CHICAGO – A Chicago federal magistrate judge has ordered Cook County officials who are suing Bank of America for allegedly discriminatory lending to tell the bank when they learned of a similar suit by the State of Illinois, which the bank believes will show some of the county's claims are barred by the statute of limitations.
The decision was isseud April 30 by Magistrate Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois.
In March 2014, Cook County lodged a suit against North Carolina-based Bank of America and its subsidiaries Countrywide and Merrill Lynch, alleging the banks made home loans to minorities, but with rates and terms more burdensome than loans extended to whites with similar finances. This practice violated the U.S. Fair Housing Act, according to the county.
The county said such practices fueled a wave of foreclosures, as the loans "strip equity from minority homeowners," who fail to make more expensive payments and slip into default. As a result, neighborhoods are scarred with vacant houses and home values drop, depriving the county and other governmental bodies of billions in property tax revenue and governmental services related to foreclosures.
Cook County Board President Toni Preckwinkle
The case is similar to others the county has brought both before and since against other lenders, including Wells Fargo and HSBC. The State of Illinois filed a similar action in 2010.
Bank of America filed motions to make county officials disclose when the officials learned of the state's 2010 suit, because the bank said the state and county suits are overlapping. As a consequence, such knowledge on the part of officials could bar county claims stemming from prior to the expiration of the two-year statute of limitations, which would have been 2012, in the bank's view.
The county officials in question are County Board President Toni Preckwinkle, Special Legal Counsel to the President Laura Felicione, and former State's Attorney Anita Alvarez, as well as Preckwinkle and Felicione's assistants.
The county contended it is not subject to the two-year statute because the "continuing violation doctrine" applies. Under this doctrine, none of the county's claims can be time-barred because the alleged violations were continuing to occur at the time the county's suit was filed.
Rowland found the bank's requests "relevant" and not "unduly burdensome or out of proportion to the needs of the case," ordering the officials to comply.
The bank also wanted to dig into the officials' possible knowledge of the state suit after the county suit was filed, as a way for the bank to undermine the continuing violation doctrine. However, Rowland refused, restricting the bank's discovery to any knowledge obtained between 2011 and the date the county's suit was filed in March 2014.
"Defendants offer no justification for the relevance of knowledge and notice after the lawsuit was filed," Rowland observed.
Cook County is represented by Evangelista Worley LLC, of Atlanta, Georgia; Milberg, Tadler, Phillips, Grossman LLP and Milberg LLP, both of New York City; and James D. Montgomery & Associates of Chicago.
Bank of America and its subsidiaries are defended by Goodwin Proctor LLP of Boston and Washington, D.C. and Winston & Strawn of Chicago.