Ironbeam, Inc. v. Evert
Filing
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OPINION AND ORDER. Signed by the Honorable Sara L. Ellis on 10/21/201. :Mailed notice(rj, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IRONBEAM, INC.,
Plaintiff/Counter-Defendant,
v.
ERIK EVERT,
Defendant/Counter-Plaintiff.
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No. 18 C 1287
Judge Sara L. Ellis
OPINION AND ORDER
Defendant Erik Evert had a terrible, horrible, no good, very bad day on August 14, 2017,
when in the span of a few hours, his newly opened trading account suffered losses in excess of
$120,000, he learned that his account had no default risk protections in place to halt those losses,
he had to admit he allowed a third party to trade using his account in violation of his customer
agreement, and Plaintiff Ironbeam, Inc. (“Ironbeam”), a commodity broker registered as a
Futures Commission Merchant (“FCM”) with the Commodity Futures Trading Commission
(“CFTC”), sought payment from him of both the debit balance in the account as well as the
liquidation fee – putting him on the hook for over $150,000. After the close of fact discovery,
Ironbeam filed a motion for summary judgment against Evert for breach of contract for failure to
pay the debit balance remaining on trades made with his user ID, or in the alternative, for breach
of their settlement contract. In response, Evert asserts two affirmative defenses: (1) that the
original contract, the Customer Service Agreement (“Agreement”), is a contract of adhesion,
procedurally and substantively unconscionable, and therefore, void; and (2) that there was no
meeting of the minds and no definite terms for the settlement agreement; therefore, the
settlement agreement is unenforceable. Evert also brings two counterclaims asserting consumer
fraud, in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act
(“ICFA”), 815 Ill. Comp. Stat. 505/10a, and breach of fiduciary duty. Because the Court finds
that the Agreement is a valid contract, not a contract of adhesion or unconscionable, and that
Ironbeam did not engage in consumer fraud or breach a fiduciary duty, the Court grants
Ironbeam’s motion for summary judgment and enters judgment against Evert on the complaint
and counterclaims.
BACKGROUND 1
On August 5, 2017, Evert responded to a Craigslist advertisement entitled “let a high
level trader make you money.” Doc. 40-1, Ex. E at 1. Following a brief email exchange, Evert
and the Craigslist advertiser, Lon Richardson 2 , entered into an agreement under which Evert
would open a trading account funded with at least $10,000 and Richardson would use that
account to turn a daily profit of $1,000 by trading crude oil futures.
On August 10, Evert opened a commodity futures trading account with Ironbeam through
DeepDiscountTrading.com (“Deep Discount”). Evert electronically signed the contract labeled
“Ironbeam Customer Agreement,” which included “Acknowledged Customer Agreements and
Risk Disclosure Statements.” Id., Ex. A at 3–11. The Agreement lays out several specific
obligations for the Customer: that the Customer agrees to “provide to and maintain with
Ironbeam sufficient funds to meet the applicable initial and maintenance margin requirements,”
id. at 4 ¶ 7, to “immediately wire transfer funds to Ironbeam in order to adequately meet
The facts in this section are derived from the Joint Statement of Undisputed Material Facts. The Court
has considered Evert’s statement of disputed fact and included in this background section only those
portions of the statements that are appropriately presented, supported, and relevant to resolution of the
pending motion for summary judgment. All facts are taken in the light most favorable to Evert, the nonmovant.
2
Richardson is on the CFTC’s radar for his activity in soliciting and trading customer accounts.
Unfortunately for Evert, the CFTC filed an enforcement action against Richardson after he solicited Evert
and used Evert’s account. Doc. 39 at1(fn. 1).
1
2
additional margin when and as required and demanded by Ironbeam,” id., and that the Customer
would at all times “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,” id. at 5 ¶ 8. Additionally, the Customer agreed that Ironbeam could debit
his or her account for “customary brokerage and commission charges and for charges for any
other services rendered by Ironbeam, including . . . margin call/risk liquidation fees.” Id. at 5–6
¶ 11. Finally, though not exhaustively, the Agreement includes a provision for the Customer to
pay Ironbeam’s attorneys’ fees in the collection of a debit balance. Id. at 11 ¶ 40.
In his account application, Evert represented that he had ten years of futures and options
trading experience, a net worth of $20,000,000, an annual income of $250,000, and an
approximate risk capital of $100,000. He also represented that there was no third-party
discretionary trader for his account. Evert had not seen any Ironbeam advertisements before
opening his account; indeed, he did not know of Ironbeam until after he opened the account.
Evert believed his contract and account were with Deep Discount.
Despite his representations in his account application, Evert provided his login and
password to Richardson, who is not affiliated with Ironbeam. On August 11, Evert deposited
$10,000 into his account to be used in trading futures. On August 14, Richardson entered several
trades into Evert’s account. Although the Ironbeam clerks who set up new customers’ accounts
are supposed to enable default risk procedures, the clerk who set up Evert’s account failed to do
so. Ironbeam had not put any trading limitations on Evert’s account; however, the same morning
that Richardson had entered these trades, Ironbeam noticed the activity and called Evert to
discuss the positions in his account. Evert indicated that he had not logged into his account but
did not disclose the fact that he had given Richardson access to the account and authority to
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make trades. Ironbeam called Evert again less than twenty minutes later to “try[] to figure out”
the “weird activity” going on in Evert’s account. Doc. 40 ¶ 19. Evert still did not disclose
Richardson’s role in this activity. About ten minutes later, Evert called Ironbeam and indicated
that “something goofy” was going on. Id. ¶ 20. In this phone call, Evert first disclosed that he
had “an advisor” but that he now could not reach the advisor. Id. After further questioning, and
after Ironbeam informed Evert that someone using his user ID placed the trades, Evert admitted
that the “advisor” was trading the account on Evert’s behalf.
At the time of the last call, the debit balance in Evert’s account was negative $77,000 and
Ironbeam indicated that it would be liquidating the positions. By the time Ironbeam was able to
fully liquidate the positions, the debit balance in the account grew to negative $126,183.36.
Ironbeam’s standard liquidation fee is $50 per contract. Richardson had entered 750 futures
contracts in Evert’s account, amounting to a $37,500 total liquidation fee. Had the default risk
procedures been in place, Evert should have only been able to place around twenty contracts.
Because Ironbeam is the guarantor of Evert’s account, Ironbeam had to pay the commodity
futures exchange clearinghouse the full amount of Evert’s debit balance.
Ironbeam then demanded that Evert pay for reimbursement because Evert agreed to cover
all trading losses and debit balances in the Customer Agreement. On August 16, Evert paid
$5,000. By email on August 17, Evert proposed a payment plan of $10,000 due on August 30,
with a monthly payment of $10,000 to $15,000 for the first “couple of months” and monthly
payments escalating after that until he paid the debit balance in full. Id. ¶ 24. On August 31, and
again on September 29, Evert made a payment to Ironbeam of $10,000. Evert did not make
another payment. The current debit balance in his account is $101,286.96.
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After Ironbeam liquidated Evert’s account, Justin Dendinger, whose relation to either
party is unknown to the Court, called Ironbeam to ask about account creation and risk
management. Ironbeam told him “that it is virtually impossible for such a problem to occur
since Ironbeam has risk management procedures in place to where positions would be closed
when the account was down to 25%.” Doc. 40 ¶ 46. However, Ironbeam has no system or
procedure to close out positions to refuse trades when an account suffers a 25% loss or any
predetermined loss. Id. ¶ 50-51. Thus, it is commonplace for customer accounts to suffer losses
greater than the amount of funds in the account and thereby suffer a debit balance. Id. ¶ 53.
LEGAL STANDARD
Summary judgment obviates the need for a trial where there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.
To determine whether a genuine issue of fact exists, the Court must pierce the pleadings and
assess the proof as presented in depositions, answers to interrogatories, admissions, and
affidavits that are part of the record. Fed. R. Civ. P. 56 & advisory committee’s notes. The party
seeking summary judgment bears the initial burden of proving that no genuine issue of material
fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265
(1986). In response, the non-moving party cannot rest on mere pleadings alone but must use the
evidentiary tools listed above to identify specific material facts that demonstrate a genuine issue
for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Although a
bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v.
Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the Court must construe all facts in a light
most favorable to the non-moving party and draw all reasonable inferences in that party’s favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
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ANALYSIS
Ironbeam argues that this is a straightforward contract claim: the Agreement includes a
provision by which Evert agreed to pay all trading losses and debits and Evert has not done so;
therefore, Ironbeam is entitled to performance. In the alternative, Ironbeam claims that the
parties had a valid and enforceable settlement agreement and that Evert had begun to perform
under that agreement but has since stopped; thus, Evert must comply with the terms of that
agreement.
Evert responds that the Agreement was unconscionable and a contract of adhesion, that
the settlement agreement was never a valid contract, and that Ironbeam engaged in consumer
fraud and breached its fiduciary duties. Evert does not argue that he did not breach the
Agreement or the settlement agreement. He focuses his claims solely on the validity of both
contracts. Ironbeam has moved for summary judgment on its claims and Evert’s counterclaims.
The Court addresses each issue in turn.
I.
Validity of the Customer Agreement
The Court must first decide whether there is any genuine issue of material fact regarding
the validity of the Agreement. Evert argues that the Agreement is invalid because it is a contract
of adhesion and is both procedurally and substantively unconscionable.
“In determining whether a valid agreement arose between the parties, a federal court
should look to the state law that ordinarily governs the formation of contracts.” Gibson v.
Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997). Under Illinois law,
provisions of a contract may be procedurally or substantively unconscionable. Jackson v.
Payday Fin., LLC, 764 F.3d 765, 778 (7th Cir. 2014) (citing Razor v. Hyundai Motor Am., 854
N.E.2d 607, 622, 222 Ill. 2d 75, 305 Ill. Dec. 15 (2006)). “Procedural unconscionability refers to
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a situation where a term is so difficult to find, read, or understand that the plaintiff cannot fairly
be said to have been aware he was agreeing to it, and also takes into account a lack of bargaining
power.” Razor, 854 N.E.2d at 622. In determining whether an agreement is procedurally
unconscionable, the Court considers several factors, including “whether each party had the
opportunity to understand the terms of the contract, whether important terms were hidden in a
maze of fine print, and all of the circumstances surrounding the formation of the contract.”
Phoenix Ins. Co. v. Rosen, 949 N.E.2d 639, 647, 242 Ill. 2d 48, 350 Ill. Dec. 847 (2011) (citation
omitted).
“A contract of adhesion is a contract submitted by one party to another on a take-it-orleave-it basis, without any opportunity to negotiate its terms.” Martinell v. Navistar Int’l Corp.,
No. 11 C 8707, 2012 WL 2503964, at *3, (N.D. Ill. June 28, 2012) (citing Larned v. First
Chicago Corp., 636 N.E.2d 1004, 1006, 264 Ill. App. 3d 697, 201 Ill. Dec. 572 (1994)). Simply
a lack of opportunity to negotiate terms or a disparity in bargaining power will not create a
contract of adhesion. Larned, 636 N.E.2d at 1006. “An unconscionable bargain is one which no
reasonable person would make and which no honest person would accept.” Id.
Substantive unconscionability “concerns the actual terms of the contract and examines
the relative fairness of the obligations assumed.” Kinkel v. Cingular Wireless LLC, 857 N.E.2d
250, 267, 223 Ill. 2d 1, 306 Ill. Dec. 157 (2006). “Indicative of substantive unconscionability are
contract terms so one-sided as to oppress or unfairly surprise an innocent party, an overall
imbalance in the obligations and rights imposed by the bargain, and significant cost-price
disparity.” Id.
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A.
Procedural Unconscionability
Evert claims that the contract was procedurally unconscionable because “there was no
negotiation or explanation,” he “believed the contract was with Deep Discount,” the terms were
“all uniform in fine size and appearance,” and there was “no distinction between the risk
management disclosures, the liquidation procedures or the general administration of an account.”
Doc. 44 at 6–7. Yet, nothing from this smattering of unsubstantiated claims sticks.
To begin, some of these claims are simply untenable. As an electronic contract, Evert
had the ability to enlarge the font of the Agreement to larger than “fine size,” whether through an
operation on the customer website or increasing the zoom of the monitor on which he viewed the
Agreement. Furthermore, each of the 40 provisions is in uniform font size and clearly labeled
with an appropriate heading to describe its content, which goes directly against his claim that
there was no distinction between certain terms and that “[l]iterally, every material and important
term of agreement is buried in a maze of legalize [sic].” Id. at 7; see Davis v. Fenton, 26 F.
Supp. 3d 727, 738 (N.D. Ill. 2014) (finding that uniform font size and separate sectioning and
labeling of agreement weighed against a finding of procedural unconscionability). None of these
clearly labeled provisions are “so difficult to find, read, or understand that the plaintiff cannot
fairly be said to have been aware he was agreeing to it.” Razor, 854 N.E.2d at 622; Brown v.
Luxottica Retail N. Am. Inc., 09 C 7816, 2010 WL 3893820, at *1–3 (N.D. Ill. Sept. 29, 2010)
(finding a dispute resolution agreement in the middle of a fifty-one-page employee handbook
was neither hidden nor buried). Additionally, while it may be true that Evert believed the
contract, entitled “Ironbeam Customer Agreement” and containing the name “Ironbeam” over
200 times, was with Deep Discount, the Court is confident in finding that he had the opportunity
to understand that the contract was indeed with Ironbeam. See Rosen, 949 N.E.2d at 647; Vargas
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v. Esquire, Inc., 166 F.2d 651, 654 (7th Cir. 1948) (“[A] man in possession of all his faculties,
who signs a contract, cannot relieve himself from the obligations of the contract by saying he did
not know or understand what it contained.”).
Furthermore, Evert’s argument that the Agreement was a contract of adhesion fails.
Although the Agreement was a form contract, with Evert lacking the opportunity to negotiate its
terms, Evert still freely chose to open his account with Ironbeam through Deep Discount from
among a number of other brokers offering similar services. Montgomery v. Corinthian Colls.,
Inc., No. 11 C 365, 2011 WL 1118942, at *3–4 (N.D. Ill. Mar. 25, 2011) (finding agreement was
not procedurally unconscionable or an adhesion contract and noting “that form contracts like the
ones at issue here are a fact of modern life even if the average consumer does not completely
understand them”); Larned, 636 N.E.2d at 1006 (“In the present case, the Visa card agreement is
not an adhesion contract since Larned freely chose to obtain this Visa card from among a number
of other credit cards offering similar benefits.”).
Thus, finding that the Agreement was neither procedurally unconscionable nor a contract
of adhesion, the Court next turns to the issue of substantive unconscionability.
B.
Substantive Unconscionability
Evert argues that the Agreement is substantively unconscionable because “[t]here is no
mutuality in the Ironbeam agreement” and that “the agreement itself is invalid as totally onesided and oppressive.” Doc. 44 at 7. While Ironbeam may benefit from many of the contract
provisions, Evert does not point to any single provision that “unfairly surprise[d]” him. Kinkel,
857 N.E.2d at 267. Although the Agreement makes clear that most of the risk in opening a
futures trading account with Ironbeam falls on the customer, a thorough review of the contract
does not disclose, nor does Evert direct the Court’s attention to any provision that is inordinately
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one-sided or oppressive. Rosen, 949 N.E.2d at 656 (finding contract was not substantively
unconscionable where the terms were not inordinately one-sided, hidden, or unclear, and did not
unfairly surprise defendant). Finding no further citations to the Agreement or any relevant
caselaw, and no further argument from Evert that the Agreement is substantively
unconscionable, the Court concludes that it is not.
The Court finds that the Agreement was neither procedurally nor substantively
unconscionable, nor was it a contract of adhesion. Therefore, because the parties do not
otherwise dispute its validity, the Court finds that the Agreement was a valid, enforceable
contract.
III.
Breach of Contract Claims
Having found that the Agreement is valid and enforceable, the Court turns to Ironbeam’s
substantive claim that Evert breached the Agreement. Ironbeam’s breach of contract claim is
based on a few specific paragraphs of the Agreement. Paragraphs 7 and 8 state that the
Customer will “without notice or demand, maintain adequate margin at all times so as to
continuously meet the margin requirements established by Ironbeam” and “immediately wire
transfer funds to Ironbeam in order to adequately meet additional margin when and as required
and demanded by Ironbeam,” and that he will be liable for “the payment of all liabilities of
Customer due to Ironbeam” and that he will “pay, upon demand, the deficit and all unpaid
liabilities.” Doc. 40-1, Ex. A ¶¶ 7–8. The current debit balance in Evert’s account is
$101,286.96. Doc. 40 ¶ 26. Paragraph 40 states that the Customer agrees to pay “all expenses,
including attorney’s fees, incurred by Ironbeam . . . to collect any debit balances in Customer
account(s).” Doc. 40-1, Ex. A ¶ 40.
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According to Ironbeam’s schedule of fees, Ironbeam also has a liquidation fee of $50 per
contract. Doc. 40-1, Ex. J at 2. As a result of Evert’s losses, Ironbeam had to liquidate 750
futures contracts in Evert’s account, amounting to a $37,500 liquidation fee. Id. Evert argues
that this liquidation fee is an unenforceable liquidated damages penalty. Liquidated damages are
“[a]n amount contractually stipulated as a reasonable estimation of actual damages to be
recovered by one party if the other party breaches.” Black’s Law Dictionary (11th ed. 2019). A
liquidated damages clause generally represents an agreement by the parties of an estimated
amount of injury one party would suffer if the other party breaches the contract in situations
where one could not readily ascertain an actual amount of injury. Even though “liquidation fees”
and “liquidated damages” both share a root in the word “liquidate,” Evert’s attempt to conflate
the two is unpersuasive. Ironbeam applied the liquidation fees to Evert’s account pursuant to the
schedule of fees he received when he opened his account, not pursuant to any liquidated damages
clause in the contract. Doc. 40-1, Ex. J. Furthermore, these fees for liquidating each individual
contract in Evert’s account are more analogous to overdraft fees, which are decidedly not
liquidated damages. Saunders v. Michigan Ave. Nat’l Bank, 662 N.E.2d 602, 609, 278 Ill. App.
3d 307, 214 Ill. Dec. 1036 (1996) (“[O]verdraft fees are not liquidated damages.”). The Court
thus finds that Ironbeam’s liquidation fee for the individual contracts in Evert’s account is not an
unenforceable liquidated damages penalty.
By the terms of the Agreement, therefore, Evert owes Ironbeam the amount of the current
debit balance, $101,286.96, and the $37,500 liquidation fee, plus interest, costs, and attorneys’
fees. Evert has not paid this sum even though Ironbeam demanded it. The Court, therefore,
finds that Evert breached the Agreement and enters judgment against Evert on Count I of
Ironbeam’s amended complaint in the amount of $138,786.96 plus interest, costs, and attorneys’
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fees. Because Ironbeam asserted Count II of its amended complaint regarding the settlement
agreement as an alternative ground for recovery in the event that the Court did not find the
Agreement valid and enforceable or that Evert breached the Agreement, the Court dismisses
Count II as moot.
II.
Evert’s Counterclaims
Evert claims that Ironbeam committed consumer fraud and violated a fiduciary duty to
Evert by not implementing trading restrictions on Evert’s account. The Court first addresses
Evert’s consumer fraud counterclaim.
A.
ICFA Counterclaim
Despite Evert’s assertion to the contrary, Ironbeam directly addressed his consumer fraud
counterclaim. See Doc. 39 at 11. To establish an ICFA violation, 815 Ill. Comp. Stat. 505/10a,
Evert must show: (1) a deceptive or unfair act or promise by Ironbeam; (2) Ironbeam’s intent that
Evert rely on the deceptive or unfair act or promise; and (3) that the unfair or deceptive practice
occurred during a course of conduct involving trade or commerce. Camasta v. Jos. A. Bank
Clothiers, Inc., 761 F.3d 732, 739 (7th Cir. 2014). Evert’s relies on Dendinger’s testimony to
show a deceptive or unfair act or promise, claiming that Ironbeam told Dendinger that it had risk
management procedures in place and that Ironbeam’s program would refuse trades once an
account was down to 25%. Doc. 40 ¶¶ 46–47. Even if Ironbeam made such a promise to
Dendinger, Evert cannot possibly show that Ironbeam intended that Evert rely on the deceptive
or unfair act or promise, because Ironbeam made these statements after his injury. Because he
cannot overcome this logical and temporal impossibility, Evert’s consumer fraud counterclaim
fails. See Ehrhart v. UNUM Life Ins. Co. of Am., No. 99 C 1340, 1999 WL 498597, at *2–3
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(N.D. Ill. July 2, 1999) (finding plaintiff could not show defendant induced his agreement to a
contract with lies “after the fact”).
B.
Breach of Fiduciary Duty Counterclaim
Under Illinois law, to establish a claim for breach of fiduciary duty, Evert must show: (1)
Ironbeam owes Evert a fiduciary duty; (2) Ironbeam breached that duty; and (3) Ironbeam’s
breach caused Evert damages. Autotech Tech. Ltd. P’ship v. Automationdirect.com, 471 F.3d
745, 748 (7th Cir. 2006) (citing Neade v. Portes, 739 N.E.2d 496, 502, 193 Ill. 2d 433, 250 Ill.
Dec. 733 (2000)).
It is unclear whether Evert asserts that Ironbeam’s alleged breach absolves him of his
duty of performance under the Agreement or that this breach caused him damages in the amount
of roughly what he would owe Ironbeam under the Agreement. Either way, for Evert to succeed,
the Court must first find that Ironbeam owed a fiduciary duty to Evert.
“Only a broker operating a discretionary account—in which the broker determines which
investments to make—is a fiduciary.” CFTC v. Heritage Capital Advisory Servs. Ltd., 823 F.2d
171, 173 (7th Cir. 1987); see Stotler & Co. v. Dierschke, No. 88 C 7135, 1993 WL 128141, at *3
(N.D. Ill. Apr. 21, 1993) (ruling that broker on nondiscretionary account did not owe fiduciary
duty to customer); ADM Inv’r Servs., Inc. v. Collins, No. 05 C 1823, 2006 WL 224095, at *6
(N.D. Ill. Jan. 26, 2006) (same). A broker does, however, owe a fiduciary duty to its customer to
faithfully execute the customer’s orders. Anspacher & Assocs., Inc. v. Henderson, 854 F.2d 941,
945 (7th Cir. 1988).
Evert argues that Ironbeam breached its fiduciary duty to faithfully execute the
customer’s orders by not implementing “default protocols” that would have stopped Evert from
making orders that resulted in massive losses. Evert argues that Ironbeam’s alleged breach is
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analogous to the breach in Anspacher. However, these cases are factually distinguishable. In
Anspacher, the customer alleged that the broker failed to liquidate his positions upon his request
and failed to close his account upon his instruction, which led to the customer realizing a
significantly greater financial loss than he would have if the broker had faithfully executed his
orders. 854 F.2d at 945. Here, just like in Collins, Ironbeam did exactly as Evert ordered.
Collins, 2006 WL 224095, at *7. Indeed, it is precisely because Ironbeam faithfully executed
Evert’s (or Richardson’s) orders that Evert realized such a significant financial loss. The
fiduciary duty contemplated in Anspacher does not extend to force Ironbeam to install
protections in order to shield Evert from his own orders. Id. (“Anspacher involved allegations
that the broker failed to liquidate the customer’s positions upon the customer’s request and failed
to follow the customer’s instructions to close out the account, whereas the instant case involves a
broker who executed the orders that Collins placed.”). The Court agrees with the Collins court
that Anspacher does not suggest that brokers owe their customers a fiduciary duty to implement
risk management protocols. Id. (“The decision in Anspacher in no way suggests that brokers
owe their customers a fiduciary duty to enforce initial margin requirements set by an
exchange.”).
Evert also argues that Ironbeam “usurped control” over Evert’s account, turning Evert’s
account into a discretionary one and placing a higher fiduciary duty on Ironbeam. Heritage
Capital, 823 F.3d at 173; Martin v. Heinold Commodities, Inc., 487 N.E.2d 1098, 1101–02, 139
Ill. App. 3d 1049, 94 Ill. Dec. 221 (1985) (“However, a broker may become the fiduciary of his
customer in a broad sense, as, for example, when he handles a discretionary account or a hybridtype account in which the broker has usurped actual control over a technically non-discretionary
account.”). Evert does not articulate what actions Ironbeam took that constituted an usurpation
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of control. The parties agree, and the law is clear, that in liquidating Evert’s account, Ironbeam
acted within its rights and without exercising anything more than the ordinary control with which
a broker may act. First Am. Disc. Corp. v. Jacobs, 756 N.E.2d 273, 280, 324 Ill. App. 3d 997,
258 Ill. Dec. 291 (2001) (“[T]he pervasive federal regulatory paradigm in the area of futures
trading is designed to afford maximum protection to the commodities merchants and the
commodities exchanges themselves and therefore permits the liquidation of a customer’s undermargined account without prior demand or notice.”). Evert does not list another action that
Ironbeam took in exerting control over his account; instead, he rehashes his arguments that
Ironbeam should have placed various risk management controls on his account instead of
faithfully executing his orders. The Court thus finds that Ironbeam did not “usurp control” over
Evert’s account and did not owe him any higher fiduciary duty than to faithfully execute his
orders.
The Court, therefore, finds that Evert’s counterclaim based on breach of fiduciary duty
fails as a matter of law.
CONCLUSION
For the foregoing reasons, the Court grants Ironbeam’s motion for summary judgment
[38] and enters judgment against Evert on Count I of Ironbeam’s amended complaint [15], in the
amount of $138,786.96 plus interest, costs, and attorneys’ fees. The Court dismisses Count II of
Ironbeam’s amended complaint as moot. The Court also enters judgment in favor of counterdefendant Ironbeam on Counts I and II of Evert’s counterclaims [16] and terminates the case.
Dated: October 21, 2019
______________________
SARA L. ELLIS
United States District Judge
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