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Allstate Toxic Debt Case Against Countrywide is Narrowed

A judge threw out federal securities-law claims in Allstate Corp's fraud lawsuit against Bank of America Corp's Countrywide unit over $700 million of toxic mortgage debt, but said the insurer may pursue state law claims.

By Jonathan Stempel (Reuters) | Updated on October 25, 2011

Oct. 24 (Reuters)—A judge threw out federal securities-law claims in Allstate Corp’s fraud lawsuit against Bank of America Corp’s Countrywide unit over $700 million of toxic mortgage debt, but said the insurer may pursue state law claims.

U.S. District Judge Mariana Pfaelzer in Los Angeles said Allstate waited too long to sue over the debt, which is not covered by other Countrywide residential mortgage-backed securities (RMBS) litigation she oversees.

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