JPMorgan Chase & Co. (JPM:US), the biggest U.S. bank by assets, won a New York appeals court ruling upholding the dismissal of a lawsuit by the defunct commodities fund Amaranth Advisors LLC.
Amaranth collapsed in 2006 after losing $6.6 billion on natural gas trades. The fund sued New York-based JPMorgan in 2007 in state court in Manhattan, alleging bank executives helped cause its demise by sabotaging a bailout by Citadel Investment Group LLC.
Justice O. Peter Sherwood of New York’s trial-level Supreme court threw out the suit in August 2011, saying Amaranth officials can’t prove the executives’ statements were the reason Citadel officials decided to cancel the bailout.
An appeals panel in Manhattan upheld the dismissal today, saying Amaranth’s case relies on a statement indicating that JPMorgan had concerns about the impact of any potential bridge loan to the fund, instead of the defamatory statement alleged in its complaint.
The statement Amaranth now relies on “is not defamatory, as it simply expresses an opinion based on information available to all potential parties to the potential fund transaction,” the appeals court said in its ruling. “Furthermore, the statement is substantially true.”
The appeals court said it found “uncontroverted evidence” that JPMorgan “did consider, if only briefly, making a bridge loan to the fund and concluded that it was ‘less than creditworthy’ and a ‘potential preference risk.’”
The case is Amaranth LLC v. JPMorgan Chase & Co., 603756/2007, New York state Supreme Court, New York County (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Hytha at email@example.com