On Monday night, AIG filed a motion to stay its $7 billion securities fraud case claiming that Countrywide duped the insurer into purchasing mortgage-backed securities. That motion went a long way toward explaining a maneuver AIG's lawyers at Quinn Emanuel Urquhart & Sullivan pulled Friday, when they filed a declaratory judgment suit in New York State Supreme Court asking for a New York judge to rule whether AIG lost its right to assert securities fraud claims when it sold its MBS portfolio to the Federal Reserve Bank of New York in 2008. But AIG's latest tactic raises questions of its own. Is the insurer scared to face a ruling on the claims-ownership issue in the Countrywide case, where it has been fully briefed? Or is the stay motion a smart way for the insurer to preserve potential claims against other MBS sponsors and underwriters?

I believe the answer is both. As I've explained, AIG's declaratory judgment complaint in New York state court seemed to be a response to filings by Fed officials in AIG's case against Countrywide, which is proceeding as part of the consolidated Countrywide securities litigation before U.S. District Judge Mariana Pfaelzer in federal court in Los Angeles. A Fed vice president and deputy general counsel both supplied Countrywide with declarations outlining the Federal Reserve's view that when it bought AIG's MBS portfolio, it acquired all litigation rights stemming from those securities. Countrywide's lawyers at Reed Smith and Munger, Tolles & Olson have moved to dismiss AIG's case on those grounds, arguing that AIG can't assert claims it doesn't own. The Fed declarations, as well as letters exchanged between AIG and Fed officials in the fall of 2011 as they tried to reach an understanding of who owns what under the 2008 MBS purchase agreement, are now all part of the record before Pfaelzer, which also includes a full set of briefs from both sides.

In the normal course of litigation, in other words, Pfaelzer would surely rule on Countrywide's dismissal motion before AIG gets a definitive answer in its new declaratory judgment suit in New York. I speculated yesterday -- before AIG filed its stay motion in Pfaelzer's court -- that the insurer sued in New York to make a statement in the court that will eventually decide whether to approve Bank of America's proposed $8.5 billion settlement with holders of Countrywide mortgage-backed notes. As you know, the Fed and AIG have quite different views of that settlement, which would resolve noteholders' breach-of-contract (but not fraud) claims. AIG is the settlement's leading objector; the Fed was part of the group that negotiated the BofA deal. Fed officials, moreover, have accused AIG of objecting to the settlement simply to attain leverage in the insurer's fraud case against BofA, Countrywide and Merrill Lynch.

The stay motion filed Monday night makes it clear that AIG's declaratory judgment suit wasn't just for the sake of appearances. AIG argues that it doesn't make sense for Pfaelzer to interpret the contract it signed with the Federal Reserve because Countrywide isn't even a party to that contract, which involves issues of New York law and includes a forum selection clause directing litigation to state court in New York. AIG also points out, crucially, that only some of the mortgage-backed securities it sold to the Fed in 2008 were originated by Countrywide. A ruling by Pfaelzer in the Countrywide case, AIG says, wouldn't resolve the issue of its standing to bring claims against other MBS originators, underwriters and sponsors. Only a definitive contract interpretation from New York, according to AIG, can foreclose piecemeal challenges to its standing.

If we take AIG at its word, the stay motion is a good (and necessary) move, a way for the insurer to preserve its ability to bring fraud claims against the other banks that sold it mortgage-backed securities. A ruling by Pfaelzer that AIG doesn't own those claims wouldn't be binding precedent in future cases against other banks, but it sure wouldn't help AIG in presuit settlement talks, which are all about leverage. Filing the New York suit and moving to stay the case in Pfaelzer's court, at the very least, buys AIG some time.

On the other hand, the insurer is not maneuvering from a position of strength. Consider the timing of the New York filing. Based on the letter exchange disclosed in the Countrywide case, AIG has known since the fall of 2011 that the Fed disputes its interpretation of the MBS purchase agreement. Countrywide explicitly challenged AIG's ownership of the fraud claims back in October. Yet AIG didn't bring its declaratory judgment suit to clarify the terms of the contract until last week -- after the Fed declarations supporting Countrywide's argument entered the record before Pfaelzer. If AIG weren't concerned about that record, why wouldn't it take its chances with Pfaelzer, as it was apparently prepared to do until recently? After all, if AIG won a ruling from Pfaelzer that it has standing to sue Countrywide, it would improve its leverage with other MBS issuers.

Prolonging uncertainty is only a good move if certainty favors the other side.

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