Federal Appeals Court Affirms Lower Court Dismissal Of Cleveland Civil Suit Alleging Subprime Loan Peddlers Created A Public Nuisance

In Cleveland, Ohio, The Plain Dealer reports:

• A federal appeals court has ruled that Cleveland's attempt to punish banks for bankrolling subprime loans has no merit, leaving the city with little hope of ever collecting millions of dollars in damages related to the foreclosure crisis. The 6th Circuit U.S. Court of Appeals rejected arguments that the city's lawsuit should go to trial.

• A U.S. District Court judge dismissed the same lawsuit in May 2009, stating that the city could not prove that the banks were directly responsible for blight, crime and other problems foreclosures had caused in Cleveland. Law Director Robert Triozzi said Tuesday that the 3-0 ruling by the three-judge panel was disappointing. He said the city plans to ask the entire 6th Circuit to hear the appeal.

For more, see Cleveland loses appeal in nuisance lawsuit vs. financiers of subprime loans.

For the court ruling, see City of Cleveland v. Ameriquest Mortgage Securities, Inc., et al., No. 09-3608 (6th Cir. July 27, 2010).