Discover v. Steadman

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

DISCOVER BANK, Plaintiff/Appellant,

v.

DEE STEADMAN, Defendant/Appellee.

No. 1 CA-CV 20-0593
FILED 6-8-2021

Appeal from the Superior Court in Maricopa County
No. CV2019-093773
The Honorable Tracey Westerhausen, Judge

REVERSED AND REMANDED

COUNSEL

Rausch, Sturm, Israel, Enerson & Hornik, LLC, Las Vegas, Nevada
By Nicholas Hemphill Bullock
Counsel for Plaintiff/Appellant

Stoops, Denious, Wilson & Murray, P.L.C., Phoenix
By Michael T. Denious
Counsel for Defendant/Appellee
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Decision of the Court

MEMORANDUM DECISION

Judge Lawrence F. Winthrop delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Cynthia J. Bailey joined.

W I N T H R O P, Judge:

¶1 Discover Bank (“Discover”) appeals the superior court’s
dismissal with prejudice of its complaint for failure to state a claim.
Discover argues its complaint contained all necessary elements to meet
Arizona’s notice pleading standard and assert a valid breach of contract
claim. See Ariz. R. Civ. P. (“Rule”) 8(a). We agree and accordingly reverse
and remand for further proceedings consistent with this decision.

FACTS AND PROCEDURAL HISTORY

¶2 On April 4, 2019, Discover filed a single-count complaint
against Dee Steadman (“Steadman”) for breach of contract. The complaint
alleged that on or about May 28, 2014, Steadman “entered into an
agreement for the extension of credit bearing account number ending in
********4754” with Discover. The complaint stated Steadman had failed to
make any payments pursuant to the agreement since January 3, 2017, and
owed a total of $12,748.66 on the account, including interest and fees.

¶3 Steadman filed a motion for a more definite statement, asking
Discover to amend its complaint and provide details of the total amount
lent to Steadman, the dates upon which money was due, the terms of
repayment, and whether the contract was oral or in writing. Discover
opposed that motion, arguing the complaint adequately provided a “short
and plain statement of the claim showing that [Discover was] entitled to
relief,” in compliance with the requirements of Rule 8(a). Discover further
argued Steadman could determine the account at issue based on the
information provided in the complaint, including the creditor, the last four
digits of the account number, the date of her default, and the total amount
owed.

¶4 The court held a brief oral argument and then denied the
motion for a more definite statement, directed Steadman to answer the

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complaint based on the information given,1 encouraged the parties to
cooperate in the informal exchange of relevant information, and concluded
specific details about the account would be “flesh[ed] out in discovery.”

¶5 Steadman instead, some months later, filed a Rule 12(b)(6)
motion to dismiss the complaint, arguing that because Discover did not
explicitly allege a written contract, the court should conclude the contract
was oral and therefore time-barred by the applicable three-year statute of
limitation period for a debt based on a contract not evidenced in writing.
See Ariz. Rev. Stat. (“A.R.S.”) § 12-543(1). In that regard, Steadman argued
the statute of limitation began to run at the time the contract was formed in
2014, citing In re Estate of Musgrove, 144 Ariz. 168, 170 (1985) and Freeman v.
Wilson, 107 Ariz. 271, 277 (1971).

¶6 Discover responded to the motion to dismiss, contending—
without providing any documentation—that the agreement was “a contract
evidenced by writings” subject to a six-year statute of limitation period
pursuant to A.R.S. § 12-548. Discover also argued the statute of limitation
began to run on the date of Steadman’s last payment in January 2017.

¶7 The superior court granted the motion to dismiss. In its
minute entry, the court gave a brief recitation of the procedural history of
the case, summarized the parties’ arguments, laid out the standard of
review, and then concluded simply, “In its Complaint, Discover failed to
allege whether the contract was oral or written and failed to allege any
terms of that contract. The Court grants Steadman’s Motion to Dismiss.”
The court entered a final judgment of dismissal with prejudice and awarded
Steadman her attorneys’ fees and costs.

¶8 Discover filed a timely notice of appeal. We have jurisdiction
pursuant to A.R.S. § 12-2101(A)(1).

ANALYSIS

¶9 We review de novo the superior court’s dismissal of a
complaint. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). We assume
the truth of all well-pled factual allegations contained in the pleadings and
“indulge all reasonable inferences therefrom.” Cullen v. Auto-Owners Ins.
Co., 218 Ariz. 417, 419, ¶ 7 (2008). We “will not affirm the dismissal unless
satisfied as a matter of law that plaintiffs would not be entitled to relief

1 Counsel for Steadman indicated that, rather than file an answer, he
intended to file a motion to dismiss based on the statute of limitation.

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under any interpretation of the facts susceptible of proof.” Fid. Sec. Life Ins.
Co. v. Ariz. Dep’t of Ins., 191 Ariz. 222, 224, ¶ 4 (1998).

¶10 Arizona courts assess the sufficiency of a claim pursuant to
Rule 8’s requirement that a pleading contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” The purpose of
this requirement is to give the defendant “fair notice of the nature and basis
of the claim and indicate generally the type of litigation involved.” Cullen,
218 Ariz. at 419, ¶ 6 (quoting Mackey v. Spangler, 81 Ariz. 113, 115 (1956)).
The notice pleading standard has only “minimal requirements,” and “a
complaint need not set forth every fact that may be associated with a claim.”
Shepherd v. Costco Wholesale Corp., 250 Ariz. 511, 514, ¶¶ 14-15 (2021); accord
Reyes v. Town of Gilbert, 247 Ariz. 151, 159, ¶ 30 (App. 2019) (explaining
Arizona’s notice pleading standard “is a broad standard”).

¶11 In addition to a short and plain statement of the claim, Rule 8
also requires a statement of the grounds for the court’s jurisdiction and
demand for the relief sought. Here, although not a model of clarity,
Discover’s complaint met the minimum requirements of the broad notice
pleading standard pursuant to Rule 8. Discover set forth the grounds for
the superior court’s jurisdiction and made a plain statement of the alleged
breach of contract by explaining Steadman’s failure to make payments on
an “agreement for the extension of credit bearing account number ending
in ********4754” with Discover. Discover also identified the relief it sought:
the balance due on the account, along with interest and late fees, totaling
$12,748.66. The superior court erred in dismissing with prejudice
Discover’s complaint based on the fact that “Discover failed to allege
whether the contract was oral or written and failed to allege any terms of
that contract.”

¶12 On the record before us, however, the specific nature of the
contract is unclear. We cannot say as a matter of law that Discover “would
not be entitled to relief under any interpretation of the facts susceptible of
proof” because it is not clear what the applicable statute of limitation is for
the alleged agreement.2 See Fid. Sec. Life Ins. Co., 191 Ariz. at 224, ¶ 4.

2 Based on our ultimate resolution of this matter, we do not address
the merits of the parties’ arguments regarding when the cause of action
accrued or which statute of limitation applies. However, we note that the
statute of limitation is an affirmative defense, see Rule 8(d)(1)(P), and thus
Steadman bears the burden of proof in establishing such a defense. See In

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¶13 We are puzzled by Discover’s reluctance to explicitly advise
the court and Steadman regarding the nature of the agreement or to provide
any documentation, despite Steadman’s requests for additional
information. Discover’s complaint is vague regarding the agreement’s
details, and that vagueness persists in its briefs on appeal. Based on the
ambiguous pleadings, the superior court would have been well within its
discretion to either grant the motion for a more definite statement or
dismiss the complaint without prejudice to Discover refiling and providing
additional detail on the nature of the agreement between the parties. We
are equally puzzled by Steadman’s apparent reluctance to seek a good
cause exception to Rule 26.1(f)’s presumptive ban on serving discovery
requests until disclosure statements are exchanged. If authorized by the
court, any of the typical written discovery options available—non-uniform
interrogatories, requests for admission, or requests for production of
documents—would likely have provided the specific account information
and documents necessary to assist the parties and the court in determining
with certainty the nature of the contract claim and the applicable limitation
period.

¶14 In summary, questions of fact related to the nature or terms
of the agreement can be further explored on remand through the discovery
process and compliance with Rule 26.1. Accordingly, we reverse the
superior court’s dismissal of Discover’s complaint, recognizing summary
judgment proceedings may be appropriate if the facts indicate through the
discovery process that the complaint is barred as a matter of law by the
applicable statute of limitation. Based on our reversal of the motion to
dismiss, we also vacate the court’s award of attorneys’ fees and costs
without prejudice to the court reconsidering such award in light of further
proceedings.

CONCLUSION

¶15 For the foregoing reasons, we reverse the superior court’s
order dismissing Discover’s complaint with prejudice and remand for
further proceedings consistent with this decision. We also vacate the
court’s award of attorneys’ fees and costs. Pursuant to A.R.S. § 12-341, we

re Est. of Page v. Litzenburg, 177 Ariz. 84, 91 (App. 1993). Simply pointing to
the ambiguity in Discover’s complaint regarding whether the parties’
agreement was written or oral is not sufficient to presume—let alone
establish—that the agreement was oral, nor constitute adequate proof to
establish the applicable statute of limitation.

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award Discover its costs on appeal, subject to compliance with Arizona
Rule of Civil Appellate Procedure 21(b).

AMY M. WOOD • Clerk of the Court
FILED: AA

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