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Advice from strategists who don''t trust the market
By Colleen DeBaise
Wednesday, November 6, 2002
NEW YORK (Dow Jones) -- A federal judge denied J.P. Morgan
amp; Co.'s request for summary judgment in its dispute with
insurers over nearly $1 billion in surety bonds on Enron Corp.
oil and gas contracts.
The ruling, handed down Wednesday by U.S. District Judge
Jed S. Rakoff in Manhattan, clears the way for the case to go
to trial Dec. 2.
J.P. Morgan sued 11 insurers for payment on the bonds in
December 2001, shortly after Enron filed for bankruptcy and
defaulted on the contracts. The insurers refused to pay,
claiming J.P. Morgan may have deliberately camouflaged
bank loans to Enron as commodity transactions.
In denying J.P. Morgan's request for summary judgment,
Judge Rakoff said: quot;The bottom line is that taking the
disputed facts most favorably to the defendants, a
reasonable juror ... could find by clear and convincing
evidence the fraud alleged.quot;
He added: quot;A jury will hear this case.quot;
John M. Callagy, an attorney for J.P. Morgan, said the
bank expects to prevail at trial. quot;The insurance companies
have just fabricated these defenses and we are going to
prove to a jury that they're improperly refusing to honor
their commitments,quot; he said.
In September, the same judge dismissed J.P. Morgan's
fraud claim against the 11 insurers, which include Liberty
Mutual Insurance Co., Safeco Insurance Co., St. Paul
Fire amp; Marine Insurance Co., and Travelers Property amp;
The insurers made commitments in the form of surety
bonds of about $1.1 billion, of which J.P. Morgan's share is
about $965 million. The bonds guaranteed that Enron would
deliver natural gas and oil to the bank's Mahonia Ltd.