Friday, November 22, 2013

MDCM Holdings, Inc. v. Credit Suisse First Boston Corporation case brief

MDCM Holdings, Inc. v. Credit Suisse First Boston Corporation case brief summary
216 F.Supp.2d 251 (2002)


CASE SYNOPSIS
Plaintiff corporation, on behalf of itself and others similarly situated filed an action against defendant bank alleging breach of contract, breach of good faith and fair dealing, breach of fiduciary duties, and alternatively unjust enrichment. The bank filed a motion to dismiss the complaint in its entirety or in part.

CASE FACTS
The corporation entered into a securities underwriting agreement with the bank in order to offer stock in an initial public offering (IPO). In addition to taking a commission as agreed to in the contract, the bank made arrangements with certain stock purchasers so that the bank could take advantage of the stock price increase that occurred within days after the IPO was commenced. Because of this practice, the corporation filed its claim for breach of contract.

DISCUSSION

  • The court denied the bank's motion to dismiss the corporation's complaint. 
  • The court held that the corporation's complaint did not violate 15 U.S.C.S. § 78bb(f)(1), the preemption provisions of the Securities Litigation Uniform Standards Act of 1988, Pub. L. No. 105-333, 112 Stat. 3227, because the corporation did not allege that the bank committed misrepresentation or fraud, but only alleged claims under the contract. 
  • The corporation had standing because it had entered into agreements with the bank that were allegedly violated. 
  • The corporation's claims were viable at the early stage of the proceedings, and the corporation was entitled to plead an unjust enrichment claim as an alternative theory of recovery.

CONCLUSION
The court denied the bank's motion to dismiss the claim filed by the corporation for breach of contract, breach of the covenants of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment.


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