Supreme Court rules cities can go after big banks under Fair Housing Act

In Bank of America Corp. v. City of Miami, the city complained that banks during the subprime crisis intentionally lent to minority ethnicity borrowers using riskier loans that led to foreclosures and vacancies. The foreclosures and vacancies led to diminished property tax revenue while increasing demand for police, fire and other city services, the city argued. Lower courts agreed that Miami could sue the banks.

Justice Stephen Breyer wrote the high court’s opinion that said a city is an aggrieved person under the FHA. His opinion was joined by Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.

However, the justices said it wasn’t clear if the city had shown the direct injury needed to the suit to proceed against Bank of America, Citigroup and Wells Fargo, telling the lower court to reconsider if Miami can sue the banks for their lending practices.

“A claim for damages under the FHA is akin to a ‘tort action’ … and is thus subject to the common-law requirement that loss is attributable ‘to the proximate cause, and not any remote cause,'” Breyer wrote for the high court. “The [Supreme] Court declines to draw the precise boundaries of proximate cause under the FHA, particularly where neither the 11th Circuit nor other courts of appeals have weighed in on the issue.

“Instead, 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.”

Justice Clarence Thomas wrote an opinion concurring in part and dissenting in part, which was joined by Justices Samuel Alito and Anthony Kennedy. Justice Neil Gorsuch did not participate. Thomas’ opinion agreed with Breyer’s opinion about proximate cause, but also wrote that Miami’s urban blight problems “fall outside the FHA’s zone of interests.”