June 19 (Bloomberg) -- Deutsche Bank AG reached a settlement with the city of Los Angeles to resolve a lawsuit claiming the bank acted like a “slumlord” and let foreclosed homes in low-income neighborhoods fall into disrepair.
The bank and the Los Angeles city attorney filed a joint notice of settlement June 17 in California state court. The two sides reached an agreement in principle and are in the process of completing the documentation, according to the filing.
Terms of the settlement of the two-year-old lawsuit, which also accused Deutsche Bank of illegally evicting tenants, weren’t disclosed in the filing.
Los Angeles sued the Frankfurt-based bank in May 2011, claiming Deutsche Bank had become one of the major “slumlords” in the city by buying more than 2,200 properties through foreclosure. California Superior Court Judge Elihu Berle at an April 8 hearing denied the bank’s request to dismiss the case.
City Attorney Carmen Trutanich had sought a court order for Deutsche Bank to clean up the properties and comply with the municipal code, a penalty of $2,500 a day for each violation of the code and restitution. The bank faced liabilities of “hundreds of millions of dollars,” the city attorney said in 2011.
The bank said when the lawsuit was filed that the city sued the wrong party. Loan servicers, not Deutsche Bank as trustee, were contractually responsible for maintaining the properties and for any actions taken with respect to tenants of the foreclosed properties, the bank said.
Duncan King, a spokesman for Deutsche Bank in New York, declined to comment on the settlement. Representatives of Trutanich didn’t immediately respond to calls and e-mails seeking comment.
The case is People v. Deutsche Bank National Trust Co., BC460878, Superior Court of California (Los Angeles).
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