Perhaps the New Year has brought a fresh set of luck for the beleaguered bank. After basically taking it on the chin again and again in 2011, Bank of America Corp. (BofA) caught a break in its battle with Allstate Insurance Co.
BofA won dismissal yesterday from Allstate’s lawsuit against Countrywide Financial Corp., alleging the mortgage lender misrepresented the $700 million in mortgage-backed securities that Allstate had purchased between March 2005 and June 2007. BofA bought Countrywide for $4.2 billion in July 2008, and assumed most of its liabilities at the time.
U.S. District Judge Mariana Pfaelzer found that the evidence Allstate provided was insufficient to support its allegations that BofA set out to defraud Countrywide’s creditors.
In October 2011, Judge Pfaelzer granted BofA’s request to be dismissed from the case and gave Allstate permission to amend its claims. In the revised complaint, Allstate alleged that BofA structured its acquisition of Countrywide in such a fashion as to strip the unit of all its worthwhile assets and leave a “raided” shell for creditors to sue.
Unfortunately for Allstate, this case has been trouble from the start. Back in June 2011, the case took a wrong turn when a New York judge granted a motion by BofA to move the case to the Western Division of the Central District of California.
For more analysis on the case and what it could mean for future BofA settlements, read Bloomberg.