SUPREME COURT OF ARIZONA
En Banc
MICHAEL CULLEN, a single man; ) Arizona Supreme Court
and JANA CORONADO, a single ) No. CV-07-0402-PR
woman, )
) Court of Appeals
Plaintiffs/Appellants, ) Division Two
) No. 2 CA-CV 07-0020
v. )
) Pima County
AUTO-OWNERS INSURANCE COMPANY, ) Superior Court
a foreign corporation, ) No. C20061255
)
Defendant/Appellee. ) O P I N I O N
)
__________________________________)
Appeal from the Superior Court in Pima County
The Honorable Deborah Bernini, Judge
AFFIRMED
________________________________________________________________
Opinion of the Court of Appeals, Division Two
216 Ariz. 509, 168 P.3d 917 (App. 2007)
VACATED IN PART; AFFIRMED IN PART
________________________________________________________________
HARALSON MILLER PITT FELDMAN & McANALLY, P.L.C. Tucson
By Stanley G. Feldman
Thomas G. Cotter
Rebecca A. Reed
Attorneys for Michael Cullen and Jana Coronado
HARPER CHRISTIAN DICHTER GRAIF, P.C. Phoenix
By Kevin C. Barrett
Jay R. Graif
Lara E. Goldfarb
Attorneys for Auto-Owners Insurance Company
CHARLES M. BREWER, LTD. Phoenix
By David L. Abney
Attorneys for Amicus Curiae Arizona Trial Lawyers Association
1
ARIZONA CENTER FOR LAW IN THE PUBLIC INTEREST Phoenix
By Timothy M. Hogan
Attorneys for Amicus Curiae Arizona Center for Law in the Public
Interest
________________________________________________________________
M c G R E G O R, Chief Justice
¶1 Arizona Rule of Civil Procedure 8(a)(2) (Rule 8)
requires that all pleadings that set forth a claim for relief
“shall contain . . . [a] short and plain statement of the claim
showing that the pleader is entitled to relief.” We granted
review to dispel any confusion as to whether Arizona has
abandoned the notice pleading standard under Rule 8 in favor of
the recently articulated standard in Bell Atlantic Corp. v.
Twombly, 127 S. Ct. 1955 (2007). We hold that Rule 8, as
previously interpreted by this Court, governs the sufficiency of
claims for relief.
I.
¶2 In February 2004, Michael Cullen was injured in an
accident involving an automobile owned and operated by a third
party. Cullen received benefits from the third party’s
insurance policy and also filed a claim for underinsured
motorist (UIM) benefits with Auto-Owners Insurance Company
(Auto-Owners). Cullen had no individual insurance policy with
Auto-Owners, but filed the claim under an insurance policy that
covered a Dodge Caravan used by his mother, Jana Coronado.
2
Sierrita Mining and Ranch Company owned and purchased automobile
insurance for the Dodge Caravan, and provided the vehicle to
Coronado for her and her family’s exclusive use. The insurance
policy, issued by Auto-Owners and sold by Koty-Leavitt Insurance
Agency, listed Sierrita as the named insured. Auto-Owners
denied Cullen’s UIM claim.
¶3 Cullen and Coronado subsequently sued Auto-Owners for
breach of the insurance contract and denial of benefits in bad
faith. Pursuant to Arizona Rule of Civil Procedure 12(b)(6),
Auto-Owners moved to dismiss the suit for failure to state a
claim upon which relief could be granted. The trial judge
granted Auto-Owners’ motion to dismiss.1
¶4 In affirming the trial court’s judgment, the court of
appeals discussed the appropriate standard of review for a
motion to dismiss, stating that “recent standards articulated by
our supreme court do not permit a trial or appellate court to
speculate about hypothetical facts that might entitle the
plaintiff to relief.” Cullen v. Koty-Leavitt Ins. Agency, Inc.,
216 Ariz. 509, 515 ¶ 12, 168 P.3d 917, 923 (App. 2007). The
1
Cullen and Coronado’s original suit included a claim
against Koty-Leavitt Insurance Agency for negligence. The
parties agreed to stay claims pending against Koty-Leavitt until
resolution of the trial court’s order dismissing the complaint
against Auto-Owners. The parties stipulated that if Auto-Owners
prevailed on appeal, Cullen and Coronado would voluntarily
dismiss all claims against Koty-Leavitt.
3
court concluded that dismissal is appropriate only if a
plaintiff is not entitled to relief, as a matter of law, on any
interpretation of the facts alleged in the plaintiff’s
complaint. Id. The court’s opinion also discussed the recent
United States Supreme Court decision in Twombly. Id. ¶¶ 13-15.
¶5 Cullen petitioned this Court for review, arguing that
the court of appeals erroneously relied on Twombly to revise
Rule 8’s notice pleading requirements, in contravention of this
Court’s rulemaking authority. Today we consider two limited
issues raised in Cullen’s petition: (1) Does this Court have
exclusive authority to change the notice pleading standard under
Rule 8?; and (2) Should Rule 8 be re-interpreted to modify the
notice pleading standard established by this Court in favor of a
more fact-specific pleading standard?2 Whether this Court has
abandoned notice pleading standards under Rule 8 presents an
issue of statewide importance. We exercise jurisdiction
pursuant to Article 6, Sections 5.3 and 5.5, of the Arizona
Constitution and Rule 23(c) of the Arizona Rules of Civil
2
We granted review of the third issue presented in the
petition: When a court acts as a fact-finder on a motion to
dismiss, may it disregard supplemental factual allegations not
set forth in the complaint? We conclude, after further review
of the record, that the trial court did not act as fact-finder.
Through an order filed contemporaneously with this Opinion,
therefore, we dismiss the third issue as improvidently granted.
We also denied review of the fourth issue presented in the
petition concerning Cullen’s reasonable expectation of
underinsured motorist coverage.
4
Appellate Procedure.
II.
A.
¶6 Arizona courts assess the sufficiency of a claim under
Rule 8’s requirement that a pleading contain a “short and plain
statement of the claim showing that the pleader is entitled to
relief.” Under Rule 8, Arizona follows a notice pleading
standard, the purpose of which is to “give the opponent fair
notice of the nature and basis of the claim and indicate
generally the type of litigation involved.” Mackey v. Spangler,
81 Ariz. 113, 115, 301 P.2d 1026, 1027-28 (1956).
¶7 If a pleading does not comply with Rule 8, an opposing
party may move to dismiss the action for “[f]ailure to state a
claim upon which relief can be granted.” Ariz. R. Civ. P.
12(b)(6). When adjudicating a Rule 12(b)(6) motion to dismiss,
Arizona courts look only to the pleading itself and consider the
well-pled factual allegations contained therein. See, e.g.,
Dressler v. Morrison, 212 Ariz. 279, 281 ¶ 11, 130 P.3d 978, 980
(2006); Long v. Ariz. Portland Cement Co., 89 Ariz. 366, 367-68,
362 P.2d 741, 742 (1961). Courts must also assume the truth of
the well-pled factual allegations and indulge all reasonable
inferences therefrom. Doe ex rel. Doe v. State, 200 Ariz. 174,
175 ¶ 2, 24 P.3d 1269, 1270 (2001); Long, 89 Ariz. at 367, 362
P.2d at 742. Because Arizona courts evaluate a complaint’s
5
well-pled facts, mere conclusory statements are insufficient to
state a claim upon which relief can be granted. The inclusion
of conclusory statements does not invalidate a complaint, Long,
89 Ariz. at 369, 362 P.2d at 743, but a complaint that states
only legal conclusions, without any supporting factual
allegations, does not satisfy Arizona’s notice pleading standard
under Rule 8.
B.
¶8 The language of Rule 8 mirrors its federal
counterpart. Compare Ariz. R. Civ. P. 8(a)(2) with Fed. R. Civ.
P. 8(a)(2). Despite the similar language, this Court and the
United States Supreme Court have articulated the pleading
requirement somewhat differently. In Conley v. Gibson, 355 U.S.
41 (1957), the United States Supreme Court established a
pleading standard broader than that adopted by Arizona. Rather
than direct courts to consider only the reasonable inferences
that can be drawn from well-pled facts, the Supreme Court held
that “a complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would
entitle him to relief.” Id. at 45-46 (emphasis added).
¶9 In a 2007 antitrust case, however, the Supreme Court
retreated from Conley’s formulation, describing the “no set of
facts” language as “an incomplete, negative gloss on an accepted
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pleading standard.” Twombly, 127 S. Ct. at 1969. The Court
rejected the language in Conley and clarified the federal
standard for filing a complaint, at least in an antitrust class
action. According to Twombly, Federal Rule of Civil Procedure
8(a) requires that a complaint include sufficient factual
allegations to demonstrate that the plaintiff’s claim for relief
is “plausible.” Id. at 1965-66. The Court concluded that a
complaint must be dismissed if “the plaintiffs . . . have not
nudged their claims across the line from conceivable to
plausible.” Id. at 1974.
C.
¶10 Arizona has not revised the language or interpretation
of Rule 8 in light of Twombly. If our prior interpretation of
Rule 8 is to change, that change may occur only through one of
two discrete methods. First, the Arizona Constitution grants
this Court the “[p]ower to make rules relative to all procedural
matters in any court.” Ariz. Const. art. 6, § 5, cl. 5. This
power includes the “authority to interpret rules of procedure.”
Nielson v. Patterson, 204 Ariz. 530, 531 ¶ 5, 65 P.3d 911, 912
(2003). Because this Court has the final say in the
interpretation of procedural rules, only this Court can revise
or reconsider its prior interpretation of the rules, even if a
lower court believes that subsequent events may call into
question a prior interpretation.
7
¶11 Rule 28 of the Rules of the Supreme Court of Arizona
provides the second method for revising a rule of procedure.
Rule 28 permits any person, association, or public agency to
file a petition to adopt, amend, or repeal a rule of procedure.
Ariz. R. Sup. Ct. 28(A)(1). Proposed rule changes are made
available for public comment and may be the subject of public
hearings. Id. at 28(A)(3), (B), (C), (E). Once the comment
period expires and public hearings have concluded, the Court
acts on the proposed rule. Id. at 28(F).
¶12 Because the Arizona Constitution grants this Court the
power to create all procedural rules, the Arizona Rules of Civil
Procedure may be revised only through our inherent power to
interpret procedural rules or through the procedures established
in Rule 28. See Ariz. Const. art. 6, § 5, cl. 5. We have not
changed our interpretation of Rule 8 and have not received any
Rule 28 petition. The standard described in ¶¶ 6 and 7,
therefore, continues to apply.
D.
¶13 If the court of appeals had used its opinion to revise
our interpretation of Rule 8, the court would have exceeded its
authority. We conclude, however, that the court of appeals did
not purport to modify or abandon Arizona’s notice pleading
standard under Rule 8 simply by citing the Twombly decision.
¶14 In its opinion, the court first addressed the standard
8
that Cullen advocated: The court could “only affirm the trial
court’s ruling if there are no possible facts that would allow”
Cullen’s claim. Cullen, 216 Ariz. at 514 ¶ 11, 168 P.3d at 922
(quotation omitted). The court dismissed Cullen’s proposed
standard of review as inaccurate and contrary to this Court’s
recent articulations. Id. at 514-15 ¶ 12, 168 P.3d at 922-23.
The court identified the correct notice pleading standard, as
discussed above, citing our recent decisions in Dressler, 212
Ariz. at 281 ¶ 11, 130 P.3d at 980, Doe, 200 Ariz. at 175 ¶ 2,
24 P.3d at 1270, and Mohave Disposal, Inc. v. City of Kingman,
186 Ariz. 343, 346, 922 P.2d 308, 311 (1996). Cullen, 216 Ariz.
at 514-15 ¶ 12, 168 P.3d at 922-23. The court also correctly
noted that Rule 8 does “not permit a trial or appellate court to
speculate about hypothetical facts that might entitle the
plaintiff to relief.” Id. at 515 ¶ 12, 168 P.3d at 923.
Instead, the court stated, courts are limited to considering the
well-pled facts and all reasonable interpretations of those
facts. Id. at 514-15 ¶ 12, 168 P.3d at 922-23.
¶15 The court of appeals engendered some confusion,
however, when it included an additional discussion about
Twombly. See id. at 515 ¶¶ 13-15, 168 P.3d at 923.3 The court
3
In their briefs to the court of appeals, neither party
cited Twombly nor advocated for the court to adopt Twombly’s
pleading standards.
9
referenced Twombly because the decision “addressed a similar
question” under the federal rules of civil procedure. Id. ¶ 13
(emphasis added). The court concluded that even under the
federal rules, courts cannot speculate about unpled facts. Id.
¶ 15. Notably, the court of appeals did not rely on Twombly to
establish a “plausibility” requirement, nor even once mention
the term. Furthermore, although the court cited Twombly for
additional support, the discussion of Twombly was wholly
unnecessary to the court’s conclusion. Indeed, the court
correctly articulated the notice pleading standard under Rule 8
and reached its decision by relying on Arizona cases. Id. at
514-15 ¶ 12, 168 P.3d at 922-23. We conclude, therefore, that
the court of appeals properly applied Arizona’s Rule 8 pleading
standards.
¶16 Although the court of appeals applied the correct
notice pleading standard, the briefs to this Court demonstrate
that the opinion has resulted in some confusion. To eliminate
any confusion, we vacate that portion of the court of appeals’
opinion citing to Twombly. Cullen, 216 Ariz. at 515 ¶¶ 13-15,
516 ¶ 16, 168 P.3d at 923, 924. If Arizona elects to revise the
notice pleading standard for stating a claim under Rule 8, such
revision will occur through an interpretation by this Court or
through the procedures set forth in Rule 28.
10
III.
¶17 For the foregoing reasons, we vacate the portion of
the court of appeals’ opinion citing Twombly and affirm the
remainder of the opinion.
_______________________________________
Ruth V. McGregor, Chief Justice
CONCURRING:
_______________________________________
Rebecca White Berch, Vice Chief Justice
_______________________________________
Michael D. Ryan, Justice
_______________________________________
W. Scott Bales, Justice
H U R W I T Z, Justice, concurring in part and dissenting in
part
¶18 The Court correctly decides today that Bell Atlantic
Corp. v. Twombly, 127 S. Ct. 1955 (2007), does not provide the
standard for determining under Arizona Rule of Civil Procedure
12(b)(6) whether a complaint states a claim upon which relief
can be granted. I therefore concur in ¶¶ 1-12 of the majority
opinion.
¶19 I am less convinced than my colleagues, however, that
the court of appeals did not use the Twombly standard to
11
evaluate the complaint in this case. Four full paragraphs of
the opinion below are devoted to analysis of Twombly. Cullen v.
Koty-Leavitt Ins. Agency, Inc., 216 Ariz. 509, 515-516 ¶¶ 13-16,
168 P.3d 917, 923-24 (App. 2007). I am reluctant to conclude
that such a detailed discussion is simply dictum.
¶20 As the Court notes, we did not grant that portion of
the petition for review asking us to determine whether the
complaint actually stated a claim upon which relief can be
granted. Op. ¶ 5, n.2. The plaintiffs are entitled to have at
least one appellate court evaluate their complaint under the
appropriate legal standard, and I would remand this case to the
court of appeals to do so. I therefore dissent from the
majority opinion insofar as it affirms the judgment of the court
of appeals sustaining the dismissal of the complaint.
__________________________________
Andrew D. Hurwitz, Justice
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