United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Steven C. Seeger Judge
case involves a futures commission merchant (basically a
broker for derivatives) that sued traders for breach of
contract when their trading accounts had negative balances.
This Court granted a motion to strike three of the
affirmative defenses (Dckt. No. ), and Defendants
responded by filing a motion for reconsideration. This Court
respectfully denies Defendants' Motion to Reconsider
Order Striking Amended Affirmative Defenses and/or to
Reconsider Denial of Motion to Dismiss (Dckt. No. ), as
well as Defendants' Motion for Leave to File Fourth
Affirmative Defense (Dckt. No. ).
for reconsideration are disfavored, and rightly so. See
Minch v. City of Chicago, 486 F.3d 294, 301 (7th Cir.
2007) (“[A] court ought not to re-visit an earlier
ruling in a case absent a compelling reason, such as manifest
error or a change in the law, that warrants
re-examination.”); Caisse Nationale de Credit
Agricole v. CBI Indus. Inc., 90 F.3d 1264, 1269 (7th
Cir. 1996) (“Motions for reconsideration serve a
limited function: to correct manifest errors of law or fact
or to present newly discovered evidence.”); Solis
v. Current Dev. Corp., 557 F.3d 772, 780 (7th Cir. 2009)
(“Motions to reconsider . . . do not empower litigants
to indefinitely prolong a case by allowing them to raise
their arguments, piece by piece.”); Quaker
Alloy Casting Co. v. Gulfco Indus., Inc., 123
F.R.D. 282, 288 (N.D. Ill. 1988) (“[T]his Court's
opinions are not intended as mere first drafts, subject to
revision and reconsideration at a litigant's
courts have enough work on their plates without collateral
litigation about motions that they have already ruled upon.
Motions about rulings on motions do not add much value, and
slow down the wheels of progress (and justice) for everyone
else. Ordinarily, a party who disagrees with a ruling by a
District Court should raise that issue with the Court of
Appeals, rather than trying the same argument a second time
before the same judge (let alone a different one). Motions
for reconsideration are even less welcome after the
reassignment of a case from one District Court Judge to
another. See Aparicio-Brito v. Lynch, 824 F.3d 674,
688 (7th Cir. 2016); HK Sys. v. Eaton Corp., 553
F.3d 1086, 1089 (7th Cir. 2009).
Defendants' motion is little more than a rehash, warmed
over, of arguments that they advanced unsuccessfully before
Judge Feinerman. See Dckt. No. 92. Motions for
reconsideration might make sense when there are new facts or
new law. See Caisse Nationale de Credit Agricole, 90
F.3d at 1269. But Defendants offer neither. Instead, they
offer more of the same.
event, Judge Feinerman's ruling was right on the merits.
Defendants' theme that Plaintiff had a “license to
steal” is little more than an empty catch phrase.
See Dckt. No. 63, at 6. No. one is alleging that
Plaintiff stole anything. A futures commission merchant does
not “steal” from a trader when it liquidates an
account that has fallen below margin requirements. Instead,
it is exercising an express contractual right.
cannot defeat a breach of contract claim by alleging that
Plaintiff did not follow regulatory requirements.
See Dckt. No. 63, ¶¶ 26-39; Dckt. No. 93,
at 6-7. As Judge Feinerman ruled, Defendants offered no
support for their legal theory. See Dckt. No. 92, at
7-9. And once again, Defendants come to this Court empty
handed. Plaintiff, in contrast, has in hand controlling
authority from the Seventh Circuit. See ADM Investor
Services, Inc. v. Collins, 515 F.3d 753 (7th Cir. 2008)
(holding that a trader cannot avoid paying for trading losses
by claiming that the futures commission merchant violated
regulatory requirements). Defendants offer no reason to
distinguish ADM, and they advance no argument why
the Seventh Circuit should abandon it.
implied covenant of good faith and fair dealing is not a
colorable defense here, either. That doctrine comes into play
when a party abuses discretion afforded by the terms of a
contract by acting “‘arbitrarily, capriciously,
or in a manner inconsistent with the reasonable expectation
of the parties.'” See Goldberg v. 401 N. Wabash
Venture LLC, 755 F.3d 456, 462 (7th Cir. 2014) (quoting
N. Tr. Co. v. VIII S. Mich. Assocs., 657 N.E.2d
1095, 1104 (Ill.App.Ct. 1995)). It “prevent[s] one
party from depriving another of the right to receive the
benefit of the contract in a way the parties could not have
contemplated at the time of drafting.” RBS
Citizens, N.A. v. Sanyou Import, Inc., 525 Fed.Appx.
495, 499 (7th Cir. 2013); see also In re Kmart
Corp., 434 F.3d 536, 542 (7th Cir. 2006) (“This
doctrine is a rule of construction, not a stand-alone
obligation.”); Chrysler Credit Corp. v.
Marino, 63 F.3d 574, 579 (7th Cir. 1995) (“The
contractual duty of good faith only applies as a method by
which gaps in the contract are filled.”).
contracts in question required the traders to satisfy margin
requirements, meaning that they needed to post sufficient
funds to cover their positions. The contracts also authorized
the broker to sell the traders' positions if they did not
provide enough margin. A broker's right to sell the
positions is a form of “self-protection, ”
because a broker is on the hook to the clearinghouse for the
trades of its customers. See ADM Investor Services, Inc.
Collins, 515 F.3d 753, 757 (7th Cir. 2008). Margin
requirements thus protect futures commission merchants from
the traders. “Margin protects dealers and
counterparties from defaulting customers, who are in
no position to complain when the protection of their trading
partners turns out to be incomplete.” Id.
the accounts fell below margin requirements, and the traders
failed to provide more capital when requested by the broker
(with one exception). So the broker did what the contracts
expressly permitted: it liquidated the positions when the
traders did not post enough margin. The opportunity to sell
the traders' positions was not a gap in the contracts -
it was a core part of the design itself.
broker did not act in a manner that the parties did not
reasonably expect. The liquidation of the positions was not
an “unanticipated development.” Life Plans,
Inc. v. Security Life of Denver Ins. Co., 800 F.3d 343,
355 (7th Cir. 2015). Quite the opposite - it was just what
the contracts contemplated, and what the parties expressly
bargained for. See In re Kmart Corp., 434 F.3d 536,
542 (7th Cir. 2006) (noting that the doctrine applies to
“opportunistic behavior”); Kham &
Nate's Shoes No. 2, Inc. v. First Bank of Whiting,
908 F.2d 1351, 1357 (7th Cir. 1990) (“‘Good
faith' is a compact reference to an implied undertaking
not to take opportunistic advantage in a way that could not
have been contemplated at the time of drafting, and which
therefore was not resolved explicitly by the
agreements in question required the traders to provide
sufficient funds to cover their positions. The contracts also
entitled the broker to liquidate the traders' positions
if they did not satisfy margin requirements. And that is
exactly what happened. The broker did not behave
“opportunistical[ly]” by doing what the contracts
expressly permitted. Kham & Nate's Shoes
No. 2, 908 F.2d at 1357. Plaintiff was entitled to
“advance its own interests, and it did not need to put
the interests of [Defendants] first.” Kham &
Nate's Shoes No. 2, 908 F.2d at 1358.
implied covenant of good faith is not a tool to frustrate the
enforcement of a contract when it conforms to the reasonable
expectations of the parties. The implied covenant of good
faith does not “block use of terms that actually appear
in the contract.” Kham & Nate's Shoes No.
2, 908 F.2d at 1357; see also Continental Bank, N.A.
v. Everett, 964 F.2d 701, 705 (7th Cir. 1992). The
traders “may rue their decision but cannot escape
it.” Continental Bank, 964 F.2d at 705.
implicit theory seems to be that Plaintiff had a legal
obligation to look out for Defendants' financial
interests. But the implied covenant of good faith “does
not create ‘an enforceable legal duty to be nice or to
behave decently in a general way.'” Beraha v.
Baxter Health Care Corp., 956 F.2d 1436, 1445 (7th Cir.
1992) (quoting Zick v. Verson Allsteel Press Co.,
623 F.Supp. 927, 929 (N.D. Ill. 1985)); Market St. Assoc.
Ltd. Partnership v. Frey, 941 F.2d 588, 594 (7th Cir.
1991) (“[E]ven after you have signed a contract, you
are not obligated to become an altruist toward the other
party and relax the terms if he gets into trouble in
performing his side of the bargain.”); Kham &
Nate's Shoes No. 2, 908 F.2d at 1357 (“Firms
that have negotiated contracts are entitled to enforce them
to the letter, even to the great discomfort of their trading
partners, without being mulcted for lack of ...