Adams Housing, LLC v. City of Salisbury, Maryland, 672 F. App'x 220

Salisbury, MD enacted an Occupancy Ordinance limiting who may occupy a house (families, up to two unrelated persons, or a 4-person "functional family").
In 2014 three unrelated college students rented a house owned by Adams Housing; Salisbury’s Code Enforcement Officer ordered a reduction in occupants under the Ordinance.
Adams Housing contested enforcement before the local appeals board and in state court; it also sued Salisbury in federal court asserting facial and as-applied constitutional (equal protection and due process) and vagueness challenges, plus tortious interference.
Salisbury moved to dismiss under Fed. R. Civ. P. 12(b)(6). At a status conference the district court concluded facts were undisputed and (without explicit notice or citation) treated the matter as suitable for declaratory relief and entered judgment for Adams Housing declaring the Ordinance unconstitutionally vague as-applied.
Salisbury appealed, arguing the district court improperly converted a motion to dismiss into summary judgment without giving notice or an opportunity for discovery or to present evidence.
The Fourth Circuit vacated and remanded, holding the district court failed to afford the required notice and opportunity to be heard before granting summary judgment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court could resolve as-applied vagueness without discovery	Ordinance enforcement to Adams Housing was unconstitutionally vague as-applied and ripe for declaratory relief	Motion was only a Rule 12(b)(6) dismissal; Salisbury had not waived discovery or conceded facts and needed opportunity to present evidence	Court held summary judgment requires notice and opportunity to be heard; district court erred by granting judgment without providing them; vacated and remanded
Whether sua sponte conversion to summary judgment was proper without notice	N/A (plaintiff benefited from conversion)	Conversion without notice deprived Salisbury of chance to "come forward with all of its evidence"	Held improper; conversion without giving the losing party notice and time to respond violated precedent
Whether facts were undisputed such that no discovery required	Facts were undisputed and case ripe for declaratory judgment	Salisbury maintained it accepted allegations only for 12(b)(6) purposes and requested discovery if dismissal denied	Court found the status call and letter did not substitute for formal notice and opportunity; discovery opportunity required
Whether district court reached other constitutional claims	Adams Housing sought broader relief	Salisbury contended proceedings were premature	Court did not reach as-applied due process and equal protection claims; only vacated the summary judgment determination

Allstate Ins. Co. v. Fritz, 452 F.3d 316 (4th Cir. 2006) (court has inherent power to grant summary judgment but must provide notice and opportunity to be heard)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party’s burden at summary judgment and requirement that nonmovant come forward with evidence)
U.S. Dev. Corp. v. Peoples Fed. Sav. & Loan Ass’n, 873 F.2d 731 (4th Cir. 1989) (notice must allow party an adequate opportunity to present evidence and show genuine factual disputes)
aaiPharma Inc. v. Thompson, 296 F.3d 227 (4th Cir. 2002) (summary judgment conversion rules aim to ensure a full and fair opportunity to present a case)