(Rick Kopstein)

Ever since then–New York Supreme Court Justice Barbara Kapnick approved an $8.5 billion settlement between Bank of America and mortgage-backed securities investors last month, interested parties have debated what should happen next. BofA and an investor group backing the deal asked Kapnick’s successor, Saliann Scarpulla, to issue a final judgment that they prevailed over other investors who challenged the adequacy of the settlement. The most high-profile objector, American International Group Inc., urged Scarpulla to keep the case open, arguing that Kapnick left issues unresolved in the Jan. 31 ruling—her last before joining New York’s intermediate appeals court.

Scarpulla brought that debate to a quick end on Wednesday, stating from the bench that she’ll soon declare the case closed, as BofA requested. “The settlement agreement says what it says,” Scarpulla said at the hearing, according to our affiliate New York Commercial Litigation Insider. “If you’re unhappy with it and you’re unhappy with Justice Kapnick’s ruling, your remedy is to go to the Appellate Division and seek a stay, not to come to me and seek a stay of the supplemental proceedings.”

The settlement, first announced in 2011, resolves claims that BofA’s Countrywide Financial unit misled investors about the riskiness of roughly 500 MBS trusts that it sponsored before the financial crisis. A group of 22 institutional investors represented by Kathy Patrick of Gibbs & Bruns negotiated the deal, which would be binding on all investors in the trusts. Bank of New York Mellon, which served as trustee for the MBS trusts, threw its weight behind the deal.

Per an agreement by the parties, the settlement required the approval of a judge under Article 77 of New York’s civil code, which allows a trustee to get a judge’s input on whether it acted reasonably. Kapnick held a 10-week bench trial in 2012, giving AIG’s lawyers at Flemming Zulack Williamson Zauderer a chance to argue that the deal was inadequate and collusive. The task of defending the deal fell on Patrick and her colleagues at Gibbs & Bruns, as well as BNYMellon’s attorneys at Mayer Brown and Dechert.

In Kapnick’s Jan. 31 ruling, she concluded that there were good reasons for BNYMellon to think that $8.5 billion was a good result for certificate-holders. She refused, however, to sign off on one part of the settlement that resolved claims that BofA should repurchase a certain type of home loans pooled into the MBS trusts. AIG lawyer Mark Zauderer of Flemming Zulack has argued that those claims are worth billions.

In the days that followed, AIG fought to keep the Article 77 case open at the trial court. AIG’s lawyers argued that Kapnick left major questions unanswered, like which trusts are covered by the settlement and how funds will be disbursed. Scarpulla gave AIG a glimmer of hope on Feb. 5, agreeing to temporarily delay the issuance of a final judgment.

Scarpulla said at Wednesday’s hearing that she won’t enter final judgment until she’s had a chance to review an outstanding motion in which AIG seeks to vacate Kapnick’s ruling. If she denies that motion, which appears nearly certain, AIG’s only hope is to appeal Kapnick’s ruling to the U.S. Court of Appeals for the Second Circuit. AIG said in a statement that it “looks forward to pressing ahead with its appeal at the appropriate time.”