Opinion ID: 1235030
Heading Depth: 1
Heading Rank: 4

Heading: PSECU's Claims For Unjust Enrichment Against Fifth Third and BJ's.

Text: The elements of unjust enrichment under Pennsylvania law have been defined as follows: (1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Limbach Co. LLC v. City of Philadelphia, 905 A.2d 567, 575 (Pa.Cmwlth.2006) (citation omitted). The cause of action is similar to a claim for equitable indemnification that we discussed in No. 06-3392. To sustain a claim of unjust enrichment, a claimant must show that the party against whom recovery is sought either wrongfully secured or passively received a benefit that it would be unconscionable for her to retain. Torchia v. Torchia, 346 Pa.Super. 229, 499 A.2d 581, 582 (1985) However, a claim for unjust enrichment requires more than a showing that the defendant may have benefited in some way from the disputed conduct. Walter v. Magee-Womens Hosp., 876 A.2d 400, 407 (Pa.Super.2005). PSECU argues that BJ's and Fifth Third benefited from PSECU's cancellation and replacement of its Visa cards because the cancellation stopped the fraudulent use of those cards and permitted PSECU's members to resume using their cards for retail purchases. PSECU's actions also limited the liability that BJ's and Fifth Third would otherwise have incurred to PSECU and its members. Thus, argues PSECU, BJ's and Fifth Third's acceptance and retention of the benefits conferred without compensation to PSECU, would be inequitable. Accordingly, BJ's and Fifth Third were unjustly enriched by PSECU's cancelling and replacing its members' Visa cards. We cannot agree. The district court held that BJ's and Fifth Third received no benefit from PSECU's cancelling and reissuing of its members' Visa cards because PSECU replaced the cards pursuant to its contractual obligation with its cardholders. The district court relied on Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429 (3d Cir. 2000), in holding that any benefit that BJ's or Fifth Third may have derived was purely incidental, and could not form the basis of an unjust enrichment claim. 398 F.Supp.2d at 331. In Allegheny Gen. Hospital, a group of hospitals sued various tobacco companies asserting an unjust enrichment claim for unreimbursed medical care the hospitals had provided to nonpaying, diseased smokers. The hospitals claimed that by paying for the medical services required by nonpaying patients, the Hospitals discharged the Tobacco Companies' legal duties and saved them from bearing costs caused by their fraudulent and wrongful conduct. 228 F.3d at 447. We held that a claim for unjust enrichment may not be based on the performance of an obligation that is independently owed to third parties: In addition, since the Hospitals had an independent obligation to provide health care to the nonpaying patients [through Medicaid], incidental benefit to the Tobacco Companies is not enough to maintain an action; the nonpaying patients get the main benefit, not the Tobacco companies. See Restatement of Restitution § 106 (1937) (A person who, incidentally to the performance of his own duty ... has conferred a benefit upon another, is not thereby entitled to contribution.). Id. PSECU's unjust enrichment claims against BJ's and Fifth Third are analogous to the hospital's failed unjust enrichment claim against the tobacco companies. PSECU attempts to distinguish Allegheny by arguing that, unlike the hospitals, it did not replace its members' Visa cards pursuant to an independent obligation. However, PSECU's amended complaint fatally undermines that contention. There, PSECU alleged that it replaced its members' Visa cards to fulfill a contractual obligation to its customers. Am. Compl. ¶ 65. Although PSECU's attempt to salvage its unjust enrichment claim now requires that it take a contrary position, the allegation in the amended complaint is a binding judicial admission. See Parilla v. IAP Worldwide Serv., VI, Inc., 368 F.3d 269, 275 (3d Cir.2004) (Judicial admissions are formal concessions in the pleadings, or stipulations by the party or its counsel, that are binding upon the party making them.). Accordingly, the district court properly dismissed the unjust enrichment claim. Finally, PSECU tries to distinguish this case from Allegheny. According to PSECU, this case should be governed by the Restatement of Restitution § 81, which provides: Unless otherwise agreed, a person who has discharged more than his proportionate share of a duty owed by himself and another as to which, between the two, neither had a prior duty of performance, is entitled to contribution from the other, except where the payor is barred by the wrongful nature of his conduct. Comment (b) offers the following guidance: The rule stated in this Section applies where two or more persons are interested in an enterprise out of which the obligation arises, whether as primary or secondary obligors, and where neither of them with respect to the other has a prior duty of performance, irrespective of the question whether, as between them and the creditor, one of them appears to be primarily responsible. Comment (c) explains the limited scope of § 81: The rule stated in this Section is limited to those who are parties to a single transaction or series of transactions. If there is but one debt or duty, the fact that there are a number of separate agreements which guarantee its performance does not prevent contribution between all the secondary obligors. Id. at comment (c). PSECU argues that it entered into the series of contracts that make up the Visa system with BJ's and Fifth Third, but it does not have any prior duty of performance within the Visa system. PSECU concedes that it did allege that it replaced its members' cards pursuant to its contractual obligations within the Visa system. However, it submits that Visa's designated representative's deposition testimony establishes that cancellation and reissuance of its members cards is only one of a number of options an Issuer may take in response to a breach of Cardholder Information by a Merchant or Acquirer. According to PSECU, this establishes that it had no obligation to cancel and reissue the cards; rather, doing so was just one of PSECU's options under the Visa system. PSECU claims that by promptly cancelling and replacing cards, it protected BJ's and Fifth Third from greater fraud losses, which would have been shifted to Fifth Third's compliance process (and then shifted to BJ's for indemnification to Fifth Third). PSECU concludes that it, BJ's and Fifth Third are all interested in an enterprise [the Visa system, and its associated network of contracts] out of which [obligations] arise, as to which none of the three have a prior duty of performance. PSECU's Br. at 55 (quoting Restatement of Restitution § 81, comment (b)). It further says that by cancelling and reissuing its members' Visa cards, it discharged more than [its] proportionate share of a duty owed by [PSECU, BJ's and Fifth Third] as to which, between the [three], neither had a prior duty of performance. Id. (quoting Restatement of Restitution § 81). Therefore, PSECU contends that it is entitled to contribution from BJ's and Fifth Third on its unjust enrichment theory, regardless of whether PSECU, BJ's or Fifth Third appears to be primarily responsible for reissuance of Visa cards. Id. (quoting Restatement of Restitution § 81, comment (b)). This argument has some facial appeal. However, PSECU did not make this argument in the district court, and we therefore need not determine its merit now. Generally, barring exceptional circumstances, like an intervening change in the law or the lack of representation by an attorney, this Court does not review issues raised for the first time at the appellate level. Gleason v. Norwest Mortgage, Inc., 243 F.3d 130, 142 (3d Cir.2001). PSECU does not contend that there are exceptional circumstances present here, and we do not find any. Accordingly, this argument has been waived, and we will reject it without discussion. We conclude that the district court did not err in dismissing PSECU's unjust enrichment claim against either BJ's or Fifth Third.