INTL FCStone Markets, LLC v. Intercambio Mexicano de Comercio S.A. de C.V.

Filing 65

ORDER DENYING IN PART AND GRANTING IN PART MOTIONS FOR JUDGMENT ON THE PLEADINGS granting in part and denying in part 52 Motion for Judgment on the Pleadings; granting in part and denying in part 54 Motion for Judgment on the Pleadings. The cr oss-motions for judgment on the pleadings are denied except for Plaintiff's claim for account stated, which is dismissed. The Clerk is instructed to terminate the open motions, ECF Nos. 52, 54. Plaintiff shall file an amended complaint removi ng the dismissed count and providing further factual detail showing that a demand for margin was made by May 24, 2021. Defendant shall file an amended answer by June 7, 2021, striking the dismissed counterclaims and defenses, with leave to replead Counterclaims 9 and 13 for defamation count. Plaintiff shall file its answer to the asserted counterclaims by June 21, 2021. The parties are hereby ordered to appear for a case management conference on July 9, 2021. SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 5/11/21) (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.,
:
:
Defendant.
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ORDER DENYING IN PART
AND GRANTING IN PART
MOTIONS FOR JUDGMENT
ON THE PLEADINGS
18 Civ. 1004 (AKH)

ALVIN K. HELLERSTEIN, U.S.D.J.:
Plaintiff Intl FCStone Markets LLC, (“Plaintiff”), a financial services firm, brings this
suit for breach of contract and account stated against its former client, Defendant Intercambio
Mexicano de Comercio S.A. de C.V. (“Defendant”). See Compl., ECF No. 27. Plaintiff alleges
that Defendant breached the terms of their trading agreement by failing to pay a margin call,
while Defendant alleges that Plaintiff wrongfully liquidated its account. The Parties now crossmove for judgment on the pleadings. I held oral argument on May 6, 2021 and, upon the briefs
and argument, granted in part and denied in part the cross-motions for judgment on the
pleadings, stating my findings and conclusions in the record of argument. For the reasons stated
in the record, I held:
1. There are uncertainties regarding the contract which preclude granting either
party’s Motion for Judgment on the Pleadings as to Plaintiff’s claim for breach of
contract. An Event of Default in Paragraph 2.4 of the Terms of Trading
Agreement requires non-payment of a margin call; however, there is no showing
anywhere in pleadings that Plaintiff made such a margin call;

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2. Plaintiff’s claim for account stated is hereby dismissed. The daily account
statements and transaction confirmations do not constitute an account stated, and
the pleadings do not contain any other statement which would provide the debit
and credit as of certain time. See IMG Fragrance Brands, LLC v. Houbigant,
Inc., 679 F.Supp.2d 395, 411 (S.D.N.Y.2009) (explaining that a plaintiff must
plead that “(1) an account was presented; (2) it was accepted as correct; and (3)
debtor promised to pay the amount stated.”);
3. Counterclaim Nos. 1 and 7 for breach of the implied covenant of good faith in
providing notice of margin standards and issuing margin calls are hereby stricken.
Paragraphs 2.3 and 2.4 of the Agreement provide that Plaintiff may act “in its sole
discretion” in issuing margin calls and determining the margin due. A party
“which acts in accordance with its contractual rights cannot be held liable for
breaching an implied covenant of good faith.” In re Minpeco, USA, Inc., 237 B.R.
12, 26 (Bankr. S.D.N.Y. 1997); see also Chrysler Credit Corp. v. Dioguardi Jeep
Eagle, Inc., 596 N.Y.S.2d 230, 232 (1993) (a party “does not act in bad faith
when it exercises its contractual right” to act at its “sole discretion”);
4. Counterclaim No. 3, alleging waiver based on Plaintiff’s prior pattern of conduct
is hereby stricken. Paragraph 8.2 of the Agreement plainly contains a no-waiver
provision which states that no past waiver shall be construed as a waiver of any
other default. See Park Irmat Drug Corp. v. Optumrx, Inc., 152 F. Supp. 3d 127,
137 (S.D.N.Y. 2016) (finding that no-waiver clauses are enforceable under New
York law); Structured Capital Sols., LLC v. Commerzbank AG, 177 F. Supp. 3d
816, 825 (S.D.N.Y. 2016) (same);

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5. Counterclaim No. 5, alleging that the amount demanded by plaintiff in its First
Notice was not consistent with the amount demanded by plaintiff in any margin
call, is stricken. This bad faith argument fails, as Plaintiff was contractually
permitted to calculate initial and variation margin “in its sole discretion.” See
Chrysler Credit Corp. 596 N.Y.S.2d at 232 (no claim for bad faith when a party
exercises its contractual right to act at its sole discretion);
6. Counterclaim No. 9, alleging that Plaintiff breached its contractual duties by
failing to provide written notice of the early termination date pursuant to
Paragraph 5.1(b) of the Agreement prior to liquidating Defendant’s account, is
sustained. The time and place of a breach and the remedies are material terms in
a contract. See Bear, Stearns Funding, Inc. v. Interface Grp.-Nevada, Inc., 361 F.
Supp. 2d 283, 295 (S.D.N.Y. 2005) (explaining that a breach “must go to the root
of the agreement between the parties”). However, there are underlying factual
issues which need to be explored, such as contractual definitions and whether
there were any negotiations or discussions between the parties. There may also be
a need for expert testimony regarding the practices of margin trading;
7. Counterclaim No. 11, alleging that Plaintiff failed to provide the requisite one-day
notice is stricken. The claim is repetitive of Counterclaim 9, and does not state a
claim for relief;
8. Counterclaim No. 13, alleging that Plaintiff breached the confidentiality provision
is stricken with leave to replead as a defamation claim. Confidential information
is contractually defined as “non-public, proprietary or confidential information
that is labeled as such or should reasonably be understood by the recipient to be

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confidential, and includes the terms of each specific transaction, including but not
limited to the price, the quantity, the identity of other sellers or intermediaries,
and all other material terms thereof.” Defendant’s pleadings do not include
sufficient factual detail regarding what was disclosed, when it was disclosed, or
why the disclosures were confidential. See Parker Waichman LLP v. Squier,
Knapp & Dunn Commc'ns, Inc., 28 N.Y.S.3d 603 (2016) (“The complaint’s
boilerplate allegations that defendants disclosed confidential information, thereby
causing harm, are too vague and conclusory to sustain a breach of contract cause
of action.”);
9. Counterclaim Nos. 2, 4, 6, 8, 10, 12, 14-16 are stricken. Defendant’s allegations
only provide vague allegations that “some law” violated and do not provide
sufficient information to determine whether a private right of action exists for
such violations. See Solomon v. Ocwen Loan Servicing, LLC, 2013 WL 1715878,
at *6 (E.D.N.Y. Apr. 12, 2013); c.f. Sofia v. Esposito, 2019 WL 6529432, at *6
(S.D.N.Y. Dec. 4, 2019) (“A regulation, by itself, may not create a private right of
action.”);
10. Defendant’s affirmative defenses 17-20 are stricken. There is no basis for the
defense of estoppel, mitigation of damages, or failure to state a claim. Moreover,
the condition precedent is duplicative of Defendant’s counterclaim for breach of
contract.
In conclusion, the cross-motions for judgment on the pleadings are denied except for
Plaintiff’s claim for account stated, which is dismissed. The Clerk is instructed to terminate the
open motions, ECF Nos. 52, 54. Plaintiff shall file an amended complaint removing the

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dismissed count and providing further factual detail showing that a demand for margin was made
by May 24, 2021. Defendant shall file an amended answer by June 7, 2021, striking the
dismissed counterclaims and defenses, with leave to replead Counterclaims 9 and 13 for
defamation count. Plaintiff shall file its answer to the asserted counterclaims by June 21, 2021.
The parties are hereby ordered to appear for a case management conference on July 9, 2021.
SO ORDERED.
Dated:

May 11, 2021
New York, New York

_____/s/_Alvin K. Hellerstein_________________
ALVIN K. HELLERSTEIN
United States District Judge

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