Dribeck Importers, Inc. v. G. Heileman Brewing Co., Inc., s. 88-2984

• Citation: 883 F.2d 569
• Decision Date: 23 August 1989
• Docket Number: Nos. 88-2984,88-3087,s. 88-2984
• Parties: DRIBECK IMPORTERS, INC., Plaintiff-Appellee, Cross-Appellant, v. G. HEILEMAN BREWING CO., INC., Defendant-Appellant, Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 569

883 F.2d 569

DRIBECK IMPORTERS, INC., Plaintiff-Appellee, Cross-Appellant, v. G. HEILEMAN BREWING CO., INC., Defendant-Appellant, Cross-Appellee.

Nos. 88-2984, 88-3087.

United States Court of Appeals Seventh Circuit.

Argued June 1, 1989.

Decided Aug. 23, 1989.

Bradley H. Foreman, Ronald L. Barnard, Barnard & Associates, Chicago, Ill., for plaintiff-appellee, cross-appellant.

David E. Beckwith, Robert L. Binder, Foley & Lardner, Milwaukee, Wis., Eugene L. Resnick, John H. Anderson, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., Debra A. Juncker, Milwaukee, Wis., for defendant-appellant, cross-appellee.

Before BAUER, Chief Judge, CUMMINGS and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Dribeck Importers, Inc. (Dribeck) filed this case against G. Heileman Brewing Co., Inc. (Heileman), seeking recovery for costs incurred in the defense of lawsuits brought by former beer wholesalers against Dribeck. Dribeck claimed that Heileman breached its duty to defend and indemnify Dribeck against such wholesaler actions--a duty imposed pursuant to an earlier settlement agreement entered into between Dribeck and Heileman. Both parties moved for summary judgment. The district court granted summary judgment to Dribeck. See Dribeck Importers, Inc. v. G. Heileman Brewing Co., No. 86 C 4901, 1987 WL 15761 (N.D.Ill. Aug. 12, 1987) (memorandum opinion and order); R. 39 [hereinafter Mem. op.]. The district court then awarded Dribeck damages for expenditures incurred by the wholesaler suits, R. 58, and later ruled that Dribeck could recover its costs incurred in this present action, but not its attorney's fees. R. 69; 70. Heileman appeals the determination of liability entered on summary judgment (No. 88-2984); Dribeck cross-appeals on the attorney's fees issue (No. 88-3087). We now reverse the district court's grant of summary judgment and remand for further proceedings.

I. BACKGROUND

Beck's beer (Beck's) is brewed in Bremen, West Germany and is imported into this country by Dribeck. ¹ In August 1979, Dribeck and Heileman entered into a distribution agreement under which Heileman was named the exclusive master distributor of Beck's in a 22-state region occupying the central continental United States. As master distributor, Heileman executed buy-sell agreements with wholesalers for the distribution of Beck's; these agreements between Heileman and individual wholesalers could be cancelled by either party on thirty days' written notice. See R. 23 at Ex. A. These wholesalers acted as the exclusive subdistributors in certain specified markets, selling Beck's to retailers.

In January 1985, Dribeck decided to terminate the Heileman master distributorship. Heileman responded by filing a complaint that alleged that Dribeck's proposed termination violated the Wisconsin Fair Dealership Law. This action, together with Dribeck's counterclaim for breach of contract, was settled by agreement between Dribeck and Heileman on July 15, 1985. ² R.1. at Ex. A [hereinafter Settlement Because it no longer could provide Beck's after September 1, Heileman sent, to each of its wholesalers, cancellation notices stating that its buy-sell agreement for the distribution of Beck's was cancelled as of September 1, 1985. R. 23 at Ex. B (sample cancellation notice dated July 30, 1985). Although the Settlement Agreement permitted Dribeck to execute new buy-sell agreements with former Heileman-contracted wholesalers for the continued distribution of Beck's, see R.1 at Ex. A, pp. 3-4, Dribeck did not execute such agreements with all former wholesalers. Several former Heileman-contracted wholesalers of Beck's whom Dribeck declined to re-engage filed actions against Dribeck, alleging various intentional, wrongful acts by Dribeck. ³ The disposition of these cases was as follows: (1) three Ohio lawsuits filed against Dribeck were dismissed for lack of personal jurisdiction, and the Sixth Circuit affirmed the two cases that were appealed; ⁴ (2) a Tennessee lawsuit ⁵ was settled for $5,250; and (3) a Wisconsin lawsuit ⁶ was settled for $1,500.

Agreement]. Under the Settlement Agreement, Heileman ceased acting as regional master distributor on August 31, 1985; effective September 1, 1985, Dribeck assumed direct responsibility for distributing Beck's to wholesalers in the central United States.

Dribeck then filed this action against Heileman for recovery of defense and indemnification costs incurred as a result of these five wholesaler actions. R. 1. On cross-motions for summary judgment, both parties relied primarily on the explicit language of the Settlement Agreement. According to Dribeck, Heileman breached its duties imposed by paragraph 8 of the Settlement Agreement; those duties are best understood by also considering the Agreement's scope as detailed in paragraph 7. The two provisions state that:

7. Heileman agrees that at any time from and after the date of this agreement, Dribeck may communicate with and enter into agreements with current Heileman wholesalers and any other wholesalers to act as wholesalers of Beck's beer after August 31, 1985. This paragraph applies solely to the Heileman area as defined in the Distribution Agreement.

8. Heileman agrees, at its sole cost, to defend and hold Dribeck harmless from and against any claim, suit, liability of judgment made, asserted or recovered against Dribeck by any Heileman wholesaler arising from the discontinuance of Heileman's supplying Beck's beer to any such wholesaler. In the event only a portion of said claim, suit, liability or judgment pertains to the said discontinuance of Heileman's supplying Beck's beer, then this indemnification shall only relate to that portion. This indemnity does not extend however to (a) that part R.1 at Ex. A, paragraphs 7, 8.

of any claim, suit or liability made or asserted by any Heileman wholesaler arising from the discontinuance after August 31, 1985, of any direct commercial relationship which may arise between Dribeck and any Heileman wholesaler, and (b) that part of any claim, suit or liability made or asserted by any Heileman wholesaler alleging any intentional, wrongful act by Dribeck other than a claim that Dribeck induced the breach of any contract between the wholesaler and Heileman.

In its ruling on summary judgment, the district court (Williams, J.) agreed with Dribeck's interpretation. Reading paragraphs 7 and 8 of the Settlement Agreement jointly, it concluded that the five wholesaler suits fell "squarely within the terms of the Settlement Agreement's language that Heileman shall defend and indemnify Dribeck from any claim 'arising from the discontinuance of Heileman's supplying Beck's beer to any such wholesaler.' " Mem. op. at 6. In later proceedings on the determination of damages, the district court (Conlon, J.) awarded Dribeck $110,137.92 for attorney's fees and costs incurred in defense of the five wholesaler lawsuits, as well as costs incurred in this indemnification action against Heileman. See R. 59; 70. The district court, however, denied Dribeck's motion for attorney's fees incurred in this action.

II. ANALYSIS

On appeal, Heileman submits that the district court erred in granting summary judgment to Dribeck. According to Heileman, the explicit terms of paragraph 8 of the Settlement Agreement require this court to vacate the judgment of the district court and enter summary judgment in Heileman's favor. Appellant's Br. at 6-25. In the alternative, it asserts that genuine questions of material fact render summary judgment inappropriate and the case should be remanded for trial. Id. at 25-31. ⁷ Dribeck responds by arguing that the district court correctly rejected this argument and that a reading of the Settlement Agreement in its entirety yields the contrary result--the plain language of the Settlement Agreement compels Heileman to pay Dribeck for expenditures incurred in the five wholesaler suits. Appellee's Br. at 9-18. ⁸ Dribeck also cross-appeals the district court's determination that the so-

called "American rule" of attorney's fees bars an award of attorney's fees incurred as a result of prosecuting this case. Appellee's Br. at 22-26. In light of our disposition of the case--reversing the district court's grant of summary judgment on liability--we decline to reach the merits of Dribeck's cross-appeal.

A. Governing Law

Our duty, in examining the district court's grant of summary judgment, is to review de novo the record and the controlling law. "[W]e must decide whether the record shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Colan v. Cutler-Hammer, Inc., 812 F.2d 357, 360 (7th Cir.) (per curiam), cert. denied, --- U.S. ----, 108 S.Ct. 79, 98 L.Ed.2d 42 (1987); see also DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987). A genuine issue of material fact exists only where "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

Generally, "[c]ontract interpretation is a subject particularly suited to disposition by summary judgment." Metalex Corp. v. Uniden Corp., 863 F.2d 1331, 1333 (7th Cir.1988); see also Fed.R.Civ.P. 56(c). As an initial step, however, "a court must first decide whether or not the contract is ambiguous." Samuels v. Wilder, 871 F.2d 1346, 1351 (7th Cir.1989) (indemnification clause case); see also Metalex, 863 F.2d at 1333; Skycom Corp. v. Telstar Corp., 813 F.2d 810, 815 (7th Cir.1987). If a contract is " 'unambiguous and contains no uncertain terms, interpretation of the contract is a question of law for the court,' " City of Clinton, Ill. v. Moffitt, 812 F.2d 341, 342 (7th Cir.1987) (quoting Nerone v. Boehler, 34 Ill.App.3d 888, 340 N.E.2d 534, 536 (1976)), and "summary judgment based on the plain meaning of the contract is appropriate...