Bank of America was dismissed from a lawsuit brought by investors who bought mortgage-backed securities ("MBS's") sold by Countrywide Financial, the home lender BofA acquired in 2008.   U.S. District Judge Mariana Pfaelzer granted BofA's request to dismiss the claim against it on grounds that it can’t be held liable for actions of a unit.  The order was filed in Los Angeles. 

In her statement, Judge Pfaetzer noted ... that investors tried to show that 2 separate transactions in 2008, in which Bank of America, through a subsidiary, acquired and transferred the Countrywide assets, were a “de facto” merger.  The investors, however, didn’t sufficiently demonstrate they suffered an injury for the securities they bought;  furthermore, the statute of limitations had expired for some claims.   The Judge did allow plaintiffs to file an amended complaint to address these failings before she would rule on BofA's 8/20/10 request to dismiss it from the complaint.

Bank of America's Argument ... said in its 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. 

Investors' Argument ... claimed that Countrywide systematically disregarded lending guidelines for the loans it originated and sold as MBS's.  The other defendants in the case include Countrywide entities, the underwriters that sold the securities, and some of the mortgage lender’s former executives.  The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).   [Bloomberg, 4/23/11]