Delaware Business Litigation Report

Presented with Documents Outside the Pleadings, Chancery Converts Motion To Dismiss to Motion for Summary Judgment and Allows Discovery

Totta v. CCSB Fin. Corp., C.A. No. 2021-0173-KSJM (Del. Ch. Oct. 20, 2021)
While the Court may take judicial notice of the contents of materials like newspaper articles, public filings and websites for certain purposes, it generally may not do so to establish the truth of their contents. Where, as here, a party relies on documents outside the pleadings, the Court may convert a motion to dismiss into a motion for summary judgment, and therefore deny the motion.

In a 2021 corporate election, the inspector of elections disallowed certain votes that would have secured plaintiffs’ seats on the board. Plaintiffs brought suit challenging that disallowance and seeking a declaration that they had been elected to the board. Defendant moved to dismiss.

In its motion to dismiss, Defendant relied on thirty-three documents neither attached to nor referenced in the complaint, as part of describing the “fuller story” to the Court. Although documents outside the pleadings are not properly considered in a motion-to-dismiss record, Defendant argued that the documents fell within exceptions—that they were integral to the complaint or subject to judicial notice.

The Court focused on the issue of judicial notice and explained that documents such as websites, newspapers, and SEC filings might be subject to judicial notice for certain purposes, but not for the truth of their contents. Presented with thirty-three documents outside the pleadings that the defendant cited twice as often as the complaint’s actual allegations, the Court declined to expend judicial resources and risk prejudice to the plaintiff by attempting to parse them. Accordingly, it treated the motion to dismiss as a motion for summary judgment in accord with Court of Chancery Rule 12(b), and permitted discovery before it would rule on the motion.

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