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City of Miami v. Wells Fargo & Co.

Court: 11th Circuit
Case Number: No. 14-14544, No. 14-14543
Decision Date: May 03, 2019
Case Type: Fair Housing
The Eleventh Circuit Court of Appeals held that the City of Miami adequately pled proximate cause in relation to some of the city's economic injuries when the pleadings were held to the standard required by the Fair Housing Act. Miami had brought lawsuits against Wells Fargo and Bank of America alleging that the financial institutions carried on discriminatory lending practices by intentionally targeting minority groups with predatory loans. As a result of these loans, the city alleged that there was a disproportionate rate of foreclosures amongst those minority groups, which lead to decreased property values in predominately minority neighborhoods, and subsequently reduced tax revenue for the city. The decrease in tax revenue for the city, consequently, caused increased expenditures for city services.

The first time the case came before the Eleventh Circuit the court held that Miami had standing under the Fair Housing Act and that it had adequately pled proximate cause. The Supreme Court agreed in part but remanded on the question of proximate cause. The Court held that proximate cause under the Fair Housing Act had to show some direct relation between the injury asserted and the conduct alleged. The Eleventh Circuit held that the city pled proximate cause in relation to some of the city's economic injuries when measured against the standard required by the Fair Housing Act. The court held that the pleadings set out a plausible claim by the city because the allegations of a substantial injury to the city's tax base was not just reasonably foreseeable, but was necessarily and directly connected to the conduct of the financial institutions. The court held that the injury to the city's finances was unique to the city and that only the city could allege and litigate this kind of injury to the tax base. The court, however, stopped short of finding that the pleadings showed a direct relation between the financial institutions' conduct and the increase in expenditures for municipal services. The court made clear that the case was merely at a motion to dismiss stage and that the court was merely evaluating the plausbility of the city's argument and not going any further.