City of Los Angeles v. Bank of America Corporation

The city of Los Angeles (plaintiff) brought suit against Bank of America Corporation (defendant) pursuant to the Fair Housing Act of 1968, 42 U.S.C. § 3601 (FHA). The city alleged the bank engaged in an ongoing practice of lending discrimination against minorities. Specifically, the city alleged the bank engaged in redlining and reverse redlining by charging minority mortgagors unreasonably high interest rates not justified by the mortgagors’ credit history, using teaser interest rates disproportionately for minorities, and misleading minority borrowers about refinancing opportunities. The city presented statistical data showing that the bank was more likely to give borrowers in minority neighborhoods high cost and predatory loans. The city also presented evidence that there was a proportionally high number of bank foreclosures in minority neighborhoods, and alleged it was a result of these predatory practices. The city sought damages for (1) decreased property tax revenues resulting from the decreased property values of vacancies caused by the high number of foreclosures, and (2) the increased costs of the city’s services, such as police and fire, needed to fix the blight and minimize the dangerousness at the vacancies. The city also brought a claim for alleged unjust enrichment resulting from these practices. The bank filed a motion to dismiss based on lack of standing and failure to state a claim on which relief can be granted.