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R.J. O'BRIEN & ASSOCIATES, INC. v. VIERSTRA

March 25, 2003

R.J. O'BRIEN & ASSOCIATES, INC., PLAINTIFF,
v.
SUSAN VIERSTRA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Joan B. Gottschall, United States District Judge

MEMORANDUM OPINION & ORDER

Plaintiff R.J. O'Brien & Associates, Inc. ("RJO"), a registered futures commission merchant seeks summary judgment against defendants Susan Vierstra and her husband Michael Vierstra for the deficit balance presently due on a futures trading account opened in Mrs. Vierstra's name. For the reasons explained below, RJO's motion for summary judgment is granted with respect to Mrs. Vierstra but denied with respect to Mr. Vierstra.

Summary Judgment Standard & Local Rule 56.1

Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. It Civ. P. 56(c). Once the movant sets forth its argument, properly supported by the record, that there is no genuine issue of material fact that requiring trial, the burden shifts to the nonmovant to identify specific facts that preclude summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "[U]nless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party," there is no issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Additionally, in cases pending in this district, all parties must comply with Local Rule 56.1 which governs motions for summary judgment. Local Rule 56.1 requires the movant to file a statement of material facts demonstrating why the movant believes it is entitled to judgment as a matter of law. This statement "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph." L.R. 56.1(a)(3). The opposing party must respond to each numbered paragraph in the movant's L.R. 56.1(a)(3) statement. L.R. 56.1(b)(3). If the opposing party contests any fact set forth by movant, the opposing party must expressly state its disagreement and include "specific references to the affidavits, parts of the record, and other supporting materials" that establish the basis for the disagreement. Id. "All material facts set forth in the statement required of the moving party will be deemed admitted unless controverted by the statement of the opposing party." Id. The opposing party may also file a statement of any additional material facts demonstrating why summary judgment cannot be granted. Id. If the movant fails to properly controvert those additional material facts, they are also deemed admitted. L.R. 56.1(a)(3).

Here, RJO properly filed its L.R. 56.1(a)(3) statement of material facts, but the Vierstras failed to respond. As a result, all of the material facts set forth in RJO's L.R.56.1(a)(3) statement ("RJO SUF") are deemed admitted, provided they are properly supported by the record. L.R. 56.1(b)(3); Wienco, Inc. v. Katahn Assoc., Inc., 965 F.2d 565, 567 (7th Cir. 1992).

The Vierstras did file a document entitled "Statement of Disputed Facts of Michael Vierstra and Susan Vierstra" ("Vierstra SDF"), but they failed to comply with L.R. 56.1(b)(3) in doing so. The statement includes both facts and legal argument, not all facts are properly supported by citations to the record, and in certain instances, although there is a reference to the record, the reference is not specific. For example, the Vierstras state that their deposition transcripts show the existence of a disputed issue of fact, (Vierstras' SDF at ¶ 5), but there are no references to page and line numbers. And as expressly stated in this court's standing order, "a reference to a transcript that does not include the page and line numbers is not a specific reference. The court will not search a multi-page document [or] guess as to which language in a document the party relies upon." Standing Order Regarding Mot. Summ. J., Oct. 14, 1999 (Gottschall, J.) To the extent that the Vierstras' SDF actually sets forth facts, as opposed to legal argument, and to the extent the court is able to determine whether there is proper factual support, the court will consider the SDF, despite the Vierstras' failure to comply with the local rules. The court further notes that RJO failed to respond to the Vierstras' SDF. This is of little consequence because, as explained below, RJO argues that even accepting the Vierstras' claims as true, RJO is entitled to judgment as a matter of law.

Factual Background

RJO is a futures commission merchant registered with the Commodity Futures Trading Commission ("CFTC") and a clearing member of the Chicago Mercantile Exchange ("CME"). The Vierstras jointly own a dairy farm in Twin Falls, Idaho. On September 26, 2000, Mrs. Vierstra opened a futures trading account with RJO ("Vierstra account"). Although only Mrs. Vierstra executed the Account Agreement, both Mr. and Mrs. Vierstra were authorized to trade in the Vierstra account, and were authorized to receive and respond to margin calls related to the Vierstra account. All of the trades made in the Vierstra account were in milk futures contracts.

The Account Agreement

When Mrs. Vierstra opened the Vierstra account, she signed an account agreement (the "Account Agreement"). Under the express provisions of the Account Agreement, "Customer [Mrs. Vierstra] agrees at all times to maintain such margin in [her] account as RJO may from time to time (in its sole discretion) require, and will meet all margin calls in a reasonable amount of time." (Account Agreement at ¶ 3, RJO Ex. Supp. Mot. Summ. J. at Tab 7.) For purposes of the Account Agreement, one hour is deemed a reasonable amount of time. (Id.) Further, "in the event that the account(s) have zero equity or is [sic] in deficit at any time, or in the event that RJO is unable to contact Customer due to Customer's unavailability . . . RJO shall have the right to liquidate all or any part of Customer's positions through any means available, without prior notice to the Customer." (Id.) Additionally, "RJO may require margin [in] excess of that required by applicable law, regulation, exchange or clearinghouse minimums." (Id.) "Customer understands that [she] is liable to RJO for any deficit ("debit") balance in the account. . . ." (Id. at ¶ 4.) Further, in the event RJO must take action to collect any unpaid debit balance, Customer "will reimburse RJO for all costs incurred, including reasonable attorneys' fees." (Id.). The Account Agreement also provides that "no provisions hereof shall in any respect be waived, augmented or modified by any other party unless in writing and signed by an official so authorized in RJO's office headquarters."

The Account Agreement further states that it is "subject to the constitution, regulations, customs, and interpretations of each exchange or market (and its clearing house, if any) on which trades are executed, and to all applicable governmental regulations." (Id. at ¶ 6.) This includes, but is not limited to, CME Rules, regulations promulgated by the Commodity Futures Trading Commission ("CFTC"), and the Commodities Exchange Act, 7 U.S.C. § 1, et seq.

The Account

Through the Vierstra account, the Vierstras established "long" future positions in milk; "Those positions are generally `speculative' and represent a greater risk to a brokerage firm, such as RJO, than if [the Vierstras] were establishing `short' positions as a `hedge'." (RJO SUP ¶ 33.) As of June 11, 2001, the Vierstra account held "361 open positions in `long' milk futures contracts which had been executed on the CME," (id. at ¶ 43), including open positions that expired the following February, March and April. Futures contracts expiring several months in the future are relatively illiquid. RJO deemed the Vierstras' open ...


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