Arnold & Associates, Inc. v. Misys Healthcare Systems, No. CIV-03-0287-PHX-ROS (D. Ariz. 7/31/2003)

• Decision Date: 31 July 2003
• Docket Number: No. CIV-03-0287-PHX-ROS.,CIV-03-0287-PHX-ROS.
• Parties: Arnold & Associates, Inc., an Arizona corporation, Plaintiff, v. Misys Healthcare Systems, a division of Misys, PLC; Misys Physician Systems, LLC, a North Carolina corporation, Defendants.
• Court: U.S. District Court — District of Arizona

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Arnold & Associates, Inc., an Arizona corporation, Plaintiff, v. Misys Healthcare Systems, a division of Misys, PLC; Misys Physician Systems, LLC, a North Carolina corporation, Defendants.

No. CIV-03-0287-PHX-ROS.

United States District Court, D. Arizona.

July 31, 2003.

ORDER

ROSLYN O. SILVER, District Judge.

This action arises out of a business dispute between Plaintiff Arnold & Associates, Inc. ("Plaintiff") and Defendant Misys Physician Systems, LLC ("Defendant").¹ Plaintiff asserts the existence of an oral contract obligating Defendant to retain Plaintiff as its insurance broker of record for a period of 18 months. When Defendant allegedly terminated the broker relationship prematurely, Plaintiff filed suit in Arizona state court seeking damages. Defendant removed to this Court on diversity and now moves to dismiss. For the reasons stated below, the Court will grant in part and deny in part Defendant's Motion to Dismiss.

BACKGROUND

A. Factual Background

The following facts from the Complaint (Doc. #1 at 9) are construed in a light most Favorable to Plaintiff. Plaintiff is an Arizona corporation in the business of providing insurance brokerage services. Compl. ¶ 3. Defendant is a North Carolina based healthcare company with operations in Arizona. Id. In the fall of 2002, Defendant approached Plaintiff for help in obtaining more favorable insurance coverage. Id. ¶ 4. In exchange for Plaintiff's efforts, Defendant promised that it would retain Plaintiff as its broker of record with regard to a particular insurance program for a minimum of 18 months, commencing in November 2002. Id. The broker of record status entitled Plaintiff to receive commissions on the insurance arrangements it procured for Defendant. Id. ¶ 9. In addition, Defendant also promised that Plaintiff would remain as the broker of record for Defendant's Tucson, Arizona operation through at least the end of 2003. Id. ¶ 6. In return, Plaintiff would assist in the transition of certain insurance activities and services for Defendant's move from Arizona to North Carolina in 2004. Id. Plaintiff agreed to perform the services and ultimately saved Defendant $774,371.00 in medical and dental costs. Id. ¶ 5.

In reliance on Defendant's representations, Plaintiff expended substantial time, effort, and expense acquiring insurance services, including $19,500.00 in out-of-pocket costs. Id. ¶¶ 7-8. On December 31, 2002, four weeks after the broker relationship began, Defendant terminated Plaintiff as its broker of record. Id. ¶ 12. As a result, Plaintiff estimates a loss in insurance commissions of $200,000.00. Id. ¶ 11. Shortly thereafter, on January 1, 2003, Defendant appointed a new broker of record that is entitled to receive commissions on the insurance Plaintiff arranged for Defendant.² Id. ¶ 13.

B. Procedural Background

Plaintiff's Complaint (Ex. 1, Doc. #1) seeks damages and was promptly removed to he United States District Court for the District of Arizona on February 13, 2003 (Doc. #1)³ Soon thereafter, on February 20, 2003, Defendant moved to dismiss under Fed. R. Civ. P. 12(b)(6) (Doc. #6). Plaintiff filed its Opposition (Doc. #8) on March 10, 2003, to which Defendant replied on March 20, 2003 (Doc. #9).

DISCUSSION

A. Jurisdictional Basis

Plaintiff is an Arizona corporation with its principal place of business in Arizona (Doc. #1 at 2; Compl. ¶ 1). Defendant is a North Carolina limited liability company with its principal place of business in North Carolina (Doc. #1 at 2; Compl. ¶ 2). Pursuant to 28 U.S.C. § 1332(c)(1), Plaintiff is a citizen of Arizona, and Defendant is a citizen of North Carolina. Plaintiff prays for relief substantially in excess of $75,000. Accordingly, this Court possesses diversity jurisdiction under 28 U.S.C. § 1332(a)(1). Furthermore, the parties stipulate that Arizona substantive law applies (Doc. #15, Doc. #16).

B. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A court may not dismiss a complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Barnett v. Centoni, 31 F.3d 813, 813 (9th Cir. 1994) (citing Buckley v. Los Andes, 957 F.2d 652, 654 (9th Cir. 1992)); see Conley v. Gibson, 355 U.S. 41, 47 (1957); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). "The federal rules require only a `short and plain statement of the claim showing that the pleader is entitled to relief.'" Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 248 (9th Cir. 1997) (quoting Fed. R. Civ. P. 8(a)). "The Rule 8 standard contains a powerful presumption against rejecting pleadings for failure to state a claim." Id. at 249 (quotation marks omitted). "All that is required are sufficient allegations to put defendants fairly on notice of the claims against them." McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991) (citing Conley, 355 U.S. at 47; 5 C. Wright & A. Miller, Federal Practice & Procedure § 1202 (2d ed. 1990)). Indeed, though "`it say appear on the face of the pleadings that a recovery is very remote and unlikely[,] . . . that is not the test.'" Gilligan, 108 F.3d at 249 (quoting Scheur v. Rhodes, 416 U.S. 232, 236 (1974)). "`The issue is not whether the plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Id.

When analyzing a complaint for failure to state a claim, "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the non-moving party." Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996); see Miree v. DeKalb County, 433 U.S. 25, 27 n.2 (1977). In addition, the district court must assume that all general allegations "embrace whatever specific facts might be necessary to support them." Peloza v. Capistrano Unified Sch. Dist., 37 F.3d 517, 521 (9th Cir. 1994), cert. denied, 515 U.S. 1173 (1995) (citations omitted). The district court need not assume, however, that the plaintiff can prove facts different from those alleged in the complaint. See Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Similarly, legal conclusions couched as factual allegations are not given a presumption of truthfulness and "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998); see Jones v. Cmty. Redev. Agency, 733 F.2d 646, 649-50 (9th Cir. 1984); W. Mining Council, 643 F.2d at 624.

"Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988); see William W. Schwarzer et al., Federal Civil Procedure Before Trial § 9:187 at 9-46 (J. Silver contrib. ed. 2002). Alternatively, dismissal may be appropriate when the plaintiff has included sufficient allegations disclosing some absolute defense or bar to recovery. See Weisbuch v. County of L.A., 119 F.3d 778, 783, n.1 (9th Cir. 1997) ("If the pleadings establish facts compelling a decision one way, that is as good as if depositions and other. . . evidence on summary judgment establishes the identical facts."); see also Federal Civil Procedure Before Trial § 9:193 at 9-47.

C. Analysis

Defendant moves for dismissal, pursuant to Fed. R. Civ. P. 12(b)(6), on each of Plaintiffs five counts: (1) breach of contract, (2) estoppel, (3) unjust enrichment, (4) breach if the implied covenant of good faith and fair dealing, and (5) fraud or negligent misrepresentation. For the reasons stated below, the Court will grant Defendant's Motion to Dismiss Counts One, Two, Four, and Five, leaving Count Three as Plaintiffs only remaining claim.

1. Count One — Breach of Contract

In Count One, Plaintiff alleges Defendant breached an oral agreement to retain Plaintiff as its insurance broker of record through, at least, April 2004 (Doc. #1 at 12). Defendant argues that the Statute of Frauds bars enforcement of the alleged oral contract because it was incapable of performance within one year (Doc. #6 at 5). The Court agrees with Defendant and will grant dismissal of Count One.

a. The Statute of Frauds Bars Plaintiff's Contract Claim

The agreement at issue, formed in the fall of 2002, involves the following undisputed promises and performances alleged in the Complaint:

"4. As an inducement to [Plaintiff], to cause it to engage in substantial effort and activities and expense to obtain favorable insurance arrangements for [Defendant], [Defendant] re resented and promised to [Plaintiff] in the fall of 2002 that [Defendant] would continue to retain [Plaintiff] as its insurance broker of record with regard to a certain insurance program for a minimum of 18 months, commencing in November 2002"

...

"6. As a further inducement to [Plaintiff] to undertake the substantial effort and expense of obtaining and putting in place insurance arrangements favorable to [Defendant] during a time when [Defendant] was considering movement of its management of certain insurance arrangements from Arizona to North Carolina, [Defendant] promised, represented to, and assured [Plaintiff] that [Plaintiff] would remain as the broker of record for the [Defendant] Tucson operation at least through the end of calendar year 2003. These representations and assurances were made specifically to cause [Plaintiff] to assist [Defendant] n the transition of certain activities from [Defendant's] Arizona operations to its North Carolina facility in 2004."

(Compl. ¶¶ 4, 6).

Because this case involves an action based on an alleged oral agreement, the Court first looks to Arizona's Statute of Frauds which provides, in relevant part, that:

"No action shall be brought in any court in the following cases unless the promise or agreement upon...