High Rock Westminster Street, LLC v. Bank of America, N.A.

Filing 76

OPINION AND ORDER denying as moot 32 Motion to Dismiss for Failure to State a Claim; denying as moot 39 Motion to Dismiss; denying 65 Motion to Amend/Correct. So Ordered by Chief Judge William E. Smith on 8/6/14. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
Plaintiff,
)
)
v.
)
)
BANK OF AMERICA, N.A.,
)
)
Defendant.
)
___________________________________)
HIGH ROCK WESTMINSTER STREET LLC,

C.A. No. 13-500 S

OPINION AND ORDER
WILLIAM E. SMITH, Chief Judge.
Bank of America, N.A. (“BOA”) has filed a Motion to Amend
its Counterclaim against High Rock Westminster Street LLC (“High
Rock”).

(ECF No. 65.)

For the reasons set forth below, the

motion is DENIED.
I.

Background
This case involves a dispute over a commercial real estate

lease.
owned

According to the Complaint, Fleet Bank, N.A. (“Fleet”)
and

Westminster

occupied
Street

the
in

so-called

“Superman

Providence,

Westminster”), until April 7, 2003.
Westminster

Office

1031,

LLC

Building”

Rhode

Island

at

111

(“111

On that date, Fleet and

(“Westminster”)

entered

into

a

sale-leaseback agreement whereby Westminster acquired ownership
of

111

Westminster

and

simultaneously

agreed

to

let

Fleet

continue to occupy the premises pursuant to a ten-year lease
(“the Lease”).
2004,

BOA

Westminster,
Lease.
111

Subsequent to the leaseback-sale, on April 1,

acquired
and

Fleet,

assumed

took

Fleet’s

over

occupancy

responsibilities

of

111

under

the

Four years later, on January 24, 2008, High Rock bought

Westminster

responsibilities

and

took

over

Westminster’s

under

the

Lease.

Thus,

rights

until

the

and
Lease

expired, by its own terms, on April 30, 2013, High Rock was the
landlord and BOA the tenant at 111 Westminster.
A few months after the expiration of the Lease, on July 2,
2013, High Rock sued BOA alleging that BOA breached the Lease by
failing to properly repair and maintain the building, that BOA
violated

the

implied

committed waste.

covenant

of

good

faith,

and

that

BOA

High Rock seeks monetary damages to pay for

the necessary repairs and to compensate for lost rental income.
High Rock also alleges that BOA is liable for several months’
rent as a hold-over tenant because it failed to remove certain
moveable

furnishings,

personal

property

trade

(the

fixtures,

“Personalty”)

equipment,
from

111

and

other

Westminster

following the expiration of the Lease.
On September

10,

2013,

BOA

filed

an

answer

denying

all

liability, as well as two counterclaims, both of which pertain
to

High

Rock’s

claim

for

hold-over

rent.

In

its

first

counterclaim, BOA sought a declaratory judgment to the effect
2

that

BOA

was

not

required

under

the

Lease

to

remove

Personalty and thus was never a hold-over tenant.
counterclaim

alleged

that

seeking hold-over rent.
counterclaims,

arguing

High

Rock

breached

the

The second

the

Lease

by

High Rock filed a motion to dismiss the
first

that

the

counterclaim

for

declaratory judgment should be dismissed because it is simply
the inverse of High Rock’s claim for hold-over rent, and second
that

the

dismissed

counterclaim
because

the

for
Lease

breach

of

expired

the

before

Lease
High

should
Rock

be

sought

hold-over rent and, regardless, nothing in the Lease says that
High Rock cannot seek hold-over rent from a hold-over tenant. 1
The parties then entered into an agreement, on October 29,
2013,

concerning

the

removal

of

the

Westminster (the “Personalty Agreement”).

Personalty

from

111

Under the Personalty

Agreement, BOA agreed to pay High Rock $350,000 and to waive all
its claims to title of the Personalty.

In exchange, High Rock

agreed to arrange for the removal of the Personalty and to waive
any claims for hold-over rent for the period beginning 45 days
after High Rock received the $350,000 payment from BOA.

The

parties explicitly agreed that the Personalty Agreement would
not affect the parties’ respective claims and counterclaims with
1

High Rock later renewed this motion to dismiss BOA’s
counterclaims.
Because of the pending Motion to Amend that is
the subject of this Opinion and Order, these motions to dismiss
(ECF Nos. 32, 39) may be DENIED AS MOOT without prejudice to
High Rock’s right to refile.
3

respect to hold-over rent for any period prior to 45 days after
the date on which High Rock received the $350,000 payment.
On June 17, 2014, BOA filed the instant Motion to Amend its
Counterclaim.

Acknowledging

that

the

counterclaim

for

declaratory judgment is, in fact, the flip side of High Rock’s
claim, BOA seeks to drop that counterclaim.

BOA also seeks to

re-characterize its breach of contract counterclaim as a claim
for unjust enrichment.
upon

High

Rock

by

BOA argues that it conferred a benefit

paying

$350,000

under

the

terms

of

the

Personalty Agreement for the removal of the Personalty, and that
it would be inequitable for High Rock to retain that benefit
without paying for it, as BOA was never legally obliged to pay
for the removal of the Personalty.
II.

Discussion
A.

Standard of Review

Courts should freely give leave to amend a pleading when
justice so requires. Fed. R. Civ. P. 15(a)(2).

However, a court

may refuse leave to amend if the amendment is futile.

Hatch v.

Dep’t for Children, Youth and Their Families, 274 F.3d 12, 19
(1st Cir. 2001).
conclusion
judgment,

of
a

When a motion to amend is filed before the

discovery
court’s

and

futility

before

any

analysis

motions
is

identical

analysis under a Rule 12(b)(6) motion to dismiss.

4

for

summary
to

the

Juarez v.

Select Portfolio Servicing, Inc., 708 F.3d 269, 276 (1st Cir.
2013).
Under Rule 12(b)(6), “the combined allegations, taken as
true, must state a plausible, not a merely conceivable, case for
relief.”

Sepulveda-Villarini v. Dep't of Educ. of P.R., 628

F.3d 25, 29 (1st Cir. 2010) (Souter, J.) (discussing Ashcroft v.
Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550
U.S.

544

claims,

(2007)).
courts

When

“accept

evaluating

the

the

well-pleaded

plausibility
facts

the

true

as

of

and

indulge all reasonable inferences therefrom in the [non-moving
party]’s favor.” 2
2005).

In

Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st Cir.

addition,

a

court

“may

consider

the

whole

of

a

document integral to or explicitly relied upon in a [pleading],
even if that document is not annexed to [that pleading].”

Id.

(citing Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228
F.3d

24,

consider

32

(1st

both

Personalty

Cir.

the

Agreement

2000)).

proposed

Therefore,

amended

explicitly

this

Court

will

and

the

counterclaim

referred

to

in

the

proposed

amendment. 3

2

Although BOA moved for leave to amend, BOA is the “nonmoving party” for purposes of the Rule 12(b)(6) analysis since
its counterclaim is evaluated.
3

The Personalty Agreement was attached in its entirety to
High Rock’s opposition to BOA’s motion to amend.
The Court
notes that this copy is signed only by BOA, but neither party
suggests that it is not the final, enforceable version.
5

B.

Plausibility of the Unjust Enrichment Claim

To succeed on a claim for unjust enrichment, BOA must prove
that BOA conferred a benefit upon High Rock, that High Rock
appreciated the benefit, and that it would be inequitable under
the circumstances for High Rock to retain the benefit without
paying for its value.

See W. Reserve Life Assurance Co. of Ohio

v. Caramadre, 847 F. Supp. 2d 329, 348 (D.R.I. 2012) (citing
Narragansett Elec. Co. v. Carbone, 898 A.2d 87, 99 (R.I. 2006)).
Normally, unjust enrichment claims are precluded “where a valid
contract governs the subject matter.”

Tantara Co. v. Bay St.

Neighborhood Ass’n, LLC, C.A. No. NC-11-55, 2012 R.I. Super.
LEXIS

155,

at

*15

(R.I.

Super.

Ct.

Oct.

4,

2012)

(citing

Restatement (Third) of Restitution and Unjust Enrichment § 2(2)
(2011)).
unjust

However, a party to a contract may recover under an
enrichment

rescinded,

or

theory

otherwise

if

made

the

contract

invalid,

or

is

[if]

“breached,
the

benefit

received was outside the scope of the contract.”

Id. at *16

(quoting Clapp

1021,

v.

Goffstown

Sch.

Dist.,

977

A.2d

1025

(N.H. 2009)); see also Restatement (Third) of Restitution and
Unjust Enrichment § 2 cmt. c.
conferred

under

the

terms

But when the benefit received was
of

a

contract

and

there

is

no

allegation that the contract was invalid, voidable, unclear, or
otherwise

flawed,

a

court

may

6

properly

dismiss

the

unjust

enrichment claim.

See Reed v. Zipcar, Inc., 527 Fed. Appx. 20,

24 (1st Cir. 2013).
Here, BOA alleges that it paid $350,000 to High Rock under
the terms of the Personalty Agreement.
¶ 24, ECF No. 65-1.)

(See Am. Counterclaim

It does not allege, however, that the

Personalty Agreement is invalid, voidable, or unclear, and thus
BOA cannot “escape its terms by resort to equity.”

Reed, 527

Fed. Appx. at 24; see also 42 C.J.S. Implied Contracts § 38 (“An
unjust enrichment claim is not a means for shifting the risk one
has assumed under contract.”). 4
Furthermore,

when

a

party

“is

fully

compensated

for

a

benefit conferred, a claim for unjust enrichment will not lie.”
Bisbano v. Strine Printing Co., 737 F.3d 104, 108 (1st Cir.
2013) (citing Narragansett Elec. Co., 898 A.2d at 99).

Here,

BOA does not allege that High Rock retained a benefit without
paying for its value.

High Rock received the payment as part of

a bargained-for exchange that was mutually beneficial to the
parties.

In exchange for the $350,000 payment, High Rock agreed

4

Of course, a party may plead both breach of an enforceable
contract and unjust enrichment in the alternative. See Fed. R.
Civ. P. 8(d)(3); see also Lass v. Bank of Am., N.A., 695 F.3d
129, 140 (1st Cir. 2012). Here, BOA is not seeking to bring its
unjust enrichment claim in the alternative. It merely seeks to
replace its breach counterclaim with a counterclaim for unjust
enrichment.
Further, whether or not it is pled as an
alternative theory, an unjust enrichment claim to recover a
benefit conferred pursuant to a contract must include an
allegation that the contract was voidable or otherwise invalid.
7

to remove the Personalty and to waive any claims for hold-over
rent starting 45 days after it received the payment, thereby
effectively
rent.

capping

BOA’s

potential

liability

for

hold-over

(See Personalty Agreement ¶¶ 1, 7, ECF No. 71.)

Again,

BOA does not allege that the contract is unenforceable or that
High Rock failed to perform.

Therefore, the unjust enrichment

claim would not survive a Rule 12(b)(6) motion to dismiss and
thus BOA’s Motion to Amend is futile.
In support of its Motion to Amend, BOA argues that High
Rock should be equitably estopped from arguing that the unjust
enrichment claim is barred by the existence of a contract, since
High

Rock

moved

to

dismiss

BOA’s

original

counterclaim

for

breach of contract on the seemingly opposite theory that there
was no contract because the Lease had previously expired.
argument
relate

is
to

based
two

on

an

equivocation;

different

High

contracts.

Rock’s
In

its

BOA’s

arguments
original

counterclaim, BOA claimed that High Rock breached the Lease by
seeking hold-over rent.

High Rock argued in response that the

by-then expired Lease did not apply.

But the unjust enrichment

claim is not barred by the existence of the Lease.

Rather, the

unjust enrichment claim is barred by the Personalty Agreement,
pursuant to which the $350,000 payment was made.
is no inconsistency in High Rock’s position.

8

Hence, there

III. Conclusion
The

proposed

amended

counterclaim

for

unjust

enrichment

would not survive a Rule 12(b)(6) motion to dismiss because the
benefit received was allegedly conferred under the terms of an
agreement, and there is no allegation that the agreement was
invalid

or

subject

to

avoidance.

amendment is DENIED as futile.

IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: August 6, 2014

9

Therefore,

the

proposed