Erie guess: No bank duty to non-customer

Midwest Feeders, a cattle feedlot business, sued The Bank of Franklin under Mississippi law, alleging that the Bank tolerated a customer’s fraudulent activities that resulted in considerable financial harm. The Fifth Circuit affirmed summary judgment for the bank. Among other rulings, the Court addressed whether Mississippi law imposed  a duty to avoid negligence on a bank, as against a non-customer. Finding no guidance from that state’s supreme court, and inconclusive opinions from other Mississipi courts, the Court surveyed authority nationally and noted “the merits of [the] line of cases” that potentially allowed such liability if the bank knoows of a fiduciary relationship between the customer and the non-customer. Unfortunately for the plaintiff, however, the Court held that “we cannot use our Erie guess to impose upon Mississippi a new regime of liability for its banks.” Midwest Feeders, Inc. v. Bank of Franklin, No. 17-60092 (March 27, 2018).