Shares of MBIA jumped more than 10% Tuesday afternoon after a New York appeals court ruled in its favor, dismissing a lawsuit that had contested the company’s February 2009 restructuring.

The case was filed in May 2009 by more than a dozen major financial institutions. It is one of two lawsuits contesting MBIA’s restructuring.

The plaintiffs hold insurance policies issued by MBIA for structured finance products, including RMBS. They believe the value of MBIA’s guaranty was irreparably harmed when the insurer split its structured finance portfolio from its safer portfolio of municipal bonds.

The appellate division of the New York State Supreme Court ruled 3 to 2 in favor of MBIA.

MBIA has continued to pay all insurance claims since the restructuring, so “no breach of a specific contractual provision has been made out,” the court said in its 34-page decision. “In effect, plaintiffs seek an advisory opinion premised on future events that are beyond defendants’ controls and thus are speculative.”

MBIA earlier called the case “an improper collateral attack” on its regulator, the New York Insurance Department, which approved the restructuring.

If the banks wish to contest the approval of its restructuring, the insurer contends they must do so under Article 78 of New York Civil Practice Law and Rules, which would allow them to argue that the NYID decision was “arbitrary and capricious.” The banks in June 2009 filed such a lawsuit, which remains pending.

Robert Giuffra Jr., lead counsel for the banks and a partner at Sullivan & Cromwell, called Tuesday’s decision “far from the last word.” He vowed to vigorously pursue the Article 78 proceeding, while appealing Tuesday’s decision to the New York State Court of Appeals.

“As powerfully demonstrated in the dissent, the majority opinion is wrong on the law and ignores the allegations of the complaint,” Giuffra said in an e-mailed statement. “Next month, we will submit compelling evidence to the trial court [in the Article 78 proceeding] showing that MBIA used misleading and outdated financial numbers to obtain the New York Insurance Department’s approval of these fraudulent transactions.”

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