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Ross Brothers Construction Co., Inc. v. International Steel Services

March 18, 2002

ROSS BROTHERS CONSTRUCTION CO., INC., PLAINTIFF-APPELLANT,
v.
INTERNATIONAL STEEL SERVICES, INC. AND AMERICAN IRON OXIDE COMPANY, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Southern District of Indiana, Evansville Division. No. 00 C 27--Richard L. Young, Judge.

Before Posner, Manion, and Diane P. Wood, Circuit Judges.

The opinion of the court was delivered by: Manion, Circuit Judge

Argued October 26, 2001

Ross Brothers Construction Company, Inc. brought suit against International Steel Services, Inc. and American Oxide Company to recover damages for labor and materials it furnished during a construction project. Ross sued International Steel for breach of contract, and sought to foreclose on a mechanic's lien that it filed against real estate owned by American Oxide. The defendants moved for summary judgment, seeking to have the breach of contract claim dismissed and transferred to arbitration, and the mechanic's lien released and discharged. During the course of the summary judgment proceedings, a dispute arose as to the number of purchase order agreements at issue in the litigation. Ross argued that it was seeking relief pursuant to three separate purchase order agreements. The defendants, however, contended that Ross' complaint only stated claims for relief under one purchase order agreement, not three. The district court held that Ross' complaint only requested relief under one purchase order agreement, and granted the defendants' motion for summary judgment as to that agreement. The plaintiff appeals, and we reverse and remand for further proceedings.

I.

On May 10, 1999, Ross Brothers Construction Co., Inc. entered into a purchase order agreement ("P.O. 130") with defendant International Steel Services, Inc. whereby Ross agreed to supply labor and materials to International Steel for the construction of an acid regeneration plant on real estate owned by defendant American Oxide Company. P.O. 130, and its accompanying attachments, provided that the agreement was "made under Pennsylvania law," and included arbitration and "waiver of lien" clauses. In addition to P.O. 130, Ross contends that it also entered into two subsequent verbal purchase order agreements with International Steel, P.O.s 167 and 200, and that these agreements were separate and independent from P.O. 130.

Ross submitted invoices to International Steel for work performed and materials supplied pursuant to all three purchase order agreements. After International Steel refused to pay the invoices, Ross filed a mechanic's lien on American Oxide's real estate in the amount of $1,400,000. Ross then initiated an action in state court against International Steel for breach of contract, and against American Oxide to foreclose on the mechanic's lien. The defendants removed the case to federal district court on the basis of diversity of citizenship, and filed a counterclaim against Ross for breach of contract. Shortly thereafter, the defendants filed a motion for summary judgment, arguing that the arbitration provision contained in P.O. 130 required Ross' breach of contract claim to be transferred to arbitration, and that Ross had waived the right to file a mechanic's lien because P.O. 130 contained a valid lien waiver provision. In responding to these arguments, Ross noted that P.O. 130 was not the only purchase order agreement at issue in the litigation. Ross asserted that it had performed work pursuant to three separate purchase order agreements, P.O.s 130, 167 and 200. Ross argued that P.O.s 167 and 200 are not subject to the choice of law, arbitration, and lien waiver provisions contained in P.O. 130, and that even if these provisions apply to P.O.s 167 and 200 they are void as a matter of law. The defendants countered by asserting that Ross' complaint did not state claims for relief pursuant to P.O.s 167 and 200, and requested that the district court "hold this dispute is covered only by [P.O. 130] because Ross is bound by its Complaint which refers only to purchase order - 130." The defendants argued that Ross was precluded from asserting these claims because it had failed "to reference or even mention [P.O.s 167 and 200] in its prior pleadings [i.e., the complaint]." The district court granted the defendants' motion, transferring Ross' claim for breach of P.O. 130 to arbitration *fn1 and ordering Ross to release and discharge the mechanic's lien in its entirety. The district court did not, however, specifically address Ross' claims for breach of P.O.s 167 and 200, or whether the mechanic's lien was valid to the extent that it encompassed these purchase orders. Instead, the district court merely noted at the conclusion of its order that "[t]his Entry does not apply to other purchase orders that exist between the parties."

II.

We begin our analysis with some jurisdictional housekeeping. After a preliminary review of the short record in this case, we discovered two potential jurisdictional problems and ordered the parties to brief the issues. We noted that while the district court's judgment purported to be "final," the status of the defendants' counterclaim was unclear. We also questioned whether diversity of citizenship existed between the parties. After reviewing the parties' respective briefs, we concluded that the district court disposed of the defendants' counterclaim, and that diversity of citizenship existed between the parties in accordance with 28 U.S.C. sec. 1332.

At oral argument, however, another jurisdictional wrinkle appeared, once again bringing into question the finality of the district court's judgment. Specifically, we questioned the parties as to whether the district court's statement that "[t]his Entry does not apply to other purchase orders that exist between the parties" meant that Ross' P.O. 167 and 200 claims remained pending before the court, thus depriving this court of jurisdiction under 28 U.S.C. sec. 1291. The parties contended that the only matter pending before the district court was the defendants' motion for attorneys' fees. The Supreme Court has held that a "[q]uestion remaining to be decided after an order ending litigation on the merits does not prevent finality if its resolution will not alter the order or moot or revise decisions embodied in the order," Budinich v. Becton Dickinson & Co., 486 U.S. 196, 199 (1988), and therefore "a claim for attorney's fees is not part of the merits of the action to which the fees pertain." Id. at 200. See also Barrow v. Falck, 977 F.2d 1100, 1102 (7th Cir. 1992). The claim for attorneys' fees notwithstanding, neither party was, quite understandably, sure how to characterize the district court's cryptic reference to "other purchase orders." Nevertheless, both parties maintained that the district court's judgment was final, and that we had jurisdiction to hear the appeal. Parties may not, however, confer jurisdiction on this court by merely agreeing that the district court's decision is final, and thus appealable under sec. 1291. See, e.g., ITOFCA, Inc. v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir. 2000). "It is our own threshold and independent obligation to make that determination even [when] both parties agreeably [consider an] order to be final and appealable." Horwitz v. Alloy Auto. Co., 957 F.2d 1431, 1435 (7th Cir. 1992). Whether a decision is final for purposes of sec. 1291 "generally depends on whether the decision by the district court 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" MegaTrans, 235 F.3d at 363 (citation omitted). As explained below, we conclude that the district court made a final determination with respect to Ross' P.O. 167 and 200 claims. Because the district court's order ended the "merits" phase of the litigation, it is a final appealable judgment for purposes of sec. 1291. Id.

We now turn to Ross' argument that the district court improperly "dismissed" the claims it brought for breach of contract and to foreclose on the mechanic's lien pursuant to P.O.s 167 and 200. Ross contends that the district court's order violates Circuit Rule 50 *fn2 because the court dismissed the P.O. 167 and 200 claims without explanation.*fn3 Ross also challenges the district court's decision ordering a complete release and discharge of the mechanic's lien. According to Ross, it was improper for the district court to order a release and discharge of the entire amount of the lien without first considering the lien's validity as to P.O.s 167 and 200. Furthermore, to the extent the mechanic's lien covers P.O. 130, Ross argues that the purchase order's arbitration clause precluded the district court from ordering the release and discharge of that portion of the lien as well.

As an initial matter, we note the absence of any specific discussion by the district court of P.O.s 167 and 200 in its order. While the district court's order discusses P.O. 130 in great detail, it was not until the end of the opinion that the court even acknowledged the existence of other purchase orders, noting "[t]his Entry does not apply to other purchase orders that exist between the parties." Viewed in isolation, it is unclear what the district court intended to convey through this statement. Hence, Ross' argument that we should remand the case back to the district court, pursuant to Circuit Rule 50, to enable the court to explain the meaning of the statement.

While we agree that the district court's order violates Circuit Rule 50, we do not believe that it is necessary to remand the case for clarification. We have consistently held "that lack of an explanation [by a district court] does not necessarily defeat appellate jurisdiction, at least where the reasons are apparent from the record." See, e.g., United States v. Ettrick Wood Products, Inc., 916 F.2d 1211, 1218 (7th Cir. 1990). After a careful examination of the record, we conclude that the district court accepted the defendants' argument that Ross failed to sufficiently plead claims for relief pursuant to P.O.s 167 and 200 in its complaint, and that P.O. 130 was the only purchase order at issue in the case.*fn4 We find this to be the case for two reasons. First, only three purchase orders were mentioned by the parties during the course of the litigation, P.O.s 130, 167, and 200. As such, when the district court refers to "other purchase orders" it can only mean P.O.s 167 and 200. Second, we must presume the district court read the briefs submitted during the summary judgment proceedings, where the parties spent a substantial amount of time arguing over the scope of the lawsuit (i.e., whether P.O.s 167 and 200 were at issue). Viewed in this context, the district court's statement that "[t]his Entry does not apply to other purchase orders that exist between the parties," can only be interpreted as evidencing the court's acceptance of the defendants' argument that Ross' complaint did not state claims for relief pursuant to P.O.s 167 and 200, and that Ross was precluded from clarifying the scope of its complaint during the course of the summary judgment proceedings.

In reviewing the district court's disposition of Ross' P.O. 167 and 200 claims, our degree of scrutiny is governed by Fed. R. Civ. P. 8, which provides that a pleading is sufficient if it contains: "(1) a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief the pleader seeks . . . ." Fed. R. Civ. P. 8(a). As this court has consistently noted, "the essential function of a complaint under the civil rules . . . is to put the defendant on notice of the plaintiff's claim." Davis v. Ruby Foods, Inc., 269 F.3d 818, 820 (7th Cir. 2001). In placing the defendant on notice, however, a plaintiff must comply with Rule 8(e)(1), which requires that "[e]ach averment of a pleading shall be simple, concise, and direct." Fed. R. Civ. P. 8(e)(1). Nevertheless, "[n]o technical forms of pleading or motions are required." Id. Finally, we note ...


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