Priority v. Durbin

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

PRIORITY MEDICAL GROUP LLC, Plaintiff/Appellant,

v.

DREW DURBIN, et al., Defendants/Appellees.

No. 1 CA-CV 25-0852
FILED 09-15-2026

Appeal from the Superior Court in Maricopa County
No. CV2024-036999
The Honorable Randall H. Warner, Judge

VACATED AND REMANDED

COUNSEL

Bache Lynch Goldsmith & Mendoza, PLLC, Tucson
By Maria del Pilar Mendoza, Frances T. Lynch
Counsel for Plaintiff/Appellant

Moon Law Firm, PLC, Mesa
By Robert J. Moon
Co-Counsel for Defendants/Appellees

Arambula Terrazas, PLLC, TX
By Kevin James Terrazas
Co-Counsel for Defendants/Appellees

PRIORITY v. DURBIN
Decision of the Court

MEMORANDUM DECISION

Vice Chief Judge David D. Weinzweig delivered the decision of the Court,
in which Presiding Judge D. Steven Williams and Judge Anni Hill Foster
joined.

W E I N Z W E I G, Vice Chief Judge:

¶1 Priority Medical Group, LLC (“Priority”) appeals the superior
court’s order denying its motion to compel arbitration. For the reasons
below, we vacate the order and remand with instructions to compel
arbitration.

FACTS AND PROCEDURAL BACKGROUND

¶2 Priority held a 50% membership interest in each of two
medical practices: AZ Premier Medical Providers, LLC (“Premier”) and
Drew Durbin, DO, LLC (“Durbin LLC”) (collectively, “Companies”).
Priority acquired both interests in April 2022 when it signed two operating
agreements—one with PDMI, LLC (“PDMI”), and one with Durbin himself.
For our purposes, the operating agreements (“Agreements”) were identical.

¶3 The Agreements name Priority as a Member in several places.
Section 1.7 lists Priority as a “Member” holding a 50% interest in each of the
Companies. Schedule A to the Agreements lists Priority as a 50% capital
contributor. And Section 1.8 defines “Member” as “each of the Members
named in this Agreement and any other Person that becomes a Member
pursuant to this Agreement.” None of these provisions is qualified or
carries an expiration date.

¶4 Section 5.2 of the Agreements authorizes a Member to
voluntarily withdraw from the Companies with written notice to the other
Members. That notice “triggers” a dissolution of the Companies under
Article VII, unless the remaining Member elects, within ninety days, to
continue the business. If the Companies continue, Section 5.2 entitles the
departing Member to a discounted appraisal value for its interest, paid over
seven years, with the first payment due “at the closing for the sale of the
Withdrawn Member’s Interest.” Section 5.3 then sets out how the parties
get that appraisal: they jointly select an appraiser, and the withdrawing
Member pays for it.

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¶5 Section 8.18 describes how Members resolve disputes, and it
sets out two tracks. Section 8.18(b) through (d) governs “business
dispute[s]”: the Members must meet, then attempt non-binding mediation,
then (if that fails) submit to binding arbitration. Section 8.18(e) is broader
and separate: on a Member’s written request, “all claims and controversies
arising out of or in connection with” the Agreements go straight to binding
arbitration, with no meeting or mediation requirement.

¶6 In April 2024, Priority gave notice that it was withdrawing
from both Companies. Durbin and PDMI elected to continue operating
rather than dissolve. The parties jointly selected an appraiser and began
the Section 5.3 process. During that process, (1) Priority discovered that
Durbin had filed a final tax return for Premier back in 2022 when Priority
acquired its interest, and (2) Durbin and PDMI claimed, without
documentation, that Premier’s assets had been absorbed into Durbin LLC.
Priority believed these facts supported claims for fraud, conversion,
rescission and violations of the federal Racketeer Influenced and Corrupt
Organizations (“RICO”) statute. It invoked Section 8.18 and asked for
mediation. Durbin and PDMI refused.

¶7 Priority then asked the superior court to compel mediation
and, if that failed, arbitration. Durbin and PDMI opposed the motion,
arguing that Priority lacked standing to invoke Section 8.18 because it lost
its Member status when it supplied the withdrawal notice. The superior
court agreed and dismissed the case, reasoning that Section 5.2’s use of the
term “Withdrawn Member” showed that a Member who gives notice of
withdrawal immediately ceases to be a “Member” for purposes of the
Agreements.

¶8 Priority timely appealed. We have jurisdiction. A.R.S. § 12-
2101.01(A)(1).

DISCUSSION

I. Standard of Review.

¶9 We review the denial of a motion to compel arbitration de
novo. Sun Valley Ranch 308 Ltd. P’ship ex rel. Englewood Props., Inc. v. Robson, 231 Ariz. 287, 291, ¶ 9 (App. 2012). Contract interpretation is also a question
of law reviewed de novo. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588,
593, ¶ 9 (App. 2009). If the parties’ intent is clear and unambiguous from
the contract language, we apply it as written. Id. If there is an ambiguity
in the contract, we resolve it in favor of arbitration. Gray v. GC Servs., LP,
256 Ariz. 480, 485, ¶ 13 (App. 2023).

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II. The Superior Court Properly Decided Whether an Arbitration
Agreement Existed Between These Parties.

¶10 Priority argues the superior court exceeded its authority by
deciding whether Priority remained a Member, rather than confining itself
to whether the Agreements contain an arbitration clause at all. We reject
that argument.

¶11 A court decides whether an arbitration agreement exists and
whether it covers a given dispute; the arbitrator decides everything else.
A.R.S. §§ 12-3006(B), -3007. That first question is not limited to whether an
arbitration clause appears somewhere in a signed document. The court
must decide whether the parties entered into a valid and binding
arbitration clause. An arbitration clause that binds only “Members” does
not bind a non-Member, whatever the clause says. So when Durbin and
PDMI argued that Priority had ceased to be a Member, they were not
raising a defense to an existing arbitration agreement—they were disputing
whether one existed at all. The superior court had to resolve that dispute
before it could order, or decline to order, arbitration.

¶12 Priority leans on Foy v. Thorp, 186 Ariz. 151 (App. 1996), and
similar cases, to argue that membership status is a merits question for the
arbitrator. Those cases hold no such thing. They hold that once a valid
arbitration agreement binds the parties, the arbitrator—not the court—
decides the substance of the dispute, including defenses to the underlying
claims. See, e.g., id. at 153–54. They do not hold that a court must presume
an arbitration agreement.

III. Priority Remained a Member and Retained its Right to Invoke
Section 8.18 When it Sought Mediation and Arbitration.

¶13 The superior court asked the right question, but we reach a
different answer.

A. Priority is a Member under the plain terms of the
Agreements.

¶14 Section 1.8 defines “Member” as “each of the Members named
in this Agreement and any other Person that becomes a Member pursuant
to this Agreement.” Section 1.7 names Priority as a Member of both Premier
and Durbin LLC, each with a 50% interest, and Schedule A lists Priority as
a 50% capital contributor to each of the Companies. At minimum, Priority
was a Member when it signed the Agreements. The only question is
whether Priority lost that status before it invoked Section 8.18.

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B. Sections 5.2 and 5.3 describe a process, not an event.

¶15 Sections 5.2 and 5.3 confirm that notice under Section 5.2
starts the withdrawal process. It does not, by its own terms, complete it.

¶16 Section 5.3 refers to a Member who gives notice as a
“Withdrawing Member.” That Member has triggered the withdrawal
process, but not withdrawn:

Within thirty (30) days after withdrawal is initiated, the
Company and the Withdrawing Member shall mutually
agree to appoint an appraiser to determine the value of the
Company. The Withdrawing Member shall pay the fees and
other costs of the mutually appointed appraiser.

Nothing in the Agreements says a Withdrawing Member dissociates the
moment the notice goes out.

¶17 Section 5.2 reinforces this interpretation. A “Withdrawn
Member,” as opposed to a “Withdrawing Member,” is entitled to a
“discounted Appraisal Value of his/her Membership Interests” paid out
over seven annual installments—with the first payment due “at the closing
for the sale of the Withdrawn Member’s Interest.” The Agreements tie a
Member’s payout to a future closing and condition the amount owed on an
appraisal process that has not yet run its course.

¶18 The grammar tracks the same distinction: “Withdrawing” is a
present participle, denoting an action still in progress; “Withdrawn” is a
past participle, denoting one that has been completed. That structure and
grammar do not read as a rule terminating a Member’s status the moment
notice is sent.

C. Section 5.1(C) confirms the Agreements tie status changes to
closing, not to notice.

¶19 Section 5.1(C) governs a different withdrawal mechanism—a
Member’s sale of its interest to another Member under a right of first
refusal—but it uses the same drafting convention and answers the same
interpretive question. It labels the parties the “Offering Member” and the
“Receiving Member” throughout the transaction, and it provides that
“[f]ollowing the closing, the Receiving Member, as the sole remaining
Member, shall have the right to continue the Company.” That language ties
a change in membership status to the closing of the transaction, not to the
Offering Member’s initial notice of intent to sell. We do not import Section

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5.1(C)’s mechanics wholesale into Section 5.2—they govern different
transactions. But the same drafters wrote both sections, and both use
“closing” as the operative event that changes who holds membership
status. We read Section 5.2 the same way.

D. The same reasoning answers the superior court’s reliance on
Section 5.2’s payment language.

¶20 The superior court reads Section 5.2’s instruction that “the
Members” pay the “Withdrawing Member” to mean Priority could not
remain a Member, reasoning that a Member cannot sensibly be required to
pay itself. But that reasoning conflates who gets paid with who counts as a
Member. Section 5.2, like Section 5.1(C), uses “the Members” and “the
Withdrawing Member” only to identify who pays whom during a
withdrawal—not to declare that the payee no longer held membership
status. A Withdrawing Member simply does not participate in that
particular payment obligation, just as an Offering Member under Section
5.1(C) does not pay itself for its own interest. Neither provision purports
to amend Section 1.8’s definition of “Member.”

E. Sections 3.5 and 4.1 describe a Member’s ongoing rights;
they do not say when membership ends.

¶21 The superior court also pointed to Section 3.5, which governs
distributions to Members, and Section 4.1, which governs Members’
management rights, as further evidence that Priority lost its membership
status upon giving notice. Neither provision supports that conclusion.
Sections 3.5 and 4.1 describe how the Members exercise ordinary rights
while the Companies operate; they say nothing about withdrawal, and
nothing about when a Member’s status changes. Section 1.8 defines
“Member” without qualification, and Sections 3.5 and 4.1 do not narrow
that definition merely by failing to mention Withdrawing Members.

F. Section 8.3 reinforces that membership tracks the
underlying capital interest.

¶22 Section 8.3 requires each of the Companies to maintain “[a]
written list showing the names, last known addresses and Capital Interests
of all Members.” That provision assumes membership and capital interest
travel together—the list exists to record who holds what interest, because
that is what makes someone a Member. This corroborates, but does not
independently establish, the conclusion we reach from the other sections.
A Member’s status tracks its underlying interest in the company, and that

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interest does not disappear the moment the Member sends a withdrawal
letter.

G. A Withdrawing Member remains a Member until closing.

¶23 Reading Sections 1.8, 5.2, 5.3, 5.1(C) and 8.3 together, the
Agreements describe a phased process, not one event. A “Withdrawing
Member” is a Member who has given notice of withdrawal but has not yet
completed dissociation from the company. That Member retains its rights
under the Agreements, including the right to invoke Section 8.18, until the
sale of its interest closes and its Membership Interest, as defined in Section
1.8, terminates. Only then does the Member become a “Withdrawn
Member” and lose those rights.

H. No closing occurred, and Priority retained its rights.

¶24 The record contains no evidence that any closing occurred on
Priority’s interest in either of the Companies. The appraisal process itself
had not concluded. Rather, Priority invoked Section 8.18 while that process
was ongoing. Under our reading of the Agreements, Priority remained a
Member—specifically, a Withdrawing Member—when it invoked Section
8.18’s dispute resolution provisions. Even if the language were ambiguous,
however, Arizona law requires that we resolve it in favor of arbitration.
Gray, 256 Ariz. at 485, ¶ 13. The superior court erred in holding otherwise.

IV. Priority’s Claims Fall Within Section 8.18’s Scope.

¶25 Durbin and PDMI argue, in the alternative, that even if
Priority remained a Member, it never raised a “controversy” or “business
dispute” covered by Section 8.18. We disagree. Priority’s claims—that
Durbin misrepresented Premier as an active, ongoing business while
quietly filing a final tax return for it, and that Durbin and PDMI have never
documented their claim that Durbin LLC absorbed Premier’s assets—are
not a disagreement over an appraiser’s math. They implicate potential
fraud, conversion and RICO claims arising directly out of the parties’
relationship under the Agreements. Section 8.18(e) requires arbitration of
“all claims and controversies arising out of or in connection with” the
Agreements. See Sun Valley Ranch, 231 Ariz. at 292, ¶ 14 (describing
similarly broad language as “the paradigm of a broad clause”). We need
not decide whether Priority raised a “business dispute,” because Priority’s
claims are, at minimum, a “claim or controversy.”

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¶26 Because Priority’s claims arise out of and are connected with
the Agreements, they fall within the scope of Section 8.18(e)’s arbitration
clause.

CONCLUSION

¶27 We vacate the superior court’s order denying Priority’s
motion and dismissing the case. We remand with instructions that the
superior court enter an order compelling Durbin and PDMI to arbitrate
Priority’s claims under Section 8.18(e).

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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