Case: 1:12-cv-04033 Document #: 1 Filed: 05/23/12 Page 1 of 7 PageID #:1

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION TRANSCEND INVESTMENTS LLC, an Illinois limited liability company, ) ) ) Plaintiff, ) ) vs. ) ) STUART SIMONSEN, ) ) Defendant. ) ___________________________________ )

JURY TRIAL DEMANDED

Plaintiff, Transcend Investments LLC, by counsel, Katten & Temple, LLP, and for its causes of action against Defendant, Stuart Simonsen, hereby alleges as follows: Parties, Jurisdiction and Venue 1. Plaintiff, Transcend Investments LLC (“Transcend”), is an Illinois limited

liability company with its principal place of business located in Chicago, Illinois. All of the members of Transcend are Illinois residents. 2. Defendant, Stuart Simonsen (“Simonsen”), is an individual who resides at

865 Paintbrush Place, Billings, Montana 59106. 3. This Court has personal jurisdiction over Simonsen pursuant to a certain

License Agreement, attached hereto as Exhibit A and made a part hereof, in which Simonsen consented to the jurisdiction of this Court. Exhibit A, Article 9.3. In addition, this Court has personal jurisdiction over Simonsen because at all times relevant Simonsen has transacted continuous and systematic business in this jurisdiction.

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4.

This Court has subject matter jurisdiction over this matter pursuant to 28

U.S.C. § 1332(a) because the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states. 5. Venue is proper in the Northern District of Illinois pursuant to 28 U.S.C. §

1391 because a substantial part of the events or omissions giving rise to the claim occurred in this District. In addition, Simonsen has consented to venue in this District. Exhibit A, ¶ Article 9.3. Allegations Common to all Counts 6. On or about August 1, 2009, Transcend entered into a certain License

Agreement with Simonsen, a true and accurate copy of which is attached hereto as Exhibit A (the “Agreement”). 7. In or about 2009, Transcend funded an account through which Simonsen

was authorized to utilize the software referenced in the Licensing Agreement to trade futures (the “Account”). So that Simonsen could gain the requisite authority to trade in the Account, the principals of Transcend executed a certain Power of Attorney, which Simonsen also executed (the “POA”). 8. Pursuant to Article 3 of the Agreement, Transcend was to pay Simonsen a

monthly fee equal to 50% of the net profits earned by Transcend each month from Simonsen’s trading through the licensed software (the “Monthly Fee”). 9. At the end of each calendar year the parties were to “true-up” and

recalculate any and all licensing fee payments based on the total net profits attributable to the net trading profits in the Account for the entire calendar year. To the extent

Transcend had paid a license fee in excess of that which Simonsen was entitled for the

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year, Transcend had a right to “clawback” the excess payments and Simonsen was obligated to pay Transcend the overage. Exhibit A, Article 3.1. 10. In 2009 and 2010, Transcend fulfilled its obligations and made Monthly

Fee payments to Simonsen. 11. At the end of the calendar year for 2009, the parties performed a true-up

analysis that indicated that Simonsen had received $488,770 in Monthly Fees more than he was entitled to based on the trading profits for the entire calendar year. 12. Accordingly, pursuant to Article 3.1 of the Agreement, Simonsen is

required to pay Transcend $488,770, i.e. the difference between what Simonsen received as Monthly Fees and the actual trading profits for calendar year 2009 (the “2009 Adjustment”). 13. In addition, in or about 2010 Simonsen exercised control over the Account

under the POA and executed various trades on futures. In the course of this activity, Simonsen caused a loss in the Account totaling $244,000 due to his failure to utilize a 13point “stop” on his trading positions. This failure to utilize a 13-point stop was contrary to the numerous representations that Simonsen had made to Transcend and its principals that a 13-point stop was always in place concerning his trading on the Account. 14. Following the May 2010 loss of $244,000, Simonsen admitted to

Transcend that his failure to utilize the 13-point stop caused the loss and that he was responsible for the total loss amount. Simonsen and Transcend agreed that Simonsen would pay Transcend 50% of that amount, or $122,000 (the “Stop Loss”). 15. Transcend has demanded payment of both the 2009 Adjustment and the

Stop Loss from Simonsen, totaling $610,770.

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16.

Simonsen has failed to pay to Transcend the 2009 Adjustment and/or the

Stop Loss, or any portion thereof, despite repeatedly acknowledging that he owes these sums to Transcend. Simonsen’s repeated acknowledgment that he owes these sums, coupled with his refusal and/or failure to pay the same upon demand, constitutes an unreasonable and vexatious delay of payment. Count I – Breach of Contract 17. Transcend hereby incorporates by reference the allegations in paragraphs

1-16 as if fully restated herein. 18. Pursuant to the Agreement, Simonsen is contractually obligated to pay

Transcend the difference between the Monthly Fees he received during each calendar year as compared with the total net trading profits realized for that calendar year. 19. For calendar year 2009, Simonsen received $488,770 in Monthly Fees

more than he was entitled to based on the trading profits for the entire calendar year. 20. $488,770. 21. Simonsen has never contested Transcend’s calculation of the annual net Pursuant to the Agreement, Simonsen is required to pay Transcend

trading profits for 2009, the total Monthly Fees that Transcend paid to him, or otherwise disputed that he owes the 2009 Adjustment. 22. Despite repeated demands for payment, Simonsen has refused to pay the

2009 Adjustment to Transcend. 23. Transcend fully performed its obligations under the Agreement, including

but not limited to paying Simonsen Monthly Fees under Article 3 of the Agreement.

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24.

Simonsen’s refusal to pay the 2009 Adjustment to Transcend is a material

breach of the Agreement. 25. Transcend is entitled to payment of its reasonable attorneys’ fees and costs

incurred in collecting the amounts due from Simonsen. Exhibit A, Article 9.2. WHEREFORE, the plaintiff, Transcend Investments LLC, hereby prays for judgment against the defendant, Stuart Simonsen, granting plaintiff: (i) an award of damages to be proved at trial based on the amounts due and owing under the Agreement through and including the date of trial of this matter; (ii) costs of this action and Plaintiff’s reasonable attorneys’ fees; (iii) prejudgment interest pursuant to 815 ILCS 205/2; and (iv) such further relief as Plaintiff may be entitled to under the law and that this Court deems just and/or appropriate in the premises. Count II – Unjust Enrichment (Pled in the Alternative to Count I) 26. Transcend hereby incorporates by reference the allegations in paragraphs

1-16 as though fully restated herein. 27. Transcend has paid in excess of $488,000 to Simonsen based on the

Monthly Fees, even though Transcend actually lost money on an annual basis as a result of Simonsen’s conduct. 28. At the time Simonsen accepted the Monthly Fees, he knew that his right to

those funds was subject to a clawback based on the net annual profits realized in the Account. In other words, Simonsen knew that his title to those funds was not absolute and was subject to a reversion to Transcend at the end of each year.

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29.

Simonsen has been unjustly enriched because he has no right to the

monies he has received, has acknowledged that he owes Transcend said funds, but has refused to return the same, despite repeated requests. 30. It is unjust, inequitable and against good conscience for Simonsen to

accept and retain the benefit of Transcend’s funds despite having no right to the same, and despite admitting that he owes the funds to Transcend. WHEREFORE, the plaintiff, Transcend Investments LLC, hereby prays for judgment against the defendant, Stuart Simonsen, granting plaintiff: (i) an award of damages to be proved at trial; (ii) costs of this action; (iii) prejudgment interest pursuant to 815 ILCS 205/2; and (iv) such further relief as Plaintiff may be entitled to under the law and that this Court deems just and/or appropriate in the premises. Count III – Breach of Fiduciary Duty 31. Transcend hereby incorporates by reference the allegations in paragraphs

1-16 as though fully restated herein. 32. Transcend reposed trust and confidence in Simonsen such that it agreed to

provide him with the unrestricted ability to execute trades and take other positions with funds from the Account. 33. At all times relevant, Simonsen owed Transcend a fiduciary duty to act in

good faith and with the utmost loyalty, candor and fidelity by virtue of the POA permitting Simonsen to execute trades in the Account. 34. On numerous occasions, Simonsen represented to Transcend’s principals

that he had placed a 13-point “stop” on the Account such that his trading losses would be minimized in the event of market fluctuations. Based in part on this representation,

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Transcend agreed to provide Simonsen with the POA and otherwise permitted him total control over the Account and its trading positions. 35. Simonsen breached his duty to Transcend by, inter alia, failing to place a

stop loss on the Account despite representing to the contrary, such that his trading activity caused a $244,000 loss in or about May, 2010. 36. Had Simonsen actually placed a 13-point stop loss on the Account the

May 2010 Stop Loss would not have occurred. 37. Simonsen knew or should have known when he represented to

Transcend’s principals that a stop loss was in place that this was a materially false statement in that no stop loss was in fact in place, and Transcend in fact had unlimited risk of loss in the Account. WHEREFORE, the plaintiff, Transcend Investments LLC, hereby prays for judgment against the defendant, Stuart Simonsen, granting plaintiff: (i) an award of damages to be proved at trial; (ii) costs of this action; (iii) prejudgment interest pursuant to 815 ILCS 205/2; and (iv) such further relief as Plaintiff may be entitled to under the law and that this Court deems just and/or appropriate in the premises. Respectfully submitted, TRANSCEND INVESTMENTS LLC By:/s/ Joshua R. Diller One of its Attorneys Nancy A. Temple Joshua R. Diller Katten & Temple LLP 542 S. Dearborn, #1060 Chicago, IL 60605 312-663-0800 312-663-0900 (fax)

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