Tech Hills II Associates v. Phoenix Home Life Mut. Ins. Co.

• Decision Date: 12 October 1993
• Docket Number: Nos. 92-1048,92-1068,s. 92-1048
• Citation: 5 F.3d 963
• Parties: TECH HILLS II ASSOCIATES, Plaintiff-Appellant, Cross-Appellee, v. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 963

5 F.3d 963

TECH HILLS II ASSOCIATES, Plaintiff-Appellant, Cross-Appellee, v. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY Defendant-Appellee, Cross-Appellant.

Nos. 92-1048, 92-1068.

United States Court of Appeals Sixth Circuit.

Argued July 1, 1993.

Decided Aug. 17, 1993.

Rehearing and Suggestion for Rehearing En Banc Denied Oct. 12, 1993.

Norman C. Ankers (argued and briefed), Lee W. Brooks (briefed), Honigman, Miller, Schwartz & Cohn, Detroit, MI, for plaintiff-appellant cross-appellee.

Mark W. McInerney, James E. Brenner (argued and briefed), Robert R. Maxwell, Mary C. Dirkes, Houghton, Potter, Sweeney & Brenner, Detroit, MI, for defendant-appellee cross-appellant.

Before: KENNEDY and MARTIN, Circuit Judges; and WISEMAN, District Judge. ^*

KENNEDY, Circuit Judge.

This diversity action involves the failed contract negotiations between plaintiff Tech Hills II Associates ("Tech Hills"), a Michigan partnership created to own and develop real estate, and defendant Phoenix Home Life Mutual Insurance Company ("Phoenix"), a potential lender for development. Tech Hills appeals and Phoenix cross-appeals from the judgment dismissing claims and counterclaims for breach of contract and misrepresentation, and awarding plaintiff $252,000, plus interest, on its claims seeking the return of a loan commitment fee. Phoenix has moved to dismiss Tech Hills' notice of appeal after payment and satisfaction of the judgment of the District Court. Tech Hills moved for summary reversal based on lack of jurisdiction in the District Court. For the reasons that follow, we deny Tech Hills' motion, grant Phoenix's motion and affirm the judgment of the District Court.

I. Background

Representatives of Tech Hills and Phoenix engaged in negotiations surrounding the financing of the development of approximately fifteen acres of land, owned by Tech Hills, in Farmington Hills, Michigan. The contemplated deal involved a mortgage loan and a sale/leaseback agreement. C. Michael Kojaian, a partner of Tech Hills, and Richard DeVore, a mortgage banker acting on behalf of Phoenix, were the initial negotiators of the transaction. The issue of the personal liability of Kojaian and his fellow partners arose throughout the negotiations. Kojaian understood and agreed that the partners would be personally liable in certain limited circumstances.

On December 28, 1988, a mortgage loan commitment and a sale/leaseback commitment were executed by the parties. Phoenix agreed to loan Tech Hills $10,400,000.00, at an interest rate of 9.5%. Tech Hills paid $252,000 as a commitment fee for the loan. According to the terms of the loan commitment, the fee would be returned "at the closing if the loan closes in accordance with the terms of the commitment, otherwise the standby fee [would] be deemed to have been earned by [Phoenix] for the issuance and holding open of this commitment." The loan commitment does not refer to any personal warranties on behalf of Tech Hills. In contrast, the sale/leaseback commitment referred to year-long warranties and representations that would appear in the sale/leaseback agreement. At no time prior to December 28, 1988, when the commitments were signed, did the parties discuss any personal liability enuring to the partners beyond the already agreed upon limited liability.

In March, 1989, Phoenix presented Tech Hills with proposed closing documents. The proposed purchase and sale agreement contained twenty one new warranties and representations and provided for personal liability if any of them were breached. A representative of Tech Hills informed Phoenix that the additional warranties were unacceptable.

On May 2, 1989, the parties met in Hartford, Connecticut to iron out their disagreements with an eye toward closing the deal. Tech Hills brought three issues to the table, none of which were resolved by the end of the meeting. The primary point of contention between the parties was the additional warranties included in section 9 of the purchase and sale agreement. Phoenix agreed to amend and delete several of the warranties, but Tech Hills was unwilling to compromise. Phoenix left the meeting feeling that any unresolved problems could be worked out with further negotiation. Tech Hills was not so optimistic; it did not want to expose its partners to additional personal liability.

II. Procedural History

A. District Court

On May 17, 1989, Tech Hills filed a three-count complaint against Phoenix alleging breach of contract (Count I); fraud (Count II); and misrepresentation (Count III). Phoenix removed the action, filed in Oakland County Circuit Court, to the United States District Court for the Eastern District of Michigan. Phoenix filed a counterclaim against Tech Hills claiming breach of contract (Count I); negligence (Count II); gross negligence/reckless misconduct (Count III); fraud and misrepresentation (Count IV); and seeking a declaratory judgment that Phoenix could keep the $252,000 commitment fee paid by Tech Hills (Count V). Following a bench trial, the court found that there had been no "meeting of the minds" between the parties on material matters within the agreement, namely the grounds for personal liability enumerated in the purchase and sale agreement, therefore, no contract was ever formed. The court also found that both parties had bargained in good faith throughout the negotiations and "were honestly talking about two different 'deals.' " Consequently, the court dismissed the parties' claims and counterclaims for breach of contract, fraud and misrepresentation.

Having concluded that the parties never agreed on material terms of the loan arrangement, the court believed Tech Hills was entitled to the return of the commitment fee, plus interest. Tech Hills had prayed for the return of the commitment fee as part of its damages for breach of contract. The court could not award the sum to plaintiff under a breach of contract theory since the court found that no contract ever existed. The court indicated that it would allow Tech Hills to amend its complaint to seek return of the fee under an appropriate theory of recovery. Tech Hills filed an amended complaint seeking return of the $252,000 under five alternative theories.

On September 23, 1991, the court issued an order finding that Tech Hills was entitled to the fee under a theory of unjust enrichment or failure of consideration. On the same day, the court issued its judgment incorporating its orders of November 28, 1990, and September 23, 1991. The judgment, entered October 1, 1991, ordered the return of the fee plus interest and costs to Tech Hills; dismissed all other claims made by Tech Hills; and dismissed all claims asserted by Phoenix.

On October 10, 1991, Phoenix filed a motion to alter or amend the judgment. It sought a ruling that any prejudgment interest on the $252,000 would be calculated from the filing date of plaintiff's amended complaint, instead of the filing date of the original complaint. On October 29, 1991, Tech Hills executed a partial satisfaction of judgment in exchange for payment of $253,000.30, the $252,000 fee, plus $1,000.30 post-judgment interest. On December 3, 1991, the court denied defendant's motion to amend the judgment. In lieu of appealing the court's decision, Phoenix decided to pay the remaining pre-judgment interest, from the date of the original complaint, in exchange for a full satisfaction of judgment from Tech Hills. On December 17, 1991, Tech Hills executed the following unconditional satisfaction of judgment:

WHEREAS, judgment was rendered in this case in favor of the plaintiff, Tech Hills II Associates, and against the defendant, Phoenix Mutual Life Insurance Company, and was entered in the Court on September 23, 1991, in the amount of $252,000 with interest and costs to be taxed;

WHEREAS, defendant has paid to plaintiff the full amount of said judgment;

NOW, THEREFORE, Tech Hills II Associates, the owner of said judgment, acknowledges full payment and satisfaction of said judgment and releases and discharges the same.

Tech Hills subsequently filed a notice of appeal from the same judgment that it acknowledged was fully satisfied. Phoenix then cross-appealed.

B. Court of Appeals

Phoenix filed a motion to dismiss Tech Hills' notice of appeal on the grounds that plaintiff has waived its right to appeal by accepting the benefits of the judgment. Alternatively, Phoenix requests that the money paid to Tech Hills be returned. Tech Hills filed a motion for summary reversal of the judgment on the ground that this action was improperly removed from state court. Consequently, plaintiff asserts that the District Court lacked jurisdiction and its judgment must be summarily reversed and the case remanded to state court. On June 18, 1992, this Court granted defendant's motion to dismiss and denied plaintiff's motion for summary reversal as moot. 966 F.2d 1454. Tech Hills petitioned the Court for rehearing. On July 23, 1992, a panel of this Court vacated the order of June 18, 1992 and referred both motions to the panel assigned to hear the merits of the appeals.

III. Removal Jurisdiction

A. Commencement of Removal Period

Plaintiff argues that the removal petition was procedurally defective and, consequently, that the District Court erred in denying its motion to remand. First, plaintiff asserts that the removal notice was untimely because it was not filed within thirty days of the receipt of the complaint by the defendant. The notice of removal must be filed "within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based...." 28 U.S.C.A. Sec. 1446(b) (West Supp.1993). In this case, the complaint was sent by Federal Express, and received by a security guard in defendant's closed office building on Saturday, May 20, 1989. Bradford Buck, defendant's in-house counsel, received the...