Opinion ID: 2709532
Heading Depth: 2
Heading Rank: 1

Heading: Termination of the 2004 Guarantee Agreement

Text: Prestwick’s challenge to the district court’s decision regarding the temporal scope of the 2004 Guarantee Agreement is threefold. First, Prestwick contends that the district court erroneously disregarded the plain contractual language. Prestwick’s suggested construc- (...continued) ment. See Fed. R. Civ. P. 56(d). The court rejected this request as well. Prestwick Capital Mgmt. Ltd., 2011 WL 3796740, at . 18 No. 12-1232 tion of the 2004 Guarantee Agreement would render PFG liable for Acuvest’s obligations concerning any account opened with PFG “during the term of” that agreement—no matter when any subsequent wrongdoing related to such account occurred. Second, Prestwick accuses the district court of misinterpreting and rewriting the 2006 IIB Agreement when the court concluded that this document, not the 2004 Guarantee Agreement, governed the PFG account containing Prestwick’s funds. According to Prestwick, the parties did not intend the 2006 IIB Agreement to end PFG’s guarantee of Acuvest’s obligations for accounts predating its execution. Third, Prestwick argues that the district court’s ruling contravenes significant consumer protection policies underlying the CFTC’s regulatory scheme for guaranteed IBs. We respectfully disagree with Prestwick as to all arguments it has advanced on this issue. Like various other species of contracts, guarantee agreements and IB agreements often reflect the parties’ bargained-for preferences, such as the law to be applied in resolving any ensuing disputes. We regularly honor reasonable choice of law provisions in contract lawsuits; in fact, “it is the exceptional circumstance that a federal court, or any court[,] for that matter, will not honor a choice of law stipulation.” AutoOwners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) (quoting Mass. Bay Ins. Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116, 1120 (7th Cir. 1998)). Here, seeing no reason to override the choice of law terms in the relevant agreements, we accede to the parties’ wishes and apply Illinois law to the facts. Illinois No. 12-1232 19 requires that “meaning and effect . . . be given to every part of [a] contract including all its terms and provisions, so no part is rendered meaningless . . . unless absolutely necessary.” INEOS Polymers Inc. v. BASF Catalysts, 553 F.3d 491, 500 (7th Cir. 2009) (quoting Coles-Moultrie Elec. Coop. v. City of Sullivan, 709 N.E.2d 249, 253 (Ill. App. Ct. 1999)). Undefined contractual terms are typically afforded their plain and ordinary meanings “[u]nless the agreement unequivocally specifies” nuanced connotations, Frederick v. Prof’l Truck Driver Training Sch., Inc., 765 N.E.2d 1143, 1152 (Ill. App. Ct. 2002), and words of art or technical terms are assigned their industrial meanings within the commercial context of the agreement, ArcherDaniels Midland Co. v. Ill. Commerce Comm’n, 704 N.E.2d 387, 392 (Ill. 1998) (noting that Illinois follows the approach described in R ESTATEMENT (SECOND) OF C ONTRACTS § 202(3)(b)). These rules of construction emanate logically from the notion that contracts do not exist in a vacuum. See id. Notwithstanding the foregoing, we have previously cautioned that contract interpretation does not turn on “pure[] semantic[s].” Tice v. Am. Airlines, Inc., 288 F.3d 313, 316 (7th Cir. 2002). On the contrary, we generally presume that a contract’s significance must, to a certain extent, be attributed to the parties’ intent to bargain for “something sensible.” Id. (citing R.I. Charities Trust v. Engelhard Corp., 267 F.3d 3, 7 (1st Cir. 2001)). It is therefore incumbent upon a reviewing court to understand the practical context of the operative contractual language as well. Beanstalk Grp., Inc. v. AM Gen. Corp., 283 F.3d 856, 860 (7th Cir. 2002). Both Prestwick and PFG have implicitly 20 No. 12-1232 conceded as much by advancing policy-based argu- ments, which we address infra. First, however, we turn to the practical aspects of terminating a guarantee agreement consistent with the CEA and its attendant rules and regulations. The CFTC explicitly addressed the contours of termination in its final rule on “Registration and Other Regulatory Requirements” for IBs, dated August 3, 1983, as follows: If [a] guarantee agreement does not expire or is not terminated in accordance with the provisions of § 1.10(j) . . . , it shall remain in effect indefinitely. The [CFTC] wishes to make clear that the termination of a guarantee agreement by an FCM or by an intro- ducing broker, or the expiration of such an agree- ment, does not relieve any party from any liability or obligation arising from acts or omissions which occurred during the term of the agreement. 48 Fed. Reg. 35,248, 35,265 (citation omitted). This rule corresponds to Title 17, Section 1.10(j) of the Code of Federal Regulations, which provides the protocol for ending a guaranteed IB relationship. Termination of a guarantee agreement may take place at any time during its effective term through one of three procedures: (i) [b]y mutual written consent of the parties, signed by an appropriate person on behalf of each party, with prompt written notice thereof, signed by an appropriate person on behalf of each party, to the Commission and to the designated self-regulatory organizations of the [FCM] or retail foreign exchange dealer and the [IB]; No. 12-1232 21 (ii) [f]or good cause shown, by either party giving written notice of its intention to terminate the agreement, signed by an appropriate person, to the other party to the agreement, to the Commission, and to the designated self-regulatory organizations of the [FCM] or retail foreign exchange dealer and the [IB]; or (iii) [b]y either party giving written notice of its intention to terminate the agreement, signed by an appropriate person, at least 30 days prior to the proposed termination date, to the other party to the agreement, to the Commission, and to the designated self-regulatory organizations of the [FCM] or retail foreign exchange dealer and the [IB]. 17 C.F.R. § 1.10(j)(6). At the summary judgment stage, the district court firmly rejected Prestwick’s contention that the 2004 Guarantee Agreement was never terminated. In point of fact, the court concluded that the signpost of termination was the execution of the 2006 IIB Agreement by Acuvest and PFG. The court was not persuaded by Prestwick’s argument that the 2006 IIB Agreement related only to customer accounts opened after August 24, 2006 and opined, as we do today, that Prestwick’s logic “simply does not follow.” Prestwick Capital Mgmt. Ltd., 2011 WL 3796740, at . As a matter of law, the district court ruled: [T]he fact that the 2006 agreement covered new ac- counts does not mean that the 2004 agreement was not terminated. On the contrary, the 2006 agreement unequivocally states: “[t]his Agreement supersedes and replaces any and all previous agreements 22 No. 12-1232 between IB [Acuvest] and PFG.” It is difficult to imagine a clearer way in which the parties could have terminated the 2004 agreement. Id. We thoroughly endorse this line of reasoning as well as this conclusion. It is clear that the district court determined, as a matter of law, that PFG and Acuvest terminated the 2004 Guarantee Agreement by the method set forth in 17 C.F.R. § 1.10(j)(6)(i). Mutual written consent of the parties was manifest by the very existence of the 2006 IIB Agreement, which was signed by appropriate representatives from both PFG (Neil Aslin, PFG President) and Acuvest (Caiazzo). Finally, as required by 17 C.F.R. § 1.10(j)(6)(i), the letter and documents provided by Ms. O’Meara (from PFG) and signed by Caiazzo indicate prompt written notice of termination to the NFA (“the designated self-regulatory organization[] of the [FCM]”). Our view that the district court properly heeded the plain language of the 2004 Guarantee Agreement is bolstered by record evidence confirming that the contract was effectively terminated on August 24, 2006, i.e., an authenticated screenshot of information from the NFA’s “External Tracking” electronic database.9 The NFA maintains data repositories like these to log start and end dates of guarantee agreements for registered IBs. This undertaking is critical because “[a]n introducing broker 9 Docket No. 147-1 (trial record); see also Docket No. 146 ¶¶ 1920 (citing declaration of Thomas Sexton, NFA Senior Vice President). No. 12-1232 23 may not simultaneously be a party to more than one guarantee agreement.” 17 C.F.R. § 1.10(j)(8). For PFG, the pertinent data entries are: NFA ID Guarantor Name Start Date End Date