In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 18-1740 & 18-1791

MICHAEL ALONSO, individually and derivatively on behalf of 

NUTMEG/MERCURY FUND, LLP (hereinafter within this caption 

MERCURY FUND, LLP), et al.,

Plaintiffs-Appellants,

 and

RANDALL S. GOULDING,

Plaintiff-Appellant,

v.

LESLIE J. WEISS and BARNES & THORNBURG,

Defendants-Appellees.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:12-cv-7373 — Joan Humphrey Lefkow, Judge.

____________________

ARGUED APRIL 11, 2019 — DECIDED AUGUST 6, 2019

____________________

Before SYKES, SCUDDER, and ST. EVE, Circuit Judges.
2 Nos. 18-1740 & 18-1791

SCUDDER, Circuit Judge. This appeal centers on the performance of the court-appointed receiver of financial advisory 

firm Nutmeg Group, LLC. The district court appointed the receiver after the Securities and Exchange Commission initiated 

an enforcement action against Nutmeg and its managing 

member, Randall Goulding. Against the Commission’s allegations of ongoing fraud and misappropriation of client assets, the district court presiding over the SEC matter entered 

a temporary restraining order prohibiting Goulding from operating Nutmeg and appointed a receiver to oversee all aspects of the firm’s business. 

This civil suit followed. Goulding and a group of limited 

partners in one or more of the Nutmeg funds alleged that the 

receiver breached her fiduciary duties and, in doing so, reduced the value of the funds’ assets. After dismissing certain 

counts, the district court entered summary judgment in the 

receiver’s favor on all remaining claims. Because we agree 

that no reasonable jury could find that the receiver engaged 

in a willful, deliberate, or even grossly negligent breach of a 

fiduciary duty, we affirm.

I

A

Nutmeg Group, LLC, formerly managed by Randall 

Goulding, served as an investment advisor and sole general 

partner of more than a dozen investment funds, which we 

will refer to collectively as the Funds. Each of the constituent 

funds is a limited partnership under Illinois or Minnesota 

law. With Goulding at the helm, Nutmeg executed transactions on behalf of the Funds and oversaw their investment 

strategies. Goulding’s management of the Funds ended in 
Nos. 18-1740 & 18-1791 3

2009, when the SEC brought an enforcement action against 

him, Nutmeg, and others in the Northern District of Illinois, 

alleging violations of the Investment Advisors Act of 1940. 

The thrust of the Commission’s complaint was that Nutmeg 

misappropriated client assets and failed to maintain proper 

records. See SEC v. Nutmeg Grp., LLC, No. 09 C 1775, 2011 WL 

5042094 (N.D. Ill. Oct. 19, 2011). 

The district court handling the SEC action found that the 

Commission made the showing necessary to warrant the issuance of a restraining order prohibiting Goulding from managing the Funds. The court also granted the SEC’s unopposed 

motion to appoint attorney Leslie Weiss as receiver for Nutmeg. The appointment order granted Weiss the authority to 

“oversee all aspects of Nutmeg’s operations and business,” 

including “serving as general partner and investment advisor” to the Funds. It also provided that, as receiver, Weiss was 

“solely the agent of [the] [c]ourt,” and should continue Nutmeg’s business “in such manner, to such extent, and for such 

duration as [she] may in the exercise of her business judgment 

and in good faith deem to be necessary or appropriate.” The 

order directed Weiss to file regular status reports with the district court detailing her acts as receiver. 

The appointment order separately addressed Weiss’s liability, broadly providing that Weiss and any professionals she 

retained would not be held liable to anyone “for their own 

good faith compliance with any order, rule, law, judgment, or 

decree.” The order added that neither Weiss nor any retained 

personnel would be held liable “with respect to the performance of their duties and responsibilities as Receiver and Retained Personnel . . . except upon a finding by [the district] 

[c]ourt that they acted or failed to act as a result of 
4 Nos. 18-1740 & 18-1791

malfeasance, bad faith, gross negligence or in reckless disregard of their duties.” 

B

Following her appointment, Weiss submitted the required 

status reports to the district court. In her first report, she 

broadly shared the results of her initial due diligence. She informed the court of her review of the Funds’ assets, which included convertible notes (many of which were in default); 

lawsuits or judgments against borrowers who had defaulted 

on their notes or refused to convert notes to stocks; and 

“shells” of failed borrower companies that Nutmeg or the 

Funds had recovered when the companies defaulted on their 

debt. Weiss also reported on her efforts to assess the collectability of any outstanding judgments, while also conveying her 

concern that some of the notes’ issuers were not financially 

stable. In time Weiss submitted additional reports informing 

the district court of particular developments and challenges 

she was encountering as well as decisions she was making as 

receiver. 

To further fulfill her duties, Weiss sought assistance from 

investment advisors and attorneys. For example, in addition 

to retaining Barnes & Thornburg, the law firm where she is a 

partner, Weiss hired McClendon, Morrison & Partners, LLC 

as an investment advisor. She also consulted with a collection 

firm regarding the collectability of certain judgments against 

borrowers who had defaulted on their notes. 

Unsatisfied with Weiss’s performance as receiver, Goulding and a group of limited partners from certain funds managed by Nutmeg filed an individual and derivative action on 

behalf of the Funds. The complaint named as defendants 
Nos. 18-1740 & 18-1791 5

Weiss, Barnes & Thornburg, Nutmeg, and the Funds, and alleged state-law claims for breach of fiduciary duty and legal 

malpractice. Specifically, the plaintiffs alleged that Weiss 

breached her fiduciary duties as receiver, including under Illinois’s and Minnesota’s partnership statutes, by failing to 

pursue certain opportunities to the detriment of one or more 

of the Funds and, separately, by not converting certain debt 

owed to Nutmeg or a particular fund into stock to be sold on 

the open market. The plaintiffs also brought a federal claim 

pursuant to the Investment Advisors Act of 1940 and SEC 

Rule 206(4)-2. 

For their part, Weiss and Barnes & Thornburg filed a motion to dismiss, which the district court granted in part. The 

court dismissed the plaintiffs’ federal securities law claim as 

well as several other counts in an amended complaint, including all claims against Nutmeg, all legal malpractice claims 

against Weiss and Barnes & Thornburg, and two breach of fiduciary duty claims against Weiss. These dismissals are not at 

issue on appeal. 

Weiss and Barnes & Thornburg then successfully moved 

for summary judgment on the remaining seventeen counts. In 

a detailed and thorough opinion, the district court assessed 

each of the plaintiffs’ allegations, concluding that even when 

viewed in the light most favorable to the plaintiffs, no reasonable jury could find that either Weiss or Barnes & Thornburg 

willfully and deliberately violated any fiduciary duties. On 

appeal the plaintiffs challenge the district court’s ruling on select claims advanced against Weiss. 
6 Nos. 18-1740 & 18-1791

II

A

We begin with a brief word on our appellate jurisdiction. 

We do so because the plaintiffs’ amended complaint named 

not only Weiss and Barnes & Thornburg as defendants, but 

also Nutmeg and the Funds. The district court’s final judgment did not address the Funds, however. 

We nonetheless agree with the parties that the district 

court’s judgment constituted a final and appealable judgment 

under 28 U.S.C. § 1291. First, although the amended complaint named 13 separate funds as defendants, the plaintiffs 

did not assert any claims against these entities or seek any relief from them. More to it, the summary judgment order, by 

its terms, expressly resolved all claims in the district court. See 

Baltimore Orioles, Inc. v. Major League Baseball Players Ass'n, 805 

F.2d 663, 666 (7th Cir. 1986) (explaining that “a decision is final for the purpose of § 1291 if it ends the litigation on the 

merits and leaves nothing for the district court to do but execute the judgment”). In these circumstances, our appellate jurisdiction is secure. 

And this is so despite ongoing proceedings in the district 

court in the underlying SEC enforcement action. The docket 

shows that the parties consented to a bench trial before a magistrate judge in January 2018. They are awaiting a decision. 

We have no reason to believe any outcome of the bench trial 

will affect this appeal, however. 
Nos. 18-1740 & 18-1791 7

B

We turn next to the standard of liability governing the 

plaintiffs’ state-law claims for breach of fiduciary duty. The 

plaintiffs assert that Minnesota and Illinois law apply because 

each of the funds is either a Minnesota or Illinois limited partnership. With both states having adopted the Uniform Limited Partnership Act—and the plaintiffs not identifying any 

conflict in the states’ respective interpretations of the Act—

our analysis proceeds by applying Illinois law. We would 

reach the same conclusions under Minnesota law. 

To recover for a breach of fiduciary duty, Illinois law required the plaintiffs to establish the existence of a fiduciary 

duty, a breach of that duty, and damages proximately caused 

by the breach. See Gross v. Town of Cicero, Ill., 619 F.3d 697, 709 

(7th Cir. 2010). On this much the parties agree. From there, 

however, they dispute the substantive standard to which 

Weiss should be held when assessing whether she breached 

her fiduciary duties as receiver. 

The district court relied on our 1985 decision in In re Chicago Pacific Corp. and determined that, to hold a court-appointed receiver personally liable, the plaintiffs must show 

that Weiss engaged in a “willful and deliberate” violation of 

her fiduciary duties. 773 F.2d 909, 915 (7th Cir. 1985) (citing 

Mosser v. Darrow, 341 U.S. 267, 272 (1951) and Sherr v. Winkler, 

552 F.2d 1367, 1375 (10th Cir. 1977)). In this way, the district 

court effectively saw the Illinois state-law standard of liability 

as mirroring the federal willful and deliberate standard announced by the Supreme Court in the bankruptcy context in 

Mosser v. Darrow, see 341 U.S. at 272, which we, in turn, have 

applied in cases involving alleged breaches of duty by bankruptcy trustees. See, e.g., Grochocinski v. Mayer Brown Rowe & 
8 Nos. 18-1740 & 18-1791

Maw, LLP, 719 F.3d 785, 800 (7th Cir. 2013); In re Chicago Pac. 

Corp., 773 F.2d at 915. 

The plaintiffs contend that the federal benchmark sets the 

liability bar too high. By their measure, the lesser gross negligence standard that the Illinois legislature made applicable to 

the acts of all general partners reflects the proper rule of decision. See 805 ILCS 215/408(c); see also Minn. Stat. 

§ 321.0408(c). This is especially so, the plaintiffs urge, because 

the district court order appointing Weiss as receiver expressly 

stated that she could be held liable upon a showing of gross 

negligence. 

The plaintiffs have some, but not all, of the analysis right. 

They are right, of course, that they brought claims under Illinois (and Minnesota) law. They are equally right, as a matter 

of subject matter jurisdiction, that the doctrine of ancillary jurisdiction permitted them to bring these claims against Weiss, 

a federally-appointed receiver, in the same federal court presiding over the SEC action, here, the Northern District of Illinois. See, e.g., Robinson v. Michigan Consolidated Gas Co. Inc., 

918 F.2d 579, 586 (6th Cir. 1990) (quoting C. WRIGHT & A.

MILLER, FEDERAL PRACTICE AND PROCEDURE § 2985 at 45) (“It 

is well settled that ‘actions against a receiver arising out of his 

conduct of the receivership business may be brought in the 

appointing court even though there may not be any independent grounds for asserting federal jurisdiction.’”). 

This case presents a slight wrinkle. Ordinarily in the receivership context, the exercise of ancillary jurisdiction would 

entail the same district judge responsible for the SEC matter 

(here, Judge Coleman) also hearing any claims asserted 

against a court-appointed receiver. Here the record shows 

that the plaintiffs sought permission to file claims against the 
Nos. 18-1740 & 18-1791 9

receiver and her appointed counsel in the Northern District of 

Illinois and Judge Coleman appropriately authorized the request. But a different judge, Judge Lefkow, ultimately handled the plaintiffs’ ancillary claims. We can view all of this as 

reasonably occurring as part of the Northern District’s case 

management following the death of Judge Hibbler, the district judge who had presided over the SEC enforcement action 

since its inception. In these circumstances, we agree with the 

plaintiffs that the district court properly exercised ancillary 

jurisdiction over the claims challenging Weiss’s performance 

as a court-appointed receiver. For her part, Weiss too agrees 

that the district court had subject matter jurisdiction over the 

plaintiffs’ claims.

Turning to the claims themselves, we agree with the plaintiffs that state law, and not federal bankruptcy law or federal 

common law, supplies the controlling standard of fiduciary 

care. See 28 U.S.C. § 959(b) (stating that a court-appointed receiver “shall manage and operate the property in his possession as such trustee, receiver or manager according to the requirements of the valid laws of the State in which such property is situated, in the same manner that the owner or possessor thereof would be bound to do if in possession thereof”). 

Where we part ways with the plaintiffs is in their insistence that Weiss had to abide by the ordinary gross negligence 

standard that both governs general partners under Illinois 

(and Minnesota) law and appears in the receivership appointment order. Put another way, the plaintiffs see Weiss as a general partner, albeit court-appointed, who should be held to 

the run-of-the-mill general partner standard of liability under 

Illinois law. If only the analysis was so straightforward. 
10 Nos. 18-1740 & 18-1791

As a threshold matter, it is far from clear that the district 

court, in appointing Weiss as receiver, made her the general 

partner of the Funds. The appointment order, to be sure, authorized Weiss to “oversee all aspects of Nutmeg’s operations, 

which include, but are not limited to, serving as general partner and investment advisor” to the Funds. While this language makes plain that Weiss acquired the authority held in 

the ordinary course by a fund’s general partner, this is not the 

same as making Weiss a general partner for any and all purposes, including for personal liability for a breach of a fiduciary duty such that ordinary state partnership statutes should 

apply.

This conclusion is underscored by the fact that the appointment of Weiss as receiver was far from an ordinarycourse event—indeed, it came upon a finding by the district 

court that Nutmeg, as the sole general partner of the Funds, 

and Goulding, as Nutmeg’s managing partner, had engaged 

in substantial malfeasance. What is more, the order appointing Weiss did not put her only in the former shoes of Nutmeg 

and Goulding. To the contrary, Weiss was appointed not as a 

fiduciary of any particular fund but instead “solely [as] the 

agent of th[e] Court in acting as Receiver,” and charged with 

the broad responsibility of “tak[ing] such action necessary 

and appropriate to prevent the dissipation or concealment of 

any funds or assets constituting Receivership Property and 

otherwise preserve any such funds and assets.” 

To identify the proper rule or decision, we need to ask 

what standard of fiduciary care Illinois courts have adopted, 

not for ordinary general partners, but in the context of a courtappointed receiver. If Illinois caselaw does not supply the answer, the question becomes what standard the Illinois 
Nos. 18-1740 & 18-1791 11

Supreme Court would adopt if presented with the issue. See 

In re Zimmer, NextGen Knee Implant Products Liab. Litig., 884 

F.3d 746, 751 (7th Cir. 2018) (collecting authorities and explaining that a federal court’s task in applying state law is to 

determine how the state’s highest court would rule and, 

where a state’s courts have yet to address the question, to examine the law in other jurisdictions to discern the probable 

direction of the state law at issue).

Our research has identified no Illinois case addressing the 

question. But that observation does not lead to a dead end. In 

predicting what standard of liability the Illinois Supreme 

Court would adopt, we have every reason to believe the court 

would see a court-appointed receiver as just that—as an individual serving not as an ordinary fiduciary or general partner, 

but instead at a federal court’s direction to fulfill unique responsibilities. Here that would mean treating Weiss as a receiver appointed to oversee and to protect the assets of at least 

13 limited partnerships in the wake of a federal district court 

finding substantial misconduct by Nutmeg and its former 

managing partner.

Informed by our decision in Chicago Pacific Corp., we believe the Illinois Supreme Court would arrive at the willful 

and deliberate standard of personal liability for a court-appointed receiver. See 773 F.2d at 915. This heightened standard of liability roots itself in the Supreme Court’s 1951 decision in Mosser and accounts for the context in which a receiver 

is operating. The standard recognizes that if a receiver is “burdened with having to defend against suits by litigants disappointed by his actions on the court’s behalf, his work for the 

court will be impeded.” Matter of Linton, 136 F.3d 544, 545 (7th 

Cir. 1998). So too does this standard reflect the reality that 
12 Nos. 18-1740 & 18-1791

receivers are often appointed to take charge of entities with 

which they have had no prior involvement: imposing personal liability for mistakes in business judgment could discourage competent individuals from acting as receivers. 

Given the clarity and reasons supporting this standard in our 

caselaw—developed, to be sure, in the analogous bankruptcy 

context—we conclude that the Illinois Supreme Court most 

likely would chart the same course as a matter of Illinois law.

The practical considerations warranting a heightened liability standard are far from fiction here. Take, for example, the 

observations the district court made in the underlying SEC 

matter. Judge Hibbler went out of his way to warn that 

“Goulding’s obstinacy in the underlying litigation demonstrates an animosity towards the Receiver and provides further pause to be wary of any purported claim he might raise 

against the Receiver, particularly in the absence of even a scintilla of evidence that the Receiver acted in bad faith.” SEC v. 

Nutmeg Grp., LLC, No. 09 C 1775, 2011 WL 5042092, at *4 (N.D. 

Ill. Oct. 19, 2011). In much the same vein, Judge Hibbler observed that “[t]o say that Goulding has been uncooperative 

with the Receiver is to understate his recalcitrance.” Id. 

In the end, we believe the Illinois Supreme Court would 

require a showing that Weiss willfully and deliberately violated her fiduciary duties before imposing judgment for personal liability. Under this standard, the plaintiffs must show 

that Weiss intentionally took actions she knew violated her fiduciary duties. See, e.g., Petrovic v. Dep't of Employment Security, 2016 IL 118562, ¶ 30–31 (defining “deliberate and willful” 

in the context of the Illinois Unemployment Insurance Act as 

“conscious act[s] made in violation of company rules, when 

the employee knows it is against the rules”); see also Levy v. 
Nos. 18-1740 & 18-1791 13

Markal Sales Corp., 268 Ill. App. 3d 355, 380 (1st Dist. 1994) 

(finding a “willful breach of a fiduciary duty” based on evidence that corporate directors engaged in acts that were 

“lacking in good faith, underhanded, deceitful and sly”). 

Even if our prediction is mistaken, however, all agree that 

Illinois law, at the very least, would hold Weiss to a standard 

of gross negligence. See 805 ILCS 215/408(c). And the plaintiffs are quick to remind that this same gross negligence 

standard appears in the district court’s order appointing 

Weiss as receiver in the first instance. Fair enough. It is certainly possible, especially as a matter of comity, that the Illinois Supreme Court would inform its identification and definition of the controlling liability standard by the standard appearing in the order appointing Weiss as receiver. 

Under a gross negligence standard, the plaintiffs could not 

recover absent a showing that Weiss acted in her capacity as 

receiver with “reckless indifference to or deliberate disregard 

of” her duties or that her actions were “without the bounds of 

reason.” Sherman v. Ryan, 392 Ill. App. 3d 712, 732 (1st Dist. 

2009) (quoting Benihana of Tokyo, Inc. v. Benihana, Inc., 891 A.2d 

150, 192 (Del. Ch. 2005)). 

We can stop short of staking out a more definitive position 

on the substantive liability standard, however. As our ensuing 

analysis shows, the district court properly determined that 

the record evidence required entry of summary judgment for 

Weiss. This is so, we conclude, whether we apply the heightened willful and deliberate standard or the lesser gross negligence standard. 
14 Nos. 18-1740 & 18-1791

III

The plaintiffs challenge the entry of summary judgment 

on sixteen distinct claims alleging that Weiss breached her fiduciary duties by failing to take certain actions like bringing 

lawsuits, enforcing notes, converting debt owed to Nutmeg or 

one or another of its funds into stock, or entering into certain 

transactions. 

We pause to highlight that, based on our review of the 

briefs, the plaintiffs do not challenge any aspect of the district 

court’s rulings on the claims asserted against Barnes & Thornburg. Accordingly, this appeal proceeds only as to the plaintiffs’ challenge to the district court’s resolution of claims 

against Weiss as receiver. See Mahaffey v. Ramos, 588 F.3d 1142, 

1146 (7th Cir. 2009) (declining to consider claims not adequately briefed). 

As to those claims, we review the district court’s grant of 

summary judgment de novo, construing all facts and drawing 

all reasonable inferences in the plaintiffs’ favor as the nonmoving party. See Van den Bosch v. Raemisch, 658 F.3d 778, 785 

(7th Cir. 2011). 

A

We begin with the plaintiffs’ claims challenging Weiss’s 

decisions to pursue or decline certain opportunities on behalf 

of Nutmeg. As the plaintiffs see it, Weiss breached her fiduciary duties by failing to pursue certain litigation and by failing 

to enforce certain judgments and promissory notes. The district court carefully considered and rejected this category of 

claims, and we see no error in its analysis. A few examples 

suffice to explain why.
Nos. 18-1740 & 18-1791 15

Consider Count V. The plaintiffs alleged that Weiss 

breached her duties by failing to enforce a $2.7 million judgment held by a particular Nutmeg fund against an entity 

called RMD Entertainment Group. While the plaintiffs assert 

that Weiss made no effort to settle or collect the judgment, the 

district court saw the facts otherwise. Instead, the court explained, the evidence demonstrates that Weiss investigated 

the collectability of the judgment by contacting RMD and 

learning not only that Nutmeg’s judgment may be defective, 

but also that RMD had no assets in the United States. But 

Weiss did not stop at RMD’s word. She went further by consulting a collection agency, which confirmed that RMD was 

judgment proof. She then conveyed this information to the 

district court handling the SEC matter, explaining that she 

had contacted third parties to inquire about their interest in 

purchasing the judgment but was unable to find a buyer. The 

plaintiffs, although plainly disagreeing with Weiss’s business 

judgment, did not show that this diligence never occurred. So, 

even when viewed in the light most favorable to the plaintiffs, 

the record shows that Weiss took steps to collect on this judgment and ultimately decided it was not worth pursuing. The 

district court was on sound footing concluding that no reasonable jury could find that Weiss willfully or even recklessly 

breached her fiduciary duties. 

Similarly, in Count XI, the plaintiffs alleged that Weiss 

breached her fiduciary duties by failing to follow Goulding’s 

advice and “d[oing] nothing” to monetize a defaulted convertible note issued by North Bay Resources. But here, too, we 

see the evidence much the same way as the district court. The 

record shows that Weiss contacted North Bay and explained 

that, based on Nutmeg’s records, she believed the firm still 

owed on the note. North Bay disagreed, taking the position 
16 Nos. 18-1740 & 18-1791

that the note had been satisfied with shares issued to Nutmeg. 

In a sworn declaration, Weiss explained that, based on her 

due diligence, she made the decision not to expend further 

resources to pursue a claim against North Bay. An informed 

decision not to move forward with a particular course of action falls short of demonstrating a willful and deliberate (or, 

for that matter, a grossly negligent) violation of her duties. 

We likewise agree with the district court that Count VII 

(the plaintiffs’ third failure to enforce claim) and Counts X, 

XIV, and XVI (relating to lawsuits on behalf of the Funds) fail 

for the same reasons. In each instance, the evidence shows 

that Weiss investigated the potential claims or litigation opportunities, considered the strengths and weaknesses of available options, and weighed the costs of pursuing certain opportunities before exercising her business judgment. The 

plaintiffs, while vigorously disagreeing with Weiss’s decisions, did not bring forth evidence to show that a jury could 

find that those decisions reflected a willful, deliberate, or 

grossly negligent breach of her fiduciary duties. 

B

The plaintiffs also brought a series of claims (in Counts VI, 

VIII, and XVII) alleging that Weiss breached her duties by failing to convert debt owed to Nutmeg or to certain funds into 

stock to be sold on the open market. Here again, though, the 

district court got it right in concluding that the record evidence requires a contrary conclusion. 

The plaintiffs allege three instances where, as they would 

have it, Weiss should have converted certain debt to stock and 

then liquidated the equity at a profit. For example, the plaintiffs contend that Weiss breached her duties by settling a 
Nos. 18-1740 & 18-1791 17

$50,000 note owed by an entity named GoIP Global, rather 

than exercising a right to convert the note to stock. Yet even if 

we credit the plaintiffs’ view that it was both feasible and advantageous for Weiss to convert the GoIP debt and sell the 

stock, we agree with the district court that the plaintiffs’ allegations, at most, support an inference that Weiss exercised 

poor judgment. But a poor business decision falls well short 

of demonstrating either a willful and deliberate or even a 

grossly negligent breach of her duties. 

At a more specific level, the record shows that Weiss did 

convert some of the GoIP debt and tried to convert the remainder, only to find GoIP non-responsive. She then sought, 

received, and followed professional investment advice about 

what to do with the remaining debt. Even viewing the facts in 

the plaintiffs’ strongest favor, we cannot conclude that Weiss 

came anywhere close to willfully, deliberately, or even negligently offending her fiduciary obligations: she retained—and 

sought guidance from—an investment advisory firm, and 

when faced with two choices, she chose the option advised by 

the firm. Absent from the record are facts showing that Weiss 

intended to harm the Funds by settling the GoIP debt rather 

than undertaking conversion and liquidation transactions. 

And the record shows the same level of diligence as to the 

facts underlying the allegations in Counts VIII and XVII.

C

The plaintiffs also devote substantial attention to three 

specific claims against the receiver. Once again, though, the 

district court properly saw no genuine issue of material fact 

pertinent to these claims. 
18 Nos. 18-1740 & 18-1791

First, in Count IV, the plaintiffs allege that Weiss breached 

her fiduciary duties by failing to receive court approval to pay 

any fees exceeding a $150,000 cap imposed by the district 

court to Crowe Horwath, the accounting firm that advised her 

in the execution of her receivership responsibilities. While it 

is undisputed that Weiss incurred $168,000 in advisory fees 

beyond the cap, we agree with the district court that no reasonable jury could find that her doing so reflected an intentional breach of her fiduciary duties. The court handling the 

SEC matter appointed Crowe Horwath before Weiss became 

receiver and explicitly authorized her to continue using the 

firm. The record also shows that Crowe Horwath estimated 

its fees at $168,000 to complete its outstanding work. Weiss 

shared this information with the district court and kept the 

court informed of what Crowe Horwath was doing, why the 

work was needed, and how much it would cost. She also 

heeded the court’s instruction to take a “conservative approach” by submitting payment requests in installments as 

Crowe performed its work. While it is clear that the plaintiffs 

believe Crowe Horwath’s work was unnecessary, what is 

missing is evidence showing that Weiss’s continued use of 

Crowe’s services reflected a willful, deliberate, or grossly negligent flouting of the district court’s directions or her fiduciary 

duties. Indeed, neither the district court overseeing the SEC 

matter nor the Commission itself took issue with Weiss’s handling of the additional payments for Crowe Horwath’s services. 

Second, in Count IX, the plaintiffs allege that Weiss 

breached her fiduciary duties by terminating a transaction 

that would have enabled Inverso Corp., a corporate shell 

owned by several Nutmeg funds, to be used as a vehicle for 

an initial public offering. Notably, however, in the SEC’s 
Nos. 18-1740 & 18-1791 19

motion to appoint Weiss as receiver, the Commission flagged 

the Inverso deal and directed Weiss to review it. Upon doing 

so Weiss chose to halt the transaction because it “reeked of a 

scam.” In her sworn declarations, Weiss provided a detailed 

explanation of why she did not approve the transaction: she 

questioned its legitimacy and determined the business plan 

was implausible because, among other things, it projected Inverso would gain 5% of the global market share for multiple 

sclerosis treatment in just two years and 5% of global cancer 

treatment revenues in just four years with a budget of only a 

few million dollars. No evidence suggests Weiss formed these 

views on a whim or held them in willful or deliberate (or 

grossly negligent) disregard of her duties as receiver. 

Third, Count XIX alleged that Weiss breached her fiduciary 

duties by expending attorneys’ fees on a frivolous motion to 

show cause. In April 2010, in the SEC matter, Weiss filed a motion for an order to show cause against Goulding for his failure to cooperate with her. She pointed to 11 different instances of his noncooperation, one of which involved locating 

evidence of investor approval to modify the operating agreement for the Nutmeg/Mercury LLP Fund. As it turned out, 

however, Weiss already had the relevant documents in the 

files seized from Nutmeg. Goulding reacted to learning of this 

mistake by urging the district court in the SEC case to sanction 

Weiss. The district court denied the motion, explaining that 

there was “no evidence of an intentional fraud, concealment 

or conspiracy” on Weiss’s part and because “there [was] no 

suggestion that all of the other issues raised in the [r]eceiver’s 

motion also were without merit.” We see no error with this 

conclusion. 
20 Nos. 18-1740 & 18-1791

IV

The plaintiffs’ amended complaints and arguments on appeal are expansive. Based upon our review of the record and 

the parties’ briefs, we have focused only on those claims that

we believe warrant discussion. But our ultimate conclusion—

that no reasonable jury could find that Weiss engaged in a 

willful, deliberate, or even grossly negligent breach of a fiduciary duty—applies with equal force to the totality of the 

plaintiffs’ claims on appeal. For these reasons, we AFFIRM.