Damages and Attorney’s Fees

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7^th Circuit Court of Appeals

Case Name: Straits Financial LLC, v. Ten Sleep Cattle Company, et al.

Case No.: 16-3860; 163903; 16-3967; 17-2100

Officials: WOOD, Chief Judge, and ROVNER and HAMILTON, Circuit Judges.

Focus: Damages and Attorney’s Fees

Atop the Chicago Board of Trade Building in downtown Chicago stands Ceres, the Roman goddess of agriculture and grain. She faces north, but her reach extends at least as far west as Ten Sleep, Wyoming, to the family cattle ranch of defendant‐appellee Richard Carter. In 2010, through a broker in Scottsbluff, Nebraska, Carter opened a commodities futures and options trading account with a Chicago‐based financial institution. Carter intended to use the account to secure the prices his ranch—defendant‐appellee Ten Sleep Cattle Company—would receive for its cattle using various financial instruments.

At the same broker’s behest, Carter opened another account in 2011 with plaintiff‐appellant Straits Financial to speculate in other investment categories. After Carter and the broker split a tidy profit of $300,000, Carter instructed the broker to close out the account in March 2012. The broker did not follow those instructions. Instead, he continued speculating on U.S. Treasury Bond futures, losing approximately $2 million over the course of the next three months before his unauthorized trading was stopped. Straits Financial then liquidated Carter’s livestock commodities holdings to satisfy most of that $2 million shortfall, and turned to the courts for the remaining deficiency. After a bench trial, Carter prevailed on most points and established his ranch’s right to the seized funds and an award of attorney fees. However, the district court significantly reduced the amount of damages, finding that Carter had failed to mitigate his ranch’s damages by not closely reading account statements and trading confirmations during his broker’s trading spree.

Straits Financial and Perkins have appealed, and Carter and Ten Sleep have cross‐appealed. We must decide three principal issues: whether the district court correctly interpreted and applied the contracts governing Ten Sleep’s relationship with Straits Financial; whether the award of attorney fees was proper; and whether Ten Sleep’s damages should have been reduced under Illinois law. We affirm the district court’s judgment on the first two questions, but we reverse and remand in part for recalculation of Ten Sleep’s damages.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.