SCA Services, Inc. v. Lucky Stores, s. 78-1266
| Citation | 599 F.2d 178 |
| Decision Date | 18 May 1979 |
| Docket Number | Nos. 78-1266,78-1267,s. 78-1266 |
| Parties | SCA SERVICES, INC., Plaintiff and Counterdefendant-Appellant and Cross-Appellee, v. LUCKY STORES, Defendant and Counterclaimant-Appellee, v. SCA SERVICES, INC., Third-Party Plaintiff and Counterdefendant-Appellant and Cross-Appellee, v. GENERAL MILL SUPPLY COMPANY, Third-Party Defendant and Counterclaimant-Appellee and Cross-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
James C. Donnelly, Jr., Boston, Mass., for plaintiff and counterdefendant-appellant and cross-appellee.
Brian G. Shannon, Detroit, Mich., for defendant and counterclaimant-appellee.
Before FAIRCHILD, Chief Judge, and SPRECHER and TONE, Circuit Judges.
This opinion deals with the allowability to the prevailing party of interest on a judgment and the cost of copies of depositions.
SCA Services, Inc. entered into a contract with Lucky Stores, which operates more than one hundred supermarkets in various Midwestern states, to purchase used cardboard from Lucky's supermarkets. The contract also obligated SCA to install machines to bale the cardboard at the supermarkets. SCA also entered into a contract with General Mill Supply Company in which it was agreed that General Mill, acting as broker, would sell to paper mills all the cardboard SCA bought from Lucky. Disputes among the parties concerning the quality of the cardboard and whether SCA was including in its shipments cardboard from stores other than Lucky's were aggravated by the falling market price of the cardboard. Unable to settle their differences, SCA and Lucky terminated their relationship, and SCA stopped picking up Lucky's cardboard on April 30, 1975. General Mill continued to act as broker in the sale of other cardboard for SCA until July 1975.
SCA sued Lucky in the United States District Court for the Eastern District of Virginia for breach of their contract. Lucky then sued SCA on the same contract in the Southern District of Illinois. The district court in Virginia transferred its case to the Southern District of Illinois, where the cases were consolidated, with SCA as the plaintiff-counterdefendant and Lucky as the defendant-counterclaimant. SCA then filed a third-party complaint against General Mill, alleging a breach of contract and, further, that if Lucky prevailed against SCA, General Mill should be liable to SCA for the damages because SCA relied on General Mill's representations as to the quality of the cardboard in terminating the Lucky contract. General Mill responded with a counterclaim against SCA, asserting in Count I that SCA breached the contract with General Mill described above by failing to continue to supply paper to be sold by General Mill, and asserting in three other counts breaches of other contracts between the parties. The court stayed proceedings on the latter three counts pending arbitration and eventually dismissed them without prejudice.
After a trial of the remaining issues before a jury, the court entered judgment on the verdicts as follows: Lucky was found liable to SCA for the unpaid balance due on the baling machines in the amount of $433,339.21. SCA was found liable to Lucky for breach of contract in the amount of $220,776. SCA was also found liable to General Mill in the amount of $82,000. The court also denied General Mill's motion for interest from the date its counterclaim was filed and refused to include deposition expenses in the award of costs.
SCA settled with Lucky and appeals from the judgment in favor of General Mill, which cross appeals from the rulings on interest and costs. This opinion addresses only the issues raised by General Mill's cross-appeal. They are (1) whether General Mill was entitled to interest on its judgment in accordance with Michigan law in view of the provision in the contract that Michigan law would govern the rights and liabilities of the contracting parties, and (2) whether the district court abused its discretion by excluding from the award of costs the entire expense of deposition copies claimed by General Mill. The portion of our decision dealing with the questions presented by the appeal of SCA does not meet the criteria for publication stated in Circuit Rule 35 and is therefore filed as an unpublished order.
Included among the laws of the state in which the district court sits that Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), makes applicable in diversity cases are the state's conflict of laws rules. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The district court in the case at bar was therefore required to apply the conflict rules of Illinois.
The contract between SCA and General Mill contained the following choice of law provision:
All questions with respect to the construction of this Agreement and the rights and liabilities of the parties hereunder shall be determined in accordance with the provisions of the laws of the State of Michigan.
The term "liabilities" includes the measure of recovery in the event of breach. Interest is a part of the measure of recovery. See Restatement (Second) of Conflict of Laws § 207 & Comment E (1971). Illinois courts give effect to choice of law clauses. E. g., Hofeld v. Nationwide Life Ins. Co., 59 Ill.2d 522, 529, 322 N.E.2d 454, 458 (1975). See Restatement, supra, §§ 186, 187, and 207. Consequently, Michigan law applies. Under Mich. Comp. Laws § 600.6013, Mich.Stat.Ann. § 27A.6013 (Callaghan 1977), General Mill was entitled to interest in the amount of 6% per year, calculated from March 22, 1976, the date General Mill filed its counterclaim against SCA.
Fed.R.Civ.P. 54(d) and 28 U.S.C. § 1920 give the district court discretion in determining whether expenses claimed by the prevailing party are taxable as costs against the losing party, but this discretion is not unfettered. Popeil Brothers, Inc. v. Schick Electric, Inc., 516 F.2d 772, 774 (7th Cir. 1975). General Mill requested reimbursement in the amount of $10,640.42, which included both the costs of transcribing the depositions taken by General Mill and the cost of copies of transcripts of depositions taken by SCA and Lucky. The district court...
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