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Business litigation doesn't bring big settlement to Los Angeles

Two years' worth of business litigation resulted in a $10 million settlement between the city of Los Angeles and Deutsche Bank recently. It was, however, only a fraction of the amount that Los Angeles was seeking and will not likely be paid back by the bank.

Los Angeles alleges that the bank failed to properly maintain properties in the city that it had foreclosed on. Among the complaints in the business litigation were that the bank illegally evicted residents of those homes and left the unoccupied homes to be damaged and inhabited by squatters. The bank reportedly foreclosed on more than 2,000 California homes between 2007 and 2011.

The bank argued that loan servicers -- not the bank itself -- were contractually responsible for maintaining the properties. The bank did not admit to any wrongdoing in the settlement and a bank representative said that the settlement will be paid by loan servicers and securitization trusts on the properties. The city continues to contend that the bank is responsible for ensuring that the foreclosed properties are maintained to city standards.

The business world works through a series of contracts. Just as the loan servicers had a contractual obligation to the bank to maintain the properties that were foreclosed on, the bank also had a contractual obligation with the city.

Often, breach of contract suits are resolved as this one was, through an out-of-court settlement. When settling out of court, representatives for each side discuss the merits of the suit and whether the defendant is willing to pay the price requested. Ultimately, both sides may agree to a settlement price and other provisions. If the sides are unable to agree on a settlement through alternative dispute resolution methods such as mediation, then the lawsuit could proceed to court.

Source: Los Angeles Times, "L.A. settles for $10 million in Deutsche Bank slumlord lawsuit," Ari Bloomekatz, June 29, 2013

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