Ficher Imaging Corp. v. General Electric Co.

• Decision Date: 03 August 1999
• Docket Number: No. 98-1225,98-1225
• Citation: 187 F.3d 1165
• Parties: (10th Cir. 1999) FISCHER IMAGING CORPORATION, Plaintiff-Counter-Defendant-Appellant, v. GENERAL ELECTRIC COMPANY, Defendant-Counter-Claimant-Appellee
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1165

187 F.3d 1165 (10th Cir. 1999)

FISCHER IMAGING CORPORATION, Plaintiff-Counter-Defendant-Appellant, v. GENERAL ELECTRIC COMPANY, Defendant-Counter-Claimant-Appellee.

No. 98-1225

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

August 3, 1999

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. D.C. No. 97-WY-2529-WD

[Copyrighted Material Omitted] Richard P. Holme, Davis, Graham & Stubbs, LLP, Denver, Colorado for Plaintiff-Counter-Defendant-Appellant.

Terry M. Grimm, (John P. Carreon and Rachel M. Janutis, Winston and Strawn, Chicago, Illinois and George B. Curtis, Gregory J. Kerwin, Patricia E. Foley, Gibson, Dunn & Crutcher, LLP, Denver, Colorado, with him on the briefs), Winston and Strawn, Chicago, Illinois for Defendant-Counter-Claimaint-Appellee.

Before BALDOCK, HOLLOWAY, and HENRY, Circuit Judges.

BALDOCK, Circuit Judge.

This dispute arose from a purchase agreement between Plaintiff Fischer Imaging Corporation ("Fischer") and Defendant General Electric Company ("GE") for the manufacture and purchase of medical imaging devices called Tilt C units. Fischer brought this diversity action in federal district court, seeking a declaratory judgment to determine a reasonable price for the Tilt C units. See 28 U.S.C. §§ 1332(a), 2201. GE filed a counterclaim seeking specific performance of the production requirements contained in the purchase agreement. Fischer timely filed a demand for a jury trial which the district court struck upon GE's motion. The district court, however, exercised its discretion pursuant to Fed. R. Civ. P. 39(c) and empaneled an advisory jury.

The advisory jury returned a verdict setting the reasonable price at $157,400 per Tilt C unit. Choosing not to follow the advisory jury's verdict, the district court issued an "Order and Judgment" setting the reasonable price at $122,648 per unit for Tilt C units delivered in 1998 and $126,082 per unit for Tilt C units delivered in 1999, and ordering Fischer to perform its obligations under the contract. Fischer appeals on the sole ground that the district court improperly struck its jury demand. To remedy the alleged error, Fischer seeks a remand directing the district court to instate the advisory jury's verdict as the judgment in this case. Our jurisdiction arises under 28 U.S.C. § 1291. We reverse and remand for a new trial.

I. Background

On August 29, 1994, the parties entered into an agreement for the sale of Tilt C units. The units are used in a medical imaging product produced by GE. The initial purchase agreement expired on December 31, 1997, but GE retained the unilateral power to extend the term of the agreement for two years. On June 25, 1997, GE provided Fischer with notice of its intent to exercise its option to extend the agreement. The initial contract contained pricing provisions, but these provisions did not apply to the extended term of the contract. Fischer indicated to GE that it would not order materials or schedule production of the Tilt C units under the extended term of the contract until the parties reached an agreement on the price per unit. The parties attempted unsuccessfully to negotiate a new price. As a result, Fischer filed the instant declaratory action asking the district court to determine a reasonable price for the units under Colo. Rev. Stat. § 4-2-305(1). Under Colorado's Commercial Code, parties may "conclude a contract for sale even though the price is not settled. In such a case, the price is a reasonable price at the time for delivery . . . ." Colo. Rev. Stat. § 4-2-305(1). GE counterclaimed for specific performance of the extended agreement. The district court struck Fischer's jury demand, tried the case with an advisory jury, did not follow the advisory jury's verdict, set the price for the units and ordered Fischer to produce the units according to the terms of the contract.

II. Analysis

At issue in this appeal is whether the Seventh Amendment of the United States Constitution entitles Fischer to a jury determination of a reasonable price under the extended term of the contract for the Tilt C units. Fischer argues that the relief it seeks is legal in nature, requiring a trial by jury if properly requested. In response, GE argues that Fischer's claims sound in equity and do not accord Fischer the right to a jury trial. We review de novo the trial court's decision to strike Fischer's jury demand. See Manning v. United States, 146 F.3d 808, 811 (10th Cir. 1998).

The Seventh Amendment provides that "[i]n suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved . . . ." U.S. Const. amend. VII. The Supreme Court has interpreted the Seventh Amendment as requiring trial by jury if the action involves "rights and remedies of the sort traditionally enforced in an action at law, rather than in an action in equity or admiralty." Pernell v. Southall Realty, 416 U.S. 363, 375 (1974). The Seventh Amendment right to a jury trial applies not only to common law causes of action, but also to statutorily created ones. See City of Monterey v. Del Monte Dunes, 119 S.Ct. 1624, 1638 (1999).

To resolve whether the right of trial by jury attaches to a particular cause of action, we apply a two-step analysis. See id. First, we determine whether the cause of action was tried at law in 1791, or is analogous to such a cause of action. Markman v. Westview Instr., Inc., 517 U.S. 370, 376 (1996). "To determine whether a statutory cause of action is more analogous to cases tried in courts of law than to suits tried in courts of equity or admiralty, we examine both the nature of the statutory action and the remedy sought." Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 348 (1998). The nature of the remedy is the more important factor. See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 (1989). Second, "[i]f the action in question belongs in the law category, we then ask whether the particular trial decision must fall to the jury in order to preserve the substance of the common-law right as it existed in 1791." Del Monte Dunes, 119 S.Ct. at 1638 (internal citations omitted).

Fischer's pursuit of this action under the Declaratory Judgment Act does not alter Fischer's rights under the Seventh Amendment. See Manning, 146 F.3d at 811. The Declaratory Judgment Act does not create a right to a jury trial, but merely preserves the right where one already exists. Id. Declaratory relief may be legal or equitable depending on the "basic nature of the underlying issues." United States v. New Mexico, 642 F.2d 397, 400 (10th Cir. 1981).

A. Nature of the Statutory Action

Applying these principles, we look first to the nature of § 4-2-305, which provides as follows:

(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if:

(a) Nothing is said as to price; or

(b) The price is left to be agreed by the parties and they fail to agree . . .

Colo. Rev. Stat. § 4-2-305. At the time the Seventh Amendment was adopted no parallel action to § 4-2-305 existed. Indeed, at common law an agreement omitting the price and failing to provide a definite method for ascertaining a price was void and unenforceable. See Boatright v. Steinite Radio Corp., 46 F.2d 385, 388 (10th Cir. 1931); Red Wing Shoe Co. v. Shepherd Safety Shoe Corp., 164 F.2d 415, 418 (7th Cir. 1947). Today, however, § 4-2-305 salvages an agreement where the parties fail to include a price, if the parties intend to be bound. Neither party here contends that they did not intend to be bound. Therefore, the parties have an enforceable contract under § 4-2-305.

Determining whether a contract action would have historically been tried to a jury is "difficult and even at times impossible." 5 Arthur L. Corbin, Corbin on Contracts, § 1103 (1964). Generally, breach of contract actions claiming monetary damages were tried to a jury. See Chauffeurs, Teamsters, and Helpers Local No. 391 v. Terry, 494 U.S. 558, 569-70 (1990). By contrast, actions seeking reformation of a contract were tried to the judge, see 9 Wright & Miller, Federal Practice and Procedure Civil 2d, § 2316 (1982), as were actions seeking specific performance of a contract. Id. at § 2309. The foregoing suggests that the nature of the remedy that the plaintiff seeks in a contract action determines whether the plaintiff is entitled to a jury trial. Thus, we must determine whether the remedy sought by Fischer under § 4-2-305 is legal or equitable in nature.

B. Remedy Sought

The remedy in this case is difficult to pigeonhole into one distinct category. The posture of the case as a declaratory action further complicates the analysis. Fischer argues that the claim is a straightforward one for money damages. The case is not so simple. Prior to filing suit, Fischer refused to perform under the extended term of the contract. As a result, Fischer had yet to suffer a loss when it filed the declaratory action. Therefore, one of the traditional purposes associated with legal relief, compensation for damages does not apply. See Feltner, 523 U.S. at 352 (1998) (traditional purposes of legal relief include compensation and punishment); see also 5 Corbin, supra § 990 (damages "nearly always award reparation in money for harm already done"). Such a situation is not unusual in a declaratory action, however, because normally the purpose of such a cause is to obtain relief before a wrong has been committed or a loss incurred. See 5 Corbin supra § 991.

In contrast, GE attempts to characterize the remedy as one of reformation of a contract.¹ Reformation is an "equitable remedy used to reframe written contracts to reflect accurately [the] real agreement between contracting parties when, either through mutual mistake or unilateral mistake coupled with actual or equitable fraud by the other party, the writing does...