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de Malmanche v. Glenrock Asset Mgmt. Assocs.

March 30, 2009


The opinion of the court was delivered by: Kevin Nathaniel Fox United States Magistrate Judge



In this breach of contract action, brought pursuant to the Court's diversity jurisdiction, the plaintiff, Bibi de Malmanche ("de Malmanche") alleges the defendants breached the parties' Introduction Agreement ("Agreement") by failing to: a) maintain accurate records of investments made by investors introduced to the defendants (hereinafter "Glenrock" or the "defendants")*fn1 by the plaintiff; b) provide her with "full and complete access" to records related to investments she maintains were made by investors whom she introduced to Glenrock; and c) pay her fees related to investments made by investors she introduced to the defendants. The plaintiff also asserts causes of action for: i) breach of the implied covenant of good faith and fair dealing; and ii) unjust enrichment. In addition, de Malmanche seeks an accounting.*fn2 Subsequent to filing its answer to the amended complaint, Glenrock moved for judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. The plaintiff opposes the motion; it is analyzed below.


On November 24, 2003, the parties entered into the Agreement, through which Glenrock appointed the plaintiff, on a non-exclusive basis, to market investment funds managed by Glenrock to prospective investors. Under the terms of the parties' contract, Glenrock agreed, throughout, "the term of [the] Agreement[,] to keep proper and up to date books of account and records showing the revenues referred to in clause 4.1 [of the Agreement]; and to make available to the Introducer[, the plaintiff,] on request any books of account, records, reports, returns and other information relating to the revenues referred to in clause 4.1 [of the Agreement] as the Introducer may reasonably require, and to allow the authorized officers and employees of the Introducer to have access to such information and to take copies of such documents as required."

Pursuant to paragraph 4.1 of the Agreement, de Malmanche was to receive fees from the defendants equal to 33.33% of any Glenrock investment management and performance-based commissions earned from investments made by investors introduced to Glenrock, by the plaintiff exclusively. The parties agreed that de Malmanche's fees would decrease from 33.33% to 20%, in the event that aggregate net assets, under Glenrock's management, exceeded $100 million.

The plaintiff alleges Glenrock breached the Agreement by failing to pay her at least $1,000,000 in fees she earned by introducing investors to Glenrock who deposited investment funds with it, including the following entities: GFA/Fortun; Brunner Invest; Credit Suisse Private Bank; and Dexia. For their part, the defendants contend they have paid de Malmanche the fees to which she is entitled for introducing investors to them exclusively, who, thereafter, invested funds with Glenrock. The defendants allege de Malmanche is attempting, through this action, to obtain fees for investors who came to them from sources other than de Malmanche or investors who were introduced to them, independent of de Malmanche, through investors whom de Malmanche brought to Glenrock.

The Agreement specifies that: (i) "[a]ny dispute or difference as to the fees payable [under the Agreement] shall be referred to the Administrator," who "shall be deemed to be acting as experts (sic) and not as arbitrators (sic) and their (sic) determination as to the amount of such fees shall be final and binding on the parties"; and (2) "the Agreement shall be governed by and construed in accordance with the laws of the State of New York." The Agreement explains that the term "Administrators" "means the administrators for the time being of Glenrock Funds." According to Glenrock, de Malmanche failed to submit the parties' fee dispute to the Administrator(s), prior to commencing this action, and Glenrock maintains de Malmanche's failure to exhaust this contractual alternative dispute resolution remedy bars her from prosecuting this action. The plaintiff does not allege she submitted the fee dispute to the Administrator(s). She contends the Administrator's function is "limited to ministerial calculations," and the Administrator does not serve as "an arbitrator for all factual disputes." Moreover, de Malmanche denies having agreed to the alternative dispute resolution procedure contained in paragraph 9.1 of the Agreement.


Judgment on the Pleadings

Fed. R. Civ. P. 12(c) provides that "[a]fter the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings." "Judgment on the pleadings is appropriate where material facts are undisputed and where a judgment on the merits is possible merely by considering the contents of the pleadings." Sellers v. M.C. Floor Crafters Inc., 842 F.2d 639, 642 (2d Cir. 1988) (citation omitted). A court should dispose of the claims on the pleadings "if, from the pleadings, the moving party is entitled to judgment as a matter of law." Burns Int'l Sec. Servs., Inc. v. Int'l Union, United Plant Guard Workers of Am., 47 F.3d 14, 16 (2d Cir. 1994) (Fed. R. Civ. P. 12[c]). "The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim." Cleveland v. Caplaw Enter., 448 F.3d 518, 521 (2d Cir. 2006). "In each case, the court must accept as true the complaint's factual allegations and draw all inferences in the plaintiff's favor." Id.

At the pleading stage, no obligation exists to prove anything, only to set forth "'enough facts to state a claim for relief that is plausible on its face.'" Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (2007).

Alternative Dispute Resolution ("ADR")

In New York, ADR procedures are "recognized as an effective and expeditious means of resolving disputes between willing parties desirous of avoiding the expense and delay frequently attendant to the judicial process." Westinghouse Elec. Corp. v. New York City Transit Auth., 82 N.Y.2d 47, 53-54, 603 N.Y.S.2d 404, 407 (1993) (citation omitted). "New York public policy [ ] favors alternative dispute resolution mechanisms that reflect the informed negotiation and endorsement of the parties." VCG Special Opportunities Master Fund v. Citibank, N.A., 594 F. Supp. 2d 334, 343 (S.D.N.Y. 2008) (citations omitted). Where a party "understood the implications of the ADR clause prior to undertaking its business and legal risks under the [ ] agreement, [t]o allow it, after the fact, to secure the assistance and power of the courts to relieve it of a particular procedural ...

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