Opinion
No. 1 CA-CV 19-0340
08-06-2020
NICHOL ROYSTON, Plaintiff/Appellant, v. PIERCE WAYCHOFF, et al., Defendants/Appellees.
COUNSEL Burg Simpson Eldredge Hersh & Jardine PC, Phoenix By Paul D. Friedman, Christopher Post, Andrew L. Gartman Counsel for Plaintiff/Appellant Wicker Smith O'Hara McCoy & Ford, PA, Phoenix By Mandi J. Karvis, Karen F. Dougherty Counsel for Defendants/Appellees Pierce Waychoff D.C. and Erin Waychoff D.C.
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2017-013779
The Honorable James D. Smith, Judge
AFFIRMED
COUNSEL Burg Simpson Eldredge Hersh & Jardine PC, Phoenix
By Paul D. Friedman, Christopher Post, Andrew L. Gartman
Counsel for Plaintiff/Appellant Wicker Smith O'Hara McCoy & Ford, PA, Phoenix
By Mandi J. Karvis, Karen F. Dougherty
Counsel for Defendants/Appellees Pierce Waychoff D.C. and Erin Waychoff D.C.
MEMORANDUM DECISION
Chief Judge Peter Swann delivered the decision of the court, in which Presiding Judge Samuel A. Thumma and Judge Randall M. Howe joined. SWANN, Chief Judge:
¶1 This is an appeal from the dismissal of various fraud-based claims. We affirm because the claims were insufficiently pled.
FACTS AND PROCEDURAL HISTORY
¶2 Nichol Royston, a former patient of chiropractors Pierce and Erin Waychoff's Pain Stop North Phoenix clinic (collectively and individually, "Waychoff"), brought claims against Waychoff for, inter alia, fraud/constructive fraud, fraudulent concealment, consumer fraud, and fraud-based racketeering. The court dismissed the fraud-based claims as insufficiently pled three times. Royston did not seek to amend her pleading after the third dismissal and instead voluntarily dismissed her surviving medical malpractice claim, obtained a final judgment, and appealed the dismissal order.
DISCUSSION
¶3 We review dismissal for failure to state a claim under Ariz. R. Civ. P. ("Rule") 12(b) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 8 (2012). Under Rule 8, claims are subject to dismissal for failure to state a claim unless they are supported with well-pled facts; conclusory statements are insufficient. Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008). Moreover, under Rule 9(b), fraud must be pled with particularity. Green v. Lisa Frank, Inc., 221 Ariz. 138, 155, ¶ 53 (App. 2009). "Magic language" is not required, but bare allegations of fraud are insufficient. Hall v. Romero, 141 Ariz. 120, 124 (App. 1984).
Waychoff attached online Yelp reviews as an exhibit to the final motion to dismiss. Royston contends that the summary judgment standard therefore should apply. But the court provided no notice under Rule 12(d) that it converted the motion to one for summary judgment, and nothing else in the record indicates that the superior court relied on the Yelp reviews. We therefore review the matter as a dismissal.
¶4 Actual fraud requires:
(1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's knowledge of its falsity or ignorance of its truth, (5) the speaker's intent that the information should be acted upon by the hearer and in a manner reasonably contemplated, (6) the hearer's ignorance of the information's falsity, (7) the hearer's reliance on its truth, (8) the hearer's right to rely thereon, and (9) the hearer's consequent and proximate injury.Green, 221 Ariz. at 156, ¶ 53 (citation omitted). Constructive fraud requires "a fiduciary or confidential relationship, a breach of duty by the person in the confidential or fiduciary relationship, and that the person in breach induce[d] justifiable reliance by the other to his detriment." Id. (alteration in original) (citation and quotation marks omitted). Fraudulent concealment requires that "[o]ne party to a transaction . . . by concealment or other action intentionally prevent[ ] the other from acquiring material information . . . [thereby causing] pecuniary loss as though he had stated the nonexistence of the matter that the other was thus prevented from discovering." Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Tr. Fund, 201 Ariz. 474, 496, ¶ 87 (2002) (citation omitted). A private cause of action for consumer fraud requires that the claimant be damaged as the result of "[t]he act, use or employment by any person of any deception, deceptive or unfair act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely on such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise." A.R.S. § 44-1522(A); Nataros v. Fine Arts Gallery of Scottsdale, Inc., 126 Ariz. 44, 48 (App. 1980). As relevant here, a private cause of action for racketeering requires that the claimant "sustain[ ] reasonably foreseeable injury to his person, business or property by a pattern of racketeering activity" chargeable or indictable as a scheme or artifice to defraud for financial gain. A.R.S. §§ 13-2301(D)(4)(b)(xx), -2314.04(A).
¶5 Royston's fraud-based claims were based primarily on allegations that Waychoff documented and billed her for therapeutic exercises that she never received. Royston did not, however, allege with particularity that she suffered any injury as a result of the false records and billing entries. Her conclusory allegation that she "was damaged" is insufficient. She did not allege with specificity that she paid or otherwise suffered any detriment as a result of the false records (which, she alleged, she was unaware of until months after her last appointment with Waychoff) or the false billing entries. Though she alleged that upon her initial consultation with Waychoff she paid $200 for unprovided "treatment" or "therapy" and thereafter paid approximately $125 more, she failed to establish how her payment related to the unprovided services—as opposed to the extensive services that she described Waychoff as having provided. And though Royston alleged that her insurer paid on false billing entries, and that she was "obligated to reimburse [the insurer] for all amounts paid as a result of . . . physical therapy modalities which were charged but not provided," her other allegations established that her contractual obligation to reimburse would be triggered only if she recovered from Waychoff, and she provided no context for her summary allegation that the insurer (which is not a party to this case) "is seeking reimbursement." Her pleading was simply insufficient to establish reliance or injury as required to sustain her claims.
To the extent Royston contends on appeal that the treatment she received was unnecessary or improperly explained to her, those allegations relate to her abandoned medical malpractice claim. Further, to the extent Royston contends that she suffered pain as a result of the treatment she received, damages for that pain bear no relation to her fraud-based claims. Divorced from her medical malpractice claim, Royston's fraud-based claims set forth damages that would place the controversy within the jurisdiction of the justice court. See Ariz. Const. art. 6, § 32(C); A.R.S. § 22-201(B).
Royston also alleged that she was required to provide reimbursement under A.R.S. § 12-962. Subsection (A) of that statute provides that a political subdivision that "provides medical care and treatment to a person who is injured or suffers from a disease under circumstances creating tort liability upon a third person . . . may recover from the third person or the injured or diseased person the reasonable value of the medical care and treatment." We need not decide whether Royston's political-subdivision employer provided "medical care and treatment" by contracting with the insurer or whether Royston was "injured" within the meaning of subsection (A) because in any event subsection (B) of the statute makes clear that the political subdivision may enforce its right against the injured person only if the person recovers from the tortfeasor. --------
¶6 Royston points out that in Echols v. Beauty Built Homes, Inc., 132 Ariz. 498 (1982), the supreme court reversed the entry of summary judgment against plaintiffs who had relied on fraudulent statements but had not yet sustained any injury. In Echols, the plaintiffs purchased a home in reliance on the defendants' representation that they qualified for a tax credit. Id. at 499-500. The plaintiffs were not in fact entitled to the tax credit, but they claimed it on their tax return without challenge by the taxing authority and, according to the defendants, the limitations period had expired. Id. at 500-01. The supreme court held that the plaintiffs might still be subject to a tax and willful-evasion penalty and "should be allowed to show what pecuniary loss they have sustained as a result of their reliance upon the defendants' misrepresentation as to the tax credit." Id. at 501. We do not read Echols as dispensing with the requirement that fraud requires actual injury—by contrast, the court expressly held that the plaintiffs would have to demonstrate loss.
¶7 We acknowledge that Royston's allegations describe a troubling scheme whereby Waychoff defrauded Royston's insurer. But the insurer is not a party, and Royston failed to sufficiently allege that she suffered personal harm as a result of the claimed fraud. And though Royston might have been able to salvage her claims via further amendment, she chose instead to proceed directly to appellate review. We therefore affirm the dismissal of the action.
CONCLUSION
¶8 We affirm for the reasons set forth above.