On June 13, 2017, Judge Kevin Gross of the Delaware Bankruptcy Court issued an opinion granting in part and denying in part BMW’s motion to dismiss a complaint filed by Emerald Capital Advisors Corp., in its capacity as trustee for FAH Liquidating Trust – established in the Fisker bankruptcy proceedings. A copy of the Opinion is available here.
Judge Gross addresses a large number of issues in the Opinion, including extraterritorial transfers, the findings necessary to support a motion to dismiss, and the relevant statute of limitations. The primary holding in the Opinion, was that for the majority of the causes of action alleged by the plaintiff, the statute of limitations has expired – resulting in granting the motion to dismiss as to $31,786,216.13 and denied to the remaining $793,761.87. The one major caveat and the most interesting aspect of the decision involves the plaintiff’s claim for unjust enrichment.
Judge Gross spent less than two pages of the 26-page Opinion in denying the motion to dismiss as to the count of unjust enrichment in the complaint. Judge Gross cited to Halperin v. Moreno, (In re Green Field Energy Svcs., Inc.), 2015 WL 5146161 at *10 (Bankr. D. Del. Aug. 31, 2015) in holding that a claim for unjust enrichment can survive a motion to dismiss where it is plausible that the plaintiff’s other claims may fail and leave the plaintiff without a remedy at law.
It is clear however, that at the pleading stage it is entirely acceptable to pursue alternative theories. Lass v. Bank of Am., N.A., 695 F. 3d 129, 140 (1st Cir. 2012). It is also well established that a plaintiff may plead alternative claims for relief even where the pleading contains claims for breach of contract and unjust enrichment. Pedrick v. Roten, 70 F. Supp. 3d 638, 653 (D. Del. 2014) (citing Corbin on Contracts § 66.10 (2014) for the proposition that “[e]xpectancy damages and restitution will not ordinarily be given as concurrent remedies for the same injury, although they may be pleaded as alternatives”). The unjust enrichment claim in Count V is significant because it keeps alive the claim for the entire amount which the Trustee has placed at issue, namely, $32,579,798.87.
Opinion at *25. Clearly, the fact that the Bankruptcy Court is a court of equity is clearly on display in allowing the unjust enrichment count survive, specifically for the purpose of ensuring that a plaintiff has a remedy at law in the failure of its other claims. In this case, claims totaling $31 million that would otherwise have been dismissed survive to be disputed another day. I have little doubt that trustees who had not been including unjust enrichment counts in their preference complaints will quickly make an adjustment.
John Bird is a bankruptcy attorney with the law firm of Fox Rothschild LLP. John is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach John at (302) 622-4263 or at email@example.com.