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Citibank Denies Duty to Warn Former Partners of Dewey on Capital Loans
Former Dewey partner Steven Otillar is the only former Dewey partner to be singled out and sued by Citibank for loan default. But when Citibank asked for a summary judgment against Otillar, he responded with claims that Citibank had “fraudulently induced” him to sign up for a loan program that financed capital to incoming partners at Dewey, in spite of knowing the law firm’s precarious financial situation. In the opposing motion filed last month, Otillar claimed that Citibank had a duty to disclose its alleged knowledge of Deweys true financial condition to Otillar and other partners who received capital loans from Citibank for joining Dewey.
On Wednesday, Citibank responded with a motion claiming Otillar had failed to provide any factual basis for his claims that Citibank hid Dewey’s financial conditions from incoming partners. Citibank argued, “Otillar offers only his speculation that because Citibank was Dewey’s longtime lender, it must have had information that was unknown and unavailable to Otillar.”
Citibank also argued that even if the bank did possess knowledge of Dewey’s true financial conditions, it did not have any fiduciary duty to disclose confidential information it had obtained from Dewey to Otillar. Citi called caveat emptor and said it was the duty of Otillar to look into the financial stability of the law firm he joined in 2011.
The bank further said, “Having failed to ensure that the firm’s finances were in order, Otillar cannot now be heard to complain that he was defrauded by Citibank failing to disclose the firm’s allegedly deteriorating financial condition.”
Helen Davis, the lawyer of Otillar said that she was “confident that Citibank’s internal documents will prove our contentions.”
Otillar is currently a partner at Akin Gum Strauss Hauer & Feld, and seems to be in no mood to give up without a fight. It may be that Otillar had a duty to find out about Dewey before joining it, but whether failure in that duty by Otillar absolves Citibank of any duty to inform a loan purchaser remains to be seen.