of limitations, but the plaintiff did not plead any violations within the statutory time frame. The court left the question for the district court to decide on remand, but held that the “continuing violation” exception would apply if an amended complaint alleged a violation for which the statute of limitations had not yet run. Finally, the court upheld the dismissal of the state law unjust enrichment claim. The court did not speak as to the merits of the plaintiff’s claims, but held the city did have constitutional standing to bring the claims and that the district court erred by dismissing the claims with prejudice.

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