Anwar v. FAIRFIELD GREENWICH LTD.
826 F. Supp. 2d 578
S.D.N.Y.2011Background
- Three Delaware/MDL cases against SCBI concern investments in Fairfield Sentry tied to the Madoff scheme; MDL consolidation governs the proceedings.
- Plaintiffs Almiron and Carrillo (Mexico) invested after SCBI recommended Fairfield Sentry via accounts at AEBI (later acquired by SCBI); Lou (Panama) alleges a separate, authorization-based claim of investment in 2005.
- Almiron and Carrillo assert statutory (Florida §517.301) and common-law claims (fiduciary duty, negligence, negligent misrepresentation, unjust enrichment) against SCBI; Lou asserts breach of fiduciary duty and gross negligence claims.
- SCBI and affiliates move to dismiss under Rule 12(b)(6) and Rule 9(b); the Court previously issued the SCBI-Anwar Order in 2010.
- The Court dismisses most §517.301, negligent misrepresentation, and related claims for lack of Rule 9(b) particularity; defeats §517.211 privity for plaintiffs; permits breach of fiduciary duty for due-diligence failure to proceed only for Almiron and Carrillo after leave to replead is granted; Lou’s claims are dismissed; leave to replead is allowed with limits.
- Outcome: partial dismissal with leave to replead for certain claims; case proceeds only on the due-diligence breach claim against SCBI by Almiron and Carrillo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §517.301 claims are sufficiently pled under Rule 9(b) | Almiron & Carrillo claim misrepresentations/omissions; pleaded generally | Lacked particularity; failed to identify statements and context | §517.301 claims dismissed for lack of Rule 9(b) specificity |
| Whether §517.211 liability applies to SCBI | SCBI as broker/agent liable for purchaser/seller privity | No buyer/seller privity; SCBI not shown as seller or agent | §517.211 claims dismissed for lack of privity |
| Whether negligent misrepresentation survives | Claims rely on §517.301 fraud theory | Same pleading defects as §517.301; Rule 9(b) applies | Negligent misrepresentation claims dismissed under Rule 9(b) |
| Whether breach of fiduciary duty claims survive, including duty to due diligence and monitor | SCBI breached duties before and after recommending Fairfield Sentry | Duties limited for nondiscretionary accounts; no ongoing monitoring duty | Due-diligence breach claims survive for Almiron and Carrillo; monitoring-based claims for nondiscretionary accounts are dismissed; Lou’s claims dismissed |
| Whether Florida economic loss rule bars negligence | Negligence not barred by contract | Rule limits apply; professional services exception not applicable | Economic loss rule precludes Almiron and Carrillo’s negligence claims |
Key Cases Cited
- Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004) (Rule 9(b) particularity required for fraud-based claims)
- Anwar v. Fairfield Greenwich Ltd., 745 F. Supp. 2d 360 (S.D.N.Y. 2010) (SCBI-Anwar Order; prior related rulings on fiduciary duties and due diligence)
- E.F. Hutton & Co., Inc. v. Rousseff, 537 So. 2d 978 (Fla. 1989) (statutory misrepresentation/§517.301 private action limits; requirements for liability)
- Ward v. Atlantic Sec. Bank, 777 So. 2d 1144 (Fla. Dist. Ct. App. 2001) (duty owed to nondiscretionary account holders; due diligence duty when recommending investments)
- Indem. Ins. Co. v. Am. Aviation, Inc., 891 So. 2d 532 (Fla. 2004) (economic loss rule limitations; professional services exception discussed)
- Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999) (professional services exception; securities broker not a 'professional' under rule)