Caro Capital, LLC v. Koch

Background

The Bedford Parties—Robert Koch, Bedford Investment Partners, LLC, Kaizen Advisors LLC, and John Does 1-10—filed counterclaims against Caro Capital, LLC, Caro Partners, LLC, Jupiter Wellness, Inc., Brian John, and Richard Miller. The counterclaims included breach of contract, unjust enrichment, fraudulent inducement, breach of fiduciary duty, accounting, and defamation.

In an earlier order, the court dismissed the breach-of-contract counterclaim without prejudice to filing a renewed counterclaim and dismissed the other identified counterclaims with prejudice. Although the earlier opinion did not discuss the unjust-enrichment counterclaim, its conclusion stated that the Caro Parties’ motion for judgment on the pleadings was granted with prejudice as to every claim except breach of contract. The Bedford Parties moved under Federal Rule of Civil Procedure 60(a), which permits a court to correct an omission in an order, asking the court to address the unjust-enrichment claim.

Court’s analysis

The court granted reconsideration because it had inadvertently failed to address the unjust-enrichment claim. Under New York law, an unjust-enrichment claim generally requires allegations that the defendant was enriched at the plaintiff’s expense and that fairness requires the defendant to give up what it received. The claim is an equitable, non-contractual remedy and ordinarily is unavailable when an enforceable contract covers the same subject. It may be pleaded as an alternative when there is a genuine dispute about whether a contract covers the subject.

The Bedford Parties alleged that the Caro Parties asked Koch to provide services to customers, promised specific percentages of payment, received payment from the customers, and retained the benefits of Koch’s services. The court found these allegations too vague to support an unjust-enrichment claim. In particular, they did not adequately identify the nature, amount, or character of the consulting services, or explain how long the services were to continue. The court also found that the bare allegation that the Caro Parties requested and received consulting services did not plausibly show that fairness required the Caro Parties to pay the amount sought.

Disposition

The court granted the motion for reconsideration. It dismissed the Bedford Parties’ unjust-enrichment claim without prejudice and gave them leave to amend their amended counterclaim as to unjust enrichment. The court set a filing deadline of June 4, 2021, at 5:00 p.m., and directed the Clerk of Court to close the motion at Dkt. No. 58. Judge Lewis J. Liman signed the order.