Court Opinion

ID: 4423210
Source: CourtListenerOpinion
Date Created: 2019-08-06 20:00:21.276063+00
Date Added: 2024-06-11T14:23:26.879532
License: Public Domain

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 perfor-
mance of the court-appointed receiver of ﬁnancial advisory
ﬁrm Nutmeg Group, LLC. The district court appointed the re-
ceiver after the Securities and Exchange Commission initiated
an enforcement action against Nutmeg and its managing
member, Randall Goulding. Against the Commission’s alle-
gations of ongoing fraud and misappropriation of client as-
sets, the district court presiding over the SEC matter entered
a temporary restraining order prohibiting Goulding from op-
erating Nutmeg and appointed a receiver to oversee all as-
pects 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, re-
duced 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 transac-
tions 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 is-
suance of a restraining order prohibiting Goulding from man-
aging the Funds. The court also granted the SEC’s unopposed
motion to appoint attorney Leslie Weiss as receiver for Nut-
meg. The appointment order granted Weiss the authority to
“oversee all aspects of Nutmeg’s operations and business,”
including “serving as general partner and investment advi-
sor” to the Funds. It also provided that, as receiver, Weiss was
“solely the agent of [the] [c]ourt,” and should continue Nut-
meg’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 dis-
trict court detailing her acts as receiver.
    The appointment order separately addressed Weiss’s lia-
bility, 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 perfor-
mance of their duties and responsibilities as Receiver and Re-
tained 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 disre-
gard 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 in-
formed the court of her review of the Funds’ assets, which in-
cluded 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 collecta-
bility 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, Gould-
ing and a group of limited partners from certain funds man-
aged 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 al-
leged 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 Il-
linois’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 mo-
tion 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, includ-
ing all claims against Nutmeg, all legal malpractice claims
against Weiss and Barnes & Thornburg, and two breach of ﬁ-
duciary 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 reason-
able 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 se-
lect 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 judg-
ment 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 com-
plaint named 13 separate funds as defendants, the plaintiﬀs
did not assert any claims against these entities or seek any re-
lief 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 ﬁ-
nal for the purpose of § 1291 if it ends the litigation on the
merits and leaves nothing for the district court to do but exe-
cute the judgment”). In these circumstances, our appellate ju-
risdiction 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 mag-
istrate 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 part-
nership. With both states having adopted the Uniform Lim-
ited 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 re-
quired 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 Chi-
cago Paciﬁc Corp. and determined that, to hold a court-ap-
pointed 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 an-
nounced 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 bank-
ruptcy 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 negli-
gence standard that the Illinois legislature made applicable to
the acts of all general partners reﬂects the proper rule of deci-
sion. 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 Illi-
nois (and Minnesota) law. They are equally right, as a matter
of subject matter jurisdiction, that the doctrine of ancillary ju-
risdiction permitted them to bring these claims against Weiss,
a federally-appointed receiver, in the same federal court pre-
siding over the SEC action, here, the Northern District of Illi-
nois. 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 inde-
pendent grounds for asserting federal jurisdiction.’”).
    This case presents a slight wrinkle. Ordinarily in the re-
ceivership 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 re-
quest. But a diﬀerent judge, Judge Lefkow, ultimately han-
dled 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 dis-
trict 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 plain-
tiﬀs 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 re-
ceiver “shall manage and operate the property in his posses-
sion as such trustee, receiver or manager according to the re-
quirements of the valid laws of the State in which such prop-
erty is situated, in the same manner that the owner or posses-
sor thereof would be bound to do if in possession thereof”).
     Where we part ways with the plaintiﬀs is in their insist-
ence 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 appoint-
ment order. Put another way, the plaintiﬀs see Weiss as a gen-
eral 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, au-
thorized Weiss to “oversee all aspects of Nutmeg’s operations,
which include, but are not limited to, serving as general part-
ner and investment advisor” to the Funds. While this lan-
guage 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 pur-
poses, including for personal liability for a breach of a ﬁduci-
ary duty such that ordinary state partnership statutes should
apply.
    This conclusion is underscored by the fact that the ap-
pointment of Weiss as receiver was far from an ordinary-
course 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 appoint-
ing 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 court-
appointed receiver. If Illinois caselaw does not supply the an-
swer, 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 ex-
plaining 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 ex-
amine 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 indi-
vidual serving not as an ordinary ﬁduciary or general partner,
but instead at a federal court’s direction to fulﬁll unique re-
sponsibilities. Here that would mean treating Weiss as a re-
ceiver 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 be-
lieve the Illinois Supreme Court would arrive at the willful
and deliberate standard of personal liability for a court-ap-
pointed receiver. See 773 F.2d at 915. This heightened stand-
ard of liability roots itself in the Supreme Court’s 1951 deci-
sion in Mosser and accounts for the context in which a receiver
is operating. The standard recognizes that if a receiver is “bur-
dened with having to defend against suits by litigants disap-
pointed 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 per-
sonal liability for mistakes in business judgment could dis-
courage 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 lia-
bility 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 demon-
strates an animosity towards the Receiver and provides fur-
ther pause to be wary of any purported claim he might raise
against the Receiver, particularly in the absence of even a scin-
tilla 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 ob-
served 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 vio-
lated her ﬁduciary duties before imposing judgment for per-
sonal liability. Under this standard, the plaintiﬀs must show
that Weiss intentionally took actions she knew violated her ﬁ-
duciary duties. See, e.g., Petrovic v. Dep't of Employment Secu-
rity, 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 evi-
dence 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 plain-
tiﬀs 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 cer-
tainly possible, especially as a matter of comity, that the Illi-
nois Supreme Court would inform its identiﬁcation and deﬁ-
nition of the controlling liability standard by the standard ap-
pearing 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 height-
ened willful and deliberate standard or the lesser gross negli-
gence 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 ﬁ-
duciary 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 & Thorn-
burg. Accordingly, this appeal proceeds only as to the plain-
tiﬀs’ 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 ade-
quately 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 non-
moving 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 ﬁduci-
ary duties by failing to pursue certain litigation and by failing
to enforce certain judgments and promissory notes. The dis-
trict 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 judg-
ment 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 ex-
plained, 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 con-
sulting 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 judg-
ment and ultimately decided it was not worth pursuing. The
district court was on sound footing concluding that no rea-
sonable 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 con-
vertible 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 ac-
tion 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 op-
portunities, considered the strengths and weaknesses of avail-
able options, and weighed the costs of pursuing certain op-
portunities before exercising her business judgment. The
plaintiﬀs, while vigorously disagreeing with Weiss’s deci-
sions, 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 fail-
ing 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 evi-
dence 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 plain-
tiﬀs 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 ad-
vantageous for Weiss to convert the GoIP debt and sell the
stock, we agree with the district court that the plaintiﬀs’ alle-
gations, 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 re-
mainder, 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 negli-
gently 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 rea-
sonable jury could ﬁnd that her doing so reﬂected an inten-
tional 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 ap-
proach” 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 neg-
ligent 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 han-
dling of the additional payments for Crowe Horwath’s ser-
vices.
   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 In-
verso 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 mo-
tion for an order to show cause against Goulding for his fail-
ure to cooperate with her. She pointed to 11 diﬀerent in-
stances of his noncooperation, one of which involved locating
evidence of investor approval to modify the operating agree-
ment 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 ap-
peal 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 ﬁdu-
ciary duty—applies with equal force to the totality of the
plaintiﬀs’ claims on appeal. For these reasons, we AFFIRM.