Butts v. Weltman, Weinberg & Reis Co., LPA
Filing
13
MEMORANDUM OPINION re Motion to Dismiss. Signed by District Judge James C. Cacheris on 11/14/13. (klau, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
DONNA BUTTS,
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Plaintiff,
v.
WELTMAN, WEINBERG & REIS
Co., LPA,
Defendant.
M E M O R A N D U M
1:13cv1026 (JCC/IDD)
O P I N I O N
This matter is before the Court on Defendant Weltman,
Weinberg & Reis’s (“Defendant”) Motion to Dismiss (“Motion”).
[Dkt. 7.]
For the following reasons, the Court will deny
Defendant’s Motion.
I.
Background
The pertinent factual allegations in this case are as
follows. 1
In August 2007, Plaintiff Donna Butts (“Plaintiff”)
opened a personal line of credit with Beneficial Floria, Inc.
(“BFI”).
(Compl. [Dkt. 1] ¶ 13.)
Plaintiff withdrew $5,000
from this line of credit and paid off her entire balance by June
2010.
(Compl. ¶¶ 14-15.)
Nevertheless, her account was
1
In considering a motion to dismiss for failure to state a claim, as is the
case here, “a court accepts all well-pled facts as true and construes these
facts in the light most favorable to the plaintiff[.]” Nemet Chevrolet, Ltd.
v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citations
omitted). Accordingly, the following facts, taken from Plaintiff's
Complaint, are accepted as true for purposes of this motion. See Erickson v.
Pardus, 551 U.S. 89, 94 (2007).
1
transferred to a collection agency known as Atlantic Credit and
Finance, Inc. (“Atlantic Credit”).
(Compl. ¶¶ 13, 16.)
Atlantic credit, in turn, hired Defendant to pursue collection
efforts against Plaintiff.
(Compl. ¶¶ 13, 16.)
Defendant subsequently contacted Plaintiff and
demanded additional payment on the account.
(Compl. ¶¶ 16-19.)
Defendant “refused to hear Plaintiff’s dispute that she did not
in fact borrow more than $5,000, and had paid that.”
16.)
(Compl. ¶
In light of Defendant’s threats to take further action,
Plaintiff forfeited an additional $2,691.03.
(Compl. ¶ 18.)
Defendant continued its collection efforts despite Plaintiff’s
overpayment.
(Compl. ¶ 19.)
On August 20, 2013, Plaintiff filed this action
seeking recovery of her overpayment and damages.
Plaintiff’s
Complaint raises two claims: (1) violation of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692; and (2) unjust
enrichment.
(Compl. ¶¶ 20-14.)
Concerning her unjust
enrichment claim, Plaintiff alleges that “Defendant’s demand and
consequent receipt of the overpayment . . . constitutes unjust
enrichment to Defendant.”
(Compl. ¶ 24.)
Defendant has moved to dismiss Plaintiff’s unjust
enrichment claim pursuant to Federal Rule of Civil Procedure
12(b)(6).
(Mot. to Dismiss [Dkt. 7] at 1.)
Defendant argues
that because “the underlying facts involve an enforceable
2
contract between Plaintiff and Defendant’s client, any claims
for unjust enrichment are misplaced.”
(Def.’s Mem. Supp. Mot.
to Dismiss (“Def.’s Mem.”) [Dkt. 8] at 1.)
In rebuttal,
Plaintiff argues that this claim is “properly supported” and
“Virginia law does not prohibit a claim for unjust enrichment
against a debt collector who wrongfully collects funds which are
not owed.”
1-2.)
(Pl.’s Opp’n [Dkt. 10] (as paginated by CM/ECF) at
Defendant’s Motion is now before the Court.
II.
Standard of Review
“A motion to dismiss under Rule 12(b)(6) tests the
sufficiency of a complaint; importantly, it does not resolve
contests surrounding the facts, the merits of a claim, or the
applicability of defenses.”
Republican Party of N.C. v. Martin,
980 F.2d 943, 952 (4th Cir. 1992) (citation omitted).
The
Supreme Court has stated that in order “[t]o survive a motion to
dismiss, a [c]omplaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible
on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id.
“Determining whether a complaint states a plausible
claim for relief [is] . . . a context-specific task that
3
requires the reviewing court to draw on its judicial experience
and common sense.”
Iqbal, 556 U.S. at 679 (citations omitted).
While legal conclusions can provide the framework for a
complaint, all claims must be supported by factual allegations.
Id.
Based upon these allegations, the court will determine
whether the plaintiff's pleadings plausibly give rise to an
entitlement to relief.
Id.
Legal conclusions couched as
factual allegations are not sufficient, Twombly, 550 U.S. at
555, nor are “unwarranted inferences, unreasonable conclusions,
or arguments,” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P’ship,
213 F.3d 175, 180 (4th Cir. 2000).
Moreover, the plaintiff does
not have to show a likelihood of success; rather, the complaint
must merely allege - directly or indirectly - each element of a
“viable legal theory.”
Twombly, 550 U.S. at 562-63.
In addition, at the motion to dismiss stage, the Court
must construe the complaint in the light most favorable to the
plaintiff, read the complaint as a whole, and take the facts
asserted therein as true.
Iqbal, 556 U.S. at 678.
III.
Analysis
As a threshold matter, it is worth noting that the
parties concur that Virginia law governs this matter.
Mem. at 3; Pl.’s Opp’n at 2-3.)
(Def.’s
Accordingly, the Court applies
Virginia law in its discussion below.
See G4I Consulting, Inc.
v. Nana Servs., LLC, No. 1:11cv810 (LMB/TCB), 2012 WL 1677985,
4
at *4 (E.D. Va. May 14, 2012) (“Because the rule of lex loci
delicti, or the law of the place of the wrong, applies to
choice-of-law decisions in tort actions, and the site of the
alleged wrong in this instance was the Commonwealth, Virginia
law governs the unjust enrichment claim[.]”).
At issue here is Plaintiff’s claim that Defendant was
unjustly enriched at her expense as a result of the
overpayments.
To recover under this theory, Plaintiff must
demonstrate the following three elements: “(1) [she] conferred a
benefit on [Defendant]; (2) [Defendant] knew of the benefit and
should reasonably have expected to repay [Plaintiff]; and (3)
[Defendant] accepted or retained the benefit without paying for
its value.”
Schmidt v. Household Fin. Corp., II, 276 Va. 108,
116 (2008).
Generally, an action for unjust enrichment lies
when one has money of another that he has no right to retain.
See Robertson v. Robertson, 137 Va. 378 (1923).
Under Virginia law, unjust enrichment is an implied
contract action based on the principles of equity.
See Kern v.
Freed Co., Inc., 224 Va. 678, 680-81 (1983); Primrose Dev. Corp.
v. Benchmark Acquisition Fund I, Ltd. P’ship, No. 19161, 1998 WL
957312, at *2-3 (Va. Cir. Ct. Oct. 29, 1998); Singer v. Dungan,
No. 107888, 1992 WL 884986, at *4 (Va. Cir. Ct. Oct. 28, 1992).
“To avoid unjust enrichment, equity will effect a contract
implied in law, i.e., a quasi-contract, requiring one who
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accepts and receives the services of another to make reasonable
compensation for those services.”
Rosetta Stone Ltd. v. Google,
Inc., 676 F.3d 144, 165 (4th Cir. 2012) (citations and internal
quotation marks omitted). 2
“[A] quasi-contract is not a contract
at all but rather an equitable remedy thrust upon the recipient
of a benefit under conditions where the receipt amounts to
unjust enrichment.”
Nossen v. Hoy, 750 F. Supp. 740, 744 (E.D.
Va. 1990).
A condition precedent to the assertion of such a claim
is that no express contract exists between the parties.
Vollmar
v. CSX Transp., Inc., 705 F. Supp. 1154, 1176 (E.D. Va. 1989).
Logic dictates that “an express contract defining the rights of
the parties necessarily precludes the existence of an implied
contract of a different nature containing the same subject
matter.”
(1940).
S. Biscuit Co., Inc. v. Lloyd, 174 Va. 299, 311
“[T]here can be no recovery in quantum meruit where a
valid express contract between the parties exists.
Parties to
an express contract are entitled to have their rights and duties
adjudicated exclusively by its terms.”
Ciliv v. UXB Int’l,
2
Virginia law recognizes two types of implied contracts: contracts that are
implied-in-fact and contracts that are implied-in-law. See Rosetta Stone,
676 F.3d at 166. To circumvent the confusion caused by this, the tendency is
to substitute the term “quasi contract” in place of the term “contract
implied-in-law.” See Maier v. Hendrickx, LAW NO. 135590, 1995 WL 1055848, at
*2 n.2 (Va. Cir. Ct. May 2, 1995). Unjust enrichment is a quasi-contract
claim in Virginia. See The Christian Broad. Network, Inc. v. Busch, Civil
Action No. 2:05cv558, 2006 WL 2850624, at *7 (E.D. Va. Oct. 3, 2006); Park
Eldenwood Assocs. v. Firestone Capital Corp., AT LAW NO. 106597, 1991 WL
835327, at *3 (Va. Cir. Ct. Dec. 2, 1991).
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Inc., Civil Action No. 7:12–cv–290, 2012 WL 5245323, at *2 (W.
D. Va. Oct. 22, 2012) (citation and internal quotation marks
omitted); see also U.S. ex rel. Badr v. Triple Canopy, Inc.,
Case No. 1:11–cv–288 (GBL/JFA), 2013 WL 3120204, at *15 (E.D.
Va. June 19, 2013) (noting that a claim of unjust enrichment
cannot survive when an express contract governs the parties’
dispute).
Relying upon this rule, Defendant argues that the
valid contract between Plaintiff and BFI precludes her unjust
enrichment claim.
(Def.’s Mem. at 3 (“The dispute over the
amount owed by Plaintiff to Defendant’s client, [BFI], is
governed by the contract existing between Plaintiff and [BFI];
thus, Plaintiff’s supposed overpayments must be resolved through
contractual remedies.”).)
Although Defendant correctly cites to
the legal principles set forth above, (Def.’s Mem. at 3-4), they
are not squarely applicable in this case.
This doctrine plainly
bars unjust enrichment claims when both parties to the lawsuit
are also parties to the contract; however, the question
presented here is whether Virginia law bars an unjust enrichment
claim when the plaintiff is a party to the contract but the
defendant is not.
settled.
(Def.’s Mem. at 1.)
This issue is less
See Datastaff Tech. Group, Inc. v. Centex Constr. Co.,
528 F. Supp. 2d 587, 598 (E.D. Va. 2007) (“While some courts
have held that this rule applies to bar a suit between A and B
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where an express contract on the same subject matter exists
between A and C, other courts have rejected such an application
of this rule.” (footnote omitted)).
When a federal court exercises diversity or pendent
jurisdiction over state-law claims, as is the case here, “the
outcome of the litigation in the federal court should be
substantially the same . . . as it would be if tried in a State
court.”
Guar. Trust Co. of N.Y. v. York, 326 U.S. 99, 109
(1945).
Thus, the court applies state rules when analyzing
substantive issues of law.
151 (1988).
See Felder v. Casey, 487 U.S. 131,
To the extent this Court must draw conclusions
about matters of Virginia law in evaluating the instant motion,
“the [Virginia Supreme Court] is the final arbiter of what is
state law.
When it has spoken, its pronouncement is to be
accepted by federal courts as defining state law unless it has
later given clear and persuasive indication that its
pronouncement will be modified, limited or restricted.”
West v.
Am. Tel. & Tel. Co., 311 U.S. 223, 236 (1940).
The lone decision of the Virginia Supreme Court
touching upon this issue is Nedrich v. Jones, 245 Va. 465
(1993).
In Nedrich, the plaintiff, Weber, executed an
employment agreement with Dulles, a property management company,
wherein Dulles promised to pay Weber a bonus for any tenant that
he procured for their properties.
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245 Va. at 468-70.
After
Dulles failed to pay Weber the promised bonus, Weber brought an
implied contract claim against Riggs, a bank that had foreclosed
on Dulles’s property, seeking to recoup the bonus.
70.
Id. at 469-
The trial court found this claim frivolous and sanctioned
Weber’s attorney.
Id. at 470.
At issue on appeal was whether
the trial court had properly entered sanctions on the ground
that Weber’s implied contract claim was not warranted by
existing law.
Id. at 476-77.
The Virginia Supreme Court agreed
with the trial court, concluding that Weber’s implied contract
claim was unwarranted because the “law will not impose an
implied contractual relationship upon parties in contravention
of an express contract.
In the present case, Weber's right to
receive a bonus was defined by the terms of his express contract
with Dulles.”
Id. at 477.
Contrary to Defendant’s assertion, Nedrich does not
stand for the blanket rule that the existence of an express
contract between different parties bars all subsequent implied
contract claims touching upon the same subject matter.
The rule
in Nedrich, according to its terms, applies only when the
resulting implied contract would contravene an express contract.
245 Va. at 477.
Subsequent case law supports this
interpretation.
See Forest City Commercial Dev., Inc. v. Agere
Sys., Inc., Civil Action No. 3:08CV328, 2010 WL 2245499, at *8
(E.D. Va. June 1, 2010) (noting that under Nedrich an implied
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contact is permissible provided it does not contravene an
express agreement); Appleton v. Bondurant & Appleton, P.C., No.
04–1106, 2005 WL 517491, at *7 (Va. Cir. Ct. Feb. 28, 2005)
(holding that a quantum meruit claim could be viable when no
agreement covered post-departure compensation for work
previously performed); see also Lion Assocs., LLC v. Swiftships
Shipbuilders, LLC, 475 F. App’x 496, 503 (4th Cir. 2012) (“If an
express contract exists but does not cover the services
rendered, a cause of action for unjust enrichment remains
available.”); Raymond, Colesar, Glaspy & Huss, P.C. v. Allied
Capital Corp., 961 F.2d 489, 493 (4th Cir. 1992) (concluding
that Virginia law “permits implied contract claims to be brought
even though an express contract concerning the same subject
matter exists between the claimant and a third party”); 17 CJS
Contracts § 7 (2013) (“An implied agreement is precluded only
where the express and the asserted implied contract relate to
the same subject matter and where the provisions of the express
contract would supersede those of the other.
An implied
agreement may be given effect where it is based on the
subsequent conduct of the parties not covered by the express
contract.” (footnotes omitted)).
Accordingly, resolution of this motion requires
determining if the agreement between Plaintiff and BFI
contravenes the existing action for Plaintiff to recover monies
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paid to a third-party debt collector.
In other words, is there
an express contractual provision that covers the alleged
wrongful conduct.
See Three Rivers Landing of Gulfport, LP v.
Three Rivers Landing, LLC, No. 7:11-cv-00025, 2012 WL 1598130,
at *5 (W.D. Va. May 4, 2012).
The Court finds Defendant’s argument that the contract
clearly covers the current dispute unconvincing at the motion to
dismiss stage.
(Def.’s Mem. at 3.)
This issue cannot be
decided on the current record because the substance of
Plaintiff’s contract with BFI is unknown.
While it certainly
plausible (if not likely) that the contract does in fact contain
provisions regarding overpayment, this fact is not before the
Court.
The merits of this defense requires further litigation,
either by summary judgment or trial.
The Court now turns to the Defendant’s other
contentions, and specifically to the issue of whether the
elements of unjust enrichment are sufficiently pled in this
case.
Plaintiff alleges that, “Defendant’s demands and
consequent receipt of the overpayment referenced above
constitutes an unjust enrichment to Defendant.”
(Compl. ¶ 24.)
Plaintiff’s Complaint states that she paid $2,691.03 to
Defendant despite the absence of any valid obligation.
¶ 16.)
(Compl.
Plaintiff also alleges that Defendant accepted and
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retained this overpayment knowing that this money was not due. 3
(Compl. ¶¶ 16-24.)
Accordingly, the Court finds that
Plaintiff’s unjust enrichment claim is properly pled and will
not be dismissed.
See Schmidt, 276 Va. at 116.
IV.
Conclusion
For the foregoing reasons, the Court will deny
Defendant’s Motion.
November 14, 2013
Alexandria, Virginia
An appropriate Order will issue.
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
3
Defendant’s contention that it did not receive any benefit from Plaintiff
because any payments were remitted to Atlantic Credit is unavailing at this
stage. See WRH Mortg., Inc. v. S.A.S. Assocs., 214 F.3d 528, 534 (4th Cir.
2000) (noting that recovery in quasi-contract is barred where there is no
showing that any benefit accrued to the defendant). Although this defense
may ultimately prevail, whether Defendant received any value is a factual
issue not addressable here. Plaintiff has alleged that Defendant kept the
overpayments, and the Court is bound to accept this factual contention as
true. See Collier v. Land & Sea Rest. Co., LLC, No. 7:13–cv–00104–JCT, 2013
WL 5274824, at *2 (W.D. Va. Sept. 18, 2013) (“In considering a motion to
dismiss under Rule 12(b)(6), the Court is obligated to accept as true all of
the complaint's factual allegations and take the facts in the light most
favorable to the plaintiff.” (citation omitted)).
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