Kalos, LLC v. Twin Springs at White House

• Court: Court of Appeals for the Sixth Circuit
• Decided: January 6, 2022
• Docket: 21-5352
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 22a0014n.06

No. 21-5352

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

KALOS, LLC, ) FILED ) Jan 06, 2022 Plaintiff-Appellant, ) DEBORAH S. HUNT, Clerk ) v. ) ON APPEAL FROM THE ) UNITED STATES DISTRICT TWIN SPRINGS AT WHITE HOUSE, LLC, et al., ) COURT FOR THE MIDDLE ) DISTRICT OF TENNESSEE Defendants-Appellees. ) )

Before: GILMAN, KETHLEDGE, and LARSEN, Circuit Judges.

LARSEN, Circuit Judge. Kalos, LLC performed work as a subcontractor on an apartment

project but says it was never paid. So Kalos sued the property owner, general contractor, and other

defendants, claiming unjust enrichment. The district court dismissed the complaint for failure to

state a claim. We AFFIRM.

I.

Kalos says that defendants never paid it for the work it performed as a subcontractor on a

Tennessee apartment project. Kalos recorded a mechanics’ and materialmen’s lien, then filed suit

in state court, raising four counts—two related to the lien, one for liability under bond, and a claim

for unjust enrichment. Defendants removed the action to federal court, invoking diversity

jurisdiction.

Defendants then moved to dismiss the two lien counts and the unjust-enrichment count for

failure to state a claim. The district court gave Kalos four extensions of time to file a response, No. 21-5352, Kalos, LLC v. Twin Springs at White House, et al.

but it never did. Although the motion to dismiss was unopposed, the court nevertheless considered

it on the merits and granted it in full. As to the only claim on appeal, unjust enrichment, the court

found that Kalos had failed to allege two necessary elements under Tennessee law: that any

contract with defendants was unenforceable or invalid and that, to the extent any valid contract

existed, it had exhausted its contractual remedies.

Defendants then filed another motion to dismiss or for judgment on the pleadings on

Kalos’s remaining claim for liability under bond. Soon after, Kalos filed motions for

reconsideration and to amend the complaint. In a single opinion, the district court granted

defendants’ motion on the bond claim and denied Kalos’s motions. Having dismissed Kalos’s

only remaining claim, the court entered judgment in favor of defendants. Kalos appealed.

II.

A.

We review de novo a district court’s order granting a motion to dismiss. Health One Med.

Ctr., Eastpointe P.L.L.C. v. Mohawk, Inc., 889 F.3d 800, 801 (6th Cir. 2018). “To survive a motion

to dismiss, [the plaintiff] must allege ‘enough facts to state a claim to relief that is plausible on its

face.’” Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep’t of Educ., 615 F.3d 622, 627 (6th

Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “When determining

facial plausibility, the court must construe the complaint in the light most favorable to the

plaintiff.” Strayhorn v. Wyeth Pharm., Inc., 737 F.3d 378, 387 (6th Cir. 2013). A reviewing court

must “accept all of the complaint’s factual allegations as true, and determine whether the plaintiff

undoubtedly can prove no set of facts in support of his claim that would entitle him to relief.” Hall

v. Callahan, 727 F.3d 450, 453 (6th Cir. 2013) (quoting Ziegler v. IBP Hog Mkt., Inc., 249 F.3d

509, 511–12 (6th Cir. 2001)).

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Kalos’s briefing is not easy to follow, but the company seems to appeal only the dismissal

of the unjust-enrichment claim.1 But because Kalos never responded below to defendants’ motion

to dismiss, even this claim may not be properly before us. See Humphrey v. U.S. Att’y Gen.’s Off.,

279 F. App’x 328, 331 (6th Cir. 2008) (“[W]here . . . plaintiff has not raised arguments in the

district court by virtue of his failure to oppose defendants’ motions to dismiss, the arguments have

been [forfeited].”). Nonetheless, Kalos’s claim fails on the merits. Under Tennessee law, an

unjust-enrichment theory can succeed only when “there is no contract between the parties or a

contract has become unenforceable or invalid.” Whitehaven Cmty. Baptist Church v. Holloway,

973 S.W.2d 592, 596 (Tenn. 1998). But Kalos’s complaint alleges throughout that Kalos had “a

contract with the Defendants.” A plaintiff may state a claim for unjust enrichment by pleading in

the alternative that an underlying contract is unenforceable or invalid, see, e.g., Adv. Sec. Servs.

Evaluation & Training, LLC v. OHR Partners Ltd., No. M2017-00249-COA-R3-CV, 2018 WL

1391626, at *12 (Tenn. Ct. App. Mar. 20, 2018), but Kalos has not done so here.

Kalos suggests that it may proceed nonetheless because it had a valid contract only with

some defendants. Perhaps Kalos’s complaint could be read in this fashion. As the district court

pointed out, Kalos’s complaint is confusing on this score, alleging at some points that it had a

contract with all Defendants, but at others mentioning only some. For example, the complaint

states that Kalos contracted with Horizon Construction, and Kalos notes in its appellate brief that

it “contracted with a specific individual company.” But even if we read these allegations to mean

that Kalos did not have a contract with some of the defendants, the company could not proceed on

an unjust-enrichment theory unless it first “exhausted all remedies against the person with whom

1 To the extent that Kalos attempts to appeal the district court’s dismissal of its other claims, its arguments are perfunctory and therefore forfeited. A.K. ex rel. Kocher v. Durham Sch. Servs., L.P., 969 F.3d 625, 632 n.7 (6th Cir. 2020). -3- No. 21-5352, Kalos, LLC v. Twin Springs at White House, et al.

the plaintiff enjoyed privity of contract.” Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d

512, 525 (Tenn. 2005). Kalos does not allege exhaustion.

Kalos also seems to argue generally that the district court misapplied the motion-to-dismiss

standard by failing to view the complaint in the light most favorable to it and by not accepting its

factual allegations as true. We see no fault in the district court’s ruling. Viewing Kalos’s

complaint under the appropriate motion-to-dismiss standard, the complaint fails to plead a claim

for unjust enrichment because it does not allege the requisite elements.

B.

In their response to Kalos’s appellate brief, defendants claim that Kalos’s appeal is

frivolous and ask for sanctions under Federal Rule of Appellate Procedure 38. That rule permits

us to “award just damages and single or double costs to the appellee” if we “determine[] that an

appeal is frivolous.” But the plain text of that rule permits sanctions only “after a separately filed

motion or notice from the court and reasonable opportunity to respond.” See also Hankins v. City

of Inkster, 832 F. App’x 373, 380 (6th Cir. 2020). Although we have concerns about the way

Kalos has litigated this case, defendants have not filed a separate motion seeking sanctions. So we

decline to award them. Id.

***

For the reasons set forth in this opinion, we AFFIRM the district court’s judgment.

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