Cullen v. Auto-Owners Insurance

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
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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.

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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

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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.

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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.
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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
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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.
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¶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
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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.

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 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
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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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