Citigroup Global Markets, Inc. v. Vcg Special Opportunities Master Fund Limited

598 F.3d 30 (2nd Cir. 2010)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D entered into a brokerage services agreement with P. D was obligated to provide prime brokerage services by clearing and settling trades in fixed income securities for P. D then entered into a credit default swap agreement with Citibank, N.A. (Citibank). D alleges that it was a “customer” of P, which allegedly acted as the middleman culminating in the credit default swap agreement with Citibank. Citibank eventually declared a write-down of the assets covered in its credit default swap agreement triggering D's obligation to pay Citibank a total of $10,000,000. D sued Citibank, seeking a declaration that, by declaring the write-down, Citibank had violated the terms of the parties' credit default swap agreement. The district court found D was in breach of the agreement by failing to fulfill its payment obligation. D also began arbitration proceedings against P before the FINRA. P filed a complaint in the district court to permanently enjoin the arbitration and for a declaration that P had no obligation to arbitrate with D regarding the claims submitted to the FINRA arbitrators. P moved for a temporary restraining order and preliminary injunction against the FINRA arbitration. P asserted that it was not a party to, and did not broker, the credit default swap and thus not a customer and was under no obligation to arbitrate. D submitted a declaration that “P recommended and set the terms for” the credit default swap and that D's employees had “dealt with several P representatives in connection with the transaction, but most often with Jeff Gapusan, Donald Quintin, and Jaime Aldama.” The district court granted P's motion for a preliminary injunction under the standard where the movant is required to show “‘irreparable harm absent injunctive relief, and either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in plaintiff's favor.’ P raised “serious questions” as to whether D was, in fact, a customer granted the preliminary injunction on that basis. This appeal eventually resulted.