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Arizona Radiation Therapy Management Services Inc. v. Translation Research Management LLC

United States District Court, D. Arizona

October 22, 2015

Arizona Radiation Therapy Management Services Incorporated, Plaintiff,
Translation Research Management LLC, Defendant.



Defendant Translational Research Management, LLC filed a motion to dismiss. Doc. 24. The motion is fully briefed, and no party has requested oral argument. The Court will grant Defendant’s motion in part and deny it in part.[1]

I. Background.

In February of 2012, Arizona Radiation Therapy Management Services (“ARTMS”) engaged Translational Research Management (“TRM”) to find medical practitioners to carry out a cancer treatment research program. Doc. 1, ¶ 5. ARTMS agreed to advance TRM $6, 000 per practitioner to cover program set-up costs (“Credential Advances”). Id., ¶ 9. Credential Advances were to be repaid by TRM within six months, regardless of whether participating practitioners generated sufficient revenue to cover them. Id., ¶¶ 11, 13.

The research program generated additional fees and costs that were paid to ARTMS or TRM by the participating practitioners (“Research Fees”). Id., ¶ 15. TRM was required to deposit all Research Fees it received into an ARTMS account. Id., ¶ 15. ARTMS agreed to pay 50% of those Research Fees to TRM (“Service Fees”). Id. at 11. TRM was required to provide a monthly accounting of all Research Fees deposited, id., ¶ 16, as well as all Service Fees that should be paid to TRM, id. at 11-12. ARTMS terminated the contract on August 13, 2014. Id., ¶ 18. It now alleges that TRM failed to refund all Credential Advances and failed to deposit all Research Fees. Id., ¶ 23.

ARTMS filed its complaint on June 18, 2015, seeking payment of outstanding Credential Advances and Research Fees under four legal theories: (1) breach of contract; (2) promissory estoppel; (3) conversion; and (4) an accounting. Id., ¶¶ 20-41.

II. Legal Standard.

When analyzing a complaint for failure to state a claim under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Securities Litigation, 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged B but it has not ‘show[n]’ B ‘that the pleader is entitled to relief.’” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

III. Analysis.

Defendant argues that the Court should stay Count I pending mediation. Doc. 25 at 11-12. It asks the Court to dismiss Count II because an express contract exists between the parties. Id. at 5-6. It argues the Court should dismiss Count III because the complaint fails to plead conversion and the economic loss rule bars recovery. Id. at 6-10. Finally, it argues the Court should dismiss Count IV because actions for accountings are reserved for parties in a fiduciary relationship. Id. at 10-11.

A. Motion to Stay Contract Claim.

Defendant argues that the breach of contract claim should be stayed because the contract contains a mediation clause. Doc. 25 at 12. Defendant argues that because no mediation has occurred, the Court should stay the litigation and compel mediation. Id. Plaintiff responds that nothing in the contract “makes formal mediation mandatory, discretionary, or otherwise.” Doc. 26 at 9.

Defendant relies on United States v. Sundt Construction, No. CV-07-673-PHX-LOA, 2007 WL 1655976 (D. Ariz. June 7, 2007), where the mediation and arbitration provisions used words such as “shall” and provided substantial detail about which mediation rules to apply, which arbitration rules to apply if mediation failed, and who should hear the arbitration. Id. at *1. The contract also expressly provided that “[t]he party commencing the suit agrees to stay court proceedings pending arbitration under this Agreement.” Id. at *2.

The contract in this case includes only one relevant sentence: “In the event of any controversy or dispute related to or arising out of this Agreement, the parties agree to meet and confer in good faith to attempt to resolve the controversy or dispute without an adversary proceeding.” Doc. 1 at 18. This sentence lacks the detail and mandatory language found in Sundt. The sentence does not mention mediation, and it contains no agreement that the party commencing suit would stay the action pending mediation. What is more, Plaintiff’s response describes several communications in which ...

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