United States District Court, S.D. New York
OPINION AND ORDER
Choice Money Transfer, Inc. ("Choice") provides
consumer money transfer services, facilitating international
money transfers in 181 countries worldwide. See
Plaintiff's Response to Defendants' Rule 56.1
Statement of Undisputed Material Facts and Counterstatement
of Facts ("PI. Response to Rule 56.1 Statement)
¶¶ 5-6, ECF No. 31; Defendants' Reply to
Plaintiff's Rule 56.1(b) Counterstatement of Material
Facts ("Defs. Reply to Rule 56.1 Counterstatement")
¶ 6, ECF No. 32. Defendant Societe International de
Change ("SIC") is a Mauritanian company that, among
other things, executes payments for international money
transmitters, such as Choice. Id. ¶ 1.
Defendant Arimec, LLC ("Arimec") exports goods from
the United States to Mauritania and, most relevant here, owns
the bank account to which Choice made payments to SIC.
Id. at ¶ 2. Defendant Mohamed Nagem is the
majority owner and president of the board of SIC and sole
owner of Arimec. Id. at ¶ 3.
action, Choice makes claims for breach of contract, fraud,
and money had and received, alleging that SIC, beginning in
2013 and continuing through February 2017, improperly
calculated and deliberately obfuscated its invoices so as to
conceal the miscalculation. Specifically, Choice alleges that
SIC provided it with U.S. Dollar
("USD")/Mauritanian Ouguiya ("MRO") and
Euro/MRO exchange rates inconsistent with the USD/Euro
exchange rate and calculated amounts owed by applying the
USD/MRO rate to the total number of MROs paid out regardless
of whether the transaction originated in Euros or dollars.
The result, says Choice, is that SIC requested and received
payment beyond what it was owed. See Complaint, ECF
No. 1. In addition to denying those claims, SIC brings a
counterclaim for breach of contract based on Choice's
refusal to pay SICs final invoice. Answer, Affirmative
Defenses and Counterclaim of Defendants Societe International
de Change, Arimec, LLC, and Mohammed Nagem, ECF No. 19.
the Court is the motion for summary judgment of defendants
SIC, Arimec, and Nagem. Memorandum of Law in Support of
Defendants' Motion for Summary Judgment Pursuant to Rule
56 of the Federal Rules of Civil Procedures ("Defs.
Mem."), ECF No. 26. For the reasons set forth below, the
Court grants the motion in part and denies it in part.
Specifically, the Count denies summary judgment on both
parties' breach of contract claims because there is a
genuine dispute as to whether SIC breached an obligation to
set MRO exchange rates consistent with the USD/Euro rate and
as to whether the voluntary payment doctrine bars
Choice's breach of contract claim. The Court grants
summary judgment for defendants on Choice's claims for
money had and received and fraud because those claims arise
out of the same subject matter as, and legal duties derived
from, the parties' written agreement.
of course, a truism that summary judgment is only appropriate
"if the pleadings, depositions, answers to
interrogatories on file, together with the affidavits, if
any, show that there is no genuine dispute as to any material
fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c). The moving party has
the burden of demonstrating the absence of any genuine
disputes of material fact. Adickes v. S.H. Kress &
Co., 398 U.S. 144, 157 (1970). In determining whether
summary judgment is appropriate the court must resolve all
ambiguities and draw all reasonable inferences against the
movant. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986).
pertinent facts, undisputed except where indicated, are as
Choice entered into a written agreement "made as of July
1, 2007, " pursuant to which SIC would serve as
Choice's delivery correspondent in Mauritania (the
"Agreement"). Pi. Response to Rule 56.1 Statement
¶ 13. As Choice's delivery correspondent, SIC was
obligated to deliver funds to beneficiaries m Mauritania m
the local currency - Mauritaman Ouguiya - in accordance with
Choice's payment instructions. Id. ¶¶
16-17. Under Section 5.2 of the Agreement, Choice agreed
“[t]o deposit into [SIC's] bank account (as per
instructions) the equivalent of the funds, which [SIC]
delivered to the Beneficiaries in the Territory [of
Mauritania] on a daily basis or as agreed upon between [SIC]
and [Choice]." Id. ¶ 19. SIC originally
acted as the delivery correspondent only for transactions
originating in the United States. Id. ¶ 24. At
some later point, SIC began acting as the correspondent for
European transactions as well. Id. ¶ 25.
practice, the parties fulfilled money transfer requests in
the following manner: First, before Choice's customers
made any money transfer requests, SIC provided Choice with
MRO exchange rates. Defs. Reply to Rule 56.1 Counterstatement
¶ 28. SIC did this even though the Agreement neither
required SIC to set the exchange rates nor established the
mechanism by which it was to establish MRO exchange rates.
Id. ¶ 26. Choice allowed SIC to set the rates
at which SIC would pay out in local currency because SIC had
knowledge of the local market. Id. ¶ 27. Two
factors SIC considered in setting rates were the rates of
Choice's competitors, such as Money Gram and Western
Union, and the rates set by the Central Bank of Mauritania.
PI. Response to Rule 56.1 Statement ¶ 30. Second, Choice
would receive customer requests for money transfers to
Mauritania, passing on to its customers the rates provided by
SIC. Id. ¶ 32. Third, after SIC paid MRO to the
beneficiaries, it would seek reimbursement by Choice.
Id. ¶ 27(g). SIC would issue an invoice to
Choice requesting reimbursement for the MRO it had paid, plus
the commissions due SIC. Id. ¶ 27(h). Choice
was to pay a 30% net commission per order to SIC for all MRO
payments originating in the United States, and a 25%
commission on such payments originating in Spain and Italy.
Reply to Defs. Rule 56.1 Counterstatement ¶ 22. Fourth
and finally, Choice would pay SIC's invoices. PI.
Response to Rule 56.1 Statement ¶ 27 (i). Choice almost
always paid the invoices in USD, although SIC expressed a
desire to be paid in Euros. Id. ¶¶ 27(k),
beginning of the parties' relationship, Dr. Joseph
Neuschatz, the head of treasury and vice president of Choice,
id. ¶ 8, reviewed SIC's invoices to
determine whether the exchange rates SIC provided tracked the
USD/Euro rate, Id. ¶ 53. Later, however,
Neuschatz "only very casually checked."
Id. ¶ 54. According to Choice, Neuschatz began
only casually checking the rates because he "had built
up trust with SIC . . . [and] trusted that [SIC] was . . .
presenting these invoices with integrity." Id.
¶ 55, By contrast, defendants suggest that it was simply
"because [Choice] had ... a tremendous amount of work
and then it was very difficult for - for [it] to do
that." Id. All parties agree that "[a]t
the time [Choice] received each invoice from SIC it had the
independent ability to verify whether the USD/MRO and EUR/MRO
rates were tracking the USD/EUR rate." Id.
May 2008, SIC and Choice discussed how Choice would reimburse
SIC for Euro-originating transactions. According to Choice,
but disputed by defendants, Neuschatz had "several"
discussions with SIC about the importance of SIC's
setting out MRO exchange rates that tracked the USD/Euro
exchange rate. See Defs. Reply to Rule 56.1 Counterstatement
¶ 42. Nagem asked Neuschatz: "For Euro let's
say the rate is 360 (to simplify) and we pay about 3, 600,
000 MRO on [Choice's] behalf, the equivalence of about
10, 000 EURO, you would then take the 3, 600, 000/USD
(237.35) to get = $15, 167, 474? A[m] I right about this?
[O]r would you convert the 10, 000 Euro to USD and pay us
about $15, 500?" Id. ¶ 47. Neuschatz
responded, "I would take the total m the local currency
and divide it by the dollar rate and get the amount in
dollars that Choice would have to pay. If you paid 3, 600,
000 then we would divide that by the rate and pay the dollar
equivalent. ... I would use the same rate as I use for the
U.S. funding." Id. In an email several days
later, SIC, providing Choice a Euro/MRO exchange rate, stated
that the rate would be "more competitive than any rate
money gram is offering in all European countries" and
highlighted that "the equivalence of this [rate] would
be 1EU=$1.55, which is what the current market is today
(1.5628)." Id. ¶ 50.
four years later - and about one year before SIC allegedly
began seeking excessive reimbursement - Choice and SIC
exchanged a series of emails in which Choice raised questions
about how SIC set the MRO exchange rates. Upon receiving an
invoice from SIC, Neuschatz complained that the Euro/MRO rate
seemed too high. Pi. Response to Rule 56.1 Statement ¶
41. Specifically, Neuschatz asked, "Isn't the euro
rate supposed to relate to the dollar rate? Isn't the
euro rate suppose[d] to adjjust [sic] as the dollar/euro
exchange rate changes? How is this managed?"
Id. ¶ 43. Nagem explained that SIC had been
computing rates based on the Money Gram and Western Union
rates. Id. ¶ 45. He further explained that,
"the EURO/USD are related, but in Mauritania the ratio
maybe [sic] different in the local currency than the
Internationa one, I am not sure. Money Gram Rates today:
372, and 286, so the ratio is th[en] = 1.30. The
International ratio is = 1.35." Id. Nagem also
asked for Choice's position on how it would like SIC to
determine rates going forward: "D[o] we want to be
competitive and follow Money Order [Money Gram] rates as we
have done in the past? OR do you want to get rates that
reflect a ratio: EURO/USD very close to market, and maybe
lose customers by doing so?" Id. ¶¶
did not recall Neuschatz responding to this email and could
not locate any such response in SICs files. Id.
¶ 49. According to Neuschatz, but disputed by
defendants, he followed up on this email by telephone and
informed Nagem that Choice's expectation would be that
the MRO rates SIC provide would track the USD/Euro exchange
rate. See Defs. Reply to Rule 56.1 Counterstatement
¶¶ 57-58 (citing Declaration of Joseph Neuschatz in
Opposition to Defendants' Motion for Summary Judgment
("Neuschatz Decl.") ¶ 51, ECF No.
paid all of SIC's invoices for the period of 2007 through
February 14, 2017. PI. Response to Rule 56.1 Statement ¶
59. According to Choice, it suffered only a few hundred
dollars of loss in 2013 and 2014. Its losses in 2016 and 2017
were greater because: "(a) the dollar strengthened
against the euro, such that the EUR/USD exchange rate dropped
from about 1.33 to 1.06; and (b) the volume of
euro-originating transactions that Choice processed for SIC
increased substantially, from just a few million MROs
disbursed in 2015 to tens of millions disbursed in
2017." Defs. Reply to Rule 56.1 Counterstatement ¶
90. From 2013 to 2017, according to Choice, SIC's
invoicing approach "sometimes resulted in undercharges
and sometimes resulted in overcharges, " but the net
result was an overcharge of $220, 665.72. Id. ¶
77. Choice did not reimburse SIC for the period of February
15, 2017 through February 28, 2017, which was covered by a
final invoice sent on March 1, 2017, Id.
¶¶ 80, 85. SIC's counterclaim for breach of
contract seeks payment of that final invoice.
New York law, a party claiming breach of contract must prove
"(1) a contract; (2) performance of the contract by one
party; (3) breach by the other party; and (4) damages."
Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522,
525 (2d Cir. 1994). Choice alleges that SIC breached the
contract by overcharging it. Specifically, Choice alleges
that SIC supplied Choice with MRO exchange rates inconsistent
with the USD/Euro exchange rate. This resulted in
overcharges, notwithstanding that Choice passed on SIC's
exchange rates to its customers, because SIC did not
distinguish between transactions that originated in dollars