COVID-19 market loss
Robert Goodrich v. Bank of America N.A.
Date: May 6, 2025
Issue: Whether the D.C. Circuit should affirm the district court’s ruling that Bank of America (BofA) and its investment manager were not liable for Robert Goodrich’s investment losses because he directed them to liquidate his portfolio and accepted contract terms that limited their liability.
Case Summary: A unanimous D.C. Circuit panel ruled that BofA and its adviser, Matthew Lettinga, did not cause Robert Goodrich’s investment losses because he directed them to liquidate his portfolio and accepted contract terms that limited their liability.
In 2021, Goodrich sued BofA for gross negligence, breaching its fiduciary duty, and violating the D.C. Securities Act, claiming it liquidated “virtually all” of his investments after he expressed interest in doing so. Goodrich allegedly contacted BofA in March 2020 to cash out his investments due to concerns about further deterioration in the financial market. He claimed BofA did not explain the consequences of liquidating his portfolio, which allegedly caused him to lose $2 million. BofA contended the investment contract entered into by Goodrich (the agreement) protected the bank from any liability.
In January 2024, Judge Dabney Friedrich of the D.C. federal court granted summary judgment to BofA, denying Goodrich’s fiduciary duty claim, gross negligence, and D.C. Securities Act claims. Goodrich appealed, arguing that the district court’s decision was both premature and incorrect.
The panel affirmed summary judgment on the fiduciary duty claim, determining the Agreement’s exculpatory clauses limited the duties that Goodrich alleged were breached by BofA. Goodrich argued that investment advisers, as fiduciaries, can never limit their duties. But the panel rejected that view and explained that financial advisers and clients are not categorically barred from contractually limiting fiduciary duties or liability. Instead, the panel ruled that a financial adviser’s duties depend on agency law principles, which permit fiduciary obligations to vary based on the parties’ agreement and the nature of their relationship.
The panel determined that advisers can contractually limit their fiduciary duties, rejecting Goodrich’s claims of no mutual assent and ambiguity in the Agreement’s disclaimer. The panel noted that Goodrich signed the Agreement, which under D.C. law indicates mutual assent. Although Goodrich argued that the clause dismissing liability for implied duties was unclear because it did not specifically mention fiduciary duties, the panel concluded such omissions do not create ambiguity. Additionally, Goodrich claimed that promotional materials contradicted the waiver by stating BofA would act as fiduciaries. The panel clarified that the key issue was whether the Agreement limited BofA’s duties, not their fiduciary status. The panel also denied Goodrich’s appeal of the dismissal of his gross negligence claim. It found he failed to show that BofA acted with the bad faith or extreme recklessness required under D.C. law to establish gross negligence.
Bottom Line: The panel ruled that advisers may limit their fiduciary duties through a contract.
Documents: Opinion
