A Raymond Tinnerman Manufacturing Inc v. TecStar Mfg Company
ORDER signed by Judge Lynn Adelman on 4/10/12 granting 6 TecStar's Motion for judgment on the pleadings to the extent that this action is dismissed without prejudice to refiling after the conclusion of mediation. Further, denying as moot 12 Motion for Partial Summary Judgment. (cc: all counsel) (dm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
A. RAYMOND TINNERMAN
Case No. 11-C-0987
TECSTAR MFG. COMPANY,
DECISION AND ORDER
The present lawsuit involves a dispute between two suppliers of Solyndra LLC, a
manufacturer of solar panels that declared bankruptcy in September 2011. The defendant,
TecStar Mfg. Company (“TecStar”), manufactured assemblies that Solyndra incorporated
into frames for its solar panels. The plaintiff, A. Raymond Tinnerman Manufacturing, Inc.
(“Tinnerman”), supplied TecStar with parts for its assemblies. When Solyndra filed for
bankruptcy, TecStar cancelled the purchase orders it had placed with Tinnerman.
According to the complaint, at the time of the cancellation, TecStar owed Tinnerman
$1,722,743.52 for parts that Tinnerman had previously delivered to TecStar, along with
$934,882.11 for costs associated with work in progress at the time of the cancellation.
When Tinnerman demanded that TecStar pay these amounts, TecStar said that it could
not pay Tinnerman until it received payment from Solyndra.
TecStar also denied
responsibility for some of the costs. Tinnerman responded by filing this lawsuit alleging
breach of contract.1
This court has subject matter jurisdiction because the parties are diverse and the
amount in controversy exceeds $75,000. See 28 U.S.C. § 1332. The parties do not raise
any choice-of-law issues, and so I will apply Wisconsin substantive law. See, e.g., Camp
TecStar answered the complaint, but along with its answer it filed a motion to
dismiss the complaint. One of the issues that TecStar raises in this motion is that the
parties’ contract, which consists of the terms and conditions of TecStar’s purchase orders,
contains a mediation clause stating that “any claims or disputes . . . will be submitted to
non-binding mediation prior to initiation of any formal legal process.” (Kolbow Decl., Ex.
1 at ¶ 19, ECF No. 7-1.) The parties agree that Tinnerman did not attempt to submit this
dispute to non-binding mediation prior to initiating this lawsuit. Tinnerman, however,
argues that mediation would be futile, and that therefore this suit may proceed even though
the parties have not engaged in non-binding mediation.
Before proceeding further, I make note of two procedural issues. First, although
TecStar filed the present motion as a motion to dismiss the complaint, the motion is more
properly characterized as a motion for judgment on the pleadings, since TecStar answered
the complaint before filing the motion. See Fed. R. Civ. P. 12(c). Therefore, I will refer to
the motion as one for judgment on the pleadings. Second, the mediation clause is not
mentioned in the pleadings, and so TecStar has submitted a declaration from one of its
officers that identifies the terms and conditions of the relevant purchase orders, which
include the mediation clause. Normally, a court cannot consider matters outside the
pleadings on a motion for judgment on the pleadings without treating the motion as one for
summary judgment and giving the parties a reasonable opportunity to present all material
that is pertinent to the motion. See Fed. R. Civ. P. 12(d). However, an exception to this
v. TNT Logistics Corp., 553 F.3d 502, 505 (7th Cir. 2009) (where parties in a diversity case
do not raise any choice-of-law issues, federal court applies substantive law of the forum
rule allows a court to consider a document that the plaintiff references in the complaint but
fails to attach to the complaint, so long as the document is central to the plaintiff’s claim
and is concededly authentic. See Hecker v. Deere, 556 F.3d 575, 582–83 (7th Cir. 2009).
Here, Tinnerman attached the relevant TecStar purchase orders to the complaint and
identified those purchase orders as the contracts that are central to its claim. Those
purchase orders state that they are “subject to the standard TecStar Purchase Order
Terms & Conditions which are attached hereto and incorporated herein.” (Compl., Ex. A.)
Tinnerman, however, did not attach the referenced terms and conditions to the complaint.
When TecStar submitted a copy of those terms and conditions with its motion for judgment
on the pleadings, Tinnerman did not question their authenticity. In fact, Tinnerman in its
brief acknowledged that the terms and conditions submitted by TecStar are authentic.
(See Br. in Opp. at 3, ECF No. 11.) Thus, the terms and conditions qualify for the
exception to Rule 12(d) for documents that are referred to in the complaint, central to the
plaintiff’s claim, and concededly authentic. See also Tierney v. Vahle, 304 F.3d 734, 738
(7th Cir. 2002) (stating that the contract at issue in a suit for breach of contract is the kind
of document that can be considered on a motion to dismiss or for judgment on the
pleadings without treating the motion as one for summary judgment); 188 LLC v. Trinity
Indus., Inc., 300 F.3d 730, 735 (7th Cir. 2002) (holding that when plaintiff attaches to the
complaint a contract stating that it is subject to terms and conditions located on reverse
side and those terms and conditions are not also attached to complaint, the court can
consider the terms and conditions submitted by defendant in support of its motion to
dismiss without treating the motion as one for summary judgment).
Turning to the merits of TecStar’s motion, I conclude that it must be granted
because Tinnerman commenced this lawsuit before the parties engaged in mediation.
Tinnerman does not dispute that this lawsuit must be dismissed if the mediation clause
applies. Instead, it argues that the mediation clause does not apply because mediation
would be futile. Tinnerman points out that when it demanded that TecStar pay the
amounts owed, TecStar responded by stating that it would be in no position to make any
payment to Tinnerman until the Solyndra bankruptcy had concluded, and that TecStar was
not responsible for some of the claimed costs. Tinnerman argues that these statements
show that TecStar had no intention of paying Tinnerman’s claims, and that therefore
mediation would have been futile.
There are at least two problems with Tinnerman’s argument. First, Tinnerman does
not cite any relevant authority in support of the proposition that a party is excused from
complying with a mediation clause in a contract when it appears that mediation would be
futile. Tinnerman cites two unpublished cases in support of this proposition, but neither
case involved a mediation clause in a contract. The first case, Poindexter v. Kagan, No.
99-0282, 2000 WL 1358124 (Wis. Ct. App. Sept. 21, 2000), involved mediation required
by statute in a child-custody matter. In the second case, Stockbridge-Munsee Community
v. Oneida Indian Nation of New York, No. 86CV1140, 2003 WL 21715863 (N.D.N.Y. July
24, 2003), a district court simply refused to refer the case to a federal magistrate for
mediation because, in his view, mediation would not have been useful. Thus, Tinnerman
has not established that the futility of mediation in this case would excuse noncompliance
with the mediation clause.
The second problem with Tinnerman’s argument is that mediation is not futile simply
because one party has taken the position that it is not liable. At the outset of almost any
legal dispute, the parties will have very different views of the case. The purpose of
mediation is to attempt to reach a compromise. Thus, although TecStar responded to
Tinnerman’s demand letters by stating that it would not pay anything, that does not mean
that TecStar would not have changed its position during mediation. Indeed, TecStar
seems to concede that it owes Tinnerman something, and TecStar’s problem is that it will
not have the funds to pay Tinnerman unless it receives payment from Solyndra. It is
possible that, with the assistance of a mediator, the parties will be able to work out a
payment plan or some other compromise. In any event, the parties’ contract requires that
they at least try to work out a compromise through mediation, and until that mediation
occurs Tinnerman cannot proceed with a lawsuit. Therefore, this lawsuit will be dismissed
without prejudice to refiling after the conclusion of mediation.
Accordingly, IT IS ORDERED that TecStar’s motion for judgment on the pleadings
[Docket #6] is GRANTED to the extent that this action is dismissed without prejudice to
refiling after the conclusion of mediation. IT IS FURTHER ORDERED that Tinnerman’s
motion for partial summary judgment is DENIED as MOOT.
Dated at Milwaukee, Wisconsin, this 10th day of April 2012.
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