relationship. See, e.g., R2. Ex. 29. Because a jury could find
that Lehman served as a CTA through the advice and opinions it
gave to Non-Ferrous with respect to these transactions, summary
judgment is inappropriate.
3. Commodity Futures Trading Commission Rules § 32.9
Non-Ferrous alleges in its Twelfth Counterclaim that Lehman
violated § 32.9 of the CFTC Rules. Lehman correctly argues that
summary judgment is proper because there is no private action
for violations of CFTC rules. See Fustok v. ContiCommodity
Servs., Inc., 618 F. Supp. 1069, 1073-74 (S.D.N.Y. 1985);
Procter & Gamble, 925 F. Supp. at 1288; Khalid Bin Alwaleed
Foundation v. E.F. Hutton Co., 709 F. Supp. 815, 820 (N.D.Ill.
1989). Despite Non-Ferrous' arguments to the contrary, the Court
finds that the "better reasoned rule of law is that § 32.9 is
applicable only to CFTC enforcement actions and does not give
rise to a private cause of action." Procter & Gamble,
925 F. Supp. at 1288. Summary judgment on this counterclaim is
therefore granted to Lehman.
Lehman moves for summary judgment on Non-Ferrous' Fourteenth
Counterclaim, which alleges that Lehman is liable for conversion
stemming from Non-Ferrous' loss of the $42 million in State
Reserve Bank money. Under New York law, the tort of conversion
requires a showing that a defendant exercised "unauthorized
interference with plaintiffs ownership or possession of
property." See, e.g., Republic of Liberia v. Bickford,
787 F. Supp. 397, 402 (S.D.N.Y. 1992). Lehman's only argument in
favor of summary judgment is that Hu's trading was authorized,
and therefore the Defendants cannot establish the unauthorized
trading requirement. As previously discussed, Hu's authority to
enter into these transactions on Non-Ferrous' behalf is a
question of fact in this case. Therefore, summary judgment is
inappropriate on this counterclaim.
M. Remaining Defenses
1. Personal Jurisdiction
Lehman moves to dismiss the Defendants' Seventeenth
Affirmative Defense, which alleges that Lehman's claims are
barred because this Court does not have personal jurisdiction
over the Defendants. Lehman argues, inter alia, that because
Non-Ferrous specifically consented to the jurisdiction of this
Court in the FX agreement, that provision should be enforced
under N.Y. Gen. Oblig. Law § 1402.
The Defendants, in response, merely state that disputed
material facts exist, without identifying any evidence in
support of that statement. The Court therefore finds that it has
personal jurisdiction over the Defendants in this case.
Non-Ferrous consented to the jurisdiction of this Court in its
agreements with Lehman and engaged in commercial activity with
New York corporations that occurred, in part, in New York. The
Defendants' Seventeenth Affirmative Defense is therefore
2. Twentieth Affirmative Defense
Lehman moves for summary judgment on the Defendants' Twentieth
Affirmative Defense, arguing that it "consists of nothing more
than a grab-bag collection of adjectives and adverbs that
recapitulate issues already addressed." Lehman's Mem. in Supp.
at 35-36. The Defendants do not specifically address Lehman's
motion for summary judgment on this defense. The Court agrees
with Lehman, and therefore grants summary judgment
in its favor on the Defendants' Twentieth Affirmative Defense.
Lehman's motion for summary judgment is granted in part and
denied in part. The Defendants' motion for summary judgment is
denied. The Court reserves decision on aspects of both sides'
motions. Lehman may assert Counts One, Two, Four, and Five of
its Amended Complaint at trial. Against these, the Defendants
may raise the following affirmative defenses: the First, the
Second, the Third, the Fifth, the Sixth, the Eighth, the
Eleventh, the Twelfth, and the Sixteenth. Non-Ferrous may also
assert the following counterclaims at trial: the First, the
Second, the Third, the Fourth, the Fifth, the Sixth, the Eighth,
the Ninth, the Tenth, the Eleventh, and the Fourteenth.
The parties are hereby given a ready for trial date of
Wednesday, November 22, 2000. Any remaining discovery shall be
completed by the close of business on Wednesday, October 11,
2000. Pre-trial materials, as listed in the memorandum attached
to this Opinion and Order, are due by Wednesday, November 1,
2000. The Court directs that after it has established a firm
trial date, the parties are to submit the briefs referred to in
this Order and Opinion on the issues relating to Count Three,
the Thirteenth Counterclaim, and the unsuitability and
markup-fraud components of the Fifth Counterclaim.