A federal judge threw out an investor's lawsuit that claimed Bank of America's 2008 acquisition of home loan giant Countrywide Financial amounted to a fraud on creditors, the Daily Journal reports.
U.S. District Court Judge Mariana Pfaelzer dismissed with prejudice plaintiffs' claim of successor liability and fraudulent conveyance, ruling that Bank of America is not liable for judgments made against Countrywide.
She described plaintiff's argument that the deal was structured to defraud "maddeningly circular."
The decision saves BofA from having to make payments as investors chase Countrywide for billions of dollars for alleged fraud.
The dismissal could have an impact beyond the plaintiff Allstate Insurance Co. More than a dozen similar cases-a significant percentage of the Countrywide buyout litigation--are in Pfaelzer's court, and other courts could cite her ruling.
Plaintiffs lawyers also may have to review their settlement options.
