PROFESSIONAL BENEFIT CONSULTANTS, INC. et al v. PROSTAR SATELLITE, INC. et al
Filing
28
OPINION. Signed by Judge Renee Marie Bumb on 12/01/2011. (tf, )
NOT FOR PUBLICATION
[Docket Nos. 18, 20]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
PROFESSIONAL BENEFIT
CONSULTANTS, INC., NATIONAL
ALLIANCE OF ASSOCIATIONS
Civil No. 10-4962 RMB/AMD
Plaintiffs,
OPINION
v.
CLAIMS AND BENEFIT MANAGEMENT,
INC., NATIONAL ALLIANCE OF
BENEFITS SERVICES ASSOCIATION,
and PAYLOGIX, LLC,
Defendants.
This Court previously dismissed Plaintiffs’ Complaint for
failure to satisfy the demands of Twombly/Iqbal. It provided
Plaintiffs with an opportunity to replead, but cautioned
Plaintiffs that they would need to provide more than “[l]egal
conclusions” and would instead need “factual detail” in support.
Plaintiffs have now submitted an Amended Complaint (the “Amended
Complaint”), which Defendants have moved to dismiss.
Because
the Amended Complaint is similarly dominated by conclusory
allegation, and devoid of factual substantiation, that motion is
GRANTED without prejudice.
I.
Background1
Plaintiff National Alliance of Associations (“National
Alliance”) is a membership organization that provides its
members with cost savings products and services, including
limited medical insurance programs.
National Alliance
contracted with co-Plaintiff Professional Benefit Consultants,
Inc. (“Professional Benefit”) for Professional Benefit to
provide it with sales, marketing, and administrative services.
In August 2007, National Alliance entered into an agreement
with Defendant Claims and Benefit Management, Inc. (“Claims &
Benefit”) to obtain limited medical benefits for its members.
Two months later, in October 2007, the principal officer and
shareholder of Claims & Benefit formed National Alliance of
Benefits Service Association (“NABSA”) to compete with National
Alliance.
From May 2005 until December 2007, Defendant Paylogix LLC
(“Paylogix”) provided billing, reporting, and remittance service
for Professional Benefit, for which Paylogix received a per
transaction fee.
Paylogix also provided Professional Benefit
with a secured, password protected web portal for the purpose of
processing new and recurring monthly payments of National
Alliance members.
1
Those payments, according to Plaintiffs, were
The allegations contained in the Amended Complaint are
accepted as true for purposes of the motions to dismiss.
posted with the descriptive tag “PBC Insurance 856-374-8665” on
customers’ bank statements.
According to Plaintiffs, this was
problematic because it created the false impression that
Professional Benefit was an insurance company.
In December 2007, however, Paylogix blocked access to the
web portal and transferred approximately 7,500 members of
National Alliance to NABSA, both without notice or explanation
to Plaintiffs.
Plaintiffs claim that this transfer “converted
the members” “for the purpose of [all of the] defendants [sic]
unjust enrichment.”
Plaintiffs also claim that, due to
Defendants’ refusal to honor refund requests made by the former
members of the National Alliance following the transfer,
Plaintiffs were forced to pay these refunds and were damaged in
an amount over $350,000.
II.
Standard
To survive a motion to dismiss, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
Sheridan v. NGK Metals
Corp., 609 F.3d 239, 262 n.27 (3d Cir. 2010) (quoting Ashcroft
v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009) (internal
quotations omitted)).
“A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.”
Id. (quoting Iqbal, 129 S.Ct. at 1949).
The Court conducts a three-part analysis when reviewing a
claim:
First, the court must take note of the elements a plaintiff
must plead to state a claim. Second, the court should
identify allegations that, because they are no more than
conclusions are not entitled to the assumption of truth.
Finally, where there are well-pleaded factual allegations,
a court should assume their veracity and then determine
whether they plausibly give rise to an
entitlement for
relief.
Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir.
2010)(quotations and citations omitted); see also Fowler v. UPMC
Shadyside, 578 F.3d 203, 211 (3d Cir. 2009)(“ . . . [A]
complaint must do more than allege the plaintiff’s entitlement
to relief. A complaint has to ‘show’ such an entitlement with
its facts.”).
III. Analysis
Defendants have construed Plaintiffs’ Amended Complaint,
which does not list specific counts or claims, as asserting
claims for breach of contract, conversion, and unjust
enrichment.
Because Plaintiffs take no issue with that
characterization, and, in fact, have adopted it in opposing
dismissal of this action, this Court will similarly construe the
Amended Complaint. On all three claims, Plaintiffs have failed
to present sufficient factual material, accepted as true, to
state a plausible claim for relief as required.
A.
Breach of Contract
To assert a claim of breach of contract under New Jersey
law2, a plaintiff must demonstrate that the parties entered into
a valid contract, that the plaintiff honored his own obligations
under the contract, that the defendant failed to perform his
obligations under the contract, and that the plaintiff sustained
damages as a result.
DeHart v. U.S. Bank, N.A. ND, No. 10-5869,
2011 WL 3651270, at *7 (D.N.J. Aug. 18, 2011).
With respect to Defendant NABSA, Plaintiffs have failed to
present any factual allegations suggesting a contractual
relationship between NABSA and Plaintiffs.
With respect to
Defendants Paylogix and Claims & Benefit, Plaintiffs were
required, and failed, to offer any factual allegations of how
these Defendants’ conduct breached specific contractual
obligations between them and the Plaintiffs.
DeHart, 2011 WL
3651270, at *7 (finding that the plaintiffs had failed to state
a claim where they failed to point to a specific provision in
the contract that was breached); GKE Ent., LLC v. Ford Motor
Credit Co., No. 09-4656, 2010 WL 2179094, at *3 (D.N.J. May 26,
2010)(dismissing breach of contract claim where the “Complaint
neither alleges which provision of the contract Defendant
breached, nor how Defendant breached it.”).
2
The parties all cite to New Jersey law as the law governing this case.
Because the parties do not dispute the applicability of New Jersey law,
this Court will apply it. Flaherty-Wiebel v. Morris, Downing &
Sherred, 384 F. App’x 173, 176-77 (3d Cir. 2010)(applying New Jersey
law in a diversity action where the parties agreed that New Jersey law
applied).
While Paylogix is alleged to have blocked access to an online reporting portal and transferred members to Defendant NABSA
without notice or explanation, Plaintiffs fail to offer any
detail as to the nature of Paylogix’s obligation to maintain the
site at the time it was blocked, any obligation it had not to
“transfer” members, or any obligation it had to provide notice
or explanation of its actions to Plaintiffs.
And while Claims &
Benefit is alleged to have been a beneficiary of the transfer,
Plaintiffs make no claim in the Amended Complaint that it
breached any contractual obligation.
The lone contractual
obligation of Claims & Benefit identified by Plaintiff, which
was not alleged to have been breached, was to obtain limited
medical benefit programs for National Alliance members.
Because Plaintiffs have failed to plausibly allege, with
respect to each Defendant, a required element of a breach of
contract claim, Plaintiffs’ breach of contract claim is
dismissed.
B.
Conversion
“Under New Jersey law, the tort of conversion is the
wrongful exercise of dominion and control over property owned by
another in a manner inconsistent with the owner’s rights.”
Wiatt v. Winston & Strawn, LLP, No. 10-6608, 2011 WL 2559567, at
*15 (D.N.J. June 27, 2011).
“[C]onversion applies only to
interference with tangible property.”
United Ass’n v. Schmidt,
2011 WL 766057, at *9 (D.N.J. Feb. 24, 2011).
“When money . . .
is the subject of a conversion claim, New Jersey courts require
that a plaintiff . . . show that the money in question was
identifiably the plaintiff’s property or that the defendant was
obligated to segregate such money for the plaintiff’s benefit.
Scholes Elec. & Comm., Inc. v. Fraser, No. 04-3898, 2006 WL
1644920, at *5 (D.N.J. June 14, 2006).
To the extent Plaintiffs’ conversion claim relates to
intangible property - the transfer of electronic data and the
National Alliance “membership” - it must be dismissed.
O’Brien
Oil Pollution Serv., Inc. v. Kapoor, No. 06-CV-2945, 2009 WL
2407399, at *2 (D.N.J. Aug. 4, 2009)(“ Importantly, however, the
tort of conversion may be applied only to interference with
tangible property, and courts have consistently held that
intangible property cannot be the subject of such a claim. Here,
Plaintiff argues that Defendants wrongfully retained and used
OOPS's ‘confidential / proprietary business information’ without
consent. Because confidential and proprietary business
information is not tangible property, however, Plaintiff's claim
is not viable.”); Slim CD, Inc. v. Heartland Payment Systems,
Inc., No. 06-2256, 2007 WL 2459349, at *12 (D.N.J. Aug. 24,
2007)(finding that customer data transmitted by computer was
intangible property, incapable of satisfying the tangible
property requirement of the tort of conversion).
To the extent Plaintiffs’ conversion claim relates to
Defendants retaining the revenue stream from any member payments
post-transfer, this is a claim for conversion of money.
And
Plaintiffs have failed to demonstrate that the member accounts,
and any accompanying revenue stream, was identifiably their
property and belonged to them.
Comms. Programming, Inc. v.
Summit Mfg., Inc., No. Civ. A. 98-253, 1998 WL 329265, at *5
(D.N.J. June 16, 1998)(holding that plaintiff could not
establish conversion where it failed to establish that
commissions at issue belonged to it); United Ass’n, 2011 WL
766057, at *9 (“The Complaint fails to state a cause of action
for conversion because the Complaint fails to allege that the
assets Schmidt received actually belonged to HCW.”).
Because Plaintiffs have failed to plausibly allege the
conversion of tangible property, or monetary property that
identifiably belonged to them, their conversion claim is
dismissed.
C.
Unjust Enrichment
To state a claim for unjust enrichment under New Jersey
law, the Plaintiffs must establish that: (i) the Defendants
received a benefit; (ii) at Plaintiffs’ expense; (iii) that
retention of that benefit without payment would be unjust; (iv)
that the Plaintiffs expected remuneration from the Defendants at
the time they performed or conferred a benefit on Defendants;
and (v) that the failure of remuneration enriched Defendants
beyond their contractual rights.
Slack v. Suburban Propane
Partners, L.P., No. 10-2548, 2010 WL 5392845, at *9 (D.N.J. Dec.
22, 2010); Maniscalco v. Brother Intern. Corp., 627 F. Supp. 2d
494, 506 (D.N.J. 2009).
Plaintiffs allege that Defendants have been unjustly
enriched in two respects: (1) by their receipt of the 7,500
former National Alliance members; and (2) because Plaintiffs
were forced to pay refund claims when Defendants would not honor
refund claims.
With respect to both claims, Plaintiffs were
required, and failed, to allege that they expected remuneration
from the Defendants when the membership transfer occurred and
when Plaintiffs paid the refund claims.
UltraFlex Systems, Inc.
v. Verseidag-Indutex GmbH, No. Civ.A. 01-129, 2006 WL 1098181,
at *13 (D.N.J. Mar. 30, 2006)(dismissing unjust enrichment
claim, for failure to state a claim, where plaintiff had “not
alleged that it performed or otherwise conferred a benefit on
[Defendant] . . . with the expectation of remuneration”).
Accordingly, Plaintiffs’ unjust enrichment claim is dismissed.
IV.
Conclusion
For all the foregoing reasons, Plaintiffs’ Amended
Complaint is DISMISSED without prejudice.
While Plaintiff has
already had one opportunity to amend, in light of the liberal
amendment standard, Plaintiff will be given “one final
opportunity” to further amend.
Resnik v. Boskin, No. 09-5059,
2011 WL 689617, at *9 (D.N.J. Feb. 17, 2011); Fennell v. Alie,
2009 WL 2984200, at *2 (D.Del. Sept. 16, 2009)(affording
plaintiff a “final opportunity” to amend where he had already
amended once and the court could not say that amendment would be
futile).
Plaintiff may have 30 days to do so.
Dated: December 1, 2011
s/Renée Marie Bumb
RENÉE MARIE BUMB
United States District Judge
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