Go-Best Assets Ltd. v. Citizens Bank, 463 Mass. 50

Go-Best wired $5 million to Goldings’ Cit izens Bank client account in July 2000 based on Goldings’ representations.
Goldings admitted the representations were false and that funds were used to pay other debts.
Go-Best alleged misrepresentation, conversion, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, aiding and abetting conversion, and negligence.
Lower courts: trial court dismissed; Appeals Court reversed in part on negligence and aiding and abetting claims; grant of summary judgment for Citizens Bank.
Key issue: whether Citizens Bank may be liable where it had no knowledge of the fraud and did not notify the board of dishonored checks more than six months before Go-Best wired funds.
Court held the bank could not be liable in tort; liability arose only if the bank had actual knowledge or under a contractual duty to notify the Board of Bar Overseers for trust accounts.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty of care for banks in fiduciary account context	Go-Best asserts a duty based on misappropriation risk and board notification agreement.	Bank owed no duty absent actual knowledge of misappropriation; contractual duty to notify board does not create tort duty.	No tort duty absent actual knowledge; negligence claims fail.
Knowledge requirement for duty to prevent misappropriation	Evidence of dishonored checks and negative balances suggests bank knew or should have known.	No evidence bank had actual knowledge of intended misappropriation of Go-Best funds.	No actual knowledge; no duty to prevent misappropriation.
Whether the client account was a trust account with board notification duties	Account should be treated as trust account under Rule 1.15 with notification duties to board.	Record shows genuine issues about whether the account was a trust account and whether bank knew it.	Issue of fact; but on summary judgment record, no tort-based duty established.
Contractual duty to notify board as basis for tort liability	Bank’s contract to notify the board should create a duty of care to beneficiaries.	Contractual duty to board is not a tort duty to Go-Best; public policy and confidentiality limit private rights.	Contractual duty did not give rise to tort liability; no private right of action.

Go-Best Assets Ltd. v. Citizens Bank, 79 Mass. App. Ct. 473 (Mass. App. Ct. 2011) (affirmed dismissal of negligence and aiding/abetting claims)
Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (bank liable where it knew of misappropriation and concealed overdrafts)
Boston Note Brokerage Co. v. Pilgrim Trust Co., 318 Mass. 224 (Mass. 1945) (bank liable only when privy to misappropriation; no general liability for fiduciary embezzlement)
Kendall v. Fidelity Trust Co., 230 Mass. 238 (1918) (no liability without knowledge of misappropriation)
Schlichte v. Granite Sav. Bank, 40 Mass. App. Ct. 179 (Mass. App. Ct. 1996) (bank’s liability turns on actual knowledge of misappropriation)
Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365 (Mass. 1997) (distinguishes contract-based obligations from tort duties)
Juliano v. Simpson, 461 Mass. 527 (Mass. 2012) (summary judgment standard and approach to contract/ tort interaction)
Gossels v. Fleet Nat’l Bank, 453 Mass. 366 (Mass. 2009) (statutory Article 4A context; discharge of duties under UCC)
Spinner v. Nutt, 417 Mass. 549 (Mass. 1994) (intended beneficiary analysis for contract rights)
Miller v. Mooney, 431 Mass. 57 (Mass. 2000) (intended beneficiary requirements for contract remedies)