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Hicks v. Midwest Transit

March 9, 2006


The opinion of the court was delivered by: Gilbert, District Judge


This matter comes before the Court on HARRISdirect LLC ("Harris")'s motion for summary judgment (Doc. 100), to which plaintiff Hal Hicks ("Hicks") has responded (Doc. 110) and Harris has replied (Doc. 113). In its motion, Harris seeks dismissal of Count V -- the only count remaining in this action. Also before this Court is Harris's motion for a hearing on this motion (Doc. 112). After reviewing the briefs, the Court does not believe oral arguments on this motion are necessary. Therefore, Harris's motion for a hearing on its motion is DENIED. For the following reasons, Harris's motion for summary judgment is GRANTED.


This action arose because of Hicks's activities as part owner of Midwest Transit, Inc. ("Midwest"). In 2000, C. Michael Witters and his wife Diane (co-owners with Hicks of Midwest) sued Hicks in state court for, among other things, fraud resulting from numerous shady transactions conducted by Hicks while operating Midwest. In this action the Witters had the circuit court appoint a receiver for Midwest, Don Hoagland. Soon after his appointment, Hoagland successfully petitioned the circuit court for prejudgment attachment of Hicks's assets. Importantly, the circuit court did not require Hoagland to post a surety bond due to its determination that he was a State officer. See 735 ILCS § 5/4-107.

Harris is involved in this litigation because its predecessor had custody of some of Hicks's assets -- his online stock trading accounts. The circuit court issued an Order for Attachment and Summons ("attachment order") directed at Harris's predecessor DLJdirect, and Hicks's accounts.*fn1 The attachment order was served on Credit Suisse First Boston ("CSFB") at its Chicago office on July 27, 2001; the order described the attached property as follows:

Online stock trading account with DLJ Direct, a subsidiary of Donaldson, Lufkin and Generette, c/o Credit Suisse First Boston, AT&T Corporate Center, 227 West Monroe Street, Chicago, IL 60606-5016, or DLJ Direct, a subsidiary of Donaldson, Lufkin and Generette, c/o Credit Suisse First Boston, 200 West Madison Street, Chicago, IL 60606.

Service was effected at CSFB's office at 227 West Monroe in Chicago. When CSFB's Legal and Compliance Department received the attachment order, it faxed it to CSFBdirect's compliance manager, Linda Rich. (Affdv't of Linda Rich) (Doc. 101 at 2). Rich examined the order and determined it to be regular on its face. (Id.). Accordingly, CSFBdirect froze Hicks's accounts pending subsequent directions from the circuit court. Ten days after the circuit court entered its attachment order, Hicks moved to vacate that order claiming it was invalid because Hoagland did not post bond. The circuit court denied this motion the next day, August 7, 2001. Over a year later, the Illinois Court of Appeals for the Fifth Circuit reversed the circuit court and vacated the attachment order because it found that the circuit court should have required Hoagland to post bond. Witters v. Hicks, 780 N.E.2d 713, 722 (Ill. App. Ct. 5th Dist. 2002). After receiving notice of the ruling by the appellate court, CSFBdirect unfroze Hicks's accounts.

In Count V of the Complaint, Hicks claims Harris was negligent for complying with a facially invalid order, failing to contest the allegedly improper service against it and by failing to take "affirmative steps to challenge the defective and wrongful" orders of the circuit court.


Summary judgment is proper where "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. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). In determining whether a genuine issue of material fact exists, the Court construes all facts in the light most favorable to the nonmoving party and draws all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath, 211 F.3d at 396. The moving party has the burden of establishing that there is no genuine issue of material fact. Celotex Corp., 477 U.S. at 323. If it meets this burden, the nonmoving party must set forth facts that demonstrate the existence of a genuine issue for trial. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine issue of material fact is not demonstrated by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247; Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005), or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252; Insolia v. Phillip Morris Inc., 216 F.3d 596 (7th Cir. 2000).

This Court has previously (if briefly) addressed the issues presented in this motion. In its order of May 11, 2004, the Court held that "in Illinois . . . the law views stockbrokers as agents of their customers. They therefore have a corresponding duty to exercise all the skill, ability and industry of the broker pursuant to the specific agency purpose." (Doc. 69 at 3); see Penrod v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 385 N.E.2d 376, 381 (Ill. App. Ct. 3d Dist. 1979). Continuing, this Court held that Hicks's "objective in this case was for Harris to safeguard his stock, which was within Harris's exclusive care and control. Thus, to the extent necessary one can draw the reasonable inference that Harris acted as [Hicks's] agent in the safekeeping of his stock." (Doc 69 at 3). In this ruling and in a subsequent ruling affirming the existence of Harris's duty to safeguard Hicks's property, this Court held that whether Harris breached its duty to Hicks was a question of fact for the jury. (Docs. 69, 85).

In its motion for summary judgment, Harris argues it should not be held liable for complying with what it believed to be a valid attachment order. It claims the attachment order was valid on its face and that it had no duty to go beyond the four corners of the document in determining its validity. In his response, Hicks argues that Harris breached the above-described duty by complying with an order that was invalid on its face. Hicks's claims the attachment order was facially invalid because the circuit court did not require a surety bond and, as the situs of his accounts was in New Jersey, service on CSFB's Chicago office was insufficient to attach these assets. He also argues CSFBdirect was never properly served. To prevail on his negligence claim, Hicks must show that Harris owed him a duty, that it breached its duty, and that as an actual and proximate result of the breach he was injured. Cunis v. Brennan, 308 N.E.2d 617, 618 (Ill. 1974). Harris does not make any arguments on the issues of damages or causation. Thus, the Court must determine the scope of Harris's duty and whether its actions amounted to a breach.

A. The Scope of Harris's Duty

The existence and scope of Harris's duty is a question of law for the Court. Brennan, 308 N.E.2d at 619; Ferrell v. Esparza, 773 N.E.2d 650, 654 (Ill. App. Ct. 5th Dist. 2001); Taake v. WHGK, Inc., 592 N.E.2d 1159, 1173 (Ill. App. Ct. 5thDist. 1992); see also Kirk v. Michael Reese Hosp. and Medical Ctr., 513 N.E.2d 387, 396 (Ill. 1987).Whether Harris breached its duty is a ...

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