Maurice Greenberg Loses Bid for Damages From A.I.G. Bailout

The appeals court also ruled that the lower court had not erred in denying A.I.G.'s shareholders up to $40 billion in damages they had sought as a result of the government's takeover.

Starr International, the Greenberg company that made the appeal as one of the largest shareholders of A.I.G. stock, did not have the legal standing to pursue the claims, the appeals court said

Those claims, the court said in its opinion, instead "belong to A.I.G., which has exercised its business judgment and declined to prosecute this lawsuit."

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In arguing their appeal last fall, the government's lawyers said doing nothing would have punished A.I.G. shareholders more by erasing the value of their stock in a bankruptcy filing. The lower court ruled that the bailout helped shareholders avoid this fate.

In its opinion on Tuesday, the appeals court said, "Outside third parties with leverage over a transaction, even in a take-it-or-leave-it scenario, do not necessarily have a responsibility to protect the interests of a counterparty, less so the interests of a counterparty's constituents."

Mr. Boies said he would ask the Supreme Court to review the decision.