140 F. Supp. 3d 138
D. Mass.2015Background
- Whitman & Co. was substituted as the party to a marketing/agency Agreement with Longview (originally with R. Eugene Whitman); Agreement provided annual retainer plus Agency Fees as a percentage of Management Fees from clients introduced by Whitman.
- Whitman & Co. received approximately $3.4 million in Agency Fees tied to Longview’s work for the North Carolina Retirement System (NCRS).
- Following a North Carolina investigation into placement agents, Longview agreed to refund $10 million of Management Fees to NCRS. Longview alleges this reduced the Management Fees on which Agency Fees should have been calculated.
- Longview asserts Whitman & Co. retained $2.1 million that should have been returned or reduced after the refund, and filed counterclaims for money had and received and unjust enrichment seeking recovery of that $2.1 million.
- Whitman & Co. moved to dismiss the counterclaims under Rule 12(b)(6). The court found the contract did not address the precise issue of funds paid based on subsequently refunded Management Fees and denied the motion to dismiss.
Issues
| Issue | Whitman & Co.'s Argument | Longview's Argument | Held |
|---|---|---|---|
| Whether the existence of an express contract bars unjust enrichment and money had and received claims at the pleading stage | Contract governs the dispute; equitable claims should be dismissed because parties contracted | Contract does not address what happens to Agency Fees when Management Fees are later refunded, so equitable claims are permissible | Denied — existence of a contract alone does not require dismissal where contract doesn’t address the disputed subject matter |
| Whether Longview plausibly pleaded unjust enrichment/money had and received | Allegations are speculative and fail to show Whitman & Co. unjustly retained funds | Alleged benefit conferred (Agency Fees), defendant’s awareness, and retention under inequitable circumstances (post-refund) are sufficiently alleged | Denied — Longview pleaded facts that, if true, satisfy the elements and survive a Rule 12(b)(6) motion |
Key Cases Cited
- United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377 (1st Cir. 2011) (pleading standard on a motion to dismiss; accept well-pleaded facts and reasonable inferences in non-movant’s favor)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaints must plead facts that make relief plausible, not merely conceivable)
- Jelmoli Holding, Inc. v. Raymond James Fin. Servs., 470 F.3d 14 (1st Cir. 2006) (unjust enrichment and money had and received elements; money-specific variation)
- Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47 (1st Cir. 2009) (elements of unjust enrichment)
- Lass v. Bank of Am., N.A., 695 F.3d 129 (1st Cir. 2012) (mutually exclusive remedies but permissible to plead contract and unjust enrichment at pleading stage)
- Szulik v. State St. Bank & Tr. Co., 935 F. Supp. 2d 240 (D. Mass. 2013) (existence of contract does not automatically bar unjust enrichment claim at pleading stage)
- Reed v. Zipcar, Inc., 883 F. Supp. 2d 329 (D. Mass. 2012) (distinguishable: contract expressly addressed disputed fees, supporting dismissal of equitable claims)