Vantage Commodities Fin. Servs. I, LLC v. Assured Risk Transfer PCC, LLC

VANTAGE COMMODITIES FINANCIAL SERVICES I, LLC, Plaintiff, v. ASSURED RISK TRANSFER PCC, LLC et al., Defendants.

Case No. 1:17-cv-01451 (TNM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

November 16, 2018

MEMORANDUM AND ORDER

Vantage Commodities Financial Services I, LLC ("Vantage") alleged that reinsurance companies breached their contract with Vantage to reimburse its losses under a reinsurance arrangement. The reinsurance companies moved to dismiss, and the Court granted that motion, finding that Vantage failed to establish the Court's jurisdiction over them. See Vantage Commodities Fin. Servs. I, LLC v. Assured Risk Transfer PCC, LLC, et al., 321 F. Supp. 3d 49, 60 (D.D.C. 2018). Vantage now seeks leave to file an amended complaint and to perfect service. Because some—but not all— of Vantage's claims in its Proposed Amended Complaint would survive a motion to dismiss, the Court will grant in part and deny in part Vantage's motion.

I. BACKGROUND

Assured Risk Transfer PCC, LLC ("ART") sold Vantage a credit insurance policy, covering Vantage's losses up to $22 million after Vantage extended $44 million of credit to an energy company. Id. at 54. Then Willis Limited, Willis Re Inc., and Willis Towers Watson Management (Vermont), Ltd. ("Willis Defendants") helped ART reinsure 90% of its own liability by brokering reinsurance contracts with the Reinsurer Defendants. Id.

But when the energy company defaulted, ART refused to pay Vantage based on Vantage's purported failure to comply with a collateralization requirement in the credit insurance policy. Id. Vantage eventually won a multi-million dollar arbitration award against ART. Id. The arbitration award represented the proceeds of the credit insurance policy, but ART says that it cannot pay by itself. Id. The Reinsurer Defendants have paid nothing because they claimed that they did not receive prompt notice of Vantage's losses. Id. So Vantage sued ART and the Reinsurer Defendants.¹ Id. It also sued the Willis Defendants, which Vantage claims offered ART their services in captive insurance management and as reinsurance brokers and intermediaries. Id.

This Court granted the Reinsurer Defendants' Motions to Dismiss because it determined that Vantage failed to establish the Court's jurisdiction over the Reinsurer Defendants. Id. The Court then ordered Vantage to show cause why its Complaint should not be dismissed as to ART. August 6, 2018 Order, ECF 72.

Vantage filed a response to the show-cause order, see Resp. to Order to Show Cause ("Resp."), ECF 74, and a motion for leave to amend its Complaint, see Mot. to Amend/Correct, ECF 75. It now seeks to amend its Complaint and perfect service of process on the Reinsurer Defendants. See Mem. in Supp. of Pl.'s Mot. 1, ECF 75-24 ("Pl.'s Mem."). The Proposed Amended Complaint again asserts a breach of contract claim against the Reinsurer Defendants and requests a declaratory judgment establishing their contractual obligations. Id. at 2. It alsoadds three alternative claims against the Reinsurer Defendants based on the same conduct.² Id. The Reinsurer Defendants oppose Vantage's motion. See Defendants Hannover Rückversicherung AG, Partner Reinsurance Europe PLC, and Caisse Centrale de Reassurance's Mem. in Opp'n, ECF 76 ("Hannover Opp'n"); Reinsurers' Opp'n to Pl.'s Mot., ECF 77 ("Reinsurers Opp'n").

II. LEGAL STANDARDS

A plaintiff can amend its complaint "once as a matter of course within 21 days" of service. Fed. R. Civ. P. 15(a)(1). In "all other cases," it may amend "only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). The "grant or denial of an opportunity to amend is within the discretion" of the Court. Foman v. Davis, 371 U.S. 178, 182 (1962). "Courts may deny a motion to amend a complaint as futile . . . if the proposed claim would not survive a motion to dismiss." James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996).

To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint must contain sufficient factual allegations that, if true, "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility requires that a complaint raise "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Pleading facts that are "merely consistent with" a defendant's liability "stops short of the line between possibility and plausibility." Twombly, 550 U.S. at 545-46. Thus, a court does not accept the truth of legal conclusions or "[t]hreadbare recitals of the elements of a cause of action, supported by mereconclusory statements." Iqbal, 556 U.S. at 678. Still, courts must construe a complaint in the light most favorable to the plaintiff and accept as true all reasonable factual inferences drawn from well-pleaded allegations. See In re United Mine Workers of Am. Emp. Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994).

III. ANALYSIS

In the Proposed Amended Complaint, Vantage claims again that the Reinsurer Defendants breached a contract with Vantage. Prop. Am. Compl. ¶¶ 161-72. In the alternative, it asserts (1) an implied-in-fact contract claim; (2) a promissory estoppel claim; and (3) an unjust enrichment claim. Id. at ¶¶ 198-215.

A. Vantage Has Not Stated a Claim for Breach of Contract

In its original Complaint, Vantage alleged that the Reinsurer Defendants entered into "valid and binding contractual agreements" to pay Vantage "on the same terms, conditions, and settlements as the" Credit Insurance Policy. Compl. ¶ 152, ECF 1. Now, Vantage seeks to clarify that the Reinsurer Defendants created this contractual relationship when ART and the Willis Defendants—as agents for the Reinsurer Defendants—gave Vantage the Credit Insurance Binders, which "provided confirmation that the reinsurance that backed up the Credit Insurance Policy." Prop. Am. Compl. ¶¶ 44; 65.

"For an enforceable agreement to exist there must be both (1) agreement as to all material terms and (2) intention of the parties to be bound." Mawakana v. Bd. of Trustees of Univ. of D.C., 113 F. Supp. 3d 340, 346 (D.D.C. 2015) (quoting Cambridge Holdings Grp., Inc. v. Fed. Ins. Co., 357 F. Supp. 2d 89, 94 (D.D.C. 2004)). And "the plain and unambiguous meaning of awritten agreement is controlling, in the absence of some clear evidence indicating a contrary intention." Vogel v. Tenneco Oil Co., 465 F.2d 563, 565 (D.C. Cir. 1972).

Even if ART and the Willis Defendants were agents for the Reinsurer Defendants, Vantage fails to allege facts showing that the Credit Insurance Binders created a contractual relationship. The Binders disclose the existence of the reinsurance policy and its terms, but that description alone does not create a contractual relationship with the Reinsurer Defendants. The Binders do not include an offer but rather merely a description. As before, "the allegations in the Complaint do not overcome the general rule that a reinsurer does not have a direct contractual relationship with the original insured unless the terms of the reinsurance agreement create such a relationship." Vantage, 321 F. Supp. 3d at 60.

The Court will thus deny Vantage's motion for leave to amend its Complaint as to Count I Breach of Contract and Count II Declaratory Judgment.

B. Vantage Has Adequately Stated a Claim for Breach of Implied Contract

Vantage also alleges that there was an implied contractual agreement, even if there was not an express contract. Pl.'s Mem. 13. Here, Vantage is on firmer ground.

"All the necessary elements of an express contract—including offer, acceptance, and consideration—must be shown in order to establish the existence of an implied-in-fact contract." Paul v. Howard Univ., 754 A.2d 297, 311 (D.C. 2000). An implied-in-fact contract "differs from other contracts only in that it has not been committed to writing or stated orally in express terms, but rather is inferred from the conduct of the parties in the milieu in which they dealt." Bloomgarden v. Coyer, 479 F.2d 201, 208 (D.C. Cir. 1979).

The Reinsurer Defendants insist that "the allegations of the proposed complaint" suggest that the Willis Defendants and ART "acted in service of Vantage, not of the ReinsurerDefendants." Reinsurers Opp'n 11. Whether Vantage can prove that ART and the Willis Defendants acted as agents for the Reinsurer Defendants is yet to be seen, but Vantage has alleged sufficient facts in support of its allegation of agency at this early stage. The Proposed Amended Complaint claims that ART's President testified that ART "merely facilitated the transaction between Vantage and [the] Reinsurer Defendants." Id. ¶ 66. It also alleges that the Reinsurer Defendants delegated their underwriting authority to ART's President and designated him as their "King Man," mandating that he "remain employed by [ART] as condition to providing reinsurance." Id. ¶¶ 80-82.

Applying the motion to dismiss standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. The Binders stated that the Reinsurer Defendants would pay 90% of Vantage's losses "on the same terms, conditions and settlements" as the Credit Insurance Policy. Id. ¶ 68. These Binders allegedly were given to Vantage by the Reinsurer Defendants' agents. Id. ¶ 65. And the Credit Insurance Binders alone do not resolve the issue of whether there was an implied contract. All parties knew that ART lacked the funds to pay Vantage's losses. Prop. Am. Compl. ¶ 72. And Vantage "insisted on being involved in the selection and approval of the reinsurers." Id. ¶ 43. Viewing the facts in light most favorable to Vantage, as this Court must, it is plausible that the Reinsurer Defendants knew that Vantage expected the Reinsurer Defendants to pay and agreed to this arrangement.

The Reinsurer Defendants argue that Vantage has "not pled...