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March 19, 1998


The opinion of the court was delivered by: BUCKLO


 The plaintiff, Donna Lee H. Williams, the Insurance Commissioner of the State of Delaware (the "Commissioner"), has sued Continental Stock Transfer and Trust Company ("Continental") alleging breach of contract and breach of fiduciary duties. Continental has filed affirmative defenses to the Commissioner's complaint as well as a counterclaim against the Commissioner which seeks indemnification for legal fees incurred by Continental. Continental moves to dismiss portions of the Commissioner's complaint, and the Commissioner, in turn, has moved to strike Continental's affirmative defenses and to dismiss its counterclaim. For the reasons set forth below, Continental's motion is granted and the Commissioner's motion is granted in part and denied in part.

 I. Background

 National Housing Exchange ("NHE") was the issuer of 21 series of 1993 8.5% Registered Collateralized Mortgage Debentures (the "Bond"). The Bond had a total face value of $ 126,000,000, secured by a pool of mortgages. NHE sold the Bond to National Heritage Life Insurance Company ("National Heritage") on December 28, 1993. On that same date, NHE entered an Indenture and Servicing Agreement (the "Indenture") with Continental, which was the trustee on the Bond, and with APX Mortgage Services ("APX"), which was the servicer of the mortgages securing the Bond. Subsequently, the Court of Chancery of the State of Delaware placed National Heritage in rehabilitation and then ultimately in liquidation. The court appointed the Commissioner as the receiver for National Heritage.

 Many of the mortgages securing the Bond were unperforming or deficient in some other manner leaving the face value of the Bond inflated by more than three million dollars. As a consequence, National Heritage suffered losses on its investment in the Bond. The Commissioner, acting on behalf of National Heritage, claims that some of the losses were due to the actions or inaction of Continental prior to closing on the Bond. Specifically, the Commissioner argues that Continental breached the terms of the Indenture *fn1" and its fiduciary duties by not obtaining good, valid and indefeasible title to the mortgage loans, by failing to execute a servicing fee agreement with APX, and by improperly reimbursing itself from the trust proceeds for a portion of its legal fees related to litigation involving the Bond.

 Continental, in addition to denying any wrongdoing, has raised several affirmative defenses to the Commissioner's claims. Continental also has filed a counterclaim contending that the Commissioner has an obligation pursuant to the terms of the Indenture, a separate indemnity agreement, and the common law to indemnify Continental for all of the legal fees and expenses it has incurred in connection with a separate suit regarding the Bond (the "NHE Litigation"). *fn2" The Commissioner denies that she has any duty to indemnify Continental.

 II. Continental's Motion to Dismiss

 An indenture trustee's fiduciary duties are more limited in scope than the duties of an ordinary trustee. Under New York law, *fn3" the duties of an indenture trustee prior to default, with two exceptions, "are strictly defined and limited to the terms of the indenture." Elliott Assocs. v. J. Henry Schroder Bank & Trust Co., 838 F.2d 66, 71 (2nd Cir. 1988) (citations omitted); New York State Medical Care Facilities Fin. Agency v. Bank of Tokyo Trust Co., 163 Misc. 2d 551, 621 N.Y.S.2d 466, 470 (N.Y. Sup. Ct. 1994). New York courts have placed two extra-contractual duties on an indenture trustee prior to the occurrence of default. First, the indenture trustee must avoid conflicts of interest, and second, the indenture trustee must perform all basic, non-discretionary, ministerial tasks. LNC Investments., Inc. v. First Fidelity Bank, Nat'l Ass'n, 935 F. Supp. 1333, 1347 (S.D.N.Y. 1996). The indenture trustee owes no other duties, fiduciary or otherwise, to the debenture holders prior to a default. Elliot Assocs., 838 F.2d at 71.

 A. Mortgage Loans

 The Commissioner argues that Continental breached its fiduciary duties and its duties under the Indenture by failing to inspect certain documents prior to the closing of the Bond sale and to ensure that valid title to the mortgage loans was transferred at the closing. The Commissioner claims that this duty is found in Section 2.06 of the Indenture. That section states:

on or before the Start-Up Date and as a condition to the obligations of the Servicer and Trustee under this Agreement, the Company shall deliver documents set out in Section 2.01(b) above and the following documents to the Trustee, which shall be in form and substance satisfactory to the Trustee. *fn4"

 Section 2.01(b), in turn, lists several types of documents relating to the mortgage loans and their assignment to Continental. These are the documents that, according to the Commissioner, Continental failed to obtain prior to the closing. Complaint P 31.

 Under New York law, terms of an unambiguous contract may be interpreted as a matter of law, see K. Bell & Assocs. v. Lloyd's Underwriters, 97 F.3d 632, 637 (2nd Cir. 1996) (citations omitted), and any claim "turning on that interpretation may thus be determined by . . . dismissal." Painewebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2nd Cir. 1996) (citing American Express Bank Ltd. v. Uniroyal, Inc. 164 A.D.2d 275, 562 N.Y.S.2d 613, 614 (N.Y. App. Div. 1990)). When interpreting a contract, a court should give words and phrases their plain meaning. Id. (citing American Express, 562 N.Y.S.2d at 614).

 With these standards in mind, the Commissioner has failed to state a claim against Continental with respect to the mortgage loans. The Commissioner has confused the nature of the obligation contained in Section 2.06. The section states that NHE "shall deliver" these documents. Under the section, Continental had no obligations under the agreement unless NHE delivered these documents. It turns the language completely around to argue, as the Commissioner does, that the section imposes obligations on Continental as opposed to NHE.

 This conclusion is bolstered by several other provisions of the Indenture. First, in the warranty section, NHE warranted to Continental and National Heritage that it had good and marketable title to each of the specified mortgage loans and that execution of the Indenture would result in the valid transfer of these loans to Continental. Indenture § 4.01(v). In contrast, Continental made no such warranty to National Heritage. Id. § 10.13. Furthermore, the Indenture specifically insulates Continental from any liability with respect to the mortgage loans. Section 10.03 states that Continental does not assume any responsibility for the correctness or performance of the warranties provided by NHE and APX. It further provides that Continental "makes no representation as to the validity, enforceability or sufficiency of this Agreement or of the Debentures or of any Mortgage Note, Mortgage or Mortgage Loan or related document or of the sale, assignment, or transfer of, or the existence or perfection of, any interest transferred to the Trustee pursuant to Article II." Id. § 10.03.

 The Commissioner argues that Continental owed fiduciary duties to National Heritage outside the context of its role as Indenture Trustee. She claims that Continental's limited fiduciary duties after the Indenture was signed have no bearing on its duties prior to execution of the Indenture. She claims that National Heritage reposed trust and confidence in Continental's ability to close bond transactions because National Heritage had no experience or expertise in this area. She also contends that receipt and inspection of the mortgage loan documents was a basic, non-discretionary, ministerial task which Continental should have performed prior to closing. She contends that Continental never should have closed on the Bond without having the proper documents ensuring the transfer of the mortgage loans.

 The Commissioner attempts to evade well-settled New York law concerning the limited nature of an indenture trustee's fiduciary duties. As explained above, an indenture trustee's fiduciary duties are "strictly limited" to those contained in the indenture with the addition of two other extra-contractual duties. Elliot, 838 F.2d at 71; LNC Invs., 935 F. Supp. at 1347. Neither of these extra-contractual duties is at issue here. The one relied on by the Commissioner, an obligation to perform basic, non-discretionary, ministerial tasks, is inapplicable in the context in which the Commissioner seeks to use it -- to impose liability for failing to obtain documents whose delivery was a precondition to Continental having any obligation -- because the language of the Indenture, including the indemnity provision, expressly precludes liability. The language relied on did not impose this task on Continental. *fn5"

 Neither may the Commissioner hold Continental responsible on the ground that Continental breached a fiduciary duty. Although an informal fiduciary relationship can arise under New York law by the repose of trust and confidence in another party, see Northeast Gen. Corp. v. Wellington Adver., Inc., 82 N.Y.2d 158, 604 N.Y.S.2d 1, 9, 624 N.E.2d 129 (N.Y. 1993), to allow such an informal fiduciary relationship in the indenture ...

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