(Bloomberg News) American International Group Inc. was blocked from pursuing some claims against Bank of America Corp.'s Countrywide unit that are part of a lawsuit over $10 billion in losses related to residential mortgage-backed securities.
U.S. District Judge Mariana Pfaelzer in Los Angeles yesterday dismissed AIG's securities-law claims as untimely because they were filed more than three years after the bonds were first sold. The judge also said some state-law claims by AIG units in Arizona, California, Texas and Tennessee were time barred.
The claims against Countrywide were part of a complaint AIG filed in New York state court last year, alleging it was a victim of a "massive fraud." The claims against Countrywide were removed to federal court in Los Angeles, where Pfaelzer is presiding over a group of consolidated lawsuits by investors in Countrywide's mortgage-backed securities.
The New York-based insurer alleges it was misled into believing that loans underlying its investment were issued according to certain underwriting guidelines that in fact had been "long abandoned," according to the complaint. The only measure of whether a loan would be approved was whether it could be packaged into bonds and sold to investors such as AIG, the company said.
AIG to Proceed
AIG said that the court "largely rejected Bank of America's attempt obtain the dismissal of AIG's more than $10 billion in claims."
"AIG can and will continue to pursue more than 98 percent of the recovery it seeks," the company said in an e-mailed statement. "We are not surprised that the court has barred AIG's federal claims in the same way it has for other RMBS investors and will await the outcome of various appeals already filed on that issue."
Lawrence Grayson, a spokesman for Bank of America, declined to comment.
AIG's claims against Charlotte, North Carolina-based Bank of America and Merrill Lynch, which were part of the original suit, are in federal court in New York.
The case is AIG v. Countrywide, 11-10549, U.S. District Court, Central District of California (Los Angeles).