Trustees of Pension, Welfare & v. Pyramid Electric et al, 99-3889

• Decision Date: 04 August 2000
• Docket Number: No. 99-3889,99-3889
• Parties: (7th Cir. 2000) Trustees of the Pension, Welfare, and Vacation Fringe Benefit Funds of IBEW Local 701, Plaintiffs-Appellees, v. Pyramid Electric, and George P. Edwards, individually, Defendants, and Paul H. Schwendener, Inc., Citation Respondent-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 459

223 F.3d 459 (7th Cir. 2000) Trustees of the Pension, Welfare, and Vacation Fringe Benefit Funds of IBEW Local 701, Plaintiffs-Appellees, v. Pyramid Electric, and George P. Edwards, individually, Defendants, and Paul H. Schwendener, Inc., Citation Respondent-Appellant.

In the United States Court of Appeals For the Seventh Circuit

No. 99-3889

Argued April 12, 2000

Decided August 4, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 1392--George W. Lindberg, Judge. [Copyrighted Material Omitted]

Before Cudahy, Coffey and Kanne, Circuit Judges.

Cudahy, Circuit Judge.

We are asked today to decide whether the district court erred in refusing to vacate a final order. But first we must decide whether that order--or any of the four that followed it--are, in fact, final and therefore appealable.

I) Facts

Paul H. Schwendener, Inc. is a general contractor. In the 1990s, it subcontracted with Pyramid Electrical, Inc., to complete electrical work on three of Schwendener's construction projects. The work apparently proceeded smoothly for a while. Then, for a reason undisclosed in the record, Pyramid "walked off" the final construction project, known as Loews Woodridge. See R. at 20 (Schwendener Mot. to Vacate Orders at 3 (July 28, 1999)). Schwendener apparently had to hire a different subcontractor to complete about $1.7 million of outstanding electrical work. See App. Tab B at 4 (Exhibit). Schwendener had agreed to cover Pyramid's payroll, including its contributions to the Trustees of the Pension, Welfare and Vacation Fringe Benefit Funds of IBEW Local 701 (the Funds). Schwendener stopped making those payments, and it is unclear from the record whether the payroll cutoff precipitated Pyramid's exit or vice versa.

In any event, the Funds were out about $140,000, and wanted to recover the money. The Funds sued Pyramid, and Pyramid officer George P. Edwards, for the past due payments. Pyramid permitted an agreed judgment order to be entered for the outstanding $140,000, after the Funds "represented and warranted to Pyramid that they would pursue collection of the judgment from money due to Pyramid from Schwendener." R. at 6-2 (Objection to Agreed Order on Citation to Discover Assets). Under the agreed order, the Funds dismissed their claims against Pyramid, but maintained their claims against Edwards, promising not to seek relief against Edwards "except on due notice." R. at 2-2.

In keeping with this agreement, the Funds filed a "Citation to Discover Assets" against Schwendener. Schwendener did not, as requested in the citation, churn out a thorough accounting of its assets and liabilities with respect to Pyramid. Instead, it readily admitted that it owed Pyramid for the first project that they completed together, known as St. James. Schwendener and the Trustees agreed that Schwendener would turn over directly to the Trustees what it owed to Pyramid for the St. James project, which would cover the debt owed to the Funds. Schwendener and the Funds submitted a proposed agreed order to this effect.

In May 1999, Pyramid objected to the Funds- Schwendener deal. It argued that Schwendener also owed it money for the Woodridge project, and contended that Pyramid's union contributions associated with the Woodridge project should be paid out of Schwendener's debt to Pyramid on that project. See Tr. Vol. 1 at 3-5. At this early point in the litigation, Pyramid urged that any order settling the matter "should recite all the money owed by Schwendener to [Pyramid], and the Project where the money was earned so that this court might in the exercise of its discretion, achieve equity in compelling application of disclosure of assets." R. at 6-13 (Objection to Agreed Order at 3). At a hearing on May 19, 1999, the district court denied Pyramid's objection, and approved the agreed order by which Schwendener would make incremental payments directly to the Funds as soon as the St. James project owner made its expected payments. The Funds asked the court to continue the citation proceeding in order to retain jurisdiction until all of the incremental payments had been made. See Tr. Vol. 1 at 6. On June 1, the district court entered an order specifically directing Schwendener to pay over the money to the Funds, and continuing the citation until Schwendener received payments from the project owner. See R. at 8; Appellant's App. at para.para. 3-4 (Order).

On June 21, before Schwendener had tendered any payments to the Funds, a Kankakee bank objected to the deal. It contended that it had a prior perfected security interest in Pyramid's proceeds from the St. James Project. See Tr. Vol. 3 at 2. The Funds told the court that "it is essential that Schwendener come forward on its citation with an analysis or . . . documentation regarding the total amount that [it] owes to Pyramid . . . I do think it's necessary that we understand how much total is due and owing from Schwendener on at least [these] three projects." See id. at 4. Presumably, the Funds were afraid that the district court might order Schwendener to pay the St. James project funds to the bank, and therefore the Funds wanted to find out if Schwendener had any other debts to Pyramid that it could tap to cover the fringe benefit payments. Schwendener resisted the lengthy examination of its books, and urged the court to cut the matter short by permitting it to pay the Trustees. The district court set the matter over, asking the parties to try to resolve it privately. See id. at 6-7.

When the parties reconvened on July 1, 1999, without a solution, the Funds again asked the judge to order Schwendener to submit to a citation hearing and document its debt to Pyramid. See Tr. Vol. 2 at 3-4. The district court agreed, and ordered Schwendener to share its documentation with the Funds. Schwendener again tried to tender the check so as to resolve the matter, but after the bank objected that a payment to the Funds would prejudice its rights as a creditor, the court ordered that the check be deposited with the clerk of court. The court then continued the matter.

On July 15, 1999, Schwendener submitted to its lawyer a total cost breakdown for the three projects on which Pyramid served as electrical subcontractor. Schwendener announced surprisingly that its books showed Pyramid actually owed it $1.4 million on the Woodridge project, which had ended so unhappily. Ultimately, taking account of Schwendener's debts on the first two projects, the contractor now contended that Pyramid owed it about $1.2 million.¹

Schwendener then moved to vacate the June turnover order by which it was to pay $140,000 to the Funds. It apparently attempted to notice the motion for a court hearing during the week of July 19, but the court calender did not permit a hearing until July 28. At that hearing, Schwendener argued that because it ultimately owed Pyramid no money, it should not have to cover Pyramid's unpaid union contributions for its employees. After receiving briefs on the matter, the district court on August 25 denied Schwendener's motion to vacate. The district court reasoned that the June and July orders were final orders. The motion was therefore, if treated as a motion to amend a final judgment pursuant to Rule 59(e), untimely. See Fed. R. Civ. P. 59(e) (motions to amend or alter judgments shall be filed within ten days of judgment). If the motion was treated as a motion for relief from a final judgment, pursuant to Rule 60, it was timely. However, under Rule 60(b), relief from a final judgment could only be appropriate in this case if evidence proffered by the moving party as newly discovered could not have been discovered before the entry of judgment, even in the exercise of due diligence. See Fed. R. Civ. P. 60(b). The court reasoned that Schwendener could have discovered Pyramid's debt much earlier, and therefore declined to grant relief from the final judgment. Schwendener asked the court to reconsider, and it again denied the motion in October. Schwendener filed a notice of appeal on November 5, 1999.

On November 23, 1999, the bank and the Funds advised the district court that they were close to a settlement on how to apportion the money turned over by Schwendener. Schwendener advised the court it had paid the turnover amount in full, and the court held that Schwendener was discharged from the proceeding. On March 14, 2000, the district court entered an order detailing the settlement between the bank and the Funds. Under that settlement, the bank took 57 percent of the money paid by Schwendener, and the Funds took 43 percent of the money. Based on this division, the Funds are still owed $79,461.41 of the $140,766.13 judgment Pyramid agreed to in April 1999. Further, the district court in the settlement order acknowledged that Schwendener was appealing the order to pay, and stated that, if Schwendener succeeded, the Funds would have to return their $61,000 portion of Schwendener's payment. In light of the Funds' partial-- and potentially temporary--recovery, Pyramid agreed to pay the Funds $5,000 a month until the Funds' entire judgment had been satisfied. Based on these terms, the district court dismissed all of the Funds' claims against Pyramid and Edwards without prejudice, giving the Funds leave to reinstate in the event Pyramid breached the settlement order. The court retained jurisdiction for the purposes of enforcing the judgment and terms of the settlement order, and in the event of reinstatement. The court also stated that once the judgment was satisfied, the settlement called for the Funds to dismiss the action with prejudice and to sign any documents needed to release liens against Pyramid or Edwards.

II) Analysis

We must first decide whether, for purposes of appellate jurisdiction, there has been a final order entered in this case and, if so, when it was entered. Our review on this issue of law is de novo....