Unjust enrichment claim remains a ‘live dispute’

Where a party argued there was no longer a justiciable Article III case or controversy following the court’s prior opinion, but the court found there was still a “live dispute” over whether the plaintiff unjustly enriched itself, the plaintiff’s motion to dismiss was denied.

Background

Therese Harmon, as trustee for the Harmon 1999 Descendants’ Trust, or H99DT, and on behalf of H99DT, filed a one-count complaint seeking relief against Germaine Harmon for breach of fiduciary duty. In response, Germaine Harmon asserted a counterclaim against H99DT and a third-party complaint against CGH Investment Management LLC.

CGH then brought a crossclaim and counterclaim against H99DT and Germaine Harmon, respectively, seeking a declaratory judgment that H99DT has never been a partner in Traditions, as well as a crossclaim against H99DT for unjust enrichment. Therese Harmon has now filed a motion to dismiss for lack of subject matter jurisdiction and a motion for judgment on the pleadings.

Jurisdiction

Therese Harmon argues that there is no longer a justiciable Article III case or controversy over whether H99DT is a partner in Traditions. According to Therese Harmon, at the outset of this litigation, its breach of fiduciary duty claim, which was premised on Germaine Harmon’s refusal to treat H99DT as a partner in Traditions, created a case or controversy sufficient to confer on this court jurisdiction over Germaine Harmon’s and CGH’s declaratory judgment counts. However, the H99DT Trustee explains, once the court entered judgment in favor of Germaine Harmon on the breach of fiduciary duty claim, the pending factual allegations were reduced to the point where subject matter jurisdiction for the declaratory judgment counts no longer exists.

Germaine Harmon and CGH disagree that this court’s summary judgment opinion eliminated all claims pertaining to H99DT’s status as a partner in Traditions. Germaine Harmon and CGH explain that certain email records that H99DT withheld from production show that Tim Harmon converted a $48 million asset of Traditions into an asset of H99DT’s by altering CIH’s tax reporting documents in September and October of 2020.

According to Germaine Harmon and CGH, H99DT’s defense of this conduct is directly related to the declaratory judgment action. The Trust claims to have a large capital account within Traditions that it could draw upon. Thus, if H99DT is not a limited partner of Traditions and consequently has no capital account, then H99DT’s justification for its conduct is no longer viable.

For the reasons stated by Germaine Harmon and CGH, this court finds that the partnership issue does in fact support the “live dispute” over whether H99DT unjustly enriched itself. Accordingly, the declaratory judgment claims satisfy the Article III case or controversy requirement and this court retains subject matter jurisdiction over those claims.

Pleadings

The H99DT Trustee’s motion for judgment on the pleadings argues that Germaine Harmon’s and CGH’s pleadings indisputably establish as a matter of law that H99DT was admitted to Traditions as a partner in 2004. According to the H99DT Trustee, Germaine Harmon’s and CGH’s pleadings incorporate the Florida lawsuit against Tim Harmon, in which Germaine Harmon and Traditions (the predecessor in interest to CGH) acknowledged that H99DT was added as a limited partner to Traditions.

In response, Germaine Harmon and CGH maintain that (1) their pleadings do not incorporate by reference the Florida lawsuit and (2) regardless, the H99DT Trustee mischaracterizes the allegations they made in that lawsuit. This court agrees with Germaine Harmon and CGH on both fronts.

Plaintiff’s motions to dismiss and motion for judgment on the pleadings denied.

Therese Harmon as Trustee v. Harmon, Case No. 1:20-cv-1442, May 25, 2023. EDVA at Alexandria (Alston). VLW 023-3-280. 15 pp.