GSR Mkts. v. McDonald

• Decision Date: 22 March 2022
• Docket Number: 1:19-cv-1005-MLB
• Parties: GSR Markets Limited, Plaintiff, v. Diana McDonald, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

GSR Markets Limited, Plaintiff, v. Diana McDonald, et al., Defendants.

No. 1:19-cv-1005-MLB

United States District Court, N.D. Georgia, Atlanta Division

March 22, 2022

OPINION & ORDER

MICHAEL L. BROWN, UNITED STATES DISTRICT JUDGE.

After a failed attempt to purchase Bitcoin and the theft of its purchase money, Plaintiff GSR Markets Limited (“GSR”) sued Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) for aiding and abetting fraud breach of fiduciary duty, and conversion; negligence accounting and equitable and injunctive relief; punitive damages; and attorneys' fees. (Dkt. 76 ¶¶ 134-147, 153-163, 171-180, 190-198, 219-222, 244-251.) Defendant moves for summary judgment on all claims and moves for leave to file its statement of undisputed facts in support of its motion for summary judgment. (Dkts. 217; 229.) The Court grants those motions.

I. Background

A. Motion for Leave to File Statement of Facts

On July 9, 2021, Defendant filed its motion for summary judgment. (Dkt. 217.) About five days later, Defendant realized it had mistakenly failed to file its statement of undisputed facts. (Dkt. 229-4 ¶ 8.) When asked, Plaintiff took “no position” on whether Defendant should be permitted to file its statement of undisputed facts out of time. (Dkt. 229-5 at 2.) Defendant filed a motion asking the Court for permission to do so. (Dkt. 229.)

Federal Rule of Civil Procedure 6(b) governs extensions of time in which to file motions and responsive documents. Under Rule 6(b)(1)(B), when an act is required or allowed to be done within a specified time, the Court “may, for good cause, extend the time . . . on motion made after the time has expired if the party failed to act because of excusable neglect.” Fed.R.Civ.P. 6(b)(1)(B); Fisher v. Office of State Att'y 13th Judicial Circuit Fla., 162 Fed.Appx. 937, 940 (11th Cir. 2006) (“Rule 6(b) specifically contemplates that a party can obtain an extension of time even after missing a deadline.”). The Supreme Court has designated four factors a court should consider to determine whether a late filing constitutes excusable neglect. See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd., 507 U.S. 380, 395 (1993). These factors include: (1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant; and (4) whether the movant acted in good faith. Id. “[T]he determination of excusable neglect is an equitable one that should take into account the totality of the circumstances surrounding the party's omission.” Safari Programs, Inc. v. CollectA Int'l Ltd., 686 Fed.Appx. 737, 744 (11th Cir. 2017) (citing Pioneer, 507 U.S. at 395).

The Court finds good cause exists to extend the time for Defendant to file its statement of undisputed facts. First, the filing did not prejudice Plaintiff in its ability to respond to Defendant's motion for summary judgment because the facts were included in the motion itself, there was only a five-day delay, and the statement of facts was filed on the docket long before Plaintiff's response to the motion for summary judgment was due. Second, the delay did not adversely impact the judicial proceedings. Third, counsel for Defendant did not deliberately disregard Local Rule 56.1 and the Court's standing order when omitting the statement of undisputed facts. The omission was simply an oversight by counsel. Cheney v. Anchor Glass Container Corp., 71 F.3d 848, 850 (1996) (nothing to indicate counsel deliberately disregarded the local rule and because the “nonfiling was simply an innocent oversight by counsel, ” there was no showing of bad faith); Sorenson v. Delta Air Lines, Inc., 2021 WL 2667528, at *1-2 (N.D.Ga. May 17, 2021) (“[T]here is no indication that Defendant acted in bad faith. Indeed, it appears that Defendant addressed the issue as quickly as possible once it became aware of it.” (internal citation omitted)). The Court grants Defendant's motion such that its statement of undisputed facts is deemed timely.

B. The Court's Use of Proposed Facts and Responses

The Court draws the facts largely from the parties' submissions. In support of its motion for summary judgment, Defendant filed a statement of undisputed material facts (Dkt. 229-2). See LR 56.1(B)(1), NDGa. Plaintiff responded to Defendant's statement of material facts (Dkt. 235). See LR 56.1(B)(2)(a). Plaintiff also filed a separate statement of facts that it contends are material and present genuine issues for trial (Dkt. 236). See LR 56.1(B)(2)(b). Defendant responded to Plaintiff's statement of additional facts (Dkt. 241). See LR 56.1(B)(3). The Court did not consider Defendant's reply to Plaintiff's response to Defendant's statement of undisputed material facts (Dkt. 242). As several judges in this District have noted, the Local Rules do not provide for reply filings in further support of a party's own statement of material facts. See Shenzhen Shenchuang Elec. Appliance Co. v. HauteHouse, LLC, 2021 WL 5033823, at *1 n.2 (N.D.Ga. Sept. 1, 2021); Moore-Tolden v. AirTran Airways, Inc., 2009 WL 10666355, at *2 (N.D.Ga. July 2, 2009), adopted by 2009 WL 10669476 (N.D.Ga. Aug. 28, 2009). And these judges have opted to ignore any such filings. See, e.g., Shenzhen, 2021 WL 5033823, at *1 n.2. This Court follows suit and ignores Defendant's reply filing (Dkt. 242).

The Court uses the parties' proposed facts and responses as follows. When a party does not dispute the other's fact, the Court accepts it for purposes of summary judgment and cites the proposed fact and corresponding response. When one side admits a proposed fact in part, the Court includes the undisputed part. When one side denies the other's proposed fact in whole or in part, the Court reviews the record and determines whether a fact dispute exists. If the denial lacks merit, the Court deems the fact admitted so long as the record citation supports it.

If a fact is immaterial, it is excluded.^[1] If a fact is stated as an issue or legal conclusion, it is excluded. See LR 56.1(B)(1)(c). Where appropriate, the Court modifies one party's fact per the other's response when the latter better reflects the record. Finally, as needed, the Court draws some facts directly from the record. See Fed. R. Civ. P. 56(c)(3) (“The court need consider only the cited materials, but it may consider other materials in the record.”).

C. Facts

Plaintiff is a digital asset trading company that sought to purchase Bitcoin from Alivic Corporation Pty., Ltd. (“Alivic”). Defendants Hugh Austin, Brandon Austin, and the Valkyrie Group, LLC, were supposed to broker the deal. The parties designated Defendant Diana McDonald, a Georgia lawyer, as the escrow agent. She had IOLTA accounts with Defendant Wells Fargo to receive and distribute the money. Plaintiff wired $4 million into one of Ms. McDonald's IOLTA accounts but never received the Bitcoin. Ms. McDonald disbursed much of the money, returning only $2 million back to Plaintiff. Plaintiff now seeks to hold Wells Fargo liable for its alleged negligent response to Plaintiff's concerns of potential fraud surrounding Ms. McDonald's accounts. With that background, the more detailed facts necessary to address summary judgment are as follows.

1. The Underlying Transaction

Plaintiff, a Hong Kong company, was formed in 2013 by Cristian Gil, Alex Sirkia, and Richard Rosenblum. (Dkts. 229-2 ¶ 39; 235 ¶ 39.) Plaintiff describes itself as an algorithmic trading company that specializes in digital assets. (Dkts. 229-2 ¶ 45; 235 ¶ 45.) Plaintiff trades in Bitcoin and other cryptocurrency. (Dkts. 229 2 ¶¶ 48, 51; 235 ¶¶ 48, 51.) Plaintiff is experienced in trading tens or hundreds of millions of dollars in cryptocurrencies. (Dkts. 229-2 ¶ 46; 235 ¶ 46.) Plaintiff testified that over the past seven years, banks have become unfriendly towards cryptocurrency transactions. (Dkts. 229-2 ¶ 50; 235 ¶ 50.) Plaintiff also knows that cryptocurrency transactions are risky. Mr. Gil testified there “are many so-called brokers in the space who don't conduct themselves as professionally as the brokers [he] [was] used to dealing with when [he] used to trade oil for Goldman Sachs. But that is . . . just the nature of the business.” (Dkt. 221-1 at 72:4-10.)

On January 1, 2019, Austin Yavorsky, a broker with a company called OTC Desks Ltd., contacted Mr. Gil about an opportunity for Plaintiff to purchase Bitcoin. (Dkts. 229-2 ¶ 71; 235 ¶ 71.) Yavorsky explained he was in contact with a large Bitcoin broker that would also be part of the transaction. (Dkts. 229-2 ¶¶ 74-75; 235 ¶¶ 74-75.) Plaintiff confirmed its interest. (Id.) Mr. Gil had a second call with Yavorsky that day during which Yavorsky introduced Mr. Gil to his “large Bitcoin broker”-Valkyrie Group, LLC, and its owners, Hugh Austin and Brandon Austin. (Dkts. 229-2 ¶¶ 76-77; 235 ¶¶ 76-77.) He also introduced Ms. McDonald by name. (Id.) Plaintiff had not previously done business with Yavorsky, OTC Desks, the Austins, or Valkyrie. (Dkts. 229-2 ¶¶ 241, 247; 235 ¶¶ 241, 247.) The second call made Mr. Gil “feel a bit strange” because Hugh Austin “sounded a bit like a con man.” (Dkts. 229-2 ¶ 79; 235 ¶ 79.) At some point between January 1 and January 3, Plaintiff also learned Louie Sumich and his company, Alivic, would be the sellers. (Dkt. 221-1 at 51:9-18, 51:14-18, 61:24- 62:1.) Plaintiff had never transacted business with Sumich or Alivic. (Dkts. 229-2 ¶ 252; 235 ¶ 252.)

Later that day, Plaintiff sent a non-binding letter of intent to OTC Desks, agreeing to purchase Bitcoin from Alivic. (Dkts 229-2 ¶ 80; 235 ¶ 80.) Plaintiff then began its so-called “onboarding process.” (Dkt. 222-1 at 36:12-16.) This includes know a your customer ...