Burton W. Wiand v. Wells Fargo Bank N.A., Inc.
677 F. App'x 573
| 11th Cir. | 2017Background
- Arthur Nadel ran a Ponzi scheme (1999–2009) through six hedge funds and stole millions; he pled guilty to multiple fraud counts.
- Burton Wiand was appointed receiver for the hedge funds and sued Wells Fargo and former employee Timothy Best on behalf of the funds, alleging Wells Fargo had notice of Nadel’s diversion of funds.
- Nadel opened multiple Wells Fargo accounts, including unauthorized d/b/a accounts for certain funds; Wells Fargo also had separate investments and made loans to Nadel and his entities.
- Defendants removed the state-court action to federal court, invoking federal-question jurisdiction under 28 U.S.C. § 1348 and asserting fraudulent joinder of Best; Best was later dismissed.
- The district court granted summary judgment for Wells Fargo on negligence, Florida Uniform Fraudulent Transfers Act (FUFTA), and unjust enrichment claims; Receiver appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal-question jurisdiction under 28 U.S.C. § 1348 | Receiver contends federal jurisdiction does not exist | Wells Fargo argued § 1348 supports jurisdiction for securities-related claims | District court found § 1348 provided jurisdiction; appellate court noted diversity existed at time of judgment and affirmed judgment (jurisdiction not deficient) |
| Diversity / fraudulent joinder effect on jurisdiction | Receiver argued lack of subject-matter jurisdiction due to Best’s citizenship | Defendants argued Best was fraudulently joined and diversity existed once Best was dismissed | Appellate court held that because Best was dismissed before entry of judgment, complete diversity existed and jurisdiction was proper (Caterpillar governs) |
| Negligence duty owed by bank to funds/non-customers | Receiver argued Wells Fargo had a duty to the hedge funds and customers given its knowledge/relationship | Wells Fargo argued no cognizable duty to funds/non-customers based on record | Court found no actionable duty and granted summary judgment for Wells Fargo on negligence claims |
| FUFTA liability / initial transferee and mere-conduit defense | Receiver argued Wells Fargo was an initial transferee or otherwise liable under FUFTA | Wells Fargo argued it was not an initial transferee and alternatively was entitled to mere-conduit defense | Court held Wells Fargo was not liable as an initial transferee and was entitled to defense; summary judgment affirmed |
Key Cases Cited
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (jurisdictional defect cured if diversity exists before entry of judgment)