NEW YORK (Bloomberg) Maurice (Hank) Greenberg, the former American International Group Inc chief executive officer, seeks to break new ground in lawsuits challenging the US takeover of the insurer in a bailout that reached $182 billion.Greenberg’s Starr International Co sued the US government on November 21, calling the public assumption of 80 percent of stock in the insurer in 2008 an unconstitutional “taking” of property that requires $25 billion in compensation.Starr also sued the Federal Reserve Bank of New York, saying it breached its duty to AIG shareholders by loaning $85 billion at 14.5 percent while offering better terms to banks in a “backdoor bailout.” AIG almost collapsed after bets tied to the housing market soured, and the bailout was revised at least four times before reaching $182 billion.Both complaints were filed by attorney David Boies, who represented the US in its Microsoft Inc 1999 antitrust trial and Al Gore in the Florida presidential recount litigation in 2000.“Any time David Boies is asking for $25 billion, I would say this is not a normal case,” said Robert Thomas of the Honolulu firm Damon Key Leong Kupchak Hastert.“He takes cutting edge cases in unexplored areas of law,” said Thomas, who specialises in land-use and eminent domain. “It’s audacious. As someone who represents plaintiffs in these kinds of cases, I’d say more power to him. But it’s a stretch.”Boies convinced a judge that Microsoft Corp was a monopolist and successfully defended Starr against an AIG claim in 2009 that it looted the insurer of $4.3 billion in stock. He also worked for National Basketball Association players in labour talks that just concluded.Boies didn’t respond to requests for comment on his chances of success in the Starr cases.He sued the Federal Reserve in US District Court in New York, and the takings case is in the US Court of Federal Claims in Washington. That court handles cases against the federal government for money, including claims that the US took private property for public use without just compensation in violation of the Fifth Amendment to the Constitution.Most of those cases involve the loss of property value through regulation, Thomas said.Starr, AIG’s largest shareholder at the time of the bailout, claims that in the midst of the financial crisis in September 2008, the US took 80 percent of AIG’s equity while violating the constitutional rights of shareholders to due process and equal protection of the law.While the bailout was “ostensibly designed to protect the United States economy and rescue the country’s financial system,” Starr claims, “the ends could not and did not justify the unlawful means employed by the government to achieve that goal.”Greenberg led AIG for almost four decades though 2005, resigning amid an investigation by New York Attorney General Eliot Spitzer into accounting practices. Greenberg is also chairman and CEO of CV Starr & Co.Before recovering compensation for a taking, Starr must accept the government’s underlying premise for the action and not challenge its validity, according to attorney Jerry Stouck of Greenberg Traurig LLP in Washington.“It’s assumed that if they took your property, they did it for a good reason,” Stouck said. “The issue is whether the 80 percent equity in AIG was taken from its owner under circumstances that require the government to pay for that stake.”Takings cases have produced mixed results at the Supreme Court in recent years. In 1992, it ruled in Lucas v South Carolina Coastal Council that a landowner is entitled to compensation when regulators bar all development on a parcel.In 2005, the court gave local governments broad power to take over private property to make way for shopping malls, office parks and sports stadiums.Government agencies can constitutionally take property as part of an economic development plan and transfer it to another party, as long as the landowner is compensated, the court ruled in a case involving development in New London, Connecticut.Starr argues that AIG was caught in a liquidity crisis hastened by the Fed’s denying the insurer access to lending through its so-called discount window.The central bank struck the AIG equity deal a day after the Lehman Brothers Holdings Inc. bankruptcy on September 15, 2008. Starr claims the US could have lent money without demanding equity, as it did with foreign banks and other lenders.“It is important to remember that the government provided assistance to AIG and stopped it from collapsing in order to prevent a meltdown of the entire global financial system,” said Tim Massad, assistant secretary for financial stability at the US Treasury. “Our actions were necessary, legal and constitutional. We are reviewing the lawsuit and expect to defend our actions vigorously.”Jack Gutt, a spokesman for the New York Fed, said the allegations have no merit.“AIG’s board of directors had an alternative choice to borrowing from the Federal Reserve, and that choice was bankruptcy,” Gutt said. “Bankruptcy would have left all AIG shareholders with worthless stock. The Federal Reserve’s actions with regard to AIG helped to restore financial stability in the United States during a period of intense volatility and vulnerability in the US economy.”Starr must show that it suffered an injury that requires compensation, said Vermont Law School professor John Echeverria.“That depends on a showing that the assets were worth X before the government acted and X minus Y after the government acted,” Echeverria said. “The suit is on its face unappealing and unattractive. The court will look with great scepticism on a claim seeking billions of dollars in taxpayer funds.”