Merrill Lynch said today that it filed a lawsuit against XL Capital Assurance to compel XLCA, a unit of Security Capital Assurance, to meet its contractual obligations for credit default swaps. In a lawsuit filed in the U.S. District Court in Manhattan, Merrill alleged that XLCA is attempting to avoid its financial obligations of up to $3.1 billion under seven credit default swaps. The bank wants a court order that each of the credit default swaps remains in full force and effect.

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