Coquina Investments v. TD Bank, N.A.
2014 U.S. App. LEXIS 14388
| 11th Cir. | 2014Background
- Rothstein ran a billion-dollar Ponzi scheme; Coquina invested about $37.7 million and lost around $6.7 million plus interest.
- Coquina claimed TD Bank aided the scheme via misrepresentations and other actions; a jury ruled in Coquina’s favor on aiding-and-abetting and misrepresentation theories.
- Settlement with the Trustee (RRA estate) required Coquina to pay $12.5 million upfront and potentially up to $18.6 million, with the Trustee releasing claims; Coquina sought damages equal to the settlement payments in this suit.
- The district court imposed discovery sanctions: two facts (unreasonable monitoring/alerts and actual knowledge of fraud) were deemed established; Coquina recovered attorney’s fees related to sanctions.
- At trial, issues included Spinosa’s Fifth Amendment invocation and potential adverse inference, the admissibility and effect of the settlement recital, damages for the settlement payments, sanctions, and Coquina’s attempt to amend its RICO claim; the Eleventh Circuit affirmed on all grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue | Coquina possesses standing as a distinct entity with its own injury. | TD Bank contends Coquina lacks injury-in-fact as a passive conduit. | Coquina has constitutional standing. |
| Admissibility of Spinosa’s Fifth Amendment invocation and adverse inferences | Spinosa’s invocation supports adverse inferences about TD Bank’s knowledge. | Adverse inferences from a nonparty’s silence may be limited and should be case-specific. | District court did not abuse discretion; adverse inferences were trustworthy under LiButti factors. |
| Settlement recital as evidence | Recital shows Coquina’s lack of knowledge and is admissible to rebut TD Bank’s “too good to be true” defense. | Recital is inadmissible hearsay and prejudicial. | Admissible but harmless error; did not warrant a new trial. |
| Damages for settlement payment to Trustee | Settlement amount paid to Trustee is recoverable as a loss caused by TD Bank’s misconduct and reasonable in amount. | Recovery for settlement payments is improper or speculative. | Damages proper; potential future reduction addressed via pending Rule 60(b) motion for possible partial reduction. |
| Amendment of RICO claim (continuity/open-ended pattern) | Open-ended continuity or at least proper closed-ended pattern could be pled. | Open-ended theory not pled timely; closed-ended duration is insufficient. | District court did not abuse discretion in denying amendment; Coquina failed to show good cause. |
Key Cases Cited
- LiButti v. United States, 107 F.3d 110 (2d Cir. 1997) (adverse inferences from nonparty Fifth Amendment invocations, flexible factors)
- Baxter v. Palmigiano, 425 U.S. 308 (Supreme Court 1976) (civil adverse inferences from silence permitted under certain conditions)
- Jackson v. BellSouth Telecommunications, 372 F.3d 1250 (11th Cir. 2004) (continuity in RICO context; relevant period for predicate acts)
- GAB Business Services, Inc. v. Syndicate 627, 809 F.2d 755 (11th Cir. 1987) (settlement recoverability; reasonableness and amount tied to potential liability)