Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-02586/USCOURTS-azd-2_15-cv-02586-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

David V. Cavan, 

Plaintiff, 

v. 

Robert Maron, et al., 

Defendants.

No. CV-15-02586-PHX-PGR

ORDER 

 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

 

Background

 According to the Complaint,2 Plaintiff, David Cavan, and Defendants, Robert 

 

1

 The Court finds that oral argument would not assist in resolving this matter and 

accordingly finds the pending motions suitable for decision without oral argument. See

LRCiv 7.2(f); Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 

1998). 

2

 In ruling on the motion to dismiss, the Court “accept[s] all factual allegations in 

the complaint as true and construe[s] the pleadings in the light most favorable to the 

nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 1 of 14
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

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 

3

 Defendants have requested the Court take judicial notice of the initial agreement 

(Doc. 19) and the modification agreement (Doc. 19-1), both of which are referenced in 

the Complaint. Cavan has not opposed the request. The Court will, accordingly, grant 

Defendants’ Request for Judicial Notice (Doc. 16). 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 2 of 14
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

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.) 

Discussion

A. Choice of Law4

 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 

 

4

 In deciding the choice of law issue, the Court has considered the declarations of 

Cavan (Doc. 24-1) and Maron (Doc. 18), and the exhibits to Maron’s Declaration (Docs. 

19, 19-1), in addition to the Complaint (Doc. 1). 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 3 of 14
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

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-

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 4 of 14
- 5 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

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 Court looks to 

both the initial agreement and the modification agreement in determining which state has 

the most significant contacts with the parties and the transactions. 

 Finally, as to the residence, place of incorporation, and place of business of the 

parties, according to the Complaint, Cavan is a citizen of Arizona; Moran is a citizen of 

California; and RMI is a California corporation with its principal place of business in 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 5 of 14
- 6 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

California. 

 The Court finds, based on these factors, that Arizona has the most significant 

contacts. Accordingly, the Court will apply Arizona law. 

B. Motion to Dismiss

1. Count I - Breach of Contract

 To maintain a claim for breach of contract, a plaintiff must demonstrate 

(1) the existence of a contract, (2) breach of the contract, and (3) resulting damages. See 

Chartone, Inc. v. Bernini, 83 P.3d 1103, 1111 (Ariz. Ct. App. 2004). Here, the 

Complaint alleges that both of the Defendants “materially breached the agreement to 

provide the Patek Ref 2499J by not providing the original dial and, instead, delivering the 

Inferior Substituted Watch to Plaintiff Cavan.” (Doc. 1 at 5.) However, the agreements 

themselves demonstrate that the only parties to the agreements are RMI and Cavan. 

(Docs. 19 and 19-1.) The initial agreement is on what appears to be an invoice, which 

has across the top “Robert Maron, Inc., Important Wristwatches” and is signed by Maron. 

(Doc. 19.) The modification agreement is on what appears to be letterhead, with “Robert 

Maron, Important Wristwatches” across the top; is signed by “Robert Maron, President, 

Robert Maron, Inc.”; and, on the bottom in small print the designation “Robert Maron, 

Inc.” The agreements thus demonstrate that RMI entered a contract with Cavan. 

 Cavan contends that it was his understanding that he was negotiating with Maron 

both on Maron’s behalf and on behalf of RMI, and that he trusted and relied on Maron 

and his expertise in entering the agreements. (Doc. 24 at 6-7; Doc. 24-1 at 2-3.) The 

allegations of the Complaint do not, however, demonstrate how or why Moran, who 

signed the initial agreement, which was on an RMI invoice, and who signed the 

modification agreement as president of RMI, would be responsible in his individual 

capacity for breaching the agreement. The Court will, accordingly, dismiss Moran from 

the breach of contract claim. Because Cavan may be able to correct the deficiencies in 

the claim, dismissal will be without prejudice and Cavan will be given leave to amend. 

 2. Count II - Breach of Covenant of Good Faith and Fair Dealing

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 6 of 14
- 7 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 “Arizona law recognizes that a party can breach the implied covenant of good 

faith and fair dealing both by exercising express discretion in a way inconsistent with a 

party’s reasonable expectations and by acting in ways not expressly excluded by the 

contract’s terms but which nevertheless bear adversely on the party’s reasonably 

expected benefits of the bargain.” Bike Fashion Corp. v. Kramer, 46 P.3d 431, 435 (Ariz. 

Ct. App. 2002); see Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986) (“The essence 

of that duty is that neither party will act to impair the right of the other to receive the 

benefits which flow from their agreement or contractual relationship.”) 

 To state a claim for breach of the covenant of good faith and fair dealing against 

Moran, the Complaint must first demonstrate the existence of a contractual obligation on 

the part of Moran. See Rawlings, 726 P.2d at 569 (“The duty arises by virtue of a 

contractual relationship.”). As discussed above, the Complaint does not include 

allegations demonstrating that Moran in his individual capacity was a party to, or 

otherwise can be held responsible for obligations owed under, the modification 

agreement. Accordingly, the Court will dismiss this claim as to Moran. However, as 

with the breach of contract claim, Cavan may be able to correct the deficiencies in the 

claim as to Moran. Therefore, dismissal will be without prejudice and Cavan will be 

given leave to amend. 

 As to RMI, a fair reading of the allegations in the Complaint demonstrates (1) that 

a contractual relationship existed between RMI and Cavan; (2) that RMI was obligated 

under the agreement to deliver the Patek 2449J with the original dial; (3) that RMI 

delivered the Patek 2449J with the wrong dial; (4) that RMI knew that it delivered a 

Patek 2449J with the wrong dial but did not inform Cavan that it had the wrong dial; and 

(5) that by delivering the Patek 2449J with the wrong dial, RMI either intended to injure 

Cavan or acted with reckless disregard as to such injury. The allegations demonstrate 

that RMI acted to impair the right of Cavan to receive the reasonably expected benefit of 

the agreement and are thus sufficient to state a claim for breach of the covenant of good 

faith and fair dealing as against RMI. 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 7 of 14
- 8 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 3. Count III – Breach of Fiduciary Duty

 Defendants argue that the Complaint fails to state a claim for breach of fiduciary 

duty because Defendants did not owe Cavan a fiduciary duty. 

 Under Arizona law, a “fiduciary relationship is a confidential relationship whose 

attributes include ‘great intimacy, disclosure of secrets, [or] intrusting of power.” 

Standard Chartered PLC v. Price Waterhouse, 945 P.2d 317, 335 (Ariz. Ct. App. 1996) 

(citation and internal quotations omitted) (alteration in original). ). “Mere trust in 

another’s competence or integrity does not suffice; ‘peculiar reliance in the 

trustworthiness of another’ is required.” Id. (citation omitted). “In a fiduciary 

relationship, the fiduciary holds ‘superiority of position’ over the beneficiary. This 

superiority of position may be demonstrated in material aspects of the transaction at issue 

by a ‘substitution of [the fiduciary's] will.’” Id. (citations omitted). Further, reliance on 

another’s superior knowledge can establish a fiduciary relationship where “the 

knowledge is of a kind beyond the fair and reasonable reach of the alleged beneficiary 

and inaccessible to the alleged beneficiary through the exercise of reasonable diligence.” 

Id. at 336. 

 The Complaint alleges that Defendants represented themselves to Cavan “as watch 

dealers with significant rare watch expertise, who acknowledged and accepted receipt of 

watches valued at $2,295,000.00 and $150,000 cash” from Cavan and that, therefore, 

“Defendants owed Plaintiff Cavan a fiduciary duty regarding the purchase of the Patek 

Ref 2449J.” These allegations are insufficient to demonstrate that Defendants owed a 

fiduciary duty to Cavan. For example, there is no allegation in the Complaint of great 

intimacy, disclosure of secrets, or the entrusting of power; that Defendants’ knowledge 

was superior to that of Cavan’s; of the substitution of Defendants’ will for that of Cavan; 

or that Defendants had superior knowledge “of a kind beyond the fair and reasonable 

reach” of Cavan and inaccessible to Cavan “through the exercise of reasonable 

diligence.” Standard Chartered, 945 P.2d at 335-36. The Court will therefore dismiss 

the breach of fiduciary duty claim. However, because Cavan may be able to correct the 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 8 of 14
- 9 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

deficiencies in the claim, dismissal will be without prejudice and Cavan will be given 

leave to amend. 

 4. Counts IV and V – Negligent Misrepresentation and Fraud

 Defendants argue that Cavan’s Negligent Misrepresentation and Fraud claims are 

subject to dismissal because (1) the claims are barred by the respective statutes of 

limitations, and (2) the Complaint fails to plead the claims with the required specificity. 

 a. Statute of Limitations

 In Arizona, the statute of limitations for fraud is three years, see A.R.S. § 12-

543(3), and for negligent misrepresentation is two years, Hullett v. Cousin, 63 P.3d 1029, 

1034 (Ariz. 2003) (citing A.R.S. § 12–542). The statute of limitations begins to run for 

both types of claims when the plaintiff knew or through reasonable diligence could have 

learned of the fraud or the misrepresentation. Coronado Dev. Corp. v. Superior Court of 

Arizona In & For Cochise Cty., 678 P.2d 535, 537 (Ariz. Ct. App. 1984) (fraud); Barnett 

v. Lincoln Nat. Life Ins. Co., 2014 WL 4259482, at *9 (D. Ariz. 2014) (negligent 

misrepresentation); CDT, Inc. v. Addison, Roberts & Ludwig, C.P.A., P.C., 7 P.3d 979, 

982 (Ariz. Ct. App. 2000) (“Under the common law ‘discovery rule,’ ‘a cause of action 

does not accrue until the plaintiff knows or with reasonable diligence should know the 

facts underlying the cause.’”) (citations omitted). “The burden of establishing that the 

discovery rule applies to delay the statute of limitations rest[s] on plaintiff.” Logerquist 

v. Danforth, 932 P.2d 281, 284 (Ariz. Ct. App. 1996). 

 As Defendants argue, the Complaint in this case shows that the misrepresentation 

and fraud claims would be barred without the benefit of the discovery rule because the 

allegations in the Complaint and the modification agreement indicate that the watch was 

delivered on or before January 20, 2012, more than three years before his action was filed 

on December 21, 2015. Thus, Cavan has the burden of demonstrating that the discovery 

rule applies. 

 Defendants argue that Cavan must plead facts in his complaint to demonstrate 

applicability of the discovery rule and that Cavan has failed to do so. Cavan responds by 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 9 of 14
- 10 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

pointing to paragraphs 21 and 22 of the Complaint and contends that he has met his 

burden for application of the discovery rule based on these paragraphs. The Court 

disagrees. These paragraphs merely state that in April 2015, “Plaintiff Cavan first 

became aware that the [delivered watch] may not have the original dial, so Plaintiff 

Cavan, at substantial expense, had the watch examined and evaluated by [a] watch 

expert”; and that, in the expert’s report of June 26, 2015, the expert “confirmed that the 

original dial on the Patek Ref 2499J had been replaced with an inferior dial.” (Doc. 1 at 

4, ¶¶ 21, 22.) This is insufficient to demonstrate “(1) the time and manner of discovery 

and (2) the inability to have made earlier discovery despite reasonable diligence.” Fox v. 

Ethicon Endo-Surgery, Inc., 110 P.3d 914, 921 (Cal. 2005) (citations omitted) (emphasis 

in original). 

 Cavan’s declaration5

 does provide additional information, explaining why Cavan 

did not discover that the watch did not have the original dial when he first received the 

watch; why and when he first suspected that the watch did not have the original dial; and 

how and when he confirmed that the watch did not have the original dial. (See Doc. 24-1 

at 3-4.) The declaration does not, however, explain how Cavan exercised reasonable 

diligence when he did not obtain an independent expert evaluation of the watch until 

more than three years after he received the watch, particularly in light of his assertion that 

he has “relatively limited expertise.” (Doc. 24-1 at 3.) 

 In sum, Cavan has not met his burden of establishing applicability of the discovery 

rule. The fraud and negligent misrepresentation claims will therefore be dismissed. 

However, because Cavan may be able to amend the complaint to meet his burden, 

dismissal will be without prejudice and Cavan will be given leave to amend. 

 b. Rule 9(b) Particularly Requirement 

 Both negligent misrepresentation and fraud claims must be pled with particularity 

under Federal Rule of Civil Procedure 9(b). 389 Orange St. Partners v. Arnold, 179 F.3d 

 

5

 For purposes of this pending motion to dismiss, the Court assumes, without 

deciding, that it can look outside the Complaint to determine whether Cavan has met his 

burden for application of the discovery rule. 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 10 of 14
- 11 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

656, 663 (9th Cir. 1999) (requiring state law claim for fraudulent concealment to be pled 

with particularity under Rule 9(b)); Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 

(9th Cir. 2003) (“It is established law, in this circuit and elsewhere, that Rule 9(b)’s 

particularity requirement applies to state-law causes of action.”); Neilson v. Union Bank 

of Cal., N.A., 290 F.Supp.2d 1101, 1141 (C.D. Cal. 2003) (“It is well established in the 

Ninth Circuit that both claims for fraud and negligent misrepresentation must meet Rule 

9(b)’s particularity requirements.”). 

 Rule 9(b) requires a plaintiff to “state with particularity the circumstances 

constituting the fraud or mistake.” Fed. R. Civ. P. 9(b). To meet this requirement, the 

circumstances constituting the alleged fraud must “be specific enough to give defendants 

notice of the particular misconduct ... so that they can defend against the charge and not 

just deny that they have done anything wrong.” Vess v. Ciba-Geigy Corp. USA, 317 

F.3d 1097, 1106 (9th Cir. 2003) (citations and internal quotation marks omitted). The 

allegations must include “the who, what, when, where, and how” of the misconduct 

charged and “must set forth more than the neutral facts necessary to identify the 

transaction. The plaintiff must set forth what is false or misleading about a statement, and 

why it is false.” Id.

 Cavan contends that the Complaint meets the particularity requirement, citing 

paragraphs 20, 44, 51, 53, and 54 of the Complaint. These paragraphs state (1) that 

Maron represented to Cavan that Defendants would deliver to Cavan an original Patek 

2499J valued at substantially over $2,000,000; (2) that Defendants delivered a Patek 

2499J to Cavan that was not the Patek 2499J previously described to Cavan in that the 

original dial had been replaced with an inferior dial; (3) that Defendants knew that the 

Patek 2499J delivered to Cavan did not have the original dial; (4) that Defendants had 

replaced the original dial with an inferior dial in the hopes that Cavan would not discover 

that the delivered 2499J had the wrong dial. (Doc. 1 at ¶¶ 20, 44, 51, 53, 54.) Although 

the allegations provide details regarding the circumstances of the alleged fraud, missing 

from the Complaint are details regarding the when, where, and how the representation 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 11 of 14
- 12 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

was made by Maron that Defendants would deliver to Cavan an original Patek 2449J 

valued at substantially more than $2,000,000. Therefore, the Court will dismiss the fraud 

and negligent misrepresentation claims for this additional reason. However, because 

Cavan may be able to correct this deficiency, dismissal will be without prejudice and 

Cavan will be given leave to amend. 

 c. Punitive Damages

 Defendants argue that the allegations in the Complaint are insufficient to create an 

entitlement to punitive damages. It is the Court’s policy to resolve the issue of the 

propriety of punitive damages through the resolution of objections to jury instructions 

and/or through the resolution of a motion for judgment as a matter of law pursuant to 

Fed. R. Civ. P. 50. Therefore, the Court will deny without prejudice dismissal of the 

request for punitive damages. 

 5. Count VI – Unjust Enrichment

 Defendants argue that the unjust enrichment claim is barred by a two-year statute 

of limitations. Cavan argues that a three-year statute of limitations applies to his unjust 

enrichment claim. (See Doc. 24 at 10-11 (citing A.R. S. § 12-543(1).) 

 There appears to be a conflict in Arizona as to the length of the limitations period 

for an unjust enrichment claim, with some cases citing A.R.S. § 12-550 for a four-year 

limitations period, and other cases citing A.R.S. § 12-543(1) for a three-year limitations 

period. See, e.g., Rzendzian v. Marshall & Ilsley Bank, 2014 WL 3610897, at *4 (Ariz. 

Ct. App. 2014) (citing § 12-550 for four years); San Manuel Copper Corp. v. Redmond, 

445 P.2d 162, 166 (Ariz. Ct. App. 1968) (same); Costanzo v. Stewart, 453 P.2d 526, 529 

(Ariz. Ct. App. 1969) (citing A.R.S. § 12-543 for three years); see also Atkins v. Calypso 

Sys., Inc., 2015 WL 5856881, at *9 (D. Ariz. 2015) (recognizing that the limitations 

period is three or four years). The Court will assume that Cavan is correct and that the 

limitations period is three years. 

 Cavan does not deny that he filed this action more than three years after he 

received the watch, but argues that the statute of limitations was tolled until he 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 12 of 14
- 13 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

discovered that the watch did not have the original dial. The Court agrees that the 

discovery rule may apply to Cavan’s unjust enrichment claim, which alleges that 

Defendants switched the dial on the watch in the hopes that Cavan would not discover 

that the watch did not have the original dial. See Rzendzian v. Marshall & Ilsley Bank, 

2014 WL 3610897, at *4 (Ariz. Ct. App. 2014) (applying discovery rule to unjust 

enrichment claim); see also Mohave Elec. Co-op., Inc. v. Byers, 189 Ariz. 292, 310, 942 

P.2d 451, 469 (Ct. App. 1997) (“Generally, wrongful concealment will toll the Statute of 

Limitations.”) (citing Ulibarri v. Gerstenberger, 178 Ariz. 151, 159, 871 P.2d 698, 706, 

(App.1994)). However, as noted above, Cavan has not met his burden of establishing 

applicability of the discovery rule. Because Cavan may be able to amend the complaint 

to meet his burden, dismissal will be without prejudice and Cavan will be given leave to 

amend. 

C. Motion to File under Seal 

 Defendants move to file the initial agreement and modification agreement under 

seal. The Court will deny the motion. 

 There is a strong presumption in favor of public access to papers filed in the 

district court. See Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995). A party 

seeking to file materials under seal bears the burden of overcoming that presumption by 

showing that the materials are deserving of confidentiality. See Foltz v. State Farm Mut. 

Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2005). Specifically, a party must “articulate 

compelling reasons supported by specific factual findings that outweigh the general 

history of access and the public policies favoring disclosure.” Kamakana, City and 

County of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006) (internal citations omitted). 

 Here, Defendants make only general assertions that the agreements contain “terms 

of business that are proprietary to RMI” that “RMI uses in carrying out its business,” and 

that the public disclosure of the agreements could “potentially harm RMI” and be 

“damaging to RMI.” Moreover, although the modification agreement does state that the 

terms of the “settlement” agreement are to be kept confidential, the initial agreement 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 13 of 14
- 14 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

contains no indication that it was to be kept confidential. 

 Neither Defendants’ general assertions nor the terms of the agreements themselves 

overcome the presumption in favor of public access to court documents. (Doc. 17 at 3; 

Doc. 18 at 2-3.) Accordingly, Defendants’ motion to file under seal will be denied. 

 IT IS ORDERED that 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) is granted in part and denied in part as follows: 

 The breach of contract and breach of the covenant of good faith and fair 

dealing claims against Moran are dismissed without prejudice and with leave to 

amend. 

 The breach of fiduciary duty, negligent misrepresentation, fraud, and unjust 

enrichment claims against Moran and RMI are dismissed without prejudice and 

with leave to amend. 

 The Motion to Dismiss is otherwise denied. 

 IT IS FURTHER ORDERED that Plaintiff may file an amended complaint no 

later than May 13, 2016. 

 IT IS FURTHER ORDERED that Defendant’s Request for Judicial Notice in 

Support of Motion to Dismiss (Doc. 16) is granted. 

 IT IS FURTHER ORDERED that the Motion for Authorization to File Exhibits to 

Maron Declaration Under Seal (Doc. 17) is denied. 

 IT IS FURTHER ORDERED that the Clerk of the Court shall unseal and file 

Exhibits A and B to Maron Declaration (Doc. 19, Doc. 19-1). 

 Dated this 25th day of April, 2016. 

Case 2:15-cv-02586-PGR Document 28 Filed 04/26/16 Page 14 of 14