Ahmed D. Hussein, Appellant,
UBS Bank USA, Appellee.
District Court, Salt Lake Department The Honorable Robert P.
Faust No. 150907967
Matthew R. Lewis, Stephen E. Morrissey, Kemper P. Diehl, and
Bryan J.E. Caforio, Attorneys for Appellant
Stephen P. Horvat, David L. Goldberg, Zachary Denver,
Christian T. Kemnitz, and David Luger, Attorneys for Appellee
Gregory K. Orme authored this Opinion, in which Judges
Michele M. Christiansen Forster and David N. Mortensen
Ahmed D. Hussein appeals the district court's grant of
summary judgment in favor of UBS Bank USA. We affirm and
remand for the determination of attorney fees reasonably
incurred by UBS Bank on appeal.
Hussein is an investor who worked as a broker for major
brokerage firms in the United States for 15 years before
moving to Egypt in 1996 to pursue his own investment
opportunities. Until July 2012, he was a director and the
second-largest shareholder of Quality Systems, Inc. (QSI),
owning 15.7% of the company-an interest "worth hundreds
of millions of dollars."
In 2009, Hussein developed a relationship with a financial
advisor (Financial Advisor) from UBS Financial Services, Inc.
(UBS-FS), a brokerage firm and UBS subsidiary. To maintain a
relationship with Financial Advisor and receive financial and
investment services from UBS-FS, Hussein signed a Client
Relationship Agreement (CRA), which governed his relationship
with UBS-FS in connection with anticipated margin
loansbetween Hussein and UBS Bank.
In 2009 and 2010, UBS Bank extended two margin loans to
Hussein totaling $35.5 million. Hussein secured the loans
with 1.3 million shares of QSI stock, then valued at $77
million, and $5 million in diversified assets, but he also
pledged his other UBS-FS accounts as
collateral. Without the assistance of legal counsel,
Hussein negotiated the terms of the loans and reviewed the
loan documentation (the Loan Agreements), which granted UBS
Bank the rights to call in the loans at any time and, upon
the occurrence of certain events, to liquidate Hussein's
In particular, UBS Bank could "demand full or partial
payment of the credit line obligations, at its sole option
and discretion without cause, at any time." And if UBS
Bank "otherwise deems itself or its security interest in
the Collateral insecure, . . . then the Credit Line
Obligations will become immediately due and payable (without
demand) and the Bank may, in its sole and absolute
discretion, liquidate, withdraw or sell all or any part of
the Collateral." If the collateral "decline[s]
speedily in value" or "customarily is sold on a
recognized exchange or market," then UBS Bank had the
right to sell the collateral and to do so without "prior
notice" to Hussein.
The Loan Agreements also disclosed that UBS Bank and its
affiliates were creditors whose "interests may be
inconsistent with, and potentially adverse to,
[Hussein's] interests." Furthermore, UBS-FS would
"comply with entitlement orders originated by [UBS]
Bank" without consent from Hussein, and if UBS Bank
asserted control over the collateral, UBS-FS would have to
comply with UBS Bank's entitlement orders even if in
conflict with Hussein's instructions.
Separately, UBS Bank and UBS-FS had an agreement (the
Servicing Agreement) whereby UBS Bank would offer margin
loans to UBS-FS's clients "to be collateralized by
[UBS-FS] securities accounts and the securities, financial
assets and other investment property . . . in which a
security interest has been granted to the Bank by the
Borrower." UBS Bank would then have "ultimate
control over all entitlement orders and other instructions .
. . made with respect to the Accounts," and UBS-FS would
have to "comply with all instructions given by [UBS]
Bank without further consent by any Borrower or
After issuing the loans, UBS Bank sent a letter to Hussein,
stating that Financial Advisor could answer any questions
about his credit line. And until 2012, Hussein's only
interactions regarding the loans were with UBS-FS
employees-not UBS Bank itself.
Meanwhile, Hussein also opened two Portfolio Management
Program accounts (the PMP Accounts) with UBS-FS that held
$8.7 million in assets. Financial Advisor also suggested a
Prepaid Variable Forward (PVF), a financial product aimed at
helping Hussein obtain liquidity from his substantial stock
holdings in QSI and as an eventual replacement for the loans.
Discussions on the PVF proposal continued between Hussein and
UBS-FS employees until July 25, 2012, but a PVF was never
By July 2012, QSI's stock price had substantially
declined, eroding the value of Hussein's collateral for
the loans. On Saturday, July 21, 2012, Financial Advisor
informed Hussein that "[u]nfortunately, with the stock
closing at $23.41 we are looking at a [margin] call on
Monday" and that Hussein needed to deliver $600, 000 in
cash or additional collateral in order to prevent such
action. He also informed Hussein that selling from the PMP
Accounts "would not give us much coverage" and that
UBS Bank was "insisting we first sell [the QSI] shares
(about 25, 000 shares), or bring in cash or additional
Collateral that is not [QSI shares]."
Hussein told Financial Advisor that he did not want UBS-FS to
sell the QSI shares because of an ongoing proxy
contest and that he needed time to acquire cash to
cover the margin call. He directed Financial Advisor to sell
from the PMP Accounts before selling the QSI shares.
For a period of five days, UBS Bank and UBS-FS did not touch
the QSI shares, yet Hussein did not provide any cash or
additional collateral to cover the equity shortfall in the
account. On July 26, 2012, QSI stock continued to decline,
reducing the value of the collateral by $23 million. UBS Bank
started liquidating Hussein's QSI shares. After five
days, UBS Bank had sold approximately 2, 276, 756
Hussein lost the proxy fight and a substantial percentage of
his QSI shares. He eventually filed suit against UBS Bank in
an effort to recover his losses.
District Court's Decision
Hussein asserted six causes of action against UBS Bank in the
course of alleging that UBS Bank fraudulently induced him to
enter into the loans, breached its contractual duties when it
liquidated his QSI shares, and violated fiduciary duties it
owed to him.
Following discovery, and relying in large part on the
governing documents, UBS Bank moved for summary judgment,
arguing that it "acted within the scope of its
contractual rights when it liquidated certain collateral that
secured $35.5 million in loans that Hussein had received from
UBS Bank, and did not breach any financial duties in that
regard." Hussein responded by arguing that UBS-FS gave
him "bad investment advice" as UBS Bank's agent
and that UBS Bank wrongfully liquidated his QSI shares.
The district court granted UBS Bank's motion, concluding
that there were no genuine issues of material fact because
UBS-FS did not render financial advice to Hussein as UBS
Bank's agent. It also concluded that UBS Bank "acted
pursuant to its clear and indisputable rights under the Loan
'liquidate any part of the Collateral' without notice
to Hussein." Because the Loan Agreements contained an
expansive indemnification provision, the district court
awarded UBS Bank its costs and attorney fees.
AND STANDARDS OF REVIEW
Hussein raises two issues on appeal. First, he contends that the
district court improperly granted UBS Bank's motion for
summary judgment because there were genuine disputes of
material fact concerning each of his claims against UBS Bank.
Summary judgment is proper when "the moving party shows
that there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of
law." Utah R. Civ. P. 56(a). We review a district
court's decision to grant or deny summary judgment for
correctness, "view[ing] the facts and all reasonable