By Grant McCool

NEW YORK (Reuters) - A court hearing may be held on Monday over the rival bids of Citigroup (C.N: Quote, Profile, Research) and Wells Fargo & Co (WFC.N: Quote, Profile, Research) for Wachovia Corp (WB.N: Quote, Profile, Research) even though Citigroup dropped out of negotiations, a U.S. judge said on Friday.

Citigroup has said it would seek damages from Wachovia and Wells Fargo because it had an agreement with Wachovia to acquire the North Carolina bank before San Francisco-based Wells Fargo stepped in with a higher offer last Friday.

The legal battle started over the weekend in New York State Supreme Court and in U.S. District Court in Manhattan, then the three banks halted litigation this week during negotiations over Wachovia.

On Wednesday, Judge Lewis Kaplan of U.S District Court in Manhattan adjourned any hearings indefinitely during the legal truce, but called a telephone conference on Friday with lawyers for Wachovia and Citigroup. Citigroup announced on Thursday that it had abandoned its bid for Wachovia, which had gone to federal court at the weekend seeking to prevent Citigroup from stopping its deal with Wells Fargo.

According to a transcript of the call, Kaplan acknowledged some confusion over filings in the two courts that he wanted to have "sorted out" with more time.

"I don't see any particular reason to attempt to hold a hearing in the course of the day before I understand what the facts are," Kaplan said, according to the transcript.

"Monday is a possibility."

A hearing scheduled for Tuesday in New York State Supreme Court in Citigroup's claim against the other two banks was cancelled because it had been removed to federal court, a clerk for the state judge said.  Continued...