Weyant v. The Phia Group LLC

Background

Jessica Weyant moved for permission to file a Third Amended Complaint against Phia and INDECS on behalf of herself and similarly situated people. One claim—conversion—was already pending. The proposed amendment would add claims for money had and received, unjust enrichment, and acting in concert to commit a tort under Restatement (Second) of Torts § 876.

The dispute arose after Phia collected money from Weyant as INDECS’s collection agent for the Orange-Ulster School Districts Health Plan. The money was intended to reimburse the Plan for medical benefits paid to Weyant from the proceeds of a personal-injury settlement. Phia sent the money to INDECS but kept approximately $3,500 as a fee; INDECS sent the full amount it received to the Plan.

The court had previously held that the Defendants were not liable to repay Weyant under the Plan or New York General Obligations Law § 5-335. The conversion claim remained because factual disputes existed about whether Weyant demanded the check back, paid voluntarily, and whether Phia took the check in good faith and without notice of her claim. The court had also previously denied summary judgment on that claim.

Court’s Analysis

Under Federal Rule of Civil Procedure 15(a)(2), permission to amend should generally be freely given, but a court may deny amendment for reasons including futility, bad faith, undue delay, or undue prejudice.

The court allowed Weyant to add an unjust-enrichment claim against Phia. Unjust enrichment generally requires allegations that the defendant was enriched at the plaintiff’s expense and that fairness and good conscience do not permit the defendant to keep the benefit. The court found the proposed allegations sufficient because they asserted that Phia collected and kept part of Weyant’s settlement proceeds and that Phia should not have collected the money on behalf of the Plan or retained a collection fee.

The court rejected the argument that the Plan barred the unjust-enrichment claim. Although a valid contract generally prevents a quasi-contract claim involving the same subject matter, the court distinguished cases involving parties trying to change or avoid their own contractual obligations. Weyant was instead seeking to recover money allegedly retained by the Plan’s collection agent, which was not a signatory to the Plan and could not be sued for breach of that agreement. The court also noted that Phia’s retention of a fee meant Phia benefited from the payment.

The court did not allow the proposed money-had-and-received claim because it was substantially the same as the unjust-enrichment claim. Allowing both could create duplication and confuse the jury.

The court also denied permission to add an unjust-enrichment claim against INDECS. The proposed complaint did not allege that INDECS was enriched at Weyant’s expense. Instead, the record indicated that INDECS forwarded the money it received and did not retain Weyant’s funds.

Finally, the court found the proposed acting-in-concert claim futile. The complaint made only conclusory statements that INDECS participated in, assisted, encouraged, or approved Phia’s conduct. It did not provide facts showing that INDECS engaged in those acts or even knew that Phia was demanding and collecting repayment from Plan beneficiaries.

Disposition

The motion for leave to amend was GRANTED IN PART and DENIED IN PART. Weyant was permitted to file a Third Amended Complaint by January 7, 2022, with no substantive changes except those needed to add an unjust-enrichment claim against Phia. The parties were ordered to file a joint status letter with proposed next steps by January 11, 2022. The Clerk was directed to close the motion at Docket No. 126.