Blake Lively knew that she and Taylor Swift would be 'able to recover' their friendship, a source tells PEOPLE exclusively, after the pop star was implicated in Lively's ongoing legal drama with Justin Baldoni over behind-the-scenes conflict on their movie ‘It Ends with Us.

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Baldoni specifically talked about the “Love Story” singer in his $400 million lawsuit against Lively, her husband Ryan Reynolds and their publicist. In it, Baldoni alleged that Swift and Reynolds chimed in to support Lively’s version of the script when Baldoni was requesting rewrites.