Wells Fargo v Gopher

In January 2016, the Seminole Tribe of Florida (Plaintiffs) sued Wells Fargo, which served as trustee, alleging it mismanaged trusts holding minors’ gaming distributions by not diversifying investments and by charging improper fees. In 2005, Plaintiffs created these trusts to protect minors’ funds and directed the trustee to preserve principal by investing in conservative, fixed-income, government-backed securities. The trust agreements, governed by Florida law, allowed Wells Fargo to invest without diversification and limited liability to bad faith or willful misconduct. At the same time, later policies reinforced a strict focus on capital preservation and avoiding equities. 

Wells Fargo followed those directives, produced steady positive returns, and avoided losses during the Great Recession, while tribal officials approved the strategy and declined proposals to invest in higher-return equities. But Plaintiffs later claimed that this conservative approach caused the trusts to miss significant gains after the market rebounded and argued that the trustee should have invested in equities.

After years of evidentiary hearings and amended complaints, a Florida state court jury returned a verdict for Plaintiffs on all claims and awarded over $800 million in damages against Wells Fargo. The trial court later increased the award to roughly $1.3 billion, including prejudgment interest, on the view that Wells Fargo should have pursued higher-return equities. On appeal, Wells Fargo argued the Florida Fourth District Court of Appeal should reverse the trial court’s ruling because the trust instruments’ plain language defeats Plaintiffs’ investment-related claims as a matter of law.

In its brief supporting Wells Fargo, ABA argued the trial court’s rulings undermine trust administration in Florida by ignoring the plain language of the trust agreements. Florida law mandates that courts and trustees enforce a trust’s terms as explicitly written. However, the trial court imposed liability for actions that the trusts permitted and, in some instances, required, by relying on hindsight and speculative investment strategies. ABA stressed that trustees must be able to rely on written instructions, especially in the investment context, and warned that this approach creates uncertainty in routine trust administration. 

ABA also explained that the ruling threatens its members’ ability to build and grow in Florida by discouraging trustees from serving, increasing costs, and limiting access to fiduciary services. Florida law allows grantors to modify or eliminate duties such as diversification, and these trusts did so by prioritizing capital preservation and restricting investments to fixed-income assets. By disregarding those terms and adopting a hindsight-driven damages theory, the trial court’s ruling invites excessive litigation and undermines the predictability on which trustees, beneficiaries, and financial institutions rely.

In addition, ABA argued the trial court’s refusal to allow a “reasonable reliance” defense exacerbates these concerns. Florida’s Trust Code provides that “a trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.” This provision protects trustees who rely on a trust’s plain terms, even if that reliance later proves mistaken or a court later invalidates those terms. In ABA’s view, the trial court nullified this protection by refusing to instruct the jury on the defense. Because the trusts permitted or required a conservative, non-diversified investment strategy, Wells Fargo relied on those terms and had no reason to expect that beneficiaries would later challenge them. In effect, ABA underscored that the trial court undermined statutory protections and increased the risk of hindsight-driven liability for trustees who follow governing instruments.