INTL FCStone Markets, LLC v. Intercambio Mexicano de Comercio S.A. de C.V.
- Alvin Hellerstein
- 1:18-cv-01004
- U.S. District Court · Southern District of New York
- 6
In INTL FCStone Markets v. Intercambio Mexicano, Judge Hellerstein denied dismissal of contract and account-payment claims.
The ruling allowed INTL FCStone Markets, LLC’s breach-of-contract and account-stated claims against Intercambio Mexicano de Comercio S.A. de C.V. to continue past the pleading stage; it did not decide whether IMCO ultimately owed the claimed amount.
What happened
INTL FCStone Markets, LLC sued Intercambio Mexicano de Comercio S.A. de C.V., alleging that Intercambio failed to pay for trading services under their agreement. FCStone sought $494,500.50 plus interest, expenses, and legal fees after it liquidated Intercambio’s trading account.
Intercambio argued that FCStone’s amended complaint did not include enough facts. The court found that FCStone adequately described the agreement, its own performance, Intercambio’s alleged failure to pay margin calls, and the resulting damages. The court also found that FCStone had adequately alleged that Intercambio received an account statement and did not object to the amount calculated, although Intercambio disputed the liquidation itself.
Judge Hellerstein denied Intercambio’s motion to dismiss for failure to state a claim. The court said the nature of Intercambio’s objection required factual development and could not be decided at this stage, and it scheduled an initial pretrial conference.
The detailed version
- INTL FCStone Markets, LLC v. Intercambio Mexicano de Comercio S.A. de C.V. · No. 1:18-cv-01004
- Alvin Hellerstein
- Mar. 31, 2020
Background
INTL FCStone Markets, LLC (FCStone) brought claims for breach of contract and account stated against Intercambio Mexicano de Comercio S.A. de C.V. (IMCO). FCStone alleged that the parties entered into a Terms of Business Agreement dated October 24, 2017. FCStone agreed to provide trading services involving swaps and over-the-counter derivatives, and IMCO agreed to payment obligations.
The agreement required IMCO to meet margin calls by noon on the next business day. It also provided that IMCO would be considered to have accepted transaction confirmations unless it disputed them within two business days, absent a clear error. On December 12, 2017, FCStone sent a notice stating that IMCO had failed to pay $346,275.50 in variation margin and was in default. IMCO did not pay or object. FCStone then liquidated IMCO’s trading account and sent a December 29, 2017 notice stating that IMCO owed a final net settlement amount of $494,500.50. IMCO did not pay that amount. It told FCStone that it disagreed with the liquidation but did not dispute the calculation of the net settlement amount.
Motion to Dismiss
IMCO moved to dismiss under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. On such a motion, the court accepts the complaint’s factual allegations as true and asks whether they plausibly support relief.
Breach of Contract
The agreement selected New York law. Under that law, a breach-of-contract claim requires an agreement, the plaintiff’s adequate performance, the defendant’s breach, and damages. The court held that FCStone alleged each element: it described the relevant agreement terms, alleged that it performed, claimed that IMCO breached by failing to meet margin calls, and identified the unpaid net settlement amount and other damages. The court rejected IMCO’s argument that FCStone needed to plead additional details, such as which securities were involved or the circumstances of each margin call.
Account Stated
An account-stated claim concerns an account or statement presented to a party, acceptance of it as correct, and a promise to pay the stated amount. Acceptance and a promise to pay may be implied when the recipient keeps the statement without objecting within a reasonable time.
The court held that FCStone adequately alleged this claim because it presented IMCO with the second notice showing the net settlement amount and alleged that IMCO did not object to the amount calculated. The court recognized that an objection to the account or services may defeat an account-stated claim even if the objection does not specifically challenge the arithmetic. But the court could not determine, without discovery, whether IMCO’s objection to the liquidation was sufficiently related to the account presented. Deciding that factual issue was not appropriate on a failure-to-state-a-claim motion.
Ruling
Judge Alvin K. Hellerstein denied IMCO’s motion to dismiss for failure to state a claim. The court canceled the previously scheduled oral argument, directed the Clerk to close the motion, and ordered the parties to appear for an initial pretrial conference on May 15, 2020.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.