88 F. Supp. 3d 775
E.D. Mich.2015Background
- PNC Bank sought appointment of a receiver for a joint loan to E.L. Mechanical, Goyette Mechanical, and Goyette-West, with GP Trust and Pegúese aims tied to minority contracting goals.
- Goyette parties allege Pegúese diverted profits and funds to PS Design Systems and its principals, harming the partnership and loan collateral.
- Third-party claims were brought against PS Design, Jackson-Stovall, and Stovall alleging civil conspiracy, fraud, and unjust enrichment related to invoices for alleged engineering services.
- PS Design entities moved to dismiss or for summary judgment, arguing lack of standing, failure to plead a plausible conspiracy, and insufficient reliance/intent facts.
- Court analyzed standing, conspiracy, and unjust enrichment under Rule 12(b)(6) standards and noted abandonment of unjust enrichment claim; granted dismissal with preclusive effects absent amendment.
- Plaintiffs are given leave to amend the third-party complaint by Feb. 11, 2015 if they choose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of third-party plaintiffs to sue | Goyette entities argue damages flow from diverted profits; GP Trust is the real injured party. | Standing missing because injuries are derivative and GP Trust—not the moving defendants—owns profits. | Goyette plaintiffs lack standing; claims dismissed. |
| Civil conspiracy viability | Allegations show a single plan to defraud via PS Design; conspiratorial acts alleged. | No plausible evidence of agreement or reliance; especially against Carla Jackson-Stovall. | Conspiracy claim fails; dismissed. |
| Unjust enrichment viability | Defendants retained partnership profits unjustly. | GP Trust, not Goyette entities, is injured; no direct benefit to PS Design or Stovall shown. | Claim abandoned; dismissed. |
| Amendment rights to cure deficiencies | Should be allowed to cure standing and pleading defects. | Amendment possible but viability unclear since GP Trust is not party. | Amendment allowed subject to cure; otherwise dismissal with prejudice. |
Key Cases Cited
- Warth v. Seldin, 422 U.S. 490 (U.S. 1975) (standing as a threshold requirement in federal cases)
- Valley Forge Christian College v. American United for Separation of Church & State, 454 U.S. 464 (U.S. 1982) (zone of interests and prudential standing limits)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (injury-in-fact, causation, redressability requirements for standing)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard: plausibility required; mere conclusory statements insufficient)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard; identify non-conclusory facts supporting claims)
- Hi-Way Motor Co. v. International Harvester Co., 398 Mich. 330 (Mich. 1976) (fraud elements under Michigan law)
- Mid-State Fertilizer Co. v. Exch. Nat’l Bank, 877 F.2d 1333 (7th Cir. 1989) (derivative injuries; avoid double-counting by limiting remedies to the injured party)
- Quarles v. City of E. Cleveland, 202 F.3d 269 (6th Cir. 1999) (guarantor standing requires personal injury distinct from corporation)
- Belle Isle Grill Corp. v. Detroit, 256 Mich.App. 463 (Mich. App. 2003) (corporate standing rules; suits in common name of entity)
- Memphis Area Local, Am. Postal Workers Union, AFL-CIO v. City of Memphis, 361 F.3d 898 (6th Cir. 2004) (fraud/contract claims; pleading standards applied to conspiracies and fraud)