Jarvis v. North American Globex Fund, L.P.
2011 U.S. Dist. LEXIS 114288
E.D.N.Y2011Background
- Jarvis filed suit Feb 15, 2011 asserting fraud, breach of contract, and breach of fiduciary duty claims.
- Default judgment against NAG, Northstar, and Peister entered on June 27, 2011 and the matter was referred for an inquest as to damages.
- Judge Wall recommended compensatory damages of $247,165.54, prejudgment interest of $101,020.26, and post-judgment interest under 28 U.S.C. § 1961.
- Court reviewed the Report and adopted it where there was no objection, adopting the damages recommendations.
- Court addressed whether CFTC proceedings affect damages and whether state-law claims survive as preempted or not, then awarded the damages and interest.
- Final court order directs entry of default judgment in the recommended amount and closure of the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption by CFTC order on damages | Jarvis seeks state-law damages not fully offset by CFTC relief | Preemption may bar duplicative damages; offset allowed | Not preempted; offset awarded against damages |
| Whether CFTC order requires offset of Jarvis’s damages | Offset only part of damages reflected by CFTC recovery | CFTC recovery should reduce damages awarded | Offset applied; damages reduced by $2,834.46 from CFTC relief |
| Whether state-law claims survive post-CFTC proceeding | Breach of contract and fiduciary duty claims remain valid | Some state-law claims may be preempted by CEA | Non-preempted; state-law claims not bearing on market operations may proceed for damages |
| Adequacy of damages for defaulted defendants | Evidence supports damages causally tied to defendants’ default | No need for a damages hearing due to default | Damages supported by record; no hearing needed |
Key Cases Cited
- Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155 (2d Cir. 1992) (court may rely on pleadings and affidavits to establish damages in a default judgment)
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (district court retains discretion to determine default judgment appropriateness)
- Car-Freshener Corp. v. Excellent Deals, Inc., 2011 WL 3846520 (E.D.N.Y. 2011) (default admission of liability; damages need not be proved at hearing)
- Transatlantic Marine Claims Agency v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (no hearing required where damages can be proven by affidavits and documents)
- American Agriculture Movement, Inc. v. Board of Trade of the City of Chicago, 977 F.2d 1147 (7th Cir. 1992) (savings clause preserves some state-law actions not bearing on market operation)
- Hlavinka v. Blunt, 896 F.2d 240 (7th Cir. 1990) (CFTC claims may be preempted; related state-law claims may proceed)