Overnite Transp. Co. v. Chicago Indus. Tire Co.

Decision Date13 January 1983
Docket NumberNo. 82-1597,82-1597
Citation697 F.2d 789
PartiesOVERNITE TRANSPORTATION CO., Plaintiff, v. CHICAGO INDUSTRIAL TIRE CO., Defendant-Appellee. Appeal of Themis N. ANASTOS and Paul E. Peldyak.
CourtU.S. Court of Appeals — Seventh Circuit

Themis N. Anastos, Paul E. Peldyak, Chicago, Ill., for plaintiff.

Jeffrey J. Keck, Bloom & Tese, Chicago, Ill., for defendant-appellee.

Before CUMMINGS, Chief Judge, COFFEY, Circuit Judge, and HILL, Senior District Judge. *

COFFEY, Circuit Judge.

This is an appeal from the district court's order granting the defendant's motion for attorney's fees and costs pursuant to 28 U.S.C. Sec. 1927. The district court found that the plaintiff's filing of a lawsuit in federal court and the appeal of its dismissal were multiplicious and vexatious in nature.

The facts underlying this case are fully set forth in Overnite Transportation Co. v. Chicago Industrial Tire Co., 668 F.2d 274 (7th Cir.1981) and are not in dispute. Therefore only those facts that have a bearing upon this appeal will be discussed herein.

On April 16, 1979, Hub and Wheels, Inc. of Saltville, Virginia delivered forty wheels to Overnite Transportation Co. of Richmond, Virginia for a C.O.D. ($2,243.72) shipment to Chicago Industrial Tire Co. 1 Upon reaching Louisville, Kentucky, Overnight Transportation transferred the wheel shipment to American Freight Systems, Co. and gave American Freight a freight bill dated April 17, 1979. However, the freight bill prepared by Overnite inadvertently made no reference to the C.O.D. charge of $2,243.72, but merely listed a freight charge of $118.82. On April 26, 1979 American Freight delivered the forty wheels to Chicago Industrial Tire Co. and collected the $118.82 freight charge.

After discovering the error, Overnite sent Chicago Industrial Tire a notice of "freight bill correction" and sought recovery of the C.O.D. charges. Chicago Industrial Tire refused to pay, and in accordance with its obligations under the original bill of lading, Overnite Transportation was forced to pay Hub and Wheels, Inc. the uncollected C.O.D. charge. Thereafter, on May 27, 1980 Overnite brought suit in the Cook County, Illinois Circuit Court against Chicago Industrial Tire for the unpaid C.O.D. charge of $2,243.72. Overnite's original and amended complaints were dismissed for the failure to state a claim upon which relief could be granted. Overnite then filed an action on February 12, 1981 in the United States District Court for the Northern District of Illinois asserting federal jurisdiction "based on the Interstate Commerce Act 49 U.S.C. Section 1, et seq., as this action arises out of the shipment of goods in Interstate Commerce." The district court granted the defendant's (Chicago Industrial Tire) motion for dismissal on the grounds that the court did not have subject matter jurisdiction over the cause of action as the disputed C.O.D. charge was the contract price for the wheels and thus was not an "unpaid motor freight charge" and therefore not regulated by the Interstate Commerce Act.

The plaintiff, Overnite Transportation, appealed the district court's dismissal asserting that Chicago Industrial Tire was unjustly enriched and therefore was indebted to Overnite in the amount of $2,210.00. This court affirmed the district court's dismissal on two grounds. The court agreed that the C.O.D. charge was not a "freight charge" but rather was the contract price for the wheels and as such was not regulated by the Interstate Commerce Act. 668 F.2d at 275. The court further noted that 28 U.S.C. Sec. 1337(a) provides district courts with original jurisdiction over any civil action or proceeding brought under 49 U.S.C. 319 2 "only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interests and costs." The court held that while it was true Overnite relied upon the implied remedy of unjust enrichment, the $10,000 jurisdictional threshold also applied "to all remedies inferable from the [Interstate Commerce] Act." 668 F.2d at 276. Therefore, the court found that even if the Interstate Commerce Act applied to the C.O.D. charge, the amount in controversy ($2,210.00) did not qualify under the $10,000 jurisdictional threshold. The mandate of this court affirming the dismissal of Overnite's suit was docketed on January 28, 1982.

On February 16, Chicago Industrial Tire Co. filed a motion with the district court requesting an award of the amount of costs and attorney's fees they expended in defending Overnite's suit in federal court. Chicago Industrial based their request upon 28 U.S.C. Sec. 1927 (Supp.1981) which provides:

"Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct."

The defendant argued that the plaintiff's filing of the lawsuit in federal court and the appeal of its dismissal constituted an unreasonable and vexatious multiplication of the proceedings entitling the defendant to the recovery of attorney's fees and expenses.

The district court agreed with the defendant, and awarded the defendant $1,392.50 in attorney's fees and costs and reasoned that "[t]he vexatious character of plaintiff attorney's conduct in initiating this [C.O.D. reimbursement] lawsuit in federal court and [then] appealing its dismissal is

                manifest from the record."   Overnite Transportation Co. v. Chicago Industrial Tire Co., 535 F.Supp. 114, 115 (N.D.Ill.1982).  The court found that the Interstate Commerce Act was clearly inapplicable, and that even if the Act did apply, "the express terms of 28 U.S.C. Sec. 1337(a) would have prevented this court from exercising jurisdiction in any event over a $2,210.00 claim."    Id.  The court ruled that "[t]here is a difference between advancing an unlikely claim and repeatedly asserting a jurisdictional argument which has no basis in law," and further found that the conduct of Overnite's trial attorney and appellate attorney fell into the latter category.  Id. at 116.  The court directed plaintiff's trial attorney to pay 75% of the defendant's attorney's fees and costs ($1,044.38), and ordered the appellate attorney to pay 25% of such fees and costs ($348.12).  The attorneys appealed from the decision of the district court
                
ISSUES PRESENTED

Issue 1: Did the district court have jurisdiction to entertain a motion to compel the payment of attorney's fees and costs after the district court's dismissal of the underlying action had been affirmed on appeal prior to the date of the motion for costs and attorney's fees?

Issue 2: Did the district court abuse its discretion in awarding the defendant attorney's fees and costs?

1. Jurisdiction

Initially, we address the threshold question of whether the district court had jurisdiction over the defendant's motion for attorney's fees and costs. On June 16, 1981 the district court granted the defendant's motion to dismiss Overnite's claim on the grounds that the plaintiff had failed to establish federal jurisdiction. Thereafter, on July 9, 1981 the plaintiff, Overnite Transportation Co., filed a notice of appeal of the district court's dismissal. It is a well established general rule that the perfection of an appeal "vests jurisdiction in the court of appeals [and] further proceedings in the district court cannot then take place without leave of the court of appeals." Asher v. Harrington, 461 F.2d 890, 895 (7th Cir.1972). Therefore, under the clearly enunciated rule of this circuit, jurisdiction over Overnite's cause of action against Chicago Industrial Tire was vested in this court on the date the plaintiff properly filed his notice of appeal, July 9, 1981.

There are, however, various exceptions to the jurisdictional rule that jurisdiction is vested with the court of appeals upon the proper filing of a notice of appeal. For example, jurisdiction continues in the district court if jurisdiction is reserved expressly by statute, or if the court expressly reserves or retains such jurisdiction, or while the court is entertaining motions collateral to the judgment or motions which would aid in resolution of the appeal. See generally Armstrong v. Board of School Directors, 616 F.2d 305, 327 (7th Cir.1980); Elgen Mfg. Corp. v. Ventfabrics, Inc., 314 F.2d 440, 444 (7th Cir.1963). However, these exceptions only apply to those motions filed with the district court while the appeal on the merits is pending. Regardless of the fact that over eight months elapsed between the filing of the notice of appeal and this court's docketing its mandate affirming the district court's dismissal, no motions were filed by the defendant with either the district court or this court requesting attorney's fees pursuant to 28 U.S.C. Sec. 1927. Once this court rendered its decision and docketed its mandate affirming the district court's dismissal of Overnite's action against Chicago Industrial Tire no case or controversy any longer existed between the litigants herein. Therefore, since the plaintiff properly filed a notice of appeal with the district court on July 9, 1981 and the district court did not reserve jurisdiction over the case nor was jurisdiction reserved by statute, and because no motions concerning the case in chief were directed to either this court or the district court during the eight months the appeal on the merits was pending, we hold the district court was without jurisdiction to rule on the defendant Chicago Industrial Tire's motion for costs and attorney's fees.

Further, it should be noted that we do not in this opinion attempt to overrule or limit this court's earlier holdings in Terket v. Lund, 623 F.2d 29 (7th Cir.1980) and Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577 (7th Cir.1981). In Terket, the...

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