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Andrews v. Heinold Commodities Inc.

August 15, 1985


Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 83 C 5590--Charles P. Kocoras, Judge, and for the Southern District of Indiana, Indianapolis Division, No. IP 81-767-C--S. Hugh Dillin, Judge.

Author: Cummings

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and GRAY, Senior District Judge.*fn*

CUMMINGS, Chief Judge.

This consolidated appeal of two district court decisions presents questions arising out of the interaction between a contractual choice of forum clause entered into by the two disputing parties, and the Illinois tolling statute, Ill. Rev. Stat. ch. 110 P 13-217 (1983). for the reasons stated herein, we affirm the judgment of the Indiana district court but reverse that of the Illinois district court.


Plaintiff Charles E. Andrews, Jr., a resident of Indianapolis, Indiana, filed suit on July 15, 1981, in the Southern District of Indiana against Heinold Commodities, Inc. ("Heinold"), a large commodity brokerage house with whom Andrews had maintained a commodity trading account from February 7 until September 6, 1979, and Bill Williams, who had been a commodity futures broker in Heinold's Indianapolis, Indiana, branch office.*fn1 The dispute centered on Andrews' substantial losses, exceeding $38,000, in his trading account and was brought under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and § 4(b) of the Commodities Exchange Act, 7 U.S.C. § 6b. Jurisdiction and venue were proper (App. 17), but Heinold moved to dismiss due to a contractual choice of forum clause. That clause provides in its entirety:


All actions or proceedings arising directly, indirectly or otherwise in connection with, out of, related to or from this Agreement or any transaction covered hereby shall be litigated at the discretion and election of Heinold Commodities, Inc. ("Heinold"), only in courts whose situs is within the State of Illinois. The undersigned ("Customer") consents and submits to the jurisdiction of any state or federal court located within the State of Illinois, appoints and designates E. William Sevetson (whose address is 222 South Riverside Plaza, Chicago, Illinois 60606), or any other party whom Heinold may from time to time hereafter designate, as Customer's true and lawful attorney-in-fact and duly authorized agent for service of legal process, and agrees that service of such process upon such party shall constitute personal service of such process upon Customer; provided that Heinold shall, within five (5) days after receipt of any such process, forward the same by certified or registered mail, together with all papers affixed thereto, to Customer at Customer's mailing address specified on Customer's Application. Customer waives any right Customer may have to transfer or change the venue of any litigation brought against Customer by Heinold.

On August 17, 1982, the trial court granted Heinold's motion and dismissed the action.

Andrews, who had been adjudicated a bankrupt in April 1980, had considerable difficulty obtaining Illinois counsel. He filed a second lawsuit in the Northern District of Illinois pro se on August 12, 1983, asserting his two federal claims.*fn2 The trial court dismissed the complaint as time-barred on April 17, 1984, and denied plaintiff's motion for reconsideration on June 4, 1984. Plaintiff filed a timely appeal, docketed in this Court as No. 84-1960.

Plaintiff then returned to the Southern District of Indiana, and requested that court to vacate its original order of dismissal pursuant to Fed. R. Civ. P. 60(b)(6). The district court denied the motion, and plaintiff timely appealed. That appeal is no. 84-2674. We have jurisdiction over both appeals as final judgments under 28 U.S.C. § 1291. We consider first the appeal from the Northern District of Illinois.


Because the federal statutes giving rise to Andrews' claim contain no express statute of limitations, federal courts must borrow the applicable statute from analogous state law, which in Illinois is the three-year period contained in the Illinois securities laws. Parrent v. Midwest Rug Mills, Inc., 455 F.2d 123 (7th Cir. 1972) (Security Exchange Act of 1934); Shelley v Noffsinger, 511 F. Supp. 687, 690-691 (N.D. Ill. 1981) (Commodity Exchange Act). Assuming as did the court below that Andrews' cause of action arose when he closed his account on September 6, 1979, the statute of limitations expired on that date in 1982. Thus, the first action was timely filed in Indiana, but the second lawsuit filed in Illinois was out of time, absent some other provision of Illinois law.

The borrowing of a state statute of limitations includes the state's tolling doctrines, which suspend the application of the statute of limitations in prescribed situations. Board of Regents of the University of the State of New York v. Tomanio, 446 U.S. 478, 487-488, 64 L. Ed. 2d 440, 100 S. Ct. 1790 ; Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 463-464, 44 L. Ed. 2d 295, 95 S. Ct. 1716 .*fn3 The court below, although correctly ...

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