An amended order was entered on March 31, 2013, granting Paulson's motion to dismiss the case, court papers show.
Hugh Culverhouse, whose family had once owned the Tampa Bay Buccaneers football team, sued Paulson a year ago over the Sino-Forest investment, which turned into one of the hedge fund's biggest losses.
The judge ruled that Culverhouse did not have the standing to sue and claim a fiduciary relationship with Paulson.
"We are pleased with the judge's ruling," a spokeswoman for Paulson said on Tuesday. "We have stated from the outset that this suit was completely without merit and that there was no basis in law or fact for the action."
Paulson's New York-based firm, Paulson & Co, invests roughly $18 billion and has been watched closely ever since well-timed bets against the overheated housing market earned the fund and its founder billions in 2007 and 2008.
But the hedge fund's reputation was dealt a blow when Sino-Forest's stock price tumbled after a short-seller published a research report alleging improper accounting at the Chinese forestry products company.
By 2011, Paulson's Advantage and Advantage Plus funds owned roughly 14 percent of Sino-Forest's shares and the drop in the stock price after the Muddy Waters report was released left Paulson & Co with paper losses of roughly $500 million.
Culverhouse, who was a former federal prosecutor, accused Paulson's firm of "gross negligence," saying the fund manager failed to analyze "the substantial risks of holding a near-billion-dollar investment in a forestry company based in China" before investing in Sino-Forest.
His lawsuit sought class-action status for fund investors, as well as compensatory and punitive damages. The complaint does not say how much Culverhouse and other investors lost.
A person familiar with Paulson's funds said the net total loss on Sino-Forest ended up being around $100 million.
In addition to the Sino-Forest investment, Paulson's ill-timed bets on an economic recovery, which included losing investments in Bank of America Corp, made for even bigger losses in 2011. The Advantage Plus fund ended 2011 down more than 50 percent.
Since then, Paulson has struggled to recoup the magic his investments had only a few years before. This year, returns at his funds have been mixed in the first two months, with his gold fund suffering double digit losses through the end of February, while his merger arbitrage oriented Paulson Partners Enhanced fund gained 7.7 percent.
First quarter 2013 returns have not been tallied yet. The case is Culverhouse v. Paulson & Co et al, U.S. District Court, Southern District of Florida, No. 12-20695.
(Reporting by Svea Herbst-Bayliss. Additional reporting by Jon Stempel. Editing by Andre Grenon)
By Svea Herbst-Bayliss