                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-28-2003

CitiSteel USA Inc v. GE Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-1197




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                                                                   NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT


                                      No. 03-1197


                                CITISTEEL USA, INC.,

                                                       Appellant

                                            v.

                         GENERAL ELECTRIC COMPANY,
                              including its GE Apparatus
                               Service Division and GE
                          Industry Sales and Service Division




                      Appeal from the United States District Court
                               for the District of Delaware
                         (D.C. Civil Action No. 99-cv-00810)
                      District Judge: Honorable Gregory M. Sleet


                             Argued on September 16, 2003

              Before: ALITO, AM BRO and CHERTOFF, Circuit Judges

                           (Opinion filed: October 28, 2003)


                                       OPINION


AM BRO, Circuit Judge

      CitiSteel USA, Inc. (“CitiSteel”) appeals the decision of the United States District
Court for the District of Delaware granting General Electric Company’s (“GE”) motion

for judgment on the pleadings. CitiSteel filed a complaint against GE in the District

Court in November 1999 alleging damages for breach of warranty and contract. GE

moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil

Procedure. In January 2001, the District Court issued a Memorandum and Order granting

GE’s Rule 12(c) motion and directed the clerk to mark the record “case closed.”

       CitiSteel appealed the District Court’s ruling. In June 2002, we dismissed the

appeal and remanded the case to the District Court because, as unresolved claims

remained, the appeal was from a non-final order. In response, the parties negotiated a

settlement of the remaining unresolved claims and filed a stipulation with the District

Court. Pursuant to that stipulation, the District Court entered a final judgment in

January 2003. CitiSteel thereafter filed a timely notice of appeal challenging the District

Court’s entry of partial judgment on the pleadings in favor of GE.

       This Court has jurisdiction under 28 U.S.C. § 1291. For the reasons set forth

below, we affirm the decision of the District Court.

                                 I. Factual Background

       CitiSteel owns and operates a steel processing plant located in Delaware. To

generate the power used in melting steel for this plant, CitiSteel makes use of several

industrial-sized transformers. In 1997, it decided to overhaul and upgrade, among others,

a 56 MVA power transformer in operation at its facility. After an exchange of

correspondence with GE, CitiSteel prepared and forwarded a purchase order to GE dated
                                             2
May 23, 1997 (the “Purchase Order”). GE completed the transformer overhaul work it

contracted to perform pursuant to the Purchase Order.

       A short while after its overhaul, however, the transformer sustained significant

internal damage. According to CitiSteel’s complaint, this “resulted in a reduction of

CitiSteel’s production capability, depletion of CitiSteel’s steel supply, and inability of

CitiSteel to fulfill its contracts.” CitiSteel’s complaint further alleges the transformer

failure was a direct and proximate result of GE’s faulty workmanship.1

       The dispute, however, centers on the terms of the Purchase Order. The first page

of the Purchase Order, in addition to listing certain parts and pricing information, contains

the following language:

       Warranty offering:
       One year from installation with the understanding that CitiSteel will install
       the unit within 12 months of completion of repair. Also included for
       general warranty information is GE ISS form 4887 (CS 1/89).

Form 4887 is the “GE Industry Sales & Services Conditions of Sale for Services” (the

“GE Conditions of Sale”).2 Section 2 of the GE Conditions of Sale is entitled

“Warranty.” Subsection 2.a states GE warrants that all goods and services sold will be

free from “defects in material, workmanship and title,” and if any defect is discovered



   1
       As we review the District Court’s decision in the context of Rule 12(c), we must
accept all well pled facts alleged by CitiSteel as true. See discussion infra Part II.B.
   2
       Technically, the GE Conditions of Sale is form number 487, not 4887. At oral
argument, however, counsel for CitiSteel acknowledged that the Purchase Order’s
reference to form 4887 instead of 487 was a typographical error. Despite the error, for
the sake of convenience we continue the reference to form 4887.
                                            3
within one year of the completion of the work performed, GE will “correct any such

failure by reperforming any defective portion of the services furnished.” This, per

Subsection 2.b, is the “exclusive remedy for all claims based on failure of, or defect in,

goods or services sold hereunder,” whether such a claim is based on “contract, indemnity,

warranty, tort (including negligence), strict liability or otherwise.” In addition,

Subsection 8.b (“Limitations of Liability”) specifically disclaims liability for any “special,

incidental, exemplary or consequential damages.”

       The reverse side of the CitiSteel Purchase Order, however, contains its own

“General Terms and Conditions of Purchase” (the “CitiSteel General Terms”), which

appear to contradict the GE Conditions of Sale. Specifically, Section II, Clause No. 17 of

the CitiSteel General Terms states that all remedies “shall be cumulative and in addition

to any other remedies provided by law or equity,” and Section II, Clause No. 24 states that

GE will indemnify CitiSteel for “any and all liability, loss, damages or expense” resulting

from “any failure of [GE] to comply with the provisions hereof.”

                                       II. Discussion

       CitiSteel appeals the District Court’s judgment in favor of GE on two separate

grounds. First, CitiSteel argues the District Court erred by failing to convert GE’s Rule

12(c) motion for judgment on the pleadings to a Rule 56 motion for summary judgment.

Second, CitiSteel argues the District Court erred by concluding the GE Conditions of Sale

were incorporated into the Purchase Order, thus precluding the recovery of monetary

damages as a matter of law. We exercise plenary review over these legal conclusions.
                                              4
See, e.g., Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290 (3d Cir. 1988).

A. Rule 12(c)

       Rule 12(c) states:

       If, on a motion for judgment on the pleadings, matters outside the pleadings
       are presented to and not excluded by the court, the motion shall be treated
       as one for summary judgment and disposed of as provided in Rule 56, and
       all parties shall be given reasonable opportunity to present all material made
       pertinent to such a motion by Rule 56.

F ED R. C IV. P ROC. R. 12(c). To its Rule 12(c) motion, GE attached a letter from GE to

CitiSteel (which, among other things, alludes to the GE Conditions of Sale), the Purchase

Order itself and the GE Conditions of Sale. In its response, CitiSteel attached the

affidavit of an employee and the CitiSteel General Terms.

       Merely attaching documents to a Rule 12(c) motion, however, does not convert it

to a motion under Rule 56. In ruling on a motion to dismiss, a trial court “may consider

an undisputedly authentic document that a defendant attaches as an exhibit to a motion to

dismiss if the plaintiff’s claims are based on the document.” PBGC v. White Consol.

Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). 3 Further, in ruling on the motion a court

generally has “discretion to address evidence outside the complaint . . . .” Pryor v. Nat’l

Collegiate Athletic Ass’n, 288 F.3d 548, 559 (3d Cir. 2002).

       Applied to this case, we conclude the District Court did not err by continuing to


   3
       While White Consol. Indus. involved a motion to dismiss for failure to state a
claim under Rule 12(b)(6), we have long recognized the overlap of standards between a
Rule 12(b)(6) motion to dismiss and a Rule 12(c) motion. See Shelly v. Johns-Manville
Corp., 798 F.2d 93, 97 n.4 (3d Cir. 1986).
                                           5
consider GE’s motion as under Rule 12(c). Neither side has questioned the authenticity

of any document attached to GE’s motion or CitiSteel’s response. Indeed, most of those

documents are critical to CitiSteel’s claim for damages. 4 Conversely, the District Court

appears to rely on the GE letter to CitiSteel solely for the proposition that CitiSteel had a

copy of the GE Conditions of Sale prior to issuing the Purchase Order — a fact not

disputed by CitiSteel and otherwise inferable from the reference to the GE Conditions of

Sale on the face of the Purchase Order. Finally, the affidavit tendered by CitiSteel is a

legally irrelevant statement of its previously unexpressed, subjective intent which the

District Court was not required to consider or to give weight.

B. The Purchase Order

       As the District Court’s ruling was in the context of Rule 12(c), we must decide if

its standards have been satisfied. Under Rule 12(c), a court must “view the facts in the

pleadings in the light most favorable to the plaintiff and must grant the motion only if the

moving party establishes that no material issue of fact remains and that it is entitled to

judgment as a matter of law.” Shelly, 798 F.2d at 97 n.4.

       Basic contract interpretation standards are well established. Determining whether




   4
        We also find unpersuasive CitiSteel’s argument that the District Court’s decision
— stating CitiSteel should be barred “from recovering consequential damages” —
indicates it improperly considered evidence outside the pleadings because the CitiSteel
complaint never uses the term “consequential damages.” As stated previously, CitiSteel’s
complaint seeks damages due, in part, to a reduction of production capacity, depletion of
steel supply and inability to fulfill contracts, all of which flow consequentially from the
contractual violation CitiSteel alleges.
                                                 6
a contract provision is ambiguous is a question of law. Sanford Inv. Co. v. Ahlstrom

Mach. Holdings, Inc., 198 F.3d 415, 421 (3d Cir. 1999). Absent ambiguity, a court

enforces a contract as written absent ambiguity. Id. A contract is not ambiguous unless

“the provisions in controversy are reasonably or fairly susceptible of different

interpretations.” Kaiser Aluminum Corp. v. Matheson, 681 A.2d 392, 395 (Del. 1996)

(internal citations omitted); 5 see also Emerson Radio Corp. v. Orion Sales, Inc., 253 F.3d

159, 163-64 (3d Cir. 2002). The test is not the parties’ subjective intent, but rather “what

a reasonable person in the position of the parties would have thought” the contract

provision meant. Kaiser Aluminum Corp., 681 A.2d at 395 (internal citations and

quotations omitted); see also Emerson Radio Corp., 253 F.3d at 164 (stating that a court

must “determine if there [are] objective indicia that . . . the terms of the contract are

susceptible of different meanings”) (internal citations and quotations omitted).6

         As the dispute in this case centers on whether the GE Conditions of Sale were

incorporated into the Purchase Order, we must also examine the specific standards for

incorporation by reference. These standards are also well established. A contract may




   5
         The parties agree that Delaware law applies regardless which contractual terms
apply.
   6
       It is for this reason that CitiSteel’s reliance on its own subjective intent is
misplaced. Although not an exhaustive list, objective indicia of intent could include past
dealings between CitiSteel and GE, general custom in the industry or representations
made by GE to CitiSteel regarding the warranty. CitiSteel has failed to allege the
existence of, or allude to, any objective evidence, nor has it alleged any legal defense,
such as fraud or mistake, which warrants looking beyond the Purchase Order.
                                                 7
incorporate provisions contained in another instrument so long as the incorporated

provisions are “specifically set forth or identified.” State v. Black, 83 A.2d 678, 681

(Del. Super. 1951), as cited in Star States Develop. Comp. v. CLK, Inc., No. 93L-08-048,

1994 Del. Super. LEXIS at *10 (Del. Super. 1994). We recently reiterated this tenet of

hornbook law in Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440, 447 (3d Cir.

2003). Moreover, in the context of incorporation by reference, it “is appropriate to

require a merchant to exercise a level of diligence that might not be appropriate to expect

of a non-merchant” because the “goal of commercial contract law is to efficiently

facilitate business transactions between seasoned merchants.” Id. at 447 n.10.

       In accordance with these standards, we find that the Purchase Order

unambiguously incorporated the GE Conditions of Sale. This is the only reasonable

interpretation of the language used in CitiSteel’s Purchase Order — “included for general

warranty information is [the GE Conditions of Sale].” See Citadel Holding Corp. v.

Roven, 603 A.2d 818, 822 (Del. 1992) (stating courts typically determine the parties’

intent “from the language of the contract” and give those terms their ordinary meaning).7

CitiSteel falls far short from asserting successfully that the language of the Purchase

Order should not be given its plain meaning. See Hercules, Inc. v. AIU Ins. Co., 784


   7
        The cases CitiSteel cites to attack the specificity of the language of incorporation
in the Purchase Order are distinguishable. They generally stand for the proposition that a
specific reference to another document for the purpose of defining the applicable
standards of performance, or to define the scope of work involved, does not incorporate
other, more general terms. See, e.g., Falcon Steel Co. v. Weber Engineering Co., Inc.,
517 A.2d 281 (Del. Ch. 1986). Such is not the case here.
                                                8
A.2d 481, 490 n.24 (Del. 2001) (stating a party cannot create ambiguity where none

exists). Accordingly, we reject as unpersuasive the arguments advanced by CitiSteel in

support of its position that the Purchase Order is ambiguous.8 We also note that CitiSteel

(not GE) prepared the Purchase Order. Therefore, even assuming the Purchase Order’s

language is ambiguous, that language is construed against CitiSteel as the drafter.

Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 912 (Del. 1989).

       Finally, CitiSteel argues the CitiSteel General Terms prevented incorporation of

the GE Conditions of Sale and expressly reserved the rights and remedies supposedly

disclaimed by the GE Conditions of Sale. These arguments are also unpersuasive. Courts

must strive to give effect to all provisions of a contract and not render any provision

meaningless. Elliott Assocs., L.P. v. Avatex Corp., 715 A.2d 843, 854 (Del. 1998). If

CitiSteel’s argument were to be accepted, then the language “included for general

warranty information” on the Purchase Order is meaningless. In addition, when the terms

of a contract cannot be reconciled, the more specific terms control over the general and




   8
        In arguing the Purchase Order’s ambiguity, CitiSteel misconstrues and mis-cites
several cases. In Emerson Radio Corp., the district court granted summary judgment
despite finding that the contract term at issue was ambiguous. 253 F.3d at 164. As such,
we held the district court improperly prevented the jury from resolving this ambiguity
through extrinsic evidence. Id. We did not conclude, however, that a district court must
analyze extrinsic evidence in determining whether a contract is ambiguous. Further, the
issue in J.A. Jones Constr. Co. v. City of Dover, 372 A.2d 540 (Del. Super. 1977), was
whether a contract provision disclaiming liability applied to a particular fact situation.
Denying summary judgment, the Court noted that a contract must disclaim liability with a
sufficient degree of clarity. Id. at 553. CitiSteel, however, has never argued that the GE
Conditions of Sale (if applicable) failed to disclaim liability clearly.
                                               9
typewritten terms prevail over printed or standardized language. Stasch v. Underwater

Works, Inc., 158 A.2d 809, 812 (Del. Super. 1960); see also Goldstein v. Blumenfield,

574 A.2d 109, 110 (Pa. Super. 1990); 11 S AMUEL W ILLISTON, A T REATISE ON THE L AW

OF C ONTRACTS §   32.13 (4th ed. 1999). While both the GE Conditions of Sale and the

CitiSteel General Terms are standardized, the specific language of incorporation in the

Purchase Order is typewritten. This indicates the terms referenced by the language of

incorporation control.

                                        *****

       For these reasons, we affirm the District Court’s judgment in favor of GE.




TO THE CLERK:

       Please file the foregoing Opinion.


                                            By the Court,


                                            /s/ Thomas L. Ambro, Circuit Judge




                                              10
