Citigroup, Inc (NYSE: C) Losses Ruling Against Terra Firma over EMI

Citigroup, Inc (NYSE: C) has lost its bid to dismiss a suit accusing the company of tricking Terra Firma Capital Partners Ltd. into buying EMI Group Ltd. In Federal  Court.

The New York Based-bank had previously accused Terra Firma Capital Partners of “court shopping” and choosing a venue to sue which would be most beneficial to them. Citigroup wanted the suit to occur in England, but a judge declined Citigroup’s motion  because none of the deal documents forced Terra Firma to sue in England.

U.S. District Judge Jed Rakoff denied a request from Citigroup to dismiss the case on March 24^th and released his opinion on June 27^th, saying that “As to the public factors, there is a legitimate U.S. interest in learning whether Citi, a major American bank, may be liable for fraudulent inducement, and thus subject to substantial damages.”

Terra Firm Capital Partners accuses Citigroup, Inc (NYSE: C) of misrepresenting that another private-equity firm was still bidding on the music recording and publishing company. Terra Firm hopes to recover “lost equity of billions of dollars” and obtain punitive damages from Citigroup. Terra Firm said that it paid an inflated price for EMI because of Citigroup, Inc (NYSE: C)’s mis-representation about other bidders.

Danielle Romero-Apsilos, a Citigroup spokeswoman, said in an e-mail to the press, “We continue to believe that the plaintiff’s lawsuit is entirely without merit and we intend to seek its dismissal.”

Rakoff said that one document called the “Project Mulberry Agreement” required Citigroup, Inc (NYSE: C) to sue Terra Firma or EMI in England but did not require Terra Firm to sue there. He said that another document also did not place that requirement on Terra Firma.