Larry Muff v. Wells Fargo Bank NA, No. 22-2107 (8th Cir. 2023)
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The estate of Joseph A. Muff brings three conversion claims against Wells Fargo Bank for allegedly failing to detect that Joseph’s stepson, Josh Paige, was stealing money from Joseph by way of fraudulently endorsed checks. After denying the estate’s motion to amend its complaint, the district court granted summary judgment in favor of Wells Fargo on all three claims. The estate appealed.
The Eighth Circuit affirmed in part, vacated in part, and remanded to the district court. The court concluded that the district court did not abuse its discretion in denying the estate’s motion to amend its complaint. Further, the court explained that because the Muff Corporate and Muff Farm accounts were not controlled by Wells Fargo, any injury to those accounts under a theory of conversion is not fairly traceable to Wells Fargo. In other words, the estate has not demonstrated a “causal connection” between the “injury”—Josh’s inappropriately removing funds from said accounts—and the “conduct complained of”—Wells Fargo’s allegedly allowing this to take place. Moreover, even assuming the existence of a confidential relationship under Iowa law could give the estate standing to sue, the factual record fails to support the existence of a confidential relationship in the first place. Because the estate has not demonstrated standing, the court wrote that it lacks jurisdiction over Count 3. As with Count 2, the district court should have dismissed the claim instead of entering summary judgment for Wells Fargo. However, unlike Counts 2 and 3, the estate has standing to pursue Count 1 in federal court.
Court Description: [Shepherd, Author, with Erickson and Grasz, Circuit Judges] Civil case - Conversion. The district court did not err in denying plaintiff's motions to amend its complaint on the ground the motions did not comply with the court's local rules; two of the accounts in question were not controlled by defendant, and any injury to those accounts under a theory of conversion is not fairly traceable to defendant; as a result, the plaintiff lacked standing to assert this claim, and the claim should have been dismissed for lack of jurisdiction rather than being decided on a summary judgment motion; the grant of summary judgment on this claim is vacated and the matter remanded for dismissal for lack of jurisdiction; the record does not establish a confidential relationship between the person committing the fraud and his mother, and the estate had no standing to assert a conversion claim for the handling of their joint account; again, because the court lacked jurisdiction to decide the claim, it erred in granting summary judgment rather than dismissing the count, and the matter is remanded with directions to vacate the summary judgment and dismiss the claim; the final conversion claim is time-barred by the applicable Iowa three-year statute of limitations. [ June 27, 2023 ]
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