Zemco Manufacturing v. Navistar International Transp., 00-4189
| Decision Date | 05 November 2001 |
| Docket Number | No. 00-4189,00-4189 |
| Citation | 270 F.3d 1117 |
| Parties | (7th Cir. 2001) ZEMCO MANUFACTURING, INCORPORATED, Plaintiff-Appellant, v. NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, Defendant-Appellee |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 97 C 260--William C. Lee, Chief Judge. [Copyrighted Material Omitted]
Before RIPPLE, ROVNER and EVANS, Circuit Judges.
Zemco Manufacturing, Inc., ("Zemco") filed this action against Navistar International Transportation Corp. ("Navistar") alleging that Navistar had breached two distinct, but interrelated, agreements with Zemco ("Count I" and "Count II") and had conspired to interfere with a contract ("Count III"). Earlier in this litigation, the district court granted Navistar's motion for summary judgment on Count III, and we affirmed.1 We remanded the remainder of the case to the district court. While on remand, the district court recommended and the parties consented to separate trials for the remaining contract claims. The parties opted to litigate Count I first, and a jury returned a verdict for Navistar. Before Count II proceeded to trial, the district court granted Navistar's motion for summary judgment on this claim finding that the consideration supporting the contract had failed. For the reasons set forth in the following opinion, we reverse the judgment of the district court as to Count II and remand this case for further proceedings.
Navistar manufactures heavy-duty machinery ranging from diesel engines to semi-trailer trucks. As in the case of most manufacturers, however, Navistar cannot produce all of the parts required to complete its goods; rather, it relies on outside suppliers to furnish many of the components used in its final product. One of these suppliers, Zemco Manufacturing, provided Navistar with parts including spring shackles and air manifolds.
This particular relationship between Navistar and Zemco originated in a written contract ("Contract AZ010B") which the parties signed in 1983. Although the parties executed several written addenda extending Contract AZ010B in yearly increments, they ended this practice in 1987. Nevertheless, despite the absence of a written agreement, Navistar continued to purchase its parts from Zemco. In the summer of 1995, however, Navistar began to withdraw its business from Zemco and to obtain parts from a different supplier. Believing that the parties had agreed to an oral extension of Contract AZ010B, Zemco objected to Navistar's actions. In an effort to resolve these differences, representatives from both companies met with each other several times during the late summer months of 1995.
During these meetings, Zemco's president, Vincent Tippmann, maintained that Navistar's conduct breached Contract AZ010B. However, Tippmann apparently indicated that Zemco would cooperate with Navistar's efforts to move its business to another supplier. More precisely, Zemco's president allegedly stated: R.120, Ex.B at 79. However, still concerned that Zemco would cease providing parts during the transition period, a Navistar representative apparently pressed for further assurances. Tippmann reiterated his company's earlier stance-- R.120, Ex.B at 103.
While Navistar slowly established its ties with the new supplier, Zemco continued to furnish the necessary parts to Navistar. However, having grown impatient with this situation, Zemco sent a letter to Navistar in October of 1995 demanding that it honor Contract AZ010B and end the transition to the alternate supplier.
On December 7, 1995, Doug Willard, a buyer for Navistar, sent a letter ("December Contract") to Zemco that stated:
Navistar will now continue the outsourcing of its products from Zemco, first confirmed verbally to you on July 19, 1995. As I told you then, Navistar will work with you during the transition. You agreed to cooperate 100%.
Please send me a list of all parts in process or finished. Also any raw material (by size and alloy) that you have left. As you know, Navistar only commits to sixty day's worth of parts. We will purchase any material over this sixty day commitment, providing this matter [the dispute over Contract AZ010B] will be concluded without litigation. Fax the lists to me . . . as soon as possible.
R.20, Ex.F.
Within a few weeks, Zemco had sent the requisite list detailing the parts and raw materials it possessed. Over the next nineteen months, Zemco repeatedly sought payment from Navistar for the items contained on the list plus accrued interest and storage costs. During this period, Zemco refrained from commencing any action on Contract AZ010B. Navistar, however, did not make payments under the December Contract.
In July of 1997, Zemco filed suit against Navistar. Count I alleged that Navistar had breached the parties' purported agreement to extend Contract AZ010B into June of 1996 when it began to purchase parts from another supplier.2 Count II contended that Navistar had breached the December Contract when it failed to purchase the raw materials and miscellaneous parts referenced in this document. With the consent of the parties, the district court scheduled separate trials for the individual contract claims. Count I proceeded to trial first. A jury concluded that the parties had not agreed to an extension of Contract AZ010B. Absent an underlying agreement, Navistar could not be held liable for breach of contract on this count.
Soon after this victory, Navistar moved for summary judgment on Count II. Navistar contended that the consideration underlying the December Contract had failed and thus the agreement was void.3 Navistar argued that Zemco's agreement to refrain from litigating on Contract AZ010B provided the only consideration for the December Contract. In Navistar's view, the first paragraph of the December Contract merely referenced a prior dealing between the parties and did not supply additional consideration for the agreement. According to Navistar, Zemco's filing of Count I, alleging a breach of Contract AZ010B, constituted a failure to perform its obligation under the contract. Navistar argued that, because Zemco had failed to satisfy its portion of the agreement, Zemco could not now seek enforcement of the contract in court.
Zemco, however, maintained that its promise to cooperate in the transition provided additional consideration for the agreement. It emphasized that the first portion of the December Contract explicitly referenced this particular promise. Because Zemco had cooperated, it maintained that it could enforce the contract. At a minimum, it further submitted, the December Contract was sufficiently ambiguous as to the consideration underlying it to preclude summary judgment.
After considering the parties' positions, the district court granted summary judgment for Navistar on Count II. In interpreting the December Contract, the district court held that this two-paragraph agreement between the parties was unambiguous and that it failed for lack of consideration. More precisely, the court determined that Zemco's promise not to sue on Contract AZ010B formed the sole consideration for the December Contract. When Zemco filed suit on AZ010B, the consideration underlying the December agreement, which was in the nature of an accord and satisfaction, vanished.4 The district court therefore rejected Zemco's view that its earlier oral promise to cooperate in the transition, described in the first paragraph of the agreement, was additional consideration for the December accord. Rather, the court determined that the promise to cooperate was part of an earlier, independent verbal agreement. As Zemco could not enforce the contract, the district court granted Navistar's motion for summary judgment.
We review de novo the district court's decision to grant summary judgment. See Thomas v. Pearle Vision, Inc., 251 F.3d 1132, 1136 (7th Cir. 2001). Summary judgment is appropriate "if the pleadings, depositions, answers to inter rogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The court's function is not to weigh the evidence but merely to determine if "there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). We must ask whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250. In assessing whether a genuine issue of material fact exists, we must construe all facts and draw all reasonable inferences in the light most favorable to the nonmoving party. See id. at 255; Basith v. Cook County, 241 F.3d 919, 926 (7th Cir. 2001).
Turning to the matter before us, we are confronted with a single issue--the interpretation of the following two- paragraph contract between the parties:
Navistar will now continue the outsourcing of its products from Zemco, first confirmed verbally to you on July 19, 1995. As I told you then, Navistar will work with you during the transition. You agreed to cooperate 100%.
Please send me a list of all parts in process or finished. Also any raw material (by size and alloy) that you have left. As you...
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