United States District Court, E.D. Pennsylvania
August 2, 2004.
DAVID H. MARION, Receiver for Robert L. Bentley, Bentley Financial Services, Inc. and Entrust Group
BENISTAR, LTD., BENISTAR 419 PLAN SERVICES, INC., BENISTAR 419 ADVANTAGE BENEFIT PLAN AND TRUST and BENISTAR ADMINISTRATIVE SERVICES, INC.
The opinion of the court was delivered by: JOHN FULLAM, Senior District Judge
MEMORANDUM AND ORDER
Defendants filed a motion to dismiss plaintiff's amended
complaint. Plaintiff filed a motion to strike, contending that in
exchange for plaintiff's agreement to set aside a default which
had been entered by the Clerk's Office, defendants had agreed
that they would "answer" the complaint within the time specified
in a stipulation. Plaintiff has also filed a response to the
motion to dismiss. I conclude that the merits of the motion to
dismiss should be addressed at this time. Although the parties'
original stipulation appears to have contemplated that the
defendants would file an answer rather than a motion, the order
entered by the court allowed them to "respond" to the amended
complaint. The motion to strike will therefore be denied. And, as
a practical matter, the issues raised by the motion to dismiss could undoubtedly be made the
subject of a later motion for judgment on the pleadings, in any
Plaintiff is the Receiver for the Bentley entities, which
carried out an extensive Ponzi scheme and damaged many victims.
Plaintiff is trying to recover, for the benefit of these victims,
assets which the Bentley entities transferred to others before
the receivership was ordered.
The defendants are a multi-employer welfare benefit plan and
the entities which run it. The amended complaint alleges that, a
couple of years before the receivership was ordered, the Bentley
entities transferred $196,000 to the defendant Plan, and that
this sum should be returned to plaintiff. The amended complaint
asserts the following claims: Count I, Unjust Enrichment; Count
II, Constructive Trust; and Count III, "Return of Contributions."
Defendants assert that there can be no claim of unjust
enrichment, since there was a contract between the Bentley
entities and the defendants and that the asserted claims for
constructive trust and return of contributions are not separate
claims, but merely forms of relief which plaintiff might obtain
if there were any basis for Count I.
I conclude that plaintiff should be required to file a further
amended complaint, which clarifies the precise theory or theories
being relied upon. It is true that a claim of unjust enrichment
cannot be advanced when there is an express contract between the parties, but it is also true that there can be a
claim for unjust enrichment if the contract is nugatory, or if
there is an extra-contractual basis for relief.
Viewed in their totality, the averments of the amended
complaint can be interpreted as asserting, not only that the
defendant breached the contract between themselves and the
Bentley entities, but also that the contract was invalid, and
that the contract is subject to rescission. In addition,
plaintiff's brief seems to assert, for the first time, that the
transfers made by the Bentley entities to the defendants were
made at a time when the Bentley entities were insolvent, and
constituted fraudulent conveyances. No such theory is alleged in
the amended complaint, however.
On its face, the defendants' Plan is a multi-employer benefit
plan, and the transfers complained of were simply payments made
by an employer to fund benefits payable at death to two highly
placed employees. Apparently, Mr. Bentley contracted to pay
$65,000 per year to the Plan, so that the Plan could purchase
life insurance policies which would fund a death benefit. These
payments were supposed to give rise to taxdeductions and other
benefits. Plaintiff alleges that the defendants misrepresented
the nature of the Plan, or breached their contractual obligations
in some respect.
If the defendants breached the contract, or if Mr. Bentley
could have rescinded it, plaintiff would have standing to assert whatever claims Mr. Bentley might have in that respect.
If, on the other hand, Mr. Bentley merely exercised poor business
judgment, plaintiff may have no basis for relief.
If the transfers were made at a time when the Bentley entities
were insolvent, the issue would be whether there was adequate
consideration for the transfers. As noted above, the plaintiff's
brief speaks of fraudulent conveyance theories, but the amended
complaint contains no allegations in that respect.
I conclude that, if plaintiff has any valid legal theory for
imposing liability upon the defendants, the precise basis or
bases upon which relief is sought should be clarified.
An order follows. ORDER
AND NOW, this day of August 2004, IT IS ORDERED:
1. Plaintiff's motion to strike defendants' motion to dismiss
2. Defendants' motion to dismiss the amended complaint is
GRANTED. The amended complaint is DISMISSED, without prejudice to
the filing of an amended complaint within 30 days.
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