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A.G. BECKER-KIPNIS & CO. v. LETTERMAN COMMODITIES

November 17, 1982

A.G. BECKER-KIPNIS & CO., PLAINTIFF,
v.
LETTERMAN COMMODITIES, INC. AND LETTERMAN TRANSACTION SERVICES, INC., DEFENDANTS.



The opinion of the court was delivered by: Will, Senior District Judge.

MEMORANDUM OPINION

A.G. Becker-Kipnis & Co. (Becker-Kipnis) brings this action for breach of a commodities brokerage account agreement (the agreement) against Letterman Commodities, Inc. (Letterman Commodities) and against Letterman Commodities' parent corporation, Letterman Transaction Services, Inc. (Letterman Transaction). Our jurisdiction rests upon diversity of citizenship.

Becker-Kipnis seeks compensation for damages which allegedly resulted from a breach of the agreement, and for its costs and attorneys' fees incurred in prosecuting this action. Becker-Kipnis timely demanded a jury trial, and the defendants now argue that any claim for costs and attorneys' fees (to which Becker-Kipnis may be entitled) is one for the jury. Becker-Kipnis opposes the motion, and contends that the only questions for the jury are liability and the claim for damages which resulted from the alleged breach of the agreement. Becker-Kipnis argues that an assessment of costs and attorneys' fees is a determination for the Court in the event that the jury decides in Becker-Kipnis' favor on the question of compensatory damages. For the reasons stated below, we agree with Becker-Kipnis that a jury trial is not available for the determination of costs and attorneys' fees.

I.

Familiarity with the underlying facts will be helpful to an understanding of the remainder of this opinion. We have taken the following description of the facts from the parties' Stipulation of Uncontested Facts.

Under the agreement executed on behalf of Letterman Commodities and Becker-Kipnis in November of 1979, Letterman Commodities obtained customers who wished to trade commodities futures contracts and helped to open accounts for them with Becker-Kipnis. These customers gave their trading instructions to Dan Osborn and Ron Rooy, agents of Letterman Commodities, in Irvine, California, who would call Becker-Kipnis in Chicago to place the customers' orders. Becker-Kipnis would then execute the orders.

On July 3, 1980, Dan Osborn obtained the necessary signed forms from a customer, Dennis Sciotto, to open a commodity futures trading account with Becker-Kipnis, and, on July 7, 1980, Dan Osborn approved the opening of Sciotto's account. Thereafter, Dan Osborn and Ron Rooy transmitted orders to Becker-Kipnis for Sciotto's account and Becker-Kipnis executed trades in Sciotto's account every business day from July 8 through July 28, 1980.

On July 24, 1980, Dan Osborn or Ron Rooy transmitted orders to Becker-Kipnis for, and Becker-Kipnis purchased, 50 soybean futures contracts on the Chicago Board of Trade for Sciotto's account. As a result of these purchases, Sciotto was required under the schedule instituted at Letterman Commodities' request to make an initial margin deposit of $112,500.00 with Becker-Kipnis.

On the afternoon of July 24, 1980, after the purchase of the 50 soybean futures contracts for Sciotto's account, Dan Osborn advised Larry Zemkewicz, an employee of Becker-Kipnis, that Sciotto had told him that $150,000.00 was being wired to Becker-Kipnis to satisfy the margin requirement on Sciotto's account. On the morning of July 25, 1980, Dan Osborn of Letterman Commodities advised Mark Aleksiewicz and Bill Figiel, employees of Becker-Kipnis, that Sciotto had told him that a wire transfer in the amount of $150,000.00 was being sent to Becker-Kipnis to satisfy the margin requirement for Sciotto's account. Also on the morning of July 25, 1980, Dan Osborn or Ron Rooy transmitted orders to Becker-Kipnis for, and Becker-Kipnis purchased, an additional 40 soybean futures contracts on the Chicago Board of Trade for Sciotto's account.

Becker-Kipnis did not receive any funds to satisfy the margin requirement for Sciotto's account. On July 25, 1980, the 40 soybean futures contracts purchased earlier that day were sold at a loss of $27,500.00. On July 28, 1980, the 50 soybean futures contracts purchased on July 24, 1980, were sold at a loss of $61,625.00. The deficit in Sciotto's account, after applying the equity in the account against the losses incurred on the soybean futures contracts, is $83,563.60. Letterman Commodities has sued Sciotto, but has not recovered anything from him. Under the arrangements between Becker-Kipnis and Letterman Commodities, from time to time Becker-Kipnis would make payments to Letterman Commodities of commissions and interest. Becker-Kipnis retains $10,151.90 in such commissions and interest.

II.

We deal first with a preliminary question which is raised (but not discussed at any length) in the parties' memoranda. That question is whether Becker-Kipnis is entitled to recover from the defendants its costs and attorneys' fees at all, if it prevails on its underlying damages claim. Obviously, if we answer that question in the negative, the issue whether recovery of costs and attorneys' fees presents a jury question will be moot.

The general rule in American litigation is that the prevailing party is not entitled to collect reasonable attorneys' fees from the loser, absent either a statutory or a contractual provision for recovery of attorneys' fees. Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975); Smoot v. Fox, 353 F.2d 830, 832 (6th Cir. 1965); D. Dobbs, Remedies § 3.8 at 194 (1973); but see Empire State Ins. Co. v. Chafetz, 302 F.2d 828 (5th Cir. 1962) (noting that a Florida statute which made the setting of attorneys' fees a decision for the trial judge had superseded an earlier statute which allowed the jury to assess a reasonable sum for attorneys' fees in common law actions, and upholding the newer statute against a Seventh Amendment challenge). In their initial brief, the defendants assert that Becker-Kipnis bases its claim for attorneys' fees and costs upon Paragraph 14 of the agreement between Becker-Kipnis and Letterman Commodities. The defendants quote that provision as stating:

  We agree to fully indemnify you and to hold you
  harmless for all losses, claims, actions and
  expenses, including your attorneys' fees and
  costs, which you may incur by reason of . . . the
  failure of any Customer promptly ...

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