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MINNEAPOLIS - A state court judge denied a motion by FleetBoston Financial Corp. to dismiss a lawsuit filed against its mortgage unit by the Minnesota Attorney General Mike Hatch for alleged consumer fraud, false advertising and deceptive trade practices.

The lawsuit, filed in the state court in December, alleged that the unit of the Boston bank holding company had illegally divulged information about mortgage holders' accounts to telemarketers and participated in deceptive phone-sales tactics with those companies. The suit alleged that FleetBoston shared customers' home mortgage account numbers, loan amounts and balances with telemarketers, who then tried to enlist consumers in various membership programs involving home shopping, car repairs and other services. The fees for those services were charged to consumers' mortgage accounts, the suit alleged.

When the suit was filed, FleetBoston described it as inflammatory and based on accusations that were inaccurate or incomplete. In February, the bank holding company asked state Judge Ann D. Montgomery to dismiss the suit. Among other arguments, FleetBoston maintained that the federal Office of the Comptroller of the Currency, or OCC, was the proper regulatory authority to handle such matters and that the practices involved were not specifically outlawed under Minnesota law.

In ruling against the request for the dismissal, Judge Montgomery said that federal law does require that the OCC have exclusive jurisdiction over such matters. She also said that Minnesota's consumer protection law contains broad provisions covering conduct that "creates a likelihood of confusion or of misunderstanding." In a written decision, the judge also wrote that the state's lawsuit "sufficiently alleges as a matter of law that Fleet Mortgage provided substantial assistance to the (telemarketing) companies with knowledge of the alleged conduct."

Reached for comment, a FleetBoston spokesman said: "This is a preliminary motion and the court has made no factual determinations that any of the allegations are true."

The Minnesota attorney general's office said the ruling allows it to continue to pursue its claims against the company.

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