Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-01138/USCOURTS-azd-2_15-cv-01138-0/pdf.json

Parties Involved:
Arizona Radiation Therapy Management Services Incorporated
Plaintiff
Translation Research Management LLC
Defendant

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Arizona Radiation Therapy Management Services Incorporated, 

Plaintiff, 

v. 

Translation Research Management LLC, 

Defendant.

No. CV-15-01138-PHX-DGC

ORDER 

 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. 

 

1

 Plaintiffs’ memorandum does not follow the font and format requirements of LRCiv 7.1(b)(1). Plaintiff also failed to file a text-searchable version of its complaint as required by the Court. Plaintiffs’ counsel shall comply with the Court’s local rules and 

CMECF procedures in all future filings. Defendant has not complied with this Court’s order at Docket 10. Defense counsel shall comply with all Court orders in the future. 

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 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 

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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-PHXLOA, 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 Plaintiff 

sought Defendant’s agreement to pay the amounts owed, allegedly without success. 

Doc. 26 at 7-8. The Court will not stay Count I pending mediation. 

B. Count II – Promissory Estoppel. 

 Defendant argues that promissory estoppel cannot be pursued where there is an 

express contract covering the subject matter at issue. Doc. 25 at 5. Defendant also 

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argues that “ARTMS cannot establish it justifiably relied upon promises made by TRM 

outside of the Agreement.” Id. at 6. Plaintiff argues that “promissory estoppel ‘is a 

proper claim for relief as an alternative to the contract claim.’” Doc. 26 at 12 (citing 

Arok Constr. Co. v. Indian Constr. Serv., 848 P.2d 870, 878 (Ariz. Ct. App. 1993)). 

 “[A] promise which the promisor should reasonably expect to induce action or 

forbearance on the part of the promisee or a third person and which does induce such 

action or forbearance is binding if injustice can be avoided only by enforcement of the 

promise.” Restatement (Second) of Contracts § 90. Under Arizona law, “[t]here can be 

no implied contract where there is an express contract between the parties in reference to 

the same subject matter.” Chanay v. Chittenden, 563 P.2d 287, 290 (1977). Claims that 

Plaintiff relied upon promises outside the subject matter of the contract must be 

specifically plead. See Tiffany Inc. v. W.M.K. Transit Mix, Inc., 493 P.2d 1220, 1224 

(Ariz. Ct. App. 1972). 

 In Arok Construction, the parties disagreed on whether a contract existed and the 

court allowed a promissory estoppel claim “as an alternative to the contract claim.” Id. 

Here, Defendant does not dispute the existence of the contract. Promissory estoppel 

cannot be asserted, therefore, unless it is based on a promise outside the contract. See 

Chanay, 563 P.2d at 290. Plaintiff alleges no such extra-contract promise, but instead 

seeks to enforce the promises made in the agreement. See Doc. 1 ¶¶ 28-33 (alleging only 

that ARTMS breached promises made in the contract). Plaintiff has failed to plead any 

facts giving rise to a promissory estoppel claim. See Tiffany, 493 P.2d at 1224 (requiring 

that claims of reliance on promises outside the contract must be affirmatively pleaded). 

The Court will grant Defendant’s motion to dismiss Count II. 

 C. Count III – Conversion. 

Defendant argues that Plaintiff cannot establish the facts necessary for conversion 

of money. Doc. 25 at 6-8. Defendant also argues that the economic loss rule precludes 

conversion. Doc. 25 at 8-10. 

Conversion is “an act of wrongful dominion or control over personal property in 

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denial of or inconsistent with the rights of another.” Case Corp. v. Gehrke, 91 P.3d 362, 

365 (Ariz. Ct. App. 2004) (internal citation omitted). “To maintain an action for 

conversion, a plaintiff must have had the right to immediate possession of the personal 

property at the time of the alleged conversion.” Id. 

 Money is not the proper subject of a conversion claim when the claim is used 

merely “to collect on a debt that could be satisfied by money generally.” Id.; see also 

Autoville, Inc. v. Friedman, 510 P.2d 400, 403 (Ariz. 1973). “‘When there is no 

obligation to return the identical money, but only a relationship of debtor or creditor, an 

action for conversion of the funds representing the indebtedness will not lie against the 

debtor.’” Liberty Life Ins. Co. v. Myers, No. CV 10-2024-PHX-JAT, 2013 WL 530317, 

at *13 (D. Ariz. Feb. 12, 2013) (quoting Lyxell v. Vautrin, 604 F.2d 18, 21 (5th 

Cir.1979)). To maintain an action for conversion of money, therefore, a plaintiff must 

establish that “the money can be described, identified or segregated, and an obligation to 

treat it in a specific manner is established.” Gehrke, 91 P.3d at 365 (quotation marks and 

citation omitted). 

 Plaintiff has failed to state a claim for conversion. Plaintiff does not identify or 

describe specific funds held by Defendant, or allege that specific moneys were 

segregated. Plaintiff alleges categories of fees that were to be deposited in an account 

and the contractual obligations of Defendant, but does not allege the existence of specific 

moneys in the account. See Liberty, 2013 WL 530317 at *14 (allegation that $478,651 

remained in a trust as of 2008 adequately described the property for purposes of 

conversion). Plaintiff merely asks the Court to award “all unpaid Credentialing 

Advances and Research Fees.” Doc. 1 at 6. This is a claim for money where the “debt 

. . . could be satisfied by money generally.” See Liberty, 2013 WL 530317 at *13. 

D. Count IV – Accounting. 

 Defendant argues that the claim for an accounting should be dismissed because 

Plaintiff has failed to allege a breach of any fiduciary relationship. Doc. 25 at 10. 

“Parties to a fiduciary relationship have a right to an accounting.” Dooley v. O’Brien, 

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244 P.3d 586, 592 (Ariz. Ct. App. 2010). 

 Plaintiff does not allege a fiduciary relationship. The complaint refers only to a 

failure to “account for all proceeds received in connection with the Agreement.” Doc. 1, 

¶ 40. The parties’ agreement specifically states that they are not entering into a 

partnership or joint venture, which could give rise to fiduciary duties. Doc. 1 at 16. 

Although the parties’ contract states that Defendant will account for funds collected and 

deposited, Plaintiff cites no authority showing that such a contract term, in the absence of 

fiduciary duties, entitles Plaintiff to the remedy of an accounting. The Court will dismiss 

the claim for an accounting. 

E. Leave to Amend. 

 Plaintiff seeks leave to amend. This step potentially could have been avoided if 

Defendant had complied with the order at Docket 10. 

 The Court is concerned about motion practice resulting in unwarranted attorneys’ 

fees in this relatively modest case. Plaintiff seems to have whatever remedy it needs 

under the breach of contract claim, and the Court has difficulty understanding why 

further amendment would be justified, especially if it would be followed by another 

motion to dismiss. Plaintiff should raise this issue for discussion at the case management 

conference scheduled for November 10, 2015. 

IT IS ORDERED that Defendant’s motion to dismiss (Doc. 24) is granted in 

part and denied in part. Plaintiff’s claims for promissory estoppel, conversion, and an 

accounting are dismissed, but the request for a stay is denied. 

 Dated this 22nd day of October, 2015. 

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