In 2008, plaintiffs' lawyers were so close to lassoing onetime Countrywide chairman Angelo Mozilo in a derivative suit that they could practically smell his aftershave. The housing market had crashed, new details of Countrywide's dubious underwriting were emerging every day and the mortgage lender's shares had plummeted from $45 to $5. Shareholders in a consolidated derivative suit before U.S. District Judge Mariana Pfaelzer had survived a motion to dismiss their claims against Countrywide's directors and officers and were headed into discovery.

You know what happened next: Bank of America acquired what remained of Countrywide. And that was the end of the derivative suit against the Countrywide board, according to a December 2008 ruling by Pfaelzer, who found that the old Countrywide shareholders didn't have standing to sue because the stock-for-stock BofA deal extinguished their stock ownership.

On Thursday, more than four years after their suit was tossed, shareholders filed a brief at the Delaware Supreme Court, arguing that public policy, as well as dicta in a March 2011 ruling by this same court, demands accountability for shareholders damaged by the likes of the Countrywide board. Directors whose misconduct has pushed their companies into fire-sale mergers shouldn't be permitted to shed liability by dint of those mergers, argue shareholder lawyers from Bernstein Litowitz Berger & Grossman, Grant & Eisenhofer and Wolf Popper.

"In these exceptionally rare circumstances, shareholders of the damaged corporation who seek to prosecute (derivative) claims should not be deprived of standing simply because the merger, rendered inevitable by the very fraud that forms the basis of those claims, closes," the brief said. "To hold otherwise would ignore the economic realities of the situation, allow corporate fiduciaries who plainly abused their office for personal profit to escape liability for their malfeasance, and provide perverse incentives for corporate directors seeking to protect themselves from personal liability."

If you're wondering why that impassioned argument is in a brief to the Delaware Supreme Court, considering that the derivative suit it addressed was being litigated in federal court in Los Angeles, it's because in January (as I've reported) the 9th Circuit Court of Appeals certified a crucial question from the Countrywide derivative case to Delaware's high court. The federal appeals court asked the state justices to clarify whether former shareholders of an acquired company have standing to continue with derivative claims against directors if they can plausibly allege that the board's fraudulent conduct pushed the company into a disadvantageous (albeit legitimate) merger. Delaware's high court accepted the case last month. Wednesday's brief is the opening salvo in the merits consideration of the standing question.

Shareholders are confident that they have more than public policy considerations going for them. As the brief explains, the Delaware Supreme Court has discussed this very issue, in a related case against Countrywide. And though the court's musing was in dicta and thus not precedential, its language certainly seems to bode well for the plaintiffs. In an en banc opinion in March 2011, in a case captioned Arkansas Teacher Retirement System v. Caiafa, the Delaware justices affirmed a Chancery Court holding that derivative plaintiffs from the California case could not block the settlement of a Delaware shareholder suit over the BofA merger. But then the court went on to consider whether Delaware's longstanding fraud exception to the rule that plaintiffs must own stock to pursue derivative claims should apply when the company is driven into a merger by the board's misconduct. The Delaware justices seemed to imply that the fraud exception extends to those circumstances.

"Although we agree that the Countrywide directors and stockholders ran from the crest of a ruinous wave of losses, we cannot ignore the close connection between that wave's crest and its underlying trough," Chief Justice Myron Steele wrote in the Arkansas Teacher decision. "No one disputes that Countrywide needed to sell itself, and at a price significantly below its recent share price. An otherwise pristine merger cannot absolve fiduciaries from accountability for fraudulent conduct that necessitated that merger." Whether the merger that resulted from the supposed fraud was part of the board's plan (a scenario already encompassed by the fraud exception) or "merely ties together, like patchwork, a snowballing pattern of fraudulent conduct and conscious neglect," the Delaware court said, "the result is the same and would not fairly constitute a proper discharge of the fiduciary duties of directors of a Delaware corporation."

The new brief by the derivative plaintiffs urges the Delaware high court to take the opportunity presented by the 9th Circuit certification to clarify explicitly what it seemed to say in Arkansas Teacher, that "Delaware law does not allow officers and directors of a publicly traded company, through violations of their fiduciary duties and fraudulent conduct, to cause the near collapse of a company, and then escape liability for shareholder derivative claims through a necessary fire sale merger." Unless shareholders can sue directors and officers on behalf of the supposedly defrauded company, the brief argues, there will be "perverse incentives for corporate fiduciaries: Your fraudulent conduct may expose you to liability, unless, like Mozilo, your conduct takes the company to the brink of failure and the only solution is to sell it to another company, in which case you can evade liability. This cannot be the message this court wants to send to corporate fiduciaries."

Of course, Delaware's dicta in Arkansas Teacher isn't quite as straightforward as the plaintiffs' brief makes it out to be. The opinion calls shareholders "injured parties" and refers to their "post-merger standing to recover damages instead of the corporation." The derivative plaintiffs read that sentence to mean that the Delaware Supreme Court believes shareholders whose stock disappears in a merger still have standing to pursue claims against the board in a derivative suit. But in August 2012, a California appeals court offered a different interpretation of Delaware's holding, in a decision called Villari v. Mozilo. (Yes, believe it or not, the California appellate opinion involves yet another case against the former Countrywide CEO and his erstwhile fellow directors.)

The California Court of Appeal, Second District, said that while Arkansas Teacher might justify direct shareholder claims against board members, it doesn't give former shareholders the right to sue derivatively on behalf of the company acquired through a legitimate merger. Any other interpretation, the California court said, "is at odds with long settled Delaware law and is not supported, to our knowledge, by any authority in any other jurisdiction." (The new plaintiffs' brief contends the California opinion misreads Delaware's dicta.)

I've said before that Delaware's clarification of the fraud exception could end up having broad implications for corporate boards of troubled companies. With an explicit call for the state Supreme Court to consider the public policy significance of its ruling, the plaintiffs are underlining that point.

A Bank of America spokesman declined to comment.

Follow us on Twitter: @AlisonFrankel, @ReutersLegal  | Like us on Facebook