UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA Civil Action No. 13-cv-897 JAMES DILLON, ) on Behalf of Himself and All Others ) Similarly Situated, ) ) Plaintiffs, ) ) Judge Catherine C. Eagles v. ) ) BMO HARRIS BANK, N.A., ) FOUR OAKS BANK & TRUST, a ) North Carolina-Chartered Bank, ) GENERATIONS FEDERAL CREDIT ) UNION, and BAY CITIES BANK, ) a Florida State-Chartered Bank, ) ) Defendants. ) DEFENDANT BMO HARRIS BANK, N.A.’S MEMORANDUM OF LAW IN SUPPORT OF ITS RULE 12(b)(6)-(7) AND 19 MOTION TO DISMISS Mary K. Mandeville, Esq. N.C. Bar No. 15959 ALEXANDER RICKS PLLC 2901 Coltsgate Road, Suite 202 Charlotte, North Carolina 28211 Telephone: (704) 200-2635 Facsimile: (704) 365-3676 [email protected]Lucia Nale (Pro Hac Vice) Debra Bogo-Ernst (Pro Hac Vice) MAYER BROWN LLP 71 South Wacker Drive Chicago, IL 60606 Telephone: (312) 782-0600 Facsimile: (312) 701-7711 [email protected][email protected]Case 1:13-cv-00897-CCE-LPA Document 39 Filed 12/16/13 Page 1 of 33
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UNITED STATES DISTRICT COURTMIDDLE DISTRICT OF NORTH CAROLINA
Civil Action No. 13-cv-897
JAMES DILLON, )on Behalf of Himself and All Others )Similarly Situated, )
)Plaintiffs, )
) Judge Catherine C. Eaglesv. )
)BMO HARRIS BANK, N.A., )FOUR OAKS BANK & TRUST, a )North Carolina-Chartered Bank, )GENERATIONS FEDERAL CREDIT )UNION, and BAY CITIES BANK, )a Florida State-Chartered Bank, )
)Defendants. )
DEFENDANT BMO HARRIS BANK, N.A.’S MEMORANDUM OF LAWIN SUPPORT OF ITS RULE 12(b)(6)-(7) AND 19 MOTION TO DISMISS
Mary K. Mandeville, Esq.N.C. Bar No. 15959ALEXANDER RICKS PLLC2901 Coltsgate Road, Suite 202Charlotte, North Carolina 28211Telephone: (704) 200-2635Facsimile: (704) [email protected]
Lucia Nale (Pro Hac Vice)Debra Bogo-Ernst (Pro Hac Vice)MAYER BROWN LLP71 South Wacker DriveChicago, IL 60606Telephone: (312) 782-0600Facsimile: (312) [email protected]@mayerbrown.com
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TABLE OF CONTENTS
Page
-i-
NATURE OF THE CASE.................................................................................................. 1
STATEMENT OF FACTS................................................................................................. 2
I. Plaintiff Failed To Join An Indispensable Party: His Lender .............................. 4
II. Even Putting Aside Plaintiff’s Failure to Join His Lender, TheComplaint Fails To State A Civil RICO Claim............................................ 9
A. Plaintiff Fails To Plead A Cognizable RICO Enterprise....................... 10
B. Plaintiff Fails To Plead That BMO Harris Conducted OrParticipated In The Conduct Of The Enterprise’s Affairs ......................... 14
C. BMO Harris Did Not “Collect” Unlawful Debt .................................... 17
D. Plaintiff Has Not Adequately Alleged That BMO Harris Knew OfThe Purportedly Unlawful Conduct ........................................................... 18
III. Plaintiff Fails To State Plausible State Law Claims ....................................... 20
A. Plaintiff Fails To State A Claim Under North Carolina’s UsuryStatute Or Consumer Finance Act.............................................................. 20
B. Plaintiff Fails To State A Claim For Money Had And Received.......... 22
C. Plaintiff Fails To State A Claim For Unjust Enrichment ...................... 23
D. Plaintiff Fails To State A Claim Under North Carolina’s UnfairTrade Practices Act .................................................................................... 24
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TABLE OF AUTHORITIES
Page(s)CASES
ABT Bldg. Prods. Corp. v. Nat’l Union Fire Ins. Co.,472 F.3d 99 (4th Cir. 2006) ......................................................................................... 25
ADI Constr. of Virginia LLC v. Bordewick,2013 WL 3730084 (E.D. Va. July 12, 2013) ................................................................. 5
Andreo v. Friedlander, Gaines, Cohen, Rosenthal & Rosenberg,660 F. Supp. 1362 (D. Conn. 1987) ....................................................................... 18, 20
Ashcroft v. Iqbal,129 S. Ct. 1937 (2009), clarified............................................................................ 10, 19
Bell Atlantic Corp. v. Twombly,550 U.S. 544 (2007)....................................................................................................... 9
Blankenship v. Manchin,471 F.3d 523 (4th Cir. 2006) ......................................................................................... 3
Boyle v. United States,556 U.S. 938 (2009)..................................................................................................... 12
Durante Bros. & Sons v. Flushing Nat’l Bank,755 F.2d 239 (2d Cir. 1985), cert denied sub nom Durante Bros. & Sons v.Nat’l Bank of New York City, 473 U.S. 906 (1985)............................................... 11, 12
Ente Nazionale Idrocarburi v. Prudential Sec. Group, Inc.,744 F. Supp. 450 (S.D.N.Y. 1990)................................................................................. 7
Fluent v. Salamanci Indian Lease Auth.,928 F.2d 542 (2d Cir. 1991)........................................................................................... 5
Global Discount Travel Servs., LLC v. Trans World Airlines, Inc.,960 F. Supp. 701 (S.D.N.Y. 1997) (Sotomayor, J.)....................................................... 6
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Goren v. New Vision Intern., Inc.,156 F.3d 721 (7th Cir. 1998) ....................................................................................... 15
In re Ins. Brokerage Antitrust Litig.,2007 WL 1062980 (D.N.J. Apr. 5, 2007) .............................................................. 12, 14
Jubelirer v. MasterCard Int’l, Inc.,68 F. Supp. 2d 1049 (W.D. Wis. 1999) ........................................................... 12, 13, 15
Kermanshah v. Kermanshah,2010 WL 1904135 (S.D.N.Y. May 11, 2010) ....................................................... 6, 7, 8
Luvdarts, LLC v. A T & T Mobility, LLC,710 F.3d 1068 (9th Cir. 2013) ..................................................................................... 19
Market Am., Inc. v. Rossi,1999 WL 1939247 (M.D.N.C. Apr. 15, 1999) ............................................................ 22
Moore v. Fid. Fin. Servs.,897 F. Supp. 378 (N.D. Ill. 1995) ................................................................................ 12
Nat’l Union Fire Ins. Co. v. Rite Aid of S.C., Inc.,210 F.3d 246 (4th Cir. 2000) ..................................................................................... 4, 5
Norman Owen Trucking, Inc. v. Morkoski,506 S.E.2d 267 (N.C. Ct. App. 1998) .......................................................................... 24
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O’Shea v. Littleton,414 U.S. 488 (1974)..................................................................................................... 18
Reves v. Ernst & Young,507 U.S. 170 (1993)..................................................................................................... 14
Rothberg v. Marger,2013 WL 1314699 (D.N.J. Mar. 28, 2013).................................................................... 9
Stetser v. Tap Pharm. Products,598 S.E.2d 570 (N.C. Ct. App. 2004) .......................................................................... 21
Sundance Land Corp. v. Cmty. First Fed. Sav. & Loan Ass’n,840 F.2d 653 (9th Cir. 1988) ....................................................................................... 17
Super Vision Int’l, Inc. v. Mea Int’l Commercial Bank Co.,534 F. Supp. 2d 1326 (S.D. Fla. 2008) ........................................................................ 15
United States v. Dennis,458 F. Supp. 197 (E.D. Mo. 1978)............................................................................... 14
United States v. Erwin,793 F.2d 656 (5th Cir. 1986) ....................................................................................... 11
United States v. Giovanelli,945 F.2d 479 (2d Cir. 1991)......................................................................................... 17
United States v. Pepe,747 F.2d 632 (11th Cir. 1984) ..................................................................................... 17
United States v. Turkette,452 U.S. 576 (1981)............................................................................................... 11, 12
Walker v. Hallmark Bank & Trust, Ltd.,707 F. Supp. 2d 1317 (S.D. Fla. 2010) ........................................................................ 15
Ala. Code § 8-1-150(a).................................................................................................... 6, 7
N.C. Gen. Stat. § 24-1.1 .................................................................................................... 21
N.C. Gen. Stat. § 53-166(a) ............................................................................................... 20
N.C. Gen. Stat. § 53-191 ................................................................................................... 21
OTHER AUTHORITIES
Fed. R. Civ. P. 8(a) ........................................................................................................ 9, 10
Fed. R. Civ. P. 12(b)(6) ............................................................................................... 1, 3, 4
Fed. R. Civ. P. 12(b)(7) ............................................................................................... 1, 3, 4
Fed. R. Civ. P. 19........................................................................................................ passim
Gregory P. Joseph, Civil RICO: A Definitive Guide § 11 (2d ed. 2000)........................... 14
Restatement (Second) of Torts § 876 (1979) .................................................................... 21
5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §1359 (3d ed. 2007) ......................................................................................................... 3
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NATURE OF THE CASE
Plaintiff James Dillon entered into an agreement for a payday loan with an online
lender owned and operated by the Otoe-Missouria Tribe in South Dakota. When he
obtained the loan, Dillon authorized the lender to electronically debit his bank account as
payments came due. Dillon now alleges that the loan was usurious under North Carolina
law and seeks relief. But instead of pursuing claims against his lender, Dillon filed this
putative class action against BMO Harris Bank, N.A. (“BMO Harris”). According to
Dillon, BMO Harris should be held liable for processing electronic fund transfers
between him and his lender, an otherwise routine banking function.
Dillon’s complaint should be dismissed for several reasons. First, pursuant to
Rules 12(b)(7) and 19, Dillon’s complaint fails because he did not join his lender as a
defendant. Each of Dillon’s claims requires a determination that North Carolina law
applies to his agreement with his lender and that the agreement violates North Carolina
law. Dillon also seeks equitable relief that significantly affects the lender’s interests,
including a permanent injunction that would require BMO Harris to stop payment to the
lender of funds already debited from borrowers. Because the lender is presumptively
immune from suit and cannot be joined, Dillon’s suit should be dismissed.
Second, even if Dillon could somehow overcome his failure to join his lender,
Dillon’s complaint fails for the independently dispositive reason that he has not stated
plausible claims for relief under Rule 12(b)(6). To start, Dillon’s Racketeer Influenced
and Corrupt Organizations Act (“RICO”) claim is without merit. Dillon seeks an
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unprecedented expansion of RICO liability to cover any defendant that “participate[s] in
the collection of unlawful debts.” Compl. ¶ 120. That is not what RICO says. Dillon falls
far short of pleading a viable civil RICO claim against BMO Harris. In addition, Dillon
fails to state plausible North Carolina state law claims against BMO Harris. For these
reasons, the complaint should be dismissed.1
STATEMENT OF FACTS
Dillon’s claims against BMO Harris involve BMO Harris’s role in the ACH
network, an electronic payment processing system in which financial institutions
accumulate transactions throughout the day for later batch processing. Compl. ¶ 36.
An ACH transaction has several steps. Id. ¶ 41. First, a customer authorizes a
transaction with a merchant—the business or person providing a good or service. Id.
Second, the merchant (an “Originator”) communicates the authorization either directly to
a bank and member of the ACH network (an “Originating Depository Financial
Institution” or “ODFI”), or through a third party that has an agreement with the ODFI (a
“Third-Party Sender”). Id. ¶¶ 41-42. Third, the ODFI transmits the authorization through
an “ACH Operator” to the customer’s bank (a “Receiving Depository Financial
Institution” or “RDFI”). Id. ¶ 41. The RDFI is also a member of the ACH network, and is
the entity that actually makes the debit on its customer’s checking or savings account. Id.
An entity known as “NACHA” manages the development, administration, and
1 BMO Harris has separately moved to compel arbitration and stay litigation of the claimsagainst it. BMO Harris respectfully requests that the Court first resolve the thresholdquestion raised by that motion—whether this case should be sent to arbitration—beforeconsidering this motion, which is submitted in the alternative.
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governance of the ACH network. Id. ¶ 40.
In December 2012, Dillon obtained a $500 payday loan from Great Plains
Lending, LLC (“Great Plains”), which is owned and operated by the Otoe-Missouria
Tribe. Id. ¶¶ 16c, 81; see also Consumer Loan Agreement (attached as Ex. A).2 As part of
the application process, Dillon authorized his lender to debit his checking account with
Wells Fargo in order to repay the loan. Compl. ¶ 81. When Dillon’s payments came due,
his lender originated transactions on the ACH network totaling $891.26 with BMO Harris
purportedly serving as the ODFI. Id. ¶¶ 82-84.
Dillon filed this action on behalf of himself and the members of a putative class of
residents in 14 jurisdictions that have banned payday loans. Compl. ¶¶ 1-5. Dillon did not
name Great Plains or the Otoe-Missouri Tribe as a defendant, although he did identify
Great Plains in the complaint as “other persons and entities.” Id. ¶ 15. Dillon asserts
claims against BMO Harris for purportedly (1) violating and conspiring to violate RICO,
18 U.S.C. §§ 1962(c)-(d), (2) aiding and abetting violations of North Carolina’s usury
statute, (3) violating and aiding and abetting violations of North Carolina’s Consumer
Finance Act, (4) violating North Carolina’s Unfair and Deceptive Trade Practices Act,
and (5) for money had and received and unjust enrichment.
Dillon seeks to permanently enjoin BMO Harris “from serving as the ODFI for
2 For purposes of Rule 12(b)(7) and 19, the Court “is not limited to the pleadings.” 5CCharles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1359 (3d ed.2007). Moreover, even under Rule 12(b)(6), the Court may consider documents such asthe loan agreement which are referenced in the complaint and central to the plaintiff’sclaims. See, e.g., Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006).
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Out-Of-State Payday Lenders” and asks the Court to “direct[] [BMO Harris] to
immediately credit to all Out-Of-State Payday Lender borrowers, any money it has
debited from borrowers’ accounts but has not yet remitted to Out-Of-State Payday
Lenders.” Compl. ¶ 234. Dillon also seeks to recover alleged monetary damages,
including a “refund of every ACH debit from [each class member’s] account in which
BMO was the ODFI and which represented repayment of a loan from an Out-Of-State
Payday Lender.” Id. at pp. 80-84. As shown below, Dillon’s complaint both fails to join
an indispensable party and fails to state a claim and should be dismissed.
QUESTIONS PRESENTED
1. Whether Dillon’s complaint must be dismissed for failure to join his lender,
an indispensible party pursuant to Rules 12(b)(7) and 19?
2. Whether Dillon’s federal and state law claims must be dismissed for failure
to state a claim upon which relief can be granted pursuant to Rule 12(b)(6)?
ARGUMENT
I. Plaintiff Failed To Join An Indispensable Party: His Lender.
Rule 19 requires dismissal where, as here, an indispensable party cannot be joined.
Rule 19 involves a two step inquiry. First, the court must determine “whether the party is
‘necessary’ to the action under Rule 19(a).” Nat’l Union Fire Ins. Co. v. Rite Aid of S.C.,
Inc., 210 F.3d 246, 249 (4th Cir. 2000). A party is necessary if:
(A) in that person’s absence, the court cannot accord complete relief amongexisting parties; or (B) that person claims an interest relating to the subjectof the action and is so situated that disposing of the action in the person’sabsence may: (i) as a practical matter impair or impede the person’s ability
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to protect the interest; or (ii) leave an existing party subject to a substantialrisk of incurring double, multiple, or otherwise inconsistent obligationsbecause of the interest.
Fed. R. Civ. P. 19(a).
Second, “if the court determines that the party is ‘necessary,’ it must then
determine whether the party is ‘indispensable’ to the action under Rule 19(b).” Nat’l
Union Fire Ins., 210 F.3d at 249. Rule 19(b) identifies four factors for courts to consider:
(1) the extent to which a judgment rendered in the person’s absence mightprejudice that person or the existing parties; (2) the extent to which anyprejudice could be lessened or avoided by: (A) protective provisions in thejudgment; (B) shaping the relief; or (C) other measures; (3) whether ajudgment rendered in the person’s absence would be adequate; and (4)whether the plaintiff would have an adequate remedy if the action weredismissed for non-joinder.
Fed. R. Civ. P. 19(b). Rule 19(b) allows courts “to determine the emphasis to be placed
on each consideration according to the facts of the given case and in light of the
governing equity-and-good conscience test,” but when a party is immune, “there is very
little room for balancing of other factors set out in rule 19(b), because immunity may be
viewed as one of those interests compelling by themselves.” Fluent v. Salamanci Indian
As a party to the loan agreement at issue in this case, Great Plains is both a
necessary and indispensable party. See, e.g., Nat’l Union Fire Ins., 210 F.3d at 252 (“‘a
contracting party is the paradigm of an indispensable party’”) (quoting Travelers Indem.
Co. v. Household Int’l, Inc., 775 F. Supp. 518, 527 (D. Conn. 1991)); ADI Constr. of
Virginia LLC v. Bordewick, 2013 WL 3730084, at *3 (E.D. Va. July 12, 2013) (“In
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applying Rule 19, the Fourth Circuit has found that ‘all parties to a contract, and others
having a substantial interest in it, are necessary parties.’”) (quoting Delta Fin. Corp. v.
Paul D. Comanduras & Assoc., 973 F.2d 301, 305 (4th Cir. 1992)); Kermanshah v.
Kermanshah, 2010 WL 1904135, at *3 (S.D.N.Y. May 11, 2010) (“It is well established
that a party to a contract which is the subject of litigation is considered a necessary
party.”) (quotations and citations omitted); Hill v. Coulter, 1998 WL 460239, at *1-2
(N.D.N.Y. July 31, 1998) (“prejudice is almost presumed given that a contracting party is
often the prime example of illustrating a prejudiced party”); Global Discount Travel
Servs., LLC v. Trans World Airlines, Inc., 960 F. Supp. 701, 708 (S.D.N.Y. 1997)
(Sotomayor, J.) (a contracting party’s “attempts to protect its interest . . . may be
practically impaired or impeded by proceeding with this action in its absence”).
For example, in Hardy v. IGT, Inc., 2011 WL 3583745, *1 (M.D. Ala. Aug. 15,
2011), the plaintiff alleged that he lost money playing electronic bingo at casinos owned
by the Poarch Band of Creek Indians. But instead of suing the tribe, the plaintiff brought
claims on behalf of himself and a putative class against the manufacturers of the bingo
machines. The plaintiff asserted a claim under Ala. Code § 8-1-150(a), which allows
individuals to recover their losses from illegal gambling. Id. at *4. The court concluded
that the tribe was an indispensable party and dismissed the claims against the
manufacturers. Id. at *8. As the court explained:
Necessary to [plaintiff’s] state law cause of action is a determination thatthe electronic bingo played on the Tribe’s real estate and in its Casinosviolates Alabama and/or federal law. One struggles to envision a moresevere practical impediment to the Tribe’s interests in its Casinos and
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related business arrangements. . . . Were this action to proceed in theabsence of the Tribe, the validity and viability of the Tribe’s contracts withthe Manufacturers would be impeded, [and] the enforceability of gamblingcontracts between gamblers and the Tribe would be called into question.
Id. at *5 (citations omitted). See also Yashenko v. Harrah’s NC Casino Co., 446 F.3d
541, 552-53 (4th Cir. 2006) (holding that where Harrah’s had a management agreement
with an Indian tribe to operate a casino, a former employee’s discrimination claim against
Harrah’s had to be dismissed under Rule 19 because “such a claim would threaten ‘to
impair the [Tribe’s] contractual interests, and thus, its fundamental economic relationship
with’ the private party, as well as ‘its sovereign capacity to negotiate contracts and, in
general, to govern’ the reservation.”) (citations omitted).
A plaintiff also cannot avoid joining a contracting party by pleading tort claims
that nonetheless challenge a contract’s validity. See, e.g., Kermanshah, 2010 WL
1904135, at *5 (dismissing claims that were “inextricably intertwined with and derived
from the alleged contractual relationship”); Ente Nazionale Idrocarburi v. Prudential Sec.
As discussed in Section II.D above, Dillon does not plausibly allege that BMO
Harris knew of Great Plains’ purportedly unlawful conduct. Dillon does not plead any
3 The North Carolina Supreme Court also has not expressly adopted the Restatement(Second) of Torts § 876 (1979), which governs aiding and abetting liability in the tortcontext. See, e.g., Hinson v. Jarvis, 660 S.E.2d 604, 611-12 (N.C. Ct. App. 2008).
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facts that address what BMO Harris purportedly knew about Great Plains, the Otoe-
Missouria Tribe, or the debits to his account that he alleges were unlawful. The complaint
contains only industry-wide allegations about “Out-Of-State Payday Lenders” generally,
and as discussed above, even those allegations are wholly conclusory. As a result, Dillon
fails to state a plausible claim that BMO Harris aided and abetted Great Plains’ purported
violations of the usury statute or Consumer Finance Act.
B. Plaintiff Fails To State A Claim For Money Had And Received.
In his claim for money had and received, Dillon seeks to recover from BMO
Harris the entire amount of the funds debited from his account and the accounts of
putative class members. See Compl. Count XIII. Dillon fails to state a viable claim for
money had and received under North Carolina law.
A plaintiff may maintain a claim for money had and received:
“whenever the defendant has money in his hands which belongs to theplaintiff, and which in equity and good conscience he ought to pay to theplaintiff . . . . The plaintiff is entitled to recover when it appears that themoney in question belonged to the plaintiff and was secured by thedefendant without the consent of the plaintiff, or if with his consent,without consideration.” Recovery is allowed upon the equitable principlethat a person should not be permitted to enrich himself unjustly at theexpense of another. Therefore, the crucial question in an action of this kindis, to which party does the money, in equity and good conscience, belong?
Market Am., Inc. v. Rossi, 1999 WL 1939247, at *21 (M.D.N.C. Apr. 15, 1999) (quoting
Allgood v. Wilmington Sav. & Trust Co., 88 S.E.2d 825, 829 (N.C. 1955)) (emphasis in
original).
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Dillon does not allege that BMO Harris has (or ever meaningfully had) money in
its hands that in equity and good conscience belongs to him. To the contrary, the
gravamen of Dillon’s complaint is that as an ODFI in the ACH network, BMO Harris
transmits an ACH debit from a merchant to a customer’s bank and collects a transaction
fee for its services. Compl. ¶ 103. Equity and good conscience cannot compel BMO
Harris to return the full amount of the purported ACH debits at issue when BMO Harris
never “had” or “enriched itself” with those funds in the first place.
Moreover, Dillon does not allege that BMO Harris initiated an ACH debit without
his consent; he concedes he authorized debits to his bank account. Id. ¶ 81. Nor does
Dillon allege that BMO Harris initiated the ACH debit with his consent but without
consideration; Dillon obtained $500 in cash from Great Plains and concedes that the
ACH debits satisfied his obligation to Great Plains, interest and principal. Id. ¶¶ 81-84.
Accordingly, Dillon’s attempt to recover from BMO Harris the entire amount of the ACH
debits through an action for money had and received fails.
C. Plaintiff Fails To State A Claim For Unjust Enrichment.
Dillon limits his unjust enrichment claim to transaction fees allegedly received by
BMO Harris. (Compl. ¶ 226) and alleges that BMO Harris purportedly “received and
retained wrongful benefits from Plaintiff and the Sub-Class in the form of such
transaction fees.” Id. ¶ 227. Dillon’s unjust enrichment claim fails because Dillon has
failed to allege that he conferred a benefit on BMO Harris or that BMO Harris
consciously accepted a benefit from him.
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To state a claim for unjust enrichment, a plaintiff must allege that: (1) he conferred
a benefit on the defendant, (2) the benefit was not conferred officiously or gratuitously,
(3) the benefit is measurable, and (4) the defendant consciously accepted the benefit.
Southeastern Shelter Corp. v. BTU, Inc., 572 S.E.2d 200, 206 (N.C. Ct. App. 2002). The
plaintiff must be equitably entitled to the benefit conferred, Homeq v. Watkins, 572
S.E.2d 871, 873 (N.C. Ct. App. 2002), and the benefit must be a “direct” consequence of
the plaintiff’s own performance. Norman Owen Trucking, Inc. v. Morkoski, 506 S.E.2d
267, 273-74 (N.C. Ct. App. 1998) (“No evidence showed the direct receipt by Morkoski
of any benefit in consequence of plaintiff's performance . . . nor showed that Morkoski
“consciously accepted” . . . any such benefit.”) (citations omitted).
Dillon’s unjust enrichment claim fails because he has not alleged that he conferred
a benefit on BMO Harris. Although Dillon alleges in conclusory fashion that BMO Harris
received transaction fees “from Plaintiffs and the Sub-Class,” Compl. ¶ 227, Dillon never
alleges that those fees were actually paid by him or other putative class members. If the
transaction fees were paid by Great Plains and other lenders, then BMO Harris was not
conferred a benefit by Dillon or other putative class members. Similarly, Dillon has not
alleged that BMO Harris consciously accepted a direct benefit from him. To the contrary,
Dillon alleges that BMO Harris was a “middleman” chosen by his lender to process
debits between the lender and his bank. Compl. ¶¶ 6, 41. As a result, Dillon fails to state a
plausible unjust enrichment claim against BMO Harris.
D. Plaintiff Fails To State A Claim Under North Carolina’s Unfair TradePractices Act.
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To state a claim under North Carolina’s Unfair Trade Practices Act, a plaintiff
must allege “(1) an unfair or deceptive act or practice, (2) in or affecting commerce, and
(3) which proximately caused injury to plaintiffs,” with “[t]he determination of whether
an act or practice is an unfair or deceptive practice that violates N.C. [Gen. Stat.] § 75-1.1
[being] a question of law for the court.” Gray v. N.C. Ins. Underwriting Ass’n, 529
S.E.2d 676, 681 (N.C. 2000). “Only practices that involve some type of egregious or
aggravating circumstances are sufficient to violate the UDTPA.” ABT Bldg. Prods. Corp.
v. Nat’l Union Fire Ins. Co., 472 F.3d 99, 122-23 (4th Cir. 2006).
Besides the fact that Dillon has not alleged the type of “egregious or aggravating”
practice required under the UDTPA, the relationship between Dillon’s alleged injuries
and BMO Harris’s purportedly unfair practices is far too remote to support a claim that
BMO Harris proximately caused Dillon’s injuries. Any debits to Dillon’s bank accounts
were originated by his lender, pursuant to their loan agreement; Dillon’s own bank, as the
“RDFI” in the ACH network, actually debited his account. E.g., Compl. ¶ 41. As Dillon
alleges, BMO Harris was simply a middleman within the ACH network itself, processing
a transaction between his lender and his bank. Id. ¶¶ 6, 41. BMO Harris had no
relationship with Dillon and did not proximately cause his alleged injuries.
CONCLUSION
For all of the foregoing reasons, the complaint against BMO Harris should be
dismissed pursuant to Fed. R. Civ. P. 12(b)(6)-(7) and 19.
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Dated: December 16, 2013 By: /s/ Mary K. Mandeville
Mary K. Mandeville, Esq.N.C. Bar No. 15959ALEXANDER RICKS PLLC2901 Coltsgate Road, Suite 202Charlotte, North Carolina 28211Telephone: (704) 200-2635Facsimile: (704) [email protected]