Opinion ID: 767654
Heading Depth: 3
Heading Rank: 1

Heading: Summary Judgment Sua Sponte

Text: 6 When a district court grants summary judgment sua sponte, its decision is subject to two separate standards of review. The substance of the district court's decision is reviewed de novo under the normal standards for summary judgment. See Salehpour v. University of Tennessee, 159 F.3d 199, 203 (6th Cir. 1998), cert. denied, 119 S. Ct. 1763 (1999). The district court's procedural decision to enter summary judgment sua sponte, however, is reviewed for abuse of discretion. See id. We have held that a district court may enter summary judgment sua sponte in certain limited circumstances, 'so long as the losing party was on notice that [it] had to come forward with all of [its] evidence.' Id. at 204 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)). More specifically, we have held that Fed. R. Civ. P. 56(c) mandates that the losing party must be afforded notice and reasonable opportunity to respond to all the issues to be considered by the court. Employers Ins. of Wausau v. Petroleum Specialties, Inc., 69 F.3d 98, 105 (6th Cir. 1995). A clear example of the district court's power to grant summary judgment sua sponte is found in Fed. R. Civ. P. 12(b), which gives a district court the authority to turn a motion to dismiss into a motion for summary judgment where the court is presented with materials outside the pleadings. See Fed. R. Civ. P. 12(b); see also Employers Ins., 69 F.3d at104-05. This rule expressly states, 7 If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relied 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. 8 Fed. R. Civ. P. 12(b). Whether a district court must provide actual notice that it intends to convert a motion to dismiss into a motion for summary judgment depends on the facts and circumstances of each case. See Salehpour, 159 F.3d at 204. However, [w]here one party is likely to be surprised by the proceedings, notice is required. Id. 9 The Fund argues that the district court abused its discretion because it did not provide any notice that it was contemplating entering summary judgment against the Fund. Instead, the Fund asserts, the district court led the Fund to believe that it would have an opportunity to file a motion for summary judgment because the district court granted its motion for an extension of time to file dispositive motions within 30 days of ruling on its motion to dismiss. Therefore, the Fund claims it was denied the opportunity to present all material pertinent to a motion for summary judgment. 10 The district court did not abuse its discretion in sua sponte converting the Fund's motion to dismiss into a motion for summary judgment pursuant to Fed. R. Civ. P. 12(b). The Fund submitted substantial extrinsic material to the district court as exhibits to its motion to dismiss. In response to the Fund's motion, Shelby also included exhibits extrinsic to the pleadings. The Fund then filed a reply to Shelby's response to the Fund's motion to dismiss and thus had the opportunity torespond to the arguments and exhibits that Shelby submitted. In their briefs, both parties comprehensively addressed the Fund's argument that the Board of Trustees' interpretation of the Plan is not arbitrary and capricious. Because the parties both submitted numerous exhibits fully addressing the Fund's argument for dismissal, they had sufficient notice that the district court could consider this outside material when ruling on the issues presented in the Fund's motion to dismiss and could convert it into a motion for summary judgment under Fed. R. Civ. P. 12(b). The parties also had a reasonable opportunity to address the Board of Trustees' interpretation of the Plan. Thus, the Fund and Shelby had sufficient notice and opportunity to address the issues presented in the Fund's motion. See Salehpour, 159 F.3d at 204 (affirming the district court's conversion of a defendant's motion to dismiss into a motion for summary judgment where both parties had submitted voluminous outside material and had the opportunity to respond to the issues and evidence presented). Furthermore, when a district court is reviewing a plan administrator's denial of benefits, the court may only consider those materials that were available to the plan administrator when it made its final decision. See Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991). In this case, the materials Shelby had submitted to the Board of Trustees to review on its appeal were also submitted to the district court as exhibits to the Fund's motion to dismiss. Because the district court already had all of the material it could examine in conducting its review of the Board of Trustees' denial of benefits, the Fund could not have submitted any additional evidence. Therefore, the district court did not abuse its discretion when it sua sponte converted the Fund's motion to dismiss into a motion for summary judgment and ruled on the Fund's argument that the Board of Trustees' denial of benefits based on the Board's interpretation of the Plan regarding the requirements for filing a timely claim is not arbitrary and capricious. 11 Next we must determine whether the district court abused its discretion in granting summary judgment sua sponte to Shelby, a nonmoving party. We have noted that although a district court should only enter summary judgment in the absence of a cross-motion with great caution . . . the fact that the nonmoving party has not filed its own summary judgment motion does not preclude the entry of summary judgment if otherwise appropriate. K.E. Resources, Ltd. v. BMO Fin. Inc. (In re Century Offshore Management Corp.), 119 F.3d 409, 412 (6th Cir. 1997) (affirming the district court's sua sponte grant of summary judgment to a nonmoving party where the parties had fully briefed the determinative issue and had agreed that no factual dispute existed). Shelby had not filed any dispositive motions which would have put the Fund on notice that it had to come forward with all of its evidence in response to Shelby's complaint. When the district court ruled on the Fund's converted motion for summary judgment, the court concluded that the Board of Trustees' interpretation of the Plan regarding the requirements for filing a timely claim is arbitrary and capricious as a matter of law. As discussed above, the district court did not abuse its discretion in deciding this issue on summary judgment. Because the Fund had denied Shelby's benefits for untimeliness, the district court then sua sponte entered summary judgment on behalf of Shelby and awarded the full amount of damages requested. Neither party, however, had addressed the issue of the amount of benefits the Fund would have awarded to Shelby under the terms of the Plan had the Fund determined that Shelby had filed a timely claim. The Fund points out that Shelby may not be entitled to the full amount of the claim under the Plan. For example, the Plan states that it will not cover [c]harges which are not 'Reasonable and Customary', or which are excessive. J.A. at 34. Nor will it pay for [s]ervices which are not 'Medically Necessary.' J.A. at 34. The Plan also states that it will not cover[c]harges for benefits that are not payable due to the application of any specified deductible or co-payment provisions contained herein. J.A. at 37. Because the parties had not addressed in their briefs the issue of the amount of benefits due under the Plan and the district court had granted the Fund's motion for an extension to file dispositive motions, it was reasonable for the parties to believe that the district court would only rule on the issues presented in the Fund's converted motion for summary judgment. They were not on notice that the district court would consider on summary judgment the amount of benefits due. Moreover, the Fund and Shelby did not have a reasonable opportunity to address this issue before the district court decided it. Therefore, the district court abused its discretion in granting summary judgment sua sponte to Shelby on the amount of benefits due under the terms of the Plan.