Loomis Sayles Trust Company LLC v. Citigroup Global Markets Inc

Background

Loomis Sayles Trust Company LLC brought state-law claims against Citigroup Global Markets Inc. concerning trades involving shares of CL and SHOP. Citigroup initially moved to dismiss, arguing that the parties’ communications on the trading day unambiguously defeated Loomis’s claims. Citigroup also argued that the Securities Litigation Uniform Standards Act (SLUSA) precluded the claims and that Loomis’s breach-of-fiduciary-duty claim duplicated its breach-of-contract claim.

After Loomis disputed the completeness and accuracy of the Bloomberg chats and telephone calls submitted with the motion, the court converted the motion to one for summary judgment. The parties were allowed to submit supplemental briefing and other evidence. New York law applied.

Contract Ambiguity

Under New York law, whether a contract is ambiguous is a legal question, but an ambiguous agreement presents factual issues that cannot be resolved on summary judgment when the parties’ intent is unclear. The court treated the Bloomberg chats and two telephone conversations as the relevant agreement.

Citigroup relied on statements suggesting that Loomis agreed to use market-on-close orders for CL and SHOP, except possibly for another stock identified as SAM. The court concluded that these communications did not unambiguously establish that Loomis directed Citigroup to trade all CL and SHOP shares entirely with market-on-close orders. In particular, a reasonable jury could interpret Loomis trader Nick Gagnon’s question about whether Citigroup was “looking to complete all except maybe SAM” in more than one way.

The court identified several possible findings for a jury: Citigroup received Loomis’s instructions and obtained Loomis’s agreement as the trades progressed; Loomis gave Citigroup broad discretion over whether and how to trade some or all of the CL and SHOP shares; or the parties had no meeting of the minds, with each side reasonably misunderstanding the other’s understanding of Citigroup’s authority.

SLUSA and Fiduciary-Duty Claim

The court held that Loomis’s claims were not precluded by SLUSA. SLUSA can bar certain state-law claims in covered class actions involving material misrepresentations or omissions, manipulative or deceptive conduct, and covered securities. The court found that the substance of Loomis’s claims did not concern a misrepresentation, omission, or manipulative or deceptive device, so SLUSA did not apply.

The court also declined to treat the fiduciary-duty claim as duplicative of the contract claim. New York law imposes fiduciary obligations on brokers, and a fiduciary-duty claim is not duplicative if the alleged fiduciary responsibility arises from the relationship rather than solely from a contract. Because a jury could find that the parties never formed a binding contract concerning Citigroup’s trading discretion, the fiduciary-duty claim could be pleaded separately or alternatively.

Ruling

The court DENIED Citigroup’s converted motion for summary judgment without prejudice to renewal upon the submission of additional evidence. The court DENIED AS MOOT Citigroup’s request for oral argument and Loomis’s request to require Citigroup to file a statement of material facts under Local Rule 56.1. The Clerk was directed to close the motions listed at Dkt. Nos. 35, 44, 52, and 98.