Mercy Hospital Liquidation Trust Oversight Committee v. Mercy Health Network - Motion to Dismiss Denied

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Feb. 10, 2026 Get Citation Alerts Download PDF Add Note

Mercy Hospital Liquidation Trust Oversight Committee as designee of the Mercy Hospital Liquidation Trust v. Mercy Health Network, Inc. d/b/a MercyOne, Sean Williams, and Catholic Health Initiatives – Iowa, Corp. d/b/a Iowa Heart Center

United States Bankruptcy Court, N.D. Iowa

• Citations: None known
• Docket Number: 25-09117

• Precedential Status: Unknown Status

• Opinion

• Authorities (34)

• Cited By (0)

• Summaries (0)

• Similar Cases (0)

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Trial Court Document

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF IOWA

IN RE:
Chapter 11
MERCY HOSPITAL, IOWA CITY,
IOWA, et al., Bankruptcy No. 23-00623

Debtors

---

MERCY HOSPITAL LIQUIDATION
TRUST OVERSIGHT COMMITTEE
as designee of the MERCY
HOSPITAL LIQUIDATION TRUST, Adversary No. 25-09117
Plaintiff
VS.

MERCY HEALTH NETWORK, INC.
d/b/a MERCYONE, SEAN
WILLIAMS, and CATHOLIC
HEALTH INITIATIVES – IOWA,
CORP. d/b/a IOWA HEART
CENTER,
Defendants

OPINION AND ORDER ON DEFENDANTS’ MOTION TO DISMISS

The matter before the Court is a Motion to Dismiss (Doc. 23) filed by Mercy
Health Network, Inc. d/b/a MercyOne, Sean Williams, and Catholic Health
Initiatives d/b/a Iowa Heart Center (collectively, “Defendants”). The Court held a
telephonic hearing on November 14, 2025. Roy Leaf appeared for Mercy Hospital
Liquidation Trust Oversight Committee as designee of the Mercy Hospital
Liquidation Trust (“Plaintiff”). Michael Reck and David Goroff appeared for
Defendants. The Court heard argument and took the matter under advisement on the
papers submitted. This is a core proceeding under 28 U.S.C. § 157 (b)(2).

While this matter was pending, the United States District Court for the
Northern District of Iowa granted Defendants’ Motion for Withdrawal of Reference
(Doc. 20) based on a jury demand. This leaves this matter in an uncertain posture.

Out of an abundance of caution, this Court will treat this as an Opinion and Order of
this Court—and in the alternative, a Report and Recommendation for the District
Court to consider.
I. BACKGROUND

Debtors filed their Chapter 11 petition on August 7, 2023. The Court confirmed
Debtors’ First Amended Combined Disclosure Statement and Joint Chapter 11 Plan
of Liquidation (the “Plan”) on June 7, 2024, over the objection of MercyOne—one

of the Defendants here. MercyOne appealed. The District Court affirmed. MercyOne
then appealed to the 8th Circuit, where the case awaits decision. Under the confirmed
Plan, the Mercy Hospital Liquidation Trust was created, and the Debtors’ assets were
transferred to the Trust. Dan Childers was appointed as the Liquidation Trustee. The

Plan also created a three-member Liquidation Trust Oversight Committee to oversee
the administration and management of the Trust.
Plaintiff moved, in the bankruptcy case, for substantial prefiling discovery

under Bankruptcy Rule 2004 in anticipation of filing this adversary case. MercyOne
resisted. This Court granted the motion after several hearings discussing—at
length—the scope of discovery allowed. MercyOne then made its own motion for

similar Rule 2004 discovery. Plaintiff resisted. Again, this Court granted the
discovery, but only after several hearings discussing—at length—the scope of the
discovery for MercyOne.

In granting both parties’ motions for Rule 2004 pre-filing discovery, the Court
specifically relied on both parties’ representations that this pre-trial discovery would
expedite and streamline the forthcoming litigation. The Court noted the substantial
expenditures of time and money involved in the pre-filing process and strongly

suggested that the parties discuss settlement before costs got away from them. The
parties assured the Court that gathering the information under Rule 2004 was
essential to evaluating potential resolution. The Court’s final message to the parties

was that the Court’s orders granting both parties robust pre-filing discovery would
result in the Court pushing the matter ahead to expedite its path to trial. The Court
emphasized that it would not allow the case to move sideways any further.
Plaintiff filed this adversary proceeding on August 6, 2025. On September 2,

2025, Plaintiff filed an Amended Complaint, asserting fourteen separate causes of
action. Counts I, II, III, and IV assert causes of action for avoidance and recovery of
certain transfers to MercyOne under sections 544, 547, 548, and 551 of the

Bankruptcy Code and Chapter 684 of the Iowa Code. Counts V, VI, VII, VIII, and X
assert causes of action for breach of contract, unjust enrichment, breach of fiduciary
duty, and negligent misrepresentation against MercyOne. Count IX asserts a claim

for breach of fiduciary duty against Sean Williams. Counts XI, XII, XIII, and XIV
assert causes of action for avoidance and recovery of certain transfers to Iowa Heart
under sections 544, 547, 548, 550, and 551 of the Bankruptcy Code and Chapter 684

of the Iowa Code.
Defendants filed this Motion to Dismiss on September 19, 2025. Plaintiff filed
a response (Doc. 23). Defendants filed a reply in support of their motion (Doc. 31).
The Court heard telephonic argument on this matter shortly before Thanksgiving.

For the reasons stated below, Defendants’ Motion to Dismiss is DENIED.
II. DISCUSSION
Defendants assert three arguments in support of dismissal: (1) the Amended

Complaint does not comply with the requirement in Federal Rule of Civil Procedure
8 that it contain “a short and plain statement of the claim showing that the pleader is
entitled to relief” because it is too long and too detailed; (2) an unjust enrichment
claim cannot be based on a purported breach of contract; and (3) a breach of contract

claim cannot be transformed into fraudulent conveyance, preference, and voidable
transfer claims when the allegations are based on matters covered by the contract.
During argument, the Court raised its concern that the matter was immediately

moving sideways. The Court again noted the additional time and expense of this
motion, the likelihood of further motions, and how this cut against the parties’ earlier
representations. In the process, the Court again referenced its earlier comments on

factoring this into settlement. Defendants’ counsel responded sharply that his clients
did not appreciate the Court pressuring them to settle, saying that they now wanted
to fight for total vindication. This Court then made clear that Defendants’ position

was a change in tune and tone from the previous understanding that evaluating
potential resolution was a common goal of all parties. The Court then reiterated that
Defendants were not being prohibited—and would not be prohibited—in any way
from proceeding on the merits and an attempt at full vindication at trial. The Court

emphasized, however, that it would push the parties towards trial and not let the case
get bogged down in litigating pretrial disputes.
A. Rule 8

Defendants argue that the Amended Complaint violates the Federal Rules of
Civil Procedure’s requirements for “a short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The rule was originally
intended to provide a minimum standard for pleading—the minimum required to

give the other party notice of the claims. 5 Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 1202 (4th ed. 2008). Defendants assert that “[t]he
complaint includes unnecessary detail, and excessively recites purported evidence

more appropriate for a trial brief or summary judgment motion, after discovery
occurs, than a complaint.” (Brief in Support of Motion to Dismiss, Dkt. #23, p. 3).
They point to case law noting that the language of Rule 8 is not only a minimum

requirement but can also be used to set a maximum limit on pleading in some cases.
Defendants argue that answering the Amended Complaint would impose an undue
burden and require them to “write their own novel” in response. Defendants also

argue that Plaintiff’s pleading tactic is unfair and confusing. They assert that Plaintiff
has engaged in a form of “shotgun” pleading by incorporating all previous
paragraphs at the outset of each count, making it impossible to determine the actual
grounds for individual claims. Defendants also argue for a more concise, tightly

edited, and easily understood complaint and ask the Court to dismiss the complaint
without prejudice or to strike all of the superfluous, unnecessary detail.
In response, Plaintiff argues that under relevant case law, the length of a

complaint or its detail alone is not grounds for dismissal under Rule 8. Instead, the
Court should consider whether the complaint is coherent and puts the Defendants on
notice of Plaintiff’s claims. In addition, Plaintiff argues that the level of detail
provided in the Amended Complaint may be necessary to meet the heightened

pleading standards for fraud found in Federal Rule of Civil Procedure 9(b).
Rule 8 of the Federal Rules of Civil Procedure is made applicable in adversary
proceedings by Rule 7008 of the Federal Rules of Bankruptcy Procedure. Under

Rule 8, any pleading that contains a claim for relief must include “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). “Each allegation must be simple, concise, and direct.” Fed. R. Civ. P. 8(d).

“Specific facts are not necessary; the statement need only ‘give the defendant fair
notice of what the … claim is and the grounds upon which it rests.’” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic Corp. v. Twombly, [550 U.S.

544, 555](https://www.courtlistener.com/opinion/145730/bell-atlantic-corp-v-twombly/#555) (2007)). See also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[T]he
pleading standard Rule 8 announces does not require ‘detailed factual allegations,’
but it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.”). “No technical form is required,” and the Court must construe

pleadings “so as to do justice.” Fed. R. Civ. P. 8(d)(1), (e).
This general pleading standard is adjusted to provide a heightened minimum
standard when certain claims for relief are asserted, such as those involving fraud or

mistake. Rule 9(b) states that “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
This Court has held that Rule 9 does not apply to claims for avoidance and recovery
of constructively fraudulent transfers, only to those claims involving actually

fraudulent transfers. Sergeant v. OneWest Bank, FSB (In re Walter), 462 B.R. 698,
707 (Bankr. N.D. Iowa 2011). Here, Plaintiff is seeking avoidance and recovery of
constructive fraudulent transfers. There are no allegations of actual fraud. However,

as Plaintiff points out, the Eighth Circuit has not ruled on this pleading issue and the
Fifth Circuit (in discussing Eighth Circuit case law on constructive fraud) has found
that the 8th Circuit applied the heightened pleading standard of Rule 9. Jacobs v.

Crowley (In re Life Partners Holdings, Inc.), 926 F.3d 103, 120 (5th Cir. 2019). Given
this uncertainty, Plaintiff was not improperly taking into account the heightened
pleading standard of Rule 9. Thus, the Court factors into this analysis Plaintiff’s

proper caution in using a heightened standard. The Court need not determine whether
the Rule 9 heightened standard applies because it finds Plaintiff’s Amended
Complaint does not violate Rule 8, even if Rule 9 does not apply.
1. Length and Detail

What constitutes a “short and plain statement of the claim” under Rule 8
depends on the circumstances of the particular case. “The pleadings in a case
involving a single plaintiff, a single defendant, and one transaction usually will be

much shorter and simpler than the pleadings in a case involving several plaintiffs,
numerous defendants, and more than one transaction.” Wright & Miller, supra, §
1217. “[A] complaint that sets forth intelligible legal claims should not be
dismissed under Rule 8 simply because it is too long and contains unnecessary

details.” Miller v. Alco Mgmt., Inc., No. 22-5825, 2023 WL 2607458 (6th Cir. Mar.
20, 2023) (emphasis added). See also Kensu v. Corizon, Inc., 5 F.4th 646, 651 (6th
Cir. 2021) (“[W]hile excessive length may indicate a lack of requisite concision and

simplicity, it cannot be the sole factor justifying dismissal.”). “[D]ismissal for a
violation under Rule 8(a)(2) is usually confined to instances in which the complaint
is so verbose, confused and redundant that its true substance, if any, is well

disguised.” Hearns v. San Bernadino Police Dep’t, 530 F.3d 1124, 1131 (9th Cir. 2008)
(emphasis added) (internal quotations omitted). See also Doe v. University of Iowa,
No. 3:22-CV-00001, 2022 WL 4182196, at *1 (S.D. Iowa Sept. 2, 2022) (citing Koll

v. Wayzata State Bank, 397 F.2d 124, 126 (8th Cir. 1968)) (“Complaints that are
unnecessarily verbose and do not allow a party to understand or meaningfully
respond to allegations do not meet the Rule 8 standard and are subject to dismissal.”).
Under Rule 8, the Court must determine whether the Amended Complaint gives the

Defendants fair notice of: (1) what the Plaintiff’s claims are; and (2) the grounds
upon which those claims rest. See Erickson, 551 U.S. at 93; Twombly, 550 U.S. at
555. The first part of this analysis is largely undisputed here. While Plaintiff’s

Amended Complaint is lengthy and likely includes details that are ultimately
unnecessary at this early stage of the case, it is logically organized and clearly
written. Each claim and the defendants to which they relate are separately set out
and labeled. Defendants have not argued that they are unable to discern what claims

the Plaintiff is bringing against them. The Court thus concludes that the Amended
Complaint is enough to “give the defendant[s] fair notice of what the plaintiff’s
claim[s] [are].” Id. The second part of the analysis is somewhat less clear. The Plaintiff’s
Amended Complaint is 106 pages long. The first 73 pages contain a detailed factual

recounting of the parties’ relationships and the events leading up to Mercy Hospital’s
bankruptcy filing. The remaining pages set out fourteen causes of action against
three defendants. As previously mentioned, lengthy and unnecessarily detailed

complaints are not cause for concern as long as defendants are able to identify the
claims against them and the facts supporting those claims. This is not a simple one-
transaction, one-defendant case. It allegedly involves the many complicated
transactions of running a hospital over many years. Much of what the Court dealt

with in the underlying bankruptcy is now involved in this case. There are three
defendants and fourteen separate claims. This case thus falls into the category of
complex business litigation that properly involves a longer, more detailed complaint

to fully and fairly set of the claims. See Wright & Miller, supra, § 1217. Again, the
general rule is that “a complaint that sets forth intelligible legal claims should not be
dismissed under Rule 8 simply because it is too long and contains unnecessary
details.” Miller, 2023 WL 2607458 at *1. The Amended Complaint is not “so

verbose, confused, and redundant that its true substance, if any, is well disguised.”
Hearns, 530 F.3d at 1131. Dismissal here would be unwarranted. Thus, the main thrust
of Defendants’ argument—that the Amended Complaint is too long with too much

detail—is an insufficient basis for dismissal.
Defendants admittedly cite cases where courts have dismissed cases based on
the length and detail of the complaint. This Court expressly finds and holds (or

recommends such a finding and holding) that those cases are out of step with the
Circuit case law noting that the length and detail of a complaint is not a sufficient
basis for dismissal. As Judge Posner, writing for the 7th Circuit noted, it would be

“an abuse of discretion… to dismiss a complaint merely because of the presence of
superfluous matter. That would cast district judges in the role of editors, screening
complaints for brevity and focus; they have better things to do with their time.” Davis
v. Ruby Foods, Inc., 269 F.3d 818, 820 (7th Cir. 2001) (citations omitted).

1. Excessive Incorporation by Reference Defendants have also argued that the Amended Complaint is subject to dismissal because of the excessive incorporation of preceding paragraphs by

reference. “[I]n order to encourage pleadings that are short, concise, and free of
unwanted repetition,” the Federal Rules permit a party to incorporate earlier
allegations in a pleading by reference. Wright & Miller, supra, § 1326; Fed. R. Civ.
P. 10(c) (“A statement in a pleading may be adopted by reference elsewhere in the

same pleading”). However, excessive incorporation by reference can, in some
circumstances, “lead to the introduction into the pleadings ‘of considerable
unnecessary matter.’” Iowa Health Sys. v. Trinity Health Corp., [177 F. Supp. 2d 897,

906](https://www.courtlistener.com/opinion/2571071/iowa-health-system-v-trinity-health-corp/#906) (N.D. Iowa 2001) (citing Van Dyke Ford, Inc. v. Ford Motor Co., 399 F. Supp.
277, 285 (E.D. Wis. 1975)). One example of this is what many courts have called a
form of “shotgun pleading”1 — “a complaint containing multiple counts where each

count adopts the allegations of all preceding counts, causing each successive count
to carry all that came before and the last count to be a combination of the entire
complaint.” Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313, 1321 (11th Cir.

2015). See also id. n.11 (collecting cases). Shotgun complaints may be held to violate
Rule 8 when “it is virtually impossible to know which allegations of fact are
intended to support which claim(s) for relief.” Anderson v. District Bd. of Trustees
of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996).

This argument is also judged under the Rule 8 analysis and is similarly
unavailing. Here, the first paragraph under each of the counts incorporates by
reference “all preceding paragraphs as if fully re-alleged herein.” As noted above,

incorporating previous paragraphs by reference is allowed and is, in fact, a very
common practice. Typically, this incorporation by reference would be limited to the
factual background section of the complaint and other facts that detail the
relationship between the parties. Here, Defendants argue that the incorporation by

1 The 11th Circuit has identified four categories of “shotgun pleadings.” Weiland, 792 F.3d at 1321. The first
and most common category is the one discussed here. Id. The remaining categories include complaints that:
(1) are “replete with conclusory, vague, and immaterial facts,” (2) do not separate causes of action into
different counts, and (3) “assert[] multiple claims against multiple defendants without specifying which
defendants are responsible for which acts or omissions, or which of the defendants the claim is brought
against.” Id. at 1323. “The unifying characteristic of all types of shotgun pleadings is that they fail to one
degree or another, and in one way or another, to give the defendants adequate notice of the claims against
them and the grounds upon which each claim rests.” Id. reference uses broader language than necessary and could be read such that each
successive count incorporates everything that came before it, including prior

counts—making the final count, Count XIV, a combination of the entire complaint.
Such a broad reading may in fact make counts beyond Count I read in an absurd
fashion to the extent it incorporates the previous paragraphs of law into all the

following claims. But this Court does not read the Amended Complaint so broadly
or to intend such an understanding. The Court instead reads the Amended Complaint
to incorporate all of the factual background. Read in this fashion, it is not impossible
to understand which allegations might support which claim(s). The factual

background being re-alleged does not make the Amended Complaint unintelligible
and leaves the claims based on those facts. There is no violation of Rule 8’s
requirements when the Amended Complaint is so read. The Court’s interpretation of

the Amended Complaint is consistent with the directive of Fed. R. Civ. P. 8(e) that
“[p]leadings must be construed as to do justice.”
3. Other Alleged Inadequacies in the Amended Complaint
Defendants also appear to claim that the long and detailed complaint should

have been written more clearly and concisely—and provided an easier way to match
specific factual allegations to the legal claims for relief. One court rejected such an
argument, noting that “[d]efendant cite[d] no requirement in the federal rules or in

case law that factual allegations be matched to specific counts.” Balensiefen v.
Princeton Nat. Bancorp, Inc., No. 10-CV-1263, 2011 WL 2516897 at *4 (C.D. Ill. Mar.
30, 2011) (citing Hatmaker v. Mem’l Med. Cent., 619 F.3d 741, 743 (7th Cir. 2010)).

See also United States v. Fischer Excavating, Inc., No. 4:12-CV-4082, 2014 WL
4638600 at *6 (C.D. Ill. Sept. 17, 2014) (citing Christensen v. Cnty. of Boone,
Ill., 483 F.3d 454, 465–66 (7th Cir. 2007)) (“[T]he Federal Rules do not require

plaintiffs to plead the elements of legal theories along with facts matching each
element.”); Melvin v. U.S. Dep’t of Veterans Affs., 70 F. Supp. 3d 350, 356 (D.D.C.
2014) (citing Krieger v. Fadely, 211 F.3d 134, 136 (D.C. Cir. 2000)) (“The plaintiff
need not plead all of the elements of a prima facie case in the complaint… nor must

the plaintiff plead facts or law that match every element of a legal theory.”).2
Defendants’ briefing was filled with comments about how the Amended
Complaint could have been written more briefly and concisely. Defendants had

several editing suggestions. This material adds nothing to the analysis of what is
required by the law for dismissal or the other relief they request. It simply requests

2 The United States District Court for the District of Minnesota previously interpreted 8th Circuit case law
to require plaintiffs to match facts to each element of a legal theory. American Institute of Physics v.
Schwegman Lundberg & Woessner, P.A., No. CIV. 12-528, 2012 WL 3799647, at n.1 (D. Minn. July 2, 2012)
(citing Brown v. Simmons, 478 F.3d 922, 923 (8th Cir. 2007)). In Brown, the 8th Circuit said only: “each
element of the claim must be pled in the complaint.” Id. at 923. It did not require the complaint to carefully
match alleged facts to each element of the claim—as Defendants appear to argue. Defendants have not
argued that Plaintiff failed to plead each element; only that Plaintiff did not carefully match up the factual
allegations to each claim. That is not required.

Moreover, the Federal District Court for the Northern District of Iowa has noted that the Brown case was
effectively overruled by the Supreme Court’s decisions in Iqbal and Twombly. Cornerstone Consultants,
Inc. v. Production Input Solutions, 789 F. Supp. 2d. 1029, 1039 (N.D. Iowa 2011) (“Even if the decision of
the Eighth Circuit Court of Appeals in Brown had correctly stated the law at the time, it does not do so
now, in light of more recent formulations of the pleading requirements by the Supreme Court.).
what Judge Posner cautioned against—making judges editors of complaints. Ruby
Foods, 269 F.3d at 820.

Even if there is a technical violation of Rule 8, this ruling (or report and
recommendation) is consistent with case law noting that, in cases of technical
violations, “the appropriate remedy is rarely immediate dismissal.” Kensu, [5

F.4th at 652](https://www.courtlistener.com/opinion/4901092/temujin-kensu-v-corizon-inc/#652) (emphasis added). “Fat in a complaint can be ignored, confusion or
ambiguity dealt with by means other than dismissal.” Bennett v. Schmidt, 153 F.3d
516, 518 (7th Cir. 1998). Courts may instead “relieve a defendant of the burden of
responding to a complaint with excessive factual detail by ‘simply strik[ing] the

surplusage’ using Rule 12(f) or excusing the defendant from answering certain
allegations.” Kensu, 5 F.4th at 652–53 (citing Hearns, 530 F.3d at 1132) (emphasis
added). Here, the Court excuses Defendants from responding to any of the realleged

paragraphs, beyond those in the factual background (¶¶ 1 – 338).
This ruling is consistent with the case law and the Court’s previous Rule 2004
discovery rulings where it informed the parties that the case would continue moving
forward whenever possible—not sideways. There is no reading of the case law that

requires dismissal here. This is not a case of repeated failure to properly plead a case,
or a case of vexatious pleading, which could justify dismissal. See id. at 653. The
claims are intelligible and sufficiently pled to give Defendants fair notice of the
claims and the general universe of facts upon which they are based to allow for a
coherent response.

B. Unjust Enrichment
Defendants next argue that Plaintiff’s unjust enrichment claim (Count VI) is

not legally permissible because Plaintiff also makes a breach of contract claim.
Throughout the Amended Complaint, Plaintiff repeatedly refers to the Affiliation
Agreement (the contract between the parties) and asserts that the transfers at issue
were payments made under that agreement. Defendants assert that under Iowa law,

unjust enrichment only implies a contract in cases where a contract does not exist
and that the doctrine cannot be extended to cases like this one, where an enforceable
contract exists between the parties. Defendants argue that because the existence of a

contract between the parties is undisputed, Plaintiff fails to state a claim for unjust
enrichment.
Plaintiff argues that it has properly pled unjust enrichment as an alternative
theory of relief to breach of contract. Plaintiff asserts that MercyOne received a

number of payments for purported expenses that ultimately may not have been
within the scope of the contract or that Defendant was paid for things it never did
under the contract. Plaintiff argues that because the parties will likely litigate the

scope of the contract, if it is later determined that some of the payments at issue did
not fall under the agreement, those payments could fall within the unjust enrichment
theory of relief. Plaintiff believes that unjust enrichment was properly pled in the
alternative.

In response, Defendants argue that nothing in the Amended Complaint
suggests that Plaintiff pled unjust enrichment in the alternative. They point out that
the complaint uses the word “alternative” only once, and not in relation to any

claims. In addition, Plaintiff seeks $14.5 million on its unjust enrichment claim and
$18.8 million on its breach of contract claim. Defendants argue that there is no
indication that this relief is sought in the alternative.
1. Standard for Motion to Dismiss

To survive a motion to dismiss, this Count must satisfy Rule 8(a)(2). “[The]
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Schriener v. Quicken Loans, Inc., [774 F.3d

442, 444](https://www.courtlistener.com/opinion/2761125/kevin-schriener-v-quicken-loans-inc/#444) (8th Cir. 2014) (quoting Iqbal, 556 U.S. at 678). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “[T]he complaint should be construed in the light most favorable to

the plaintiff and with all doubts resolved in his favor.” Cool v. Int’l Shoe Co., 142
F.2d 318, 320 (8th Cir. 1944).
i. Unjust Enrichment Doctrine
Unjust enrichment is an equitable doctrine which “mandates that ‘one shall
not be permitted to unjustly enrich himself at the expense of another or to receive

property or benefits without making compensation’ for them.” Johnson v. Dodgen, 451 N.W.2d 168, 175 (Iowa 1990) (citing Larsen v. Warrington, 348 N.W.2d 637, 642–
43 (Iowa App. 1984)). Unjust enrichment implies a contract where one does not exist

so that a party may recover damages from the party who has been unjustly enriched.
State, Dept. of Hum. Servs. ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 154 (Iowa 2001). The doctrine does not apply when an enforceable contract exists
between the parties on the same subject matter. Johnson, 451 N.W.2d at 175. Where

the existence and scope of an express contract is undisputed, an unjust enrichment
claim directed towards the same subject matter is not allowed. Meardon v. Register, 994 F.3d 927, 936 (8th Cir. 2021) (citing Kunde v. Estate of Bowman, [920 N.W.2d

803](https://www.courtlistener.com/opinion/4549865/ronald-dwight-kunde-v-estate-of-arthur-d-bowman-and-diane-engelkins/), 807–08 (Iowa 2018) and Scott v. Grinnell Mut. Reinsurance Co., 653 N.W.2d
556, 561 n.2 (Iowa 2002)) (emphasis added). However, “[a] party is not barred from
pleading unjust enrichment in the alternative to a breach of contract claim when
the existence and terms of a contract are in dispute.” Id. (emphasis added).

1. Analysis For reasons similar to those stated in the section above, the Court denies dismissal of the unjust enrichment claim. Plaintiff stated in argument that Count VI is pled as an alternative if the contract is found to be limited in scope or otherwise insufficient. The Court also reads this Count as pleading in the alternative.

Rule 8 provides that “[a] party may set out 2 or more statements of a claim or
defense alternatively or hypothetically …. If a party makes alternative statements,
the pleading is sufficient if any one of them is sufficient.” Fed. R. Civ. P. 8(d)(2). “A

party may state as many separate claims or defenses as it has, regardless of
consistency.” Fed. R. Civ. P. 8(d)(3). Taken together, Rule 8(d)(2) and (d)(3) make
clear that a party may plead alternative and inconsistent claims. “While the [Plaintiff]
need not use particular words to plead in the alternative, they must use a formulation

from which it can be reasonably inferred that this is what they were doing.” Holman
v. Indiana, 211 F.3d 399, 407 (7th Cir. 2000) (citing 5 Charles A. Wright & Arthur R.
Miller, Federal Practice and Procedure, § 1282 at 525 (2d ed. 1990)). Paragraph 10

specifically states that “this action is commenced under Iowa law for MercyOne’s
breach of the Affiliation Agreement, unjust enrichment resulting from its failure to
fully perform under the Affiliation Agreement, and due to its receipt of fees for
services it did not provide.” While this particular paragraph of the Amended

Complaint is not the model of precision, it does sufficiently allege unjust enrichment
as an alternative to breach of contract. Plaintiff did also incorporate by reference
many paragraphs asserting the existence of an express contract. Some of those

paragraphs suggested an unjust enrichment claim not solely premised on the
existence of an express contract. For example, Plaintiff cites paragraph 427 of the
Amended Complaint, which alleges that “MercyOne will be unjustly enriched unless

the OC is allowed to recover the damages MIC incurred by MercyOne’s failure to
pursue strategic affiliation with MIC.”
Applying the same standards for reviewing pleadings noted in the first section

of this Opinion (or Report and Recommendation), Plaintiff has sufficiently pled
unjust enrichment in the alternative to its breach of contract claim. While the unjust
enrichment count alleges the existence of an express contract and seeks to recover
fees paid under that contract, the claim of unjust enrichment is—as Plaintiff

recognizes—only available as alternative relief to the extent that the contract does
not apply to or cover certain subject matter. Thus, Plaintiff concedes the essential
argument Defendants make—that Plaintiff cannot have a claim for unjust

enrichment for conduct covered by a valid contract. That does not mean, however,
that no unjust enrichment claim is possible. It has been sufficiently pled in the
alternative to cover the possibility that the contract is ultimately limited in scope or
otherwise invalid. The question is whether there are any facts developed to support

its application—a question for summary judgment or trial.
C. Fraudulent Transfer and Preference Claims
Defendants’ final argument is that Plaintiff’s fraudulent conveyance,

preference, and voidable transfer claims are an improper repackaging of its breach
of contract claim. They argue that Plaintiff cannot affirm the applicability of the
contract, sue for its breach, and then seek to base a voidable transfer claim on

payments made under that contract. Plaintiff again asserts that all of the voidable
transfer claims are properly pled in the alternative.
Defendants’ arguments about voidable transfers between parties to a contract

lump together separate bankruptcy concepts—fraudulent conveyance, preferential
transfer, and other voidable transfers. These concepts are pleaded in separate counts:
Count I (Constructive Fraudulent Transfer under Bankruptcy Code § 548(a)(1)(B));
Counts II and III (Constructive Fraudulent Transfer and Insider Transfers under state

law using §§ 544, 550, and 551); Count IV (Preferential Transfers to Insiders under
Bankruptcy Code § 547). While Defendants refer to fraudulent transfer claims, they
appear to be challenging each of these counts.

1. Fraudulent Transfer – 11 U.S.C. § 548 (a)(1)(B) In order to recover on a constructive fraudulent transfer claim under Bankruptcy Code section 548(a)(1)(B), the claimant “must prove, by a preponderance of the evidence, that the payments to [the recipient defendant within

2 years of the petition date] were not made in exchange for reasonably equivalent
value.” Pummill v. Greensfelder, Hemker & Gale (In re Richards & Conovor Steel,
Co.), 267 B.R. 602, 612 (B.A.P. 8th Cir. 2001) (citing 11 U.S.C. § 548 (a)(1)(B))

(emphasis added). As a general matter, payments made for work done under a
contract are not fraudulent, as the contract terms—like the consideration provided
by each party—readily demonstrate reasonably equivalent value. See In re Endo Int’l

Plc, 674 B.R. 349, 412 (Bankr. S.D.N.Y. 2025) (“Abundant case law deems payment
of antecedent debt generally dispositive as to whether ‘fair consideration’ or
‘reasonably equivalent value’ has been received.”). However, these cases

acknowledge that there may be limited or unusual circumstances that avoid the
underlying contract or limit its scope and allow the court to consider whether the
payments were constructively fraudulent. See In re Cent. Ill. Coop., 526 B.R. 786,
791 (Bankr. C.D. Ill. 2015) (“It is widely recognized by courts that where a debtor

makes prepetition payments on a contractual debt, in order for those payments to be
avoidable as constructively fraudulent, it is necessary for the trustee to first avoid
the underlying contract[.]”). The basis for avoiding such a contract requires the

plaintiff to show lack of fair consideration or reasonably equivalent value. Again,
these issues raise questions of fact that are inappropriate for determination on a
motion to dismiss. See In re Endo Int’l Plc, 674 B.R. at 411 (“Whether fair
consideration or reasonably equivalent value has been given generally is an

inherently fact-driven inquiry and not subject to a mathematical formula.”). At this
stage, Plaintiff is entitled to plead the fraudulent transfer claims in the alternative.
See Cohen v. Ernst & Young LLP (In re Friedman’s, Inc.), 372 B.R. 530, 546 (Bankr.

S.D. Ga. 2007) (“[T]he fact that a fraudulent conveyance claim may arise out of a
common set of facts in which the elements of a breach of contract claim might also
exist does not prevent [a plaintiff] from pleading both claims”); Rizack v. Starr

Indemnity & Liab. Co. (In re Grandparents.com, Inc.), 614 B.R. 625, 631 (Bankr.
S.D. Fla. 2020) (“The existence of a binding contract does not foreclose a fraudulent
conveyance claim if the elements of the cause of action for constructive fraud are

met.”); Kipperman v. Onex Corp., 411 B.R. 805, 853 (N.D. Ga. 2009) (holding that
whether the defendants provided reasonably equivalent value to the debtor with
respect to payments made for services to be provided under the terms of a
management agreement created material issues of fact; the trustee plaintiff was not

barred as a matter of law from bringing the claim).
2. Fraudulent Transfers and Insider Transfers under State Law – 11 U.S.C.
§§ 544, 550, 551

Plaintiff has made similar fraudulent transfer claims under Iowa Code Chapter
684 using Bankruptcy Code §§ 544, 550, and 551. As this Court noted in a previous
decision:
The Bankruptcy Code allows a trustee to use non-bankruptcy law to
avoid certain transfers for the estate’s benefit. Under § 544(b)(1), “the
trustee may avoid any transfer of an interest of the debtor in property
or any obligation incurred by the debtor that is voidable under
applicable law by a creditor holding an unsecured claim. …” Thus,
“under § 544(b)(1), the trustee steps into the shoes of an actual
unsecured creditor holding an allowed claim and utilizes whatever state
or nonbankruptcy federal law remedies that particular creditor may
have.”
In re Walter, 462 B.R. 698, 704 (Bankr. N.D. Iowa 2011) (citing In re Porter, No. 07-
1012, 2009 WL 902662, at *18 (Bankr. D.S.D. Mar. 13, 2009)). Iowa Code Chapter

684 is Iowa’s enactment of the Uniform Voidable Transactions Act (“UVTA”). The
provisions of UVTA parallel those of § 548 and the same analysis applies under both
laws. Id. at 706 (citing In re Zeigler, 320 B.R. 362, 372 (Bankr. N.D. Ill. 2005) and

Kaler v. Red Rivier Commodities, Inc. (In re Sun Valley Prods., Inc.), 328 B.R. 147,
155–56 (Bankr. N.D. 2005)). Thus, a key part of the state law analysis is whether
payments were made in exchange for “reasonably equivalent value”. Id. at 708–09.
Again, lack of reasonably equivalent value has been alleged here—and presents a

factual question to be addressed later in the case. There is no basis for dismissal here.
3. Preferential Transfers § 547
A somewhat different rationale applies to the section 547 preference claim

(Count IV). Under section 547, a trustee may avoid transfers as preferences where
the transfers: (1) were made to or for the benefit of a creditor; (2) for or on account
of an antecedent debt owed by the debtor to the creditor; (3) made while the debtor
was insolvent (4) made on or within 90 days before the date of the filing of the

petition or made to an insider between ninety days and one year before the date of
the filing of the petition; and (6) the transfer enabled the creditor to receive more
than the creditor would have received as a distribution in a hypothetical Chapter 7

liquidation if the transfer had not been made. 11 U.S.C. § 547 (b). To the extent that
Defendants argue that Plaintiff cannot assert claims to avoid preferential transfers
where there is a contract, the Court rejects that argument. Contracts are a routine part

of most preference cases. As previously mentioned, one requirement of a preference
is that there is payment on an antecedent (previously existing) debt. In re Pippin, 46
B.R. 281, 283 (Bankr. W.D. La. 1984). A contract between the parties defines the

terms of most antecedent debt. Id. Thus, the existence of a contract does not in any
way prohibit a prima facie claim of preference.
Defendants raise section 547(c) in support of their argument. That section sets
out several affirmative defenses to preference actions, including contemporaneous

exchange for new value and payments in the ordinary course of business. 11 U.S.C.
§ 547 (c)(1), (2). Defendants are entitled to raise those defenses, if applicable, in their
answer to the Amended Complaint. The defenses, however, do not prohibit Plaintiff

from pleading such a case. Plaintiff has therefore sufficiently pled the preference
claims in the alternative.
III. CONCLUSION
For the aforementioned reasons, the Court concludes that the Amended

Complaint satisfies the requirements of Fed. R. Civ. P. 8 and Plaintiff’s unjust
enrichment, preferential transfer, and fraudulent transfer claims have been
sufficiently pled in the alternative.
IT IS THEREFORE ORDERED, Defendants’ Motion to Dismiss is
DENIED.

Ordered: Med
February 10, 2026 Thad J. Yollins
Chief Bankruptcy Judge

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