City of Clinton, Ill. v. Moffitt, 86-2024

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before WOOD and POSNER, Circuit Judges, and WILL; POSNER; WILL
• Citation: 812 F.2d 341
• Parties: CITY OF CLINTON, ILLINOIS, Plaintiff-Appellant, v. Gene R. MOFFITT, Hoopeston I, and Travelers Indemnity Co., Defendants-Appellees.
• Docket Number: No. 86-2024,86-2024
• Decision Date: 19 February 1987

Page 341

812 F.2d 341 CITY OF CLINTON, ILLINOIS, Plaintiff-Appellant,
v.
Gene R. MOFFITT, Hoopeston I, and Travelers Indemnity Co.,
Defendants-Appellees. No. 86-2024. United States Court of Appeals,
Seventh Circuit. Argued Dec. 2, 1986.
Decided Feb. 19, 1987.

Page 342

Stephen R. Myers, Clinton, Ill., for plaintiff-appellant.

Kevin C. Travis, Griep & Swartzman, Kansas City, Mo., for defendants-appellees.

Before WOOD and POSNER, Circuit Judges, and WILL, Senior District Judge. ^*

POSNER, Circuit Judge.

The district court, rejecting a recommendation by the magistrate, granted summary judgment for the defendants in this breach of contract suit, and the plaintiff appeals. The basis of federal jurisdiction is diversity of citizenship. 28 U.S.C. Sec. 1332. The plaintiff, the City of Clinton, Illinois, is a municipal corporation of Illinois, and for diversity purposes a municipal corporation is treated just like a regular business corporation. Moor v. County of Alameda, 411 U.S. 693, 717-18, 93 S.Ct. 1785, 1799-1800, 36 L.Ed.2d 596 (1973); Illinois v. City of Milwaukee, 406 U.S. 91, 97, 92 S.Ct. 1385, 1389, 31 L.Ed.2d 712 (1972). The principal defendant, Moffitt (a real estate developer), is a citizen of Missouri. A Missouri general partnership in which he is a partner is also a defendant, but the citizenship of a partnership is irrelevant to diversity. Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 456, 20 S.Ct. 690, 693, 44 L.Ed. 842 (1900); Elston Investment, Ltd. v. David Altman Leasing Corp., 731 F.2d 436 (7th Cir.1984); 13B Wright, Miller & Cooper, Federal Practice and Procedure Sec. 3630 (2d ed. 1984). But since all the other partners are citizens of Missouri as well as Moffitt, and the remaining defendant is not a citizen of Illinois either, the requirement of complete diversity is satisfied. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806); Fidelity & Deposit Co. v. City of Sheboygan Falls, 713 F.2d 1261, 1264 (7th Cir.1983). So there is federal jurisdiction.

The parties agree that Illinois contract law governs the substantive issues. Both the parties and the district judge say that Illinois contract law governs because this is a diversity suit, but that is not accurate. Because it is a diversity suit, Illinois law governs, but it is the whole Illinois law that governs, including Illinois' conflict of law rules. Casio, Inc. v. S.M. & R. Co., 755 F.2d 528, 530-31 (7th Cir.1985). If those rules pointed to the contract law of another state, that other state's law would govern. But the parties agree that Illinois contract law governs, and that is all that is necessary to make it govern. Litigants can, by stipulation, formal or informal, agree on the substantive law to be applied to their case, within broad limits not exceeded here. Id. at 531.

With these preliminaries out of the way we turn to the merits. The district judge thought it clear from the terms of the parties' contract (which was in writing) that Moffitt did not make the promise that the City of Clinton says he broke. If the judge was right in this, then he was right to grant summary judgment for Moffitt. "If a contract is in writing, is unambiguous and contains no uncertain terms, interpretation of the contract is a question of law for the court." Nerone v. Boehler, 34 Ill.App.3d 888, 890-91, 340 N.E.2d 534, 536 (1976). See also National Tea Co. v. Commerce & Industry Ins. Co., 119 Ill.App.3d 195, 200-01, 74 Ill.Dec. 704, 708-09, 456 N.E.2d 206, 210-11 (1983). The question whether a contract is ambiguous is itself a question of law, Wilson v. Illinois Benedictine College, 112 Ill.App.3d 932, 937, 68 Ill.Dec. 257, 263, 445 N.E.2d 901, 907 (1983), and we give substantial weight to interpretations of state law by a federal district judge sitting in the state whose law is in question, Goldstick v. ICM Realty, 788 F.2d 456, 466 (7th Cir.1986). This precept is especially apropos in a case such as this where the district judge is a former judge of that state's courts. But we do not merely rubber-stamp the district judge's determination of state law, and where (as in this case) we find ourselves in strong disagreement with the determination, we must reverse.

Moffitt wanted to build a shopping center on land he owned in the City of Clinton,

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Illinois. To improve access to the shopping center he made a contract with the city by which they agreed to split the cost of building a new street that would run north and south along the western edge of the shopping center. The street would connect Route 54, which runs along the southern edge of the shopping center, and Route 10, which runs roughly parallel to Route 54 north of the shopping center. The shopping center ends about half way between Route 54 and Route 10, and the deal was that Moffitt would build the part of the new street that ran north along his property line and the city would build the rest, linking up with Route 10 and thus completing the connection between the two highways.

The city let contracts for building the street, including the intersections with Route 10 at the north end of the street and Route 54 at the south end. The total cost with the intersections came to $330,000 (we round off all dollar figures to the nearest $1,000). The city billed Moffitt $204,000, covering all the work south of the shopping center's northern border. Moffitt paid only $99,000, contending that the rest of the $204,000 was for the intersection with Route 54 and that his contract with the city had placed that cost on the city.

The contract says that Moffitt will "pay for the cost of constructing the street north from U.S. Route 54 approximately 520 feet to" the point where the shopping center ends. Moffitt interprets this to mean north from the Route 54 right of way, the northern edge of which was 38 feet beyond the northern edge of the highway itself before the improvements were made. From the right of way to the end of the shopping center is 526 feet; this Moffitt contends is the "approximately 520 feet" to which the contract refers. All the expensive work on the intersection was south of the northern edge of the right of way. Under the city's theory Moffitt must pay the cost of construction from the northern edge of Route 54 itself to the north end of the shopping center, a distance of 564 feet (526 + 38), which he contends is too long to be "approximately 520 feet."

He could be right. Intersection work is a lot less straightforward than straight street work, so that if he agreed to pick up the tab for the intersection of the street with Route 54 as well as the street itself he was buying a pig in the poke. But against this it can be pointed out that before the contract was signed an engineer had given Moffitt an estimate of Moffitt's share of the cost of the street work. The estimate was for $130,000, which included intersection work, as clearly shown on the engineering drawings submitted with the estimate. Now $130,000 is a lot more than $99,000, which is all Moffitt says he owes; and this discrepancy is some evidence for the city's interpretation of the contract. It is also, of course, a lot less than the $204,000 that the city billed him for, but the city says that the cost of constructing the intersection with Route 54 turned out to be unexpectedly great.

But we are straying beyond the written contract, which we are not allowed to do unless it is...