1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Abira Medical Laboratories LLC, No. CV-24-01485-PHX-SMB
10 Plaintiff, ORDER
11 v.
12 Blue Cross Blue Shield of Arizona Incorporated, et al., 13 Defendants. 14 15 At issue is Defendant Blue Cross Blue Shield of Arizona Inc.’s (“BCBSAZ”) 16 Motion to Dismiss (Doc. 11) Plaintiff Abira Medical Laboratories LLC d/b/a/ Genesis 17 Diagnostic’s (“Genesis”) Complaint (Doc. 1). Genesis filed a Response (Doc. 16), and 18 BCBSAZ filed a Reply (Doc. 19). After reviewing the briefing and the relevant case law, 19 the Court will grant in part and deny in part the Motion. Specifically, the Court will dismiss 20 the claims for misrepresentation, promissory estoppel, quantum meruit, and unjust 21 enrichment without prejudice, and dismiss the claim for equitable estoppel with prejudice. 22 The Court will allow Genesis the opportunity to amend the claims dismissed without 23 prejudice. 24 I. BACKGROUND 25 This is breach of contract action in which BCBSAZ allegedly refused to pay Genesis 26 for laboratory testing services rendered to “members/subscribers” (the “Insureds”) who had 27 policies with by BCBSAZ.1 (Doc. 1 ¶ 1.)
28 1 As BCBSAZ notes, this case is one of dozens that Genesis has filed against health plans across the United States. In most of the other matters, Genesis asserts similar allegations 1 Genesis is a licensed medical testing laboratory that provided clinical laboratory, 2 pharmacy, genetics, addiction rehabilitation, and COVID-19 testing services on specimens 3 submitted by BCBSAZ between 2016 and 2019. (Id. ¶ 8, 12.) The requests for laboratory 4 tests submitted on behalf of BCBSAZ’s Insureds to Genesis contained an assignment of 5 benefits (the “Assignment Clause”), which created a contractual obligation on BCBSAZ 6 to pay Genesis for services rendered. (Id. ¶ 9, 12.) The Assignment Clause states: 7 I hereby assign all rights and benefits under my health plan and direct payments be made to Genesis Diagnostics for laboratory services furnished 8 to me by Genesis Diagnostics. I irrevocably designate authorize and appoint Genesis Diagnostics or its assigned affiliates as my true and lawful 9 attorney-in-fact for the purpose of submitting my claims and pursuing any request, disclosure, appeal, litigation or other remedies in accordance with 10 the benefits and rights under my health plan and in accordance with any federal or state laws, [i]f my health plan fails to abide by my authorization 11 and makes payment directly to me, I agree to endorse the insurance check and forward it to Genesis Diagnostics immediately upon receipt. I hereby 12 authorize Genesis Diagnostics or its assigned affiliates to contact me for billing or payment purposes by phone, text message, or email with the 13 contact information that I have provided to Genesis Diagnostics, in compliance with federal and state laws. 14 15 (Id. ¶ 10.) 16 The Assignment Clause compelled BCBSAZ to pay Genesis as the 17 assignee-beneficiary under the various insurance plans for the cost of testing services 18 rendered to covered Insureds. (Id. ¶¶ 1, 12, 33.) Because BCBSAZ failed to pay the full 19 cost of Genesis’ services between 2016 and 2019, it owes Genesis $1,212,544. (Id.) 20 Making matters worse, Genesis alleges that BCBSAZ intentionally engaged in “a long 21 campaign designed to deprive [Genesis] of thousands of dollars it is rightfully owed” for 22 the laboratory testing. (Id. ¶ 13.) BCBSAZ facilitated its campaign by failing to respond 23 to claims made by Genesis or fabricating some other pretextual basis to refuse paying the 24 invoices, such as (1) lack of adequate claim information; (2) untimely filing of the claim; 25 and (3) lack of coverage by the Insureds for the services provided. (Id. ¶¶ 13–14.) 26 and seeks recovery for testing services. See, e.g., Abira Med. Lab’ys LLC v. State Farm 27 Mut. Auto. Ins., No. 23-03866 (GC) (JBD), 2024 WL 3199835, at *1 (D.N.J. June 26, 2024) (dismissing the complaint for failing to state a claim); Abira Med. Lab’ys LLC v. Nat’l 28 Ass’n of Letter Carriers Health Ben. Plan, No. 23-05142 (GC) (DEA), 2024 WL 1928680, at *11–12 (D.N.J. Apr. 30, 2024.) (same). 1 BCBSAZ’s conduct allegedly breached its payment obligations to the Insureds, and 2 now Genesis, as assignee-beneficiary, filed this lawsuit. (Id. ¶ 15.) In its Complaint, 3 Genesis asserts seven claims for relief: (1) breach of contract; (2) breach of the covenant 4 of good faith and fair dealing; (3) fraudulent misrepresentation; (4) negligent 5 misrepresentation; (5) equitable estoppel; (6) promissory estoppel; and (7) recovery under 6 theories of quantum meruit and unjust enrichment.2 (Id. ¶¶ 16–41.) BCBSAZ then filed 7 the instant Motion to dismiss, which the Court will now consider. (Doc. 11.) 8 II. LEGAL STANDARD 9 A. Rule 12(b)(6) 10 To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet 11 the requirements of Rule 8(a)(2). Rule 8(a)(2) requires a “short and plain statement of the 12 claim showing that the pleader is entitled to relief,” so that the defendant has “fair notice 13 of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 14 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). This exists 15 if the pleader sets forth “factual content that allows the court to draw the reasonable 16 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 17 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported 18 by mere conclusory statements, do not suffice.” Id. 19 Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory 20 or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. 21 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a 22 cognizable legal theory will survive a motion to dismiss if it contains sufficient factual 23 matter, which, if accepted as true, states a claim to relief that is “plausible on its face.” 24 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). Plausibility does not equal 25 “probability,” but requires “more than a sheer possibility that a defendant has acted 26 unlawfully.” Id. “Where a complaint pleads facts that are ‘merely consistent with’ a 27 2 The Complaint is constructed in a way that presents the claims for relief in four rather 28 than seven counts. Although, to give weight to each of the asserted grounds for relief, the Court cognizes the Complaint as asserting seven claims for relief. 1 defendant’s liability, it ‘stops short of the line between possibility and plausibility.’” Id. 2 (quoting Twombly, 550 U.S. at 557). 3 In ruling on a Rule 12(b)(6) motion to dismiss, the well-pled factual allegations are 4 taken as true and construed in the light most favorable to the nonmoving party. Cousins v. 5 Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as 6 factual allegations are not given a presumption of truthfulness, and “conclusory allegations 7 of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto 8 v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). A court ordinarily may not consider evidence 9 outside the pleadings in ruling on a Rule 12(b)(6) motion to dismiss. See United States v. 10 Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). “A court may, however, consider 11 materials—documents attached to the complaint, documents incorporated by reference in 12 the complaint, or matters of judicial notice—without converting the motion to dismiss into 13 a motion for summary judgment.” Id. at 908. 14 B. Rule 9(b) 15 Claims sounding in fraud or mistake are subject to the heightened pleading 16 requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff 17 alleging fraud “must state with particularity the circumstances constituting fraud.” Fed. R. 18 Civ. P. 9(b); see also Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). To 19 satisfy Rule 9(b), the allegations must be “specific enough to give defendants notice of the 20 particular misconduct which is alleged to constitute the fraud charged so that they can 21 defend against the charge and not just deny that they have done anything wrong.” Semegen 22 v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Thus, claims sounding in fraud must allege 23 “an account of the ‘time, place, and specific content of the false representations as well as 24 the identities of the parties to the misrepresentations.’” Swartz v. KPMG LLP, 476 F.3d 25 756, 764 (9th Cir.2007) (per curiam). The plaintiff must set forth “what is false or 26 misleading about a statement, and why it is false.” In re Glenfed, Inc. Sec. Litig., 42 F.3d 27 1541, 1548 (9th Cir. 1994) (en banc), superseded by statute on other grounds as stated in 28 Ronconi v. Larkin, 253 F.3d 423, 429 n.6 (9th Cir.2001). 1 III. DISCUSSION 2 BCBSAZ argues that each of the seven claims for relief suffer fatal defects, 3 warranting dismissal of the entire action. (Doc. 11 at 2.) Genesis disagrees, contending 4 that it has stated a claim for relief under each asserted theory, and thus the Court must deny 5 BCBSAZ’s Motion in its entirety. (Doc. 16 at 1.) The Complaint combines up to four 6 distinct legal claims under a single Count. (See, e.g., Doc. 1 at 9.) Here, however, the 7 Court takes care to discuss the seven claims in their most logical order and groupings. 8 A. Breach of Contract 9 A breach of contract claim in Arizona requires Genesis to show (1) the existence of 10 a contract; (2) breach; and (3) resulting damages. First Am. Title Ins. v. Johnson Bank, 372 11 P.3d 292, 297 (Ariz. 2016) (citing Graham v. Ashbury, 540 P.2d 656, 657 (Ariz. 1975)). 12 No doubt “[i]t is elementary that for an enforceable contract to exist there must be an offer, 13 an acceptance, consideration, and sufficient specification of terms so that the obligations 14 involved can be ascertained.” Savoca Masonry Co. v. Homes & Son Constr. Co., 542 P.2d 15 817, 819 (Ariz. 1975). Moreover, for an agreement to exist, the minds of the parties must 16 meet as to the material terms of the contract, such as purchase price and the time and 17 conditions of payment. Hill-Shafer P’ship v. Chilson Fam. Tr., 799 P.2d 810, 815 (Ariz. 18 1990); T.D. Dennis Builder, Inc. v. Goff, 418 P.2d 367, 369 (Ariz. 1966). Genesis has 19 pleaded damages directly related to the alleged wrongdoing, claiming over $1 million for 20 unpaid medical testing. (Doc. 1 ¶ 1.) The focus, then, is whether Genesis has adequately 21 pleaded the existence of a contract and breach. 22 BCBSAZ argues that the breach of contract claim ought to be dismissed because the 23 Complaint asserts only vague references of “insurance contracts” and the breach of 24 unidentified obligations. (Doc. 11 at 5.) According to BCBSAZ, without more concrete 25 allegations of the breached contractual terms, Genesis has not shown that it is entitled to 26 reimbursement or that BCBSAZ breached any contract. (Id.; Doc. 19 at 4.) Instead, 27 Arizona law required Genesis to allege the terms requiring coverage of the alleged services, 28 the price to be paid for such services, and other terms that would entitle Plaintiff to 1 reimbursement. (Doc. 11 at 5.) 2 In response, Genesis argues that it should not be required to plead the specific terms 3 of the contract when those agreements are in the possession of BCBSAZ. (Doc. 16 at 5 4 (citing Innova Hosp. San Antonio, LP v. Blue Cross Blue Shield of Ga., Inc., 892 F.3d 719, 5 739 (5th Cir. 2018)). Moreover, requiring non-specific allegations here is proper because, 6 during the claim process, BCBSAZ does not provide copies of the underlying insurance 7 contract or claim information. (Id.) 8 In reply, BCBSAZ notes that Genesis was the alleged assignee of “all rights and 9 benefits under [their] health plan(s)” and that it failed to ask BCBSAZ for a copy of a single 10 health plan over the four-year period that the laboratory testing occurred. (Doc. 19 at 2.) 11 Therefore, in BCBSAZ’s view, Genesis has filed this Complaint without first properly 12 investigating their claims, which is an improper attempt to “unlock the doors of 13 discovery . . . armed with nothing more than conclusions.” (Id. (citing Iqbal, 556 U.S. 14 at 678).) 15 As an initial matter, BCBSAZ seems to concede that Genesis plausibly alleged the 16 existence and terms of the Assignment Clause. (See Doc. 19 at 2.) The Clause operates as 17 follows: the Insureds agreed that the dollar amount they were entitled to receive from their 18 BCBSAZ health plan for laboratory testing performed by Genesis was to be paid directly 19 to Genesis. (See Doc. 1 ¶ 10.) Though the assignment clause supports the idea that the 20 Insureds assigned their benefits to Genesis, it alone does not plausibly allege the existence 21 of underlying health plans that entitle Genesis to payment. See, e.g., Abira Med. Lab’ys, 22 LLC v. Mutual of Omaha Ins. Co., 8:24CV194, 2024 WL 4056573, at *9 (D. Neb. Sept. 5, 23 2024) (“The rub is that such an assignment did not make Abira a party to the insurance 24 contract . . . [thus] Abira must allege that the insureds’ insurance policies . . . required 25 Mutual of Omaha to pay for the services that Abira provided.”) 26 Contrary to BCBSAZ’s position, Genesis need not “plead the terms of the alleged 27 contract with precision,” Hannibal-Fisher v. Grand Canyon Univ., 523 F. Supp. 3d 1087, 28 1093 (D. Ariz. 2021), but the Court “must be able to generally to discern at least what 1 material obligation of the contract defendant allegedly breached,” Qingdao Tang-Buy Int’l 2 Imp. & Exp. Co., Ltd. v. Preferred Secured Agents, Inc., No. 15-CV-00624-LB, 2016 WL 3 6524396, at *3 (N.D. Cal. Nov. 3, 2016). Here, the Complaint and the appended 4 spreadsheet show that Genesis has been assigned the benefits of the underlying health plans 5 and has conducted medical testing on hundreds of individuals who have BCBSAZ plans. 6 (See Doc. 1 ¶ 10.) The Complaint also alleges that BCBSAZ paid approximately 200 7 claims, showing that at least some of the underlying insurance plans exist and that they 8 provided coverage for testing. (Id. ¶ 20.) These allegations, paired with the fact that 9 BCBSAZ ceased payments on outstanding claims, allows the Court to infer that these 10 agreements likely exist. (Id.); see also Twombly, 550 U.S. at 556 (“Asking for plausible 11 grounds to infer an agreement does not impose a probability requirement at the pleading 12 stage; it simply calls for enough fact to raise a reasonable expectation that discovery will 13 reveal evidence of illegal agreement.”) 14 Considering the allegations and the appended spreadsheet, the Court finds that 15 Genesis has pleaded enough facts to stave off dismissal of its breach of contract claim. The 16 Complaint identifies the Insureds, BCBSAZ’s representation that the Insureds possessed 17 coverage, the amount due for the services rendered, the date of those services, and the 18 specific language of the Assignment Clause executed by the Insureds. (See generally Doc. 19 1.) Together these allegations evidence that the underlying agreements may exist, 20 BCBSAZ may have breached that agreement, and that Genesis was damaged. (See id.); cf. 21 Abira Med. Lab’ys, LLC v. Kaiser Found. Health Plan of Mid-Atlantic States, 22 No. 24-CV-759, 2024 WL 2188911, at *2 (E.D. Penn. May 15, 2024) (relying on similar 23 allegations and finding a breach of contract claim sufficient). 24 Accordingly, Court will deny BCBSAZ’s Motion as to Genesis’ breach of contract 25 claim. 26 B. Breach of the Covenant of Good Faith and Fair Dealing 27 A contract under Arizona law “imposes upon each party a duty of good faith and 28 fair dealing in its performance and enforcement.” Ariz. Towing Pros., Inc. v. State of 1 Arizona, 993 P.2d 1037, 1041 (Ariz. Ct. App. 1999) (finding that the government did not 2 act in good faith when it invoked a termination for convenience clause to moot an appeal 3 of another contracting party); see also Wells Fargo Bank v. Ariz. Laborers, Teamsters & 4 Cement Masons Loc. No. 395 Pension Tr. Fund, 38 P.3d 12, 28 (Ariz. 2002). This 5 covenant requires each party “to refrain from any action which would impair the benefits 6 which the other had the right to expect from the contract or contractual relationship.” 7 Rawlings v. Apodaca, 726 P.2d 565, 570 (Ariz. 1986). A party can breach the implied 8 covenant “both by exercising express direction in a way inconsistent with a party’s 9 reasonable expectations and by acting in ways not expressly excluded by the contract’s 10 terms but which nevertheless bear adversely on the party’s reasonable expected benefits of 11 the bargain.” Bike Fashion Corp. v. Kramer, 46 P.3d 431, 435 (Ariz. Ct. App. 2002). 12 Generally, breach of the implied covenant must rest on allegations separate from 13 those substantiating a defendant’s breach of an express obligation to perform. Ipro Tech 14 LLC v. Sun West Mort. Co., No. CV-17-04015-PHX-DLR, 2019 WL 2106417, *3 (D. Ariz. 15 Mar. 21, 2019). Otherwise, “if a mere failure to perform an express obligation under a 16 contract also established a breach of the implied covenant . . . , then all breaches of contract 17 necessarily would also constitute breaches of the covenant.” Id. Logically, Genesis must 18 therefore allege that BCBSAZ acted in bad faith or unfairly to deprive Genesis of payments 19 for the cost of care as the assignee-beneficiary. 20 BCBSAZ’s failure to pay under the terms of the underlying insurance contracts 21 serves as the basis for Genesis’ breach of contract claim. Thus, breach of the duty of good 22 faith and fair dealing could not be premised upon that action alone. Genesis also alleges 23 that BCBSAZ’s failure to pay the outstanding claims was done for “contrived and 24 meritless” reasons such as (1) lack of adequate claim information; (2) untimely filing of 25 claims; and (3) for lack of coverage despite representations that such coverage existed. 26 (Doc. 1 ¶¶ 14, 26, 29.) Construing the allegations as true, the Court finds that Genesis has 27 pleaded enough facts to sustain a claim for breach of the duty of good faith and fair dealing. 28 The allegations exceed mere regurgitation of the same conduct that gave rise to the breach 1 action, as they highlight the alleged improper reasons that BCBSAZ decided to cease 2 paying Genesis’ claims. (See id.) Moreover, BCBSAZ’s reliance on Ipro Tech is slightly 3 misplaced, as that case disposed of a good faith and fair dealing claim at summary 4 judgment, after the plaintiff provided no evidence other than the defendant’s failure to 5 perform. 2019 WL 2106417, at *4. Under the Federal Rules, Plaintiffs are generally 6 allowed to plead alternative claims, so long as such a claim is not independently bereft of 7 merit or legal support. Fed. R. Civ. P. 8(d); see also Trustmark Ins. Co. v. Bank One, Ariz., 8 48 P.3d 485, 492 (Ariz. Ct. App. 2002) (explaining that Arizona law allows an unjust 9 enrichment theory “as an alternative theory of recover in conjunction with [a] breach of 10 contract claim,” but only where the validity of the contract is in dispute). Therefore, this 11 case being at the motion to dismiss stage, the Court will not dismiss Genesis’ breach of the 12 covenant of good faith and fair dealing claim. 13 C. Fraudulent and Negligent Misrepresentation 14 Under Arizona law, “an actionable misrepresentation ‘must relate to either a past or 15 existing fact. It cannot be predicated on unfulfilled promises, expressions of intention or 16 statements concerning future events unless such were made with the present intention not 17 to perform.’” Crossfirst Bank v. Vieste SPE LLC, No. CV-18-01637-PHX-DLR, 2021 WL 18 2517892, at *4 (D. Ariz. Mar. 31, 2021) (quoting Staheli v. Kauffman, 595 P.2d 173, 175 19 (Ariz. 1979)); see also McAlister v. Citibank (Arizona), 829 P.2d 1253, 1261 (Ariz. Ct. 20 App. 1992) (explaining that negligent misrepresentation cannot be based on a “promise of 21 future conduct”). Moreover, the present intention not to perform “must be established 22 independent of a showing of the defendant’s failure to perform.” Krieg v. Schwartz, No. 23 CV-13-00710-PHX-DLR, 2015 WL 12669893, at *6 (D. Ariz. Aug. 19, 2015). 24 BCBSAZ argues that Genesis’ claims for fraudulent and negligent 25 misrepresentation should be dismissed because (1) the claims are impermissibly based on 26 the promise of a future action; and (2) Genesis fails to assert allegations comporting with 27 Federal Rule 9(b)’s heightened pleading standard. (Doc. 11 at 7–10.) In response, Genesis 28 argues that its claims are not based upon future action, but rather BCBSAZ’s failure to 1 continue to pay for the types of claims it had paid for in the past. (Doc. 16 at 9.) 2 Additionally, Genesis argues that it has pleaded enough to comport with Rule 9. (Id. 3 at 9–10.) 4 The Court agrees with BCBSAZ. Genesis alleges that BCBSAZ’s payment of 5 approximately 200 claims represented to Genesis that the insurer would pay the hundreds 6 of other claims that accrued over several years. (Doc 1 ¶ 30.) Further, Genesis alleges that 7 BCBSAZ’s “course of conduct constituted a representation of Plaintiff that it would 8 continue to pay for Laboratory Testing Services rendered by Plaintiff.” (Id.)3 As alleged, 9 Genesis has not set forth facts to show BCBSAZ’s past payments represented the insurer’s 10 intent to provide future payment. (See Doc. 16 at 9.) And, even if such facts were pleaded, 11 a promise of future action, i.e., continuing to pay claims, is an untenable basis for fraudulent 12 or negligent misrepresentation claims under Arizona law. See McAlister, 829 P.2d at 1261; 13 Krieg, 2015 WL 12669893, at *6. 14 Each of the misrepresentation claims also fail to comport with Rule 9. Here, Genesis 15 alleges that “[BCBSAZ’s] representatives not only request those services . . . but 16 represented to [Genesis] that the patients/insureds were all covered by policies of 17 insurance . . . and that [BCBSAZ] would pay for the services to be rendered.” (Doc. 1 18 ¶ 29.). Additionally, Genesis alleges BCBSAZ’s course of conduct was a representation 19 to pay future claims and that it “has demonstrated that it did not intend to reimburse 20 [Genesis] for providing Laboratory Testing Services.” (Id. ¶¶ 30, 33.) These allegations 21 unquestionably sound in fraud, but without concrete allegations of the “time, place, and 22 specific content of the false representation as well as the identities of the parties to the 23 misrepresentation,” the claim cannot survive. See Schreiber Distrib. Co. v. Serv-Well 24 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). Put another way, the Complaint
25 3 The Court believes that there exists a scrivener’s error in ¶ 30 of the Complaint. It is not clear how BCBSAZ’s course of conduct amount to a representation “of” Genesis that it 26 (Genesis) would continue to pay for its own services. The Court believes that the Complaint meant to say that BCBSAZ’s course of conduct amounted to a representation 27 “to Genesis” that BCBSAZ would continue to pay for Genesis’ services. Or, alternatively, that BCBSAZ’s course of conduct was a representation of BCBSAZ that it would continue 28 to pay Genesis. Though, with either alteration in place of the error, the Court’s outcome is not changed. 1 “must specify ‘the who, what, when, where, and how’ of the alleged misconduct.’” HM 2 Hotel Props. V. Peerless Indem. Ins., 874 F. Supp. 2d 850, 855 (D. Ariz. 2012) (quoting 3 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)). The current 4 Complaint omits several of these key allegations, maintaining unnamed representatives 5 made representations at some unspecified time. (See Doc. 1.) 6 Because Genesis’ claims are predicated on future promises, they fail as a matter of 7 law. See McAlister, 829 P.2d at 1261; Krieg, 2015 WL 12669893, at *6–7. Moreover, 8 Genesis’ Response seems to misunderstand the nature of a misrepresentation claim on a 9 fundamental level. (Doc. 16 at 8–10.) There, Genesis explains that BCBSAZ paid some 10 claims, which represented to Genesis that the insurer would continue to pay claims—in 11 other words, Genesis contends that BCBSAZ promised future conduct. Though Genesis’ 12 claims fails outright, the Court is not convinced that they are unsalvageable. Therefore, 13 the Court will grant BCBSAZ’s Motion as to the misrepresentation claims and dismiss 14 those claims without prejudice. 15 D. Equitable Estoppel and Promissory Estoppel 16 As an initial matter, in Arizona, equitable estoppel “is available only as a defense, 17 while promissory estoppel can be used as a cause of action for damages.” Tiffany Inc. v. 18 W.M.K. Transit Mix, Inc., 493 P.2d 1220, 1224 (Ariz. Ct. App. 1972). Although, an 19 equitable estoppel claim may be allowed to continue as a transmuted promissory estoppel 20 claim if the plaintiff alleges the elements of promissory estoppel. German v. Pima County, 21 287 P.3d 800, 804 n.4 (Ariz. Ct. App. 2012). Here, Gensis asserts both claims for equitable 22 estoppel and promissory estoppel. (See Doc. 1.) Because of this, Genesis’ equitable 23 estoppel claim is superfluous. That is, it might continue under a promissory estoppel 24 theory, but since Genesis separately alleges promissory estoppel based on the same facts, 25 there is no sense in determining whether the equitable estoppel claim should also continue. 26 Therefore, the Court will dismiss Genesis’ equitable estoppel claim with prejudice. 27 A promissory estoppel claim requires “a promise, which the promi[s]sor should 28 reasonably foresee would cause the promisee to rely, upon which the promisee actually 1 relies to his detriment.” Satamian v. Great Divide Ins., 545 P.3d 918, 926 (Ariz. 2024). In 2 stark contrast to the law on misrepresentation, promissory estoppel involves a “promise by 3 one party . . . not in regard to a past or presently existing state of facts, but rather to a 4 situation which one party promises will be true in the future.” Hisun Motors Corp., U.S.A. 5 v. Auto. Testing and Dev. Servs., Inc., No. CV 11-1918-PHX-DGC, 2012 WL 682398, 6 at *6 (D. Ariz. Mar. 2, 2012) (citing Tiffany Inc. v. W.M.K. Transit Mix, Inc., 493 P.2d 7 1220, 1224 (Ariz. Ct. App. 1972)). 8 Here, BCBSAZ argues the claim fails because the allegations in the Complaint fail 9 to allege any “representations” attributable to BCBSAZ or “representatives” of the 10 company that made such representations to Genesis. (Doc. 11 at 11.) Second, BCBSAZ 11 argues that the allegations, taken as true, cannot support finding that the insurer made a 12 promise to continue to pay claims asserted by Genesis in the future. (Id. at 11–12.) Third, 13 BCBSAZ argues that the Complaint is bereft of facts showing that Genesis reasonably 14 relied on any representations from the insurer that it would pay for the claims. (Id.) 15 In response, Genesis argues that because it stood in the shoes of the insured, it had 16 a reasonable expectation to be “compensated for [future] medical services.” (Doc. 16 17 at 11.) Genesis also argues that BCBSAZ made representations when it paid roughly 200 18 claims and refused to pay the remaining claims. (Doc. 16 at 12.) 19 Arizona’s promissory estoppel jurisprudence prescribes a relatively low factual 20 pleading bar, that is, the plaintiff must simply allege that a promise was made. See, e.g., 21 Mac Enter., Inc. v. Del E. Webb Dev. Co., 645 P.2d 1245, 1250 (Ariz. Ct. App. 1982). 22 What constitutes a “promise,” however, is subject to a bit more nuance. As the Arizona 23 Court of Appeals has explained, “[a]n expression of an intention to do something is not a 24 promise, and the word ‘desire’ is an expression of present purpose rather than a promise of 25 future action.” School Dist. No. 69 of Maricopa Cnty. v. Altherr, 458 P.2d 537, 544 (Ariz. 26 Ct. App. 1969) (emphasis added), overruled in part on other grounds by Bd. Trs. of Marana 27 Elementary Sch, Dist No. 6 v. Wildermuth, 492 P.2d 420, 422 (Ariz. Ct. App. 1972) 28 (clarifying dicta in Altherr that suggested public entities were not subject to the doctrine of 1 estoppel). 2 To recount the relevant facts, Genesis alleges that medical service providers sent 3 “requisitions of laboratory testing services” to it, which contained the assignment clause. 4 (Doc. 1 ¶¶ 8–10.) But at some other unspecified time, BCBSAZ’s representatives 5 “requested those services on behalf of” the Insureds and “represented to [Genesis] that the 6 [Insureds] were all covered by policies . . . and that [BCBSAZ] would pay for the 7 services.” (Id. ¶ 29.) Further, Genesis alleges that “contractual rights were assigned by 8 [BCBSAZ’s] [I]nsureds in favor of [Genesis],” which obligated BCBSAZ to pay for those 9 laboratory testing services. (Id.) 10 These allegations suggest that someone at BCBSAZ “represented” to Genesis that 11 the insurer would pay for medical laboratory services. (Id.) In other words, BCBSAZ put 12 Genesis on notice of its intent to pay. However, there is no allegation in the Complaint 13 that suggests BCBSAZ made an express promise to Genesis to pay for those services. See 14 Altherr, 458 P.2d at 544 (“An expression of an intention to do something is not a 15 promise.”). Apart from that fatal flaw, the Complaint does not make clear whether Genesis 16 is asserting is promissory estoppel claim on a promise made by BCBSAZ directly to 17 Genesis or asserting its entitlement to relief as the assignee-beneficiary. In either reality, 18 the claim fails for want of factual enhancement. 19 Therefore, the Court will grant BCBSAZ’s Motion and dismiss Genesis’ promissory 20 estoppel claim without prejudice. 21 E. Quantum Meruit and Unjust Enrichment 22 As BCBSAZ notes, this Court has recognized that “[u]njust enrichment and 23 quantum meruit are technically different claims.” Dependable Nurses of Phx. LLC v. 24 Cigna Healthcare Inc., No. CV-20-01877-PHX-SPL, 2021 WL 9597915, at *5 (D. Ariz. 25 Feb. 2, 2021). To prevail on an unjust enrichment claim under Arizona law, “a plaintiff 26 must establish that, (1) plaintiff conferred a benefit upon the defendant; (2) defendant's 27 benefit is at plaintiff's expense; and (3) it would be unjust to allow defendant to keep the 28 benefit.” In re Ariz. Theranos, Inc., Litig., 308 F. Supp. 3d 1026, 1057 (D. Ariz. 2018). 1 Quantum meruit is an “equitable remedy under which ‘a plaintiff who has rendered services 2 benefitting a defendant may recover the reasonable value of those services when necessary 3 to prevent the unjust enrichment of the defendant.’” Id. (quoting Cent. Ariz. Water 4 Conservation Dist. v. United States, 32 F. Supp. 2d 1117, 1140 (D. Ariz. 1988)). Quantum 5 meruit is appropriate where the parties have attempted to contract but the contract is 6 unenforceable or void. Unjust enrichment, by contrast, is properly asserted where there 7 was never any attempt to arrive at a contract.” Cent. Ariz. Water Conservation Dist., 32 F. 8 Supp. 2d at 1140. 9 BCBSAZ argues that Genesis’ claims for quantum meruit and unjust enrichment 10 fail on three grounds: (1) Genesis has alleged that there are enforceable contracts between 11 the parties; (2) Genesis could have sought the cost of the medical tests directly from the 12 patient-Insureds; and (3) Plaintiff has failed to otherwise plead sufficient facts to state a 13 claim for either claim for relief. (Doc. 11 at 12–13.) As expected, Genesis disagrees and 14 argues that it should be allowed to assert these claims as alternatives to breach of contract. 15 (Doc. 16 at 12.) 16 The several allegations about express agreements giving rise to “obligations” for 17 BCBSAZ to pay Genesis sink the claims for quantum meruit and unjust enrichment. (See 18 Doc. 1 ¶¶ 1, 5, 9–10, 12–13, 17–27, 29 (discussing the existence, enforceability, and 19 obligations of the various insurance contracts entitling Genesis to payment for services 20 rendered).) This is precisely because these claims are sustainable only where there is an 21 unenforceable or void contract, or where the parties never attempted to arrive at an 22 agreement. Cent. Ariz. Water Conservation Dist., 32 F. Supp. 2d at 1140. In other words, 23 both claims are “premised on the absence of an express contract.” Dependable Nurses, 24 2021 WL 9597915, at 5. 25 As noted above, these claims may be asserted as alternative claims for relief if the 26 alleged contract is in dispute. Trustmark, 48 P.3d at 492; Seaboard Sur. Co v. Grupo 27 Mexico, S.A.B. de C.V., No. 06-CV-0134-PHX-SMM, 2009 WL 4827029, at *13–14 (D. 28 Ariz. Dec. 19, 2009). Here, BCBSAZ contends that Genesis “vaguely references 1 ‘insurance contracts’ . . . but does not identify any allegedly breached terms of any 2 contract.” (Doc. 11 at 5.) Put another way, BCBSAZ disputes that a valid contract exists 3 between the parties. Therefore, it would be premature for the Court to prevent Genesis 4 from asserting quantum meruit and unjust enrichment as alternative claims at this time. Cf. 5 Ipro Tech, 2019 WL 2196417, at *4 (finding on summary judgment that the “Court cannot 6 grant summary judgment in favor of [plaintiff] on [undue influence] because there is 7 a . . . dispute about whether the parties have an enforceable contract”). 8 Even though Genesis may assert quantum meruit and unjust enrichment as 9 alternative claims, it must still set forth factual allegations sufficient to state a claim for 10 relief. The current iteration of the Complaint fatally omits facts showing Genesis conferred 11 a legally cognizable “benefit” to BCBSAZ. (See generally Doc. 1.) The only allegation 12 that comes close states that Genesis “conferred a benefit upon [BCBSAZ’s] subscribers 13 and/or members and, therefore, upon [BCBSAZ].” (Id. ¶ 37.) Though, given the 14 relationship between the insurer, its insured, and medical providers, this allegation strains 15 credulity. Indeed, the benefit of Genesis providing services to BCBSAZ’s Insureds 16 precisely falls onto the Insureds, as the insurer is “obligat[ed] to pay money to the 17 insured—which can hardly be called a benefit.” Travelers Indem. Co. v. Losco Grp., Inc., 18 150 F. Supp. 2d 556, 563 (S.D.N.Y. 2001); Physicians Surgery Ctr. Of Chandler v. Cigna 19 Healthcare Inc., 609 F. Supp. 3d 930, 940 (D. Ariz. 2022) (“To state a claim for unjust 20 enrichment, the plaintiff must confer a benefit to the defendant, not a third party.”). 21 That notwithstanding, Genesis posits that BCBSAZ benefits from the discharge of 22 its obligation to cover the costs of the Insureds. (Doc. 16 at 13 (citing Plastic Surgery Ctr., 23 PA v. Aetna Life Ins., 967 F.3d 218, 240–241 (3d Cir. 2020) (contemplating that a “benefit 24 conferred” in an ERISA matter to be “the discharge of the obligation the insurer owes to 25 the insured”)).) Several courts outside of the ERISA context have reached the opposite 26 result of that in Plastic Surgery Center, however. See, e.g., Travelers Indem Co., 150 F. 27 Supp. 2d at 563; Abira Med. Lab’ys, LLC v. CIGNA Health & Life Ins. Co., 2024 U.S. Dist. 28 LEXIS 176949, at *25 (D. Conn. Sept. 30, 2024); Advanced Orthopedics & Sports Med. 1 Inst. v. Int’l Union of Operating Eng’rs Local 14-14B, No. 3:19-cv-5076-BRM-ZNQ, 2019 2 U.S. Dist. LEXIS 223586, at *26 (D.N.J. Nov. 26, 2019); Angelina Emergency Med. 3 Assocs. PA v. Health Care Serv. Corp., 506 F. Supp. 3d 425, 432 (N.D. Tex. 2020); 4 BCBSM, Inc. v. GS Labs, LLC, No. 22-cv-513, 2023 U.S. Dist. LEXIS 15593, at *18–19 5 (D. Minn. Jan. 30, 2023); Patel v. Aetna, No. 2:17-cv-78, 2018 U.S. Dist. LEXIS 209955, 6 at *10–11 (S.D. Ohio Dec. 12, 2018); Joseph M. Still Burn Ctrs., Inc. v. Liberty Mut. Ins., 7 No. CV 1:08-090, 2010 U.S. Dist. LEXIS 1095, at *32 (S.D. Ga. Jan. 6, 2010). Thus, on 8 balance, the Court finds Genesis’ reliance on an ERISA case to support the discharge of 9 BCBSAZ’s duty to pay (which is not alleged in the Complaint) misplaced. As a result, 10 Genesis’ allegation that it benefitted the Insureds and therefore benefitted BCBSAZ does 11 not support the quantum meruit and unjust enrichment claims. 12 Like the misrepresentation claims, the Court is hesitant to dismiss the quantum 13 meruit and unjust enrichment claims with prejudice, as they may yet be salvaged by 14 amendment. Therefore, the Court will grant BCBSAZ’s Motion as to these claims and 15 dismiss those claims without prejudice. 16 IV. LEAVE TO AMEND 17 Federal Rule of Civil Procedure 15(a) requires that leave to amend be “freely give[n] 18 when justice so requires.” Leave to amend should not be denied unless “the proposed 19 amendment either lacks merit or would not serve any purpose because to grant it would be 20 futile in saving the plaintiff’s suit.” Universal Mortg. Co. v. Prudential Ins. Co., 799 F.2d 21 458, 459 (9th Cir. 1986). Therefore, “a district court should grant leave to amend even if 22 no request to amend the pleading was made, unless it determines that the pleading could 23 not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 24 1127 (9th Cir. 2000) (cleaned up). 25 The Court has discussed the veracity of each claim Genesis asserts in the Complaint 26 and will grant leave to amend its claims for misrepresentation, promissory estoppel, 27 quantum meruit, and unjust enrichment. 28 /// V. CONCLUSION 2 Accordingly, 3 IT IS HEREBY ORDERED dismissing the claims for misrepresentation, 4|| promissory estoppel, quantum meruit, and unjust enrichment without prejudice and 5 || dismissing the claim for equitable estoppel with prejudice. 6 IT IS FURTHER ORDERED granting Plaintiff leave to amend the claims for misrepresentation, promissory estoppel, quantum meruit, and unjust enrichment. Plaintiff 8 || may file an Amended Complaint within thirty (30) days of the date of this Order. 9 Dated this 3rd day of April, 2025. 10 —__ . 11 SO te A lonorable Susan M. Brnovich United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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