Wells Fargo on Friday urged the New York State supreme court to dismiss Pimco’s claims that the RMBS trustee had no right to reserve millions of dollars from called trusts for its own legal defense, according to court documents.
The trustee in its motion laid out a number of arguments supporting its view that it has the right to indemnification as trustee, including when it is accused of willful malfeasance, as Pimco and other investors have alleged in separate lawsuits.
“Mere allegations of willful malfeasance cannot preclude indemnity,” the Wells lawyers wrote in the motion.
“Were the law otherwise, no party would ever receive the benefit of contractual indemnification, since all indemnitors would simply lard up their complaints with conclusory assertions of intentional misconduct,” they continued.
Wells sparked a furor in June after withholding more than USD 90m from 20 called trusts to cover its expected fees on lawsuits brought by investors. Pimco filed its lawsuit in July based on the USD 57.2m reserved by Wells from 11 trusts, as reported.
The Wells lawyers also accused Pimco of attempting to rewrite contracts on indemnification, and claim that the money manager hasn’t assembled at least 25% of certificateholders needed to bring a claim.
by Al Yoon