Updates on BAC legal fights

There are a few eyes-catching news keep coming up for BAC these days.

Here is one bad news:

Shareholders suing Bank of America  Corp on Monday 02/06 won class-action status for their lawsuit  accusing the bank and various executives and directors of  fraudulently misleading them about the 2008 takeover of Merrill  Lynch & Co and size of Merrill’s losses and bonus payouts.

U.S. District Judge P. Kevin Castel in Manhattan on Monday  rejected Bank of America’s effort to deny certification, after  the lender claimed that investors could not prove they suffered  losses after relying on materially misleading statements or  omissions.

The case covers a variety of investors who owned BAC stock or call options between September 2008 and January  2009. Class certification lets plaintiffs pursue their case as a  group, which can cut costs, and can lead to larger recoveries  than if plaintiffs were to sue individually. – it might mean more $ for BAC to pay.

On the contrary, here are two big good news,

1st one,

The ruling of U.S. District Judge Mariana Pfaelzer of Los Angeles federal court on 02/02 is such a blow to Countrywide MBS investors. Pfaelzer, who’s overseeing the consolidated federal-court MBS litigation against Countrywide, dismissed Allstate’s successor-liability and fraudulent-conveyance claims against Bank of America, with prejudice.

Bank of America’s liability for Countrywide MBS failings is a huge issue for investors who want to recover their losses. In the bank’s proposed $8.5 billion breach-of-contract settlement with Countrywide investors, MBS trustee Bank of New York Mellon obtained an expert opinion that Countrywide has less than $5 billion in assets. That’s obviously a lot less money than MBS investors want to wring from BofA (and, for that matter, a lot less than the $15 billion the bank has taken in reserves for MBS liability). But Pfaelzer’s continued resistance to successor liability for BofA, especially given the considerable effort Quinn Emanuel put into the Allstate amended complaint, doesn’t bode well for investors. You can bet that lawyers for Countrywide and Bank of America will use the successor-liability issue as leverage in settlement talks. – this is a huge deal which means that even though BAC will open its pocket for settlement, the $ can be significantly less than $8.5b.

2nd one,

More than 40 states will sign a settlement with the top five mortgage servicers over alleged foreclosure abuses that arose more than one year ago, Iowa Attorney General Tom Miller said in a statement Monday night.

“The sign-on deadline for the proposed joint state-federal mortgage servicing settlement passed Monday with more than 40 states signing on,” Miller said “This enables us to move forward into the very final stages of remaining work. Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”

An official in one AG office said an announcement is expected at the end of this week at the earliest. – It look like the settlement date is looming.

Of course, we are not really 100% sure what will happen for BAC since it is a continuous legal fight. Lots of business entities and politicians all want to cut a bigger and bigger piece of pie from this settlement. Let us keep an eye on it and see what will unfold down the road.