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08/05/88 Edward Konewko Et Al., v. Kidder

August 5, 1988

EDWARD KONEWKO ET AL., PLAINTIFFS-APPELLEES

v.

KIDDER, PEABODY & COMPANY, INC., DEFENDANTS-APPELLANTS



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

528 N.E.2d 1, 173 Ill. App. 3d 939, 123 Ill. Dec. 617 1988.IL.1227

Appeal from the Circuit Court of Du Page County; the Hon. William E. Black, Judge, presiding.

APPELLATE Judges:

JUSTICE DUNN delivered the opinion of the court. NASH and INGLIS, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE DUNN

Defendants, Kidder, Peabody and Co., Inc. (Kidder), Blunt, Ellis & Loewi, Inc. , and Thaddeus Augelli, appeal from a judgment of the circuit court of Du Page County denying their motion to compel arbitration of the present dispute. On appeal, defendants contend that the Federal Arbitration Act (9 U.S.C.A. § 1 et seq. (West 1970)) applies in this case and that the trial court erred in denying defendants' motion to compel arbitration. We vacate and remand with directions.

On August 4, 1987, the plaintiffs, Edward and Genevieve Konewko, filed an 11-count complaint against the defendants in the circuit court of Du Page County. The complaint alleged that defendants had engaged in fraudulent activities, deceptive business practices, deceptive trade practices, and had violated various securities regulations during a period from August 1979 to September 1985.

BEL moved to have the complaint dismissed, alleging that plaintiffs were forced to arbitrate their dispute with BEL under the arbitration clause of an "Option Account Agreement" the Konewkos executed. The agreement reads in pertinent part:

"Gentlemen:

With respect to any transaction effected by you on my behalf for the purchase and/or sale of any options contract traded either on a national securities exchange or in the over-the-counter markets, I hereby agree as follows:

12. If any controversy arises between us in connection with my accounts it may be settled by arbitration in accordance with the rules of either the Board of Arbitration of The New York Stock Exchange, other national securities exchange providing facilities for arbitration, or the National Association Securities Dealers, Inc., as I may elect. If I do not make such election by registered mail addressed to you at your main office within five (5) days after receipt of notice from you requesting such election, then you may so elect. In any arbitration proceeding the award of the arbitrators, or of a majority of them, shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction. I understand that my entering into this agreement bars me from pursuing any claims not arising under the federal securities laws in court, but does not bar me from pursuing such claims based solely on alleged violations of the federal securities laws in a judicial forum rather than in arbitration."

Kidder then moved to dismiss two counts of the complaint for lack of jurisdiction and also moved to compel arbitration under an arbitration clause in a "Put and Call Options Agreement" the Konewkos signed. This agreement reads, in part:

"To: Kidder, Peabody & Co. Incorporated In consideration of your acceptance of instructions to purchase, sell, or endorse put and call options (hereinafter referred to as 'Puts' and 'Calls' or, collectively, 'Options') for the account of the undersigned, it is hereby agreed as follows:

10. Any controversy or claim arising out of or relating to accounts of or transactions with or for the undersigned or to this agreement [ sic ] or the breach thereof shall be settled by arbitration in accordance with the rules of either the American Arbitration Association or any of the exchanges or other markets wherein any of the Options transactions giving rise to the claim or controversy were executed as the undersigned may elect. If the undersigned does not make such election by registered mail addressed to you at your main office in New York City within five days after demand by you that such ...


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