A California Superior Court has dismissed a lawsuit filed by the California Insurance Department alleging that Fremont General Corporation used the liquidation of one of the company's subsidiaries to dodge millions in taxes.
The amended complaint, dismissed late last month by the court in Los Angeles, was filed by the state against Fremont General over issues related to the insolvency of one of its subsidiary, Fremont Indemnity Corp.
In the suit, the state charged that Fremont General made use of net operating losses of Fremont Indemnity to avoid paying taxes on the company's other operating income.
Those net operating losses, the state argued, were the property of Fremont Indemnity and should have been claimed by it. According to their complaint, Fremont turned $900 million in losses into more than $300 million in net income.
In its dismissal of the case, the court found that the state "still failed to plead any affirmative misrepresentation which is actionable" in an amended complaint filed in August. The initial complaint was filed in June of 2004, when Fremont Indemnity went into liquidation.
Additionally, the court found that the "pleading is inadequate as to damage allegations."
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