Foley v. Wilson

Background

Benjamin Foley, a lawyer representing himself, sued Peter Wilson and KPC, LLC. Foley asserted claims under New York law for breach of contract, unjust enrichment, and fraud. Although the complaint also referred to a federal securities-fraud claim, the court treated the complaint as asserting only the three New York-law claims because the complaint did not support the securities-fraud allegation and Foley’s later filings relied on diversity jurisdiction rather than a federal claim.

Foley alleged that he and Wilson entered into an agreement in February 2012. Under that agreement, Foley would transfer $400,000 to Wilson, Wilson would use the money to buy Uniloc shares, and Wilson would transfer those shares to Foley. A February 7, 2012 email stated terms including “400k @ $40 per share or better” and provided wire instructions for an account titled KPC, LLC. Foley alleged that he sent the $400,000 but never received the shares or anything else of value in return. Wilson later stated in his answer that the shares remained in KPC.

Wilson eventually filed an answer, but he did not comply with later court orders and did not indicate that he intended to defend the action. KPC never appeared. Both defendants also failed to attend scheduled conferences. The court had previously denied Foley’s request for default judgment and allowed him to renew it if the defendants continued failing to comply with court orders. Foley then filed the renewed motion.

Default Judgment

A default judgment is a judgment entered against a party that fails to plead or otherwise defend. The court found that both defendants had defaulted because Wilson failed to comply with court orders and KPC failed to appear at all. The court considered Foley’s request for default judgment on all three claims.

Breach of Contract

The court held that the complaint established liability for breach of contract against both defendants. It found that the allegations showed an agreement, Foley’s performance by transferring $400,000, Wilson’s failure to deliver the Uniloc shares, and resulting damage to Foley.

Although KPC was not a signatory to the agreement, the court found that the complaint adequately supported treating KPC as Wilson’s “alter ego” for this claim. The court relied on Wilson’s role as KPC’s manager, his connection to KPC’s registration and service of process, the apparent shared mailbox and address, the transfer of Foley’s money to a KPC account, and Wilson’s statement that KPC held the shares.

The court awarded Foley $400,000 in breach-of-contract damages. It did not yet determine the starting date for prejudgment interest. The court ordered Foley to submit evidence or legal argument by February 3, 2020, showing when the breach-of-contract claim arose. If Foley failed to do so, the court stated that it would calculate interest from the date the complaint was filed. The court declined to award the requested $85 in costs and disbursements because Foley had not explained that amount.

Unjust Enrichment and Fraud

The court denied default judgment on the unjust-enrichment claim because that claim duplicated the enforceable oral contract. Under the court’s analysis, unjust enrichment is generally unavailable when a valid contract governs the dispute.

The court also denied default judgment on the fraud claim. It found that Foley had not met the heightened pleading requirements for fraud, which require specific details about the allegedly fraudulent statements, who made them, when and where they were made, and why they were fraudulent. The court also found that the alleged fraud arose from the same facts as the contract claim and therefore could not stand as a separate fraud claim.

Disposition

Judge Ronnie Abrams granted Foley’s motion for default judgment as to the breach-of-contract claim and denied it as to the remaining causes of action. The defendants were ordered to pay Foley $400,000. The court directed the Clerk of Court to enter judgment accordingly and terminate the pending motions.