Bank of Abbeville & Trust Co. v. Commonwealth Land Title Insurance , 201 F. App'x 988 ( 2006 )


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  •                                                        United States Court of Appeals
    Fifth Circuit
    F I L E D
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT                 October 9, 2006
    Charles R. Fulbruge III
    Clerk
    No. 05-30976
    Summary Calendar
    BANK OF ABBEVILLE & TRUST CO
    Plaintiff - Appellant
    v.
    COMMONWEALTH LAND TITLE INSURANCE CO
    Defendant - Appellee
    Appeal from the United States District Court
    for the Western District of Louisiana
    No. 6:05-CV-899
    Before KING, HIGGINBOTHAM, and GARZA, Circuit Judges.
    PER CURIAM:*
    In this diversity action, plaintiff-appellant Bank of
    Abbeville & Trust Co. appeals the district court’s dismissal of
    its action for unjust enrichment against defendant-appellee
    Commonwealth Land Title Insurance Co.   For the reasons stated, we
    AFFIRM.
    I. FACTUAL AND PROCEDURAL BACKGROUND
    Plaintiff-appellant Bank of Abbeville & Trust Co. (“Bank”)
    *
    Pursuant to 5TH CIR. R. 47.5, the court has determined that
    this opinion should not be published and is not precedent except
    under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
    alleged in its complaint that an account holder at the Bank,
    Joseph Kosarek (“Kosarek”), defrauded the Bank of more than
    $600,000.   According to the complaint, Kosarek was an approved
    attorney and issuing agent of defendant-appellee Commonwealth
    Land Title Insurance Co. (“Commonwealth”).    In connection with
    various real estate transactions, Kosarek received from lenders
    certain moneys that were to be held in trust in his account at
    the Bank and then transferred to other parties.    The Bank alleges
    that Kosarek fraudulently wrote checks that the Bank honored,
    resulting in the account being overdrawn by more than $600,000.
    The Bank now seeks to recover the overdrawn amount from
    Commonwealth.
    The Bank brought an action against Commonwealth for unjust
    enrichment under LA. CIV. CODE ANN. art. 2298 (1997).   Commonwealth
    moved to dismiss under FED. R. CIV. P. 12(b)(6), contending that
    the Bank had not alleged that it had no other remedy at law, a
    requisite element of an unjust enrichment claim in Louisiana.
    The district court dismissed the Bank’s action without prejudice,
    and the Bank now appeals.
    II. DISCUSSION
    A.   Standard of Review
    This court reviews de novo the grant of a motion to dismiss
    under Rule 12(b)(6).   Martin K. Eby Constr. Co. v. Dallas Area
    Rapid Transit, 
    369 F.3d 464
    , 467 (5th Cir. 2004) (citing Gregson
    -2-
    v. Zurich Am. Ins. Co., 
    322 F.3d 883
    , 885 (5th Cir. 2003)).        We
    “accept all well-pleaded facts as true, viewing them in the light
    most favorable to the plaintiff.”      Jones v. Greninger, 
    188 F.3d 322
    , 324 (5th Cir. 1999) (per curiam) (citing Doe v. Hillsboro
    Indep. Sch. Dist., 
    81 F.3d 1395
    , 1401 (5th Cir. 1996)).      “[T]he
    court should not dismiss the claim unless the plaintiff would not
    be entitled to relief under any set of facts or any possible
    theory that [it] could prove consistent with the allegations in
    the complaint.”    
    Id. (citing Vander
    Zee v. Reno, 
    73 F.3d 1365
    ,
    1368 (5th Cir. 1996)).    “Dismissal is proper if the complaint
    lacks an allegation regarding a required element necessary to
    obtain relief . . . .”    Rios v. City of Del Rio, 
    444 F.3d 417
    ,
    421 (5th Cir. 2006) (omission in original) (quoting Campbell v.
    City of San Antonio, 
    43 F.3d 973
    , 975 (5th Cir. 1995)).
    B.   Analysis
    The Bank first contends that the district court’s dismissal
    of its unjust enrichment claim was improper because the complaint
    complied with FED. R. CIV. P. 8(a), (e).    The Bank correctly
    states Rule 8(a)’s pleading requirement for a claim: the
    complaint must set forth “a short and plain statement of the
    claim showing that the pleader is entitled to relief.”      FED. R.
    CIV. P. 8(a)(2).   The Bank also accurately recites its obligation
    under Rule 8(e) to make the complaint’s averments “simple,
    concise, and direct.”    FED. R. CIV. P. 8(e)(1).   But the Bank
    -3-
    incorrectly posits that its compliance with Rule 8 precludes
    dismissal under Rule 12(b)(6).
    The Bank’s reliance on its conformance with Rule 8 is
    misplaced.    On the one hand, a Rule 12(b)(6) motion to dismiss
    for failure to state a claim may be a proper vehicle to challenge
    the sufficiency of a pleading under Rule 8.             See 5 CHARLES ALAN
    WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE   AND   PROCEDURE § 1203 (3d ed.
    2004) (“[T]he form and sufficiency of a statement of a claim for
    relief under Rule 8(a)(2) may be tested by a motion to dismiss
    for failure to state a claim upon which relief can be granted,
    Rule 12(b)(6) . . . .”).      But mere compliance with Rule 8 does
    not itself immunize the complaint against a motion to dismiss.
    See Kirksey v. R.J. Reynolds Tobacco Co., 
    168 F.3d 1039
    , 1041
    (7th Cir. 1999).     The Bank “confuses form with substance.            Rule
    8(a)(2) specifies the conditions of the formal adequacy of a
    pleading.    It does not specify the conditions of its substantive
    adequacy, that is, its legal merit.”           
    Id. (emphases added).
    Thus, notwithstanding the Bank’s compliance with Rule 8's formal
    requirements by pleading a short and plain statement of its
    purported claim, dismissal is nevertheless proper if the Bank
    would not be entitled to relief under any set of facts or any
    possible theory that it could prove consistent with the
    complaint’s allegations.      See 
    Jones, 188 F.3d at 324
    (citing
    Vander 
    Zee, 73 F.3d at 1368
    ).
    Accepting the allegations in the complaint as true and
    -4-
    viewing them in the light most favorable to the Bank, the Bank
    would not be entitled to relief against Commonwealth under the
    theory of unjust enrichment1 because it cannot prove the fifth
    element of an unjust enrichment claim——a lack of other remedy at
    law.       Under Louisiana law, a bank may honor a check written by
    its customer and charge the amount of the check against the
    customer’s account even if doing so would result in the account
    being overdrawn.       LA. REV. STAT. ANN. § 10:4-401(a) (2003) (“A bank
    may charge against the account of a customer an item that is
    properly payable from that account even though the charge creates
    an overdraft.”); see also McGuire v. Bank One, La., N.A., 
    744 So. 2d
    714, 716-17 (La. Ct. App. 1999).         Once a bank honors a check
    that results in an overdraft, the customer is liable to the bank
    for the amount of the overdraft.          See Chrysler Credit Corp. v.
    Whitney Nat’l Bank, 
    798 F. Supp. 1234
    , 1237 (E.D. La. 1992)
    (“Whitney [National Bank] had covered TOJ’s overdrafts, which,
    legally, functions as a loan from Whitney to TOJ.”); McGuire, 744
    1
    An action for unjust enrichment under LA. CIV. CODE ANN.
    art. 2298 contains five elements: (1) enrichment on the part of
    the defendant, (2) impoverishment on the part of the plaintiff,
    (3) a causal connection between the defendant’s enrichment and
    the plaintiff’s impoverishment, (4) an absence of justification
    or cause for the enrichment and impoverishment, and (5) a lack of
    other remedy at law. See Indus. Cos. v. Durbin, 
    837 So. 2d 1207
    ,
    1213-14 (La. 2003) (citing Hartmann v. Bank of La., 
    702 So. 2d 648
    , 658 (La. 1996)).
    In the present case, the parties do not dispute that the
    complaint contains sufficient allegations regarding the first
    four elements; rather, this appeal is focused on the fifth
    element——a lack of other remedy at law.
    -5-
    So. 2d at 717 (citing with approval City Bank of Honolulu v.
    Tenn, 
    469 P.2d 816
    (Haw. 1970), which “based its reasoning on
    cases holding that payment of the check creating an overdraft
    constitutes a loan for which the bank customer is liable for
    repayment”); see also 9 C.J.S. Banks and Banking § 349 (1996).
    Thus, the Bank has another remedy at law: it may pursue an action
    against its customer, Kosarek, to recover the amount of the
    overdraft.   Moreover, at the district court, the Bank conceded
    that it had a remedy against Kosarek: “The Bank does not dispute
    that another remedy was available under the law for its
    impoverishment.   It has pursued available rights and remedies
    against . . . Kosarek . . . and his wife.”      
    1 Rawle 58
    .   Because,
    based on the complaint’s allegations, the Bank has another remedy
    at law, dismissal of its unjust enrichment claim was proper.
    In the same vein as its argument regarding Rule 8, the Bank
    next asserts that dismissal was improper because it complied with
    Rule 9(c), which provides: “In pleading the performance or
    occurrence of conditions precedent, it is sufficient to aver
    generally that all conditions precedent have been performed or
    have occurred.”   FED. R. CIV. P. 9(c).    The Bank contends that the
    existence of another remedy is actually a defense that
    Commonwealth must plead with particularity under Rule 9(c).       The
    Bank’s argument is without merit for two reasons.      First, lack of
    another remedy is an element of an unjust enrichment action, not
    a condition precedent or a defense.       See Indus. Cos. v. Durbin,
    -6-
    
    837 So. 2d 1207
    , 1213-14 (La. 2003) (citing Hartmann v. Bank of
    La., 
    702 So. 2d 648
    , 658 (La. 1996)).   Second, even if lack of
    another remedy were a condition precedent, meaning that Rule 9(c)
    would apply, the Bank has not complied with the Rule because at
    no point in the complaint does the Bank allege——not even
    generally——that it has no other remedy at law or that all
    conditions precedent to its claim have been satisfied.     Cf. EEOC
    v. Klingler Electric Corp., 
    636 F.2d 104
    , 106 (5th Cir. Unit A
    Feb. 1981) (per curiam) (“A general averment that ‘all conditions
    precedent to the institution of this lawsuit have been fulfilled’
    is quite adequate for pleading purposes.” (citing FED. R. CIV. P.
    9(c); EEOC v. Standard Forge & Axle Co., 
    496 F.2d 1392
    (5th Cir.
    1974))).   And even had the Bank complied with Rule 9(c), its
    argument is without merit for the same reason that its argument
    with respect to Rule 8 is without merit: Rule 9(c) addresses
    merely the form of the complaint, not the claim’s substance.
    The Bank additionally contends that the district court
    should have converted Commonwealth’s motion to dismiss into a
    motion for summary judgment and should have permitted discovery
    because, in deciding the motion, it considered information
    outside the scope of the complaint.   At the hearing before the
    district court, Commonwealth advised the court that the Bank was
    pursuing claims against Kosarek to recover its loss.   In making
    its decision, the court did not exclude this information even
    though it is not set forth in the complaint.   But in deciding a
    -7-
    Rule 12(b)(6) motion, the court is permitted to go beyond the
    four corners of the complaint and consider matters of public
    record without converting the motion into one for summary
    judgment.2        Cinel v. Connick, 
    15 F.3d 1338
    , 1343 n.6 (5th Cir.
    1994) (citing Louisiana ex rel. Guste v. United States, 656 F.
    Supp. 1310, 1314 n.6 (W.D. La. 1986), aff’d, 
    832 F.2d 935
    (5th
    Cir. 1987)); see also 5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL
    PRACTICE   AND   PROCEDURE § 1356 (3d ed. 2004).   The district court
    therefore did not commit error by failing to exclude from its
    consideration the existence of the Bank’s actions against
    Kosarek.
    Finally, the Bank opines that the issue of whether another
    remedy exists is a fact question that is more appropriate for
    summary judgment because at this point it is not clear that it
    has an adequate remedy for its impoverishment.           But Kosarek’s
    ability to pay any judgment the Bank may obtain against him is
    not a factor for the court to consider.            See Hartmann v. Bank of
    La., 
    702 So. 2d 648
    , 672 (La. 1996).         “The existence of a
    ‘remedy’ which precludes application of unjust enrichment does
    not connote the ability to recoup [the] impoverishment by
    bringing an action against a solvent person.           It merely connotes
    2
    In deciding this appeal, we do not rely on the existence
    of the pending action against Kosarek by the Bank. Even if the
    Bank were not seeking to recover its losses from Kosarek in a
    separate lawsuit, this remedy would nonetheless be available to
    the Bank, and dismissal would still be proper.
    -8-
    the ability to bring the action or seek the remedy.”     
    Id. Moreover, “unjust
    enrichment principles are only applicable to
    fill a gap in the law where no express remedy is provided,”
    Coastal Environmental Specialists, Inc. v. Chem-Lig International
    Industries, Inc., 
    818 So. 2d 12
    , 19 (La. Ct. App. 2001), not to
    shift responsibility to another party more able to pay.3       As it
    conceded before the district court, the Bank has the ability to
    bring an action against Kosarek.   Dismissal of the Bank’s unjust
    enrichment claim against Commonwealth was therefore proper
    regardless of whether it will successfully recover its
    impoverishment from Kosarek.
    III. CONCLUSION
    For the foregoing reasons, the judgment of the district
    court is AFFIRMED.
    3
    The Bank’s reliance on Carter v. Flanagan, 
    455 So. 2d 689
    (La. Ct. App. 1984), is misplaced. The Carter court held that
    the element of lack of other remedy at law had been satisfied
    because the responsible party’s whereabouts were unknown, even
    though she was being actively sought by law enforcement. 
    Carter, 455 So. 2d at 692-93
    . The court concluded that the plaintiff’s
    remedy against the fugitive party was impractical and that
    therefore the fifth element was fulfilled. 
    Id. Carter is
    distinguishable because in this case there is no allegation in
    the complaint that Kosarek’s whereabouts are unknown. And as the
    Bank conceded before the district court, it is already pursuing
    claims against Kosarek.
    -9-