Ladjevardian v. TD Ameritrade, Inc.
Filing
21
MEMORANDUM AND ORDER granting 16 MOTION to Dismiss 15 Amended Complaint/Counterclaim/Crossclaim etc. Plaintiff's cause is DISMISSED with prejudice for failure to state a claim upon which relief can be granted.(Signed by Judge Ewing Werlein, Jr) Parties notified.(kcarr, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MOHAMMAD LADJEVARDIAN,
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Plaintiff,
v.
TD AMERITRADE, INC.,
Defendant.
CIVIL ACTION NO. H-13-1017
MEMORANDUM & ORDER
Pending are Defendant TD Ameritrade, Inc.’s Rule 12 Motions
(Document No. 16).1
Plaintiff has filed no response, and the
motions are therefore deemed unopposed pursuant to Local Rule 7.4.
After carefully considering the motions and applicable law, the
Court concludes that the case should be dismissed.
I.
Background
Plaintiff Mohammad Ladjevardian (“Plaintiff”) alleges that
Defendant TD Ameritrade, Inc. (“Defendant”) induced him to open an
account with Defendant by offering him a package that would allow
for a margin account for trading and purchase of stocks.2
time
he
filed
his
Amended
Complaint,
1
Plaintiff
At the
alleged
he
Defendant moves to dismiss Plaintiff’s Amended Complaint
under Rule 12(b)(6) and, in the alternative, moves for a more
definite statement under Rule 12(e). Document No. 16.
2
Document No. 15 ¶ 5 (Am. Cmplt.).
maintained a margin brokerage account with Defendant which had an
equity value of $3.7 million and a margin of $1.5 million.3
On April 1, 2013, Defendant issued a notice of maintenance
call
of
$1,584,758.85,
which
Plaintiff
characterizes
as
“essentially a cancellation of the margin which Defendant granted
to [Plaintiff] to induce the moving of the account” to Defendant,
and alleges is “simply a facade for the unwarranted cancellation of
the margin account.”4
disputes that
had
believed
been
had
The maintenance call occurred in the wake of
arisen
in
prior weeks and
resolved.5
Plaintiff
which
alleges
Plaintiff
that
the
maintenance call will require the sale of large blocks of stock,
causing the stock value to spiral downwards and resulting in
“unrepairable harm” to Plaintiff.6
Plaintiff alleges that he relied on Defendant’s written and
oral representations with regard to the terms of the account, that
his account was the only account selected for liquidation of the
margin, and that “[w]ithout justification as a change in the
maintenance margin requirement or house requirements large blocks
3
Document No. 15 ¶¶ 4-6.
4
Id. ¶ 6.
5
Id.
6
Id.
2
of complainant stock were sold on a margin sell out at a greatly
reduced price due to the acting of Defendant.”7
Plaintiff alleges causes of action for breach of contract,
breach of fiduciary duty, and breach of duty of good faith and fair
dealing.8
Defendant moves to dismiss for failure to state a claim
and, in the alternative, moves for a more definite statement.9
II.
A.
Motion to Dismiss
Legal Standard
Rule 12(b)(6) provides for dismissal of an action for “failure
to state a claim upon which relief can be granted.”
12(b)(6).
FED . R. CIV . P.
When a district court reviews the sufficiency of a
complaint before it receives any evidence either by affidavit or
admission, its task is inevitably a limited one.
Rhodes, 94 S. Ct. 1683, 1686 (1974).
See Scheuer v.
The issue is not whether the
plaintiff ultimately will prevail, but whether the plaintiff is
entitled to offer evidence to support the claims.
Id.
In considering a motion to dismiss under Rule 12(b)(6), the
district court must construe the allegations in the complaint
favorably to the pleader and must accept as true all well-pleaded
7
Id.
8
Id.
9
Document Nos. 16-17.
3
facts in the complaint.
See Lowrey v. Tex. A&M Univ. Sys.,
117 F.3d 242, 247 (5th Cir. 1997).
To survive dismissal, a
complaint must plead “enough facts to state a claim to relief that
is plausible on its face.”
1955, 1974 (2007).
Bell Atl. Corp. v. Twombly, 127 S. Ct.
“A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the
reasonable
inference
misconduct alleged.”
(2009).
While
a
that
the
defendant
is
liable
for
the
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
complaint
“does
not
need
detailed
factual
allegations . . . [the] allegations must be enough to raise a right
to relief above the speculative level, on the assumption that all
the allegations in the complaint are true (even if doubtful in
fact).”
B.
Twombly, 127 S. Ct. at 1964-65.
Analysis
Plaintiff alleges that “[t]he actions of T.D. AMERITRADE,
INC., constitute a breach of contract.”10
Under Texas law, “[t]he
essential elements of a breach of contract action are: (1) the
existence of a valid contract; (2) performance or tendered performance
by
the
plaintiff;
(3)
breach
of
the
contract
by
the
defendant; and (4) damages sustained by the plaintiff as a result
of the breach.”
Smith Int'l, Inc. v. Egle Grp., LLC, 490 F.3d 380,
387 (5th Cir. 2007) (quoting Valero Mktg. & Supply Co. v. Kalama
10
Document No. 15 ¶ 6.
4
Int'l, L.L.C., 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.]
2001)). Plaintiff’s Amended Complaint does not have attached to it
and does not incorporate by reference any contract between the
parties, nor does it describe how Defendant allegedly breached any
specific provision of a contract.
Defendant attaches to its brief
in support of its motion, however, a copy of the Client Agreement,
which was also exhibited to the Court in the evidentiary hearing
held on Plaintiff’s motion for preliminary injunction on April 15,
2013.
Again, Plaintiff neither cites to any clause in the Client
Agreement that he presumably alleges was breached nor does he
specify how or in what particular Defendant breached this or any
other contract.
Plaintiff has therefore failed to state a claim
for breach of contract.
Plaintiff further alleges that “[w]hen viewed objectively the
conduct of T.D. AMERITRADE INC is harsh, wrongful, oppressive, and
constitutes a breach of fiduciary duty.”11
Under Texas law, “[t]o
prevail on a breach of fiduciary duty claim, a plaintiff must show
(1)
a
fiduciary
relationship
between
the
plaintiff
and
the
defendant, (2) a breach by the defendant of his fiduciary duty to
the plaintiff, and (3) an injury to the plaintiff or benefit to the
defendant as a result of the defendant's breach.”
Priddy v.
Rawson, 282 S.W.3d 588, 599 (Tex. App.–Houston [14th Dist.] 2009).
The nature of the duty owed by a broker to an investor depends on
11
Document No. 15 ¶ 6.
5
whether “the investor controls a nondiscretionary account and
retains the ability to make investment decisions,” in which case
“the scope of any duties owed by the broker will generally be
confined to executing the investor's order.”
Martinez Tapia v.
Chase Manhattan Bank, N.A., 149 F.3d 404, 412 (5th Cir. 1998)
(citing Romano v. Merrill Lynch, Pierce, Fenner & Smith, 834 F.2d
523, 530 (5th Cir. 1987)).
Plaintiff in his Amended Complaint
alleges that he had a “margin account for trading and purchase of
stocks” but does not describe any recognizable fiduciary relationship with Defendant, nor does Plaintiff allege that Defendant as
his broker failed to execute any of Plaintiff’s orders.
Plaintiff
therefore has not stated a claim for breach of fiduciary duty.
Finally, Plaintiff alleges that “the conduct of Defendant
constitutes a breach of duty of good faith and fair dealing.”12 The
Texas
Supreme
Court
has
rejected
the
notion
that
contracts
generally contain an implied covenant of good faith and fair
dealing.
English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983) (“To
adopt the
laudatory
sounding
theory
of
‘good faith
and fair
dealing’ would place a party under the onerous threat of treble
damages should he seek to compel his adversary to perform according
to the contract terms as agreed upon by the parties. . . . This we
are unwilling to do.”).
Texas courts have narrowly limited the
tort duty of good faith and fair dealing to distinct, special
12
Document No. 15 ¶ 6.
6
relationships, earmarked by specific characteristics, including
long-standing
relations,
imbalanced
bargaining
power,
significant trust and confidence shared by the parties.
and
Caton v.
Leach Corp., 896 F.2d 939, 948 (5th Cir. 1990) (noting that
insurers and compensation carriers owe duty of good faith and fair
dealing).
The Court is unaware of any authority suggesting that
stock brokers owe such a duty to their clients, and Plaintiff has
not alleged any facts indicating a long-standing relationship,
imbalanced bargaining power, or significant trust and confidence
shared by the parties.
Plaintiff has therefore failed to state a
claim for breach of good faith and fair dealing.
III.
Order
For the foregoing reasons, it is
ORDERED that Defendant TD Ameritrade, Inc.’s Rule 12(b)(6)
Motion to Dismiss (Document No. 16) is GRANTED, and Plaintiff’s
cause is DISMISSED with prejudice for failure to state a claim upon
which relief can be granted.
The Clerk will enter this Order, providing a correct copy to
all counsel of record.
SIGNED in Houston, Texas, on this 18th day of December, 2013.
____________________________________
EWING WERLEIN, JR.
UNITED STATES DISTRICT JUDGE
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