First Commodity Traders, Inc. v. Heinold Commodities, Inc.

• Decision Date: 21 June 1985
• Docket Number: No. 84-2437,84-2437
• Citation: 766 F.2d 1007
• Parties: FIRST COMMODITY TRADERS, INC., Plaintiff-Appellant, v. HEINOLD COMMODITIES, INC., and Vern Pherson, Defendants-Appellees, v. FIRST COMMODITY TRADERS, INC., Robert Gardner, Bruce Zins, and Robert Blankoph, Counterdefendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1007

766 F.2d 1007

FIRST COMMODITY TRADERS, INC., Plaintiff-Appellant, v. HEINOLD COMMODITIES, INC., and Vern Pherson, Defendants-Appellees, v. FIRST COMMODITY TRADERS, INC., Robert Gardner, Bruce Zins, and Robert Blankoph, Counterdefendants-Appellants.

No. 84-2437.

United States Court of Appeals Seventh Circuit.

Argued Jan. 16, 1985.

Decided June 21, 1985.

Sidney Rosenfeld, Soloman, Rosenfeld, Elliott & Stiefel & Glovka, Ltd., Chicago, Ill., for plaintiff-appellant.

William J. Nissen, Sidley & Austin, Chicago, Ill., for defendants-appellees.

Before WOOD and FLAUM, Circuit Judges, and GRANT, Senior District Judge. ^*

GRANT, Senior District Judge.

Appellants, First Commodity Traders, Inc., Robert Gardner, Bruce Zins, and Robert Blankoph appeal from an order granting partial summary judgment to defendants, Heinold Commodities, Inc. and Vern Pherson. The district court's order is reported at 591 F.Supp. 812 (N.D.Ill.1982). Appellants also challenge the district court's reduction of their request for attorneys' fees, and the court's award of attorneys' fees to appellees. For the reasons set forth below, this court AFFIRMS the judgment and order of the district court.

Facts

On September 1, 1978, appellant, First Commodity Traders, Inc. [hereinafter referred to as FCT] entered into a contract with appellee, Heinold Commodities, Inc. [hereinafter referred to as Heinold] in which FCT agreed to operate a branch office for Heinold for the purpose of selling commodities futures. Appellants, Gardner, Zins and Blankoph, signed as guarantors of the obligations of FCT under the contract. The contract required FCT to solicit brokerage business for Heinold and to comply with all rules, regulations and policies of Heinold, the Commodities Futures Trading Commission and various commodities exchanges. Heinold agreed to split the net profits of this business with FCT. The contract contained no definite termination date; however, either party could terminate it for a breach of any paragraph. Illinois law governed the agreement.

Over the course of the relationship, various exchanges found that FCT's principals had violated exchange rules. In November 1979, appellee Vern Pherson became manager of Heinold's New York office. In December 1980, Pherson recommended termination of Heinold's relationship with FCT. At trial, Pherson testified that he had several reasons for his recommendation, including fear of potential harm to Heinold's reputation following disciplinary actions by several commodities exchanges against FCT's principals.

In a January 7, 1981 letter, Heinold told FCT that the agreement would be terminated thirty days later. Heinold later extended the termination date to March 20, 1981. Heinold told FCT's attorney that it considered the contract terminable at will. After termination, an accountant reviewed monthly statements Heinold had sent to FCT during the life of the agreement. The accountant concluded that Heinold had undercredited FCT for clearing house rebates by $166,136.17. 591 F.Supp. at 825.

FCT filed an eleven-count complaint against Heinold in the Supreme Court of New York alleging unjust enrichment, breach of contract, and tortious interference with economic relationships. FCT sought an equitable accounting and the recovery of customer deficits and attorneys' fees. Heinold counterclaimed against FCT for breach of contract and alternatively for an accounting. Following removal of the case to the United States District Court for the Southern District of New York, pursuant to 28 U.S.C. Sec. 1441(c), the parties agreed to transfer the case to the Northern District of Illinois.

After two years of pretrial discovery, the district court granted Heinold summary judgment on nine counts of the complaint. Heinold withdrew its counterclaim for breach of contract and an accounting, and conceded liability to FCT for customer deficits in the amount of $11,549.34. Accordingly, the district court dismissed the first nine counts of FCT's complaint and awarded FCT $11,549.34 as recovery of customer deficits and $3,850 in attorneys' fees. The court awarded Heinold $39,042 in attorneys' fees and dismissed the remainder of Heinold's counterclaim. FCT appeals from the district court's judgment. This Court has jurisdiction under 28 U.S.C. Sec. 1291.

FCT raises five questions on appeal:

I. Whether the district court properly granted summary judgment to Heinold on FCT's claim for an equitable accounting;

II. Whether the district court properly granted summary judgment dismissing FCT's claim of unjust enrichment;

III. Whether the district court properly granted summary judgment to Heinold on FCT's claim of breach of contract;

IV. Whether the district court properly granted summary judgment on FCT's claim for the recovery of customer deficits for two customer accounts; and

V. Whether the district court properly awarded attorneys' fees?

I. Whether the district court properly granted summary judgment to Heinold on FCT's claim for an equitable accounting?

FCT requested an equitable accounting covering all transactions that occurred between the parties during the entire life of the agreement. FCT sought to show by the accounting that Heinold had failed to properly reimburse FCT for commissions and money expended for customers' clearance fees. Heinold answered that an account had already been stated between the parties for each month of their contractual relationship.

The district court dismissed FCT's claim for an equitable accounting because it found: 1) FCT had failed to raise a genuine issue of fact in support of opening the accounts stated; and 2) FCT had failed to show that its remedy at law was inadequate. 591 F.Supp. at 825.

Because an accounting is an equitable remedy, a court has broad discretion to determine whether it is appropriate to order an accounting. Netisingha v. End of the Line, Inc., 107 Ill.App.3d 275, 278, 63 Ill.Dec. 208, 210, 437 N.E.2d 857, 859 (1982). A court may refuse to award an equitable accounting to a party who has an adequate remedy at law. Medtronic, Inc. v. Intermedics, Inc., 725 F.2d 440, 443 (7th Cir.1984). FCT has made no showing why its claims for monies owed could not be identified as damages under its breach of contract claim. 591 F.Supp. at 825. During discovery, FCT had full access to Heinold's records and could ascertain the correct amount of compensation to which FCT was entitled. FCT had an adequate remedy at law and could not resort to the equitable remedy of an accounting.

The district court found that a monthly account had been stated between the parties during the period of the agreement. 591 F.Supp. at 823. Heinold sent FCT monthly income and expense statements. FCT acquiesced in the correctness of those statements by failing to object to them within a reasonable time. That acquiescence is sufficient to establish an account stated between the parties. Protestant Hospital Builders Club, Inc. v. Goedde, 98 Ill.App.3d 1028, 1032, 54 Ill.Dec. 399, 403, 424 N.E.2d 1302, 1306 (1981).

A court will not open an account stated absent a showing of fraud, omission or mistake. Meeker v. Fowler, 35 Ill.App.3d 313, 318, 341 N.E.2d 412, 415 (1976). FCT offered two affidavits as grounds for opening the accounts stated. Both of those affidavits merely support FCT's allegations by offering conclusory statements unsupported by specific facts. 591 F.Supp. at 825. Conclusory statements in affidavits opposing a motion for summary judgment are not sufficient to raise a genuine issue of material fact. Hall v. Printing and Graphic Arts Union, 696 F.2d 494, 500 (7th Cir.1982). FCT has not raised a genuine issue of fact in support of reopening the accounts stated.

II. Whether the district court properly granted summary judgment dismissing FCT's claim of unjust enrichment?

After Heinold terminated the contract, it retained many of FCT's customers. FCT claimed that retention of those customers unjustly enriched Heinold because Heinold no longer divided its sales commissions with FCT. The district court dismissed FCT's unjust enrichment claim because it found this form of quasi-contractual relief to be inappropriate. 591 F.Supp. at 822.

Unjust enrichment is a quasi-contractual theory of recovery. Under Illinois law, a plaintiff may not state a claim for unjust enrichment when a contract governs the relationship between the parties. LaThrop v. Bell Federal Savings & Loan Ass'n, 68 Ill.2d 375, 391, 12 Ill.Dec. 565, 572, 370 N.E.2d 188, 195 (1977), cert. denied, 436 U.S. 925, 98 S.Ct. 2818, 56 L.Ed.2d 768 (1978).

The fact that the agreement between Heinold and FCT did not explicitly provide for allocation of customers or commissions upon termination does not allow FCT to now invoke a quasi-contract remedy. Gordon v. Matthew Bender & Co., Inc., 562 F.Supp. 1286, 1298 (N.D.Ill.1983). In entering into the agreement, FCT assumed the risk of losing customers to Heinold in return for Heinold's trading services. FCT could have, but did not provide for the allocation of this risk under the terms of the contract. FCT may not unilaterally alter the terms of the contract by now claiming unjust enrichment. Industrial Lift Truck Service Corp. v. Mitsubishi Int'l Corp., 104 Ill.App.3d 357, 60 Ill.Dec. 100, 104, 432 N.E.2d 999, 1003 (1982).

III. Whether the district court properly granted summary judgment to Heinold on FCT's claim for breach of contract?

The district court dismissed FCT's breach of contract claim, finding first: that the contract was terminable at will; and second: that even if the contract had not been terminable at will, Heinold had terminated for cause. FCT challenges both findings.

A. Whether the contract was terminable at will?

Under Illinois law, contracting parties may terminate at will if their contract contains no specific term of duration. Mann v. Ben Tire Distributors, Ltd., 89 Ill.App.3d 695, 44 Ill.Dec. 869, 870, 411 N.E.2d 1235, 1236 (1980). When no termination date is...