District Judge Richard J. Sullivan

 

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Plaintiff special purpose investment entities (the Loreleys) invested $163 million in collateralized debt obligations (CDOs) created and sold by Wachovia, Wells Fargo’s predecessor in interest. By 2008 all three CDOs were in default. The Loreleys sued Wells Fargo and collateral managers (WF/CM) for fraud. In their third party complaint WF/CM claimed IKB Deutsche Industriebank AG (IKB AG) and IKB Credit Asset Management GmbH (collectively IKB) created the Loreleys as purchase vehicles for IKB’s investments. The court denied IKB dismissal or summary judgment. It was premature to conclude that WF/CM’s contribution claim duplicated its defenses in the main action. Further, finding WF/CM’s contribution claim premises on alleged breaches of fiduciary duty by IKB to the Loreleys, the court rejected IKB’s assertion that its obligations to the Loreleys were “purely contractual” and that WF/CM’s contribution claim was thus barred under New York law. The court deemed it inappropriate to grant IKB summary judgment on the basis of a purportedly valid Feb. 27, 2012 release agreement without first granting WF/CM the opportunity to review IKB’s submissions and make submissions of its own regarding the scope and meaning of the release.