Tjl Gourmet Subs, Llc v. Parth 13, Inc. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

N.D. Ind.July 7, 2017

1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION TJL GOURMET SUBS, LLC Plaintiff, v. PARTH13, INC., SIGNATURE SYSTEMS, INC. and VANTIV, INC., Defendants. CASE NO: 3:17-cv-00439 PARTH13, INC.’S MOTION TO DISMISS Defendant, Parth13, Inc. (hereinafter referred to as “Parth13”) by counsel, Angela M. Jones and Kevin C. Smith, of Smith Sersic, herein files its Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and in support thereof states as follows: INTRODUCTION On June 5, 2017, TJL Gourmet Subs, LLC (hereinafter referred to as “Plaintiff”) filed its Complaint in the United States District Court- Northern District of Indiana,-South Bend Division, against Parth13, Signature Systems, Inc. (hereinafter referred to as “Signature”) and Vantiv, Inc. (hereinafter referred to as “Vantiv”). See Plaintiff’s Complaint. Summarily, Plaintiff claims that on September 16, 2015, Signature made an error when it was programming credit card readers in Plaintiff’s Jimmy John’s store located in Springfield, Missouri. Specifically, Plaintiff alleges that Signature erroneously programmed the credit card readers with Parth13’s merchant id number as opposed to Plaintiff’s merchant id number.1 Id. at ¶11. As a result of this error, when Vantiv then processed the credit card payments 1 Parth13 owns a Jimmy John’s store in Merrillville, Indiana. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 1 of 11 2 for Plaintiff, the payments made to Plaintiff’s store were processed and deposited in Parth13’s bank account instead of Plaintiff’s bank account. Plaintiff claims the erroneous deposits from September 16, 2015 to May 1, 2017 total “no less than $297,036.08.” Id. at ¶13. In its Complaint, Plaintiff alleges two counts against Parth13: (1) unjust enrichment; and (2) violation of Ind. Code § 35-43-4-2.2 Plaintiff’s Complaint fails to plead a cause of action against Parth13 for unjust enrichment since Plaintiff has not and cannot allege that (1) the benefit was conferred at the express or implied request of Parth13 and (2) that it reasonably expected payment from Parth13. Plaintiff’s Complaint also fails to plead a cause of action against Parth13 for a violation of Ind. Code § 35-43-4-2 as Plaintiff has failed to allege and cannot allege that Parth13 (1) knowingly or intentionally exerted unauthorized control over Plaintiff’s Property; and (2) intended to deprive Plaintiff of its property. As Plaintiff has failed to state a claim upon which relief can be grated against Parth13, Plaintiff’s claims against Parth13 should be dismissed in their entirety. ARGUMENT I. Legal Standard To survive this motion to dismiss, the court must determine if the allegations in the complaint state a plausible claim for relief. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although Federal Rule of Civil Procedure 8(a)(2) requires only “… a short and plain statement of the claim showing that the pleader is entitled to 2 Count II of Plaintiff’s Complaint is alleged against Signature and Vantiv and, as such, will not be addressed in this Motion to Dismiss. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 2 of 11 3 relief,” the plaintiff is still obligated to provide the grounds for which he is entitled to relief and this equates to more than just labels, conclusions or “formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) citing to Papasan v. Allain, 478 U.S. 265, 286 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. citing to 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp 235-236 (3d ed. 2004). II. Plaintiff Has Not Pled A Claim Of Unjust Enrichment Against Parth13. According to the Indiana Supreme Court, unjust enrichment can also be referred to as quantum meruit, contract implied-in-law, constructive contract, or quasi contract. Bayh v. Sonnenburg, 573 N.E.2d 398, 408 (Ind. 1991). As such, unjust enrichment “. . . is a legal fiction invented by the common-law courts in order to permit a recovery . . . where, in fact, there is no contract, but where the circumstances are such that under the law of natural and immutable justice there should be a recovery as though there had been a promise.” Id. (quoting Clark v. Peoples Sav. & Loan Ass’n, 221 Ind. 168, 171, 46 N.E.2d 681, 682 (1943)). The Supreme Court went on to state that in order to succeed on a claim for unjust enrichment the “. . .Plaintiff must establish that a measurable benefit has been conferred on the defendant under such circumstances that the defendant’s retention of the benefit without payment would be unjust”. Id. Following Bayh and approximately twenty (20) other cases on unjust enrichment, the Court of Appeals in Coleman v. Coleman set the following definition USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 3 of 11 4 (in pertinent part) which the Court of Appeals stated was used, in some manner, by all twenty of the preceding cases: To prevail on a claim of unjust enrichment, a plaintiff must establish that it conferred a measurable benefit on the defendant under circumstances in which the defendant's retention of the benefit without payment would be unjust. Wright v. Pennamped, 647 N.E.2d 1223, 1229 (Id. Ct. App. 1995). Recovery under this theory only requires the plaintiff to establish that the defendant impliedly or expressly requested the benefits be conferred. Id. at 1230. However, a party who has not expressly or impliedly requested the benefit is under no obligation to pay for the benefit. Olsson v. Moore, 590 N.E.2d 160, 163 (Ind. Ct. App. 1992). Garage Doors of Indianapolis, Inc. v. Morton, 682 N.E.2d 1296, 1303 (Ind. Ct. App. 1997), trans. denied; see also Kody Eng’g Co., Inc. v. Fox & Fox Ins. Agency, Inc., 158 Ind. App. 498, 505, 303 N.E.2d 307, 310 (1973). Thus, these cases add an element to the definition of unjust enrichment that was not expressly mentioned in Bayh: that in order to recover, the plaintiff must prove that the defendant expressly or impliedly requested the benefits that he or she received from the plaintiff. … In fact, this general requirement was mentioned in the Biggerstaff case that the Bayh court cited for its definition of unjust enrichment. . . . We also noted that ‘relief will be denied if the plaintiff did not contemplate a fee in consideration of the benefit or if the defendant could not reasonably believe the plaintiff expected a fee.’ Id. We observed that taken together, ‘these two rules preclude recovery where the benefit is officiously or gratuitously conferred.’ Id. A benefit would be gratuitously conferred if either the plaintiff did not expect payment or the defendant reasonably did not expect to have to pay for the benefit conferred. As for ‘officiousness’, it ‘is a term traditionally used to describe interference in the affairs of others that is not justified under the circumstances.’ Id. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 4 of 11 5 Coleman v. Coleman, 949 N.E.2d 860, 866-867, 2011 Ind. App. LEXIS 981 (Ind. Ct. App. May 31, 2011) (emphasis added). The Court of Appeals also cited to the Restatement of Law as authoritative; stating that it “embodies the general requirement that a benefit conferred by a plaintiff was requested by the defendant” Id. at 867. The provisions cited by the Court of Appeals are all applicable to this case. The Restatement (Third) of Restitution & Unjust Enrichment § 2(1)(Tentative Draft No. 7, 2010) states as follows: “The fact that a recipient has obtained a benefit without paying for it does not of itself establish that the recipient has been unjustly enriched.” “There is no liability in restitution for an unrequested benefit voluntarily conferred…” Id. § 2(3). Additionally, “Liability in restitution may not subject an innocent recipient to a forced exchange: in other words, an obligation to pay for a benefit that the recipient should have been free to refuse.” Following its citation to abundant authoritative precedent, The Court of Appeals officially laid out the three elements of unjust enrichment: (1) the Plaintiff must show a measurable benefit to a defendant, (2) the Plaintiff must show the defendant impliedly or expressly requested that benefit, and (3) the plaintiff must have a reasonable expectation of being paid, or the defendant reasonably must have expected to pay for the benefit. Id. at 868; see also Woodruff v. Ind. Family & Soc. Servs. Admin., 964 N.E.2d 784 (Ind. 2012). “One who labors without an expectation of payment cannot recover in quasi-contract.” Bayh v. Sonnenburg, 573 N.E.2d at 408. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 5 of 11 6 In this case, the Plaintiff has not and cannot allege essential elements two and three of its unjust enrichment claim. On its face, Plaintiff’s Complaint confirms that these elements were not pled because they cannot be pled. As explained in Plaintiff’s Complaint, Signature made an error while installing and programming the credit card readers in Plaintiff’s store. It was because of this error that any money was conferred to Parth13 in the first place. See Plaintiff’s Complaint ¶11. In fact, Plaintiff alleges a cause of action against Signature and Vantiv for “. . . improperly programming credit card readers and directing payments due to TJL to Parth13” and “. . . by facilitating the transfer of funds rightly due to TJL to Parth13”. Id. at ¶23. It was not until May of 2017 that Parth13 or the Plaintiff even became aware that this was occurring. Id. at ¶14. Plaintiff has never alleged that Parth13 made this error or caused this error to be made by Signature/Vantiv. Parth13 did not cause this error, it did not request that Plaintiff cause this error, did not request that Vantiv or Signature cause this error, and was not even aware of this error until Plaintiff contacted it in May of 2017. As such, the Plaintiff cannot allege that Parth13 expressly or impliedly requested this monetary benefit and any attempts to do so would be frivolous, nay, fraudulent. Additionally, for the same reasons set forth above, Plaintiff does not and cannot allege that it had a reasonable expectation of being paid, or that Parth13 reasonably must have expected to pay for the benefit. There was an error made by Signature on September 16, 2015 that was not uncovered by the Plaintiff until 2017. See Plaintiff’s Complaint ¶¶ 11 & 14. Neither Parth13 nor Plaintiff were aware that USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 6 of 11 7 the money was being conferred until May of 2017. Id. As such, Plaintiff could not have had a reasonable expectation of payment at the time the funds were being conferred to Parth13 because it did not know this was occurring. And the same goes for Parth13 who was not aware of the error until it was informed by Plaintiff. Again, Plaintiff did not allege that it reasonably expected payment from Parth13 or that Parth13 reasonably must have expected to pay for the benefit because to do so would be frivolous and/or fraudulent. As the Court of Appeals described in Coleman v. Coleman, just because Parth13 received a benefit without paying for it does not establish that Parth13 was unjustly enriched. Plaintiff has failed to allege the necessary elements to bring this cause of action against Parth13. Furthermore, any attempts by Plaintiff to amend its complaint to set forth this cause of action would be frivolous or fraudulent. Because Plaintiff has not and cannot bring this cause of action against Parth13, Count I should be dismissed. III. Plaintiff Has Not Pled a Violation of Ind. Code Ann. § 35-43-4-2 Against Parth13. Plaintiff claims that Parth13 violated Ind. Code Ann. § 35-43-4-2 (Theft- Receiving stolen property) and, pursuant to Ind. Code § 34-24-3-1, it is entitled to treble damages, costs, and attorneys’ fees.3 Specifically, Plaintiff states that “Parth13 ‘knowingly . . . exert[ed] unauthorized control over property of another person, with intent to deprive the other person of any part of its value or use’ when it received and 3 The Plaintiff does not allege conversion under Ind. Code Ann. § 35-43-4-3. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 7 of 11 8 did not return the credit card payments of TJL’s store 447. See Ind. Code § 35-43-4- 2.” See Plaintiff’s Complaint ¶¶ 28 & 29. In order for Plaintiff to recover costs of the action, reasonable attorney fees, and treble damages, Plaintiff must prove the elements of theft by a preponderance of the evidence. Banks v. Jamison, 12 N.E.3d 968, 983 (Ind. Ct. App. 2014); citing to Newland Res., LLC v. Branham Corp., 918 N.E.2d 763, 775 (Ind. Ct. App. 2009). Ind. Code Ann § 35-43-4-2 states, in pertinent part, that the elements of a claim of theft are as follows: (a) A person who knowingly or intentionally exerts unauthorized control over property of another person, with intent to deprive the other person of any part of its value or use, commits theft, a Class A misdemeanor. Both criminal conversion and theft require proof that a person knowingly or intentionally exerted unauthorized control over the property of another person. Ind. Code §§ 35-43-4-2,-3. Theft requires the additional proof that the person intended to deprive the owner of the property of any part of the property's value or use. Ind. Code § 35-43-4-2. Pursuant to Indiana Code section 35-41-2-2(a), "A person engages in conduct 'intentionally' if, when he engages in the conduct, it is his conscious objective to do so." Subsection (b) of the same statue provides that "A person engages in conduct 'knowingly' if, when he engages in the conduct, he is aware of a high probability that he is doing so." And a person's control over the property of another is "unauthorized" if it is exerted "in a manner or to an extent other than that to which the other person has consented." Ind. Code § 35-43-4-1(b)(2). Banks v. Jamison, 12 N.E.3d 968, 983-984 (Ind. Ct. App. 2014) (emphasis added). First, Plaintiff has failed to allege that Parth13 knowingly exerted unauthorized control over Plaintiff’s Property other than to simply recite the language of Ind. Code § 35-43-4-2. See Plaintiff’s Complaint ¶28. Plaintiff has USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 8 of 11 9 alleged no other facts to support this. In fact, a simple reading of the Complaint confirms that Signature and/or Vantiv and/or Plaintiff committed the error and Parth13 did not even know of the error by Signature until May of 2017. Id. at ¶¶ 11 & 14. Even more damning, Plaintiff has erroneously and completely failed to appropriately allege intent. Intent, as noted above, is very explicitly a part of a claim for theft which is what the Plaintiff is alleging Parth13 committed. In accordance with Federal Rule of Civil Procedure 9(b), Plaintiff must generally allege intent in its complaint. Fed. R. Civ. P. 9(b). Plaintiff has not done so other than to recite the language of Ind. Code. § 35-43-4-2. Parth13 speculates that Plaintiff has not appropriately alleged intent because it cannot make this allegation. In fact, Plaintiff’s Complaint, on its face, contradicts any claim of intent on the part of Parth13. Specifically, Plaintiff alleges Signature made the mistake programming Plaintiff’s credit card readers, does not allege Parth13 had anything to do with this mistake, and alleges a count for negligence against Signature and Vantiv for this mistake. See Plaintiff’s Complaint ¶¶11, 23, & 24. Furthermore, and as noted above in Banks v. Jamison, both knowingly and intentionally require that Parth13 engage in some sort of “conduct”. In this case, Parth13 did not do anything: there was no conduct. Signature, Vantiv, and Plaintiff are the ones who committed the error and Plaintiff is the one who did not catch the error until May of 2017. Parth13 did not even know about the error until it was contacted by Plaintiff in May of 2017. Id. at ¶¶ 11, 14, 23, & 24. USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 9 of 11 10 Plaintiff has not and cannot allege that Parth13 knowingly exerted control over Plaintiff’s property with intent to deprive it of any part of its value. Because Plaintiff cannot bring a cause of action against Parth13 for a violation of Ind. Code § 35-43-4- 2, this Count against Parth13 should be dismissed. CONCLUSION WHEREFORE, Defendant, Parth13, Inc. respectfully requests that the Court dismiss Plaintiff’s Complaint against Parth13, Inc. in its entirety and for all other just and proper relief. Respectfully submitted, /s/ Angela M. Jones Angela M. Jones (#30770-45) Kevin C. Smith (#18169-45) SMITH SERSIC 9301 Calumet Avenue, Suite 1F Munster, IN 46321 Phone: 219-933-7600 Fax: 219-836-2848 Email: ajones@smithsersic.com ksmith@smithseric.com USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 10 of 11 11 CERTIFICATE OF SERVICE I hereby certify that on July 7, 2017 a true and complete copy of the foregoing pleading or paper was electronically filed with the Clerk of the Court using the CM/ECF system which sent notification of such filing to all counsel of record. Harmony A. Mappes, Esq. 300 North Meridian St., Suite 2700 Indianapolis, IN 46204 Phone: (317) 237-0300 Fax: (317) 237-1000 Email: harmony.mappes@FaegreBD.com Attorney for Plaintiff Michael J. Kanute, Esq. Ryan G. Milligan, Esq. 311 South Wacker Drive, Suite 4300 Chicago, IL 60606 Phone: (312) 212-6500 Fax: (312) 212-6501 Email: Mike.Kanute@faegreBD.com Ryan.Milligan@FaegreBD.com Attorneys for Plaintiff /s/ Angela M. Jones Angela M. Jones (#30770-45) USDC IN/ND case 3:17-cv-00439-JD-MGG document 16 filed 07/07/17 page 11 of 11