70 F. Supp. 3d 516
D.D.C.2014Background
- Transmashholding alleges a rogue employee entered a sham joint-venture that caused €20 million to be transferred from its Zurich account to Richcom in Hong Kong.
- Richcom’s board resolved to loan $600,000 from those funds to defendant Miller at the request of defendant Taylor; Richcom wired $600,000 to Miller in June 2011.
- Miller executed a promissory note naming Taylor as lender; Miller used the $600,000 for personal debts and taxes.
- Transmashholding sued in D.C. federal court asserting conversion and unjust enrichment, and sought return of the $600,000; Miller moved to dismiss under Fed. R. Civ. P. 12(b)(6) and 12(b)(7).
- Miller argued Transmashholding failed to identify an identifiable fund for conversion and that Taylor (not served) is an indispensable party under Rule 19; Transmashholding relied on board minutes and a wire transfer form tying the $600,000 to the embezzled €20 million.
- The court denied Miller’s motions, holding the complaint plausibly pleaded conversion and unjust enrichment and that Taylor, as an alleged joint tortfeasor, was not an indispensable party under Rule 19.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Conversion: whether complaint identifies an identifiable fund | Transmashholding contends documents (board minutes and interbank transfer) show the $600,000 came from the embezzled €20M, giving it a possessory right | Miller contends plaintiff cannot show the $600,000 specifically derived from the €20M and thus conversion fails | Denied dismissal — pleadings and exhibits sufficiently link the $600,000 to the stolen funds; conversion claim plausible |
| Unjust enrichment: whether plaintiff conferred and defendant unjustly retained benefit | Transmashholding alleges it conferred the $600,000 (via Richcom) and Miller retained it despite demands for return | Miller argues no benefit was conferred on him and retention is not unjust (also raises potential conflict with Miller’s note to Taylor) | Denied dismissal — elements adequately pleaded; innocence in receipt does not defeat unjust enrichment claim |
| Rule 19 joinder: whether Taylor is indispensable because he holds promissory note | Transmashholding notes Taylor is an alleged joint tortfeasor and cannot be located for assignment of the note | Miller argues Taylor must be joined and absence requires dismissal | Denied dismissal — Taylor is a permissive co-tortfeasor, not indispensable; joint tortfeasors need not all be named |
| Pleading standard for Rule 12(b)(6) | Transmashholding relies on Iqbal/Twombly plausibility standard and attached exhibits to meet it | Miller urges the court to discredit self-serving minutes and demands stricter proof at pleading stage | Court applied plausibility standard; must accept well-pleaded allegations and exhibits and not resolve credibility at motion to dismiss |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (establishes plausibility pleading standard at motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
- Kaempe v. Myers, 367 F.3d 958 (conversion under D.C. law requires unlawful exercise of control over another's property)
- Curaflex Health Serv., Inc. v. Bruni, 877 F. Supp. 30 (money may be subject to conversion when a plaintiff has a possessory right to an identifiable fund)
- Vila v. Inter–Am. Inv. Corp., 570 F.3d 274 (elements and nature of unjust enrichment under D.C. law)
- Temple v. Synthes Corp., Ltd., 498 U.S. 5 (all joint tortfeasors need not be named; permissive joinder under Rule 19)