Bank of America Corp was dismissed from a lawsuit brought by investors who bought mortgage-backed securities sold by Countrywide Financial Corp, the home lender Bank of America acquired in 2008.
US District Judge Mariana Pfaelzer granted Bank of America's request to dismiss the claim against it on grounds that it can't be held liable for actions of a unit, according to an April 20 order filed in Los Angeles.
The investors failed to show that two separ-ate transactions in 2008, whereby Bank of America, through a subsidiary, acquired and transferred the Countrywide assets, were a "de facto" merger, Pfaelzer said.
The judge had dismissed the lawsuit in November, saying the investors didn't sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims.
The judge allowed the plaintiffs to file an amended complaint to address these failings before she would rule on Bank of America's August 20 request to dismiss it from the complaint.
Bank of America said in its August 20 filing that Countrywide remained a separate, wholly owned subsidiary of the bank and that, as a parent company, it can't be held liable for the mortgage lender's alleged wrongdoing.
The investors claim Countrywide systematically disregarded lending guidelines for the loans it originated and sold as mortgage-backed securities.
The other defendants in the case include Countrywide entities, the underwriters that sold the securities, and some of the mortgage lender's former executives.
From: Gulf News