766 F.2d 1007 (7th Cir. 1985), 84-2437, First Commodity Traders, Inc. v. Heinold Commodities, Inc.

Docket Nº:84-2437.
Citation:766 F.2d 1007
Party Name: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.
Case Date:June 21, 1985
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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766 F.2d 1007 (7th Cir. 1985)

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

June 21, 1985

Argued Jan. 16, 1985.

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[Copyrighted Material Omitted]

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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.

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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

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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...

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