EAN Holdings, LLC v. National Auto Movers, LLC ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
EAN HOLDINGS, LLC )
(d/b/a ENTERPRISE RENT-A-CAR), )
)
Plaintiff, )
)
v. ) C.A. No. N22C-02-051 PAW
)
NATIONAL AUTO MOVERS, LLC, )
a Delaware limited liability company, )
)
Defendant. )
Submitted: September 26, 2023
Decided: December 29, 2023
MEMORANDUM OPINION
Upon consideration of Defendant’s Motion to Dismiss:
DENIED.
Seth A. Niederman, Esq., of FOX ROTHSCHILD LLP, Attorney for Plaintiff.
Nicole M. Faries, Esq. and D. Zachary Losco, Esq., of BAIRD MANDALAS
BROCKSTEDT & FEDERICO LLC, Attorneys for Defendant.
Winston, J.
I. INTRODUCTION
EAN Holdings, LLC, (“Enterprise”) sues National Auto Movers, (“NAM”)
for conversion, fraud, and unjust enrichment relating to a rental car. In response,
NAM moved to dismiss for failure to state a claim upon which relief can be granted
(the “Motion”). Enterprise counters that its Amended and Supplemented Complaint,
(the “Complaint”) sufficiently pleads the facts and elements for all three claims. The
Court heard argument on the Motion on September 26, 2023. For the reasons set
forth below, NAM’s Motion is DENIED.
II. FACTUAL AND PROCEDURAL BACKGROUND1
Enterprise is a national car rental company, which operates in the State of
Delaware through various branch offices located throughout the State.2 NAM is
engaged in the business of automobile towing and storing.3 Enterprise was the
record title owner of a 2020 Nissan Altima, (the “Altima”) which has a current
market value of approximately $21,299.00.4
1
The following facts are drawn from the Complaint and documents incorporated by
reference. Windsor I, LLC v. CWCapital Asset Mgmt. LLC, 238 A.3d 863, 873 (Del.
2020). Citations in the form of “Ex. __” refer to documents attached to the
Complaint.
2
Compl. ¶ 2.
3
Id. ¶ 3.
4
Id. ¶ 6. The “current market value” of the Altima was at the time the Complaint
was filed.
2
On May 27, 2021, NAM towed the Altima from a private residence in New
Castle, Delaware to its tow yard located in Wilmington, Delaware (the “Tow
Yard”).5 Unaware of the Altima’s location, in June 2021, Enterprise contacted the
police to report the Altima as stolen.6 On September 7, 2021, NAM commenced a
garage keeper’s lien.7 In November 2021, Enterprise was notified by the National
Crime Information Center, (“NCIC”) that the Altima was no longer active as stolen
in the NCIC’s system.8 Enterprise then contacted the Wilmington Police
Department which advised that the Altima was towed by NAM to the Tow Yard.9
On November 16, 2021, Enterprise contacted NAM, via telephone, to discuss
the Altima (the “November Call”).10 During the November Call, an Enterprise
representative spoke with NAM employee, “Patty” who informed Enterprise that
NAM procured a new title for the Altima because of the amount of time it was in
NAM’s possession.11 Patty further claimed that Enterprise owed NAM
approximately $30,000 for storage and towing of the Altima, but she would confer
with NAM ownership about how Enterprise could purchase back the Altima.12
5
Id. ¶ 7. The private residence was that of the Altima’s original renter who was
arrested in May 2021. Compl. ¶ 11.
6
Id. ¶ 10.
7
Id. ¶ 19.
8
Compl. ¶ 11.
9
Id.
10
Id. ¶ 12.
11
Id. ¶ 14.
12
Id. ¶¶ 14 and 15.
3
Enterprise then made NAM aware of its ownership rights and inquired about NAM’s
lack of notice regarding its possession of the Altima.13
On January 5, 2022, Enterprise sent a letter, (the “Altima Letter”) to NAM
explaining its ownership rights in the Altima and warned NAM against taking any
further steps that would be inconsistent with Enterprise’s ownership.14 The Altima
Letter also stated that it would pay the fair costs for the tow and storage of the Altima,
however, it refused to pay the additional fees that NAM charged.15 On January 10,
2022, Patty and Enterprise had another telephone conversation to discuss the Altima
Letter (the “January Call”).16 During the January Call, Patty informed Enterprise of
a garage keeper’s lien that was filed by NAM on September 7, 2021.17 Enterprise
immediately refuted being notified and demanded all documents and records in
relation to the lien.18 After the January Call, Patty emailed Enterprise an invoice in
the amount of $34,850 related to the towing and storage of the Altima.19 After
receiving the invoice, Enterprise continued to contact NAM to negotiate the release
13
Compl. ¶ 12.
14
Id. ¶¶ 16 and 17.
15
Id. ¶ 16.
16
Id. ¶ 18.
17
Id. ¶ 19.
18
Id. ¶¶ 20 and 21.
19
Id. ¶ 22.
4
of the Altima to Enterprise. NAM failed to respond and engage further with
Enterprise.20
On February 7, 2022, Enterprise commenced the instant action seeking a
declaratory judgment and asserted a conversion claim.21 In response to Enterprise’s
discovery requests, NAM produced an affidavit of publication of notice of a garage
keeper sale scheduled for January 13, 2022, (the “Sale Affidavit”).22 The Sale
Affidavit referred to the anticipated sale of the Altima which was published in the
New Castle Weekly on December 29, 2021.23 Additionally, in response to
Enterprise’s supplemental discovery requests, NAM disclosed that on February 5,
2022, NAM sold the Altima for $19,000 at a garage keeper’s lien sale.24 NAM failed
to forward the Sale Affidavit after learning of Enterprise’s interest in the Altima.25
III. DISCUSSION
NAM seeks dismissal of the Complaint under Superior Court Rule 12(b)(6)
for failure to state a claim upon which relief can be granted. Upon a Rule 12(b)(6)
motion, the Court accepts all well-pleaded factual allegations as true; (2) credits
vague allegations if they give the opposing party notice of the claim; (3) draws all
20
Compl. ¶ 23.
21
Id. ¶ 24.
22
Id. ¶ 30.
23
Id. ¶ 30; Ex. C.
24
Compl. ¶ 34.
25
Id. ¶¶ 31 and 35. During discovery, Enterprise amended and supplemented its
complaint. See D.I. 20.
5
reasonable inferences in favor of the non-moving party; and (4) denies dismissal if
recovery on the claim is reasonably conceivable.26
A. COUNT I – CONVERSION
Conversion results from any distinct act of dominion wrongfully exerted over
the property of another, in denial of his right, or inconsistent with it.27 Before
bringing a claim for conversion, if a party was once in lawful possession of the
disputed property, the plaintiff must first make a demand upon that party for the
return of the property.28 However, this requirement is excused when the alleged
wrongful act is of such a nature as to amount, in itself, to a denial of the rights of the
real owner.29
NAM argues that Enterprise’s conversion claim “should be dismissed because
[it] failed to allege well-pleaded facts demonstrating either a demand . . . for the
return of the Altima, or any wrongful act on the part of NAM.”30 Neither of those
arguments succeed. Enterprise pleads that demands were made to NAM for the
Altima’s return during the November and January Calls, and in the January Letter.31
26
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Holding, LLC, 27 A.3d 531, 535
(Del. 2011).
27
CIT Commc’ns Fin. Corp. v. Level 3 Commc’ns LLC, 2008 WL 2586694 at *2
(Del. Super. June 6, 2008) (citing Drug, Inc. v. Hunt, 168 A. 87, 93 (Del. 1933)).
28
Id.29
Id.30
Def.’s Mot. to Dismiss ¶ 7.
31
Compl. ¶¶ 12-23.
6
In addition, during the parties correspondence, Enterprise alleges it attempted to
negotiate “a fair figure to release the Altima . . . .”32 Ultimately, despite Enterprise’s
continued attempts to secure the Altima, “NAM failed to respond and engage further
with Enterprise.”33 Even if a demand was not sufficiently pled, the Court cannot
determine at this stage whether the conversion, if any, was of a nature that would
justify excusing the demand requirement in this case.34
Turning the elements of conversion, a conversion claim withstands a motion
to dismiss where a plaintiff alleges it had: (1) a property interest in the disputed
property; (2) a right to possession of the property; and (3) the property was
converted, in that the defendant wrongfully possessed or disposed of the property as
if it were their own.35 Enterprise pleads all three elements. NAM argues that
because it possessed the authority to sell the Altima under 25 Del. C. § 3901,
Enterprise’s allegations that NAM wrongfully possessed the Altima are baseless.
Whether NAM met the statutory requirements to sell the Altima is not appropriately
addressed at this stage. The allegations set forth in the Complaint are sufficient to
32
Id. ¶ 23; see also, Id. ¶ 14 (alleging NAM stated it would confer “about how
Enterprise could purchase the Altima back from NAM”); Id. ¶ 16 (alleging
Enterprise’s Altima Letter explained that Enterprise would pay the fair cost of
towing and storing the Altima but refused to pay exorbitant storage fees).
33
Id. ¶ 23.
34
CIT Commc’ns Fin. Corp., 2008 WL 2586694, at * 2.
35
Arnold v. Soc'y for Sav. Bancorp, Inc., 678 A.2d 533, 536 (Del. 1996) (citations
omitted).
7
state a conversion claim, and it is reasonably conceivable that Enterprise is entitled
to recover.
B. COUNT II – FRAUD
To establish a claim for fraudulent concealment, a plaintiff must show: (1)
deliberate concealment by the defendant of a material past or present fact, or silence
in the face of a duty to speak; (2) the defendant acted with scienter; (3) an intent to
induce the plaintiff’s reliance upon the concealment; (4) causation; and (5) damages
resulting from the concealment.36 NAM generally argues that Enterprise’s
fraudulent concealment claim must be dismissed because Enterprise failed to plead
the elements and failed to meet the particularity pleading standard.37
As an initial matter, when asserting claims of fraud, “[t]he circumstances
constituting fraud … shall be stated with particularity,” however, malice, intent,
knowledge, and other condition of mind of a person may be averred generally.38
There is no dispute that Enterprise alleges that it made NAM aware of Enterprise’s
ownership interest in the Altima during the November Call, January Call and via the
Altima Letter. NAM contends, however, the allegations are not sufficient because
the November and January Calls are not substantiated by documentation. To the
36
Nicolet, Inc. v. Nutt, 525 A.2d 146, 149 (Del. 1987).
37
Def.’s Mot. to Dismiss ¶ 20.
38
Super. Ct. R. 9(b).
8
contrary, at this stage, Enterprise need not substantiate these allegations with
documentation.39 Therefore, those allegations satisfy the pleading requirement.
As to the first element, NAM argues that Enterprise failed to plead any
affirmative duty of NAM to notify Enterprise of NAM’s possession or sale of the
Altima. Generally, there is no duty to disclose a material fact or opinion, unless the
defendant had a duty to speak.40 Enterprise claims that NAM failed to provide
Enterprise with the statutorily required notice of NAM’s garage keeper’s action,
despite having actual or constructive knowledge that Enterprise owned the Altima.41
In response, NAM contends that it “took all statutory steps required to notify interest
holders in the Altima of the pending sale.”42 Whether NAM met the statutory
requirements cannot be addressed at the motion to dismiss stage. Accordingly,
NAM’s argument fails because a genuine dispute exists. It also fails because
Enterprise sufficiently pleads the first element.
NAM next argues that Enterprise also failed to plead reliance on NAM’s
alleged concealment. That argument also fails. Enterprise pleads that NAM led
Enterprise to believe that NAM was still in possession of the Altima and would
39
Whether NAM was unaware of Enterprise’s ownership interest in the Altima due
to it being fitted with a stolen license plate or engaged in due diligence to ascertain
the owner of the Altima are matters for trial, not a motion to dismiss.
40
Nicolet, Inc. v. Nutt, 525 A.2d at 149. Also, once Enterprise asked during its
conversations with NAM, NAM had an obligation to answer truthfully. Id.41
Compl. ¶ 47.
42
Def.’s Mot. to Dismiss ¶ 23.
9
continue to possess it until the parties reached an agreement about the towing and
storage fees.43 Specifically, Enterprise pleads that during the November Call, NAM
stated it would confer with NAM’s ownership on how Enterprise could buy the
Altima back.44 Similarly, even after advising Enterprise of the garage keeper’s lien,
NAM emailed Enterprise the “alleged current balance due and owing to NAM for
the towing and storage of the Altima.”45 NAM also contends Enterprise “failed to
make a showing of damages caused by NAM’s concealment.”46 Enterprise claims
it suffered damages as result of NAM’s conduct and sale of the Altima47 which may
be pled generally.48 That is sufficient at the pleading stage.
Finally, Rule 9(b) requires all allegations of fraud to be pled with
particularity.49 In order to meet the particularity requirement, a plaintiff must plead
the time, place and contents of the alleged fraud, as well as the identity of the person
committing fraud.50 The purpose of Rule 9(b) is to put the adversary on notice so
that the adversary can prepare a defense.51 Enterprise’s claim is plead with
43
Compl. ¶¶ 49 and 50.
44
Id. ¶ 14.
45
Id. ¶ 22.
46
Def.’s Mot. to Dismiss ¶ 27.
47
Compl. ¶¶ 41 and 42.
48
Super. Ct. R. 9(g).
49
Super. Ct. R. 9(b).
50
KnighTeck, LLC v. Jive Commc’ns, Inc. 225 A.3d 343, 351 (Del. 2020) (citations
omitted).
51
Id.10
particularity as required under Rule 9(b). As set forth in the Complaint, Enterprise
conveyed, via phone calls, and the Altima Letter, the time, place and contents of the
alleged fraud, as well as the identity of the person committing the fraud. Enterprise
has, therefore, stated a claim for fraud.
C. COUNT III – UNJUST ENRICHMENT
Unjust enrichment is “the unjust retention of a benefit to the loss of another,
or the retention of money or property of another against the fundamental principles
of justice or equity and good conscience.”52 The elements of unjust enrichment
include: (i) an enrichment; (ii) an impoverishment; (iii) a relation between the
enrichment and the impoverishment; (iv) the absence of justification; and (v) the
absence of a remedy provided by law.53 Applying this standard, Enterprise
sufficiently pleads each element of an unjust enrichment claim.
Enterprise alleges that: (i) NAM was enriched when it sold Enterprise’s
Altima;54 (ii) Enterprise was impoverished because Enterprise lost the ability to use
and rent the Altima to its customers;55 (iii) Enterprise’s impoverishment relates to
the enrichment; 56 and (iv) there was no justification for NAM to sell and retain the
52
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (quoting Fleer Corp. v. Topps
Chewing Gum, Inc., 539 A.2d 1060, 1062 (Del. 1988)).
53
Windsor I, LLC v. CWCapital Asset Mgmt LLC, 238 A.3d at 875 (citing Nemec v.
Shrader, 991 A.2d 1120, 1130 (Del. 2010) (quotations omitted)).
54
Compl. ¶ 54.
55
Id. ¶ 55.
56
Id. ¶ 56.
11
Altima sale proceeds.57 As to the fifth element, if Enterprise alleged an absence of a
remedy at law, then this Court would not have jurisdiction.58 Enterprise, therefore,
does not have to plead absence of a remedy at law.
Accepting all well-pleaded allegations as true and construing them in a light
most favorable to Enterprise, the Court finds Enterprise demonstrated a reasonably
conceivable set of facts that NAM secured itself a benefit at Enterprise’s detriment.
IV. CONCLUSION
For the reasons stated herein, NAM’s Motion to Dismiss is DENIED.
IT IS SO ORDERED.
/s/ Patricia A. Winston
Patricia A. Winston, Judge
57
Id. ¶ 57.
58
Grace v. Morgan, 2004 WL 26858, at *1 (Del. Super. Jan. 6, 2004) .
12