NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ________________
No. 18-1131
NESTOR SAROZA, on behalf of himself and all other similarly situated, Appellant v.
LYONS DOUGHTY & VELDHUIS, P.C.
Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 1-17-cv-00523) District Judge: Honorable Robert B. Kugler ________________
Submitted Under Third Circuit LAR 34.1(a) April 15, 2019
Before: AMBRO, GREENAWAY, JR., and SCIRICA, Circuit Judges
(Opinion filed: May 22, 2019)
OPINION *
AMBRO, Circuit Judge
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. Before us is the District Court’s sua sponte entry of summary judgment dismissing
a claim under the Fair Debt Collection Practices Act (“FDCPA”). We conclude the
plaintiff did not have a fair opportunity to challenge that entry, and that error was not
harmless. Hence we reverse and remand for further proceedings.
I. Background
Nestor Saroza incurred a balance of $9,971.55 on his Capital One credit card. A
debt collector for Capital One, defendant-appellee Lyons, Doughty & Veldhuis, P.C.,
filed a lawsuit in state court to collect the debt and sent a collection letter to Saroza. The
letter identified the state-court lawsuit and stated an “Amount Due” of $10,053.55, which
included an unitemized charge of $82.00 for filing and service costs associated with the
lawsuit. Saroza contends this misstated the amount he owed to Capital One because it
included the $82.00. On this basis, he brings a claim against Lyons Doughty under the
FDCPA.
In response to the claim, Lyons Doughty filed a hybrid motion to dismiss, or in the
alternative, motion for summary judgment. (App. 3.) The motion attached a customer
agreement stating that Capital One was entitled to recover its court costs from Saroza.
(App. 59–64.) It argued that (1) Saroza failed to allege a “consumer” debt as required by
the FDCPA, and (2) the collection letter was accurate because the customer agreement
entitled Capital One to recover the $82.00 in costs. The second argument, which relied
on evidence extrinsic to Saroza’s complaint, was clearly the part of the motion that
sought summary judgment. (See App. 42–46.) In its reply brief, Lyons Doughty
expressly withdrew the second argument, stating that “[a]t this stage of the proceedings, 2 Defendant voluntarily withdraws its argument, without prejudice to renew it at a later
time.” (App. 110.) Due to this withdrawal, the only aspect of Lyons Doughty’s motion
that remained pending was its motion to dismiss based on Saroza’s failure to allege a
consumer debt.
While that portion of the motion was pending, the District Court issued a one-page
order on November 21, 2017, which “not[ed]” that Lyons Doughty’s hybrid motion
“presented an affidavit in support of Defendant’s motion and a Customer Agreement not
relied on in Plaintiff’s complaint, which under Fed. R. Civ. P. 12(d) converts the motion
into one for summary judgment under Rule 56.” (App. 116.) It also “not[ed]” that Lyons
Doughty “has since withdrawn its motion for summary judgment.” (Id.) It further stated
that, “under Rule 12(d), ‘all parties must be given a reasonable opportunity to present all
material that is pertinent to the motion.’” (Id.) Thus, “pursuant to Rule 56(f), the Court
will convert the pending motion to a motion for summary judgment” and invited the
parties to “submit collateral briefs, not to exceed ten (10) pages.” (Id.)
In response to the order, the parties submitted supplemental briefing. In his brief
Saroza addressed only the first argument presented in Lyons Doughty’s hybrid motion;
he did not address the argument on the customer agreement that Lyons Doughty had
expressly withdrawn. In its brief Lyons Doughty, for reasons unknown, addressed both
arguments. The briefs were filed on December 18 (though Lyons Doughty filed its brief
around 9:00 in the evening). Less than 36 hours later, on the morning of December 20,
the District Court granted summary judgment in favor of Lyons Doughty on the very
3 customer-agreement argument that it had expressly withdrawn from its motion. Saroza
appeals to us, claiming he did not have an adequate opportunity to oppose that argument.
II. Discussion
When a district court converts a motion to dismiss into a motion for summary
judgment, it must give all parties “a reasonable opportunity to present all the material that
is pertinent to the motion.” Fed. R. Civ. P. 12(d). Similarly, it may enter summary
judgment sua sponte for a nonmovant or on grounds not raised by a party, so long as it
first “giv[es] notice and a reasonable time to respond[.]” Fed. R. Civ. P. 56(f). A party
has adequate notice that summary judgment may be entered on a particular ground when
it has “reason to believe the Court might reach the issue and received the fair opportunity
to put his best foot forward.” Gibson v. Mayor and Council of Wilmington, 355 F.3d 215,
224 (3d Cir. 2004) (quotation omitted). To the extent a party believes it needs to gather
additional facts through affidavits or discovery, it must demonstrate that need through an
affidavit under Fed. R. Civ. P. 56(d). 1 See Dowling v. City of Philadelphia, 855 F.2d
136, 139–40 (3d Cir. 1988).
In this case, the District Court’s November 21 order appears to have blended the
procedures of Rule 12(d) and Rule 56(f). It cited both Rules, which could perhaps be
construed as giving notice that it would both convert Lyons Doughty’s pending motion to
dismiss into a motion for summary judgment, per Rule 12(d), and also consider granting
1 The affidavit rule was moved from Rule 56(f) to Rule 56(d) in the 2010 Amendments to the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 56 (2010 Advisory Committee Notes). 4 summary judgment on a ground not raised by either party, per Rule 56(f). But the order’s
language weighs against that dual interpretation. The sentence citing Rule 56(f) stated
the Court would, “pursuant to Rule 56(f), convert the pending motion to a motion for
summary judgment.” (App. 116 (emphasis added).) Combined with the order’s prior
reference to Rule 12(d), its use of the word “conversion” signaled that the potential
grounds for granting summary judgment were those in “the pending motion.” (Id.)
Those grounds, as noted above, were narrowed when Lyons Doughty expressly withdrew
the customer-agreement argument in its prior briefing. Our interpretation of the record,
therefore, is that “the pending motion” contained only a single live issue—whether
Saroza had adequately alleged a “consumer” debt under the FDCPA. It did not
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ________________
No. 18-1131
NESTOR SAROZA, on behalf of himself and all other similarly situated, Appellant v.
LYONS DOUGHTY & VELDHUIS, P.C.
Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 1-17-cv-00523) District Judge: Honorable Robert B. Kugler ________________
Submitted Under Third Circuit LAR 34.1(a) April 15, 2019
Before: AMBRO, GREENAWAY, JR., and SCIRICA, Circuit Judges
(Opinion filed: May 22, 2019)
OPINION *
AMBRO, Circuit Judge
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. Before us is the District Court’s sua sponte entry of summary judgment dismissing
a claim under the Fair Debt Collection Practices Act (“FDCPA”). We conclude the
plaintiff did not have a fair opportunity to challenge that entry, and that error was not
harmless. Hence we reverse and remand for further proceedings.
I. Background
Nestor Saroza incurred a balance of $9,971.55 on his Capital One credit card. A
debt collector for Capital One, defendant-appellee Lyons, Doughty & Veldhuis, P.C.,
filed a lawsuit in state court to collect the debt and sent a collection letter to Saroza. The
letter identified the state-court lawsuit and stated an “Amount Due” of $10,053.55, which
included an unitemized charge of $82.00 for filing and service costs associated with the
lawsuit. Saroza contends this misstated the amount he owed to Capital One because it
included the $82.00. On this basis, he brings a claim against Lyons Doughty under the
FDCPA.
In response to the claim, Lyons Doughty filed a hybrid motion to dismiss, or in the
alternative, motion for summary judgment. (App. 3.) The motion attached a customer
agreement stating that Capital One was entitled to recover its court costs from Saroza.
(App. 59–64.) It argued that (1) Saroza failed to allege a “consumer” debt as required by
the FDCPA, and (2) the collection letter was accurate because the customer agreement
entitled Capital One to recover the $82.00 in costs. The second argument, which relied
on evidence extrinsic to Saroza’s complaint, was clearly the part of the motion that
sought summary judgment. (See App. 42–46.) In its reply brief, Lyons Doughty
expressly withdrew the second argument, stating that “[a]t this stage of the proceedings, 2 Defendant voluntarily withdraws its argument, without prejudice to renew it at a later
time.” (App. 110.) Due to this withdrawal, the only aspect of Lyons Doughty’s motion
that remained pending was its motion to dismiss based on Saroza’s failure to allege a
consumer debt.
While that portion of the motion was pending, the District Court issued a one-page
order on November 21, 2017, which “not[ed]” that Lyons Doughty’s hybrid motion
“presented an affidavit in support of Defendant’s motion and a Customer Agreement not
relied on in Plaintiff’s complaint, which under Fed. R. Civ. P. 12(d) converts the motion
into one for summary judgment under Rule 56.” (App. 116.) It also “not[ed]” that Lyons
Doughty “has since withdrawn its motion for summary judgment.” (Id.) It further stated
that, “under Rule 12(d), ‘all parties must be given a reasonable opportunity to present all
material that is pertinent to the motion.’” (Id.) Thus, “pursuant to Rule 56(f), the Court
will convert the pending motion to a motion for summary judgment” and invited the
parties to “submit collateral briefs, not to exceed ten (10) pages.” (Id.)
In response to the order, the parties submitted supplemental briefing. In his brief
Saroza addressed only the first argument presented in Lyons Doughty’s hybrid motion;
he did not address the argument on the customer agreement that Lyons Doughty had
expressly withdrawn. In its brief Lyons Doughty, for reasons unknown, addressed both
arguments. The briefs were filed on December 18 (though Lyons Doughty filed its brief
around 9:00 in the evening). Less than 36 hours later, on the morning of December 20,
the District Court granted summary judgment in favor of Lyons Doughty on the very
3 customer-agreement argument that it had expressly withdrawn from its motion. Saroza
appeals to us, claiming he did not have an adequate opportunity to oppose that argument.
II. Discussion
When a district court converts a motion to dismiss into a motion for summary
judgment, it must give all parties “a reasonable opportunity to present all the material that
is pertinent to the motion.” Fed. R. Civ. P. 12(d). Similarly, it may enter summary
judgment sua sponte for a nonmovant or on grounds not raised by a party, so long as it
first “giv[es] notice and a reasonable time to respond[.]” Fed. R. Civ. P. 56(f). A party
has adequate notice that summary judgment may be entered on a particular ground when
it has “reason to believe the Court might reach the issue and received the fair opportunity
to put his best foot forward.” Gibson v. Mayor and Council of Wilmington, 355 F.3d 215,
224 (3d Cir. 2004) (quotation omitted). To the extent a party believes it needs to gather
additional facts through affidavits or discovery, it must demonstrate that need through an
affidavit under Fed. R. Civ. P. 56(d). 1 See Dowling v. City of Philadelphia, 855 F.2d
136, 139–40 (3d Cir. 1988).
In this case, the District Court’s November 21 order appears to have blended the
procedures of Rule 12(d) and Rule 56(f). It cited both Rules, which could perhaps be
construed as giving notice that it would both convert Lyons Doughty’s pending motion to
dismiss into a motion for summary judgment, per Rule 12(d), and also consider granting
1 The affidavit rule was moved from Rule 56(f) to Rule 56(d) in the 2010 Amendments to the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 56 (2010 Advisory Committee Notes). 4 summary judgment on a ground not raised by either party, per Rule 56(f). But the order’s
language weighs against that dual interpretation. The sentence citing Rule 56(f) stated
the Court would, “pursuant to Rule 56(f), convert the pending motion to a motion for
summary judgment.” (App. 116 (emphasis added).) Combined with the order’s prior
reference to Rule 12(d), its use of the word “conversion” signaled that the potential
grounds for granting summary judgment were those in “the pending motion.” (Id.)
Those grounds, as noted above, were narrowed when Lyons Doughty expressly withdrew
the customer-agreement argument in its prior briefing. Our interpretation of the record,
therefore, is that “the pending motion” contained only a single live issue—whether
Saroza had adequately alleged a “consumer” debt under the FDCPA. It did not
encompass the ground on which the District Court ultimately granted summary judgment
because that ground was not part of the pending motion that was “converted.” Thus we
conclude that Saroza did not have adequate notice of the Court’s intention to grant
summary judgment based on an argument expressly withdrawn by Lyons Doughty.
Saroza should not be faulted for not submitting an affidavit under Rule 56(d) when
he received Lyons Doughty’s supplemental brief in the evening of December 18. That
brief was filed after Saroza had already filed his supplemental brief, and there was no
procedure in place for Saroza to respond. He should not be charged with notice of the
potential scope of the District Court’s summary-judgment ruling based on Lyons
Doughty’s eleventh-hour reassertion of an argument it had no doubt withdrawn from the
scope of its pending motion. Moreover, even if Lyons Doughty’s supplemental brief
could be the basis for charging Saroza with notice, he did not have a reasonable
5 opportunity to respond to that argument because only a single business day passed
between its submission and the Court’s entry of summary judgment on the morning of
December 20.
Lastly, the lack of adequate notice was not harmless error. In this context, this
threshold is met only where “it appears that there is no set of facts on which [the plaintiff]
could possibly recover.” Rose v. Bartle, 871 F.2d 331, 342 (3d Cir. 1989). Saroza
contends the lack of notice deprived him of the opportunity to demonstrate the customer
agreement was inapplicable and submit other rebuttal evidence. We agree with Lyons
Doughty that Saroza has not explained precisely how that opportunity would have led to
a different result, but we are not persuaded there is “no set of facts” on which Saroza
could possibly recover. Hence we cannot affirm for harmless error.
* * * * *
Saroza did not have adequate notice that the District Court was considering
granting summary judgment in favor of Lyons Doughty on the very argument it had
expressly withdrawn from its pending motion, and that lack of notice was not harmless
error. We thus reverse the grant of summary judgment and remand for further
proceedings. In so doing, we express no view on the merits.