Minpeco, S.A. v. Conticommodity Services, Inc

676 F.Supp. 486 (S.D. NY 1987)

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Nature of the Case

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Facts

P seeks to recover both its alleged actual or 'out-of-pocket' damages and its alleged 'lost profits' in the total amount of $225 - $252 million. P alleges that it lost approximately $107.7 million in so-called actual or 'out-of-pocket' damages on short futures positions opened prior to November 30, 1979, and subsequently closed at a loss. P also alleges that it is entitled to its 'lost profits' from these short positions in the amount of $100.2 - 126.4 million, representing 'the gains which it is claimed would have occurred if the market had acted in a normal unmanipulated manner in December 1979.' On long positions, allegedly unhedged on the advice of P's brokers and on which hedges were subsequently reestablished at a loss, P claims an additional $17.2 - 18.5 million in damages, representing the difference between Po's actual losses on these transactions and the gains which would have occurred but for the manipulation. P also claims out-of-pocket losses of $49 million on its breach of fiduciary duty claim against Merrill Lynch: $38 million on short trades and $11 million on unhedged long trades. Ds take the position that as a matter of law any damages which P suffered on the silver futures market as a result of the alleged manipulation were completely offset by profits gained on P's physical silver positions. At the core of this argument are two important undisputed facts. P has admitted that all of its silver futures trades from October to December 1979 were 'hedges' backed by physical silver, and it is undisputed that P's damage calculations do not take into account any profit that P may have made as a result of its physical silver. D contend that P's damage calculations do not represent P's net economic loss because whatever losses P incurred on its futures positions when the price of silver increased were offset by the simultaneous increase in value of P's physical silver.