Washington International Insurance Company, Plaintiff,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-1174

Washington International Insurance Company,
Plaintiff,

vs.

Hannaya Health Care Inc., et al., defendants and third-party plaintiffs,
Appellants,

vs.

State of Minnesota, third-party defendant,
Respondent.

Filed March 16, 2020
Affirmed
Slieter, Judge

Hennepin County District Court
File No. 27-CV-18-9223

Daniel L. M. Kennedy, Kennedy & Cain PLLC, Minneapolis, Minnesota (for appellants)

Keith Ellison, Attorney General, Drew Bredeson, Assistant Attorney General, St. Paul,
Minnesota (for respondent)

Considered and decided by Bjorkman, Presiding Judge; Florey, Judge; and Slieter,
Judge.

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U N P U B L I S H E D O P I N I O N
SLIETER, Judge
Appellants challenge the dismissal of their claims for breach of contract and unjust
enrichment, arguing that the district court erred by determining that: (1) appellants failed
to identify a contractual agreement breached by respondent; (2) the doctrine o f unjust
enrichment does not apply; and (3) the claims were asserted against the wrong party.
Because the district court correctly concluded that no contract existed to be brea ched and
the doctrine of unjust enrichment does not apply, we affirm.
FACTS
Appellant Ahmed Abdi Jama is the owner of appellant Hannaya Health Care Inc.
which, when operational, employed personal-care attendants (PCAs) . In 2012, Hannaya
obtained a $50,000 surety bond issued by Washington International Insurance Company,
as required by Minn. Stat. § 256B.0659, subd. 21(2) (2018).1 Jama has agreed to indemnify
Hannaya’s obligations pursuant to the terms of the bond.
In February 2015, the Minnesota Department of Human Services (DHS)
Surveillance and Integrity Review Section (SIRS) sent Hannaya a notice of agency action.
In the notice, SIRS informed Hannaya that Hannaya received overpayments totaling
$92,847.53 for periods when it did not have a supervising qualified professional overseeing
the PCAs, and also for PCA services that Hannaya billed for but did not provide. In July

1 While section 256B.0659, subdivision 21(2), has been amended twice since 2012, neither
amendment is relevant to the present matter. 2013 Minn. Laws ch. 108, art 5, § 11 at 136;
2014 Minn. Laws ch. 291, art. 10, § 3, at 148.

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2015, DHS sent Hannaya notice that DHS was withdrawing the February 2015 notice of
agency action, an d instead would begin withholding all Minnesota Health Care Program
payments due to a credible allegation of fraud.
In January 2016, the state filed a criminal complaint against Hannaya, charging it
with ten counts of theft by false representation. In the criminal complaint, the state alleged
that Hannaya fraudulently obtained $31,956.35. DHS requested restitution in the criminal
matter in the amount of $112,708.35. Pursuant to a plea agreement, Hannaya pleaded
guilty to two counts of theft by false representation, and the state dismissed the remaining
eight counts. Hannaya also agreed to pay $31,956.35 in r estitution. The district court
sentenced Hannaya in accordance with the terms of the plea agreement and ordered
Hannaya to pay restitution in the amount of $31,956.35 to the Minnesota Medicaid Fraud
Control Unit, within five years.
In December 2016, DHS submitted a claim on Hannaya’s bond to Washington
International in the amount of $41,928.76. Washington International paid the amount
demanded against Hannaya’s bond, and initiated the present action against Hannaya and
Jama for breach of their obligations to indemnify Washington International in accordance
with the terms of the bond. Hannaya and Jama filed an answer and a third-party complaint
against the state alleging breach of contract and unjust enrichment . The district court
granted Washington Inter national summary judgment against Hannaya and Jama in the
principal amount of $41,928.76 plus $5,100.38 in interest.
Following the grant of summary judgment to Washington International, the state
moved to dismiss Hannaya and Jama’s third-party complaint for failing to state claims for

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which relief may be granted pursuant to Minn. R. Civ. P. 12.02(e) . The district court
granted the state’s motion and dismissed Hannaya and Jama’s third-party complaint. This
appeal follows.
D E C I S I O N
Appellants assert that the district court erred by dismis sing their complaint for
failing to state claims for which relief may be granted . We review whether a complaint
sets forth a legally sufficient claim for relief de novo, accepting the facts alleged in the
complaint as true and construing all reasonable inferences in favor of the nonmoving party.
Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014).
Breach of Contract
Appellants argue that the state breached the restitution order imposed as part of the
criminal sentence against Hannaya by collecting additional civil damages against their
bond. “In order to state a claim for breach of contract, the plaintiff must show (1) formation
of a contract, (2) performance by plaintiff of any conditions precedent to his right to
demand performance by the defendant, and (3) breach of the contract by defendant.” Park
Nicollet Clinic v. Hamann , 808 N.W.2d 828, 833 (Minn. 2011). The district court found
that appellants failed to identify the existence of a contract bet ween themselves and the
state, and dismissed their claim.
Appellants argue that because DHS sought to recover on the bond under the same
theory of liability for which they were sentenced , any additional recovery violated the
terms of their plea agreement. However, appellants’ third-party complaint does not allege
the existence of a specific contract that the state breached nor, therefore, any specific

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contractual provision. Instead, the third party complaint states that “DHS has made an
improper claim against the [s]urety [b]ond and has received payment on that claim.”
The district court asked appellants three times during argument on the state’s
motion: “Is there anything in the record that shows. . . the plea agreement was that the
[s]tate and all of its entities and actors therein were providing a release from any civil claim
for recovery or relief against the defendants?” Each time in response to the district court’s
questioning, appellants failed to identify any such term in the plea agreement. Instead, they
repeatedly argued that their agreement to pay restitution should have extinguished any
additional liability, but could not identify any contract that required such a result.
In addition to appellant s’ failure to identify a contract breached by th e state, the
terms of the bond provide that if Hannaya “violate[s] Minnesota Statutes, Chapter 256B,
or any rules made by the commissioner or other legal obligations arising out of [its] conduct
as a PCA agency, the [c]ommissioner of [DHS] shall have, in addition to all other legal
remedies, a right of action on this bond.” ( Emphasis added.) Because appellants did not
allege a specific agreement that the state violated by collecting on the bond, and because
the terms of the bond provide for recovery thereon independent of all other legal remedies,
the district court did not err by dismissing appellants’ claim for breach of contract for
failing to state a claim pursuant to Minn. R. Civ. P. 12.02(e).
Unjust Enrichment
Appellants next argue that the distric t court erred by dismissing their claim for
unjust enrichment because it would be inequitable to allow the state to recover against the
bond for the same damages that appellants were ordered to pay criminal restitution. “To

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establish an unjust enrichment claim, the claimant must show that the defendant has
knowingly received or obtained something of value for which the defendant in equity and
good conscience should pay.” Caldas v. Affordable Granite & Stone, Inc. , 820 N.W.2d
826, 838 (Minn. 2012) (quotation omitted). Unjust enrichment is a form of quasi-contract
and therefore does not apply when an enforceable contract is applicable. Id. A plaintiff
must show that the defendant was illegally or unlawfully enriched. Id.
Hannaya pleaded guilty to two counts of theft by false representation for the periods
that it submitted claims for PCA services without having a supervising qualified
professional. Minn. Stat. § 256B.0659, sub d. 14 (a) (2018), requires all PCAs to be
supervised by a qual ified professional. As set forth above, by the express terms of the
bond, if Hannaya violates chapter 256B, the commissioner of DHS has a right to collect on
the bond, in addition to all other available remedies. Therefore, the state’s recovery against
the bond was in accordance with the terms of a valid agreement and the equitable doctrine
of unjust enrichment does not apply. Id. On this basis, the distri ct court did not err by
dismissing appellant’s cause of action for unjust enrichment for failing to state a claim
pursuant to Minn. R. Civ. P. 12.02(e).
Proper Party
Because we affirm the district court’s dismissal of all of the claims in appellants’
third-party complaint, we do not reach the issue of whether ap pellants incorrectly named
the State of Minnesota as third-party defendant.
Affirmed.