Cullen v. Koty-Leavitt Ins. Agency, Inc., 2 CA-CV 2007-0020.

CourtCourt of Appeals of Arizona
Citation168 P.3d 917,216 Ariz. 509
Docket NumberNo. 2 CA-CV 2007-0020.,2 CA-CV 2007-0020.
PartiesMichael CULLEN, a single man; and Jana Coronado, a single woman, Plaintiffs/Appellants, v. KOTY-LEAVITT INSURANCE AGENCY, INC., an Arizona corporation; and Auto Owners Insurance Company, a foreign corporation, Defendants/Appellees.
Decision Date18 October 2007

Haralson, Miller, Pitt, Feldman, & McAnally, P.L.C. By Thomas G. Cotter, Tucson, Attorneys for Plaintiffs/Appellants.

Harper Christian Dichter Graif P.C. By Kevin C. Barrett and Jay R. Graif, Phoenix, Attorneys for Defendants/Appellees.

OPINION

BRAMMER, Judge.

¶ 1 Appellants Michael Cullen and Jana Coronado appeal from the trial court's grant of appellee Auto Owners Insurance Company's (Auto Owners) motion to dismiss Cullen's and Coronado's action for breach of contract and bad faith denial of Cullen's insurance claim, made pursuant to Rule 12(b)(6), Ariz. R. Civ. P. Finding no error, we affirm.

Factual and Procedural Background

¶ 2 "In reviewing the trial court's decision to dismiss for failure to state a claim, we assume as true the facts alleged in the complaint." Doe ex rel. Doe v. State, 200 Ariz. 174, ¶ 2, 24 P.3d 1269, 1270 (2001). In February 2004, Cullen was injured while riding as a passenger in a vehicle owned by a third party. He filed a claim for benefits under the underinsured motorist (UIM) provision of an insurance policy issued by Auto Owners that covered a different vehicle "used exclusively by . . . Jana Coronado and her family," including her son, Cullen. The named insured on that policy was Sierrita Mining and Ranch Company (Sierrita), which apparently owned the vehicle. Cullen and Coronado describe Sierrita as an entity that provided the insured vehicle to Coronado and her family for their exclusive use. The insurance policy named no insureds in addition to Sierrita and did not refer in any way to either Coronado or Cullen.

¶ 3 After Auto-Owners denied Cullen's claim, he and Coronado sued Auto Owners, alleging it had breached the insurance contract and had acted in bad faith by denying benefits to Cullen. The complaint also alleged that Koty-Leavitt Insurance Agency, Inc., which had sold the policy to Sierrita, had "failed to use reasonable care in structuring the [UIM] polic[y]."

¶ 4 Auto Owners moved to dismiss the claims against it pursuant to Rule 12(b)(6), Ariz. R. Civ. P., arguing that Coronado was not a proper plaintiff because she "ha[d neither] suffered any injuries related to an automobile accident" nor "made a claim under the Policy" and, as to Cullen, that "under the express terms of the policy, UIM benefits do not extend to Cullen," and he "had no reasonable expectation of coverage." The trial court determined that, because Coronado had never made a claim under the policy, she could not meet the prerequisites for a bad faith claim against Auto Owners. Thus, the court granted the motion to dismiss Coronado's claims "[b]ecause no amendment to the complaint can cure this deficiency." As to Cullen, the court determined the facts in his complaint "do not lend themselves to a finding of coverage." It also stated the policy did not cover Cullen because he "was not traveling in an automobile that was covered under the . . . policy when he was injured and the . . . policy did not offer `portable' UIM coverage." Therefore, the court concluded, Cullen "ha[d] not stated a claim upon which relief can be granted."

¶ 5 Pursuant to the parties' stipulation,1 the court "stay[ed] the proceedings of this case against Koty-Leavitt Insurance Agency, Inc. pending the outcome of [Cullen's and Coronado's] appeal of the dismissal of [their] claims against Auto Owners." The court, determining "there [was] no just reason for delay," then entered a judgment in favor of Auto Owners and awarded it attorney fees. This appeal followed.

Discussion
Coronado

¶ 6 Although her name appears in the notice of appeal and in the briefs she and Cullen filed in this court, Coronado does not argue the trial court erred in granting Auto Owners's motion to dismiss her claims. The court dismissed her claims on a different basis than it did Cullen's, determining she could not state a claim for relief because, inter alia, she had not filed a claim for benefits with Auto Owners. Accordingly, she has abandoned this issue on appeal, and we affirm the court's dismissal of her claims against Auto Owners. See Torrez v. Knowlton, 205 Ariz. 550, n. 1, 73 P.3d 1285, 1287 n. 1 (App.2003); Ariz. R. Civ.App. P. 13(a)(6) (appellant's brief shall contain "the contentions of the appellant with respect to the issues presented, and the reasons therefor with citations to the authorities, statutes and parts of the record relied on").

Standard of Review

¶ 7 Cullen's briefs assert facts that appear neither in his complaint nor in the insurance contract. The trial court expressly declined to treat Auto Owners's motion to dismiss, made pursuant to Rule 12(b)(6), Ariz. R. Civ. P., as a motion for summary judgment and considered in ruling on the motion only "the contents of the pleadings, assuming the truth of all allegations contained in the Complaint, and incorporating the insurance contract referenced in the Complaint and Answer."2 As a threshold question, we must determine whether the court erred by addressing Auto Owners's motion as a motion to dismiss rather than a motion for summary judgment.3 See Ariz. R. Civ. P. 12(b) ("If, on a motion . . . to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment. . . .").

¶ 8 A contract central to the plaintiff's claim, however, is not a "matter[] outside the pleadings" for the purposes of Rule 12(b)(6). See In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007) ("[B]ecause the defendants attached the contracts to their motions to dismiss, the contracts were referred to in the complaints, and the contracts are central to the plaintiffs' claims, we may consider the terms of the contracts in assessing the motions to dismiss."); Broder v. Cablevision Sys. Corp., 418 F.3d 187, 196 (2d Cir.2005) (when considering motion to dismiss, court may consider contract integral to complaint "even if it is not formally incorporated by reference," and court need not rely on plaintiff's description of contract terms and "may look to the agreement itself"); Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir.2003) ("In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss."); cf. Long v. City of Glendale, 208 Ariz. 319, ¶¶ 31-32, 93 P.3d 519, 528-29 (App.2004) (in context of motion to dismiss, trial court may consider whether contract language "reasonably susceptible of the meaning asserted" by party seeking to use parole evidence to vary written terms of the contract). Although the federal cases cited above are not controlling authority, because Arizona's Rule 12 is similar to Rule 12 of the federal rules, we may "give great weight to the federal interpretations of" that rule. Edwards v. Young, 107 Ariz. 283, 284, 486 P.2d 181, 182 (1971).

¶ 9 Cullen asserted at oral argument in this court that the above rule is a "minority" rule and we should not adopt it. Our research does not support his assertion. Moreover, the cases Cullen cited at oral argument are inapposite. He first relied on Colonial Tri-City Ltd. Partnership v. Ben Franklin Stores, Inc., 179 Ariz. 428, 880 P.2d 648 (App.1993). There, Division One of this court determined the trial court had erred by treating defendant's motion as a motion to dismiss instead of one for summary judgment because the trial court had considered a contract attached to the motion in reaching its decision. Id. at 431, 880 P.2d at 651. The contract in question, however, was not the lease contract that allegedly had been breached, but was an assignment contract in which the defendant had assigned its rights and duties under the original lease contract to a third party. Id. at 430, 880 P.2d at 650. Thus, the assignment contract was not central to the plaintiff's claim, but instead to the defendant's proposed defense. Cullen also relied on Zielke v. Wausau Memorial Hospital, 529 F.Supp. 571 (W.D.Wisc.1982). There, the federal trial court declined to consider a contract the defendant had attached to its motion to dismiss. Id. at 578. The contract, however, was not a contract between the plaintiff and alleged tortfeasor but between the tortfeasor and his insurance company, id., and thus, again, was not central to the plaintiff's claim.

¶ 10 Moreover, although Cullen submitted additional affidavits and a statement of facts, it was within the trial court's discretion under Rule 12(b)(6) to disregard those materials and instead consider the sufficiency of his complaint, in light of the contract at issue; the court explicitly stated that it had done so. See Garita Hotel Ltd. P'ship v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18 (1st Cir.1992) (motion to dismiss "is not automatically transformed into a motion for summary judgment simply because matters outside the pleadings are filed with" trial court, and, if trial court "chooses to ignore the supplementary materials and determines the motion under the Rule 12(b)(6)[, Fed.R.Civ.P.] standard, no conversion occurs"); Ware v. Assoc. Milk Prod., Inc., 614 F.2d 413, 414 (5th Cir.1980) ("Although Rule 12(b)[, Fed.R.Civ. P.,] provides that a 12(b)(6) motion shall be treated as one for summary judgment when matters outside the record are presented to the court and not excluded, in the instant case the express wording of the Order of Dismissal affirmatively indicates that the district court did not consider the extra-pleading matters."); Kulwicki v. Dawson, 969 F.2d 1454, 1462 (3d Cir.1992) ("Where a district court explicitly confines its ruling to...

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