987 F.2d 429 (7th Cir. 1993), 92-2512, Venture Associates Corp. v. Zenith Data Systems Corp.

Docket Nº:92-2512.
Citation:987 F.2d 429
Party Name:VENTURE ASSOCIATES CORPORATION, a Tennessee Corporation, Plaintiff-Appellant, v. ZENITH DATA SYSTEMS CORPORATION, a Delaware Corporation, Defendant-Appellee.
Case Date:March 02, 1993
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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987 F.2d 429 (7th Cir. 1993)






No. 92-2512.

United States Court of Appeals, Seventh Circuit

March 2, 1993

Argued Dec. 4, 1992.

As Amended March 5, 1993.

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Tobin M. Richter (argued), Donald L. Johnson, Chicago, IL, for plaintiff-appellant.

Thomas F. Bush, Jr., Saunders & Monroe, Chicago, IL, Craig A. Newman (argued), Michael D. Schissel, Arnold & Porter, New York City, for defendant-appellee.

Before CUMMINGS and CUDAHY, Circuit Judges, and LAY, Senior Circuit Judge. [*]

CUDAHY, Circuit Judge.

For almost a year, Venture Associates Corporation (Venture) and Zenith Data Systems Corporation (Zenith) attempted to negotiate a sale of the Heath Company (Heath), a subsidiary of Zenith. Following preliminary negotiations, the parties agreed to a "letter of intent," proposed by Venture, which provided that they would continue to negotiate in good faith and that the proposed sale was "subject to the preparation and execution of a mutually satisfactory Purchase Agreement." 1 Appellant's Br. at A21-A22. Negotiations progressed. In October 1991, after the parties had exchanged several drafts of a proposed

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agreement, Zenith refused to proceed unless the purchase price was increased by $3.5 million. Negotiations broke down shortly thereafter and a sale was never completed. Zenith continues to own Heath.

Venture filed suit in the United States District Court for the Northern District of Illinois alleging a breach of contract and of the promise to negotiate in good faith. Jurisdiction was properly predicated upon the diversity of citizenship between the parties. Venture averred that, even though the parties had never signed an agreement, they had "manifested mutual assent by documents and oral communications" and further alleged that Zenith was thus contractually obligated to complete the sale of Heath. Complaint p 10. Zenith moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted. Zenith attached to its motion copies of three letters referred to in Venture's complaint. Venture did not respond directly to the motion to dismiss but instead proffered its own motion to exclude the documents attached to Zenith's motion. The district court denied Venture's motion to exclude and granted Zenith's motion to dismiss. 812 F.Supp. 788 (1992). Venture appeals and we now affirm in part.

I. Motion to Exclude

Venture first argues that the district court impermissibly considered the documents appended to Zenith's motion to dismiss because they are extraneous to the pleadings and thus were not properly before the court. Venture relies upon Federal Rule of Civil Procedure 12(b), which provides in pertinent part:

If, on a motion asserting the ... failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56....

Rule 12(b) is mandatory; consequently, if documents outside of the pleadings are placed before a district court, and not excluded, the court must convert the defendant's 12(b)(6) motion to one for summary judgment and afford the plaintiff an opportunity to submit additional evidentiary material of his or her own. Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1972) (per curiam); Beam v. IPCO Corp., 838 F.2d 242, 244-45 (7th Cir.1988).

On the other hand, Federal Rule of Civil Procedure 10(c), which provides that "[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes," is permissive in nature. A plaintiff is under no obligation to attach to her complaint documents upon which her action is based, but a defendant may introduce certain pertinent documents if the plaintiff failed to do so. Romani v. Shearson Lehman Hutton, 929 F.2d 875, 879 n. 3 (1st Cir.1991) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1327 at 762-63 (2d ed.1990)). Documents that a defendant attaches 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 her claim. See Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 739 n. 12 (7th Cir.1986), cert. denied, 482 U.S. 915, 107 S.Ct. 3188, 96 L.Ed.2d 676 (1987). See also Field v. Trump, 850 F.2d 938, 949 (2d Cir.1988), cert. denied, 489 U.S. 1012, 109 S.Ct. 1122, 103 L.Ed.2d 185 (1989); Fudge v. Penthouse Inter., Ltd., 840 F.2d 1012, 1015 (1st Cir.), cert. denied, 488 U.S. 821, 109 S.Ct. 65, 102 L.Ed.2d 42 (1988).

Application of these principles to the present facts demonstrates that the district court properly denied Venture's motion to exclude. In its complaint, Venture referred to seven documents, including Zenith's original offer to sell Heath and various pieces of correspondence between the parties. Zenith attached to its motion to dismiss Venture's proposed letter of intent and the related letters by which the parties agreed to be bound by its terms, all of which were referred to in the complaint. Complaint pp 6-7. These documents are central to Venture's claim as they constitute

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the core of the parties' contractual relationship. See infra Part II. As a result, the district court did not err in refusing to exclude the attached documents nor in considering Zenith's motion as one for dismissal for failure to state a claim rather than one for summary judgment.

II. Motion to Dismiss

A motion to dismiss should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief. Beam v. IPCO Corp., 838 F.2d 242, 244...

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