The opinion of the court was delivered by: Elaine E. Bucklo, United States District Judge
MORMANDUM OPINION AND ORDER
Vincent Clark is a former professional football player who, through his
broker, invested money with Robert W. Baird & Co. ("Baird"). He alleges
that he lost money because his broker, Michael Weisberg (not a defendant
in this action), authorized unwise or illegal transactions from Mr.
Clark's Baird account. Mr. Clark sued Mr. Weisberg,*fn1 and he now seeks
recovery from Baird. He originally filed this action in the Ohio Court of
Common Pleas on October 22, 1999. The defendants removed the case to
federal court on the basis of diversity jurisdiction and transferred it
to this district. Mr. Clark's amended complaint alleged breach of
contract (Count I), breach of fiduciary duty (Count II), fraud (Count
III) and civil RICO violations (Count IV). After dismissing Counts III
and IV, I converted Baird's motion to dismiss Counts I and II to one for
summary judgment on the issue of whether those claims were barred by the
statute of limitations. See Clark v. Baird, 142 F. Supp.2d 1065, 1076
(N.D. Ill. 2001).
Mr. Clark met with Baird through its agent, Kenneth Fox, in June 1991,
and entered into an oral agreement, the exact
terms of which are
unclear. Mr. Clark says he had a discretionary account, which means that
Baird would decide which investments to make for him. He also says that
Mr. Fox promised that Baird would provide Mr. Clark with information
about the investments, and that Mr. Fox would ultimately be the one to
choose investments. From 1991 to September 1994, Mr. Clark says that
Baird took orders with respect to Mr. Clark's account from Mr. Weisberg,
and that Baird allowed Weisberg to make trades and withdraw money from
Mr. Clark's account without a written authorization. Baird says that it
sent monthly account statements, but Mr. Clark denies receiving them.
Mr. Clark discovered Mr. Weisberg's alleged wrongdoing sometime before he
filed suit against him in 1998, but he says that he did not discover
Baird's role until Mr. Fox's deposition on August 12, 1999.
Summary judgment is appropriate where the record and affidavits, if
any, show that there is no genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). I must construe the facts in the light most favorable to the
non-moving party and draw all reasonable and justifiable inferences in
his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Mr. Clark's oral contract and fiduciary duty claims are subject to a
five year statute of limitations. Clark, 142 F. Supp. 2d at 1074-75. The
alleged injuries occurred between 1991 and September 1994, but Mr. Clark
did not file his complaint until October 1999, so his claims are barred
unless some equitable or statutory tolling device applies. The Illinois
Supreme Court has approved application of the "discovery rule" to actions
involving "tort, tort arising from contract, or other breach of
contractual duty." Hermitage Corp. v. Contractors Adjustment Co.,
651 N.E.2d 1132, 1136 (Ill. 1995). The discovery rule delays the accrual
of a cause of action (and hence the start of the clock on the statute of
limitations) until the plaintiff "knows or reasonably should know of an
injury and that the injury was wrongfully caused." Clay v. Kuhl,
727 N.E.2d 217, 220 (Ill. 2000). A plaintiff is deemed to know that his
injury is "wrongfully caused" when he "becomes possessed of sufficient
information concerning his injury and its cause to put a reasonable
person on inquiry to determine whether actionable conduct is involved."
Knox College v. Celotex Corp., 430 N.E.2d 976, 980-81 (Ill. 1981). A
claim for breach of fiduciary duty is governed by the laws of equity,
agency and contract, see Kinzer v. City of Chicago, 539 N.E.2d 1216, 1220
(Ill. 1989), so it is an action for "other breach of contractual duty",
subject to the discovery rule.
The common law discovery rule does not ordinarily apply to straight
breach of contract claims, see Sinclair v. Bloom, No. 94 C 4465, 1996 WL
264725, at *4 (N.D. Ill. May 15, 1996) (Coar, J.), but such claims may be
subject to the tolling provision of 735 ILCS 5/13-215, which says that,
if the defendant has fraudulently concealed the cause of action from the
plaintiff, the plaintiff may bring the action within five years of
discovering it. Ordinarily, § 13-215 requires affirmative acts of
concealment by the defendant, Cramsey v. Knoblock, 547 N.E.2d 1358, 1365
(Ill. App. Ct. 1989), and reasonable investigation, or diligence, of the
plaintiff in discovering the injury, Melko v. Dionisio, 580 N.E.2d 586,
593 (Ill. App. Ct. 1991). The existence of a fiduciary duty eliminates
both of these requirements. Id. at 593-94. A
broker owes a fiduciary duty
to its clients when it exercises discretion over the client's accounts.
Martin v. Heinold Commodities, Inc., 510 N.E.2d 840, 845 (Ill. 1987).
Mr. Clark says that the account was discretionary and Baird says it was
not, but neither party points to any evidence to support its position.
However, even assuming that the account was discretionary and Baird owed
a fiduciary duty, § 13-215 excuses only the duty to ascertain facts,
not the duty to act on facts of which the plaintiff has actual or
constructive knowledge. Melko, 580 N.E.2d at 594. That is, a fiduciary
relationship does not eliminate the plaintiff's duty to investigate
wrongdoing once an injury is known. Thus the application of both the
discovery rule and § 13-215 depends on a determination of when Mr.
Clark knew or reasonably should have known of the allegedly unauthorized
Here, Baird says that it sent monthly account statements to Mr. Clark.
It supports its motion with statements from June 1991 to September 1994
that itemize all account activity, including the stock trades and checks
that form the basis of this suit, and an affidavit from its Manager of
Client Services stating that it sent the statements to Mr. Clark at the
addresses provided to it. In Illinois, there is a presumption that a
letter mailed with the proper address and postage is received.
Liquorama, Inc. v. American Nat'l Bank & Trust Co. of Chicago,
408 N.E.2d 373, 375 (Ill. App. Ct. 1980). The presumption may be
rebutted by evidence that the letter was not received, First Nat'l Bank
of Antioch v. Guerra Constr. Co., Inc., 505 N.E.2d 1373, 1376 (Ill. App.
Ct. 1987), or evidence that the letter bore an incorrect address.
Liquorama, 408 N.E.2d at 376. Once rebutted, the issue becomes a question
of fact for the jury. Id. at 375.
The account statements attached to Baird's motion bear three different
addresses: (1) 5710 Lantana Ave., Cincinnati, Ohio 45224 (June 1, 1991 to
June 25, 1993); (2) 210 W. Smoketree Terrace, Alpharetta, Georgia 30204
(June 26, 1993 to October 29, 1993); and (3) 220 W. Smoketree Terrace,
Alpharetta, Georgia 30202 (October 30, 1993 to September 30, 1994). In
his brief, Mr. Clark says that he "never received" any of the statements
produced by the defendant, and cites to his own affidavit. Arguments in
brief are not evidence, Box v. A & P Tea Co., 772 F.2d 1372, 1379 n.5
(7th Cir. 1985), so they are insufficient to rebut the presumption of
mailing. To create a question of fact, Mr. Clark may not rest on mere
allegations, but must come forward with evidence. Brill v. Lante Corp.,
119 F.3d 1266, 1275 (7th Cir. 1997).
Ordinarily, when the plaintiff discovered, or reasonably should have
discovered, his injury is a question of fact for the jury. Federal Signal
Corp. V. Thorn Automated Sys., Inc., 693 N.E.2d 418, 421 (Ill. App. Ct.
1998). The question may be resolved on summary judgment when, as here,
the parties do not dispute the crucial facts, and those facts compel only
one conclusion. Id. Most of the disputed activity is reflected in the
statements sent to addresses (1) and (2), but one allegedly unauthorized
check for the amount of $15,000 appears in the March 1994 statement that
was mailed to address (3) and presumptively received by Mr. Clark. If the
check was unauthorized, as Mr. Clark alleges in his complaint, the
account statement gives notice both of the injury, and that it was
wrongfully caused. It does not matter that the statements sent to address
(3) do not list all of the transactions disputed in this case; he need
not have known the full extent of his injury. Clay, 727 N.E.2d at 222.
Nor is it relevant that the statements do not identify who authorized the
check; all Mr. Clark needed to know to determine that he had been wronged
was that he did not authorize it himself.
Mr. Clark says that he was shocked when Mr. Weisberg told him in 1996,
after an initial investment of $500,000 and earnings of over $4 million,
that he was "broke." Mr. Clark was a professional athlete, in his early
twenties at the time of the transactions giving rise to this suit; it is
conceivable that he did not monitor his finances closely, and a jury
could conclude he did not actually know of his injuries. But upon
receiving the March 1994 statement, a reasonable person would have
noticed an unauthorized check for $15,000, a substantial sum of money
even to a person of means. See Caraluzzi v. Prudential Secs., Inc.,
824 F. Supp. 1206, 1214 (N.D. Ill. 1993) (holding investor accountable
for knowledge of injury from contents of monthly account statement).
Moreover, a reasonable person would have noticed that an account into
which half a million dollars had been deposited had a balance of only
$124.81. This is not something about which reasonable minds could
differ. Mr. Clark could argue that he engaged a broker specifically so
that he would not have to pay attention to his finances, but in that case
his grievance is with Mr. Weisberg, not the defendants.*fn3 A fiduciary
duty between Mr. Clark and Baird excuses a failure on Mr. Clark's part to
actively and diligently seek information about his accounts,
N.E.2d at 594; if Baird was a fiduciary, it had an obligation to keep
Mr. Clark apprised of the activity in his account, Hagney v. Lopernan,
590 N.E.2d 466, 468-69 (Ill. 1992). But Baird was not silent here, and it
cannot be charged with Mr. Clark's failure to listen when it spoke.*fn4
Even the existence of a fiduciary duty does not excuse Mr. Clark's
inaction in the face of information in his possession. Melko, 580 N.E.2d
at 594 (holding that statute of ...