DOVER, Del. (AP) — The Delaware Supreme Court is weighing whether former shareholders of Countrywide Financial Corp. can pursue a lawsuit filed before the company was acquired by Bank of America Corp. in 2008.
A federal appeals court has asked the Delaware justices to clarify whether, under a “fraud exception” in Delaware law, the former Countrywide shareholders can continue a federal lawsuit filed in California.
Judges in Delaware and California previously ruled that the buyout eliminated the shareholders’ standing to pursue their derivative claims. Such claims are brought by shareholders on behalf of a corporation, usually against officers and directors.
But shareholder attorneys argued Wednesday that a 2010 ruling by the Delaware Supreme Court bolsters their contention that the fraud exception rule, which has never been used, allows their claim to proceed.