Union Oil Company of CA v. Leavell et al

Citation220 F.3d 562
Decision Date18 July 2000
Docket NumberNo. 99-3084,99-3084
Parties(7th Cir. 2000) Union Oil Company of California, Plaintiff-Appellee, v. Dan Leavell, et al., Defendants-Appellants
CourtU.S. Court of Appeals — Seventh Circuit

Appeal from the United States District Court for the Southern District of Illinois. No. 98-4243-JLF--James L. Foreman, Judge. [Copyrighted Material Omitted] Before Easterbrook, Kanne, and Williams, Circuit Judges.

Easterbrook, Circuit Judge.

Members of the Leavell family bought some equipment for their recycling business in 1992. (A closely held corporation was the purchaser. For simplicity we use "the Leavells" to refer to the persons and business entities involved.) Four years later the Leavells demanded that Unocal, the seller, remove the machinery and compensate them for environmental harm that, they insisted, it had caused. According to the Leavells, Unocal's equipment led to the concentration of radium 226, an element naturally present in soil, whose decay produces radon gas, which plagues the basements of many homes. With the aid of a district judge the parties settled their differences Unocal took back the equipment, paid the Leavells $435,000, and deposited another $100,000 into an escrow account that could be drawn on for approved cleanup work. In exchange the Leavells promised that they would fully clean up the site and that the work shall be performed in full cooperation with and to the complete satisfaction of the Illinois Department of Nuclear Safety ('IDNS'). IDNS shall monitor the remediation from inception to conclusion and shall review and approve all decommissioning plans or work plans prior to remediation work beginning at the Property. The Leavells shall remediate the Property and dispose of any contaminated material in the manner set out in the decommissioning plan or work plan approved by IDNS. . . . All parties understand and acknowledge that after remediation has taken place, it is impossible to predict the time it will take for the IDNS to provide information concerning the Property's qualification for use, but the Leavells agree to use their best, good faith efforts to obtain an unrestricted use classification for the Property.

Notwithstanding this promise, the Leavells began the cleanup before submitting a plan or obtaining approval, making it impossible for the IDNS to "monitor the remediation from inception to conclusion". The escrow agent (Don C. Staab, the Leavells' original lawyer) was unfaithful, disbursing all but $2,000 without assuring compliance with the conditions. This litigation under the diversity jurisdiction ensued. After the suit was under way the Leavells at last submitted a work plan to the IDNS, but by then the Leavells had finished their planned work, which led the IDNS to reject the application and require the Leavells to start over, with the aid of appropriate engineering expertise. Unocal asked the district court to direct the Leavells to submit a plan to the IDNS, obtain approval, and follow the approved plan to the letter. The Leavells, who believe that they have done enough already, named the IDNS as a third-party defendant, seeking $25 million in damages (and a bar on future agency oversight) because the IDNS refused to approve the Leavells' methods.

The district judge put the third-party claim on the back burner while dealing with the dispute between Unocal and the Leavells. After an exasperating series of conferences and hearings at which the Leavells revealed that they knew little and cared less about their obligations under the contract (or for that matter state environmental law), the district court granted summary judgment for Unocal and entered an order of specific performance. The judge directed the Leavells to carry out eight tasks. For example, the first was to "[o]btain the services of a qualified health physics consultant approved by IDNS."

Although the Leavells did not seek a stay from either the district court or this court, their lawyer informed us at oral argument that they have not performed any of these tasks and have no intention of doing so now or in the future. Surprisingly, the district judge has declined to enforce the order, stating that the notice of appeal deprives him of jurisdiction. This is not so. A notice of appeal does not stay enforcement of a district court's order. Thornton v. Wahl, 787 F.2d 1151 (7th Cir. 1986). A judge may--and should--enforce an un-stayed injunction while an appeal proceeds. Resolution Trust Corp. v. Smith, 53 F.3d 72, 76 (5th Cir. 1995); Chrysler Motors Corp. v. Industrial Workers, 909 F.2d 248, 250 (7th Cir. 1990); Charles Alan Wright, Arthur R Miller & Edward H. Cooper, 16 Federal Practice and Procedure sec.3921.2 (2d ed. 1996). Otherwise the judge deprives the prevailing parties of the benefit of their judgment and rewards defiance. A notice of appeal "divests the district court of its control over those aspects of the case involved in the appeal." Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) (emphasis added), but whether the addressee of an injunction has complied is not a subject "involved in the appeal." Whether the judge should have held a contempt hearing last year is water under the bridge, however.

Because the third-party claim remains pending in the district court, appellate jurisdiction is questionable. Although the IDNS should have been dismissed immediately--for the eleventh amendment bars the claim to the extent it relies on state law, see Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 117 (1984), and the federal law to which the Leavells allude does not treat states and their agencies as "persons" subject to suit, see Arizonans for Official English v. Arizona, 520 U.S. 43, 69 (1997); Will v. Michigan Department of State Police, 491 U.S. 58 (1989)--that did not occur, and the unresolved third-party claim means that the decision in the Unocal-Leavell portion of the case is not "final." The parties contend that the district court entered a partial final judgment under Fed. R. Civ. P. 54(b), but the district judge did not explain why the case should be cleaved in two-- especially not when it is so easy to resolve the claim against the IDNS and produce a genuine final judgment. Nor does the use of Rule 54(b) make sense, given 28 U.S.C. sec.1292(a)(1), which authorizes immediate appeal of interlocutory injunctions. The district judge did not use the magic word "injunction," but his order is injunctive in nature, requiring the Leavells to perform enumerated steps under threat of the contempt power. If the district judge had entered a money judgment--say, one requiring the Leavells to refund what they have received from Unocal--an appeal might well be premature while the claim against the IDNS is unresolved. But as an appeal from an injunction it is securely within our jurisdiction.

On the merits, the Leavells' appeal is frivolous. They did not produce affidavits or any other evidence in response to Unocal's motion for summary judgment, so the record is lopsided and demonstrates that from the get-go the Leavells ignored their undertakings. The Leavells' current lawyer believes that denials in the answer to Unocal's complaint block summary judgment, but this misunderstands federal practice. See Fed. R. Civ. P. 56(e). We attend only to the evidence of record, which demonstrates that the Leavells began cleanup work before seeking the IDNS's approval, thus violating their promise that the "IDNS shall monitor the remediation from inception to conclusion and shall review and approve all decommissioning plans or work plans prior to remediation work beginning at the Property" (emphasis added). Most of the Leavells' troubles with the IDNS stem from their work-first-approval- later approach, reversing the contractual sequence. Breach is established.

Specific performance was an appropriate remedy. Unocal bargained for a clean site, with a clean bill of health from the IDNS, to avoid a risk of liability to those who may purchase the land from the Leavells or neighbors who may say that radon gas has wafted from the Leavells' land to theirs. Damages cannot produce that surety. And the Leavells' argument that they should be relieved of their promise because cleanup according to the IDNS's rules is more costly than they anticipated is a poor excuse, for contracts are designed to allocate risks such as this; the Leavells obtained a fixed payment, not an open purse. What...

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