Ironbeam, Inc. v. Papadopoulos et al
Filing
81
MEMORANDUM Opinion and Order Signed by the Honorable Steven C. Seeger on 1/13/2020. For the foregoing reasons, Plaintiff's motion for summary judgment (Dckt. No. 58 ) is granted in part and denied in part. Mailed notice. (jjr, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IRONBEAM, INC., a Delaware
Corporation,
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)
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Plaintiff,
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)
v.
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)
GREGORY PAPADOPOULOS, an
)
individual, and GPPB, LLC, a limited
)
liability company,
)
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Defendants.
)
____________________________________)
Case No. 1:18-cv-00992
Hon. Steven C. Seeger
MEMORANDUM OPINION AND ORDER
On February 5, 2018, the stock market suffered a historic fall. The Dow dropped nearly
1,600 points, and the S&P 500 fell more than four percent. One of the traders caught up in the
freefall was Defendant Gregory Papadopoulos, who traded commodity futures through his
company, Defendant GPPB, LLC. GPPB’s trading account lost nearly $500,000 in a single day.
Worse yet, the account suffered a negative balance – the value of GPPB’s positions fell from
$89,476 to negative $409,208.
The broker for the account, Plaintiff Ironbeam, Inc., liquidated GPPB’s positions to
salvage any remaining value, and later filed suit against GPPB and Papadopoulos to collect on
the unpaid balance. GPPB did not respond to the Complaint, so this Court entered a default
judgment against the firm. Ironbeam now moves for summary judgment against Papadopoulos
in his capacity as the guarantor of GPPB’s account.
Papadopoulos does not dispute the basic facts arrayed against him. He does not dispute
that GPPB owes hundreds of thousands of dollars to Ironbeam, or that he guaranteed GPPB’s
obligations. Instead, Papadopoulos spins a tale that his broker conspired with the FBI and an
organized crime family to cause the losses. That story, colorful as it may be, suffers from a
complete lack of supporting evidence.
Based on the undisputed facts, Papadopoulos breached his guarantee agreement with
Ironbeam by failing to pay for GPPB’s losses. Plaintiff’s motion for summary judgment [58] is
granted on the claim under the guarantee agreement.
Background
Commodity trading involves “highly leveraged and rapidly fluctuating markets” that may
lead to “significant losses,” including losses that “substantially exceed” a customer’s margin
deposits with the broker. See Dckt. No. 59, Ex. C, at ¶ 2. This case is case in point.
On November 15, 2015, Papadopoulos signed a Customer Agreement and a Personal
Guarantee Agreement with Ironbeam, a commodity broker registered with the Commodity
Futures Trading Commission. See Plaintiff’s Statement of Material Facts in Support of
Summary Judgment Motion (“Statement of Facts”), at ¶¶ 1, 3–5 (Dckt. No. 59); see also Dckt.
No. 59, Exs. B, C. The most basic fact – the identity of the customer – is not clear from the face
of the Customer Agreement itself. The Customer Agreement refers to the “Customer,” but for
whatever reason, it does not define who the “Customer” is. See Dckt. No. 59, Ex. C. That is, the
agreement itself does not reveal whether Papadopoulos signed on his own behalf, or on behalf of
an entity.
The Personal Guarantee Agreement – signed the very same day – fills the gap. That
agreement provides that Ironbeam was “enter[ing] into the Customer Agreement . . . with GPPB
LLC.” Id. Ex. B. The signature block also sheds some light. Papadopoulos signed the Personal
Guarantee Agreement as the “GENERAL MANAGER” of the “Account Holder.” Id. (all caps
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in original). Taken together, the two agreements establish that GPPB was the Customer, and
Papadopoulos was the guarantor.1 That’s consistent with the account statement, too, which
identifies the customer as “GPPB LLC.” See Dckt. No. 59, Ex. D, at 1; see also Statement of
Facts, at ¶ 5 (stating that GPPB “opened a commodity futures trading account with Ironbeam”).
Under the Customer Agreement, Ironbeam agreed to serve as GPPB’s broker for the trade
of commodity futures. A commodity futures contract is an agreement to buy or sell a commodity
at a specific price on a specific date. Each side of the contract basically makes a bet about the
future price of a commodity. Buyers and sellers place their trades through registered brokers,
who in turn execute the trades with a futures clearinghouse. See ADM Investor Services, Inc. v.
Collins, 515 F.3d 753, 756 (7th Cir. 2008). The clearinghouse serves as the middleman: it is the
buyer to each seller, and the seller to each buyer. Id.
Commodity futures traders must put money down as a deposit with their brokers. Known
as “margin,” this deposit represents “only . . . a fraction of the actual cost on a trade.” Capital
Options Investments, Inc. v. Goldberg Bros. Commodities, 958 F.2d 186, 188 (7th Cir. 1992).
“Margins in the futures markets are not down payments like stock margins, but are performance
bonds designed to ensure that traders can meet their financial obligations.” See Economic
Purpose of Futures Markets and How They Work, U.S. Commodity Futures Trading
Commission, https://www.cftc.gov/ConsumerProtection/EducationCenter/economicpurpose.html
(last visited Jan. 10, 2020). Margin helps protect brokers from holding the bag when the traders
1
In its amended complaint, and in its summary judgment motion, Ironbeam suggests that Papadopoulos
might also be a customer under the Customer Agreement, and thus might have personal liability under
that agreement. See Dckt. No. 11, at ¶ 7; Dckt. No. 58 (“Plaintiff moves for summary judgment on its
claims for breach of contract and guarantee.”). But in its memorandum supporting its summary judgment
motion, Ironbeam dropped the argument. “For the purposes of this motion, Plaintiff will leave aside the
issue as to whether or not Papadopoulos is also directly liable for the debit since he arguably signed the
customer agreement in his individual capacity.” See Dckt. No. 60, at 1 n.1. So, for now, the only issue
before the Court is Papadopoulos’s liability as guarantor.
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suffer losses. See In re MF Global Inc., 531 B.R. 424, 435 (Bankr. S.D.N.Y. 2015) (“Margin is
a security deposit to insure that futures commission merchants have adequate customer funds to
settle open positions and is required by brokerage houses and exchanges to assure their own
financial integrity and the financial integrity of the entire market place.”) (quoting Friedman v.
Dean Witter and Company, Inc. et al., Comm. Fut. L. Rep. (CCH) ¶ 21,307, 1981 WL 26050, at
*1 (Nov. 13, 1981)).
Traders can buy positions worth many times more than the margin they have deposited.
But if the value of the positions declines, the broker can demand more margin from the trader to
protect itself against the risk of loss. See ADM Investor Services, 515 F.3d at 756. Traders must
provide enough margin so that “short-term price movement[s]” on the futures contracts won’t
wipe out their account balances. Id. Margin reduces the risk posed by default, particularly given
that a “futures contract is executory; no asset changes hands when the contract is formed.” Id.
(citation omitted).
The clearinghouse settles the trades between buyers and sellers, and sets the minimum
margin requirements for all futures contracts. Id. The brokers, in turn, are responsible to the
clearinghouse for the trades. If a trader suffers losses that it cannot pay, the broker must pay the
clearinghouse from its own funds. Id. (“The futures commission merchant then is on the hook,
for it is a condition of participation in these markets that each dealer guarantee customers’
trades.”). To protect themselves, brokers enter into contracts with their customers that impose
margin requirements and entitle the brokers to liquidate the customers’ positions when
necessary.
The agreement between Ironbeam and GPPB reflected this industry practice. Ironbeam’s
Customer Agreement required GPPB to keep enough money in its account to meet “applicable
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. . . margin requirements,” as determined by Ironbeam. Dckt. No. 59, Ex. C, at ¶ 7. “Customer
shall, without notice or demand, maintain adequate margin at all times so as to continuously
meet the margin requirements established by Ironbeam.” Id.
The agreement gave Ironbeam substantial remedies if GPPB did not provide enough
funds to comply with margin requirements. Ironbeam had the right to close out GPPB’s
positions – that is, liquidate them – if GPPB did not post enough margin. “If at any time
Customer’s account does not contain the amount of margin required, Ironbeam may, in its sole
and absolute discretion, without notice or demand to Customer, close out Customer’s open
position(s) in whole or in part, in any manner Ironbeam deems fit, or take any other action it
deems necessary to satisfy such margin requirements.” Id.
The next paragraph of the agreement – entitled “Liquidation of Accounts” – gave
Ironbeam the power to protect itself by selling GPPB’s positions:
In the event of . . . (i) Ironbeam’s determination that any collateral deposited to
protect one or more of the Customer’s accounts is inadequate, regardless of
current market quotations to secure the account; or (j) Ironbeam, for any reason
whatsoever, deems itself insecure or if necessary for Ironbeam’s protection, then
Ironbeam is hereby authorized, in its sole discretion, to sell any or all of the
Commodity Interests or other property of Customer which may be in Ironbeam’s
possession, or which Ironbeam may be carrying for Customer, or to buy in any
Commodity Interests or other property of which the account or accounts of
Customer may be short, or cancel any outstanding order, in order to close out the
account or accounts of Customer in whole or in part or in order to close out any
commitment made on behalf of Customer all without any liability on the part of
Ironbeam to Customer . . . .
Id. at ¶ 8 (bold in original). Note the sweeping language. Ironbeam had “sole discretion” to sell
“any or all” of GPPB’s positions and “close out the account” if Ironbeam “deem[ed] itself”
insecure “for any reason whatsoever.” Id.
The agreement foreclosed GPPB from second-guessing Ironbeam’s liquidation decisions
after the fact. “Such sale, purchase or cancellation may be made according to Ironbeam’s
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judgment and may be made at its sole discretion, on the exchange or other market where such
business is usually transacted, without notice to Customer or the legal representative of
Customer.” Id. The agreement continued: “Specifically, Ironbeam is hereby authorized,
according to its judgment and in its sole discretion, to . . . sell any or all futures contracts,
commodities, or securities held or carried for Customer or purchase any or all futures contracts,
commodities or securities held or carried as a short position for Customer.” Id. Ironbeam did
not need to give advance notice to GPPB, let alone receive its approval. Ironbeam had the right
to make such sales “without prior notice of sale or purchase or other notice or advertisement to
Customer.” Id.
The Customer Agreement repeatedly provided that GPPB was responsible for any
shortfall. That is, if the losses in the account were greater than the proceeds from the liquidation,
then GPPB had to make up the difference. “Customer shall remain liable for any deficiency.”
Id. “Customer at all times shall be liable for the payment of any debit balance upon demand by
Ironbeam, and shall be liable for any deficiency remaining in Customer’s account(s) in the event
of the liquidation thereof in whole or in part by Ironbeam or by Customer.” Id. If the proceeds
from liquidation were “insufficient for the payment of all liabilities of Customer due to
Ironbeam, Customer promptly shall pay, upon demand, the deficit and all unpaid liabilities.” Id.;
see also id. at ¶ 5 (“Customer agrees to indemnify Ironbeam and hold Ironbeam harmless from
and against any and all deficits, liabilities, losses, damages, cost and expenses . . . including . . .
any debit balances which may occur in the Customer’s account.”).
In the Personal Guarantee Agreement, Papadopoulos agreed to back-stop GPPB’s
obligations as its guarantor. Papadopoulos “personally guarantee[d] the prompt, full and
complete performance of any and all of the duties and obligations of Customer and the payment
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of any and all damages, costs and expenses which may become recoverable by Ironbeam from
Customer.” See Dckt. No. 59, Ex. B. The Personal Guarantee Agreement reiterated that “[t]his
guarantee is unconditional and is a guarantee of payment and performance and not of collection
only. Accordingly, each of the undersigned guarantees immediate payment, upon demand, to
Ironbeam of all amounts guaranteed hereunder.” Id.
The relationship continued for the next few years, apparently without incident. But on
February 5, 2018, the stock market plunged, with the Dow industrials suffering the greatest
single-day decline in history and the S&P 500 suffering its largest single-day percentage drop
since August 2011. See Lewis Krauskopf, Wall Street Plunges, S&P 500 Erases 2018’s Gains,
Reuters, Feb. 5, 2018.
GPPB’s account wasn’t immune to the market shock. Indeed, the account held options in
the crashing S&P 500. See Dckt. No. 59, Ex. D. The account became undermargined and
suffered large losses. See Statement of Facts, at ¶¶ 6–7 (Dckt. No. 59); see also Dckt. No. 59,
Ex. A, at ¶ 3.E.
Ironbeam took quick action to limit those losses, closing out all of GPPB’s open
positions. See Dckt. No. 59, Ex. A, at ¶ 3.E. When the dust settled on February 6, 2018, the old
account balance of nearly $90,000 was wiped out. See id. at ¶¶ 3.E–F; see also id. Ex. D, at 27.
The account instead had a deficit of $409,208.60. See id. Ex. A, at ¶ 3.F; Ex. D, at 27.
Ironbeam paid the account’s deficit to the commodity futures exchange clearinghouse.
See Statement of Facts, at ¶ 8 (Dckt. No. 59); see also Dckt. No. 59, Ex. A, at ¶ 3.G. Ironbeam
then demanded reimbursement of the $409,208.60 deficit from GPPB (as the account holder) and
Papadopoulos (as the guarantor), in addition to $44,450 in fees for liquidating the account’s
positions (Ironbeam’s fee schedule specified a $50 charge for liquidating each position, and
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Ironbeam liquidated 889 options in GPPB’s account, for a total of $44,450). See Statement of
Facts, at ¶¶ 7–10 (Dckt. No. 59); see also Dckt. No. 59, Ex. A, at ¶¶ 3.F–I. GPPB and
Papadopoulos refused to pay. See Statement of Facts, at ¶ 15 (Dckt. No. 59); see also Dckt. No.
59, Ex. A, at ¶ 3.J.
Ironbeam then sued GPPB and Papadopoulos to recover the losses and liquidating fees.
The complaint alleged two claims. Count I alleged a breach of the Customer Agreement, and
Count II alleged a breach of the Personal Guarantee Agreement. See Dckt. No. 11. GPPB never
appeared or defended the lawsuit, and the Court entered a default judgment against it in the
amount of $470,423.94, including the entire account deficit and liquidation fees, plus interest and
attorneys’ fees and costs. See Dckt. Nos. 27, 29.
Papadopoulos appeared pro se, and Ironbeam ultimately filed a bare-bones motion for
summary judgment, supported by a four-page brief. The motion and the supporting
memorandum are not exactly in sync. The motion states that Ironbeam is moving on both the
breach of contract and guarantee claims against Papadopoulos – the only claims remaining in the
case after GPPB’s default. See Dckt. No. 58 (“Plaintiff moves for summary judgment on its
claims for breach of contract and guarantee.”). Yet Ironbeam’s supporting memorandum
“leave[s] aside [whether] Papadopoulos is . . . directly liable” on the Customer Agreement with
Ironbeam, instead asserting that “[t]he application and the account statement are in the name of
GPPB, LLC and the parties intended for the account to be held in the name of the LLC.” Dckt.
No. 60, at 1 n.1. As a result, the Court treats the motion as one for partial summary judgment
only as to Ironbeam’s guarantee claim against Papadopoulos (that is, on Count II only).
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Analysis
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); see Jajeh v. County of Cook, 678 F.3d 560, 566 (7th Cir. 2012). The Court’s role is “to
determine whether there is a genuine issue for trial.” Tolan v. Cotton, 572 U.S. 650, 656 (2014).
The Court should not “weigh conflicting evidence . . . or make credibility determinations.”
Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697, 704 (7th Cir. 2011) (citations
omitted). The Court must “constru[e] the facts and mak[e] reasonable inferences in favor of
the nonmovant.” H.P. by & Through W.P. v. Naperville Cmty. Unit Sch. Dist. #203, 910 F.3d
957, 960 (7th Cir. 2018) (citation and internal quotation marks omitted).
If the party moving for summary judgment shows that there is no disputed issue of
material fact, the burden shifts to the nonmovant, who must show more than “some metaphysical
doubt as to the material facts.” Scott v. Harris, 550 U.S. 372, 380 (2007) (citation and internal
quotation marks omitted); see Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012). “[T]he mere
existence of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the requirement is that there be no genuine
issue of material fact.” Scott, 530 U.S. at 380 (emphasis in original, citation and internal
quotation marks omitted).
Ironbeam’s guarantee claim is based on state law and brought under the Court’s diversity
jurisdiction. See Dckt. No. 11, at ¶¶ 4–5, 22–26. Illinois federal courts sitting in diversity follow
Illinois choice-of-law rules, which respect contractual choice-of-law provisions unless the
parties’ choice of law contradicts Illinois’s fundamental public policy. See Sound of Music Co.
v. Minnesota Mining & Mfg. Co., 477 F.3d 910, 915 (7th Cir. 2007). Both the Customer
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Agreement and the Personal Guarantee Agreement specify that Illinois law applies. See Dckt.
No. 59, Ex. B (Personal Guarantee Agreement), Ex. C at ¶ 30 (Customer Agreement). And
applying Illinois law does not appear to contradict any Illinois public policy. See Sound of Music
Co., 477 F.3d at 915. So, Illinois law applies.
A guarantor “agrees to assume liability for the payment of another’s debt or the
performance of another’s obligations under a contract.” City of Elgin v. Arch Ins. Co., 2015 IL
App (2d) 150013, ¶ 19, 402 Ill. Dec. 900, 53 N.E.3d 31 (2015) (citations omitted). “A guaranty
is . . . an obligation in the alternative to pay the debt [of the principal debtor] if the principal does
not.” JPMorgan Chase Bank, N.A. v. Earth Foods, Inc., 238 Ill. 2d 455, 474, 345 Ill. Dec. 644,
939 N.E.2d 487 (2010).
A guarantor’s obligations may be triggered by a breach of contract by the principal
debtor. See Village of Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651, 668, 98 Ill. Dec.
470, 494 N.E.2d 592 (1986). A breach of contract claim requires four elements: “(1) the
existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a
breach by the defendant; and (4) the resultant damages.” Hongbo Han v. United Cont’l
Holdings, Inc., 762 F.3d 598, 600 (7th Cir. 2014) (citation and internal quotation marks omitted).
“As a general rule, the liability of a [guarantor] is measured by the liability of its principal” under
the contract at issue. Village of Rosemont, 144 Ill. App. 3d at 668.
The undisputed evidence demonstrates that GPPB breached its agreement with
Ironbeam.2 First, GPPB has a valid and enforceable contract with Ironbeam. Papadopoulos
Ironbeam’s motion could be read to argue that the default judgment against GPPB precludes
Papadopoulos from arguing that GPPB did not breach the contract, or from disputing the amount of
damages caused by the breach. But under Illinois law, default judgments do not have preclusive effect
because the issues are not actually litigated. See Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S.
497, 508 (2001) (holding that a federal court sitting in diversity applies federal common law regarding the
preclusive effect of a previous federal diversity judgment, but the federal common law to be applied is the
2
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signed the Customer Agreement on behalf of GPPB. See Dckt. No. 59, Ex. C, at 18
(Papadopoulos’s signature on Customer Agreement); id. Ex. B (Papadopoulos’s signature on
Personal Guarantee as “General Manager” of GPPB); see also Dckt. No. 59, Ex. A at ¶ 3.D
(declaration by Ironbeam Chief Compliance Officer). Papadopoulos offers no facts that call into
question the existence of a valid contract.
Second, Ironbeam substantially performed under the agreement. The account was open
for trading for two years. See Dckt. No. 59, Exs. B–D. Again, Papadopoulos does not offer any
facts suggesting that Ironbeam did not substantially perform.
Third, GPPB breached the Customer Agreement, in at least two ways. GPPB breached
the agreement by becoming undermargined. Ironbeam’s Chief Compliance Officer Michael
Higgins swore in an (admittedly terse) affidavit that the account “suffered a large loss,” thus
forcing Ironbeam to liquidate the account. See Dckt. No. 59, Ex. A, at ¶ 3.E. The account was
more than $400,000 in the red after Ironbeam closed out all positions. Id. at ¶ 3.F. GPPB also
committed a second breach by refusing to pay the account deficit, in direct violation of the
promise to “indemnify Ironbeam . . . against any and all deficits, . . . losses, . . . costs and
expenses.” Dckt. No. 59, Ex. C, at ¶ 5; see also id. at ¶¶ 7–8. In his response, Papadopoulos
does not dispute that the account was undermargined, or that GPPB refused to pay the deficit.
See Dckt. No. 64.
Fourth, Ironbeam suffered damages as a result of the breach. After Ironbeam closed out
the positions, the account had a deficit of more than $400,000, and GPPB owed liquidation fees
state law of the jurisdiction in which the deciding court sits); In re Nikitas, 326 B.R. 127, 133 (Bankr.
N.D. Ill. 2005) (“Illinois adheres to the majority rule: default judgments have no collateral estoppel
effect.”); accord Restatement (Third) of Suretyship & Guaranty § 67(c) (1996).
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totaling almost $50,000. See Dckt. No. 59, Ex. A, at ¶¶ 3.E–F, H–I. In the meantime, Ironbeam
had to pay the balance to the clearinghouse. Id. at ¶ 3.J.
GPPB thus breached the Customer Agreement. Under the Personal Guarantee
Agreement, Papadopoulos shares the same liability as GPPB. Papadopoulos agreed to
“personally guarantee[] the prompt, full and complete performance of any and all of the duties
and obligations of [GPPB] and the payment of any and all damages, costs and expenses which
may become recoverable by Ironbeam from [GPPB].” Dckt. No. 59, Ex. B; see also Village of
Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651, 668, 98 Ill. Dec. 470, 494 N.E.2d 592
(1986) (“the liability of a [guarantor] is measured by the liability of its principal”).
Based on the undisputed material facts, Ironbeam is entitled to judgment as a matter of
law on its claim that Papadopoulos breached the guarantee. Ironbeam and Papadopoulos entered
into a valid contract, the Personal Guarantee Agreement. See Dckt. No. 59, Ex. B. Ironbeam
substantially performed by serving as the broker for GPPB in the years that followed. See Dckt.
No. 59, Ex. D. Papadopoulos breached that agreement by failing to pay GPPB’s debit balance.
See Dckt. No. 59, Ex. A, at ¶ 3.J. And Ironbeam suffered damages totaling $453,658.60, plus
interest, costs, and attorneys’ fees. Id. at ¶ 3.I. Papadopoulos does not dispute these facts. See
Dckt. No. 64.
Instead, Papadopoulos asserts that Ironbeam “brought [the] losses on to themselves” by
“recklessly liquidat[ing] [GPPB’s] account[] in the middle of the night and at a time that no
liquid markets exist.” Id. at 1–3. Papadopoulos asserts that he saw Ironbeam making these
reckless trades “as I watched the screens in the middle of the night.” Id. at 2.
Papadopoulos does not offer any admissible evidence to support those assertions. And he
did not file a Rule 56.1 response, either. Instead, Papadopoulos simply asserted facts in his brief,
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without more, and thus they count for nothing. See Fed. R. Civ. P. 56(e); Local Rule 56.1(b)(1);
Grant v. Trustees of Indiana Univ., 870 F.3d 562, 568 (7th Cir. 2017) (“As the ‘put up or shut
up’ moment in a lawsuit, summary judgment requires a non-moving party to respond to the
moving party’s properly-supported motion by identifying specific, admissible evidence showing
that there is a genuine dispute of material fact for trial.”) (citation and internal quotation marks
omitted); Bolden v. Barnes, 2013 WL 5737359, at *2 (7th Cir. 2013) (“Bolden’s written response
to the summary judgment motion asserts certain facts. Those facts are disregarded because facts
may be considered on summary judgment only if they are presented in a compliant Local Rule
56.1 statement or response.”); Gunville v. Walker, 583 F.3d 979, 985 (7th Cir. 2009) (“[A] court
may consider only admissible evidence in assessing a motion for summary judgment.”) (citation
omitted); Midwest Imps., Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995) (holding that the
predecessor to Local Rule 56.1(b)(3) “provides the only acceptable means of . . . presenting
additional facts to the district court”); see also Stevo v. Frasor, 662 F.3d 880, 886–87 (7th Cir.
2011); Ammons v. Aramark Uniform Services, Inc., 368 F.3d 809, 817 (7th Cir. 2004).
But even if Papadopoulos had put his story in an affidavit, the result would not change.
He essentially argues that Ironbeam failed to mitigate GPPB’s losses. Papadopoulos may want
to second-guess Ironbeam’s trading decisions, but from a contractual perspective, that ship has
sailed.
The Customer Agreement gave Ironbeam unfettered discretion to “close out [GPPB’s]
open position(s) in whole or in part, in any manner Ironbeam deem[ed] fit,” if GPPB failed to
properly margin its account. Dckt. No. 59, Ex. C, at ¶ 7. If “Ironbeam, for any reason
whatsoever, deem[ed] itself insecure or if necessary for Ironbeam’s protection,” then Ironbeam
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was authorized, “in its sole discretion,” to sell the positions and close the account. Id. at ¶ 8.
Any such sale was “without any liability on the part of Ironbeam to Customer.” Id.
When the S&P 500 plunged, the Customer Agreement gave Ironbeam authority to close
out GPPB’s positions at any time of Ironbeam’s choosing. Papadopoulos complains that the
trades took place shortly before midnight (EST), when the “only open active market in the world
is Australia” and “Shanghai is on lunch break.” Dckt. No. 64, at 3. But under the plain language
of the agreement, the timing of the trades was Ironbeam’s call to make. See Cromeens,
Holloman, Sibert, Inc v. AB Volvo, 349 F.3d 376, 395–96 (7th Cir. 2003) (holding that the Court
will enforce the parties’ contractual terms to the letter).
Papadopoulos complains that the value of the positions might have rebounded in the
weeks that followed, if Ironbeam had simply sat tight and waited. A few weeks later, the
account “would have made an additional $25,000–35,000.” Dckt. No. 64, at 3. But there was no
way to know the future of the market. Ironbeam had no crystal ball foretelling future price
changes. And in the meantime, Ironbeam did not have to suffer the risk of even greater losses.
The agreement gave Ironbeam the express contractual right to protect itself from day one.
It is no surprise that the contract gave Ironbeam such broad discretion. Illinois case law
gives brokers a wide berth to quickly close out commodity futures positions when financial
markets fall. See First Am. Discount Corp. v. Jacobs, 324 Ill. App. 3d 997, 1012, 258 Ill. Dec.
291, 756 N.E.2d 273 (2001). And there is little reason to worry that the brokers are needlessly
tossing traders overboard when seas get rough. Indeed, brokers and traders are both exposed to
losses due to market dips, and both want to diminish the damage. Ironbeam’s interests were
aligned with GPPB and Papadopoulos – all of them wanted to minimize losses, and extract as
much value from the positions as they could.
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Remember, Ironbeam had to immediately pay all of GPPB’s losses to the clearinghouse,
and then seek reimbursement from GPPB or Papadopoulos. But collecting from Papadopoulos is
a dubious proposition. As Papadopoulos admits, Ironbeam knew that he did not have any “other
funds besides” what was deposited in the trading account, and so Papadopoulos was judgment
proof. Dckt. No. 64, at 2, 4. Ironbeam had no reason to inflate GPPB’s losses by waiting to
trade at the worst possible moment.
Papadopoulos offers a Hollywood-ready explanation for Ironbeam’s midnight trading,
but it requires a departure from the workaday world of commodity exchanges. According to
Papadopoulos, he is the victim of a conspiracy between Ironbeam, the FBI, and organized
“Gangsters” to cause the losses in GPPB’s trading account. See Dckt. No. 64, at 2.
“[F]or 24 years, [Papadopoulos] has been a victim of a corrupt cooperation between FBI
agents and Gangsters, the Fanjul Organized Crime Family.” Id. The midnight trading, according
to him, was part of the conspiracy. Ironbeam “actually wanted to wait until there was no
liquidity so they can easily cross trades with organized crime.” Id. at 3. “The Ironbeam incident
is just another FBI scam designed to convince the defendant to relocate to Greece and abandon
all domestic litigation plans.” Id. at 2.
That story, while striking, was nothing new. In fact, it was par for the course.
Papadopoulos offered similar conspiracy theories in other submissions to this Court. See, e.g.,
Dckt. No. 43, at 1 (“I have been a victim of a corrupt conspiracy between FBI agents and
Gangsters for some 23 years.”); Dckt. No. 62, at 2 (complaining about “FBI death threats”);
Dckt. No. 77, at 2 (alleging that the Fanjul family has the “$17 billion missing from the Madoff
Investors”).
15
Papadopoulos does not elaborate on what his “domestic litigation plans” are, or why the
FBI wants to snuff them out. See Dckt. No. 64, at 2. But he asserts that he has been a party to
“about 80 cases” where “the adversary was the FBI, the Fanjuls or 3rd parties cooperating with
them.” Id. at 5. Papadopoulos further asserts that the FBI or the Fanjul family has subverted the
federal judiciary to stack the deck against him by engineering transfers of his cases to judges
friendly to the FBI, or by transferring cases to judges who are junior and/or overworked, or even
by bribing judges. Id. at 3–5.
Those are serious allegations. But Papadopoulos submits no admissible evidence to
support them, as required by Rule 56 and Local Rule 56.1. Without admissible evidence, his
story is just a story. It has no evidentiary value, and cannot create a genuine issue of material
fact. The Court gives no weight to his tale of conspiracy.
Conclusion
Ironbeam’s motion for summary judgment against Papadopoulos is granted with respect
to Count II (the guarantee claim). To the extent that Ironbeam’s motion seeks summary
judgment against Papadopoulos on Count I (the breach of contract claim under the Customer
Agreement), the motion is denied without prejudice.
Date: January 13, 2020
Steven C. Seeger
United States District Judge
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