Star Pass Resort Developments, LLC v. Pima County, No. 2 CA-CV 2023-0082 (App. Div. II, May 22, 2024) (J. Sklar) https://www.appeals2.az.gov/decisions/CV20230082Opinion.pdf

TRIAL COURT HAS WIDE DISCRETION IN CONVERTING MOTION TO DISMISS INTO MOTION FOR SUMMARY JUDGMENT AND MAY DO SO BEFORE ANSWER IS FILED, MAY LIMIT SUPPLEMENTAL BRIEFING, MAY DECIDE NOT TO REQUIRE STATEMENTS OF FACT OR ALLOW FOR DISCOVERY AND MAY AWARD ATTORNEYS' FEES IN THE FACE OF BLOCK BILLING, AND WITHOUT PROOF THE FEES WERE ACTUALLY PAID

This case involves a dispute over who is entitled to collect an Environmental Enhancement Fee from guests staying at the Starr Pass Resort.  The developer who bought the resort through receivership and its assignee filed suit against Pima County seeking a determination that it was entitled to the fee. Pima County did not answer the complaint but instead filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) Arizona Rules of Civil Procedure. The motion and response attached many documents resulting in the trial court converting the motion into one for summary judgement under Rule 12(d).  The trial court then allowed each party to file a seven-page supplemental memorandum with more exhibits. The trial court granted Pima County summary judgment, the plaintiff appealed, and the Arizona Court of Appeals affirmed the trial court.

Rule 12(d) of the Arizona Rules of Civil Procedure states that when a motion to dismiss relies on matters outside the pleadings it must be converted to a motion for summary judgment under Rule 56 and the parties  “must be given a reasonable opportunity to present all the material that is pertinent to the motion” when the court converts a motion to dismiss into a motion for summary judgment. Exhibits to a complaint and public records are not “outside the pleadings.” Here while there were no exhibits to the complaint and only references to public records, the motion to dismiss attached exhibits which were arguably “outside the pleadings” thus allowing the trial court to convert the motion to one for summary judgment. Contrary to the plaintiff's argument Rule 12(d) does not require the court mandate an answer to the complaint, allow for discovery or require separate statements of fact. A trial court under Rule 12(d) has broad discretion not to require any of these things. With respect to discovery, plaintiff should have moved under Rule 56(d) for the right to do discovery alleging it could not “present evidence essential to justify its opposition.”  It did not.

The trial court properly granted Pima County summary judgment finding the county was entitled to the Environmental Enhancement Fee as collateral foreclosed in the trustee sale and pursuant to the Development agreement.

Finally, the trial court properly awarded Pima County $70,170 in attorneys' fees pursuant to A.R.S. § 12-341.01 where the dispute “arose out of contract.” The trial court only abuses its discretion in awarding such fees when “there is [no] reasonable basis for the award.”  Here the court reviewed the application for fees, the affidavit supporting the request for fees and the itemized billing, found no duplication and while Arizona courts discourages “block billing” such billing does not render the award of fees here unreasonable. Pima County was not required under A.R.S. § 12-341.01 to prove the fee was actually paid.