188 LLC v. Trinity Industries, Inc.

• Court: U.S. Court of Appeals — Seventh Circuit
• Writing for the Court: Ripple
• Citation: 188 LLC v. Trinity Industries, Inc., 300 F.3d 730 (7th Cir. 2002)
• Decision Date: 01 August 2002
• Docket Number: No. 01-3561.,01-3561.
• Parties: 188 LLC, Plaintiff-Appellant, v. TRINITY INDUSTRIES, INCORPORATED, Defendant-Appellee.

300 F.3d 730

188 LLC, Plaintiff-Appellant, v. TRINITY INDUSTRIES, INCORPORATED, Defendant-Appellee.

No. 01-3561.

United States Court of Appeals, Seventh Circuit.

Argued June 7, 2002.

Decided August 1, 2002.

COPYRIGHT MATERIAL OMITTED

James H. Ryan, argued, Horwood, Marcus & Berk, Chicago, IL, for Plaintiff-Appellant.

William M. Gantz, argued, Piper Rudnick, Chicago, IL, for Defendant-Appellee.

Before BAUER, POSNER and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

188 LLC ("188"), which leases railroad tanker cars, appeals from decisions of the district court dismissing Count 1 of its second amended complaint under Federal Rule of Civil Procedure 12(b)(6) and denying 188 leave to amend its complaint to add a Count 2. 188's complaint alleged that Trinity Industries breached its contract to repair some of 188's tanker fleet. The district court held that 188's suit was barred by a limitation of remedies provision, which it held was part of the contract as a matter of law. On appeal, 188 contends that the limitation of remedies provision was never a part of the contract; it also submits that the district court erred in denying 188 leave to amend its complaint to add Count 2. For the reasons set forth in the following opinion, we affirm in part, reverse in part and remand this case to the district court for further proceedings.

I BACKGROUND

A.

188 is in the business of leasing railroad tanker cars. 188 and Trinity negotiated a contract under which Trinity would repair approximately 168 of 188's tankers. The contract consisted of two documents: 1) a January 10, 2000 letter proposal from Trinity to 188 that detailed the services to be performed and the price of the services ("Term Sheet" or "January 10 letter"); 2) a letter from 188 to Trinity dated February 15, 2000 ("February 15 letter"), and signed by the parties on February 17, 2000. The February 15 letter specifically incorporated the Term Sheet and added several clarifications. On the first page of the Term Sheet was the following statement: "Sales of all services and materials are subject to the general terms and conditions on the reverse side." R. 35, Ex. A, Ex. 1.

The parties dispute what, if anything, actually was on the reverse side of the Term Sheet. In its second amended complaint, which is the subject of this appeal, 188 alleged that the reverse side of the Term Sheet was blank. Trinity argued that "Trinity Railcar Repair General Terms and Conditions Form 4," contained the terms and conditions referenced on the first page of the Term Sheet, and that 188 was bound by those terms whether Form 4 was printed on the back of the Term Sheet or not. R. 35, Ex. A, Ex. 2.

Form 4 contains a limitation of remedies provision that, were it part of the contract, would have barred the relief 188 sought in its second amended complaint. The form is a one-page document consisting of four sections denominated by roman numerals. Section II is entitled "Warranty." R. 35, Ex. A, Ex. 2. It begins by stating: "Trinity's standard limited warranty set forth below shall be applicable to any repair services performed." Id. In further relevant part, Section II states:

TRINITY'S LIABILITY FOR ANY AND ALL LOSSES AND DAMAGES RESULTING FROM ANY CAUSE WHATSOEVER, INCLUDING TRINITY'S NEGLIGENCE, ALLEGED DAMAGES OR DEFECTIVE GOODS, IRRESPECTIVE OF WHETHER SUCH DEFECTS ARE DISCOVERABLE OR LATENT, SHALL BE LIMITED TO THE REPAIR OR REPLACEMENT AT THE ELECTION OF TRINITY, AT TRINITY'S RAILCAR REPAIR SHOP OR AT A SHOP SELECTED BY TRINITY, OF ANY PART OR PARTS OF ANY CAR (A) THAT SHALL, WITHIN ONE YEAR AFTER DELIVERY OF SUCH CAR, BE RETURNED TO TRINITY WITH TRANSPORTATION CHARGES PREPAID AND (B) THAT TRINITY'S EXAMINATION SHALL DISCLOSE TO ITS SATISFACTION TO HAVE BEEN SO DEFECTIVE. IN NO EVENT, INCLUDING THE CASE OF A CLAIM FOR NEGLIGENCE, SHALL TRINITY BE LIABLE FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES.... AS A MATERIAL INDUCEMENT TO TRINITY TO ENTER INTO AND PERFORM THIS AGREEMENT, AND AS A MATERIAL PORTION OF THE CONSIDERATION TO BE RECEIVED BY TRINITY FOR THE PERFORMANCE OF THE WORK DESCRIBED IN THIS CONTRACT, CUSTOMER HEREBY AGREES THAT TRINITY SHALL HAVE NO LIABILITY TO CUSTOMER FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING FROM A BREACH OF THIS CONTRACT BY TRINITY, A BREACH OF WARRANTY EXPRESSLY SET FORTH IN THIS CONTRACT, OR FROM ANY CAUSE ARISING FROM THIS CONTRACT.

Id. (capitalization and bold print in original).

B.

A brief recitation of the procedural history of this action will provide needed context for the resolution of the issues before us.

188's initial complaint was filed on December 20, 2000. Trinity moved to dismiss, and the district court suggested that 188 amend its complaint. 188 followed this advice and, with the permission of the court, filed an amended complaint on April 2, 2001. This first amended complaint included a breach-of-contract count that corresponds to Count 1 at issue in this appeal. With respect to Form 4, the first amended complaint alleged: "Plaintiff has performed all of the covenants and conditions of said contract, having specifically excluded from the contract Trinity Railcar Repair General Terms and Conditions — Form 4, with Defendant's consent." First Amended Complaint ¶ 5, R. 35, Ex. A. In this complaint, 188 also alleged violations of the Illinois Consumer Fraud Act and tortious interference with contractual relations. Trinity moved to dismiss the first amended complaint, and the district court granted the motion, without prejudice.

188 then filed a motion for leave to file a second amended complaint, this time with two counts, both alleging breach of contract. In the second amended complaint, Form 4 was addressed tangentially in Count 1 and directly in Count 2. In Count 1, the complaint alleged: "Although the bottom of the first page of Exhibit B states that other `general terms and conditions' are `on the reverse side....,' no other terms or conditions were on the reverse side of Exhibit B or otherwise were attached to the document transmitted (by facsimile or mail delivery), nor communicated in any other way to Plaintiff at the time of the formation of the Contract." Second Amended Complaint ¶ 8. In Count 2, the complaint alleged: "However, even if the general terms and conditions submitted by Defendant and attached as Exhibit C hereto were part of the contract, those designated `Warranty' provisions do not apply to Plaintiff's damages for breach of the Contract...." Second Amended Complaint ¶ 16. The district court granted the motion to amend with respect to Count 1, but denied it with respect to Count 2 on the ground that "Count II does not actually state an additional contract claim, but rather raises new arguments as to why 188 was not bound by Trinity's general terms and conditions." July 9, 2001 Order. Trinity then moved to dismiss Count I under Rule 12(b)(6).

The district court granted Trinity's motion and dismissed Count 1 with prejudice. Relying on an earlier decision of the Northern District of Illinois, the court concluded that the reference to "general terms and conditions" on the first page of the Term Sheet was sufficient to incorporate Form 4 into the parties' contract. The district court further concluded that the limitation of remedies provision barred the relief sought in Count 1 of the second amended complaint. 188 appealed both the dismissal of Count 1 and the denial of leave to amend its complaint to add Count 2.

II DISCUSSION

The district court dismissed Count I of 188's second amended complaint because of 188's "failure to state a claim upon which relief can be granted." Fed. R.Civ.P. 12(b)(6). Specifically, the court held that Form 4 was a part of the parties' contract and that, consequently, Form 4's limitation of remedies provision barred 188's claim. We review this determination de novo. See Help at Home, Inc. v. Med. Capital, L.L.C., 260 F.3d 748, 752 (7th Cir.2001).

A.

We first address 188's contention that the district court should not have considered Form 4 at all. 188 argues that, because it neither attached Form 4 to Count 1 of its complaint nor referenced Form 4 in Count 1, the district court could not consider Form 4 on a motion to dismiss. 188 contends that the district court should have either converted the motion to a motion for summary judgment and permitted additional evidence, or ignored Form 4 altogether.

Federal Rule of Civil Procedure 10(c) provides that "[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." Fed.R.Civ.P. 10(c). It is also well-settled in this circuit that "documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim. Such documents may be considered by a district court in ruling on the motion to dismiss." Wright v. Assoc. Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir.1994). "[T]his is a narrow exception" to the general rule that when additional evidence is attached a motion to dismiss, "the court must either convert the 12(b)(6) motion into a motion for summary judgment under Rule 56 ... or exclude the documents attached to the motion to dismiss and continue under Rule 12." Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir.1998). While narrow, this exception is "aimed at cases interpreting, for example, a contract." Id.

Form 4 fits within this narrow exception. The contract appended to the second amended complaint contains the statement: "Sales of all services and materials are subject to the general terms and conditions on the reverse side." R. 35, Ex. A, Ex. 1. Trinity argued in its motion to dismiss that Form 4 provided those terms and conditions referenced in the parties' contract. Although, as we shall discuss below, there remain factual issues as to whether Form 4 actually was incorporated into the contract, the district court properly considered the document. The purpose of the exception is...