Strategic Development and Construction, Inc. v. 7th & Roosevelt Partners, LLC (3/18/2010)

March 24, 2010

Arizona Court of Appeals Division One Holds That, In Connection with a Motion to Dismiss, a Trial Court Has Discretion to Consider Documents That Are a Matter of Public Record or Central to the Complaint Without Converting it to a Motion for Summary Judgment.

Strategic Development and Construction (“Strategic”) sued 7th & Roosevelt Partners (“Partners”) for breach of contract, unjust enrichment, and foreclosure of a mechanics’ lien.  Partners filed a motion to dismiss.  The court granted the motion because Strategic did not respond.  Strategic asked the court to reconsider, requesting more time to respond and arguing that the court should have treated the motion to dismiss as a motion for summary judgment because Partners had included facts outside the complaint in its motion.  The court denied the motion for reconsideration, noting that the deadline for a response to a summary judgment motion had also passed.  The court did not rule on the request for additional time to respond and Strategic never filed a response to the motion to dismiss.  Strategic appealed.

Writing for a unanimous Court, Judge Johnsen upheld the trial court’s rulings on the motions, but reversed and remanded so that the trial court could rule on Strategic’s request for an extension of time.  First, The Court held that the motion to dismiss did not convert to a motion for summary judgment.  Generally, if a motion to dismiss contains “matters outside the pleading,” then the court should treat the motion as one for summary judgment.  That general rule, however, is subject to several exceptions.  A Rule 12(b)(6) motion that (1) refers to a contract or other document attached to the complaint, (2) presents a document that is a matter of public record, or (3)  refers to a document “central to the complaint” need not be treated as a motion for summary judgment.  In this case, Partners referred to Strategic’s contract, which was an exhibit to the complaint and therefore was not a matter “outside the pleading.”  In addition, Partners’ argument that the unjust enrichment claim should be dismissed as a matter of law had “assumed the truth” of Strategic’s allegations and thus did not go beyond the scope of a motion to dismiss.  Finally, Partners’ reference to publicly recorded documents – Strategic’s mechanics’ lien – did not convert the motion into a motion for summary judgment because (1) the lien was a matter of public record and, alternatively, (2) the lien was “central” to one of Strategic’s claims for relief.

Second, the Court held that the trial court properly granted Partners’ motion to dismiss.  Under Rule 7.1, if a party fails to respond to a motion to dismiss, the court has discretion to summarily grant the motion. 

Third, the Court held that the trial court properly denied the motion for reconsideration because Strategic had not responded within the time permitted for either a motion to dismiss or summary judgment. 

Finally, noting that the trial court had not ruled on Strategic’s request for an extension of time to respond to the motion to dismiss, the Court reversed the judgment and remanded the case so that the trial court could consider the request.

Judge Johnsen authored the opinion; Judges Orozco and Thompson concurred.

PRACTICE NOTE: The Court rejected Strategic’s argument that it was entitled to delay responding to the motion to dismiss until the trial court signaled whether it was converting the motion to a summary judgment motion.  The Court explained that, although a court must give a non-moving party an opportunity to present its own facts before entering summary judgment, the non-moving party must make a timely response to the motion.  If the motion is clearly subject to conversion, then the response must be made within the time allowed for a summary judgment motion.  If a party is uncertain about conversion, the Court suggested that the parties together propose a briefing schedule to the court or respond to the motion to dismiss and also ask for additional time to supplement the record if the motion is converted.