Western Smelting & Metals v. Slater Steel, Inc.

Citation621 F. Supp. 578
Decision Date12 November 1985
Docket NumberCiv. No. F 85-364.
PartiesWESTERN SMELTING & METALS, INC., Plaintiff, v. SLATER STEEL, INC.; Joslyn Manufacturing and Supply Co.; and Joseph Behr & Sons, Inc., Defendants.
CourtU.S. District Court — Northern District of Indiana


Verne W. Newcomb and Richard Pope, Newcomb, Sabin, Schwartz & Landsverk, Portland, Or., William L. Sweet, Jr., Barrett, Barrett & McNagny, Fort Wayne, Ind., for plaintiff.

Carl R. Neil and William C. Campbell, Lindsay, Hart, Neil & Weigler, Portland, Or., Richard Blaich and Martin T. Fletcher, Rothberg, Gallmeyer, Fruechtenicht & Logan, Fort Wayne, Ind., for defendant Slater.

R.G. Stephenson and Mary Danford, Bullivant, Houser, Bailey, Hanna, Pendergrass, Hoffman, O'Connell & Goyak, Portland, Or., Kenneth M. Waterman, Shoaff, Parker & Keegan, Fort Wayne, Ind., for defendant Joslyn.

E. Richard Bodyfelt, Bodyfelt, Mount, Stroup & Chamberlain, Portland, Or., David K. Schmitt, Katten, Muchin, Zavis, Pearl & Galler, Chicago, Ill., Edward E. Back, Shambaugh, Kast, Beck & Williams, Fort Wayne, Ind., for defendant Joseph Behr & Sons.


WILLIAM C. LEE, District Judge.

This matter is before the court on the motion for partial summary judgment filed by defendant Slater Steel, Inc. ("Slater"). Plaintiff ("Western") has filed a memorandum in opposition, and Slater filed a reply. For the following reasons, the motion for partial summary judgment will be granted in part and denied in part.

This action arises out of a contract entered into by Western, Slater and defendant Joslyn Manufacturing and Supply Company ("Joslyn") under which Western would undertake to sell scrap metal to Slater and Joslyn. Defendant Joseph Behr & Sons, Inc. ("Behr") acted as broker for the sales. In its amended complaint, Western alleges that Slater and Joslyn breached their contract, converted scrap metal that Western had sent to them, and that Slater, Joslyn and Behr engaged in acts of misrepresentation. The complaint seeks $300,000.00 on the contract and misrepresentation claims, treble damages of $900,000.00 on the conversion claim, prejudgment interest, attorney fees and exemplary damages. Slater's motion for partial summary judgment is directed solely at the request for exemplary damages.

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may only be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, summary judgment serves as a vehicle with which the court "can determine whether further exploration of the facts is necessary." Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975).

In making this determination, the court must keep in mind that the entry of summary judgment terminates the litigation, or an aspect thereof, and must draw all inferences from the established or asserted facts in favor of the non-moving party. Munson v. Friske, 754 F.2d 683, 690 (7th Cir.1985). The non-moving party's reasonable allegations are to be accepted as true for purposes of summary judgment. Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215, 1218-19 (7th Cir.1984). A party may not rest on the mere allegations of the pleadings or the bare contention that an issue of fact exists. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). See also Atchison, Topeka & Santa Fe Railway Co. v. United Transportation Union, 734 F.2d 317 (7th Cir.1984); Korf v. Ball State University, 726 F.2d 1222 (7th Cir.1983). See generally C. Wright, Law of Federal Courts, § 99 (4th ed. 1983); 6 Moore's Federal Practice, § 56.15 (2d ed. 1984).

Thus, the moving party must demonstrate the absence of a genuine issue of material fact. The court views all evidence submitted in favor of the non-moving party. Even if there are some disputed facts, where the undisputed facts are the material facts involved and those facts show one party is entitled to judgment as a matter of law, summary judgment is appropriate. Egger v. Phillips, 710 F.2d 292, 296-97 (7th Cir.1983); Collins v. American Optometric Assn., 693 F.2d 636, 639 (7th Cir.1982). See also Bishop v. Wood, 426 U.S. 341, 348, 348 n. 11, 96 S.Ct. 2074, 2079, 2079 n. 11, 48 L.Ed.2d 684 (1976).

In light of these principles, the facts relevant to this motion are as follows. Western is an Oregon corporation with its principal place of business in Oregon. It is engaged in the collection and sale of scrap metal, primarily high-nickel alloys. Joslyn, an Illinois corporation, owned a plant in Fort Wayne, Indiana until February, 1981, when it sold the plant to Slater. Slater, a Delaware corporation with its principal place of business in Fort Wayne, is a manufacturer of stainless steel, and needs high-nickel alloy scrap as raw material for its steel. Behr is an Illinois corporation which acted as a broker for Joslyn and Slater, soliciting scrap suppliers, arranging for shipment to Fort Wayne, and receiving a commission on the payment made by Joslyn or Slater to the scrap supplier.

Between September 1, 1980 and September 30, 1983, Western shipped to Joslyn and Slater a total of thirty-six loads of high-nickel scrap with varying metal contents. According to Western, the contract required Joslyn and Slater to melt and perform a meltdown analysis of all scrap metal in each shipment, and then to report to Western and pay for all nickel, chrome and molybdenum units recoverable from the scrap. The breach of contract claim asserts that Joslyn and Slater in effect short-changed Western by underreporting the amount of alloy in the shipments, and the conversion count is based on the claim that the amounts not reported to Western were converted to Joslyn's and Slater's own use. The misrepresentation count is premised both on Slater and Joslyn's underreporting and on certain representations made by Behr.

This lawsuit was originally filed in the District of Oregon, but was transferred to this court on August 14, 1985 after Magistrate William M. Dale found that the court did not have jurisdiction over Slater and recommended granting of Slater's motion to transfer the cause in order to cure the jurisdictional defect. See Findings and Recommendations of Magistrate Dale, p. 9 n. 3 (Docket # 60).

Slater's motion for partial summary judgment is based upon its belief that Indiana law prohibits the assessment of punitive damages in this action under the rule of Taber v. Hutson, 5 Ind. 322 (1854). Western's opposition to the motion is based on its conclusion that Oregon, and not Indiana, law applies to the question of the availability of punitive damages, and that Indiana statutory law has in effect overridden the Taber rule. Slater admits that if Oregon law applies, punitive damages are available. The court must therefore determine whether Indiana or Oregon law applies, and if Indiana law applies, whether the rule of Taber v. Hutson will apply to this case.

In resolving a conflict of laws question, a federal court sitting in diversity will generally apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The situation becomes more complicated when the federal court deciding the question has had the case transferred to it from another federal court. If a case is transferred under 28 U.S.C. § 1404(a) for the sake of convenience, then the transferee court should apply the law of the transferor forum. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Nelson v. International Paint Co., 716 F.2d 640, 643 (9th Cir.1983). The rationale behind this rule is to prevent the party seeking a transfer to take advantage of more favorable laws in another forum. Van Dusen. However, when a case is transferred to cure a lack of jurisdiction, the law of the transferee forum must apply, in order to prevent plaintiffs from enjoying choice-of-law advanages to which they would not have been entitled in the proper forum. Tillett v. J.I. Case Co., 756 F.2d 591, 593 n. 1 (7th Cir.1985); Gonzalez v. Volvo of America Corp., 734 F.2d 1221, 1223 (7th Cir.1984); Nelson, 716 F.2d at 643; Roofing and Sheet Metal Services, Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 992 (11th Cir.1982); Ellis v. Great Southwestern Corp., 646 F.2d 1099, 1110 (5th Cir.1981); Reyno v. Piper Aircraft Co., 630 F.2d 149, 165 (3d Cir.1980), rev'd on other grounds, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981); Martin v. Stokes, 623 F.2d 469, 475 (6th Cir.1980). This conclusion is buttressed by the language of 28 U.S.C. § 1631, which provides that if a case is transferred because of a want of jurisdiction, the action "shall proceed as if it had been filed in ... the court to which it is transferred...." Therefore, the court must apply Indiana choice-of-law rules.

The Indiana choice-of-law rule for contract actions is the "most intimate contacts" approach, described by the Indiana Supreme Court as follows:

The court will consider all acts of the parties touching the transaction in relation to the several states involved and will apply as the law governing the transaction the law of that state with which the facts are in most intimate contact.

W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417, 423 (1945). See Eby v. York Division, Borg Warner, 455 N.E.2d 623, 626 (Ind.App.1983); Suyemasa v. Myers, 420 N.E.2d 1334 (Ind.App.1981). Based upon the Restatement (Second) of Conflict of Laws, § 188 (1971), the Eby court listed the following contacts as representative of the contacts a court should consider:

(a) the place of contracting;
(b) the place of negotiation of the contract;
(c) the

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