San Francisco, July 13 (Bloomberg) -- Verizon Communications Inc. failed to persuade a judge to dismiss most of a $4 billion lawsuit by NorthPoint Communications Group Inc. that accuses the largest U.S. local-telephone company of unfairly abandoning a takeover.

The California Superior Court judge rejected Verizon's bid to throw out claims of fraud and punitive damages totaling as much as $3 billion. NorthPoint sued Verizon after the New York-based phone company scrapped plans to acquire the high-speed Internet provider for an estimated $2.15 billion in November 2000. NorthPoint filed for bankruptcy weeks later.

The ruling yesterday by Judge James McBride clears the way for a California jury to begin hearing San Francisco-based NorthPoint's suit on July 29.

``We are aggressively going to pursue the fraud claims,'' said Lynn Schoenmann, a Chapter 7 trustee managing NorthPoint's business on behalf of creditors. ``I think $4 billion is not out of the realm of possibility.''

Verizon spokesman Robert Varettoni didn't immediately return calls for comment.

Even if McBride had ruled for Verizon yesterday, the New York- based telephone company still would have faced a $1 billion damage claim by NorthPoint.

In its lawsuit, NorthPoint asks for $1 billion in actual damages, $1 billion for fraud, $1 billion for negligent misrepresentation, and an award of punitive damages that may bring its total claims to more than $4 billion.

Abandoned Takeover

Verizon has said NorthPoint's deteriorating business and finances gave it the right to abandon its August 2000 agreement to buy the Internet provider. NorthPoint reported third-quarter 2000 sales of $24 million, 20 percent less than first reported, as Internet companies failed to pay their bills on time.

``The goal of NorthPoint's fraud claims is to make Verizon look bad in front of a jury and add the potential risk of punitive damages to the calculus of this case,'' Verizon said in a court filing last month.

In the lawsuit, NorthPoint says Verizon abandoned the takeover for reasons that had nothing to do with NorthPoint's finances, such as criticism from investors.

Shares of NorthPoint, up more 320 percent in the past year, were unchanged Friday at 21 cents. Verizon shares fell $2.30 to $35.30.

NorthPoint filed for bankruptcy protection in January 2001 and sold its operations to AT&T Corp. the following March for $135 million. The defunct Internet company still owes lenders $52 million, bondholders about $400 million, and other creditors about $100 million, according to Schoenmann.

U.S. Bankruptcy Judge Thomas Carlson in San Francisco converted NorthPoint's bankruptcy to a Chapter 7 liquidation in June 2001.