Legal News

Updating L?Affaire Wachovia: Lawyers Wage Three-Front War

By Ashby Jones

Perhaps it’s naive. But we don’t imagine we’ll see too much more legal wrangling in L’Affaire Wachovia for at least, well, the next few hours. So now might be as good a time as any to get you up to speed on where we are. (Find LB background here and here.)

For now, here’s what we know: Lawyers are waging a three-front battle.

New York State Court: This suit was the Shot at Lexington, the one that set the big pile of kindling ablaze. Citigroup brought this suit Saturday, presenting it at Judge Charles Ramos’s country estate up in Cornwall, Conn., which, the town’s Web site informs us, is home to the “Famous Covered Bridge.” On Saturday, Ramos granted Citi’s request to extend the “exclusivity agreement” between Citi and Wachovia, an order which was later shot down by the appellate division. In an order dated Sunday, Judge Ramos issued an order essentially stating that, regardless of the appellate court’s decision, the hearing would go forward. For now, it’s scheduled for Friday Oct. 10 at 11 a.m.

In the meantime, the complaint filed against Wachovia and Wells Fargo reached the public’s hands earlier Monday. Citi seeks some $60 billion in damages from the two companies and their directors. Click here for the WSJ story; here for the NYT story. The complaint is largely devoid of good nuggets. Three parties, two (count ‘em!) causes of action — breach of contract against Wachovia, tortious interference against Wells Fargo — and that’s it.

New York Federal Court: On Saturday afternoon, in the midst of the Summit at Cornwall, Wachovia filed its own suit against Citi in New York federal court asking for a preliminary injunction to keep Citi from getting in the way of the Wachovia/Wells Fargo deal. They rely, in part, on section 126(c) of the newly passed Bailout Bill, which, Wachovia argues, undoes some of the force of the exclusivity agreement. Judge Lewis Kaplan, of KPMG fame, has the case. He’s scheduled a hearing for Tuesday at 2 p.m. in his lower-Manhattan courtroom.

Mecklenberg County, North Carolina: Further complicating matters is a ruling made Sunday night by a judge in Mecklenberg County, N.C. Wachovia shareholders filed a putative class action against Citi, asking judge Robert Johnston to enjoin Citi from enforcing the exclusivity agreement. On Sunday, Judge Johnston granted the motion. Here’s the story from the Charlotte News & Observer.

Full post as published by Law Blog - WSJ.com on October 06, 2008 (boomark / email).