United Health Alliance, LLC v. United Medical, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
UNITED HEALTH ALLIANCE, LLC, )
a Delaware limited liability company, )
)
Plaintiff/ ) C.A. No. 7710-VCP
Counterclaim Defendant, )
)
v. )
)
UNITED MEDICAL, LLC, )
a Delaware limited liability company, )
)
Defendant/ )
Counterclaim Plaintiff. )
MEMORANDUM OPINION
Submitted: August 13, 2014
Decided: November 20, 2014
Jeffrey M. Weiner, Esq., LAW OFFICES OF JEFFREY M. WEINER, Wilmington,
Delaware; James S. Green, Sr., Esq., SEITZ, VAN OGTROP & GREEN, P.A.,
Wilmington, Delaware; Attorneys for Plaintiff/Counterclaim Defendant United Health
Alliance, LLC.
Adam L. Balick, Esq., Melony R. Anderson, Esq., BALICK & BALICK, LLC,
Wilmington, Delaware; Attorneys for Defendant/Counterclaim Plaintiff United Medical,
LLC.
PARSONS, Vice Chancellor.
This is primarily a breach of contract action seeking damages and injunctive relief
for loss of access to medical billing and records management software. The plaintiff who
filed the initial complaint claims to have entered into a contract with the defendant. The
complaint was amended later to add two more plaintiffs who allegedly are third-party
beneficiaries of that contract. The defendant has moved to dismiss the latter two
plaintiffs for failure to state a claim upon which relief can be granted. Those plaintiffs
allege, in the alternative, legal theories of quasi-contract, unjust enrichment, and third-
party beneficiary status.
For the reasons that follow, I conclude that it is reasonably conceivable that the
two additional plaintiffs could prove facts at trial that would entitle them to recover on a
third-party beneficiary theory. The plaintiffs’ claims based on theories of quasi-contract
and unjust enrichment, however, fail to meet the pleading requirements to survive a Rule
12(b)(6) motion. Therefore, I grant in part and deny in part the defendant’s motion to
dismiss.
I. BACKGROUND1
A. The Parties
Plaintiff United Health Alliance, LLC (―UHA‖) is a Delaware limited liability
company that provides administrative, management, and billing support for the medical
1
Unless otherwise noted, the facts recited herein are drawn from the well-pled
allegations of the Verified Amended Complaint (the ―Complaint‖) and are
presumed true for purposes of Defendant’s motion to dismiss.
1
services rendered by its affiliates, Christiana Medical Group, P.A. (―CMG‖), Bayhealth
Hospitalists, LLC (―BHH,‖ and, together with CMG, the ―Affiliates‖), and St. Francis
Hospitalists, LLC. UHA, CMG, and BHH comprise the ―Plaintiffs‖ in this case.
Defendant, United Medical, LLC (―UM‖), is a Delaware limited liability company
and an authorized distributor of PowerWorks Practice Management (―PowerWorks‖), a
software application for the healthcare services industry. UM distributes PowerWorks
pursuant to an agreement with Cerner Healthcare Solutions, Inc. (―Cerner‖).
B. Facts
Plaintiffs aver that prior to January 2011, when UM began providing access to
PowerWorks, UHA was party to a Software License, Hardware Purchase, Services and
Support Agreement with Cerner, through which it had access to Cerner’s PowerWorks
software. UHA entered into the agreement with Cerner on or about January 27, 2009,
and the agreement had a term of five years. Beginning in January 2011, UHA began
accessing PowerWorks from UM, in its role as an authorized Cerner distributor, rather
than from Cerner directly. At or around that time, UHA and Cerner formally terminated
the contract between them. UM allegedly assumed its responsibility for UHA pursuant to
an agreement between UM and Cerner. Specifically, UM and Cerner had entered into an
Amended and Restated Cerner System Schedule No. 1 on February 4, 2011, which was
effective retroactively as of December 31, 2010. After signing the agreement with
Cerner, UM, not Cerner, provided PowerWorks to UHA.
UM and UHA never signed a written contract for this service. UM provided its
standard service agreement to UHA, which UHA revised and returned to UM. Though
2
the parties attempted to resolve their differences, their negotiation was unsuccessful. No
written agreement was ever finalized and executed. During these negotiations, UHA paid
UM for access to PowerWorks, and UM continued to provide software and support
services. Plaintiffs allege that, despite the disagreement as to certain terms, there was an
unwritten contract between UHA and UM, based on the continued payments by UHA and
the provision of service by UM. The Affiliates are alleged to have been third-party
beneficiaries of that contract.
On or before May 1, 2012, Defendant UM prepared and sent an invoice to UHA
for the entire month of May 2012. UHA paid by check indicating clearly thereon that the
payment was for the entire month of May; UM deposited UHA’s check on May 7, 2012.
UM, therefore, accepted payment for the entire month of May.
Although the parties disagree regarding the cause, on May 7, 2012, UM blocked
UHA’s access to PowerWorks. UM restored UHA’s access to that software from around
6:00 p.m. on May 14 until June 1, 2012. Thereafter, UHA demanded eight more days of
access, which it alleges were necessary to close out the electronic billing and payment
information from before June 1, 2012. UM never restored this access. UHA also
demanded the return, in an electronic format, of ―its confidential information provided for
storage and processing of data for billing‖2 that had been maintained by the PowerWorks
system.
2
Compl. ¶ 15.
3
Plaintiffs contend UM’s actions breached its agreement with UHA. As a result of
this breach, Plaintiffs allege that they have been precluded from seeking payment ―from
insurers and/or their insureds/patients.‖3 According to UHA and its Affiliates, they have
been unable, due to UM’s breach, to bill their insureds and certain patients and have
incurred: (1) financial damages of $286,395; and (2) expenses of $48,601 as of
November 2013. The Complaint further alleges that ―Plaintiff UHA has no adequate
remedy at law or otherwise for the harm done,‖ and that ―Plaintiff UHA will suffer
irreparable harm, damage and injury,‖ unless UM is enjoined.4 The Affiliates claim that
they were third-party beneficiaries to the contract between UHA and UM. In addition, all
Plaintiffs have asserted a quasi-contract claim and an unjust enrichment claim against
UM for the above actions, as alternate theories of relief.
In their prayer for relief as to the claims subject to UM’s motion to dismiss,
Plaintiffs seek: (1) a temporary restraining order (―TRO‖) against UM preventing it from
destroying or interfering with Plaintiffs’ confidential information in electronic format; (2)
a TRO and preliminary injunction requiring UM to surrender to UHA all confidential
information which UHA provided to UM in connection with patient billing and other
management services performed by UHA; (3) eventually, a permanent injunction to the
same effect; (4) a monetary award equal to the loss of collections from payors as a result
of the breach; and (5) their fees and expenses.
3
Id. ¶ 16.
4
Id. ¶¶ 22-23.
4
C. Procedural History
On July 20, 2012, UHA filed its initial complaint with this Court. On November
30, 2013, CMG and BHH moved to intervene; this Court granted that motion on
December 2, 2013. A few days later, UHA amended its Complaint to add CMG and
BHH as parties. UM answered on January 6, 2014 and also moved to dismiss the
Affiliates pursuant to Court of Chancery Rule 12(b)(6). Having since had the benefit of
full briefing and oral argument, this is the Court’s ruling on UM’s motion.
D. The Parties’ Contentions
With regard to the third-party beneficiary claim, UM argues that the Affiliates
have not pled that they were intended beneficiaries of the contract between UM and
UHA. Specifically, UM avers that UHA’s allegation that it ―provides administrative,
management and billing for medical services rendered by [CMG and BHH]‖5 is not
sufficient to plead that the Affiliates were intended third-party beneficiaries to any
potential contract. Concerning the unjust enrichment and quasi-contract claims, UM
contends that ―[the Affiliates] have not alleged that they conferred any benefit upon UM,
or that UM unjustly retained that benefit.‖6 UM also asserts that there is no legally
cognizable relationship between the Affiliates and UM and, as such, any damages from
the loss of access to PowerWorks sought by the Affiliates must come from UHA, with
whom CMG and BHH have a legal relationship.
5
Id. ¶ 1.
6
Def.’s Opening Br. 8.
5
The Affiliates argue that the Complaint supports the allegation that they were
third-party beneficiaries to the contract between UHA and UM. CMG and BHH also
maintain that they have pled sufficiently their alternate claims based on theories of quasi-
contract and unjust enrichment.
II. ANALYSIS
A. Applicable Standard
Pursuant to Rule 12(b)(6), this Court may grant a motion to dismiss for failure to
state a claim if a complaint does not assert sufficient facts that, if proven, would entitle
the plaintiff to relief.
A motion to dismiss pursuant to Rule 12(b)(6) for failure to
state a claim must be denied unless, assuming the well-pled
allegations to be true and viewing all reasonable inferences
from those allegations in the plaintiff’s favor, [the Court
does] not find there to be a reasonably conceivable set of
circumstances in which the plaintiff could recover. In this
analysis, [the Court should] not accept as true any conclusory
allegations unsupported by specific facts.7
B. Third-Party Beneficiary Claim
I first consider the claims of CMG and BHH that they are entitled to relief as third-
party beneficiaries of the contract between UHA and UM.
7
City of Providence v. First Citizens BancShares, Inc., 2014 WL 4409816, at *3
(Del. Ch. Sept. 8, 2014) (citing Cent. Mortg. Co. v. Morgan Stanley Mortg.
Capital Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011), and Gantler v. Stephens, 965
A.2d 695, 704 (Del. 2009)).
6
―Well-settled within precepts of contract law is recognition that non-parties to a
contract ordinarily have no rights under it.‖8 This general principle is subject to an
exception recognizing that intended, but not incidental, third-party beneficiaries of a
contract have legal rights under that contract, despite being non-parties.9 This Court has
held that that:
In order for third party beneficiary rights to be created, not
only is it necessary that performance of the contract confer a
benefit upon third parties that was intended, but the
conferring of a beneficial effect on such third party—whether
it be a creditor of the promisee or an object of his or her
generosity—should be a material part of the contract’s
purpose.10
In Madison Realty Partners 7, LLC v. AG ISA, LLC,11 this Court identified the
three elements of a third-party beneficiary claim:
(1) an intent between the contracting parties to benefit a third
party through the contract, (2) the benefit being intended to
serve as a gift or in satisfaction of a pre-existing obligation to
the third party, and (3) a showing that benefiting the third
8
MetCap Sec. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *7 (Del. Ch.
May 16, 2007).
9
Diamond Elec., Inc. v. Delaware Solid Waste Auth., 1999 WL 160161, at *6 (Del.
Ch. Mar. 15, 1999) (―A third party has rights under a contract when the
contracting parties intend by their contract to confer a benefit on the third party‖);
see also RESTATEMENT (SECOND) OF CONTRACTS § 302 (1981).
10
Insituform of N. Am., Inc. v. Chandler, 534 A.2d 257, 270 (Del. Ch. 1987); see
also NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 434 (Del.
Ch. 2007) (―As a general rule, only parties to a contract and intended third-party
beneficiaries may enforce an agreement’s provisions. Mere incidental
beneficiaries have no legally enforceable rights under a contract.‖).
11
2001 WL 406268 (Del. Ch. Apr. 17, 2001).
7
party was a material aspect to the parties agreeing to
contract.12
Here, CMG and BHH argue that they are intended third-party beneficiaries of an
unwritten contract between UHA and UM. A mere allegation that a party ―was an
intended beneficiary is, of course, not sufficient to state a claim.‖13 Generally, plaintiffs
claiming third-party beneficiary status must plead more than a relationship with one of
the parties to the contract at issue.
In arguing that the Affiliates have failed to meet their pleading burden in that
regard, UM relies on MetCap Securities. In that case, this Court dismissed a third-party
beneficiary claim because the alleged third-party beneficiary failed to show that the
contract it had with a party to the disputed contract evidenced the requisite intent, even
though the disputed contract acknowledged the other contract with the third party.14 The
case before me is distinguishable from MetCap Securities, however, because it involves a
high degree of government regulation. The sharing of medical information and data,
such as the data at the heart of this case, is heavily regulated, at a minimum, at the federal
level.
Paragraph four of the Complaint specifically points to the Health Insurance
Portability and Accountability Act (―HIPAA‖) as part of the federal regulatory regime
12
Id. at *5.
13
MetCap, 2007 WL 1498989, at *7.
14
Id. at *7-8.
8
governing the handling and transfer of medical information. As part of HIPAA,
Congress authorized the Department of Health and Human Services (―DHHS‖) to
promulgate regulations to protect the privacy of health information. 15 These regulations
are codified under 45 C.F.R. §§ 160 and 164, and known as the Privacy Rule. As
described by DHHS, the Privacy Rule requires that covered entities enact ―appropriate
safeguards to protect the privacy of personal health information, and sets limits and
conditions on the uses and disclosures that may be made of such information without
patient authorization.‖16
The applicable HIPAA regulation defines a covered entity as: ―(1) [a] health plan,
(2) [a] health care clearinghouse, or (3) [a] health care provider who transmits any health
information in electronic form in connection with a transaction covered by this
subchapter.‖17 Based on the allegations in the Complaint, I consider it reasonably
conceivable that Plaintiffs will be able to show that CMG and BHH, as alleged health
care providers, fall within this definition and constitute covered entities for HIPAA
purposes. Under the statute, ―[a] covered entity may disclose protected health
information to a business associate and may allow a business associate to create, receive,
15
See generally Deborah F. Buckman, Validity, Construction, and Application of
Health Insurance Portability and Accountability Act of 1996 (HIPAA) and
Regulations Promulgated Thereunder, 194 A.L.R. Fed. 133 (2004).
16
U.S. DEP’T OF HEALTH AND HUMAN SERVS., The Privacy Rule,
http://www.hhs.gov/ocr/privacy/hipaa/administrative/privacyrule/ (last visited
Nov. [14], 2014).
17
45 C.F.R. § 160.103.
9
maintain, or transmit protected health information on its behalf, if the covered entity
obtains satisfactory assurance that the business associate will appropriately safeguard the
information.‖18 As defined by HIPAA, a business associate is an entity that:
On behalf of such covered entity . . . creates, receives,
maintains, or transmits protected health information for a
function or activity regulated by this subchapter, including
claims processing or administration, data analysis, processing
or administration, utilization review, quality assurance,
patient safety activities listed at 42 CFR 3.20, billing, benefit
management, practice management, and repricing.19
UHA ―provides administrative, management and billing for medical services rendered by
its affiliates.‖20 Thus, UHA would appear to qualify as a business associate to the
Affiliates for purposes of HIPAA and the DHHS regulations.
As a business associate, UHA is entitled to:
disclose protected health information to a business associate
that is a subcontractor and may allow the subcontractor to
create, receive, maintain, or transmit protected health
information on its behalf, if the business associate obtains
satisfactory assurances, in accordance with § 164.504(e)(1)(i),
that the subcontractor will appropriately safeguard the
information.21
A subcontractor is ―a person to whom a business associate delegates a function, activity,
or service, other than in the capacity of a member of the workforce of such business
18
Id. § 164.502(e)(1)(i) (emphases added).
19
Id. § 160.103.
20
Compl. ¶ 1.
21
45 C.F.R. § 164.502(e)(1)(ii) (emphases added).
10
associate.‖22 Plaintiffs have alleged that UHA contracted first with Cerner and then with
UM ―in connection with the storage and processing of data for the Affiliates.‖23 HIPAA
requires disclosures to subcontractors to meet a variety of mandatory protocols for
contracts between covered entities and business associates.24 These protocols are
identical for contracts between business associates and subcontractors. Indeed, the
regulations require that contracts between business associates and subcontractors must
―ensure that any subcontractors that create, receive, maintain, or transmit protected health
information on behalf of the business associate agree to the same restrictions and
conditions that apply to the business associate with respect to such information.‖25
Based on these facts, I find that the Complaint supports a reasonable inference that
UM was a subcontractor under the HIPAA regulatory regime. The record also supports a
reasonable inference that UHA was a business associate of the Affiliates, CMG and
BHH, which are covered entities under HIPAA. Accordingly, it is reasonably
conceivable that Plaintiffs can show that UM, as a subcontractor, was subject to the same
regulatory restrictions and conditions that applied to UHA as a business associate. In
these circumstances, I am convinced that a court could find that when UM received from
UHA the information provided to it by the Affiliates—information protected by
22
Id. § 160.103.
23
Compl. ¶ 4.
24
See 45 C.F.R. § 164.502(e)(2).
25
Id. § 164.504(e)(2)(ii)(D).
11
HIPAA—UM was aware not only of the federally mandated privacy controls to which
the information was subject, but also of the existence of the Affiliates, as the source of
the protected health information. I therefore consider it reasonably conceivable that the
Affiliates could prove at trial that UM may have intended to benefit the Affiliates through
its arrangement with UHA. Thus, Plaintiffs adequately have pled the first element of the
third-party beneficiary standard.
The second element of a third-party beneficiary claim requires that the agreement
confer a beneficial effect on a third party. This benefit must be either a gift or in
fulfillment of a pre-existing obligation. The Complaint alleges, and I presume it is true,
that the Affiliates contracted with UHA to provide administrative, management, and
billing services. As such, there likely was some benefit and burden placed on both the
Affiliates and UHA by the arrangement they had between them. Any contract between
UHA and UM would have provided the benefit of billing services to the Affiliates,
thereby fulfilling UHA’s pre-existing obligation. Hence, I infer that Plaintiffs also could
satisfy this element of the third-party beneficiary test.
Lastly, I examine whether making the Affiliates third-party beneficiaries of
whatever contract existed between UHA and UM was a material aspect of that
arrangement. Because UM was a subcontractor of UHA, it is reasonably conceivable that
UM knew that the confidential patient information UM received for processing was
generated by a party other than UHA. This is a logical consequence of the regulatory
mandate under HIPAA that the business associate–subcontractor relationship be subject
to the same conditions as the covered entity–business associate relationship. As such, it
12
is also reasonable to infer that, as a material purpose of its alleged contract with UHA,
UM intended to provide a benefit to the underlying medical providers that generated the
confidential information. Based on the allegations in the Complaint and the overlay of
federal medical privacy regulation referenced herein, I conclude that the Affiliates have
pled sufficient facts to meet the final element of their third-party beneficiary claim.
In sum, the Complaint supports a reasonable inference that, in light of relevant
HIPAA regulations, CMG and BHH were third-party beneficiaries of the alleged contract
between UHA and UM. I have no difficulty reaching this conclusion with respect to the
portion of Plaintiffs’ claims related to the handling and return of their confidential
information. Another important aspect of Plaintiffs’ claim, however, relates to a different
issue: Plaintiffs’ request for an award of damages against UM ―equal to the loss of
collections from secondary payors based upon UM’s breach and expenses incurred in
connection therewith.‖26 Both Plaintiffs and Defendant provided only sparse and
relatively unhelpful briefing on this aspect of the third-party beneficiary claim. Having
concluded that Plaintiffs have stated a third-party beneficiary claim as to the alleged
UHA–UM contract, at least as it relates to the treatment of confidential information of the
Affiliates, I am not convinced at this preliminary stage that Plaintiffs could not
conceivably prove that the Affiliates are entitled to damages on a third-party beneficiary
theory. I am skeptical about such a damages claim, but conclude that it must be
evaluated after a more thorough development of the record and clarification of the
26
Compl. Prayer for Relief ¶ d.
13
relevant law and its application to the facts of this case.27 Therefore, UM’s motion to
dismiss the Affiliates’ third-party beneficiary claim for breach of contract is denied.
C. Alternative Theories
Plaintiffs also assert, as alternative theories, a quasi-contract claim and an unjust
enrichment claim. Although they are not clearly delineated either in the Complaint or in
Plaintiffs’ briefing, I will examine these two claims separately, because the elements of
each are distinct.
1. The Quasi-Contract Claim
Plaintiffs’ quasi-contract claim against UM alleges that, even if no express
contract existed between UHA and UM, the Court should find that a quasi-contract
existed between the Affiliates and UM. An ―implied, or quasi-contract, is one where the
law will infer the existence of a contractual relationship without regard to the actual
intention of the parties where circumstances are such that justice warrants a recovery as
though there had been a promise or contract.‖28 There is no such relationship between
the Affiliates and UM.
As the governing standard for quasi-contracts, the parties both cite the Delaware
Superior Court’s decision in Spanish Tiles, Ltd. v. Hensey,29 which holds:
27
Cf. Tunnell v. Stokley, 2006 WL 452780, at *2 (Del. Ch. Feb. 15, 2006) (stating, in
context of a motion for summary judgment, that the Court ―maintains the
discretion to deny summary judgment if it decides that a more thorough
development of the record would clarify the law or its application.‖).
28
Dorsey v. State ex rel. Mulrine, 301 A.2d 516, 518 (Del. 1972).
29
2005 WL 3981740 (Del. Super. Mar. 30, 2005).
14
The essential elements of a quasi-contract are [1] a benefit
conferred upon the defendant by the plaintiff, [2] appreciation
or realization of the benefit by the defendant, and [3]
acceptance and retention by the defendant of such benefit
under such circumstances that it would be inequitable to
retain it without paying the value thereof.30
Further, ―it is not enough that the defendant received a benefit from the activities of the
plaintiff; if the services were performed at the behest of someone other than the
defendants, the plaintiff must look to that person for recovery.‖31
Thus, the primary inquiry under the first element of Spanish Tiles focuses on
which party conferred the benefit and on whom. Paragraph 8 of the Complaint states that
on January 1, 2011, ―UM began providing software and support services to Plaintiff
UHA.‖32 Plaintiffs allege that over the following months UM and UHA were unable to
agree on specific terms of service, although ―UM continued to provide software and
support services to Plaintiff UHA.‖33 This continued until May of 2012. The Complaint
then alleges that:
On or before May 1, 2012, Defendant UM prepared and sent
an invoice to Plaintiff UHA for the entire month of May
2012, Plaintiff UHA paid by check . . . and UM knowingly
deposited Plaintiff UHA’s check . . . accepting payment for
the entire month of May; however, Defendant UM blocked
30
Id. at *3 n.9.
31
MetCap Sec. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *6 (Del. Ch.
May 16, 2007).
32
Compl. ¶ 8.
33
Id. ¶¶ 9-11.
15
the access of Plaintiff UHA to the Cerner software from . . .
May 7, 2012 through . . . May 14, 2012.34
These allegations support a reasonable inference that a quasi-contract existed
between UHA and UM, but they do not include any specific facts that suggest the
Affiliates provided a benefit to UM under circumstances such that it would be inequitable
for UM to retain the benefit without paying for it. Similarly, Plaintiffs’ Opposition Brief
to this motion states that, ―Plaintiff UHA . . . conferred a direct, monetary benefit upon
Defendant UM.‖35 The Complaint portrays a two-way relationship between UHA and
UM, under which UM received UHA’s money in exchange for granting UHA access to
PowerWorks. There is no reasonable basis to infer, however, that a similar benefit was
transferred between the Affiliates and UM. Plaintiffs have not pled sufficient facts to
support a reasonable inference that the Affiliates conferred a benefit upon UM that would
fulfill the first element of a quasi-contract claim. Failure to plead an essential element of
a claim will result in the dismissal of that claim.36 As such, because CMG and BHH have
failed to plead the first element of a quasi-contract claim, their claim for such relief is
dismissed.
2. The Unjust Enrichment Claim
The factual premises for the unjust enrichment claim of CMG and BHH are
similar to their quasi-contract claim, but the elements of such a claim are distinct. ―The
34
Id. ¶ 12.
35
Pls.’ Opp’n Br. 11.
36
Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 972 (Del. Ch. 2000).
16
elements of unjust enrichment are: (1) an enrichment, (2) an impoverishment, (3) a
relation between the enrichment and impoverishment, (4) the absence of justification, and
(5) the absence of a remedy provided by law.‖37 In addition, this Court has held that:
[T]o recover under a theory of quasi contract, a plaintiff must
demonstrate that services were performed for the defendant
resulting in its unjust enrichment. It is not enough that the
defendant received a benefit from the activities of the
plaintiff; if the services were performed at the behest of
someone other than the defendants, the plaintiff must look to
that person for recovery.38
In this case, the unjust enrichment allegedly came from the week-long period in
May 2012 during which UM denied UHA access to the PowerWorks system, despite
UHA already having paid for such access. The relationship between the parties here is
some sort of contract or quasi-contract between UM and UHA, and another between
UHA and the Affiliates. UHA performed functions for and on behalf of the Affiliates
and subcontracted some of those functions to UM. As previously noted, the Complaint
expressly alleges that UHA paid UM.39 These allegations support a reasonable inference
that UHA, at least to some extent, was impoverished and UM was unjustly enriched by
those payments. There are no specific facts alleged, however, that link UHA’s
37
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (citing Jackson Nat’l Life Ins.
Co. v. Kennedy, 741 A.2d 377, 394 (Del. Ch. 1999), and Cantor Fitzgerald, L.P. v.
Cantor, 724 A.2d 571, 585 (Del. Ch. 1998)).
38
MetCap Sec. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *6 (Del. Ch.
May 16, 2007).
39
See supra notes 32-34 and accompanying text.
17
impoverishment to the Affiliates: the only transfers alleged are between UHA and UM.
Thus, to the extent that UM may have been unjustly enriched, it was at UHA’s expense.
Furthermore, the Affiliates, pursuant to this Court’s holding in MetCap Securities, must
look to UHA, not UM, for recovery. Because CMG and BHH have failed to plead this
critical component of their unjust enrichment claim, I dismiss that claim under Rule
12(b)(6).
III. CONCLUSION
For the reasons stated in this Memorandum Opinion, I deny Defendant’s motion to
dismiss with respect to CMG and BHH’s third-party beneficiary claim and I grant
Defendant’s motion with respect to the quasi-contract and unjust enrichment claims
asserted by CMG and BHH.
IT IS SO ORDERED.
18