Federal judge dismisses Bank of America from class action securities lawsuit

[JURIST] A judge for the US District Court for the Central District of California [official website] on Friday dismissed [order, PDF] Bank of America (BOA) [corporate website] from a $17 billion lawsuit involving securities based on mortgages issued by Countrywide Financial Corporation [NYT backgrounder], a former subsidiary of the bank. The class action suit [complaint, PDF] was filed by a number of investors who claim to have been financially harmed by Countrywide's misleading customer practices. Judge Mariana Pfaelzer dismissed BOA from the suit after the plaintiffs failed to prove a de facto merger, finding instead that two separate asset acquisition transactions in 2008 did not result in the effective merger of the businesses, thereby protecting BOA from successor liability. The plaintiffs still have claims pending against Countrywide and several other banks that served as underwriters of the securities, including Goldman Sachs Group Inc. and Deutsche Bank Securities Inc. [corporate websites]. The remaining defendants have also filed motions to dismiss [Bloomberg report], but those rulings have yet to be issued.

BOA has recently been the target of several lawsuits. In February, BOA reached a $410 million settlement in a class action suit [JURIST report] accusing the bank of excessive overdraft fees. In January, plaintiffs filed a lawsuit [JURIST report] against Countrywide in New York State Supreme Court [official website] alleging widespread fraud that resulted in substantial financial losses. Arizona Attorney General Terry Goddard filed a lawsuit in mid-December against BOA for misleading customers [JURIST report] in mortgage modification and foreclosure practices. Earlier in the month, the US Securities and Exchange Commission (SEC) [official website] reached a $137 million settlement agreement [JURIST report] with BOA over fraud charges [order, PDF] in a lawsuit that claimed BOA used anti-competitive bidding processes with 20 state municipalities. In June, BOA subsidiary Countrywide Home Loans, Inc. reached [JURIST report] a $108 million settlement agreement [text, PDF] with the Federal Trade Commission (FTC) [official website] in response to a lawsuit that charged it with collecting excessive fees from homeowners facing foreclosure.

 

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