Financial Technology Partners LP v. Circle Internet Financial Limited

Background

Financial Technology Partners LP and FTP Securities LLC, together called FT Partners, alleged that Circle Internet Financial Limited wrongfully terminated two advisory agreements and failed to pay fees required by those agreements. The Circle Agreement covered FT Partners’ advice to Circle, and the SeedInvest Agreement expanded that advisory role to transactions involving Circle’s subsidiaries. The agreements provided for retainers, transaction fees, termination conditions, and fees for certain transactions entered into or completed within a 12-month period after a valid termination.

Circle terminated the Circle Agreement in April 2022 and the SeedInvest Agreement in August 2022. FT Partners later sought transaction fees connected to a May 2022 capital raise, the SeedInvest Acquisition, and an August 2023 capital raise. Circle refused to pay the invoices or provide requested information, relying on its prior termination of the agreements.

The amended complaint included breach-of-contract claims, a declaratory-judgment claim concerning the Circle Agreement, claims for breach of the implied covenant of good faith and fair dealing concerning both agreements, and unjust-enrichment claims concerning both agreements. Circle moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a legally actionable claim. Circle did not move to dismiss the breach-of-contract claims in Counts II and III.

Court’s Analysis

The court dismissed the declaratory-judgment claim in Count I. FT Partners sought a declaration that Circle had not validly terminated the Circle Agreement and that the agreement remained in force. The court held that the breach-of-contract claim would necessarily decide whether the termination was effective, making declaratory relief duplicative. The court also concluded that the breach-of-contract claim, which sought damages, was a more effective remedy. It declined to exercise jurisdiction over the declaratory claim and dismissed it.

The court dismissed the implied-covenant claims in Counts IV and V. Under New York law, a separate claim for breach of the implied covenant of good faith and fair dealing generally cannot proceed when it is based on the same facts and seeks the same damages as a breach-of-contract claim. The court found that FT Partners’ claims were based on the same allegations that Circle improperly terminated the agreements, failed to act in good faith, failed to provide proper notice, and failed to pay transaction fees. The court also found that FT Partners’ allegations that Circle manufactured grounds for termination were encompassed by the agreements’ express termination provisions.

The court dismissed the unjust-enrichment claims in Counts VI and VII. Although unjust enrichment can sometimes be pleaded as an alternative when a written agreement is disputed or does not cover the dispute, the court found that the agreements covered both the compensation for services performed before termination and the transaction fees sought for transactions within the agreements’ post-termination period. Because the written agreements governed those disputes, the court held that equitable recovery through unjust enrichment was unavailable as a separate theory.

Disposition

Judge Victor Marrero granted Circle’s motion to partially dismiss the amended complaint. The order states: “Counts I, IV, V, VI, and VII of the Amended Complaint are dismissed without prejudice.” The breach-of-contract claims in Counts II and III were not dismissed by this order. The order also directed the Clerk of Court to terminate pending motions.