Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ADM Investor Services, Inc. v. Ramsay

June 9, 2008

ADM INVESTOR SERVICES, INC., PLAINTIFF,
v.
THOMAS RAMSAY, DEFENDANT.



The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge

MEMORANDUM OPINION AND ORDER

Introduction

ADM Investor Services, Inc. ("ADM") has sued Thomas Ramsay ("Ramsay"), seeking to recover a deficit balance in Ramsay's commodity futures account that existed when ADM closed out that account. ADM has now moved for summary judgment under Fed. R. Civ. P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, its motion is granted and the other surviving claim (brought by Ramsay against third party defendant Texas Trading Co., Inc. ("Texas Trading")) is dismissed without prejudice.

Summary Judgment Standard

Every Rule 56 movant bears the burden of establishing the absence of any genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Leach v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to avoid summary judgment a non-movant "must produce more than a scintilla of evidence to support his position" that a genuine issue of material fact exists (Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that demonstrate a genuine issue of triable fact" (id.). Ultimately summary judgment is warranted only if a reasonable jury could not return a verdict for the non-movant (Anderson v. Liberty Lobby, Inc., 466 U.S. 242, 248 (1986)).

What follows is a summary of the facts viewed in the light most favorable to non-movant Ramsay, but within the limitations created by the extent of his compliance (or noncompliance) with the strictures of LR 56.1*fn1 And that obviates the need, in the evidentiary recital, to repeat "according to Ramsay" or the like or to identify any conflicting account, though inclusion of the latter is sometimes called for as a purely informational matter.

Factual Background

ADM is a registered futures commission merchant and a member firm of various commodity exchanges, including the Chicago Mercantile Exchange ("Merc")(Kadlec Aff. ¶1). In that role ADM establishes brokerage relationships with members of the public--such as Ramsay--who wish to speculate or hedge in commodity futures contracts and related options (A. St. ¶4).

In 2003 Ramsay entered into a Customer Agreement ("Agreement," Complaint Ex. A) with ADM (referred to there as "ADMIS") that allowed him (as the "Customer") to place orders for the purchase or sale of futures or options in his account (A. St. ¶5; R. St. ¶6).*fn2 Under Agreement ¶4 Ramsay was required "without notice or demand from ADMIS, at all times, [to] maintain adequate margins, so as continually to meet the margin requirements established by ADMIS."*fn3 In addition, Agreement ¶5 (emphasis added) specified:

If, at any time, Customer's account does not contain the amount of margin required by ADMIS, or by any exchange, clearing house or other regulatory authority, ADMIS may, at its sole and absolute discretion, at any time or from time to time, without notice to Customer, close out Customer's open positions in whole or in part or take any other action it deems necessary to satisfy such requirements....

ADM's business relationship with Ramsay proceeded rather uneventfully until the latter half of 2005. At that point--and more specifically, on various dates in the two months preceding October 11 of that year--a series of events occurred that led to this lawsuit.

First, ADM complied with two Ramsay requests to execute specified orders on the Merc floor (A. St. ¶6): It sold 130 feeder cattle commodity futures contracts for delivery in October 2005 and another 50 feeder cattle commodity futures contracts for delivery in November 2005 (id.). ADM sent Ramsay written notice of those transactions through the United States Postal Service, just as it is required to do any time that a deposit to or withdrawal from a customer's account, or the purchase or sale of a futures contract in a customer's account, takes place (A. St. ¶7).

During that same time frame, however, problems arose with Ramsay's account (A. St. ¶8). As of the close of trading on October 4 the account bore a "margin deficit" of $254,918.04 (A. St. ¶9). Although Ramsay had deposited a check for $38,000 that same day, his deficit remained, the result of both several earlier, unsatisfied margin calls and one additional margin call that occurred on October 4 (id.). In particular Ramsay had an unsatisfied margin call from September 29 in the amount of $40,000, an unsatisfied margin call from September 30 in the amount of $16,250 and an unsatisfied margin call from October 3 in the amount of $71,500 (id.).*fn4 Ramsay's October 4 margin call of $127,175 was a byproduct of price fluctuations and of the sale of his 50 November feeder cattle futures contracts that took place that same day (id.).

On October 7 Ramsay deposited $55,000 into his account (A. St. ¶10). Still his margin deficit persisted, the result of three earlier and still unsatisfied margin calls--the September 30 margin call (now in the amount of $1,250), the October 3 margin call (still in the amount of $71,500) and the October 4 margin call of $127,175. Coupled with an October 7 margin call of $36,375--the result of adverse price fluctuations that took place on that date--Ramsay's margin deficit now totaled $236,293.04 (id.).

Margin call after margin call followed. On October 11, 25 of Ramsay's October feeder cattle commodity futures contracts were "covered" (or "repurchased") on the Merc floor (A. St. ¶11). Despite that transaction, Ramsay's account remained under-margined to the tune of $237,618.54 as of the close of trading on October 11 (id.). That margin deficit comprised five separate margin calls: $1,250 outstanding since September 30, $71,500 outstanding since October 3, $127,125 outstanding since October 4, $36,375 outstanding since October 7 and $1,325 outstanding since the close of business on October 11 (id.; Kadlec Aff. ¶9).

On October 12 the remaining 105 of Ramsay's October feeder cattle commodity futures contracts as well as his 50 November feeder cattle commodity futures contracts were covered, shrinking Ramsay's margin deficit to $75,644.14 (A. St. ¶13). But that positive development in Ramsay's account was short-lived. When ADM could not honor Ramsay's earlier-tendered $55,000 check, the margin deficit increased again--as of October 18 it stood at $130,669.14 (A. St. ¶14). Given its status as a clearing member firm of the Merc, ADM was required to pay Merc's clearing corporation that same amount--$130,669.14--less any costs and commissions incurred by Ramsay under the terms of the Agreement (A. St. ¶15).*fn5

Of course Ramsay had ample reason to know that all was not well with his account. Although his briefs have repeatedly denied that his account with ADM was ever the subject of a margin call (see n.4), the fact remains that ADM regularly mails a "blue sheet" to any customer whose account has become the subject of a margin call as a result of adverse market price movement on the previous business day or as a result of the prior day's trading activity (A. Add. St. ¶¶24-25).*fn6 Blue sheets differ from the type of written confirmations referred to earlier, but like those confirmations they are sent ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.