Title: Shriners Hospitals for Crippled Children, Inc. v. First Sec. Bank of Utah, N.A.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Shriners Hospitals for Crippled Children, Inc. v. First Sec. Bank of Utah, N.A.1992 WY 87835 P.2d 350Case Number: 91-207Decided: 07/28/1992Supreme Court of Wyoming
SHRINERS HOSPITALS FOR 
CRIPPLED CHILDREN, INC., A Colorado Corporation, 

Appellant, 
(Plaintiff),

v.

FIRST SECURITY BANK OF 
UTAH, N.A., a Utah Corporation, in its capacity as Co-Personal Representative of 
the Velma Rife Jones Estate and in its corporate capacity; First Security Bank 
of Rock Springs, a Wyoming Corporation, in its corporate capacity, 

Appellees 
(Defendants).

Appeal from District 
Court, Sweetwater County, Jere Ryckman, J.

Robert James 
Wyatt of Burgess, Davis, Carmichael & Cannon, Cheyenne, David H. Carmichael 
and Kate M. Fox of Burgess, Davis, Carmichael & Cannon, Sheridan, Edward F. 
Ruberry (argued), and Darcy L. Ibach of Bollinger, Ruberry & Garvey, 
Chicago, Ill., for appellant.

Randall N. 
Skanchy (argued), and Andrew H. Stone of Jones, Waldo, Holbrook & McDonough, 
Salt Lake City, Utah, and David E. Arnold of Scorsine Law Office, Rock Springs, 
for appellees First Sec. Bank of Utah, N.A. and First Sec. Bank of 
Rock Springs.

Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, Justice.

[¶1]  Appellant Shriners Hospitals for 
Crippled Children, Inc. (Shriners) appeals the trial court's dismissal of its 
second amended complaint. The complaint arose out of the sale of the Rife Ranch 
by the co-personal representatives of the Velma Rife Jones Estate (Estate). 
Shriners alleges against First Security Bank of Utah, N.A., and First Security 
Bank of Rock Springs (Banks), the co-personal representatives, claims of 
fiduciary negligence and breach of fiduciary duty, civil conspiracy, and 
fraud.

[¶2]      We reverse the 
trial court's order dismissing Shriners' complaint, and remand for further 
proceedings.

[¶3]      Shriners states 
the issues on appeal as follows: 

1. Whether the Complaint, 
as amended by the Appellant, states a claim for relief from alleged fiduciary 
negligence and breach of fiduciary duties under the notice pleading standards of 
Wyoming Rules of Civil Procedure, Rule 8(a), (e), and (f).

2. Whether the Complaint, 
as amended by the Appellant, states a claim for relief from civil conspiracy 
under the notice pleading standards of Wyoming Rules of Civil Procedure, Rule 
8(a), (e), and (f).

3. Whether the Complaint, 
as amended by the Appellant, states a claim for relief from fraud under the 
notice pleading, with circumstances particularity, standard of Wyoming Rules of 
Civil Procedure, Rule 8(a), (e), and (f) and Rule 9(b).

[¶4]      Banks present the 
following additional issues for our review:

1. Whether the district 
court's order should be treated as an order granting summary judgment, based on 
its consideration of evidentiary matter outside the pleadings.

2. Whether the district 
court properly granted summary judgment against plaintiff and in favor of 
defendants on each of plaintiff's claims.

[¶5]      Because we hold 
that Shriners must be given additional time to conduct discovery in order to 
respond to the converted summary judgment motion, it is not necessary to 
consider the substantive issues raised by the parties.

[¶6]      This is the 
second time a case involving these parties and the sale of the Rife Ranch has 
been before this court. In Matter of Estate of Jones, 770 P.2d 1100, modified on 
denial of reh'g 782 P.2d 229 (Wyo. 1989), cert. denied sub nom. Shriners 
Hospitals for Crippled Children v. First Security Bank of Utah, N.A., 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268 (1990), we considered Shriners' motion, 
filed in the Wyoming ancillary probate of Velma Rife Jones' estate, to set aside 
the sale of the Rife Ranch. Shriners claimed the sale should be set aside 
because the Banks had failed to give Shriners notice of the petition for 
authority to sell the property filed with the probate court. We held that 
Shriners was a contingent beneficiary under the trust, but not a "beneficiary 
named in the will" entitled to notice of the proposed sale of the Rife Ranch. 
Estate of Jones, at 1103.

[¶7]      After the United 
States Supreme Court denied Shriners' petition for certiorari from our decision 
in Jones, Shriners filed an independent civil action against appellees seeking 
damages and an order setting aside the sale of the Rife Ranch. Shriners' 
complaint incorporated claims of fraud, conspiracy, and breach of fiduciary 
duty. Shortly thereafter, Shriners amended its complaint to include a claim for 
RICO conspiracy.

[¶8]      On August 7, 
1990, the trial court entered an order dismissing the RICO claim and granting 
Shriners the opportunity to file a second amended complaint to state with more 
particularity its claim of fraud. The dismissal of the RICO claim is not 
presented to us as an issue on appeal. Thereafter, Banks filed a motion for 
protective order to prevent Shriners from undertaking further discovery until 
the second amended complaint was filed. It does not appear that this motion was 
ever ruled upon.

[¶9]      On November 19, 
1990, Shriners filed its second amended complaint. Apparently concerned that its 
plea of fraud would survive a motion to dismiss, Shriners drafted an extremely 
detailed complaint. The allegations of the resulting, sometimes rambling and 
picayune, thirty-eight page document are summarized in a very basic manner in 
the paragraphs which follow. We have sifted through the mass of information 
presented to arrive at a basic statement of allegations in support of Shriners' 
claims.

[¶10]   Shriners is one of two charitable 
remainder beneficiaries named in a testamentary unitrust contained in the Last 
Will and Testament of Velma Rife Jones. Banks are co-personal representatives of 
the will and co-trustees of the unitrust. On or about August 5, 1985, Banks 
prepared and filed a petition for appointment of conservator for Ms. Jones' 
estate, in which they stated that the Rife Ranch was worth $1,250,000.00. First 
Security Bank, Utah (FSB-UT) then hired Rancher's Management Company, Inc. 
(Rancher's) to represent them in the management, lease or sale of the Rife 
Ranch.

[¶11]   On September 2, 1985, Rancher's 
informed John Lamborn (Lamborn), an employee of FSB-UT, of a number of 
prospective lessors or purchasers for the Rife Ranch, including prospective 
lessors John and Brad Smith, who had agreed to pay approximately $98,305.00 per 
year to lease the property. Lamborn then offered a lease with option to purchase 
the Ranch to another prospective lessee for less than half of what the Smiths 
had agreed to pay.

[¶12]   Prior to Ms. Jones' death, she and 
her husband had relied on John Hay, the president and a director of Rock Springs 
Grazing Association (RSGA), to assist them in conducting business regarding the 
Ranch and their shares in RSGA. Hay voted the Jones' shares in RSGA on several 
occasions. The Rife Ranch telephone was located in Mr. Hay's office in Rock 
Springs and was used by RSGA for calls of its own and to intercept calls 
relating to the Rife Ranch.

[¶13]   Hay allegedly encouraged FSB-UT to 
keep the Jones' shares of RSGA separate from any leasing arrangements for the 
Rife Ranch. After he found out about the Smith offer, he advised FSB-UT not to 
allow the Smiths to use the RSGA shares because RSGA did not want the Smith 
family to gain any more involvement in RSGA. Hay allegedly falsely told FSB-UT 
that the assignment or use of the RSGA shares would create only a small price 
differential in the value of the Ranch. Shriners alleges that this 
misrepresentation caused FSB-UT to undervalue the Rife Ranch.

[¶14]   On September 23, 1985, Ranchers 
notified Lamborn that the annual rental for the Rife Ranch should be $98,000.00 
and that its sales price should be in the range of $1,225,000.00 to 
$1,400,000.00. On December 12, 1985, the Banks obtained a written appraisal on 
the Rife Ranch, which stated that the value of the surface estate was 
$1,200,000.00.

[¶15]   Ranchers told FSB-UT that the fair 
market value of the Ranch was $5.00 per AUM (animal unit month). FSB-UT then 
negotiated a lease for a value of $2.07 per AUM. On December 4, 1986, Lamborn 
told a representative of the lessee of the Rife Ranch that lamb market prices 
had risen more than 15 percent since the commencement of the lease. The effect 
of these more favorable market prices was to increase the value of the Rife 
Ranch.

[¶16]   Ranchers had also told FSB-UT that, 
in addition to the value of the surface estate, the Ranch was valuable for the 
fee interests in oil, gas and other minerals appurtenant to it and for potential 
future income from "surface owners agreements" with Union Pacific Corporation. 
Shriners alleges that the Joneses historically derived substantial income from 
such sources.

[¶17]   On January 15, 1986, Lamborn acted 
as a witness for Ms. Jones' will, in which she created the testamentary 
unitrust. Ms. Jones died on October 19, 1986. On March 6, 1987, her will was 
admitted to ancillary probate in Sweetwater County, Wyoming. The Banks were 
appointed by the Sweetwater County district court to serve as copersonal 
representatives of the Estate. In their petition for probate of the will dated 
February 20, 1987, the Banks stated that the estimated value of the property in 
Wyoming was $1,200,000.00.

[¶18]   On April 30, 1987, Banks entered 
into an agreement to sell the Rife Ranch for $820,000.00. Banks allegedly did 
not solicit other offers from the public or engage in any substantial or 
material negotiations with the purchasers regarding the purchase price or the 
inclusion of the mineral interests and the RSGA shares in the purchase price. 
Lamborn communicated with Hay during this time period, which communication was 
allegedly instrumental in the Banks' filing of their petition for authorization 
to sell and for confirmation of sale with the trial court.

[¶19]   On May 19, 1987, Banks presented, 
in the probate action, their Petition for Authority to Sell Real Property and 
for Confirmation of Sale. Shriners alleges that this petition was fraudulent for 
the following reasons: (1) the Banks misstated the need to sell the Rife Ranch 
in order to provide liquidity to pay debts of the Estate; (2) the Banks did not 
disclose the disparity between the then-existing appraisal value of 
$1,200,000.00 and the offering price of $820,000.00 and did not assess the full 
potential lease, or sale market for the Ranch or disclose the existence of open 
alternative proposals already communicated to them; (3) the Banks did not 
disclose to the court that the contemplated sale would not reserve any minerals 
owned by Velma Rife Jones at her death; (4) the Banks did not disclose that the 
proposed sale would result in a complete loss of

anticipated future income 
that otherwise could accrue to the benefit of, and be payable in an aliquot 
share, to Plaintiff, if Plaintiff is allowed to receive its one-half share of 
the Rife Ranch in kind, from existing, or future, surface owners agreements with 
the real estate and mineral development divisions of the Union Pacific 
Corporation pertaining to mineral recovery on the so-called "checkerboard" lands 
being conveyed in the proposed sale, or from trespass fees, or surface damage 
payments, or other income to be produced by granting temporary use of the 
surface estate to other parties for the purpose of mineral exploration, for the 
pipeline or other transport of minerals passed or recovered, or 
otherwise[;]

(5) the Banks 
misled the court by alleging that the "ultimate beneficiary" of the Estate had 
no desire to run the Rife Ranch, when plaintiff had continually expressed its 
desire to receive its ownership of the property in kind; (6) the Banks did not 
inform plaintiff of their intent to sell the property and did not inform the 
court that they had not informed the plaintiff of this intent; (7) the Banks 
implied that plaintiff had notice of their intent to sell the property by filing 
with the court waivers of notice from other beneficiaries to the will and from 
FSB-UT as trustee for the charitable unitrust.

[¶20]   Banks did not file an appraisal of 
the Rife Ranch with the probate court until approximately three months after the 
sale, on August 14, 1987. The Banks' appraisal, dated July 9, 1987, shows the 
value of the surface estate at $925,000.00, but allegedly fails to include the 
value of the mineral interests or "future income incidences" of the surface 
estate. Shriners alleges that the Banks' delay in filing the appraisal deprived 
the probate court and Shriners of the opportunity to evaluate the terms of the 
resulting sale.

[¶21]   On May 19, 1987, the court entered 
its order approving the sale of the Rife Ranch to Southern Wyoming Cattle 
Company (SWCC). That same day, the Banks conveyed title to SWCC. SWCC is a 
Wyoming joint enterprise. Shriners alleges that SWCC was not a bona fide 
business entity separate and distinct from its members, but was a "sham" and 
"mere conduit" formed for the purpose of obfuscating the record title to the 
Rife Ranch and concealing the identities of the true purchasers.

[¶22]   At the time of her death, Velma 
Rife Jones owned three shares of RSGA, each of which had a "book value" of 
approximately $32,000.00. The Ranch purchasers have attributed a value of 
$50,000.00 each to these shares. Appellant alleges that these shares were the 
personal property of Velma Rife Jones and could have been sold separately from 
the Rife Ranch. Appellant claims that the Banks wrongfully failed to inform the 
court that they intended to transfer the RSGA shares as part of the Rife Ranch 
transaction. Appellant alleges that there was a separate market and value for 
the shares at the time the Rife Ranch was sold.

[¶23]   On May 19, 1987, SWCC conveyed its 
interest in the Rife Ranch to RSGA, Elza L. and Lois M. Eversole (Eversoles), 
and Lazy VD Land and Livestock (Lazy VD). Appellant states that the sale of the 
RSGA shares benefitted these purchasers in two ways: first, it made their own 
holdings more valuable, and second, it furthered the efforts of John Hay to keep 
the Smiths from acquiring any more interest in RSGA. Appellant also alleges that 
these subsequent conveyances were part of a scheme by the purchasers to deprive 
appellant of its interest in the Rife Ranch and to make an apparent 
third-party sale to SWCC rather than to the real purchasers. 

[¶24]   Based on these allegations, 
appellant pleads three causes of action. First, it claims that the Banks 
conspired to fraudulently induce the court to approve the sale of the Rife Ranch 
for less than its true value. Second, it claims that the Banks breached their 
fiduciary duty to Shriners by not communicating with Shriners prior to the sale, 
and by selling the Ranch for less than its true value. Finally, Shriners claims 
that the Banks also breached their fiduciary duty by not collecting any 
consideration for the mineral rights or appurtenant income rights.

[¶25]   The Banks filed an answer which 
contained a motion to dismiss Shriners' second amended complaint. The parties 
filed briefs either supporting or opposing the motions to dismiss. In their 
brief, the Banks included alternate requests that the court either dismiss 
Shriners' complaint, enter summary judgment for the Banks, or strike portions of 
the complaint. To this brief, they attached an affidavit by John Lamborn 
(hereafter called "Lamborn Affidavit") stating, among other things, that at the 
time of the hearing on the petition to authorize and confirm the sale he had in 
his possession two appraisals of the Rife Ranch: the original appraisal, which 
valued the property at $1,200,000.00, and a supplemental appraisal dated 
February 24, 1987, which valued the property at $925,000.00.

[¶26]   Shriners initially requested the 
court to set a hearing on the motions to dismiss and for summary judgment. 
Later, Shriners dropped their request for a hearing and asked the court to rule 
on the motions based on the written arguments filed in the parties' briefs. In 
Shriners' brief in opposition to the defendants' motion to dismiss, Shriners 
requested that the court clarify whether it intended to treat the motion as one 
for summary judgment, and if so, to grant Shriners a continuance to allow it to 
take several depositions prior to the court's consideration of the motion for 
summary judgment. There is no indication in the record that the trial court ever 
ruled on this request.

[¶27]   On May 30, 1991, the trial court 
filed its decision letter. The court, inter alia, dismissed Shriners' 
fraud claims for failure to plead fraud with particularity, and also dismissed 
the remainder of the complaint. An order of dismissal was entered on August 1, 
1991. Shriners took timely appeal from this order.

12(b)(6) 
Dismissals

[¶28]   Banks argue that automatic 
conversion to summary judgment occurred when the Lamborn affidavit was presented 
to and considered by the trial court in ruling on their motion to dismiss or for 
summary judgment. Wyoming Rule of Civil Procedure 12(b) governs conversion of a 
motion to dismiss to one for summary judgment:

If, on a motion asserting 
the defense numbered [12(b)](6) 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 and disposed of as provided in Rule 56, and all parties 
shall be given reasonable opportunity to present all material made pertinent to 
such a motion by Rule 56.

[¶29]   In Kimbley v. City of Green River, 
642 P.2d 443, 446 (Wyo. 1982), we stated that conversion under Rule 12(b) cannot 
be accomplished unless the nonmoving party has (1) notice of the court's intent 
to convert the motion to one for summary judgment, and (2) an opportunity to 
submit rebuttal materials under Rule 56. We elaborated on the first requirement 
in Torrey v. Twiford, 713 P.2d 1160, 1164 (Wyo. 1986). In that case, we said 
that when affidavits are attached to a motion to dismiss and considered by the 
trial court, the motion converts automatically to a motion for summary judgment. 
In such circumstances, the nonmoving party is not entitled to additional notice 
of the conversion, unless the record demonstrates unfair or inappropriate 
surprise. See also e.g., Cranston v. Weston County Weed and Pest Board, 826 P.2d 251, 254 (Wyo. 1992); Brebaugh v. Hales, 788 P.2d 1128, 1134 (Wyo. 1990); 
Mostert v. CBL & Associates, 741 P.2d 1090, 1096-97 (Wyo. 1987). We have 
also discussed the second requirement in Kimbley, which is that the nonmoving 
party be granted "reasonable opportunity to present all material made pertinent 
to such a motion." W.R.C.P. 12(b). This means, at a minimum, that the nonmovant 
must have ten days to respond to the converted motion prior to any hearing on 
it. Torrey, at 1165; see also W.R.C.P. 56.

[¶30]   On the surface, the Banks' motion 
here fulfilled the technical requisites for automatic conversion. The Lamborn 
Affidavit was both submitted to and considered by the court. We are unable to 
accept Shriners' claim that the affidavit was somehow incompetent. The affidavit 
and attachments assisted the court in arriving at two of its conclusions: (1) 
that the probate court was apprised of the existence of the appraisals, the 
interests to be sold, and the value of the Ranch; and (2) that the sale price 
was reasonable. Furthermore, more than ten days elapsed between the time the 
Banks filed their motion and the court ruled on it. We must also note that even 
though the trial court entered an order of dismissal rather than an order for 
summary judgment, this did not prevent conversion from occurring. See e.g., 
Greaser v. Williams, 703 P.2d 327, 336 n. 4 (Wyo. 1985).

[¶31]   However, under the circumstances, 
we must hold that if summary judgment was entered, it was improvidently entered. 
The record demonstrates that Shriners had neither notice of the trial court's 
intent to convert nor a reasonable opportunity to submit materials in response 
to a summary judgment motion. Shriners was "unfair[ly] or inappropriate[ly] 
surprised" when the court considered the Lamborn Affidavit, thus triggering 
automatic conversion, without having responded to Shriners' request for 
clarification as to whether conversion had occurred. Furthermore, the confusion 
created by the court's failure to respond, coupled with its refusal to grant 
more time for discovery, prevented Shriners from having a "reasonable 
opportunity" to respond to the motion.

[¶32]   The record shows how Shriners was 
deprived of notice and an opportunity to respond. Prior to the filing of 
Shriners' second amended complaint, on August 29, 1990, the Banks filed a motion 
for protective order, requesting that Shriners not be allowed to complete any 
more discovery until the second amended complaint was filed. Shriners had 
completed written discovery but had not taken depositions at that point. A 
hearing was set on the protective order for September 7, 1990; however, it does 
not appear that this hearing was ever held. Shriners later informed the court 
that the depositions had been rescheduled by stipulation for the week of 
November 5, 1990. The depositions were never completed; the Banks filed their 
answer and motion to dismiss one month later, on December 17, 1990.

[¶33]   Shriners was not on notice that 
conversion was sought and thus immediate further discovery would be needed to 
respond in summary judgment posture until January 29, 1991, when Banks submitted 
their memorandum in support of dismissal or summary judgment, with the Lamborn 
Affidavit attached. Prior to that time, Shriners could reasonably have concluded 
that only a motion to dismiss was before the court. Even after the memorandum 
was filed, Shriners would have noted that it was phrased in the alternative, as 
supporting either a motion to dismiss or a motion for summary judgment. 
It was still not clear whether dismissal or summary judgment would be 
granted.

[¶34]   On March 4, 1991, Shriners filed a 
reply brief to the Banks' brief. Shriners requested that if the court meant to 
consider the motion as one for summary judgment, that it grant a continuance for 
Shriners to take the depositions of "Mr. Lamborn, Mr. Hay, Mr. and Mrs. 
Eversole, Mr. Dickinson, appraisers, realtors, property managers, and other 
persons with relevant information."1 The court did not act on this 
request. 

[¶35]   On March 21, 1991, Shriners filed a 
motion for hearing on the defendants' motions. Shriners alleged that all parties 
had had an adequate opportunity to brief the defendants' motions. On April 3, 
1991, Shriners filed a motion withdrawing its previous request for a hearing and 
requesting that the court rule on the motions based on the briefs which had been 
filed. The Banks claim that Shriners waived lack of notice of conversion by 
filing these motions. However, Shriners referred only to pending "motions to 
dismiss," presumably because the trial court had never responded to Shriners' 
request for continuance if a motion for summary judgment was contemplated. On 
May 30, 1991, the trial court entered its decision letter of dismissal, based in 
part on the Lamborn Affidavit.

Inadequate 
Notice of Conversion

[¶36]   The court received nothing from 
Shriners but briefs with which to consider what turned out to be a motion for 
summary judgment. This result was not, as the Banks suggest, due to Shriners' 
willful failure to complete discovery or respond within the time allotted. If 
the record clearly showed that notice had been given that conversion was to 
occur, summary judgment consideration would be appropriate, whether Shriners 
submitted response materials or not. However, the record supports Shriners' 
contention that it did not respond with summary judgment materials because it 
was convinced by the court's failure to respond or grant a continuance that only 
a motion to dismiss was contemplated.

When a party files an 
affidavit which a judge considers under a Rule 12(b)(6) motion, this court will 
treat the motion as a motion for summary judgment subject to the time 
requirements of Rule 56, whether or not the record demonstrates that the parties 
had other notice of the conversion, unless the record otherwise demonstrates 
unfair or inappropriate surprise to either party but normally for the nonmoving 
party.

Torrey v. 
Twiford, 713 P.2d  at 1164 (emphasis added).

[¶37]   The facts show that Shriners was 
"unfair[ly] and inappropriate[ly] surprised" when the trial court considered the 
Lamborn Affidavit after failing to respond to Shriners' request for 
clarification.

Inadequate 
Time for Discovery

[¶38]   Additionally, the trial court 
should have granted Shriners' request for an extension of time in which to 
pursue discovery. This case involves claims of fraud and conspiracy. In claims 
of this type, the defendants often possess information crucial to a full 
factual presentation of the plaintiff's cause of action. Adequate discovery was 
therefore essential to Shriners' response in summary judgment 
posture.

[¶39]   In Pace v. Hadley, 742 P.2d 1283 
(Wyo. 1987), we reversed summary judgment entered where the plaintiffs did not 
have adequate time to respond to a 12(b)(6) converted motion. In that case, the 
defendants filed their motion to dismiss, or in the alternative for summary 
judgment, on December 23, 1986, only 40 days after the plaintiffs had filed 
their complaint. The plaintiffs notified the court that insufficient discovery 
had occurred and that they could not as yet respond to the defendants' motion. 
On February 9, 1987, the trial court nevertheless entered an order converting 
the motion to one for summary judgment and granting the plaintiffs only 21 more 
days in which to file any additional affidavits in opposition to the motions. On 
appeal, we held that the plaintiffs had not been given adequate opportunity to 
respond to the motion for summary judgment. We reversed the entry of summary 
judgment and remanded to permit the parties a reasonable time to complete 
discovery.

[¶40]   Also relevant to the facts of this 
case is Gay v. Wall, 761 F.2d 175 (4th Cir. 1985). In Gay, the plaintiff filed 
his civil rights complaint on March 12, 1984. On April 3, 1984, the defendants 
filed a motion to dismiss under Rule 12(b)(6), with accompanying affidavits. 
Plaintiff initiated discovery on April 6, 1984. He filed some affidavits with 
the court, but was unable, after requesting extra time which was denied, to 
complete discovery before summary judgment was entered against him. In 
reversing, the Fourth Circuit stated as follows:

In this case summary 
judgment was granted when the plaintiff had barely begun discovery. Gay's 
initial interrogatories were only partially answered by the defendants. The 
defendants claimed that much requested discovery was privileged. While Gay filed 
four affidavits, he was ill-equipped to counter the defendants' affidavits 
because of the defendants' objections to his preliminary discovery. * * * It was 
the lack of a reasonable opportunity for discovery which made conversion of the 
Rule 12(b)(6) motion "wholly inappropriate." Because Gay was not afforded an 
opportunity for reasonable discovery, the district court's treatment of the 
motion to dismiss as a motion for summary judgment was an abuse of 
discretion.

Gay, at 177-78. 
See also e.g., Whiting v. Maiolini, 921 F.2d 5, 7 (1st Cir. 1990); Roberts v. 
Heim, 130 F.R.D. 424, 429 (N.D.Cal. 1989).

[¶41]   The trial court's refusal to grant 
a continuance for further discovery, coupled with its failure to clarify the 
nature of the motion before it and the delay caused by the Banks' having 
previously sought protective orders, prevented Shriners from developing through 
discovery the facts needed to respond in summary judgment posture.

[¶42]   Under the circumstances of 
confusion and surprise involved here, neither the "automatic conversion" nor the 
"presumptive ten-day notice" requirement should be permitted to defeat the 
nonmovant's right to develop a response. Having reviewed Shriners' complaint, we 
cannot say that there is no "state of facts on which [Shriners] could 
conceivably recover." See Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 285 (3rd Cir. 1991), cert. denied sub nom. Altran Corp. v. Ford Motor 
Co., ___ U.S. ___, 112 S. Ct. 373, 116 L. Ed. 2d 324 (1991), and cases cited 
therein. Therefore, adequate notice and opportunity to respond were essential. 
The proper action, as in Pace, is to remand to allow further time for Shriners 
to complete discovery and respond to the motion in summary judgment 
posture.

Dismissal of 
Fraud Claims

[¶43]   The fraud claims against the Banks 
were dismissed for failure to plead fraud with particularity rather than for 
failure to state a claim. These dismissals therefore did not convert to summary 
judgment. Cf. 5A C. Wright & A. Miller, Federal Practice and Procedure § 
1366 at p. 484 (1990) (conversion appropriate only where dismissal made under 
analogous Federal Rule of Civil Procedure 12(b)(6)). Therefore, we must consider 
them separately.

[¶44]   Wyoming Rule of Civil Procedure 
9(b) provides that fraud must be pled with particularity. The rule itself does 
not, however, provide the penalty or remedy for failure to so plead. In Johnson 
v. Aetna Casualty & Surety Co., 608 P.2d 1299, 1303 (Wyo. 1980), we noted 
that courts have varied in their approach to the appropriate remedy for a Rule 
9(b) violation. Courts which have taken the stricter view and either dismissed 
the complaint or stricken the defective count for failure to plead with 
particularity have nearly always allowed leave to amend. Id. In Johnson, we 
reversed a dismissal with prejudice of a complaint which failed to comply with 
Rule 9(b). We noted that the liberal amendment provisions of W.R.C.P. 15(a) make 
such a dismissal inappropriate unless the proposed amendment will unduly 
prejudice the opposing party, has not been offered in good faith, or the party 
seeking to amend has had repeated opportunities to cure the defect and has 
failed to do so. Johnson, at 1303. Thus, the fraud claimant must generally be 
given an opportunity to amend.

[¶45]   While we agree with the trial court 
that the fraud claims as now stated are not pled with sufficient particularity, 
none of the factors we cited in Johnson as justifying dismissal with prejudice 
is applicable in this case. It may be that further discovery will allow Shriners 
to amend their complaint to state fraud with particularity. Therefore, we remand 
the fraud claims along with the claims dismissed under Rule 12(b)(6) to allow 
Shriners leave to amend.

Conclusion

[¶46]   The orders of dismissal under Rule 
12(b)(6), including those claimed converted to summary judgment, are reversed, 
and this case is remanded to the trial court to allow for further discovery and 
presentation of materials by all parties. Shriners should also be allowed leave 
to amend its claims for fraud.

FOOTNOTES

1 Shriners did not file an 
affidavit stating that it could not "for reasons stated present by 
affidavit facts essential to justify [its] opposition." See W.R.C.P. 56(f). This 
is the method provided in Rule 56 for alerting the court of the need for a 
continuance to present affidavits in response to a motion for summary judgment. 
In the alternative, a motion for enlargement of time may also be made under 
W.R.C.P. 6(b). Dudley v. East Ridge Development Co., 694 P.2d 113, 116 (Wyo. 
1985). Shriners did not comply with the formal requirements of either rule. 
However, we will follow those federal courts which hold that the "functional 
equivalent" of a rule 56(f) affidavit is sufficient to preserve a request for 
continuance. See e.g., First Chicago International v. United Exchange Co., Ltd., 
836 F.2d 1375, 1380 (D.C. Cir. 1988). Shriners' request, made in its brief in 
opposition to defendants' motion to dismiss, was sufficient to alert the trial 
court of the need to grant extra time for discovery.