OPINION & ORDER
Plаintiffs The 2002 Lawrence R. Buchal-ter Alaska Trust (“the Trust”), Alaska Trust Company, and Stephen C. Harris (“Harris”) assert seven causes of action against Defendant Philadelphia Financial Life Assurance Company (“PFLAC”), formerly known as AGL Life Assurance Company, from which the Trust purchased a variable universal life insurance policy. Defendant moves to dismiss all seven causes of action. For the following reasons, Defendant’s Motion To Dismiss is granted in part and denied in part.
I. Background
A. Factual Background
The following facts are taken from the allegations contained in Plaintiffs’ Second Amended Complaint (“SAC”), as well as the exhibits attached thereto. Lawrence Buchalter (“Buchalter”) “created and funded the Trust for his and his family’s benefit” in November 2002. (SAC ¶30 (Dkt. No. 42).) The Trust is an asset protection trust, created under Alaska law. (See SAC Ex. A (“Trust Instrument”), at 1-3,
“The Trust is the Owner and Beneficiary under a variable universal life insurance policy known as the Flexible Premium Survivorship Variable Life Insurance Contract, policy number VL300397, issued in or about December 2002” by Defendant (the “Policy”). (SAC ¶32.) The Policy issued to the Trust is not a widely available, off-the-shelf product. Rather, the “Policy is offered only to qualified investors, including individuals, trusts[,] and other entities that satisfy certain suitability standards.” (SAC Ex. C (Private Placement not registered with the SEC under the 1940 Act as an investment company, and therefore the “SEC does not supervise the management or the investment practices or policies of the Variable Account or of the Company.” (Id. at 16.)
In exchange for Defendant maintaining the tax integrity of the insurance coverage and maintaining and administering the Policy’s optional investment accounts, the Trust paid Defendant upfront and annual fees for the life of the Policy. (See SAC ¶ 36.) In total, Plaintiffs allege that the Trust paid more than $345,000 in fees to Defendant in connection with the Policy. (Id. ¶ 145; see also id. ¶ 20.) Policies such as the one at issue in this case “are designed to allow policy holders, such as the Trust, to invest a portion of their premiums in optional investment accounts that are offered under the policy.” (Id. ¶ 29.) Such policies have certain tax benefits, including that investment gains and the pаyout upon .death are non-taxable and that policy holders “are able to access account balances during their lifetime by borrowing funds, tax free, from the policies.” (Id.) As such, the policies are “essentially a combination of life insurance and a tax-advantaged investment vehicle.” (Id.) Plaintiffs allege that the Trust has made a total of $4.5 million in premium payments for the Policy. (Id. ¶ 35.)
Defendant provided Buchalter and the Trustee with the PPM “in order to allow them to select investment alternatives under the Policy.” (Id. ¶ 37.) “The pre-approved list that [Defendant] presented was a group of private hedge fund partnerships and fund-of-hedge-fund partnerships that created investment vehicles designed specifically for insurance company investment, and [were] designed to be in compliance with relevant tax and insur-anee regulations.” (Id.) Furthermore, while the investments were held by the Policy, (see id. ¶ 40 (explaining that Defendant had exclusive control over and ownership of the invested assets)), the Trust had some degree of control over how the Policy invested the funds. In particular, “the Policy provides that the Trust is permitted to change the direction of the invest
In September 2005, Defendant provided Plaintiffs with a list of insurance dedicated funds available on Defendant’s platform. (SAC Ex. D (“AGL Life Assurance Company — Insurance Dedicated Funds”).)
BEFORE MAKING ANY INVESTMENT IN THE FUND OR BEFORE ALLOCATING ASSETS TO AN SUB-ACCOUNT THAT INVESTS IN THE FUND, INVESTORS ARE ENCOURAGED TO CAREFULLY AND THOROUGHLY REVIEW THE ' FUND’S PRIVATE PLACEMENT MEMORANDUM AND RELATED GOVERNING DOCUMENTS WITH THEIR FINANCIAL, LEGALU AND TAX ADVIS-ORS TO DETERMINE WHETHER THE INVESTMENT IS APPROPRIATE AND SUITABLE FOR THEM. INVESTMENT IN THE FUND AND ALLOCATION OF ASSETS TO AN INSURANCE COMPANY SUB-ACCOUNT THAT INVESTS IN THE FUND IS NOT APPROPRIATE OR SUITABLE FOR ALL INVESTORS.
(SAC Ex. D (“August 2005 SSR Tear Sheet”), at 2.)
Plaintiffs allege that Buchalter then conducted an investigation on the Trust’s be
First, Plaintiffs allege that Defendant either failed to vet SSR at all, or “more likely, ... haphazardly ignored critical information in its rush to become a leading carrier of variable universal life policies, which involved signing up as many funds as possible, as quickly as possible, to [Defendant’s] platform[.]” (SAC ¶ 10; see also id. ¶ 114.) Plaintiffs allege that Defendant “likely ignored ... SSR’s managers’ stunning lack of relevant experience,” alleging that “one manager had no material experience in the complex world of structured finance, ¶ corporate receivables financing ancj asset-based lending, while the other had no credit or lending experience and just four years of reported business experience.” (Id. ¶ 11; see also id. ¶ 111 (alleging that neither Steven Helland nor Tim Law, who together formed SSR, “had the requisite, material experience in the arcane and complex world of structured finance, corporate receivables financing[,} and asset-based lending”).) Second, Plaintiffs allege that Defendant “also likely ignored SSR’s lucrative, overtly conflicted partnership with a fund manager named William Gunlicks[,] who had been under investigation by the SEC since 2000.” (Id. ¶ 12.) In particular, Plaintiffs allege that SSR’s relationship with Gunlicks was conflicted because approximately one-half of SSR’s assets were “dedicated to partnerships allocated into funds, managed by Gunlicks,” but his management company,' Founding Partners, had a 33% interest in SSR and Gunlicks “was paid full hedge fund fees on all capital that SSR invested in his funds.” (Id. ¶ 12; see also id. ¶¶ 112, 116, 118-22, 143.) “Thus, although Gunlicks owned a significant portion of SSR, he was receiving the largest percentage of SSR’s assets to manage himself, [and] charging SSR his full investment fund fee structure!.]” (Id. ¶ 117.) Additionally, “Gunlicks ... was on SSR’s Board and at one time was listed on a public website ... as a Registered Investment Advisor for SSR.” (Id. ¶ 116 (footnote omitted).)
Furthermore, Plaintiffs allege that Defendant misrepresented SSR as an approved and vetted investment. Plaintiffs allege that “[i]n September, 2005, [Defendant’s] Director of Research sent Buchal-ter (in his capacity as advisor to the Trust) an email in which he provided information concerning” SSR and, in particular, “identified SSR as one of its vetted and approved investment choices.” ■ (Id. ¶ 58.) The email, contained in Exhibit D to the SAC, states the following: “At your request, please find attached a list of the insurance dedicated funds available through [Defendant’s] platform. If you would like additional information on any of the funds, please do not hesitate to contact me.” (SAC Ex. D (Email from Sandy Geyelin to Larry Buchalter (Sept. 19, 2005).) Attached to the email was a list of 27 insurance dedicated funds, including SSR. (AGL Life Assurance Company — Insurance Dedicated Funds.) Plaintiffs allege that “[a]t the time [Defendant] presented SSR as an approved investment choice, there were an estimated 75 to 100 insurance-dedicated hedge funds in existence,” and therefore conclude that the fact that Defendant presented only. 27 funds “clearly indicated] that it had utilized specific criteria to select said funds, and ... [had] found that the majority of available funds were not appropriate for its policyholders.” (SAC ¶ 60.)
Plaintiffs allege that the following categories of information are material to making investment decisions regarding hedge funds and fund-of-hedge funds: (1) “the audited financial statements as presented by the independent auditor of the fund;” (2) “periodic direct communications from the manager itself (e.g., via letters, conference calls, website access);” (3) “reported changes in service providers;” and (4) “for sophisticated investors only, periodic access to the investment manager.” (SAC ¶ 47 (underlining omitted).) With regard to the financial statements provided by SSR, Plaintiffs allege that any information about any potential irregularities in the audited financial statement would be critical, as would the fact that SSR had not provided an audited financial statement, and that Defendant knew that this information was critical. (Id. ¶ 48.) Plaintiffs also allege that information regarding any changes in service providers, especially changes in independent auditor or administrator is critical because such a development would be “viewed by any sophisticated investor as a serious adverse development for a hedge fund or fund-of-hedge fund partnership.” (Id. ¶ 53; see also id. ¶¶ 49-53 (explaining that a change in service provider without a rea
Plaintiffs allege that the following information was not passed on to • them by Defendant: that in December 2007, the SEC issued a “Cease and Desist” Order against Gunlicks when “SSR and Gunlicks ... at that point essentially were alter egos of one another,” (id. ¶ 13; see also id. ¶ 129); that Founding Partners and Gun-licks had been under investigation since 2000, (id. ¶ 127); that Gunlicks had a conflicted relationship with SSR, (id. ¶ 122); that SSR’s auditors did not provide audited financial statements to SSR after 2006, (id. ¶¶ 15, 126, 134-36); that E & Y, the independent auditor at the time of the Trust’s investment, was dismissed by SSR prior to any work beginning, (id. ¶¶ 133, 137); that SSR’s fund administrator was replaced in January 2007, (id. ¶¶ 16, 138); that SSR made a significant change in strategy, increasing its investment risks by “employing substantial leverage” in 2006, (id. ¶ 17; see also id. ¶¶ 125, 139);
Additionally, Plaintiffs allege that Defendant generally had “broad access to and regular contact with SSR, and SSR regularly provided information to [Defendant] concerning its various investments.” (Id. ¶ 65.) Specifically, Plaintiffs allege that Defendant was provided with a monthly estimate, a monthly account statement, a
Finally, Plaintiffs allege that Defendant made two material misrepresentations, in addition to the alleged vetting misrepresentation. First, Plaintiffs allege that Defendant “recklessly (or worse, deliberately) overstated SSR’s assets under management by approximately 100% in a report provided to ... Buchalter (in his role as Advisor) in 2007.” (Id. ¶ 18.) Specifically, Plaintiffs allege that “[Buchalter], on behalf of the Trust, requested more information about SSR, [and Defendant] reported that SSR had $169 million in assets under management, [but SSR] in fact had only approximately half that amount based on the August 2007 [Alternative Investment Management Association Limited (‘AIMA’) ] disclosure questionnaire containing information supplied by SSR.” (Id. ¶ 141.) Plaintiffs allege that the “higher number ... would misleadingly indicate increased investor acceptance of SSR, a misstatement of SSR’s presence in the markets in which it invested, and, most importantly, a misstatement of SSR’s implied ability to meet potential redemption requests from investors.” (Id. ¶ 18.) Second, Plaintiffs allege that “SSR’s administrator had been replaced in January 2007[,] tellingly when SSR was in the process of closing their books for the 2006 year.” (Id. ¶ 16.) Plaintiffs further allege that Defendant “sent Buchalter a report in June 2007 erroneously indicating that the replaced SSR administrator still was in place.” (Id.; see also SAC. Ex. M (“May 2007 SSR Tear Sheet”).)
Based on these allegations, Plaintiffs bring seven causes of action: negligence, negligent misrepresentation, breach of fiduciary duty, professional malpractice, breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.
B. Procedural Background
Plaintiffs filed the Complaint on September 7, 2012, and a Summons was issued as to Defendant on the same day. (See Dkt. No. 1.) With the Court’s permission, Plaintiffs subsequently filed an Amended Complaint on February 15, 2013, (see Dkt. No. 20), and Defendant filed a Motion To Dismiss the Amended Complaint, (see Dkt. No. 26). After oral argument on the issue of whether Buchalter had standing as a plaintiff, the Court denied without prejudice Defendant’s Motion To Dismiss to allow Plaintiffs to further amend their Amended Complaint. (See Dkt. No. 35.) Pursuant to a scheduling order set by the Court, (see Dkt. No. 37), Plaintiffs filed the SAC on March 31, 2014, (see Dkt. No. 42), Defendant filed a Motion To Dismiss the SAC and accompanying papers on June 2, 2014, (see Dkt. Nos. 44-45), Plaintiffs filed
II. Discussion
A. Standard of Review
Defendant moves to dismiss Plaintiffs SAC under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss dоes not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly,
“[WJhen ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint.” Erickson v. Pardus,
“In ruling on a 12(b)(6) motion, ... a court may consider the complaint as well as any instrument attached to the complaint as an exhibit or any statements or documents incorporated in it by reference,” as well as “matters of which judicial notice may be taken, and documents either in plaintiffs’ possession or of which plaintiffs had knowledge and relied on in bringing suit.” Kalyanaram v. Am. Ass’n of Univ. Professors at N.Y. Inst. of Tech., Inc.,
B. Analysis
1. General Choice-of-Law Considerations
The basis for subject matter jurisdiction in this case is diversity of citizenship pursuant to 28 U.S.C. § 1332. {See SAC ¶ 26.) “A federal court sitting in diversity jurisdiction must apply the choice-of-law principles of the forum state, in this case New York.” Fargas v. Cincinnati Mach., LLC,
“In New York, the forum state in this case, the first question to resolve in determining whether to undertake a choice of law analysis is whether there is an actual conflict of laws.” Fieger v. Pitney Bowes Credit Corp.,
Under New York law, the choice of law analysis is generally done separately for each claim and defense, under a doctrine called dépegage. See Fed. Hous. Fin. Agency v. Ally Fin. Inc., No. 11-CV-7010,
2. Statute of Limitations
“A motion to dismiss on statute of limitations grounds generally is treated as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6)[.]” Nghiem v. U.S. Dep’t of Veterans Affairs,
The first issue the Court must address in assessing Defendant’s Motion To Dismiss on statute of limitations grounds is which state’s statute of limitations to apply. “Federal courts sitting in diversity apply the forum state’s statutes of limitation.” Universal Trading & Inv. Co. v. Credit Suisse (Guernsey) Ltd., No. 12-CV-198,
An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.
N.Y.C.P.L.R. § 202. The practical import of § 202 is that it “requires non-resident plaintiffs to file claims by the shorter of the statute of limitations of either (a) New York or (b) the jurisdiction where the claim accrued (in order to prevent forum shopping by time-barred claimants).” Deutsche Zentral-Genossenchaftsbank AG v. HSBC N. Am. Holdings, Inc., No. 12-CV-4025,
“Under New York law, tort and contract claims are deemed to accrue at the time and place of the injury,” and “[i]n cases involving economic harm, that place is normally the state of plaintiffs residence.” Deutsche Zentral-Genossen-chaftsbank A.G.,
Here, Defendant argues that Alaska’s statutes of limitations apply, (Def.’s Mem. 12), and Plaintiffs likewise “agree that Alaska’s statutes of limitations apply to all of Plaintiffs’ claims pursuant to New York’s borrowing statute and there is no dispute concerning the statutes of limitations that Alaska applies to Plaintiffs’ claims,” (Pis.’ Mem. 11). The Court agrees that the injury to Plaintiffs occurred in Alaska. First, the Trust is the purchaser, owner, and beneficiary under the Policy. (SAC Ex. B (“Policy”) 3.) Second, the Trust itself was located in Alaska, and organized under Alaska law. (Trust Instrument II — 11.) Third, the sole trustee at the time of the injuries was an Alaska party. (SAC ¶¶ 23, 31 n. 2.) Finally, the trust beneficiaries were not entitled to any guaranteed distributions under the trust. (Trust Instrument 1-11-12, 11-12-13.)
As a result, the shorter of New York’s or Alaska’s statute of limitations applies to all claims asserted in this Action. Because Alaska’s statutes of limitations are shorter and therefore apply, the statute of limitations for each of the alleged claims will either be two or three years. In particular, the statute of limitations for tort actions is two years, see Alaska Stat. § 09.10.070, and the statute of limitations for contract actions is three years, see Alaska Stat. § 09.10.053.
Additionally, because Alaska’s statutes of limitations apply, so do Alaska’s rules regarding when causes of action accrue. See RA Global Servs., Inc. v. Avicenna Overseas Corp.,
Because Plaintiffs allege multiple courses of conduct as bases for their claims, the Court will address the statute of limitations issues by course of conduct rather than by claim. The categories of conduct the Court will assess are as follows: (1) Defendant’s alleged failure to effect Plaintiffs’ redemption request on September 30, 2008; (2) Defendant’s alleged failure to adequately vet SSR before putting it on its platform; and (3) Defendant’s alleged failure to pass along material information regarding SSR.
Any claims based on Defendant’s failure to effect Plaintiffs’ redemption request on September 30, 2008 are time-barréd under either a two or three year statute of limitations. Plaintiffs allege that in or about July 2008, Plaintiffs' sought to redeem the Trust’s entire investment in SSR and requested that Defendant’s CEO prepare the necessary redemption documentation ASAP. (SAC ¶¶ 6, 80; July 30 Lipkind Email.) Plaintiffs allege that the request was made with enough time for Defendant to effect the, redemption request before the quarter ended in September. (SAC ¶¶62, 81.) However, instead of requesting redemption in September, as Plaintiffs wished, Defendant included special instructions “to redeem all funds on December 30, 2008, rather than three months prior as clearly directed in the ASAP’ email.” (Id. ¶ 7; see also id. ¶ 83; Investment Account Transfer Requests at unnumbered 2.) Plaintiffs further allege that “[t]he Trustee and the Advisors, expecting that [Defendant] had followed [Plaintiffs’ counsel’s] explicit instruction to redeem ASAP,’ reasonably expected that the Trust’s SSR investment would be redeemed as of September 30, 2008 and that it would recoup the entire stated balance. But this inexplicably did not occur because of [Defendant’s] aforementioned gross negligence in connection with the most routine process of filling out the redemption forms.” (SAC ¶ 85.) Finally, Plaintiffs allege that “[i]n response to a request for an explanation for this egregious error and a demand for compliance with the redemption request,” Defendant wrote back an email contained in Exhibit J to the SAC. (Id. ¶ 88.) That email, sent in response to Plaintiffs request for an explanation, was sent on November 20, 2008. (Nov. 20 Fillip Letter.)
Even under the longer Alaska statute of limitations, this claim is time-barred. Not only did the alleged tort or breach occur in July 2008, but Plaintiffs also discovered the wrongdoing no later than November 2008 according to Plaintiffs’ Own pleadings. The non-redemption itself on September 30, 2008 put Plaintiffs on inquiry notice that something had gone wrong with respect to Defendant’s efforts to effect the redemption request. Indeed, it is clear from Plaintiffs’ allegations that they discovered that they were damaged by Defen
Next, with regard to the claims arising from the allegations that Defendant failed to vet SSR before putting it on their platform or ignored warning signs about SSR, at this time the Court finds that the claims are not time-barred. Plaintiffs allege that they learned in 2012 of Defendant’s failure to vet SSR and, in particular, that they learned in 2012 that Defendant likely ignored SSR’s relationship with Gunlicks. (SAC ¶¶ 9, 12, 115.) Plaintiffs’ allegations that SSR suspended investor redemption requests in 2008 and that the Trust’s SSR investment account “steadily declined in stated value” since that point, as well as Plaintiffs attachment of an email dated November 20, 2008 discussing the possibility of Defendant bringing legal action against SSR, raises the question of whether Plaintiffs were on inquiry notice as early as 2008 of Defendant’s alleged failure to vet SSR. (See id. ¶ 8; Nov. 20 Fillip Letter.) Under Alaska law, the inquiry notice date is “the date when the plaintiff has information which is sufficient to alert a reasonable person to begin an inquiry to protect his rights.” Gefre v. Davis Wright Tremaine, LLP,
Finally, with regard to the claims based on the alleged failure to pass along material information to Plaintiffs, Plaintiffs sufficiently allege they did not discover or have a duty to inquire until 2012, thus falling within the two or three year statutes of limitations. There are two types of information-related conduct Plaintiffs allege: (1) the allegations that there was certain negative information Defendant knew about, but was non-public, and that Defendant did not pass on to Plaintiffs; and (2) that Defendant should have regularly passed on more information to Plaintiffs in the ordinary course of conduct. Looking at the first category, Plaintiffs have pleaded these allegations in a way that survives the Motion To Dismiss on statute of limitations grounds, by alleging that Plaintiffs only learned that Defendant knew of this information and did not pass it on in 2012. (See, e.g., SAC ¶¶ 15-17, 47-57, 129-42.) Plaintiffs also generally do the same for the allegations that Defendant should have regularly passed on more information to Plaintiff, by alleging that Defendant should have passed on all the information it had, and they only later learned to what information Defendant had access. (See, e.g., id. ¶¶ 99-109.) However, what gives the Court pause is Plaintiffs’ allegation that in or shortly after May 2007 “Buchalter noted that he and the Trustee had not received a detailed investment report in approximately one year and requested a copy thereof.” (Id. ¶ 76.) It is possible that this apparent knowledge by Plaintiffs that Defendant was not providing all the information it had may have put Plaintiffs on inquiry notice. However, even if this put Plaintiffs on inquiry notice, it is not clear from the allegations in the SAC at what point a reasonable inquiry by Plaintiffs would have led them to discover this claim and the Court therefore does not find a sufficient basis for finding this course of conduct to be time-barred.
Finally, Defendant asks the Court to take judicial notice of the fact that Plaintiffs allegedly “attempted in their latest amendment to remove allegations showing their claims are time-barred.” (Def.’s Mem. 12; see also id. at 12 n. 6.) Specifically, Defendant states that “the Court may take judicial notice of Plaintiffs’ prior allegation[ ] that[,] by July 2008, Bu-chalter became suspicious of SSR’s ‘aberrational’ returns ‘despite extreme market conditions’ that ‘materially informed his suspicions of wrongdoing’ and ‘possible irregularities’ at SSR, which prompted him to cause the Trustee to redeem.” (Id. at 14 (quoting Compl. ¶¶ 76-77 (Dkt. No. 1); First Am. Compl. ¶ 81 (Dkt. No. 20)).) Defendant thus argues that Plaintiffs were put on notice in 2008 to investigate whether they had a claim, which triggered the running of the limitations period. Plaintiffs respond that first, the Court should not consider prior complaints since they are legal nullities and second, concerns about SSR’s wrongdoing did not put them on inquiry notice of Defendant’s wrongdoing. (Pis.’ Mem. 2.) Defendant responds that the Court may consider the prior pleadings, and argues that Plaintiffs’ concerns about SSR put Plaintiffs on inquiry notice about any possiblе claims, and because Plaintiffs knew they could not bring claims directly against SSR, they were on notice of claims against Defendant. (Def. Phila. Fin. Life Assurance Co.’s Reply in Supp. of its Mot. To Dismiss Pis.’ Second Am. Compl. (“Def.’s Reply”) 2-4 (Dkt. No. 47).) In particular, Defendant cites two cases for the proposition that the
In rare circumstances, courts in the Second Circuit will consider prior pleadings. However, courts only do this when “the plaintiff directly contradicts the facts set forth in his original complaint,” which is not the case here, as Plaintiffs merely removed certain allegations from their Complaint and First Amended Complaint instead of alleging directly contradictory facts. Wallace v. N.Y.C. Dep’t of Corr., No. 95-CV-4404,
For the above reasons, the Court grants Defendant’s Motion To Dismiss based on statute of limitations grounds for claims arising out of Defendant’s alleged failure to effect Plaintiffs’ redemption request according to their instructions, but denies Defendant’s Motion To Dismiss on statute of limitations grounds for claims arising out of the other conduct alleged. However, the Court’s decision to deny Defendant’s Motion To Dismiss on statute of limitations grounds for claims arising out of the inadequate vetting and failure to turn over information courses of conduct is without prejudice to the renewal of a statute of limitations defense in a motion for summary judgment. See, e.g., Almasmary v. City of New York, No. 07-CV-1868,
3. Breach of Contract
a. Choice of Law
As Defendant notes, the Policy contains an express Alaska choice-of-law provision, which reads: “Governing Jurisdiction: AK.” (Policy 3.) The Policy defines “Governing Jurisdiction” as “[t]he state or jurisdiction in which [the Policy] is delivered and whose laws govern its terms.” (Id. at 10.) “New York law provides that, ‘as a general matter, the parties’ manifested intentions to have an agreement governed by the law of a particular jurisdiction are honored. It is as though the law of the selected jurisdiction were incorporated into the agreement by reference.’ ” Granite Ridge Energy, LLC v. Allianz Global Risk U.S. Ins. Co.,
New York law is clear in cases involving a contract with an express choice-of-law provision: Absent fraud or violation of public policy, a court is to apply the law selected in the contract as long as the state selected has sufficient contacts with the transaction.
Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd.,
Alaska clearly has “sufficient contacts with the transaction,” the Trust’s purchase of the Policy from Defendant. By its own terms, the Policy was delivered in Alaska, (see Policy 3, 10), and the Trust itself was created under, and continues to be governed by, Alaska law, (see Trust Instrument 1-3). Further, until 2012, the Trust’s sole trustee was the Alaska Trust Company, (see SAC ¶ 31 & n. 2), also an Alaskan entity, (see id. ¶ 23 (“Plaintiff the Alaska Trust Company is a eo-Trustee of the Trust, with a place of business in Anchorage, Alaska.”)). What is more, Defendant notes that “[t]he Trust is an Alaska asset protection trust, created under ALASKA STAT. § 34.40.110 and permitting the interests of the grantor (Buchal-ter) and beneficiaries (Buchalter’s children) to be shielded from their creditors because the Trustee cannot transfer the interests to a creditor.” (Def.’s Mem. 2-3 (footnote omitted).) In other words, Bu-chalter specifically availed himself of Alaska law in order to derive financial benefit from the Trust’s structuring. Plaintiffs do not contest this characterization of the motivation behind the decision to establish the Trust in Alaska, and nothing in their submissions is to the contrary. In short, the parties’ “sufficient contacts” with Alaska are undeniable. See Champion Auto Sales,
“ ‘The public policy doctrine is an exception to implementing an otherwise applicable choice of law in which the forum refuses to apply a portion of foreign law because it is contrary or repugnant to its State’s own public policy.’ ” Galeotti v. Cianbro Corp., No. 12-CV-900,
The party seeking to invoke this doctrine bears the “heavy burden” of establishing that the foreign law is repugnant. Galeotti
b. Analysis
Having determined that Alaska law applies in the event of a conflict between Alaska and New York law, the Court will now assess Plaintiffs’ breach of contract claim. Plaintiffs’ claim for breach of contract is set out as follows. The Trust was forbidden from contacting SSR for any reason. (SAC ¶ 172.) In support of this allegation, Plaintiffs quote the Policy as stating that the Trust “will not directly or indirectly influence or attempt to influence the Manager’s selection, purchase, retention or sale of any investment within the Fund.” (Id.) However, the “PPM expressly acknowledges [Defendant’s] role as keeper of information, stating that ‘[a]ll records and accounts relating to the Investment Accounts will be maintained by the Company.’ ” (Id. ¶ 173 (alteration in original).) Therefore, according to Plaintiffs, “where the Trust had no access to SSR, and [Defendant] had a duty to maintain all records relating to the Investment Accounts, [Defendant] had an implied obligation to pass on any SSR records to the Trust in [a] timely and accurate fashion, so that the Trustee and Advisors could determine whether to redeem or withdraw the Trust’s funds in the SSR investment.” (Id. ¶ 174 (emphases in original).) Under this theory, Plaintiffs allege that Defendant’s failure to provide full and non-misleading information to the Trust constituted a breach of the provisions of the Policy. (Id. ¶ 175.)
As Defendant points out, this is a claim for a breach of an implied contractual duty, rather than an explicit contractual duty. (See Def.’s Mem. 14-15.) Indeed, Plaintiffs do not identify a specific provision that was breached by this alleged failure to provide information, and, in fact, the Policy and PPM require only that Defendant provide annual statements. (See Policy 22 (discussing reporting require
This claim cannot survive Defendant’s Motion To Dismiss under the facts alleged. Given that the contract was extensively negоtiated at arm’s-length between sophisticated and counseled parties, the Court will not read in a duty to provide information that could have been contracted for but was not. This conclusion is warranted by both Alaska law, see Renaissance Alaska, LLC v. Rutter & Wilbanks Corp.,
Ip. Breach of Covenant of Good Faith and Fair Dealing
a. Choice of Law
Although Alaska law governs Plaintiffs’ breaeh-of-contract claim in case of a conflict, it is somewhat less clear whether the Policy’s choice-of-law provision extends to Plaintiffs’ claim that Defendant violated the implied covenant of good faith and fair dealing. A district court, “sitting in diversity [in New York], [is] bound to apply New York law to determine the scope of the contractual choice-of-law clause. New York courts decide the scope of such clauses under New York law, not under the law selected by the clause.... ” Fin. One Pub. Co. Ltd. v. Lehman Bros. Special Fin., Inc.,
There is a “reluctance on the part of New York courts to construe contractual choice-of-law clauses broadly to encompass extra-contractual causes of action.” Lehman Bros.,
But this conclusion does not resolve the issue. The Court must still identify which state’s law it should apply to determine whether a cause of action alleging a violation of the implied covenant of good faith and fair dealing sounds in contract or in tort, and once that law has been so identified, what result follows. The first question is a particularly important one in the context of this case, as under Alaska law, “an insured’s action against its insurer for breach of the implied covenant of good faith and fair dealing sound[s] in tort,” Ennen v. Integon Indem. Corp.,
While the answer is not perfectly clear, it appears as though the Court’s obligation to “aрply New York law to determine the scope of the contractual choice-of-law clause,” Lehman Bros.,
While apparently applying, though not always explicitly citing to, New York law, other courts within this District have taken a similar approach, both before and after Commerce. See, e.g., Torain v. Clear Channel Broad., Inc.,
b. Analysis
As explained in the conflict of law analysis above, there is an actual conflict between New York and Alaska law on this issue, and Alaska law controls. “The covenant of good faith and fair dealing is implied in all contracts in Alaska.” Casey v. Semco Energy, Inc.,
In the case of an ordinary commercial contract between sophisticated business entities, a tort for breach arises only when a party’s conduct rises to the level of a traditionally recognized tort. Creating a broader tort remedy would disrupt the certainty of commercial transactions and allow parties to escape contractual allocation of losses. Therefore, an action for breach of the implied covenant of good faith and fair dealing sounds in contract alone.
State, Dep’t of Natural Res. v. Transamerica Premier Ins. Co.,
However, Alaska has recognized a limited cause of action in tort for the breach of the covenant of good faith and fair dealing in certain insurance contracts. See Municipality of Anchorage v. Gentile,
In deciding against extending the tort cause of action to situations other than the ones described above, the Alaska Supreme Court has emphasized that the public pоlicy considerations that formed the basis for extension of the tort cause of action were not present in other circumstances. For example, in Municipality of Anchorage v. Gentile, the Alaska Supreme Court considered whether there should be a cause of action in tort for the breach of the implied covenant of good faith and fair dealing where the Municipality of Anchorage “reduced the post-retirement medical benefits of its retired police officers and firefighters.”
It is unnecessary to decide here whether [the municipality] would be subject to tort liability for failing to deal fairly and in good faith in the settlement of a covered insurance claim. That is not the nature of the [plaintiffs’] claim. They instead claim that [the municipality] breached the covenant of good faith and fair dealing by unilaterally decreasing the insurance coverage required by the [collective bargaining agreements]. Although insurance is the topic in dispute, [the municipality] breached the [collective bargaining agreements], not policies of insurance.
Id. Thus, the-Alaska Supreme Court recognized that it was not just the subject matter of insurance that yields this tort cause of action, but that special factors must be also be present, and it also indicated an aversion to extending the cases providing for a cause of action in tort past the circumstances of those cases.
Although insurance might play a tangential role here, it is not the center of the dispute. This claim revolves around the investment made as part of a life insurance policy and has nothing to do with the insurance aspect of the [p]olicy. There is no allegation that AGL failed to investigate a claim or that [the] [plaintiff was in an unequal bargaining position and hence found itself signing a contract of adhesion. Additionally, the [p]laintiff in this case is the Rulle Trust, which is not a person, nor is it the insured. Finally, the AGL PPM includes minimum suitability requirements for potential [p]olicy [o]wners.... Given the circumstances surrounding this [p]olicy, it is not clear that Alaska would recognize a tort for breach of the implied covenant of good faith and fair dealing here.
Id. at *13 (citation and internal quotation marks omitted). Based on this reasoning, and the reasoning in the Alaska cases, see Gentile,
5. Duty-Based Tort Claims
a. Choice of Law
As stated above, Plaintiffs’ tort claims are not governed by the Policy’s choice-of-law provision. Under New York law, negligence sounds in tort, see Aegis Ins. Servs., Inc. v. 7 World Trade Co., L.P.,
“The New York Court of Appeals has held that the relevant analytical approach to choice of law in tort actions in New York is the interest analysis.” GlobalNet Fin. Com., Inc. v. Frank Crystal & Co., Inc.,
Applying that analysis to the instant Action, the Court finds that the alleged torts “occurred” in Alaska, for the same reasons that the Alaska statute of limitations applies, as explained above. Thus, for the purposes of New York’s interest analysis, any torts that Defendant committed against Plaintiffs “occurred” in Alaska. However, the law of the state that New York’s interest analysis yields will only be applied if it conflicts with the law of New York; if there is no conflict between the law of the two jurisdictions, then New York law will apply. See Lyman,
b. Negligence
Under Alaska and New York law, the elements of a negligence claim are: (1) that the defendant owed the plaintiff a duty; (2) that the defendant breached that duty; (3) that the plaintiff was injured, and (4) that the breach of the duty was the proximate cause of the plaintiffs injury. See, e.g., Mitchell v. Icolari,
Defendant argues that “since Plaintiffs’ claims arise out of an arm’s length transaction and nothing more, there are no duties except those in the Policy and therefore Plaintiffs’ negligence claim should be dismissed.” (Def.’s Mem. 20.) Moreover, Defendant argues that “Alaska law does not permit a claim for negligent performance of a contract seeking to recover purely economic losses.” (Id. at 21 (citing St. Denis v. Dep’t of Hous. & Urban Dev.,
We have recognized that promises set forth in a contract must be enforced by an action on that contract. Only where the duty breached is one imposed by law, such as a traditional tort law duty furthering social policy, may an action between contracting parties sound in tort.... [W]hen a party’s actions violate a general duty of care, its actions may give rise to an action in tort, even if the violation also breaches a contract.
Jarvis v. Ensminger,
A tort obligation is a duty imposed by law to avoid causing injury to others. It is apart from and independent of promises made and therefore apart from the manifested intention of the parties. Thus, a defendant may be liable in tort when it has breached a duty of reasonable care distinct from its contractual obligations, or when it has .engaged in tortious conduct separate and apart from its failure to fulfill its contractual obligations.
Jarvis,
Under Alaska law, if no statute, regulation, contract, case law, or preexisting relationship establishes the ex
The foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved.
D.S.W. v. Fairbanks N. Star Borough Sch. Dist.,
Plaintiffs assert that there were several duties owed to them by Defendant that Defendant breached: to . properly vet funds, to monitor developments at the funds and provide the Trust with any material information regarding the funds, and to process the redemption requests accurately and in a timely fashion. (SAC ¶ 147.) As explained above, any claims based on the failure to effect the redemption request are time-barred. Thus, the remaining claims relate to the vetting and the provision of information to the Trust.
Plaintiffs fail to state a negligence claim regarding the failure to provide information regarding SSR. Here, Plaintiffs have not alleged the breach of a legal duty independent from Defendant’s contractual obligations. Rather, the contract defines the scope of Defendant’s duty. “[0]nce a contractual relationship was entered into between the parties, that contract defined the scope of the duties owed to the plaintiff.” Vought v. Teachers Coll., Columbia Univ.,
Plaintiffs provide no support for their theory that Defendant could be required to provide information in tort when the contract specifically addresses what information Defendant must provide.- Plaintiffs primarily rely on two cases: Bayerische Landesbank, New York Branch v. Aladdin Capital Management LLC,
Banco Multiple is similarly inapposite. In Banco Multiple, the court held that though New York generally treats relationships between insurance companies and policyholders as contractual only, because variable annuities “are more like investment vehicles than traditional insurance” it would allow a negligence action against a company that issued a variable annuity.
Finally, under the Policy, Defendant was to establish investment options. (See Policy 17; PPM 16.) Plaintiffs allege that Defendant was negligent in putting SSR on its platform. The issue here is whether Plaintiffs have alleged a duty of care in vetting investment options independent of the contract that was breached by a failure to use reasonable care in vetting. In this case, Plaintiffs have adequately pleaded the existence of a duty that arises from “circumstances extraneous to, and not constituting elements of, the contract.” Bayerische Landesbank,
Next, Plaintiffs must allege that Defendant breached the duty. Plaintiffs have done so. They allege that Defendant either failed to vet SSR at all, or “more likely, ... haphazardly ignored critical information in its rush to become a leading carrier of variable universal life policies, which involved signing up as many funds as possible, as quickly as possible, to [Defendant’s] platform[.]” (SAC ¶ 10; see also id. ¶ 114.) In particular, Plaintiffs allege that Defendant “likely ignored ... SSR’s managers’ stunning lack of relevant experience,” claiming that “one manager had no material experience in the complex world of structured finance, corporate receivables financing and asset-based lending, while the other had no credit or lending experience and just four years of reported business experience.” (Id. ¶ 11; see also id. ¶ 111 (alleging that neither Helland nor Law “had the requisite material experience in the arcane and complex world of structured finance, corporate receivables financing and asset-based lending”).) Second, Plaintiffs allege that Defendant “also likely ignored SSR’s lucrative, overtly conflicted partnership” with Gunlicks. (Id. ¶ 12.) These pleadings plausibly allege that Defendant breached its duty of due care in placing SSR on its platform.
Third, Plaintiffs must allege that they were injured. They have done so, as they
Finally, Plaintiffs must allege that the breach of the duty was the proximate cause of Plaintiffs’ injury. Plaintiffs have also satisfied this requirement. Specifically, Plaintiffs allege that, had they known that Defendant had not properly vetted SSR, “the Trust would have made a redemption request immediately,” and that after “SSR suspended redemptions in October 2008, the Trust could do nothing as all of its investment in SSR was lost.” (Id. ¶ 19.) For the above reasons, the Court holds that Plaintiffs adequately pleaded a claim for negligence in connection with the vetting of SSR.
c. Negligent Misrepresentation
To state a claim for negligent misrepresentation under New York law, a plaintiff must allege: “(1) carelessness in imparting words; (2) upon which others were expected to rely; (3) and upon which they did act or failed to act; (4) to their damage.... [T]he action [also] requires that (5) the declarant ... express the words directly, with knowledge or notice that they will be acted upon, to one to whom the declarant is bound by some relation or duty of care.” Dallas Aerospace, Inc. v. CIS Air Corp.,
Under Alaska law, the tort of negligent misrepresentation consists of the following elements: “First, the tortfeasor must have made a statement in the course of business, employment, or some other enterprise in which he had a pecuniary interest. Second, the statement must have been false when the tortfeasor made it. Third, the victim must have justifiably relied upon the statement to his detriment. Fourth, the tortfeasor must have failed to exercise reasonable care when making the statement.” S. Alaska Carpenters Health & Sec. Trust Fund v. Jones,
First, Plaintiffs allege that Defendant “recklessly (or worse, deliberately) overstated SSR’s assets under management by approximately 100% in a report provided to ... Buchalter (in his role аs Advisor) in 2007.” (SAC ¶ 18.) Specifically, Plaintiffs allege that “[Buchalter], on behalf of the Trust, requested more information about SSR, [and Defendant] reported that SSR had $169 million in assets under management, [but] in fact [SSR] had only approximately half that amount based on the August 2007 AIMA disclosure questionnaire containing information supplied by SSR.” (Id. ¶ 141.) Plaintiffs allege that the “higher number ... would misleadingly indicate increased investor acceptance of SSR, a misstatement of SSR’s presence in the markets in which it invested, and, most importantly, a misstatement of SSR’s implied ability to meet potential redemption requests from investors.” (Id. ¶ 18.) Defendant argues that Plaintiffs are “simply misreading the documents by comparing a disclosure of gross assets in one document to net assets in the'other.” (Def.’s Mem. 22.) Defendant explains:
The May 2007 update shows that as of March 31, 2007, SSR had $169 million in assets and the fund’s General Partner had $195.5 million in assets, which included SSR’s assets and the assets of the separate SSR II fund not at issue in this case. The AIMA questionnaire shows that as of July 2007, SSR had $170.7 [million] in assets and the fund’s General Partner had $198.5 million in assets, which included $27.8 million in assets in the SSR II fund. The AIMA questionnaire explains these asset totals are gross, as they include the funds’ leveraged or borrowed assets. The AIMA questionnaire further disclosed that net of leverage, SSR had $86.7 million in assets and SSR II had $15.7 million in assets, for a total of $102.4 million in unleveraged assets under the General Partner’s management. Plaintiffs have mistakenly compared SSR’s gross assets in March 2007 ($169 million) to SSR’s net assets in July 2007 ($86.7 million).
(Id. (citations and footnotes omitted).) Plaintiffs respond that Defendant “never disclosed that it was reporting leveraged assets, instead simply reporting ‘Fund Assets’ as $169 million.” (Pis.’ Mem. 21.) Plaintiffs argue this is a misrepresentation because “actual assets under management is the true measure utilized by the hedge fund industry” and Defendant previously “represented SSR’s actual (not leveraged) assets under management of $47.3 million when presenting the investment option to Buchalter/the Trust in 2005.” (Id. at 21.)
There are two reasons why this claim fails. First, the alleged misrepresentation was made by SSR, not by Defendant, as the May 2007 disclosure was an SSR docu
Second, there was no misrepresentation.
Finally, Plaintiffs allege that Defendant misrepresented that it vetted SSR, when in fact Defendant “appears not to have vetted SSR at all.” (SAC ¶10.) Plaintiffs allege generally that Defendant made “representations as to researching and vetting of ‘platform’ funds, and monitoring and oversight of the investments[.]” (Id. ¶ 56.) Plaintiffs also allege that Defendant did not “inform the Trustee or the Advisors of ... its failure to properly vet SSR.” (Id. ¶ 143.) Defendant argues that “the email Plaintiffs rely upon shows that [Defendant] made no such representation [regarding vetting].” (Def.’s Mem. 23.) Rather, Defendant argues, “[t]he email merely identifies SSR as one ‘of the insurance dedicated funds available’ through [Defendant], which it indisputably was,” and “[t]hat Plaintiffs claim to have subjectively understood the email to imply a vetting of SSR is irrelevant.” (Id.) However, Defendant’s General Counsel emailed Buchalter’s counsel in October 2003 to state that he was “in the process of adding [SSR] to [Defendant’s] platform” “in the very near future.” (SAC ¶ 113 (internal quotation marks omitted); see also id. Ex. L (Email from Joseph A. Fillip, Jr. to William Lipkind (Oct. 17, 2003).) Later, Defendant’s Director of Research sent Bu-chalter an email identifying SSR as one of the “insurance dedicated funds available through [Defendant’s] platform.” (SAC ¶ 57; AGL Life Assurance Company — Insurance Dedicated Funds.) And Plaintiffs allege that SSR was “one of only 27 [funds] chosen from the available pool of an estimated 75 to 100 insurance-dedicated hedge funds in existence” to be put on Defendant’s platform. (SAC ¶ 4; see also id. ¶ 60 (“At the time [Defendant] presented SSR as an approved investment choice, there were an estimated 75 to 100 insurance-dedicated hedge funds in existence. [Defendant] presented just 27 insurance-dedicated funds, clearly indicating that it had utilized specific criteria to select said funds, and ... [had] found that the majority of available funds were not appropriate for its policyholders. As such, [Defendant] affirmatively preselected SSR from a much larger universe as especially suitable for policyholders such as the Trust, based on
What is left of Defendant’s arguments against the negligent misrepresentation claim is its contention that Plaintiffs cannot state a claim for negligent misrepresentation based on assertions made to Buchalter. However, this argument is unavailing for several reasons. First, that the Trust Instrument did not identify Bu-chalter as an advisor “does not mean that he was not an Advisor to the Trust as a matter of fact, which is exactly what the [SAC] alleges and must be assumed as true on this motion.” (Pis.’ Mem. 22.) Moreover, “[t]here would have been no reason for [Defendant] to send its platform funds to Buchalter (and Buchalter alone) if [Defendant] did not recognize that he was acting in an advisory capacity.” (Id.) Furthermore, the Restatement (Second) of Torts, which is followed by Alaska courts with regard to the requirements for a negligent misrepresentation tort provides that “liability ... is limited to a loss suffered ... by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it.” Restatement (Second) of Torts § 552(2) (1977) (emphasis added).
Therefore, Defendant’s Motion To Dismiss the negligent misrepresentation claim is denied as to the alleged vetting misrepresentation and granted as to the alleged fund asset and fund administrator misrepresentations.
d. Professional Malpractice
“Professional malpractice is a species of negligence under New York law.... [M]alpractice means the negligence of a member of a profession in his relations with his client.” Panteleone v. Envtl. Eng’g & Contracting, No. 12-CV-5415,
While acknowledging that there are distinctions between Alaska and New York law on professional malpractice claims, Defendant asserts that there is no conflict because “a life insurer is not a professional under either statefs] laws[J” (Supplemental Br. in Supp. of Def. Phila. Fin. Life Assurance Co.’s Mot. To Dismiss Pis.’ Second Am. Compl. Under Rule 12(b)(6) (“Defi’s Supplemental Br.”) 2 (Dkt. No. 50).) However, even assuming the ultimate outcomes would be the same under the laws of New York and Alaska, that fact would not indicate that no conflict of laws exists. “To be an ‘actual conflict,’ the difference between the laws of the two
Here, there is a conflict. Under New York law, the term professional encompasses those whose “qualities include extensive formal learning and training, li-censure and regulation indicating a qualification to practice, a code of conduct imposing standards beyond those accepted in the marketplace and a system of discipline for violation of those standards.” Chase Scientific Research, Inc. v. NIA Grp., Inc.,
However, under Alaska law, the definition of professional is much more inclusive. In Alaska, “professional malpractice ... involves a professional’s ... breach of a duty of due care which was implied by law as a result of a contractual undertaking.” Breck v. Moore,
when a person holds himself out to the public in any particular employment, work, or trade, there is an implied engagement with those who may employ him that he and his employees in that trade or business possess that reasonable degree of knowledge and skill which is ordinarily possessed by others engaged in the same business or trade; and that he and they will perform the services which he may be engaged to do, diligently and faithfully, and with that skill and prudence ordinarily possessed and observed by others engaged in the same or like employment.
Id. (internal quotation marks omitted). As such, Alaska courts have “applied the professional negligence standard to trades persons including machinists, electricians, and plumbers,” id., as well as to insurance agents, see State Farm Life Ins. Co. v. Davis, No. 07-CV-164,
As a professional under Alaska law, Defendant had a duty to perform the “services which [it][was] engaged to do[] diligently and faithfully, and with that skill and prudence ordinarily possessed and observed by others engaged in the same or like employment.” John’s Heating Serv.,
e. Breach of Fiduciary Duty
The Parties have- not identified an actual conflict between Alaska and New York law as to the elements of a cause of action for breach of fiduciary duty; therefore, the Court will apply the law of New York, the forum state. See In re Refco Inc. Sec. Litig.,
Plaintiffs base their fiduciary duty claim on the information imbalance created by the contract and the fact that the Policy invested in funds that did not release information publicly. Plaintiffs argue that this dynamic “imposed on the Trust a special confidence in [Defendant] to act in good faith and with due regard
Additionally, Plaintiffs do not allege any special relationship with Defendant such that they could expect Defendant to disavow its own self-interest and act on behalf of Plaintiffs. For example, Plaintiffs have not alleged that they were entitled to rely on Defendant for investment advice. In one New York state case, the Supreme Court of New York County held that where an insurance company “did not serve as an investment advisor in any meaningful way” in connection with a variable life insurance policy, but “merely passed on prospectuses (such as the PPM) to its insureds from the funds in which the insureds could choose investments,” such a relationship did “not amount to an advisory role that [would] give[ ] rise to a fiduciary relationship.” SSR II, LLC v. John Hancock Life Ins. Co. (U.S.A.),
6. Unjust Enrichment
a. Choice of Law
Some controversy appears to exist as to whether a claim for unjust enrichment is governed by a contract’s enforceable choice-of-law provision, or whether it is instead governed by the law of the state that New York’s interest analysis yields, being a fundamentally non-contractual cause of action. Compare Fieger,
b. Analysis
“To state a claim of unjust enrichment under New York law, the plaintiff must allege ‘(1) that the defendant was enriched; (2) that the enrichment was at the plaintiffs expense; and (3) that the circumstances are such that in equity and good conscience the defendant should return the money or [benefit] to the plaintiff.’ ” Bazak Int’l Corp. v. Tarrant Apparel Grp.,
Plaintiffs did not allege in the SAC that the unjust enrichment claim was pleaded in the alternative to their breach of contract claim, nor did they make this argument in their opposition papers: they raised it for the first time at oral argument. However, under New York law, Plaintiffs cannot raise the unjust enrichment claim in the alternative to the breach of contract claim because there is a “ ‘valid and enforceable written contract governing [the] ... subject matter.’ ” Beth Isr. Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc.,
Under Alaska law, “[a] party seeking to recover for unjust enrichment must show (1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation by the defendant of such benefit; and (3) acceptance and retention by the defendant of such benefit under such circumstances that it would be inequitable for him to retain it without paying the value thereof.”). Ware v. Ware,
Though the issue is slightly less clear cut than under New York law, the Court concludes that, as under New York law, the existence of a valid contract bars recovery under a theory of unjust enrichment. The Alaska Supreme Court has stated that “[e]ourts generally treat actions brought upon theories of unjust enrichment, quasi-contract, contracts implied in law, and quantum meruit as essentially the same. In fact, this terminology is generally employed interchangeably, often within the same opinion.” Bennett v. Artus,
The Court has not found an Alaska case addressing whether a claim for unjust enrichment can be pleaded in the alternative to a breach of contract case. However, based on Alaska’s case law, for a complaint to state an unjust enrichment claim that could plausibly warrant relief where a contract is also alleged to exist, the plaintiff must allege in the alternative either that the contract is not valid, that the contract does not apply, or that the money goods, or services, the grant of which constituted the unjust enrichment, was outside the scope of the contract. Otherwise, under the facts alleged by the complaint, the plaintiff would not be entitled to relief. See U.S. ex rel. Poong Lim/Pert v. Dick Pac./Ghemm Joint Venture, No. 03-CV-290,
For the above reasons, Plaintiffs fail to set forth an unjust enrichment claim under either Alaska or New York law, and Defendant’s Motion To Dismiss this claim is granted.
III. Conclusion
For the above reasons, Defendant’s Motion To Dismiss is denied in part and granted in part. In particular, the following claims are dismissed: the first cause of action for negligence relating to the failure to provide information and the failure to effect the redemption request, the second cause of action for negligent misrepresentation related to the alleged misrepresentations about the fund assets and fund administrators, as well as any other claims based on those alleged misrepresentations, the third cause of action for breach of fiduciary duty, the fourth cause of action for professional malpractice related to the failure to provide information and the failure to effect the redemption request, the fifth cause of action for breach of contract, the sixth cause of action for breach of the covenant of good faith and fair dealing, and the seventh cause of action for unjust enrichment. The Motion is denied as to all other claims.
SO ORDERED.
Notes
.Exhibit B to the SAC contains several documents. Unnumbered page one is the Policy Receipt; unnumbered pages two to three constitute a letter to The 2002 Lawrence R. Bu-chalter Alaska Trust from Joseph A. Fillip, Jr., Senior Vice President and General Counsel for Defendant dated December 20, 2002 (the "First Dec. 20, 2002 Letter Agreement”); unnumbered pages four to nine constitute a letter to The 2002 Lawrence R. Buchalter Alaska Trust from Joseph A. Fillip, Jr., Senior Vice President and General Counsel for Defendant dated December 20, 2002 (the "Second Dec. 20, 2002 Letter Agreement”); unnumbered pages ten to twenty-two contain the Flexible Premium Survivorship Variable Life payout tables; unnumbered pages twenty-three to fifty-one constitute the Flexible Premium Sur-vivorship Variable Life Insurance Contract (the "Policy”); and unnumbered pages fifty-two to sixty-four constitute the Buchalters' life insurance application. For ease of reference, each of these documents will be cited separately.
. Exhibit D to the SAC contains correspondence between Buchalter and an employee of Defendant. Unnumbered page one is an email from Sandy Geyelin to Larry Buchalter dated September 19, 2005; unnumbered page two is a list of AGL Life Assurance Company Insurance Dedicated Funds ("AGL Life Assurance Company — Insurance Dedicated Funds”); unnumbered page three is an email from Sandy Geyelin to Larry Buchalter dated September 21, 2005; and unnumbered pages four to nine are an information sheet about SSR dated August 2005 ("August 2005 SSR Tear Sheet”). For ease of reference, each of these documents will be cited separately.
. The document also lists the "SIGNIFICANT” risks associated with the investment objective and strategy of SSR. (August 2005 SSR Tear Sheet 2.)
. In particular, SSR was considering legal action against Thomas Petters. (See Nov. 20 Fillip Letter ("We are in contact with the managers of SSR on at least a weekly basis to monitor their activities regarding SSR's underlying investments with exposure to Pet-ters.”).) According to Defendant, Petters was a "Ponzi-schemer,” and it had been discovered that “SSR had exposure to investment funds” he operated. (Mem. of Law in Supp. of Def. Phila. Fin. Life Assurance Co.'s Mot. To Dismiss Pis.’ Second Am. Compl. Under Rule 12(b)(6) ("Def.'s Mem.”) 7 (Dkt. No. 45).)
. The Court notes that Plaintiffs allege that they received a summary of the fund in May 2007. (SAC ¶¶ 76, 141.) That summary, provided at Exhibit M, states, "Beginning in May 2006, the Fund began employing modest leverage, which the managers intend to limit to no more than one dollar of leverage per dollar of fund equity.” (SAC Ex. M ("May 2007 SSR Tear Sheet”), at 1.) Thus, it appears that Plaintiffs were advised of this change in investment strategy.
. This term is not defined in the SAC.
. Moreover, it is not clear from the pleadings where the trust beneficiaries live or lived at the lime that the Policy was issued.
. The Court notes as a final matter that the Alaska choice-of-law provision contained in the Policy does not impact the Court’s analysis as to which state's statute of limitations applies to Buchalter's claims. In Portfolio Recovery Associates, LLC v. King,
Here, the Alaska choice-of-law provision contained in the Policy is similarly "standard,” stating only, "Governing Jurisdiction: AK,” (Policy 3), and defining "Governing Jurisdiction” as "[t]he state or jurisdiction in which [the Policy] is delivered and whose laws govern its terms,” {id. at 10). Just as was the case in King, there is no express intention in the Policy that Alaska’s statute of limitations is to apply to the parties' dispute, and the choice-of-law provision cannot be read to encompass Alaska's limitations period.
. Here, Defendant’s reliance on Michael S. Rulle Family Dynasty Trust v. AGL Life Assurance Co., No. 10-CV-231,
. Plaintiffs' allegation that "SSR reported its assets to [Defendant] accurately,” but that Defendant "reported a grossly higher number to the Trust,” is contradicted by the documents on which Plaintiffs rely and thus is not presumed to be true. (SAC ¶ 141.)
. This is evident from examining the 2007 numbers presented alongside the $70.4 million 2005 number in the AIMA questionnaire. The 2007 numbers are $102.4 million unlev-eraged and $198.5 million leveraged.' (SSR AIMA Questionnaire 6.) The $102.4 million unleveraged is $86.7 million unleveraged in the SSR (ID) Fund, (id. at 16), plus $15.7 million unleveraged in the SSR II Fund, (id. at 17). Similarly, the $198.5 million leveraged in 2007 is $170.7 million leveraged in the SSR (ID) Fund, (id. at 16), plus $27.8 million leveraged in the SSR II Fund, (id. at 17). This demonstrates that, where the AIMA Questionnaire lists $70.4 million for 2005, that number includes the funds in the SSR (ID) Fund and the SSR (II) Fund.
. Defendant moved to dismiss this claim on the ground that Defendant did not owe Plaintiffs a duty, but did not argue in its briefing that Defendant did not make this particular misrepresentation. (See Def.'s Mem. 21-24.) However, the issue of whether Defendant actually made the alleged administrator misrepresentation was raised at oral argument, and Plaintiffs had an opportunity to respond.
. As explained above, Plaintiffs’ claim for professional negligence based on the failure to effect the redemption request in 2008 is barred by the statute of limitations.
. Defendant, though not Plaintiffs, addresses the fact that Alaska explicitly recognizes a fiduciary duty between an insurer and an insured, while New York does not. Compare Batas v. Prudential Ins. Co. of Am.,