RMLB LLC v. CPM Mgmt. LLC

MEMORANDUM AND ORDER BACKGROUND¹ RMLB LLC and Reldan Metals, Inc. (“Plaintiffs”) entered into an agreement with CPM Management LLC (“Defendant”) whereby Defendant was to assist in transferring Plaintiffs’ precious metals to a new depository, and to manage investments of those metals and any related securities. (First Am. Compl. (“FAC”) 21, ECF No. 11.) Defendant was not permitted to take complete ownership or control over the precious metals. (Id. 23.) On July 22, 2018, Defendant advised Plaintiffs that it had begun the process of moving Plaintiffs’ precious metals from its current depository, ScotiaBank, to a “London pool account.” (Id. 24.) After discussing account identification options, on August 9, 2018, Defendant advised Plaintiffs that: the best approach for identifying your accounts with any and all counterparts (depositories, trading companies, brokers, etc.) is for the accounts to be identified as CPM accounts, with the counterparts having a letter from CPM outlining the procedures in which the ultimate owner may step forward and claim the accounts, and/or specify that CPM no longer has authority over the accounts. You get a letter from CPM outlining the procedures you would use in such circumstances. (Id. 33.) Defendant confirmed it would move forward with that approach the same day. (Id. 34.) In November 2018, Plaintiffs requested holding statements regarding the precious metals, but Defendant did not provide them. (Id. 47.) On December 20, 2018, Plaintiffs again requested the holding statements. (Id. 49.) Plaintiffs received the statements the following day. (Id. 50.) Upon review of the statements, Plaintiffs learned that its Delaware Depository Services Company (“DDSC”) account was in Defendant’s name only. (Id. 58.) On December 27, 2018, Plaintiffs learned that Defendant had taken possession and control over the precious metals. (FAC

58-60.) And although Defendant represented that it would immediately provide a letter to the depository explaining the procedure for the ultimate owner claiming the accounts, Defendant never did so. (Id.