Opinion
01 Civ. 2709 (HB).
January 18, 2002
OPINION ORDER
Plaintiffs Panix Promotions, Ltd. and Panix of the U.S. (collectively, "Panix") are companies that at one time promoted the boxing career of defendant Lennox Lewis ("Lewis"), the heavyweight champion, until their relationship apparently went sour. Consequently, Panix brought this diversity action against Lewis in which it alleges numerous claims that sound in breach of contract, and including a claim for money had and received. Lewis moves to dismiss, but only as to the claim for money had and received — the plaintiffs' fourth claim for relief — pursuant to Fed.R.Civ.P. 12(b)(6) and, alternatively, 56(c). For the following reasons, the motion is GRANTED.
I. BACKGROUND
A. Procedural Background
On November 20, 2001, I granted the plaintiffs leave to amend their complaint which they then served in early December. Lewis objected, however, that the plaintiffs had asserted certain additional claims in the amended pleading for the first time, with the trial set to start approximately six weeks later. A conference call was held among the parties and the Court during which I gave permission for Lewis to move to dismiss the plaintiffs' "Fourth Claim for Monies Had and Received," although the last date to submit fully briefed motions had already passed on December 3, 2001. The parties were given an expedited briefing schedule of a week to submit the motion in its entirety.
I refer to the amended complaint here as the "Compl."
B. Factual Background
A note as to the parties. Plaintiff Panix Promotions, Ltd. is a boxing promoter and a United Kingdom corporation. Plaintiff Panix of the U.S. is a New York corporation and a wholly owned subsidiary of Panix Promotions, Ltd. Lewis is a citizen of the United Kingdom.
In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the court "must accept the material facts alleged in the complaint as true." Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994). The following facts, unless otherwise noted, are as alleged by Panix.
In June 1998, Panix and Main Events, Lewis's co-promoter and his co-defendant but not implicated in the claim here, entered into an agreement with Home Box Office, Inc. ("HBO") that granted them the right to promote a series of Lewis' bouts on HBO ("the 1998 Multi-Fight Agreement"). (Compl. ¶ 17).
Sometime in the year 2000 — the date is not specified by either party — Panix paid Lewis more than $1,230,000 based on Lewis' oral promise (the "Oral Agreement") that he would maintain Panix as his co-promoter for the life of the 1998 Multifight Agreement. (Compl. ¶ 37). Subsequently in October 2000, the parties entered another fight and promotion agreement (the "Tua Agreement"), the interpretation of which is plainly disputed between Panix and Lewis. In relevant part, the Tua Agreement, in paragraph 7(m), states:
Prior Agreements. Main Events [and] Panix . . . agree that to the extent that there presently exist any oral or written agreements or understandings relating to the staging of any bout after the date hereof involving Lewis, including the Bout contemplated by this Agreement, such agreements or understandings are hereby terminated; provided, however that the Parties acknowledge that there exists a certain Multibout agreement including amendment among the Parties and . . . [they] further agree that they will use their best endeavors to fulfill the obligations therein on a commercially reasonable basis. Notwithstanding the foregoing, nothing herein shall affect the contractual relationship, if any, between Panix and Main Events except as specifically provided herein . . .
Lewis argues that any oral promise to which he may have agreed prior to the Tua Agreement was terminated under the language of section 7(m). Panix views the impact of section 7(m) differently and argues that, when read in the context of the parties' prior agreements, it reaffirms Lewis' obligations to Panix for the life of the 1998 Multifight Agreement. However, Panix, in the alternative, asserts that if Lewis' interpretation of the Tua Agreement were to prevail, it would render the prior Oral Agreement between Lewis and Panix unenforceable and result in an "unearned windfall" for Lewis. (Compl. ¶ 38). It is this windfall that Panix now seeks to recover under a claim for money had and received.
II. DISCUSSION
A. Motion to Dismiss
A claim will be dismissed pursuant to Rule 12(b)(6) when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." See Tarshis v. Riese Organization, 211 F.3d 30, 35 (2d Cir. 2000). Additionally, the court is required to accept as true all of the facts alleged in the complaint and draw all reasonable inferences in the plaintiffs favor. See Madonna v. United States, 878 F.2d 62, 65 (2d. Cir. 1989). A motion to dismiss should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99 (1957).
B. Money Had And Received
As this case is before me in diversity, I apply the New York State substantive law with respect to the claim for money had and received. Under New York law, an action for money had and received lies when "(1) defendant received money belonging to plaintiff; (2) defendant benefitted from the receipt of money; and (3) under principles of equity and good conscience, defendant should not be permitted to keep the money." Aaron Ferer Sons Ltd. v. Chase Manhattan Bank. Nat. Ass'n, 731 F.2d 112, 125 (2d Cir. 1984) (citing Miller v. Schloss, 218 N.Y. 400, 407 (1916)).
Further, this action seeks to recover under a contract implied by law.See Parsa v. State of New York, 64 N.Y.2d 143 (1984). A contract in law creates an obligation "in the absence of agreement when one party possesses money that in equity and good conscience he ought not to retain and that belongs to another." Parsa, 64 N.Y.2d at 148. Traditionally, the remedy for money had and received is available "if one man has obtained money from another, through the medium of oppression, imposition, extortion, or deceit, or by the commission of a trespass." Miller, 218 N.Y. at 408. Further, such an action "has been permitted where plaintiff has paid money by mistake, money has been collected for an illegal tax or assessment, or property is erroneously taken or withheld by a public official." Parsa, 64 N.Y.2d at 148 (citing examples of actions for money had and received). It can not be said here that Lewis came to possess the $1.23 million by means of oppression, imposition, extortion, deceit or trespass — nor does Panix so allege. Panix also fails to suggest that Lewis wrongfully withheld money to which Panix is entitled. Rather, Panix essentially claims that it is owed money — that it intentionally paid Lewis — because Lewis failed to perform. To state it another way, Panix has no possessory interest in the money that it seeks from Lewis, as it was freely given to him with the expectation of performance, not repayment. See, e.g. United Republic Ins. Co. v. Chase Manhattan Bank, 168 F. Supp.2d 8 (N.D.N.Y. 2001) (finding that plaintiff had no possessory interest in money that was a loan freely given to defendant who failed to repay). Thus, Panix's claim fails the first element of an action for money had and received, and sounds instead in breach of contract.
Additionally, Panix clearly states in its complaint that "[i]n the year 2000, Panix overpaid Lewis in excess of $1,230,000 based on Lewis' oral promise to maintain Panix as his co-promoter for his boxing career during the life of the 1998 Multifight Agreement and thus, maintain his relationship with Panix." (Compl. ¶ 37) (emphasis added). However, the law is also clear that an action for money had and received is derived from an implied contract, and "a contract cannot be implied in fact where there is an express contract covering the subject matter involved." Julien J. Studley, Inc., v. New York News, Inc., et al., 70 N.Y.2d 628, 629 (1987); see also Global Entertainment, Inc. v. New York Telephone Company, 2000 WL 1672327 *5-6 (S.D.N.Y. 2000) (finding that claim for money had and received does not lie where defendant withheld payments due plaintiff under an express contract). Put another way, it is a duty that may arise when there is no contract. Here, the plaintiff admits there was a contract, albeit an oral one.
Panix seeks to avoid dismissal by asserting in circular fashion that because the Tua Agreement rendered the Oral Agreement unenforceable, the $1.23 million was not paid pursuant to an agreement, since the agreement was later made void. However, if the Oral Agreement was later rendered void by the Tua Agreement, it would still not alter the fact, as alluded to in the pleading, that Panix paid Lewis with the understanding of his promised loyalty in return. It is hardly a recent proposition that where the money at issue freely came to Lewis through an agreement, rather than pursuant to a wrong, a cause of action for money had and received may not lie. See National Trust Co. v. Gleason, 77 N.Y. 400 *6 (1879) ("To maintain such an action it is necessary that a certain amount of money belonging to one person should have improperly come into the hands of another.").
I do not consider here, nor was it briefed by the parties, whether the Oral Agreement, on its own, was enforceable under the Statute of Frauds, sufficiency of consideration or issues of part performance.
III. CONCLUSION
For the above reasons, Lewis' motion to dismiss the plaintiffs' claim for money had and received is GRANTED. I therefore need not reach Lewis' alternative motion for summary judgment. In anticipation of a request by Panix to again amend its pleadings, I must note here that such a request would likely be denied at this late stage of the litigation — about two weeks before trial. That is not to say that Panix would not have an opportunity to move after trial to amend its pleadings to conform to the proof under Fed.R.Civ.P. 15(b).