Madoff Co-Defendants|Can Sue Underwriters

(CN) - Co-defendants in the Bernie Madoff Ponzi scheme can sue their bond underwriters for the costs of defending 36 legal actions filed by investors who lost $3.1 billion in the massive scam, the Delaware Chancery Court ruled.

Massachusetts Mutual Life Insurance Co., five investment funds and nine other co-defendants sought a judgment declaring indemnity from at least 32 lawsuits and four demands filed by Madoff investors.

Lloyd's of London argued that it was protected under the independent broker exclusion, but Vice Chancellor Travis Laster ruled that the exclusion is too ambiguous to warrant dismissal.

"On a motion to dismiss, a court cannot choose between reasonable interpretations," Laster wrote. "At the present stage of the case, the Independent Broker Exclusion does not entitle the Bond Underwriters to dismissal."

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