A recent Law 360 story by William Gorta, “Banks Can Seek Fees in Dana Transport RICO Suit: Judge,” reports that a New York federal judge on said a group of banks, including PNC Bank and Wells Fargo & Co. can pursue a claim for legal fees and expenses against Dana Transport Inc., which had sued the banks for RICO violations but voluntarily dismissed the case.

After hearing more than an hour of arguments, U.S. District Judge Ronnie Abrams denied Dana’s motion to dismiss the suit and also shot down the company’s request to stay the suit while awaiting the resolution of a suit Dana filed against the banks in New Jersey state court.  That suit is substantially similar to the suit Dana filed and dismissed in the Southern District of New York in 2015, alleging conversion, breach of contract and Racketeer Influenced and Corrupt Organizations Act violations.  The SDNY suit alleged lenders worked in tandem with consultants and other companies to force Dana Transport into default on a debt facility it was still making payments on, costing millions and putting the business in jeopardy.

Last year, the banks sued Dana for their legal expenses and attorneys' fees, citing an indemnity clause in the lending agreement that obligated Dana to cover them for lawsuits and other legal proceedings.  Dana argued that the indemnity clause did not include intra-party lawsuits and, should the New Jersey court find that the banks had acted with willful misconduct, the company would not be obliged to indemnify the banks.

Caroline F. Bartlett of Carella Byrne, arguing for Dana, told Judge Abrams that the case in New Jersey was essentially the same as the one it chose to dismiss in the Southern District of New York and there was no harm in letting it play out there since legal fees would continue to accrue, should the banks be eligible to receive them.

Wells Fargo’s attorney, Richard G. Haddad of Otterbourg PC, said the “expressly broad” indemnity clause —“any claim, any person whatsoever” — on its face included intra-party claims, such as foreclosures and liens.  Haddad said there can be no finding of willful misconduct in the dismissed federal RICO case, for which his client seeks to recover fees.

The case is PNC Bank, National Association et al. v. Dana Transport Inc., case number 1:16-cv-07797, in the U.S. District Court for the Southern District of New York.