American Bank of St. Paul v. TD Bank, N.A., 713 F.3d 455

Background

Mercantile Bank lent Pearlman additional funds while Pearlman was committing a large fraud, with prior loans outstanding to Pearlman around $10 million and later about $14 million in total.
American Bank of St. Paul and 25 other banks financed Pearlman, with funds partially repaying Mercantile’s old debt to Pearlman.
A forbearance agreement was entered after Mercantile and Pearlman discussed the situation, amid concerns about Pearlman’s assets and the TCA ‘house of cards.’
NACM arranged a new financing facility to pay off existing debt, and Mercantile participated for $1.89 million, later recovered from the new facility.
Pearlman pled guilty to multiple bank frauds and Ponzi schemes; he admitted that TCA and Cohen & Siegel were fabricated.
American sued Mercantile on six theories; the district court granted summary judgment on four theories but trial proceeded on aiding and abetting and conspiracy.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was judgment as a matter of law proper for aiding and abetting?	American contends Mercantile provided substantial assistance.	Mercantile argues participation was mere forbearance and not substantial assistance.	No error; jury question on substantial assistance supported by evidence.
Was judgment as a matter of law proper for conspiracy?	There was a meeting of the minds evidenced by participation, testimony, and conduct.	No sufficient meeting of the minds; one-on-one conversation insufficient.	Sufficient evidence to support conspiracy; jury question not ruled as a matter of law.
Did the district court abuse its discretion by excluding other banks’ reactions?	Reactions of other banks were probative of reasonableness of Mercantile’s conduct.	Reactions were irrelevant to Mercantile’s knowledge and actions, risked confusion.	Exclusion did not abuse discretion; evidence would confuse issues.
Were the aiding and abetting jury instructions and related errors reversible?	Actual knowledge instruction was flawed; proposed routine-services instruction was appropriate.	Instruction on actual knowledge was correct; proposed instruction would confuse.	No reversible error; instructions taken as a whole fairly represented law and evidence.
May the district court increase damages via additur despite the jury verdict?	Additur appropriate to award full loss; damages were not disputed.	Damage amount was a jury issue; additur would violate Seventh Amendment rights.	Additur not appropriate; damages left to jury; judgment affirmed with proper prejudgment interest.

Key Cases Cited

Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) (three elements of aiding and abetting; substantial-assistance required)
In re Sharp Int’l Corp., 403 F.3d 43 (2d Cir. 2005) (consent vs. substantial assistance; forbearance not sufficient)
United States v. Bowie, 618 F.3d 802 (8th Cir. 2010) (courts may use circumstantial evidence to prove conspiracy)
McPheeters v. Black & Veatch Corp., 427 F.3d 1095 (8th Cir. 2005) (harmless-error standard for evidentiary rulings affecting verdict)
Dimick v. Schiedt, 293 U.S. 474 (1935) (citation on additur and jury trial rights)
Milprint, Inc. v. Donaldson Chocolate Co., 222 F.2d 898 (8th Cir. 1955) (jury’s damages determination and additur limitations)