Cavan v. Maron
182 F. Supp. 3d 954
D. Ariz.2016Background
- In July 2007 Cavan (Arizona) and Robert Marón/Robert Marón, Inc. (RMI, California) entered an agreement: Cavan traded 18 watches plus $150,000 credit toward two rare Patek Philippe watches; RMI was to deliver two specific watches but failed to do so.
- In December 2011 the parties executed a modification agreement (signed by Marón/RMI and faxed from Cavan in Arizona) substituting a Patek 2499J (2449J) to be delivered by Jan 20, 2012; RMI delivered a Patek 2499J on or before that date.
- In April–June 2015 Cavan discovered (via expert report) the delivered 2499J had a replaced inferior dial, materially lowering value; Marón had admitted switching the dial and promised to supply the original dial but never did.
- Cavan sued (Dec. 2015) for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligent misrepresentation, fraud, and unjust enrichment. Defendants moved to dismiss under Rule 12(b)(6) and 9(b); they also moved to file the contract exhibits under seal and sought judicial notice.
- The Court granted judicial notice of the agreements, denied the sealing request, applied Arizona choice-of-law rules and concluded Arizona law governs, and granted the dismissal motion in part and denied it in part (most dismissals without prejudice and with leave to amend).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | Arizona governs because agreements were negotiated/executed and Cavan resides in Arizona | California law applies (Defendants' preferred forum) | Court applied Restatement §188 and held Arizona has the most significant contacts; Arizona law governs |
| Breach of contract (individual liability) | Marón is personally liable because he negotiated and signed agreements and Cavan relied on him | Agreements show RMI (corporation) contracted with Cavan; Marón signed as RMI president | Breach claim must be against RMI; claim vs. Marón dismissed without prejudice with leave to amend |
| Covenant of good faith (individual v. corporate) | Marón breached implied covenant by delivering inferior watch/dial | Only RMI was party to contract; no basis for Marón individually | Claim against RMI survives; claim against Marón dismissed without prejudice with leave to amend |
| Fiduciary duty | Defendants held themselves out as expert dealers and thus owed fiduciary duties | No special confidential relationship alleged; mere trust/expertise insufficient | Fiduciary-duty claim dismissed (without prejudice) for failure to plead the necessary special relationship |
| Fraud & negligent misrepresentation (timeliness) | Discovery rule delayed accrual until Cavan learned in 2015; claims timely | Claims barred by statutes of limitations because watch delivered in 2012 | Court found plaintiff failed to plead facts showing timely discovery/diligence; claims dismissed without prejudice |
| Fraud & negligent misrepresentation (particularity) | Complaint alleges false promise to deliver original dial and concealment | Defendants contend Rule 9(b) not satisfied | Pleadings lack who/when/where/how for the alleged misrepresentations; claims dismissed without prejudice for lack of particularity |
| Unjust enrichment (statute of limitations) | Discovery rule tolls limitations until Cavan discovered the switched dial | Action filed beyond limitations period | Court assumed a three-year limitations period but found plaintiff failed to show discovery rule tolling; unjust enrichment dismissed without prejudice |
| Sealing of agreements | N/A | Agreements contain proprietary terms; should be filed under seal | Motion to file under seal denied; strong presumption of public access not overcome |
Key Cases Cited
- Waggoner v. Snow, 991 F.2d 1501 (9th Cir. 1993) (federal courts in diversity apply forum state choice-of-law rules)
- Swanson v. The Image Bank, Inc., 206 Ariz. 264, 77 P.3d 439 (Ariz. 2003) (Arizona follows Restatement for contract choice-of-law)
- Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 841 P.2d 198 (Ariz. 1992) (application of Restatement §188 factors)
- Chartone, Inc. v. Bernini, 207 Ariz. 162, 83 P.3d 1103 (Ariz. Ct. App. 2004) (elements required to state a breach of contract claim)
- Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (Ariz. 1986) (scope of implied covenant of good faith and fair dealing)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (Rule 9(b) particularity requirement applies to state-law fraud-related claims)
- Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003) (party seeking sealing must overcome presumption of public access)
- Kamakana v. City & County of Honolulu, 447 F.3d 1172 (9th Cir. 2006) (compelling reasons standard for sealing court records)