Futures Account Agreement Does Not Encompass Claims Relating to Separate Agreement

Crotser vs. Smith Barney & Co., Inc., NO 228226 (Mich. App., 4/30/02)

Appealability * Scope of Agreement * Arbitration Agreement * Competing Agreements.

A futures account agreement does not encompass claims relating to separate consulting services provided by the FCM.

Plaintiff entered into an agreement with a predecessor firm (Hutton) of Smith Barney, under which he was provided with advice concerning the sale of his corn crop. There was no arbitration clause in that agreement. When he sued Smith Barney, based upon the consultation advice and some futures losses, Smith Barney asserted plaintiff’s futures account agreement and sought arbitration. This agreement was signed by Plaintiff when he opened a commodities futures trading account with Smith Barney and called for arbitration of “any controversy” that might arise between the parties. Specifically mentioned were “transactions or accounts maintained” with predecessor firms. The trial court granted arbitration of all claims, but this Court reverses. “[T]here is strong evidence indicating that the arbitration agreement referred solely to exchange-related disputes, and the terms ‘transactions’ and ‘accounts’ clearly referenced plaintiff’s commodities trading account or any other trading accounts…. Plaintiff’s claims relating to [his corn crop] were not associated with any exchange-related trading accounts.” (SLC Ref. No. 02-18-03)

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Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.

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