Khan et al v. BankUnited, Inc. et al
Filing
58
ORDER granting in part 51 and 52 --motions to dismiss; dismissing with prejudice counts IV, V, and VI; amended complaint due 1/25/2017. Signed by Judge Steven D. Merryday on 1/11/2017. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HAIDER ALI KHAN, et al.,
Plaintiffs,
v.
CASE NO. 8:15-cv-2632-T-23TGW
BANKUNITED, INC., et al.,
Defendants.
____________________________________/
ORDER
Haider Ali Khan, Nazeer Haider Khan, Sabiha Haider Khan, QHP Group,
Inc., and QHP Financial Group, Inc., sue (Doc. 36) BankUnited, Inc., BankUnited,
N.A., Richard Fischer, John Hotchkiss, and Mark C. Foley. The plaintiffs allege a
Racketeer Influenced and Corrupt Organizations Act (RICO) violation, a RICO
conspiracy, and state-law claims for breach of contract, unjust enrichment,
intentional infliction of emotional distress, tortious interference with a contract, and
civil conspiracy. The defendants move (Doc. 51, 52) to dismiss the second amended
complaint and argue that the facts contained in the complaint are insufficient to state
a claim upon which relief can be granted.
BACKGROUND
Quality Health Plan, Inc., (QHP–HMO) is a wholly owned subsidiary of QHP
Group (QHP), a Florida health maintenance organization,. QHP Group owns all
the shares of QHP-HMO. (Doc. 36 at 2) The individual defendants worked for
Herald National Bank, which lent $5 million to QHP Group. Florida’s HMO
regulations prohibit the encumbrance of the assets of an HMO as security for a loan.
The defendants allegedly engaged in mail and wire fraud and misrepresented to
federal and state regulators the nature of QHP’s loan collateral, despite knowing that
the defendants’ actions would injure the plaintiffs’ good reputation and result in the
plaintiffs’ criminal prosecution. (Doc. 36 at 2–3)
The plaintiffs claim that:
the defendants impeded and obstructed the enforcement and
regulatory functions of the federal and state agencies through their
pattern of misrepresentation regarding whether the $5 million QHP
Group Loan was collateralized by assets of QHP-HMO and whether
Herald Bank was entitled to appropriate $5 million from QHP-HMO’s
bank account, and through knowingly withholding documents and
information from the federal and state regulators showing that Herald
Bank had no collateral rights to the money held by QHP-HMO.
(Doc. 36 at 4) The plaintiffs seek $300,000,000 in damages, treble damages, and an
attorney’s fee. (Doc. 36 at 3)
Count IV — Unjust Enrichment
The plaintiffs allege (Doc. 36 at 52) that BankUnited was unjustly enriched
and claim that the plaintiffs “conferred upon Herald Bank the rights to QHP-Group
and QHP’s financial banking business which included serving as custodian of $5
million in QHP-HMO’s bank account.” Herald Bank allegedly “unlawfully took the
$5 million and thereby appreciated, accepted or retained the benefits conferred by the
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individual plaintiffs.” (Doc. 36 at 52) Under New York law a plaintiff must plead
that the “(1) defendant was enriched, (2) at plaintiff’s expense, and (3) equity and
good conscience militate against permitting defendant to retain what plaintiff is
seeking to recover.” Briarpatch Ltd. v. Phoenix Pictures, Inc., 373 F.3d 296, 306
(2d Cir.2004) (Cardamone, J.).
BankUnited argues (Doc. 51 at 25) that a claim for unjust enrichment is
invalid because a valid and enforceable contract exists. “The existence of a valid and
enforceable written contract governing a particular subject matter ordinarily
precludes recovery in quasi-contract for events arising out of the same subject
matter.” Clark Fitzpatrick, Inc. V. Long Island R.R. Co., 70 N.Y.2d 382, 388 (1987)
(Alexander, J.). Second, BankUnited argues that the claim is improperly brought by
the Khans who do not have an individual claim to the $5 million belonging to QHPHMO. (Doc. 51 at 26) “The [complaint] is replete with allegations that defendants
inappropriately applied the . . . cash belonging to QHP-HMO to repay and close the
loan to QHP Group . . . . Accordingly, the Khans did not confer the $5 million or
any benefit at all on Herald Bank.” (Doc. 51 at 26)
The Khans respond:
[the plaintiffs] have not asserted any contractual rights to the . . .
$5 million . . . . QHP Group’s breach of contract action does not
seek disgorgement of the $5 million as damages, but rather general
contractual damages for the breach of contract. The [receiver] . . .
would ultimately receive the $5 million should defendants disgorge
those specific funds, while individual plaintiffs would seek additional
unjust enrichment [that the] defendants obtained by virtue of that
unlawful taking. There is no contractual remedy available to the
individual plaintiffs for this relief . . . . Where a defendant has been
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unjustly enriched to the detriment of individuals with no available
contractual remedy, New York law . . . provide[s] for the remedy of an
unjust enrichment cause of action.
(Doc. 56 at 28–29)
However:
The question here—whether the existence of a valid written
contract between two parties precludes an action for unjust enrichment
against a third party who is not a party to the contract—is somewhat
unsettled. . . . The Court finds the trend of recent New York state and
federal decisions to be persuasive and concludes that a claim for unjust
enrichment, even against a third party, cannot proceed when there is
an express agreement between two parties governing the subject matter
of the dispute.
Law Debenture v. Maverick Tube Corp., 2008 WL 4615896, at 12-13 (S.D.N.Y. 2008)
(Sullivan, J.). Because the individual plaintiffs bestowed no benefit on BankUnited
and because the plaintiffs fail to sufficiently allege BankUnited’s enrichment at the
plaintiff’s expense (the plaintiffs merely state (Doc. 36 at 53) that “Herald Bank
profited . . . at the expense of the individual plaintiffs”), the allegations fail to state a
claim and Count IV is dismissed.
Count V — Intentional Infliction of Emotional Distress
The plaintiffs sue for intentional infliction of emotional distress.
Under Florida law, to state a claim for intentional infliction of
emotional distress, the plaintiff must establish the following: (1)
defendant acted recklessly or intentionally; (2) defendant's conduct was
extreme and outrageous; (3) defendant's conduct caused the plaintiff's
emotional distress; and (4) plaintiff's emotional distress was severe. See
Metropolitan Life Ins. Co. v. McCarson, 467 So. 2d 277, 278–79 (Fla.
1985). Courts uphold claims for IIED in only ‘extremely rare
circumstances.’
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Delk v. Bank of America, N.A., 2016 WL 70617, at *4 (M.D. Fla. Jan. 6, 2016)
(Corrigan, J.) Whether conduct is extreme and outrageous is a question of law.
Metro. Life Ins., 467 So. 2d at 279. “Liability has been found only where the conduct
has been so outrageous in character, and so extreme in degree, as to go beyond all
possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in
a civilized community.” Delk, 2016 WL 70617, at *4.
The plaintiffs fail to allege any facts establishing that the defendants’ conduct
was extreme or outrageous and fail to identify emotional distress in the plaintiffs.
The alleged conduct is neither extreme nor outrageous. The plaintiffs plead
“conclusory allegations and resort to a bare boned recitation of the elements.”
(Doc. 51 at 27) Thus, Count V fails to satisfy Rule 8(a) and is dismissed.
Count VI — Tortious Interference With a Contract
To succeed in a tortious interference claim the plaintiffs must plead “(1) the
existence of a business relationship . . . (2) knowledge of the relationship on the part
of the defendant; (3) an intentional and unjustified interference with the relationship
by the defendant; and (4) damage to the plaintiff as a result of the breach of the
relationship.” Tamiami Trail Tours, Inc. v. Cotton, 463 So.2d 1126, 1127 (Fla. 1985).
Count VI falls foul of Rule 8(a) because the plaintiffs fail to plead the existence
of any particular agreement or business relationship between QHP-HMO and QHP,
fail to describe the actions taken by the defendants to interfere with such an
agreement, and fail to adequately allege damages caused by the defendants’
purported interference.
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CONCLUSION
The motions to dismiss (Docs. 51, 52) are GRANTED-IN-PART. The
plaintiffs sufficiently state a claim under Counts I, II, III, and VII. Counts IV, V, and
VI are DISMISSED WITH PREJUDICE. No later than JANUARY 25, 2017, the
plaintiffs must amend the complaint to comply with this order (that is, to re-number
the counts consecutively, omitting the dismissed counts and adding no new claims)
and condense the complaint to no more than twenty-five pages. All parties are
reminded of the September 23, 2016 order, which states that “[t]he complaint in this
action is excessive in length and the other papers apparently trend in the same
direction. This order creates no precedent or expectation for further enlargements of
motions or other papers.” (Doc. 50)
ORDERED in Tampa, Florida, on January 11, 2017.
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