How much more than possible is “plausible?” After the Supreme Court’s seminal decisions in Bell Atlantic v. Twombly and Ashcroft v. Iqbal, a plaintiff must allege enough facts to show a plausible right to relief. What this means in practice has been left to the lower courts and has yielded arguably disparate outcomes. Is the plausibility standard met by allegations that a loan officer “motivated by personal animosity” after not receiving personal guarantees from a bank-customer-corporation’s shareholders acted to put the corporation into receivership, convincing others, including a professional receiver, to share in his animosity and join in a plan to maliciously injure the shareholders in violation of Wis. Stat. 134.01? Judge Crabb thought no, dismissing the claim, in part because it seemed implausible that a professional receiver, who did not know the shareholders, would risk his livelihood to join a malicious scheme to injure them.
The Seventh Circuit, however, disagreed. It ruled that questions about why a receiver would risk his livelihood to engage in malicious acts against persons he didn’t know and why any person motivated by a malicious plan to do harm would decide to use the instrumentality of a court-supervised receivership were questions that had to await summary judgment—that is, questions that must await potentially long and costly discovery. Virnich v. Vorald, No. 10-3271 (CA7 Dec. 20, 2011). Ultimately the court upheld the dismissal on the alternative ground that the action was barred by issue preclusion, because a state court had ruled that the plaintiffs had waived their challenge to the receiver’s actions.
When the economy turns south, there is no shortage of disgruntled former loan customers and owners of failed businesses who are eager to sue banks and those who associate with them in collecting the bank’s collateral. Bankers and receivers in Wisconsin beware.
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.