Enquip, Inc. v. Smith-McDonald Corp., SMITH-M

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before FAIRCHILD, PELL and SPRECHER; PELL
• Citation: 655 F.2d 115
• Parties: 9 Fed. R. Evid. Serv. 652 ENQUIP, INC. and Tank Service, Inc., Plaintiffs, v.cDONALD CORP., Defendant, Third-Party Plaintiff and Counter-Defendant-Appellee, v. GARDNER CONSTRUCTION CO., Third-Party Defendant and Third-Party Plaintiff-Appellant. ENQUIP, INC. and Tank Service, Inc., Plaintiffs-Appellees, v.cDONALD CORP., Defendant, Third-Party Plaintiff and Counter-Defendant-Appellant, v. GARDNER CONSTRUCTION CO., Third-Party Defendant and Third-Party Plaintiff-Appellee.
• Docket Number: SMITH-M,Nos. 80-1633,80-1822
• Decision Date: 28 July 1981

Page 115

655 F.2d 115 9 Fed. R. Evid. Serv. 652 ENQUIP, INC. and Tank Service, Inc., Plaintiffs,
v.
SMITH-McDONALD CORP., Defendant, Third-Party Plaintiff and
Counter-Defendant-Appellee,
v.
GARDNER CONSTRUCTION CO., Third-Party Defendant and
Third-Party Plaintiff-Appellant.
ENQUIP, INC. and Tank Service, Inc., Plaintiffs-Appellees,
v.
SMITH-McDONALD CORP., Defendant, Third-Party Plaintiff and
Counter-Defendant-Appellant,
v.
GARDNER CONSTRUCTION CO., Third-Party Defendant and
Third-Party Plaintiff-Appellee. Nos. 80-1633, 80-1822. United States Court of Appeals,
Seventh Circuit. Argued Jan. 19, 1981.
Decided July 28, 1981.

Page 116

Patrick J. Mazza, Chicago, Ill., for third party defendant-appellant.

Christopher J. McElroy, Jenner & Block, Chicago, Ill., for plaintiff-appellee.

Martha A. Mills, Chicago, Ill., for third party plaintiff-appellee.

Before FAIRCHILD, PELL and SPRECHER, Circuit Judges.

PELL, Circuit Judge.

These appeals are from a judgment in an action brought to recover the contract price for oil-water separator tanks manufactured by the plaintiff-appellee, Enquip, Inc. (Enquip), sold to its dealer, the defendant third-party plaintiff-appellee, Smith-McDonald Corp. (Smith-McDonald), and sold by Smith-McDonald in turn to the third-party defendant-appellant, Gardner Construction Co. (Gardner), a general contractor who had ordered the tanks for installation at a state tollway oasis. The major issue presented is whether the trial court erred in entering partial summary judgment against Gardner on the basis of his pleading in a related state court case. ¹ The appeals are before the court following grants of partial summary judgment entered by the trial court pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.

Gardner contends that the trial court erred in its ruling on the issue of liability when it considered as an admission a statement made in a verified complaint which Gardner had filed in the Illinois courts against the Illinois State Toll Highway Authority (ISTHA), the ultimate purchaser of the tanks. The defendant asserts that it was error for the district court to have relied on the state court pleading because it was an unsworn document and not within the meaning of Rule 56(e), and further that the allegations of the complaint were consistent with Gardner's alternative and hypothetical pleadings, and thus did not constitute an admission.

I.

The factual background giving rise to this dispute is well laid out in the memorandum

Page 117

opinion of the district court. To review briefly, the general contractor Gardner contracted with ISTHA to install oil-water separator tanks as part of the renovation of a tollway oasis. Gardner then contracted with the subcontractor Smith-McDonald for sale and delivery of eight such tanks. Smith-McDonald in turn placed an order for the tanks with Enquip, the manufacturer. ISTHA, after initially appearing to have orally approved the Enquip tanks as conforming to specifications, rejected them after they arrived at the site as nonconforming and unsatisfactory on the recommendation of the project architect-engineer.

Enquip then filed suit against Smith-McDonald for breach of contract based on failure to pay for the tanks. Smith-McDonald filed a third-party complaint against Gardner for the contract price, alleging Gardner's liability over to Enquip. Gardner counterclaimed, alleging that the tanks did not meet specifications, and also filed a third-party complaint against ISTHA for failure to accept the separators. Smith-McDonald then filed a third-party complaint against Enquip, asserting that if Smith-McDonald was held liable to Gardner on the basis of the failure of the tanks to meet specifications, Enquip would be liable over to Smith-McDonald.

Meanwhile, in the Illinois courts, Gardner filed an action against ISTHA, and Pace Associates, Inc. (Pace), the architect-engineering firm which recommended that ISTHA reject the tanks. That suit claimed that the tanks met specifications. Pace filed a verified answer denying that the tanks met the specifications.

On the basis of Gardner's pleading in the state court action, Smith-McDonald filed a motion for summary judgment in the district court as to liability against Gardner. In support of its motion, Smith-McDonald cited Gardner's pleading in the state case, which had asserted that the tanks were in conformity with the specifications. Smith-McDonald...