A U.S. judge on Monday ruled against American International Group
At issue in the case were two claims that AIG made against Starr International, which is run by former AIG Chief Executive Maurice Hank Greenberg.
AIG sought $4.3 billion of damages to recover millions of its shares held by Starr and to get compensation for stock sold. AIG also claimed that Starr International breached an oral agreement that Starr's AIG shares would be used to fund an executive retirement scheme for generations of AIG employees.
In a 58-page written judgment, Judge Jed Rakoff in U.S. District Court in Manhattan underlined a jury's July 7 finding that prevented the bailed-out insurer's bid to collect $4.3 billion in damages.
He also said, The court finds that AIG has failed to prove SICO's liability on AIG's counterclaim for breach of an express trust.
A spokesman for AIG declined to comment on the judge's ruling.
AIG had sought to establish that there was the creation of an oral trust in 1970, entrusting Starr International to use a block of AIG shares acquired in a company restructuring for company retirement programs for AIG employees. It charged Starr with breach of that trust, and with a second claim of conversion related to sales of the stock for the company's own use.
The jury ruled on the two claims and the judge was left with a final decision on the breach of trust claim.
Rakoff wrote that the law will not recognize such an oral trust unless the evidence of its creation is unequivocal ... this is a burden that AIG has not come close to shouldering.
The case is: American International Group v Starr International Company Inc 05-6283 in U.S. District Court for the Southern District of New York (Manhattan)
(Reporting by Grant McCool)