Int'l Cards Co., Ltd. v. Mastercard Int'l Inc. ( 2018 )

17-2889-cv (L)
Int’l Cards Co., Ltd. v. Mastercard Int’l Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 6th day of November, two thousand eighteen.
PRESENT: JOSÉ A. CABRANES,
BARRINGTON D. PARKER,
Circuit Judges.
KIYO MATSUMOTO,
District Judge.*
INTERNATIONAL CARDS COMPANY LTD.,
Plaintiff-Counter-Defendant-
Appellant-Cross-Appellee, 17-2889-cv (L)
17-3099-cv (XAP)
v.
MASTERCARD INTERNATIONAL INC,
*
Judge Kiyo Matsumoto, of the United States District Court for the Eastern District of New
York, sitting by designation.
1
Defendant-Counter-Claimant-
Appellee-Cross-Appellant.
FOR PLAINTIFF- COUNTER-DEFENDANT-
APPELLANT-CROSS-APPELLEE: DAMIAN CAVALERI (Frederic S. Newman,
Ira J. Lipton, Miriam Manber, Jeffrey A.
Miller, on the brief), Hoguet Newman Regal
& Kenney, LLP New York, NY.
FOR DEFENDANT-COUNTER-CLAIMANT-
APPELLEE-CROSS-APPELLANT: JAY N. FASTOW (Denise L. Plunkett,
Justin W. Lamson, Thomas F. Burke,
Alexander P. Kommatas, on the brief),
Ballard Spahr LLP, New York, NY.
Appeal from the August 31, 2018 judgment and certain orders of the United States District
Court for the Southern District of New York (Lorna G. Schofield, Judge).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the order of the District Court be and hereby is
AFFIRMED.
Plaintiff-Appellant International Cards Company (“ICC”), a Jordanian financial services
firm, brought suit against Defendant-Appellee Mastercard International Inc. (“Mastercard”), a global
financial network and credit card company, raising claims under New York state law.1 Mastercard
cross-claimed, also raising claims under state law. The District Court granted summary judgment on
some claims and a jury returned verdicts with respect to the remaining claims. Both parties now
appeal various adverse rulings.
We assume the parties’ familiarity with the underlying facts, the procedural history of the
case, and the issues on appeal.
* * *
1
More precisely, ICC is the “Plaintiff-Counter-Defendant-Appellant-Cross-Appellee” and
Mastercard is the “Defendant-Counterclaimant-Appellee-Cross-Appellant.”
2
In 1999, ICC entered into an agreement with Mastercard to become a “Member” of the
Mastercard network. Under the agreement, ICC issued Mastercard-branded credit cards to
consumers and ensured payments to merchants throughout Jordan and the Palestinian territories.
Beginning in 2010, Mastercard received numerous complaints from merchants regarding the
timeliness of ICC’s payments. Mastercard alerted ICC of these complaints and demanded improved
performance. The complaints continued, and in 2012, Mastercard began discussions with ICC
competitor Middle East Payment Services (“MEPS”) about facilitating a shift in its merchant-base
from ICC to MEPS.
On April 1, 2013, Mastercard “drew down” a $2.78 million letter of credit, deposited as
collateral by ICC, claiming the sum was “due and payable” to Mastercard or its merchants. The next
day, Mastercard sent a letter to ICC informing ICC that its membership had been terminated “as
specified in Mastercard Rule 1.6.2” and citing ICC’s “continued delay [of] payments to merchants.”
On April 18, 2013, ICC filed suit against Mastercard pleading three state causes of action: (i)
breach of contract; (ii) breach of the implied covenant of good faith and fair dealing; and (iii)
conversion of the $2.78 million collateral letter of credit. Mastercard cross-claimed for breach of
contract, citing ICC’s failure to pay merchants on a timely basis and to provide information to
Mastercard as requested. Mastercard also sought a declaratory judgment that its drawdown of ICC’s
letter of credit was proper.
* * *
Before the District Court, the parties engaged in substantial motion practice and multiple
discovery disputes. Mastercard twice moved for summary judgment on all claims. On May 26, 2016,
the District Court granted summary judgment to Mastercard on ICC’s good faith and fair dealing
claim, but denied summary judgment on all other claims. Shortly before trial, the District Court
granted Mastercard leave to file an additional motion for summary judgment with respect to ICC’s
breach of contract claim, and on March 23, 2017, the District Court granted this motion. A jury trial
was held on the remaining conversion claim and cross-claims, and a verdict was returned in favor of
ICC on the conversion claim with damages of $2.78 million. The jury found for Mastercard with
respect to its crossclaim for breach of contract but awarded no damages. The judgment was entered
on August 31, 2017.
ICC appealed, challenging the District Court’s decisions granting partial summary judgment.
Mastercard cross-appealed, challenging the District Court’s denial of judgment as a matter of law
with respect to ICC’s conversion claim. Both parties also appealed various adverse evidentiary
rulings on motions in limine.
* * *
3
“We review a grant of summary judgment de novo, examining the evidence in the light most
favorable to, and drawing all inferences in favor of, the non-movant.” Huebner v. Midland Credit
Mgmt., Inc., 897 F.3d 42, 50 (2d Cir. 2018).
First, we affirm the District Court’s decision granting Mastercard’s motion for summary
judgment on ICC’s breach of contract claim. The District Court held that “the parties’ contract
authorized MasterCard’s termination of ICC’s Membership and the license agreements.” Sp. App’x
at 46. We agree.
ICC’s appeal on this issue relies on an alternative reading of the parties’ contract, in
particular, Mastercard Rule 1.6.2. ICC argues that the first paragraph in this Rule is merely
introductory, and that the second paragraph “sets forth an exclusive list of bases upon which
MasterCard may terminate a Customer,” ICC Br. at 43.
Although ICC’s competing interpretation of Mastercard Rule 1.6.2 provides a useful
explanation for two isolated phrases (i.e., “without prior notice” and “such termination,” see JA 1621),
overall its interpretation lacks plausibility. It would be bizarre indeed for Mastercard, in its own rules,
to severely limit its own right to terminate a relationship with a Customer, while allowing a
Customer to terminate without cause. Moreover, ICC’s highly restrictive interpretation of
Mastercard’s termination authority contradicts plain language elsewhere in the Mastercard Rules. For
instance, Rule 3.1 explains:
The Corporation reserves the right to limit, suspend or terminate Participation or
Participation privileges of any Customer that does not comply with any Standard or with any
decision of the Corporation with regard to the interpretation and enforcement of any
Standard, or that in any respect violates any Standard or applicable law.
Id. at 384. This explicit reservation of termination authority is simply irreconcilable with ICC’s
interpretation of the parties’ contract. ICC’s offered interpretation is therefore unsustainable, and
the grant of summary judgment on ICC’s breach of contract claim was proper.
Next, we affirm the District Court’s May 26, 2016 order granting Mastercard’s motion for
summary judgment on ICC’s implied covenant-of-good-faith-and-fair-dealing claim. ICC has alleged
no separate injury for this claim other than the injury already alleged in its breach of contract claim,
namely, the termination of its membership in the Mastercard network: “MasterCard’s breach of the
covenant of good faith and fair dealing was the proximate cause of ICC’s inability to continue its
business with regard to MasterCard.” JA 66. As we have already explained, however, Mastercard’s
termination of ICC’s membership was authorized by the contract. And under New York law, “the
covenant of good faith and fair dealing cannot be construed so broadly as effectively to nullify other
express terms of a contract, or to create independent contractual rights.” Peter R. Friedman, Ltd. v.
Tishman Speyer Hudson Ltd. P’ship, 968 N.Y.S.2d 41, 42 (N.Y. App. Div. 1st Dep’t 2013).
4
Finally, after reviewing de novo the District Court’s denial of Mastercard’s motion for
judgment as a matter of law on ICC’s conversion claim, Chowdhury v. Worldtel Bangladesh Holding, Ltd.,
746 F.3d 42, 48 (2d Cir. 2014), we affirm.
“Judgment as a matter of law is appropriate only if the court can conclude that, with
credibility assessments made against the moving party and all inferences drawn against the moving
party, a reasonable juror would have been compelled to accept the view of the moving party.”
Warren v. Pataki, 823 F.3d 125, 139 (2d Cir. 2016) (citation and internal quotation marks omitted).
Here, there was ample evidence on which the jury could rely when it found Mastercard liable for
conversion and awarded $2.78 million in damages. Under New York law, “conversion is the
unauthorized assumption and exercise of the right of ownership over goods belonging to another to
the exclusion of the owner’s rights.” Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 403–04 (2d Cir.
2006). At trial, Mastercard’s representative admitted that, in drawing down ICC’s collateral letter of
credit, Mastercard certified that the requested sum reflected accounts “due and payable” to
Mastercard and its merchants. Mastercard further admitted that it knew of no such accounts when it
made this certification. A reasonable juror could therefore have found (as indeed this jury did find)
that Mastercard’s draw-down represented an unauthorized exercise of control over the funds.
In light of our holdings above, we need not reach the remaining issues raised by the parties
on appeal.2
CONCLUSION
We have reviewed the arguments raised by the parties and find them to be without merit.
For the foregoing reasons, we AFFIRM the August 31, 2017 judgment of the District Court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
2
Reversal of any of the appealed orders would have no effect: inclusion of the license
agreement’s “notice and cure” provisions would have no effect because summary judgment on
ICC’s breach claim relied exclusively on the Mastercard Rules. Similarly, consideration of
Mastercard’s Merchant Satisfaction Survey and evidence about Alami Family Receivables, or
exclusion of Khalil Alami’s deposition and ICC’s damages experts’ testimony, would have no effect
because Mastercard has already succeeded on both parties’ claims for breach of contract.
5