Court Opinion

ID: 4508940
Source: CourtListenerOpinion
Date Created: 2020-02-20 16:03:44.421295+00
Date Added: 2024-06-11T09:37:47.212921
License: Public Domain

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                   MILLARD SELDIN, Plaintiff/Appellant,

                                        v.

 SELDIN DEVELOPMENT & MANAGEMENT COMPANY LLC, et al.,
                  Defendants/Appellees.

                             No. 1 CA-CV 19-0186
                               FILED 2-20-2020

           Appeal from the Superior Court in Maricopa County
                          No. CV2018-000815
                    The Honorable Rosa Mroz, Judge

                                  AFFIRMED

                                   COUNSEL

Tiffany & Bosco, P.A., Phoenix
By Robert A. Royal, Amy D. Sells, Todd T. Lenczycki
Co-Counsel for Plaintiff/Appellant

Sherrets Bruno & Vogt LLC, Scottsdale
By Jason Mario Bruno
Co-Counsel for Plaintiff/Appellant

Bryan Cave Leighton Paisner LLP, Phoenix
By Sean K. McElenney, Gregory B. Iannelli
Counsel for Defendants/Appellees
                      SELDIN v. SELDIN DEV., et al.
                          Decision of the Court

                      MEMORANDUM DECISION

Judge David B. Gass delivered the decision of the Court, in which Presiding
Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined.

G A S S, Judge:

¶1           Millard Seldin (Millard) appeals the dismissal of his claims for
indemnification and contribution against appellees. This case arises from
the dissolution of a family business under a negotiated Separation
Agreement (the agreement). Because Millard agreed to arbitrate “all Claims
and Disputes” arising from the business dissolution in Nebraska, the
superior court’s dismissal is affirmed.

               FACTUAL AND PROCEDURAL HISTORY

¶2            All but two appellees were parties to the agreement. Seldin
Development & Management Company (SD&M) and MTS Acquisitions
LLC (MTS) were not parties. SD&M and MTS were dissolved before these
proceedings began. SD&M and MTS appear at the direction of the former
officers and members.

¶3           In 2008, Millard and the appellees had a falling out. They
negotiated the agreement “to provide for the efficient and timely separation
of ownership of the Properties between them.” Per the agreement,
Nebraska law governs, and Nebraska state and federal courts are the
exclusive venue for any actions arising from the dissolution.

¶4             Under the agreement, Millard and appellees must resolve “all
issues that arise in connection with the separation process . . . and all such
decisions shall be final and binding upon and enforceable against each
Party in any court of competent jurisdiction.” The parties specifically
agreed to resolve all disputes between themselves “regarding, among other
things, the governance of various Entities, [and] the operation and
management of various Properties.” The agreement identified SD&M and
MTS as two such entities. The parties further agreed “all Claims and
Disputes shall be handled exclusively by arbitration.”

¶5            The agreement also recognized the parties had asserted or
might assert “certain ancillary claims and causes of action (collectively, the
‘Ancillary Claims’), which relate to or arise out of their respective business

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                      SELDIN v. SELDIN DEV., et al.
                          Decision of the Court

dealings.” The parties agreed to use arbitration “as the exclusive means of
resolving such” claims under the agreement.

¶6            The parties proceeded through the separation process. At the
end, they engaged in a complex, lengthy arbitration process. The arbitrator
issued a final award (the award). The award ordered Millard to pay the
appellees $2,997,000 for legal and ethical violations arising from “their
respective business dealings.”

¶7           In the award, the arbitrator said:

      The Separation Agreement put in place detailed contractual
      dispute resolution procedures and remedies that were
      heavily negotiated by the Parties with the assistance of legal
      counsel. The procedures and remedies were intended to
      produce a final, binding decision through a private
      arbitration proceeding that would resolve any and all post-
      separation claims that might be asserted by and between any
      of the Parties (“Ancillary Claims”).

The arbitrator continued, saying:

      Except as specifically provided herein, all other Ancillary
      Claims, theories of liability, causes of action, counterclaims,
      affirmative defenses . . . alleged damages, and requests for
      sanctions . . . which have been or could have been asserted by
      the Parties at any time during this proceeding, are hereby
      denied after considering the weight of the evidence, the
      applicable law and the equities between the Parties.

A Nebraska court affirmed the award in May 2018.

¶8           In this action, Millard seeks indemnification and contribution
from persons and entities who were subject to the agreement. Appellees
moved to dismiss Millard’s complaint for failure to state a claim. The
superior court granted the motion without argument, simply saying it
“agrees with Defendants’ arguments.” Millard timely appealed.

                                ANALYSIS

¶9            The superior court should grant a Rule 12(b)(6) motion if the
complaint fails to state a claim upon which relief can be granted. Coleman v.
City of Mesa, 230 Ariz. 352, 356, ¶ 8 (2012). This court reviews de novo the
superior court’s ruling on a Rule 12(b)(6) motion, and may affirm on any

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                      SELDIN v. SELDIN DEV., et al.
                          Decision of the Court

ground supported by the record. See id. at 355, ¶ 7; Mirchandani v. BMO
Harris Bank, N.A., 235 Ariz. 68, 72, ¶ 15 (App. 2014).

¶10            This court “must assume the truth of all of the complaint’s
material allegations [and] accord the plaintiffs the benefit of all inferences
which the complaint can reasonably support.” Gatecliff v. Great Republic Life
Ins. Co., 154 Ariz. 502, 508 (App. 1987). This court, however, does not accept
as true “allegations consisting of conclusions of law, inferences or
deductions that are not necessarily implied by well-pleaded facts,
unreasonable inferences or unsupported conclusions from such facts, or
legal conclusions alleged as facts.” Jeter v. Mayo Clinic Ariz., 211 Ariz. 386,
389, ¶ 4 (App. 2005).

I.     The superior court did not err when it declined to convert appellees’
       motion to dismiss to a motion for summary judgment.

¶11          Millard argues the superior court should have converted
appellees’ motion to dismiss to a motion for summary judgment under Rule
56 because appellees appended the agreement and award to their motion.
Millard did not append those documents to his complaint.

¶12            Contrary to Millard’s arguments, the agreement and award
fall within an exception to the general conversion rule because the two
documents are central to Millard’s complaint. See Strategic Dev. & Constr.,
Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 64, ¶ 14 (App. 2010). “The
rationale underlying the conversion rule is that a plaintiff must be given an
opportunity to respond when a motion to dismiss for failure to state a claim
includes material extraneous to the complaint.” Id. When a motion cites a
document central to the complaint “the plaintiff obviously is on notice of
the contents of the document, and the need for a chance to refute evidence
is greatly diminished.” Id.

¶13             Strategic said “Rule 56 treatment [was] not required when
Rule 12(b)(6) motion attached ‘undisputedly authentic’ copy of contract
that was the subject of complaint even though contract was not attached to
the complaint.” Id. (relying on Pension Benefit Guar. Corp. v. White Consol.
Indus., Inc., 998 F.2d 1192, 1196-97 (3d Cir. 1993)). The agreement and award
plainly fall within the exception to the conversion rule.

¶14           Because appellees’ motion to dismiss presented evidence
central to the complaint—evidence already well-known to Millard and in
his possession—the superior court did not err in treating it as a Rule 12(b)(6)
motion rather than a motion for summary judgment.

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                      SELDIN v. SELDIN DEV., et al.
                          Decision of the Court

II.    Millard had to assert all his claims against appellees under the
       agreement’s procedures and remedies.

¶15            Nebraska law controls the scope of the arbitration provision
in the agreement. Under Nebraska law, “any doubt concerning the scope of
arbitrable issues is to be resolved in favor of arbitration, whether the
problem at hand is the construction of the contract language itself or an
allegation of waiver, delay, or a like defense to arbitrability.” Smith Barney,
Inc. v. Painters Local Union No. 109 Pension Fund, 579 N.W.2d 518, 522 (Neb.
1998) (internal citations omitted).

¶16            Though SD&M and MTS were not parties to the agreement,
they were entities subject to it, and Millard had to raise and resolve any
issues regarding those entities “in the separation process.” The issue then
becomes whether Millard’s claims against appellees, including SD&M and
MTS, fall within the scope of the separation process. Following the
Nebraska Supreme Court’s directive to resolve “any doubt concerning the
scope of arbitrable issues . . . in favor of arbitration,” any claims Millard
may have against appellees—indemnity, contribution, or otherwise—
plainly fall within in the agreement’s scope. See id.

¶17           The agreement includes clear and unambiguous language in
which the parties agreed to resolve “all issues that arise in connection with
the separation process . . . and all such decisions shall be final and binding
upon and enforceable against each Party in any court of competent
jurisdiction.” The parties further agreed to resolve all such claims
“exclusively by arbitration.”

¶18            Based on this contractual language, Millard’s claims “relate to
or arise out of [his] respective business dealings [with appellees]” and “the
separation process.” See generally Smith Barney, 579 N.W.2d at 522. Those
claims were subject to an enforceable arbitration process under the
agreement and the superior court did not err in dismissing Millard’s
claims.1

III.   The superior court did not err in dismissing Millard’s complaint
       with prejudice.

¶19            Generally, before dismissing a complaint with prejudice for
failure to state a claim, a court should give the plaintiff an opportunity to
amend the complaint if amendment would cure any legal defects.

1 Because the arbitration clause is dispositive, this court need not address
the merits of Millard’s indemnification and contribution claims.

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                     SELDIN v. SELDIN DEV., et al.
                         Decision of the Court

Wigglesworth v. Mauldin, 195 Ariz. 432, 439, ¶ 26 (App. 1999). If amendment
would not cure the complaint’s legal defects, a court need not provide an
opportunity to amend and dismissal with prejudice is appropriate. See First
Citizens Bank & Trust Co. v. Morari, 242 Ariz. 562, 567, ¶ 12 (App. 2017);
Wigglesworth, 195 Ariz. at 439, ¶ 27.

¶20          As discussed above, Millard’s exclusive mechanism to
address his claims against appellees was in arbitration under the
agreement. Because no amendment could cure the legal defects in Millard’s
complaint, the superior court did not err in dismissing it with prejudice.

                    ATTORNEY FEES ON APPEAL

¶21           Appellees request attorney fees and costs incurred in this
appeal under A.R.S. § 12-349 and ARCAP 25. Millard requests attorney fees
and costs incurred under A.R.S. § 12-341.01 and ARCAP 21.

¶22           In analyzing these fee requests, this court considered all
relevant factors under A.R.S. § 12-350. Here, Millard prevailed on none of
his arguments, and his claims were largely unsupported by the record or
the law. Accordingly, we grant appellees’ requests for an award of
reasonable attorney fees and costs on appeal upon compliance with
ARCAP.

                             CONCLUSION

¶23          For the foregoing reasons, the superior court’s judgment is
affirmed.

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

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