08 B 28225, 10 A 01805
The court denied the Defendants' Motion to Dismiss as to four fraudulent conveyance Counts in Trustee Peterson's adversary complaint concerning the Premium Payment Debtors' payment of nearly $6,000,000 for insurance against the risk of certain retailers becoming insolvent. It was later revealed that Certain Petters Entities were operating a Ponzi Scheme and that the accounts receivable being insured did not exist. The court relied on the Seventh Circuit Court of Appeals ruling in Leibowitz v. Parkway Bank & Trust Co. ( In re Image Worldwide, Ltd .), 139 F.3d 574, 576 (7th Cir. 1998) in finding that such matters are issues of fact which cannot be decided on a motion to dismiss. Trustee Peterson requested rescission based on lack of consideration. The court dismissed the two rescission Counts without prejudice. The court ruled that rescission was not available as to Counts V and VI because the Premium Payment Debtors were provided with consideration in the form of insurance coverage. The Motion to Dismiss was granted with prejudice as to the Count alleging unjust enrichment. The court ruled that unjust enrichment is a quasi-contract theory of recovery that permits courts to imply the existence of a contract where none exists in order to prevent unjust results. Because the parties had an express contract, unjust enrichment as a theory of recovery is not available.