Opinion ID: 2402228
Heading Depth: 2
Heading Rank: 1

Heading: The Trial Court Improperly Relied Upon Facts Extrinsic to the Complaint

Text: Appellants argue that the trial court relied on purported facts extrinsic to the complaint [in concluding] that the loan servicing operations in question have been relocated outside the District of Columbia, and impermissibly resolved disputed facts in favor of defendant. We agree. We review a dismissal for failure to state a claim de novo.  Oparaugo v. Watts, 884 A.2d 63, 75 (D.C.2005) (citing Fingerhut v. Children's Nat'l Med. Ctr., 738 A.2d 799, 803 (D.C.1999)). [L]ike the trial court, we must construe the complaint in the light most favorable to the plaintiff, while taking the facts alleged in the complaint as true. Casco Marina Dev., L.L.C. v. D.C. Redevelopment Land Agency, 834 A.2d 77, 81 (D.C.2003) (citing Cauman v. George Washington Univ., 630 A.2d 1104, 1105 (D.C.1993)). Any uncertainties or ambiguities involving the sufficiency of the complaint must be resolved in favor of the pleader, and generally, the complaint must not be dismissed because the court doubts that plaintiff will prevail. Atkins v. Industrial Telecommunications Ass'n, Inc., 660 A.2d 885, 887 (D.C.1995) (citing McBryde v. Amoco Oil Co., 404 A.2d 200, 203 (D.C.1979)). [A] defendant raising a 12(b)(6) defense cannot assert any facts which do not appear on the face of the complaint itself. Carey v. Edgewood Mgmt. Corp., 754 A.2d 951, 954 (D.C.2000). When the trial court decides a Rule 12(b)(6) motion by considering factual material outside the complaint, the motion shall be treated as if filed pursuant to Rule 56, which permits the grant of summary judgment if there are no material facts in dispute and the movant is entitled to judgment as a matter of law. Kitt v. Pathmakers, Inc., 672 A.2d 76, 79 (D.C.1996). [W]hen treating a Rule 12(b)(6) motion as a motion for summary judgment, where outside factual material is not excluded, the trial court must give `the parties notice of its intention to consider summary judgment and an adequate opportunity to present affidavits or other matters appropriate to a ruling on such a motion.' Id. at 79-80 (quoting Bernay v. Sales, 435 A.2d 398, 402 n. 4 (D.C.1981)). See also Super. Ct. Civ. R. 12(b)(6) (2003); Vincent v. Anderson, 621 A.2d 367, 372-73 (D.C. 1993). The trial court's consideration of appellants' promissory notes, which Sallie Mae attached to its motion to dismiss, was insufficient to convert Sallie Mae's 12(b)(6) motion into a motion for summary judgment, because appellants themselves referred to the promissory notes in their original complaint. Courts may consider documents incorporated in the complaint when considering a 12(b)(6) motion. EEOC v. St. Francis Xavier Parochial Sch., 326 U.S.App. D.C. 67, 70, 117 F.3d 621, 624 (1997). [14] In contrast, the affidavit of Sallie Mae, Inc.'s Vice President of Policy unquestionably alleged facts extrinsic to the pleadings, namely, that Sallie Mae had not decided upon the alleged pyramiding scheme in the District of Columbia, had not processed loans or payments in the District of Columbia, had not received loan applications or payments in the District of Columbia, and had not mailed statements from the District of Columbia. Of controlling significance, the trial court relied on the contents of this affidavit when making its determination. The court found that all of the activity related to [appellants'] loans occurred in Defendant's offices outside the District, and that under the Student Loan Marketing Association Reorganization Act of 1996, [Sallie Mae] ceased to have any employees before 1998, and all of its functions were transferred to other affiliates, which are not alleged to be located in the District. When the trial court found that all of the activity related to [appellants'] loans occurred in Defendant's offices outside the District and that appellants loans were processed in Virginia and Pennsylvania, it was, arguably, merely acknowledging that the return addresses on the promissory notes were in Virginia and Pennsylvania. But the court's words imply reliance on a more comprehensive set of facts. It does not appear that the trial court could conclude that Sallie Mae conducted no activity related to appellants' loans in the District without considering the facts alleged in the affidavit of Sallie Mae, Inc.'s vice-president. The trial court depended, in part, upon the Student Loan Marketing Association Reorganization Act of 1996, 20 U.S.C. § 1087-3, see supra text accompanying note 2, when it concluded that Sallie Mae ceased to have any employees before 1998 and that all of [Sallie Mae's] functions were transferred to other affiliates, which are not alleged to be located in the District. In support of that finding, Sallie Mae relies on Gaither v. District of Columbia, 333 A.2d 57, 59 (D.C.1975), to advance its argument that, after noting the statute, the trial court was entitled to take judicial notice of the effect of [the statute] on Sallie Mae's operations. (emphasis added). In Gaither, we observed that statutes enacted by Congress specifically granted control of Lorton Reformatory to the District of Columbia, then concluded that the trial court had properly taken judicial notice of the District of Columbia's ownership and operation of the reformatory because it is clear that a reasonable person with reasonable knowledge of the District of Columbia community would understand that the District owns and operates its own reformatory. Id. In contrast, the conclusion that Sallie Mae ceased to operate in any manner in the District of Columbia prior to the implementation of the policies in question is neither apparent from the statutory text of 20 U.S.C. § 1087-3 nor self-evident. Earlier, we quoted the statute authorizing Sallie Mae's reorganization, 20 U.S.C. § 1087-3, and providing that [o]n the reorganization effective date, employees of [Sallie Mae] shall become employees of the Holding Company [or its subsidiaries], and the Holding Company [or its subsidiaries] shall provide all necessary and appropriate management and operational support . . . to [Sallie Mae], as requested by [Sallie Mae]. Id. § 1087-3(c)(3). But the statute itself does not offer assurance that the reorganization ever occurred. A note in the United States Code Annotated says that the reorganization occurred in 1996. However, Gaither's statement, that a court may take judicial notice of laws and statutes of the jurisdiction in which the court sits, 333 A.2d at 59, does not extend to unofficial annotations to those laws and statutes. Furthermore, Sallie Mae's additional argument  that the reorganization, and Sallie Mae's subsequent dissolution, are matters of public record detailed in filings . . . with the Securities and Exchange Commission  carries no weight. Even if the trial court were entitled to take judicial notice of these filings, [15] there is no indication in the record that the court ever considered them. In any event, judicial notice of a reorganization and dissolution  especially one that retains Sallie Mae as a subsidiary of a holding company until dissolution is complete  does not necessarily demonstrate that Sallie Mae, or any other company that provided support for the relevant functions, no longer engaged in any operations nor had any employees in the District of Columbia in 1998. Such a conclusion necessarily would require reference to facts extrinsic to the complaint. Indeed, the statute itself makes clear that the corporate structure was in flux for quite awhile. According to 20 U.S.C. § 1087-3(c)(1), until the dissolution date, [Sallie Mae] shall continue to have all of the rights, privileges and obligations set forth in, and shall be subject to all of the limitations and restrictions of, section 1087-2 of this title, and [Sallie Mae] shall continue to carry out the purposes of such section. The statute further provided that Sallie Mae could obtain management and operational support from persons or entities not associated with the Holding Company after the reorganization date but prior to the dissolution. § 1087-3(c)(3). Sallie Mae does not allege that the actual dissolution occurred prior to 1998. In fact, in its brief, Sallie Mae suggests that the dissolution was not complete until 2004. See supra note 2. When the court relied on facts asserted by affidavit, it effectively converted Sallie Mae's motion to dismiss into a motion for summary judgment, even though it continued to style its ruling as a dismissal under Rule 12(b)(6) for failure to state a claim. Kitt, 672 A.2d at 79. However, nothing in the record indicates that the trial court gave appellants any notice of its intention to consider summary judgment and an adequate opportunity to present affidavits or other matters appropriate to a ruling on such a motion. Id. at 80. Accordingly, the trial court erred in considering the affidavit without providing appellants the opportunity to submit evidence.