Deutsche Bank Must Face Los Angeles Slumlord Claim Suit

Deutsche Bank AG must face a lawsuit by Los Angeles claiming the bank let foreclosed properties in low-income neighborhoods fall into disrepair and illegally evicted tenants to sell foreclosed buildings.

California Superior Court Judge Elihu Berle at an April 8 hearing denied Deutsche Bank’s request to dismiss the city’s lawsuit, according to court minutes.

“The court’s denial of Deutsche Bank’s motion and rejection of its attempt to avoid responsibility represents a significant win for the City of Los Angeles,” City Attorney Carmen Trutanich said yesterday in an e-mailed statement. “This ruling will now allow our action to move forward to trial and ultimately to holding the bank accountable.”

The city sued the Frankfurt-based bank two years ago, claiming Deutsche Bank had become one of the major “slumlords” in Los Angeles by buying more than 2,200 properties through foreclosure.

Trutanich in the complaint sought a court order for Deutsche Bank to clean up the Los Angeles properties and comply with the city’s municipal code, a $2,500 penalty per day for each violation of the city’s code, as well as restitution. The bank could be liable for “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 maintenances of the properties and any actions taken with respect to tenants of the foreclosed properties, the bank said.

“The court did not make any factual determinations regarding Deutsche Bank’s responsibility with respect to the allegations,” Duncan King, a Deutsche Bank spokesman, said in an e-mailed statement.

“While we are disappointed in this procedural decision allowing the case to proceed, we continue to believe that the LACA has sued the wrong party and will continue to defend ourselves vigorously.”

Berle’s written order denying Deutsche Bank’s motion, issued April 23 according to the city attorney’s statement, wasn’t immediately available from the court.

The case is People v. Deutsche Bank National Trust Co., BC460878, Superior Court of California (Los Angeles).

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