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Cavan v. Maron

United States District Court, D. Arizona

April 25, 2016

David V. Cavan, Plaintiff,
Robert Maron, et al., Defendants.



The Court has before it Defendants’ Motion to Dismiss Counts I through VI of Plaintiff’s Complaint for Failure to State a Claim Pursuant to Rule 12(b)(6) and 9(b) (Doc. 15), Defendants’ Request for Judicial Notice (Doc. 16), and Defendants’ Motion for Authorization to File Exhibits to Maron Declaration Under Seal (Doc. 17). The Court will grant in part and deny in part the motion to dismiss, will grant the request for judicial notice, and will deny the motion to file under seal.[1]


According to the Complaint, [2] Plaintiff, David Cavan, and Defendants, Robert Maron and Robert Maron Incorporated (“RMI”), entered into an agreement in July 2007 (the “initial agreement”) under which Cavan agreed to purchase two rare watches from Defendants: a Patek Philippe Ref 3449 (“Patek 3449”) for $1, 800, 000; and a Patek Philippe Ref 2523 (“Patek 2523”) for $2, 100, 000; and Defendants agreed to accept eighteen watches owned by Cavan, for a value of $2, 295, 000, to be credited towards the purchase price of the two rare watches. (Doc. 1 at 2-3.) Defendants subsequently provided an additional discount of $150, 000 towards the purchase price of the two watches and Cavan made an additional payment of $150, 000. (Id. at 3.) This left the remaining balance due from Cavan towards the purchase of the two rare watches at $1, 304, 000 as of September 2010. (Id.)

Defendants did not deliver either the Patek 3449 or the Patek 2523 to Cavan and Cavan alleges that Defendants sold one or both of these watches to another purchaser. (Id.) In October 2011, Cavan requested Defendants return to him the eighteen watches and his $150, 000 payment. (Id.)

In December 2011, Maron told Cavan that Defendants had a different rare watch, a Patek Philippe Ref 2449J 18K 1st Series (“Patek 2449J”) worth over $2, 000, 000. (Id. at 3-4.) Cavan and Defendants then entered into an agreement (the “modification agreement”) under which Cavan would receive the Patek 2449J, rather than the Patek 3449 and the Patek 2523, in consideration for the eighteen watches and $150, 000 Cavan had previously delivered to Defendants. The modification agreement was evidenced by a writing signed by Cavan and Maron in December 2011, and provided that the Patek 2449J was to be delivered to Cavan on or before January 20, 2012. (Id. at 4; see Doc. 19-1.)[3]

On or before January 20, 2012, Defendants delivered to Cavan a Patek 2449J watch. More than three years later, in April 2015, Cavan first became aware that the Patek 2449J may not have the original dial, so he had the watch examined and evaluated by a watch expert. (Id.). In a written report dated June 26, 2015, the expert confirmed that the original dial on the Patek 2449J had been replaced with an inferior dial. The Patek 2449J with the replaced dial is worth significantly less than the Patek 2449J with the original dial that had been promised under the modification agreement. (Id.)

In September 2015, Cavan had a watch broker contact Defendants on Cavan’s behalf. The broker informed Defendants that the Patek 2449J did not have the original Patek 2449J dial. Maron told the broker that he (Maron) was not sure what had happened but that he (Maron) would “take care of it” and replace the dial on the delivered watch with the original Patek 2449J dial. (Id.) In November 2015, Maron admitted he had switched the dial and, again, acknowledged he and RMI were responsible for delivering the original Patek 2449J dial to Cavan and promised to do so. (Id.) Defendants did not deliver the original Patek 2449J dial to Cavan and have not returned Cavan’s eighteen watches or returned any money to Cavan. (Id.)

On December 21, 2015, Cavan filed this action against Defendants, bringing claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligent misrepresentation, fraud, and unjust enrichment. (Doc. 1 at 5-8.) Defendants have moved to dismiss the Complaint. (Doc. 15.)


A. Choice of Law [4]

The parties disagree on the law applicable to this case, with Defendants arguing that California law applies (Doc. 15 at 15-16), and Cavan arguing that Arizona law applies (Doc. 24 at 5-6). Because the case is in this court based on diversity jurisdiction, the Court must apply Arizona’s choice of law provisions to resolve this conflict. See Waggoner v. Snow, 991 F.2d 1501, 1506 (9th Cir. 1993). In a contract action, Arizona courts follow the Restatement (Second) of Conflict of Laws (“Restatement”) to determine the applicable law. Swanson v. The Image Bank, Inc., 77 P.3d 439, 441 (Ariz. 2003); Cardon v. Cotton Lane Holdings, Inc., 841 P.2d 198, 202 (Ariz. 1992); see Bobbitt v. Milberg LLP, 801 F.3d 1066, 1070 (9th Cir. 2015).

Under the Restatement, the Court is to apply the law “of the state having the most significant relationship to the parties and the transaction.” Cardon, 841 P.2d at 202 (citing Restatement § 188). To determine whether Arizona or California has the most significant contacts to the parties and transactions, the Court considers (1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the residence, nationality, place of incorporation, and place of business of the parties. See Restatement § 188. “These contacts are to be evaluated according to their relative importance with respect to the particular issue.” Id. Further, if the place of negotiation and the place of performance are in the same state, the local law of that state will usually be applied (with exceptions inapplicable to the present case). See id.

In the present case, a fair reading of the Complaint demonstrates that the initial agreement was negotiated and executed in July 2007 in Phoenix, Arizona. (Doc. 1 at 2 (“On or around July 6, 2007, at a face to face meeting in Phoenix, Arizona, Cavan purchased two rare watches from Defendants”; and on that same date, “at a face to face meeting in Phoenix, Arizona, Defendants agreed to accept as trade eighteen watches from Plaintiff.”).) The modification agreement reached in 2011 was negotiated by Defendants and a third party negotiating on behalf of Cavan (see Doc. 24-1 at 2). It is not clear where these negotiations occurred. However, Cavan asserts that he executed the modification agreement in Arizona after it was faxed to him at his office in Scottsdale. (Doc. 24-1 at 2.) Cavan’s assertion is consistent with the copy of the modification agreement provided by Defendants, which indicates it was faxed by Cavan from Arizona on December 20, 2011, most likely after Cavan signed the agreement and for the purpose of sending a signed copy to Maron. (See Doc. 19-1 (fax stamp indicating faxed on “12- 20-2011” at “14:16:33” hours, from “Cavan” at the fax number “480-747-9424”).)

Although Maron states in his declaration that the agreement was reached and signed by both himself and Cavan at an “in-person meeting” in California, this is inconsistent with both the fax stamp on the agreement and Cavan’s declaration that states Cavan signed the agreement at his office in Scottsdale. Further, Maron states in his declaration that at this same in-person meeting he delivered to Cavan the Patek 2499J (Doc. 18 at 2), which is inconsistent with the terms of the modification agreement, which state that the watch is to be delivered to Cavan on or before January 20, 2012 (Doc. 191).

Based on the allegations in the Complaint, the agreements, and the declarations of Moran and Cavan, the Court finds that the initial agreement was negotiated and executed in Arizona, and that the modification agreement was partially executed in Arizona.

As to place of performance, the eighteen watches were delivered by Cavan and accepted by Defendants in Arizona, and the parties indicate that the Patek 2449J was delivered in California. Thus, performance by Cavan occurred in Arizona and performance by Defendants occurred in California.

The Court rejects Defendants’ suggestion that the Court look only to the modification agreement in determining whether California or Arizona has the most significant contacts. As noted, Cavan’s performance under the initial agreement - the delivery of the eighteen watches and payment of $150, 000 - became his performance under, and the primary consideration for, the modification agreement. Further, the contractual relationship between the parties began in Arizona with the initial agreement, which was negotiated and executed in Arizona, and the subsequent modification agreement flowed from and arose out of the initial agreement. Thus, the ...

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