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Cavan v. Maron

United States District Court, D. Arizona

August 22, 2016

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


          Paul G. Rosenblatt United States District Judge.

         Among the motions pending before the Court is Defendants’ Motion to Dismiss Counts I Through VI of Plaintiff’s Amended Complaint for Failure to State a Claim Pursuant to Rule 12(b)(6) and 9(b) (Doc. 32). Having considered the parties’ memoranda, the Court finds that the motion should be granted in part and denied in part.[1]


         According to the Amended Civil Complaint (“Amended Complaint”) (Doc. 31), the plaintiff, David Cavan, and the defendants, Robert Maron and Robert Maron, Inc., entered into an agreement in July 2007 (the “initial agreement”) under which the plaintiff agreed to purchase two rare watches from the 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 the defendants agreed to accept eighteen watches owned by the plaintiff, valued at $2, 295, 000, to be credited towards the purchase price of the two rare watches. The defendants subsequently provided an additional discount of $150, 000 towards the purchase price of the two watches and the plaintiff made an additional payment of $150, 000. This left the remaining balance due from the plaintiff towards the purchase of the two rare watches at $1, 304, 000 as of September 2010.

         The defendants did not deliver either the Patek 3449 or the Patek 2523 to the plaintiff and he alleges that the defendants sold one or both of these watches to another purchaser. In October 2011, the plaintiff requested that the defendants return to him the eighteen watches and his $150, 000 payment.

         In December 2011, as a result of negotiations through watch broker John Young who was representing the plaintiff, the parties entered into a written agreement to modify the initial 2007 agreement (“the modification agreement”); the modification agreement states that it superseded the original agreement. In the negotiations leading up to the modification agreement, Robert Maron told the plaintiff and John Young that the defendants had a different rare watch, a Patek Philippe Ref 2499J (“Patek 2499J”) worth more than $2, 000, 000. Pursuant to the modification agreement, the plaintiff was to receive a “Patek Philippe Ref 2499J 18K 1st Series watch No. 868244/665011, ” rather than the Patek 3449 and the Patek 2523, in consideration for the eighteen watches and the $150, 000 that the plaintiff had previously delivered to the defendants; the Patek 2499J was to be delivered to the plaintiff on or before January 20, 2012.

         Several days after the modification agreement was signed, the defendants delivered to the plaintiff a Patek 2499J. In April 2015, the plaintiff first became aware that the Patek 2499J may have been sold to him without its original dial; this awareness occurred when he considered selling the watch and had it examined by experts at an auction house who questioned the authenticity of the watch’s dial but could not determine definitively that the original dial had been replaced. The plaintiff then had the watch examined by Eric Tortella, a world renowned watch expert, who confirmed in a report that the original dial on the Patek 2499J had been replaced with an inferior dial; Tortella further informed the plaintiff that the Patek 2499J with the replaced dial was worth significantly less that the watch with its original dial.

         In September 2015, the plaintiff had watch broker John Young contact the defendants on his behalf. The broker informed the defendants that the Patek 2499J did not have the original Patek 2499J dial. Robert 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 2499J watch dial. In November 2015, Maron admitted he had switched the dial and, again, acknowledged he and Robert Maron, Inc. were responsible for delivering the original Patek 2499J dial to the plaintiff and promised to do so. The defendants did not deliver the original Patek 2499J dial to the plaintiff and have not returned the plaintiff’s eighteen watches or returned any money to the plaintiff.

         The plaintiff commenced this action against the defendants on December 21, 2015, four years after he had received the Patek 2499J. In response to the defendants’ motion to dismiss the original complaint, the Court entered an order on April 26, 2016 (Doc. 28) that granted the motion in part and denied it in part with leave to amend. The plaintiff filed his Amended Complaint on May 11, 2016, wherein he alleges claims for Breach of Contract (Count I), Breach of the Covenant of Good Faith and Fair Dealing (Count II), Breach of Fiduciary Duty (Count III), Negligent Misrepresentation (Count IV), Fraud (Count V), and Unjust Enrichment (Count VI). The defendants filed their pending motion to dismiss the entirety of the Amended Complaint on May 25, 2016.


         Although Arizona’s substantive law governs all of the claims in the plaintiff’s Amended Complaint, the Federal Rules of Civil Procedure govern the sufficiency of the Amended Complaint for purposes of the motion to dismiss. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th Cir.2003) (“The Federal Rules of Civil Procedure apply irrespective of the source of subject matter jurisdiction, and irrespective of whether the substantive law at issue is state or federal.”); Dunbar v. Wells Fargo Bank, NA, 709 F.3d 1254, 1257 (8th Cir.2013) (“In a diversity suit ... we apply federal pleading standards - Rules 8 and 12(b)(6) - to the state substantive law to determine if a complaint makes out a claim under state law.”) (internal brackets and quotation marks omitted).

         A. All Claims

         The defendants, in an argument that was not raised in their original motion to dismiss, initially argue that all of the claims in the Amended Complaint must be dismissed because the allegations of damages are purely speculative. When ruling on a motion to dismiss, the Court must “accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Applying that standard here, the Court concludes that the plaintiff has adequately alleged that he was damaged because the original dial on the Patek 2499J he received pursuant to the modification agreement had been replaced by an inferior dial and that his expert, Eric Tortella, had informed him that the watch with the replaced dial is worth significantly less than it would be if it had the original dial. Whether the substituted dial actually adversely affects the value of the watch is not a matter to be determined on a motion to dismiss.

         B. Breach of Contract Claim

         The gist of the plaintiff’s breach of contract claim is that the defendants materially breached the modification agreement by not providing the Patek 2499J with its original dial but rather with an inferior substituted dial. The defendants, in another argument that was not raised in their original motion to dismiss, argue in part that Count I must be dismissed for failure to state a claim because the Amended Complaint fails to allege that any express terms of the modification agreement were breached. The defendants contend that all the modification agreement required was the delivery of a Patek 2499J with movement 868244 and case 665011 and that was what was delivered to the plaintiff and that the agreement did not state that the Patek watch could not be modified.

         The Court concludes that Count I states a claim for breach of contract. The fact that the modification agreement did not expressly state that the Patek 2499J could not be in a modified condition is not dispositive of this issue. Under Arizona law, a contract must be read in light of what the parties intended, and “[t]he intention or meaning in a contract may be manifested either expressly or impliedly, and it is fundamental that terms which are plainly or necessarily implied in the language of a contract are as much a part of it as those which are expressed.” Demand v. Foley, 463 P.2d 851, 856 (Ariz.App.1970); accord, Zancanaro v. Cross, 339 P.2d 746, 749 (Ariz.1959) (“An implied promise arising out of the expressed provisions of the contract is as much a part of the contract as a written one, and is subject to the same penalties for breach.”) The Court, drawing on its judicial experience and common sense, Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), as well as drawing the reasonable inferences from the Amended Complaint in ...

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