Farries v. Stanadyne/Chicago Div.

• Decision Date: 24 September 1987
• Docket Number: No. 85-2921,85-2921
• Parties: 126 L.R.R.M. (BNA) 2497, 107 Lab.Cas. P 10,147, 9 Fed.R.Serv.3d 189 John W. FARRIES, Plaintiff-Appellant, v. STANADYNE/CHICAGO DIVISION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 374

832 F.2d 374

126 L.R.R.M. (BNA) 2497, 107 Lab.Cas. P 10,147,

9 Fed.R.Serv.3d 189

John W. FARRIES, Plaintiff-Appellant, v. STANADYNE/CHICAGO DIVISION, Defendant-Appellee.

No. 85-2921.

United States Court of Appeals,

Seventh Circuit.

Argued Jan. 14, 1987.

Decided Sept. 22, 1987.

As Amended Sept. 24, 1987.

Richard J. O'Brien, Sidley & Austin, Chicago, Ill., for plaintiff-appellant.

Michael G. Cleveland, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for defendant-appellee.

Before WOOD, COFFEY, and MANION, Circuit Judges.

COFFEY, Circuit Judge.

The plaintiff-appellant John W. Farries appeals the district court's grant of summary judgment in favor of the defendant-appellee Stanadyne. We affirm.

I

According to the appellant's (John W. Farries') allegations in his complaint, he was employed as a laborer and "washer grader operator" with Stanadyne from November, 1968 until July 7, 1970, when he left Stanadyne to join the United States Air Force. ¹ Stanadyne, on the other hand, submitted an affidavit stating that Farries worked for Stanadyne "until July 2, 1970, when he was terminated for failing to report to work." ² Farries served in the United States Air Force until September 20, 1973, reenlisted, and then served until August 6, 1974. ³ In October 1974 ⁴ and several times subsequently, Farries applied for reinstatement as a "washer grader operator" at Stanadyne but was denied. According to the Anderson affidavit Farries was denied reinstatement because:

"Review of Company records shows that when Mr. Farries sought to return to employment with Stanadyne following military service, he was not rehired because of his past employment record, including the circumstances of his termination, and a provision of the then applicable collective bargaining agreement."

On March 23, 1977, the plaintiff's discharge from the United States Air Force was upgraded to "honorable" retroactive to August 6, 1974. He sought reinstatement with the appellee but was again denied. Wilson Given, who was Manager of Industrial Relations for Stanadyne in the late 1970s had several conversations with Farries when the appellant sought reinstatement with Stanadyne. According to the Anderson affidavit submitted by Stanadyne, "Mr. Given was the only employee of Stanadyne with knowledge of what occurred in those conversations." Given died on May 9, 1980.

Shortly after the March 23, 1977, upgrading of Farries' discharge from the Air Force, he was denied reinstatement with Stanadyne. At this time he requested the United States Department of Labor investigate his claim of unlawful refusal of reinstatement to his prior employment. ⁵ On December 6, 1978, the United States Department of Labor notified Stanadyne of Farries' claim and until June 19, 1980, Stanadyne continued discussions and correspondence with representatives of the Department of Labor and Farries concerning Farries' claim. In June of 1980, the Department of Labor informed the appellant that its investigation of his claim was concluded without a determination of fact and advised him of his right to pursue his claim in court.

Farries states he attempted from June 1980 until September 1982, without success, to employ counsel to pursue his claim against Stanadyne for unlawful denial of reinstatement. On September 23, 1982, the appellant filed an affidavit of financial status and pauper affidavit seeking the appointment of counsel in the United States District Court for the Southern District of Indiana, and on October 18, 1982, the district judge appointed counsel to represent Farries.

On March 30, 1983, Farries filed an action alleging that he had been unlawfully denied reinstatement pursuant to 38 U.S.C. Sec. 2021. On June 20, 1983, Stanadyne made a motion to dismiss pursuant to Rule 12(b) of the Federal Rules of Civil Procedure on grounds of improper venue and laches. Attached to the motion was the affidavit of Arlan Anderson, Stanadyne's Manager of Industrial Relations. On July 19, 1985, the trial judge, after finding improper venue in the Southern District of Indiana, transferred the case to the United States District Court for the Northern District of Indiana.

On September 10, 1985, the district court entered a pretrial conference order stating:

"There is presently pending a motion to dismiss filed by defendant, which the parties agree is now fully briefed. The court will consider the rule on this motion within thirty (30) days from the date of this order. In the event the motion is denied, discovery shall then proceed and discovery shall terminate in this cause on January 10, 1986. A final pre-trial conference will be held in this cause on February 13, 1986, at 1:15 p.m. This cause is set for trial on March 17, 1986, at 10:00 a.m."

On October 1, 1985, without giving notice to the parties the district court converted Stanadyne's motion to dismiss into one for summary judgment stating:

"Although Stanadyne denominates its motion as a motion to dismiss, it is clear that its argument relies heavily on the affidavit of Arlan G. Anderson, its Manager of Industrial Relations. Proper treatment of the motion requires the court to refer to and rely upon the Anderson affidavit as well. When matters outside the pleadings are presented to and not excluded by the court, a motion to dismiss will be converted into a motion for summary judgment. Fed.R.Civ.P. 12(b)(6)."

Farries v. Stanadyne, 618 F.Supp. 1324, 1325 (N.D.Ind.1985).

Relying on our decision in Lingenfelter v. Keystone Consolidated Industries, 691 F.2d 339 (7th Cir.1982) the trial judge found that Farries' claim was barred by laches finding that each of the two elements set forth in our decision in Lingenfelter necessary to support a finding of laches were present: (1) a lack of diligence on the part of Farries in pursuing his claim and (2) Stanadyne suffered prejudice as a result of Farries' lack of diligence. As to Farries' lack of diligence in pursuing his claim, the district judge found that Farries "over eight year delay" was "inexcusable" and thus the first prong of the laches test under Lingenfelter was satisfied. Regarding the second factor necessary for laches, prejudice to Stanadyne as a result of Farries' lack of diligence, the trial judge found that Farries' delay in filing his claim prejudiced Stanadyne in that (1) it deprived Stanadyne of the deceased Given's testimony and any evidence he might provide since he expired in 1980 and (2) if Stanadyne were now required to reimburse Farries for lost wages, after having paid another employee for eight years, it would have to pay twice for the same labor caused by Farries' delay in bringing the suit. The court concluded that Farries "raised no issues which would amount to a material issue of fact" and granted Stanadyne summary judgment.

On appeal Farries makes two arguments: (1) the trial judge erred in failing to give him notice before converting Stanadyne's 12(b) motion into one for summary judgment and (2) the court improperly applied the doctrine of laches to his claim.

II

Initially, Farries argues the trial judge erred in failing to give notice before converting Stanadyne's 12(b)(6) motion, Fed.R.Civ.P., into a motion for summary judgment under Rule 56(c). In converting Stanadyne's motion to dismiss into a summary judgment the district judge stated: "Proper treatment of [this motion to dismiss] requires the court to refer to and rely upon the Anderson affidavit as well. When matters outside the pleadings are presented to and not excluded by the court, a motion to dismiss will be converted into a motion for summary judgment." Farries, 618 F.Supp. at 1325.

Rule 12(b) provides that:

"If, on a motion asserting the defense numbered (6) to dismiss for 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, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56."

The Advisory Committee Notes on Rule 12(b) amplify the text of the rule:

"The addition at the end of subdivision (b) makes it clear that on a motion under Rule 12(b)(6) extraneous material may not be considered if the court excludes it, but that if the court does not exclude such material the motion shall be treated as a motion for summary judgment and disposed of as provided in Rule 56. It will also be observed that if a motion under Rule 12(b)(6) is thus converted into a summary judgment motion, the amendment insures that both parties shall be given a reasonable opportunity to submit affidavits and extraneous proofs to avoid taking a party by surprise through the conversion of the motion into a motion for summary judgment."

See also Wright & Miller, Federal Practice & Procedure Sec. 1366.

On a number of occasions we have been presented with a situation where a district court has converted a Rule 12(b)(6) motion into one for summary judgment without giving the parties notice. See Malak v. Associated Physicians, Inc., 784 F.2d 277, 280-81 (7th Cir.1986); Milwaukee Typo, Etc. v. Newspapers, Inc., 639 F.2d 386, 391 (7th Cir.), cert. denied, 454 U.S. 838, 102 S.Ct. 144, 70 L.Ed.2d 119 (1981); Chicago-Midwest Meat Assoc. v. City of Evanston, 589 F.2d 278, 281-82 (7th Cir.1978), cert. denied, 442 U.S. 946, 99 S.Ct. 2895, 61 L.Ed.2d 318 (1979). In Milwaukee Typo we stated "while ... the conversion of a 12(b)(6) motion into a summary judgment motion should be accompanied by prior notice and 'a reasonable opportunity to establish the existence of material controverted facts,' the failure to afford such procedure does not necessarily mandate reversal." 639 F.2d at 391 (quoting Chicago-Midwest Meat, 589 F.2d at 282). In Malak we noted that "[a]lthough a district court certainly should give notice to the parties when the court converts a 12(b)(6) ...