INTL FCStone Markets, LLC v. Intercambio Mexicano de Comercio S.A. de C.V.
Filing
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ORDER DENYING MOTION TO DISMISS denying 30 Motion to Dismiss. Defendant's motion to dismiss for failure to state a claim is denied. The oral argument previously scheduled for May 13, 2020 is canceled. The Clerk is directed to close the open motion (ECF No. 30). The parties shall appear for an initial pretrial conference on May 15, 2020 at 10:00 a.m. SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 3/31/20) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
INTL FCSTONE MARKETS, LLC,
:
:
Plaintiff,
:
:
-against:
:
INTERCAMBIO MEXICANO de COMERCIO
:
S.A. de C.V.,
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Defendant.
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:
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ORDER DENYING MOTION
TO DISMISS
18 Civ. 1004 (AKH)
ALVIN K. HELLERSTEIN, U.S.D.J.:
Plaintiff INTL FCStone Markets, LLC (“FCStone” or “Plaintiff”) brought this
action for breach of contract and account stated, alleging Defendant Intercambio Mexicano de
Comercio S.A. de C.V. (“IMCO”) failed to pay for trading services performed under the parties’
contract. Defendant moves to dismiss for failure to state a claim. For the reasons that follow,
Defendant’s motion is denied.
BACKGROUND
FCStone is a financial services firm that specializes in commodity trading in base
and precious metals, energy, textiles, and grain. According to the First Amended Complaint 1,
whose allegations I accept as true for purposes of this motion, FCStone entered into a Terms of
Business Agreement (the “Agreement”) 2, dated October 24, 2017, with IMCO. Under the
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The Honorable Deborah A. Batts dismissed the initial complaint without prejudice for failure to
allege citizenship for diversity purposes. The case was transferred to me following completion
of briefing on the present motion to dismiss.
2
The Agreement is attached as Exhibit A to the First Amended Complaint. ECF No. 27-1.
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Agreement, FCStone agreed to perform trading services related to swaps and over-the-counter
derivatives on IMCO’s behalf, and IMCO agreed to certain payment obligations.
In addition to daily account statements, FCStone sent IMCO a transaction
confirmation every time it executed a trade. If IMCO failed to dispute a transaction confirmation
within two business days of receipt, IMCO would be deemed to have accepted the terms of that
transaction confirmation “absent manifest error.” Agreement § 1.5. The Agreement permitted
FCStone to trade on margin and make margin calls. FCStone was required to meet margin calls
by 12:00 p.m. on the business day after the margin call.
On December 12, 2017, FCStone sent IMCO a Notice of Failure to Pay (the “First
Notice”). The First Notice declared an Event of Default due to IMCO’s failure to pay
$346,275.50 due under Agreement § 2.4, the provision related to variation margin. It further
advised IMCO that failure to pay immediately would result in an Early Termination Date, see
Agreement § 5.1(b), for all outstanding transactions and liquidation of IMCO’s account. IMCO
did not pay or object.
As a result, FCStone liquidated IMCO’s trading account. On December 29, 2017,
FCStone sent IMCO a Second Notice of Net Settlement Amount (the “Second Notice”) advising
IMCO of the liquidation and disclosing a calculation of the final payment due. According to the
Second Notice, IMCO owed $494,500.50 as a Net Settlement Amount pursuant to Agreement §
5.3. IMCO did not pay the amount demanded under the Second Notice. IMCO advised FCStone
that it disagreed with FCStone’s actions in liquidating the account, but it did not contest the
calculation of the Net Settlement Amount.
FCStone now brings claims for breach of contract and account stated, seeking the
$494,500.50 Net Settlement Amount, interest, expenses, and legal fees. IMCO moves to
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dismiss, arguing the First Amended Complaint contains insufficient factual detail to state a claim
on which relief can be granted.
DISCUSSION
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft,
556 U.S. at 678 (quoting Twombly, 550 U.S. at 555)).
I. Breach of Contract
The Agreement indicates that New York law governs. Agreement § 8.6. Under
New York law, the elements of a breach of contract claim are “(1) the existence of an agreement,
(2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant,
and (4) damages.” Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996). Plaintiff alleges
sufficient facts to plead every element. The First Amended Complaint includes the relevant
terms of the Agreement, explains the manner in which Plaintiff performed under the Agreement,
alleges Defendant breached by failing to meet margin calls, and sets forth damages in the form of
the unpaid Net Settlement Amount and more. That is all that is required. See Accurate Grading
Quality Assurance, Inc. v. Khothari, No. 12CV9130, 2014 WL 5073576, at *10 (S.D.N.Y. Sept.
30, 2014) (holding plaintiffs sufficiently stated claim for breach of contract where they alleged
that “Defendants were required to pay for the certification cards, that they did not pay all of the
associated fees and thus, that they breached the agreement between the parties, causing Plaintiffs
to suffer damages”).
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Unlike in the cases cited by Defendant, Plaintiff here did not merely “stat[e] in a
conclusory manner that an agreement was breached.” O’Neill v. Standard Homeopathic Co.,
346 F. Supp. 3d 511, 533 (S.D.N.Y. 2018). In O’Neill, for example, the plaintiff did not plead
the existence of a contract or allege the terms the defendant breached. Id. at 533-34. In Hajny v.
Best Roofing of New Jersey Inc., another case cited by Defendant, the complaint “provide[d] no
facts concerning the alleged agreements or defendants’ breaches of them”; did not “allege when
the agreements were entered into or became effective, when they expired, or specify whether
they were oral or in writing”; and did not state “the term of the agreements upon which
plaintiffs’ claim [was] based.” No. 11 Civ. 00173, 2011 WL 2493737, at *5-6 (S.D.N.Y. June
22, 2011). FCStone’s complaint is not similarly deficient. Defendant suggests that Plaintiff
should have included additional facts, such as the securities involved or the circumstances giving
rise to each margin call, but those details are not essential to pleading the elements of the claim.
II. Account Stated
Similarly, Plaintiff pleads every element of a claim for account stated. To state a
claim for account stated, a plaintiff must allege that “(1) an account was presented; (2) it was
accepted as correct; and (3) debtor promised to pay the amount stated.” IMG Fragrance Brands,
LLC v. Houbigant, Inc., 679 F. Supp. 2d 395, 411 (S.D.N.Y. 2009). “The second and third
requirements (acceptance of the account as correct and a promise to pay the amount stated) may
be implied if ‘a party receiving a statement of account keeps it without objecting to it within a
reasonable time or if the debtor makes partial payment.’” Id. (quoting LeBoeuf, Lamb, Greene &
MacRae, L.L.P. v. Worsham, 185 F.3d 61, 64 (2d Cir. 1999)). Plaintiff alleges that it presented
Defendant with the account in the form of the Second Notice and that Defendant failed to object
to the Net Settlement Amount calculated.
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Plaintiff acknowledges in the First Amended Complaint that Defendant objected
to the liquidation of its trading account. Defendant argues that this objection defeats the claim
for account stated. It is true that an objection need not specifically contest a numerical
calculation to rebut a claim for account stated. See Kasper Global Collection & Brokers, Inc. v.
Global Cabinets & Furniture Mfrs. Inc., 952 F. Supp. 2d 542, 571 (S.D.N.Y. 2013) (“[S]ummary
judgment on an account stated claim is inappropriate where the evidence shows that there was a
dispute about the account or the quality of the work performed.”); M&A Constr. Corp. v.
McTague, 21 A.D.3d 610, 612 (3d Dep’t 2005) (holding trial court properly entered judgment for
defendants on account stated claim where “defendants disputed aspects of the accounts and
informed plaintiff that payment was being withheld because certain work had not been
completed”). Still, without discovery into the nature of Defendant’s objection in relation to the
account presented, I cannot determine whether it was sufficiently specific to defeat Plaintiff’s
claim. In Kaye, Scholer, Fierman, Hays & Handler v. Ameritas Financial Services, the
defendant, in similar fashion to IMCO, did not “object to the accuracy of the statement of
account or the adequacy of the services” but instead “raise[d] the issue of the necessity of the
services billed.” No. 93 Civ. 0222, 1993 WL 258680, at *3 (S.D.N.Y. July 2, 1993). Those
objections were sufficient to raise a genuine issue of material fact for trial. Id. at *4. But this
case is not at the trial stage or even the summary judgment stage. It is not the role of the Court to
adjudicate issues of fact on a 12(b)(6) motion. Therefore, Plaintiff’s account stated claim will
not be dismissed.
CONCLUSION
Defendant’s motion to dismiss for failure to state a claim is denied. The oral
argument previously scheduled for May 13, 2020 is canceled. The Clerk is directed to close the
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open motion (ECF No. 30). The parties shall appear for an initial pretrial conference on May 15,
2020 at 10:00 a.m.
SO ORDERED.
Dated:
New York, New York
March 31, 2020
/s/ Alvin K. Hellerstein
ALVIN K. HELLERSTEIN
United States District Judge
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