Surplec, Inc. v. Maine Public Service Co.

Citations: 501 F. Supp. 2d 195; 2007 U.S. Dist. LEXIS 57845; 2007 WL 2269832Docket: CV-07-55-B-W

Court: District Court, D. Maine; August 7, 2007; Federal District Court

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Surplec, Inc. filed a lawsuit against Maine Public Service Company (MPSC), UPC Wind Management, LLC, and Evergreen Wind Power, LLC, claiming that the defendants, as joint venturers, failed to fully compensate Surplec for a transformer installed at their Mars Hill Project. UPC and Evergreen moved to dismiss the conversion and unjust enrichment claims, arguing that Surplec's complaint did not adequately state a claim. The Court denied the motion regarding conversion, finding that Surplec's allegations of wrongful taking and the futility of demanding the transformer’s return were sufficient. Similarly, the Court determined that Surplec's claims of joint venturer status between UPC, Evergreen, and MPSC supported potential joint and several liability for unjust enrichment, leading to the denial of the dismissal motion on that count as well.

The Court emphasized the legal standard under Rule 12(b)(6), which requires accepting all factual allegations as true and drawing reasonable inferences in favor of the plaintiff, while also noting that a complaint must present a plausible entitlement to relief and cannot rely on mere legal conclusions. The background details included that Surplec sold a transformer to MPSC for $398,000, and despite partial payments and assurances of future payment, MPSC failed to remit the final installment, prompting Surplec to deliver the transformer based on MPSC's representations.

MPSC failed to make the promised payment to Surplec for the transformer and claimed that the transformer was unfit for its intended purpose, stating it would hold the transformer until a replacement was provided. Despite this, MPSC, UPC, and/or Evergreen modified and installed the transformer without informing Surplec in advance, and it is currently being used to generate electricity. Surplec has not received final payment. On June 4, 2007, UPC and Evergreen sought to dismiss Counts IV and V of the Complaint under Rule 12(b)(6). 

Under Maine law, to prove conversion, a plaintiff must establish three elements: a property interest in the item, the right to possession at the time of conversion, and a denied demand for its return. The motion to dismiss focuses on the third element, with defendants arguing that Surplec did not allege making a demand for the transformer’s return. Surplec contends it should be excused from this requirement because a demand would have been futile and because the taking was wrongful. The court recognizes an exception to the demand requirement when circumstances indicate it would be futile. Surplec's complaint suggests that a demand would have been pointless since the defendants indicated their intention to continue using the transformer despite MPSC's nonpayment. 

Surplec argues that a demand was unnecessary because the defendants wrongfully took possession of the transformer, as they allegedly induced Surplec to deliver it fraudulently and modified it while knowing they lacked rightful possession. The court agrees that these allegations support Surplec's claim and conclude that the lack of a demand does not undermine its conversion claim against UPC and Evergreen. Additionally, regarding unjust enrichment under Maine law, a plaintiff must demonstrate that it conferred a benefit on the other party, the other party had knowledge of this benefit, and it would be inequitable for the other party to retain the benefit without compensating for it.

The legal principles regarding unjust enrichment allow for recovery when there is no contractual relationship, but fairness necessitates payment for benefits received. UPC and Evergreen contend that they should not be liable for unjust enrichment because the benefit was conferred by MPSC, not Surplec. They cite that a subcontractor cannot claim unjust enrichment against a property owner if the owner has fully paid the general contractor. Although Surplec claims MPSC has not paid in full, there is no allegation that MPSC has not been compensated by UPC or Evergreen.

The court finds UPC and Evergreen's argument premature, as Surplec alleges they acted as joint venturers with MPSC in the Mars Hill Project. Their joint venture status means MPSC's actions, including failing to pay Surplec, are imputed to them. Additionally, the court recognizes that Surplec’s allegations must be accepted as true at this stage and that the determination of a joint venture requires evaluation of the parties' conduct and circumstances.

UPC and Evergreen's characterization of Surplec as a "supplier/subcontractor" to argue against unjust enrichment is seen as inappropriate, as the court does not find the relationship analogous to that of a subcontractor and property owner. Despite the lack of a direct contract, the court concludes that Surplec has adequately alleged a plausible claim for unjust enrichment against UPC and Evergreen.

As a result, the court denies UPC Wind Management LLC and Evergreen Wind Power LLC's motion to dismiss and dismisses their motion to stay discovery, which is now moot.

On May 21, 2007, the Supreme Court delivered its decision in Bell Atlantic Corp. v. Twombly, rejecting the standard set in Conley v. Gibson regarding the dismissal of complaints for failure to state a claim. The Court criticized the "no set of facts" language from Conley, indicating it had been questioned and undermined over time. In the case of Surplec, Inc. v. Me. Pub. Serv. Co., the Court noted it had diversity jurisdiction under 28 U.S.C. § 1332. Surplec sought to enjoin the Defendants from using a transformer while the case was ongoing, but the Court denied this motion on July 18, 2007. MPSC, an electricity transmission and distribution company in Presque Isle, Maine, was involved in the dispute. UPC and Evergreen contested Surplec's claims, asserting they had not benefited from the transformer’s use, despite previously stating that the inability to use the transformer would lead to significant financial losses and operational shutdowns. For the purpose of the motion to dismiss, the Court accepted the truth of the Complaint's allegations, which stated that the transformer was operational and utilized for generating wind energy at the Mars Hill site, rendering the Defendants' argument that no benefit was conferred untenable.