Investor's suit against foreign bank revived.

Byline: Kris Olson

A plaintiff's Massachusetts suit against a Swiss bank should be revived, as she had made a prima facie showing that the advisor she claims caused her to lose millions of dollars was the bank's agent, the Appeals Court has decided.

The parties agreed that the trial judge had correctly concluded that the agent's contacts with Massachusetts were sufficient to support long-arm jurisdiction over him.

The propriety of long-arm jurisdiction over the bank, therefore, turned on whether the advisor was the bank's actual or apparent agent, such that his contacts in the state could be attributed to the bank.

Without allowing jurisdictional discovery or conducting an evidentiary hearing on the issue, the trial judge concluded that no prima facie case had been made on agency and dismissed the claims against the bank for lack of personal jurisdiction.

But the Appeals Court said that was incorrect. In fact, on any theory actual authority, ratification or apparent authority the plaintiff had made a prima facie showing that the advisor was operating as the bank's agent, the court determined.

That decision was reached despite a few inconvenient facts for the plaintiff. For example, she had signed a letter indicating that it was "fully clear" to her that the advisor's recommendations for private equity investments were not coming from the bank.

However, the Appeals Court concluded that the affidavit the plaintiff had submitted, claiming that the letter had been signed under duress, should have been sufficient to help the case survive a motion to dismiss.

[divider]

"[This is] another instance where the Massachusetts courts are saying that foreign businesses that do business in Massachusetts even if they don't think they're doing business in Massachusetts will be haled into Massachusetts court for wrongdoing by their employees."

Michael F. Connolly, Boston

[divider]

Writing for the court, Judge Mary T. Sullivan added that, even if the advisor originally pursued the Massachusetts investments without the bank's authorization, a fact finder could determine that the bank had ratified the conduct, either affirmatively or through "passive acquiescence."

The 48-page decision is von Schnau-Riedweg, et al. v. Rothschild Bank AG, et al., Lawyers Weekly No. 11-072-19. The full text of the ruling can be found here.

Put best foot forward

Attorneys said the decision, while not breaking new ground, is helpful.

"It provides a good road map for any practitioner interested in the status of agency law in Massachusetts,"...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT