United States District Court, D. Maryland
K. Bredar United States District Judge
Hobbs ("Plaintiff), a citizen of Virginia, brought an
action in diversity against Sean St. Martin
("Defendant"), a citizen of Maryland, alleging that
Defendant wrongfully received and retained $500, 000 that
Plaintiff loaned to one Richard Hagen, a nonparty. Plaintiff
brought claims for Money Had and Received (Count I), Unjust
Enrichment (Count II), and Conversion (Count III). Now
pending before the Court is Defendant's Motion to Dismiss
or in the Alternative for Summary Judgment. (ECF No. 8.) The
issues have been briefed (see ECF Nos. 9, 13 &
14), and no hearing is required, see Local Rule
105.6 (D. Md. 2014). For the reasons explained below,
Defendant's motion will be construed pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure and will be
Summary of the Complaint
the allegations in Plaintiffs Complaint, one might be
forgiven for thinking he has sued Richard Hagen. Plaintiff
alleges that he knew Hagen for more than ten years and that,
in or around 2003, Hagen approached him with a lucrative
"business opportunity." (ECF No. 1 ¶¶
6-7.) Evidently, Hagen held himself out as having
"numerous contacts in the defense and intelligence
communities"; through these contacts, he was poised to
"accept private investments to invest in companies with
ties to the Central Intelligence Agency."
(Id.¶7.) Plaintiff seemingly took Hagen at his
word, and he invested $500, 000 in the venture.
(Id.) Years passed. In June 2014, Hagen again
approached Plaintiff, this time seeking a $500, 000
short-term loan, ostensibly to "buy out other investors
who needed to cash out prematurely."
(Id.¶9.) Plaintiff agreed to withdraw the funds
from his individual retirement account ("IRA") and
extend the loan, provided that he would be repaid within a
month. (Id. ¶¶ 10-11.) Plaintiff supplied
Hagen with the name and contact information for his broker.
(Id. ¶ 13.) Unbeknownst to Plaintiff, however,
Hagen contacted the broker and arranged for the funds to be
wired to Defendant's account at M&T Bank.
(Id.) Hagen subsequently advised Plaintiff that
Defendant was a "former 'black ops' operative
and a high ranking official in the company who could
facilitate the investment." (Id. ¶ 14.)
that year, Plaintiff learned that Hagen had been sued for
fraud in state and federal court. (Id. ¶
Thereafter, Plaintiff repeatedly demanded that Hagen return
both the $500, 000 initial investment and the $500, 000 loan,
but Hagen failed to do so. (Id.¶17.) In
November 2015, the Grand Jury for the District of Maryland
charged Hagen with six counts of wire fraud in connection
with operating a Ponzi-like investment scheme materially
similar to the venture described in Plaintiffs Complaint,
see Indictment, United States v. Hagen,
Crim. No. RDB-15-585 (Nov. 10, 2015) (ECF No. 1). The charges
were subsequently dismissed.
alleges that, despite his demands, Defendant refused to
return the $500, 000 loan proceeds to him, instead using
those proceeds "for his personal use and gain."
(ECF No. 1¶¶ 18-19.) Plaintiff sued Defendant on
March 14, 2016, seeking $750, 000 in compensatory damages and
another $750, 000 in punitive damages. (ECF No. 1.) On May 2,
2016, Defendant moved to dismiss. (ECF No. 8.) Plaintiff
filed a response in opposition (ECF No. 13), and Defendant
replied (ECF No. 14). Defendant's motion is ripe for
Standard of Review
complaint must contain "sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.'" Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Ail. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). In analyzing a Rule
12(b)(6) motion, the Court views all well-pleaded allegations
in the light most favorable to the plaintiff. Ibarra v.
United States, 120 F.3d 472, 474 (4th Cir. 1997).
"[A] well-pleaded complaint may proceed even if it
strikes a savvy judge that actual proof of those facts is
improbable . . . ." Twombly, 550 U.S. at 556.
Even so, "[f]actual allegations must be enough to raise
a right to relief above the speculative level."
Id. at 555. "A pleading that offers 'labels
and conclusions' or 'a formulaic recitation of the
elements of a cause of action will not do.' Nor does a
complaint suffice if it tenders 'naked assertion[s]'
devoid of 'further factual enhancement.'"
Iqbal, 556 U.S. at 678 (alteration in original)
(quoting Twombly, 550 U.S. at 555, 557).
motion such as Defendant's motion here, styled in the
alternative as one for summary judgment, "implicates the
court's discretion under Rule 12(d) of the Federal Rules
of Civil Procedure, " Sager v. Hous. Comm'n of
Anne Arundel Cty., 855 F.Supp.2d 524, 542 (D. Md. 2012).
Rule 12(d) provides that "[i]f, on a motion under Rule
12(b)(6) . . . matters outside the pleadings are presented to
and not excluded by the court, the motion must be
treated as one for summary judgment under Rule 56"
(emphasis added), with all parties being given a reasonable
opportunity to present pertinent material. However, a
"district judge has 'complete discretion to
determine whether or not to accept the submission of any
material beyond the pleadings ... or to reject it or simply
not consider it.'" Sager, 855 F.Supp.2d at
542 (quoting 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1366 (3d ed.
2004)). In this case, Plaintiff has had no opportunity for
discovery; what is more, he filed a declaration identifying
the lines of inquiry he would pursue were discovery afforded
to him (see ECF No. 13-1 at 5-6). Under these
circumstances, it would be inappropriate for the Court to
take notice of evidence beyond the allegations in the
Complaint and information in the public record. Accordingly,
the Court will disregard all extraneous submissions and
related discussion in the briefs and will instead evaluate
Plaintiffs Complaint pursuant to the familiar standards of
Counts I (Money Had and Received) and II (Unjust
Count I, Plaintiff alleges that "Defendant obtained
$500, 000 from Plaintiff to which he is not entitled and
which he has no right to retain." (ECF No. 1 ¶ 23.)
In Count II, Plaintiff similarly alleges that Defendant's
continued retention of the $500, 000 would "violate
fundamental principles of justice, equity, and good
conscience and would unjustly enrich Defendant at Plaintiffs
expense." (Id.¶32.) As both parties have
acknowledged in their briefs, actions sounding in unjust
enrichment and for money had and received are materially
similar and analyzed pursuant to the same basic framework.
See Jennings v. Rapid Response Delivery, Inc., Civ.
No. WDQ-11-0092, 2011 WL 2470483, at *6 (D. Md. June 16,
2011) ("Money had and received is analogous to an unjust
enrichment or restitution claim." (citing Benson v.
State, 887 A.2d 525, 547 (Md. 2005))). To recover under
either theory, the plaintiff must demonstrate that the
defendant received a benefit which equity requires the
defendant to relinquish. A claim for unjust enrichment, in
particular, comprises three elements: (1) a "benefit
conferred upon the defendant by the plaintiff; (2) an
"appreciation or knowledge by the defendant of the
benefit"; and (3) the "acceptance or retention by
the defendant of the benefit under such circumstances as to
make it inequitable for the defendant to retain the benefit
without the payment of its value." Hill v. Cross
Country Settlements, LLC, 936 A.2d 343, 351 (Md. 2007);
cf. Benson, 887 A.2d at 547 ("The action for
money had and received is a common count used to bring a
restitution claim under the common law writ of assumpsit. . .
. [T]his count 'lies whenever the defendant has obtained
possession of money which, in equity and good conscience, he
ought not to be allowed to retain.'" (citations
the measure of recovery for these (and other) restitutionary
actions is "the gain to the defendant, not the loss by
the plaintiff." Mass Transit Admin, v. Granite
Constr. Co., 471 A.2d 1121, 1126 (Md. Ct. Spec. App.
1984); see also Restatement (First) of Restitution
§ 150 (Am. Law Inst. 1937) ("In an action of
restitution in which the benefit received was money, the
measure of recovery for this benefit is the amount of money
received."). Moreover, while scienter is not an element
of these restitutionary actions, and while an innocent
recipient enriched by third-party wrongdoing might
nevertheless be held to account under certain circumstances,
"the primary rule is that if repayment will cause the
recipient loss, restitution is barred to the extent that such
loss would occur." Bank of Am. Corp. v.
Gibbons, 918 A.2d 565, 577 (Md. Ct. Spec. App. 2007)
(citation omitted); see also Plitt v. Greenberg, 219
A.2d 237, 364 (Md. 1966) ("It has been held that a
plaintiff could recover money from even an innocent
transferee who was without knowledge that he possessed the
plaintiffs money. However, if a transferee came into
possession of a plaintiffs money in good faith after
paying a good and valuable consideration for it, then
the plaintiff could not prevail and recover . . . the funds
in that transferee's possession." (emphasis added)
memorandum accompanying his Motion to Dismiss, Defendant
observes that it is "not alleged that [he] had anything
to do with [the $500, 000 loan] transaction or had knowledge
of any of the fraudulent misrepresentations made by Hagen to
Hobbs, " nor is he alleged to have "failed to have
paid consideration for the funds received from Hobbs on
account of the loan to Hagen." (ECF No. 9 at 12.) The
Court agrees: Plaintiff devotes most of the factual
allegations in his Complaint to Hagen, barely mentioning
Defendant at all. After paring back Plaintiffs legal labels
and conclusions, which are entitled to no deference even at
the Rule 12(b)(6) stage, see Monroe v. City of
Charlottesville,579 F.3d 380, 385-86 (4th Cir. 2009),
the most the Court can gather is that (1) the $500, 000 loan
proceeds were wired into Defendant's M&T Bank
account; (2) Hagen held Defendant out as a former "black
ops" operative and a high-ranking company official; and
(3) upon demand, Defendant refused to return the proceeds to
Plaintiff but instead used them for his "personal use
and gain." (ECF No. 1 at 4.) Absent are any allegations
concerning the circumstances under which Defendant received
the wire transmission: the Court can only speculate as to
whether Defendant gave good and valuable consideration for
the funds; whether Defendant was Hagen's creditor or
donee; and whether Defendant was involved with Hagen's
apparent Ponzi scheme, ignorant of the scheme, or perhaps
himself a victim of the scheme. Yet such information is
essential to the Court's determination as to the legal
viability of Plaintiffs restitutionary theories. This is so
because the "mere fact that a person benefits another is
not of itself sufficient to require the other to make
restitution, " and while '"a person is enriched
if he has received a benefit, ' the law does not consider
him unjustly enriched unless 'the circumstances
of the ...