Nabisco Inc v. American United Logi

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
April 3, 2003
Before
Hon. Daniel A. Manion, Circuit Judge
Hon. Michael S. Kanne, Circuit Judge
Hon. Ann Claire Williams, Circuit Judge
NABISCO, INCORPORATED ] Appeals from the United
Plaintiff, ] States District Court for
Cross-Appellant, ] the Northern District of
] Illinois, Eastern Division.
Nos. 01-1711 and 01-2310 v. ]
] No. 99 C 763
AMERICAN UNITED LOGISTICS, ]
INCORPORATED, ] Elaine E. Bucklo, Judge.
Defendant, Third Party ]
Plaintiff-Appellant, ]
Cross-Appellee, ]
and ]
]
CENTRAL AMERICAN WAREHOUSE ]
COMPANY, INCORPORATED, ]
Defendant, Third Party ]
Plaintiff-Appellant, ]
v. ]
]
SPECCO INDUSTRIES, INCORPORATED ]
and HYDRITE CHEMICAL COMPANY, ]
INCORPORATED, ]
Defendants, ]
Cross-Appellees, ]
and ]
]
CATELLUS DEVELOPMENT CORPORATION, ]
KRUSINSKI CONSTRUCTION COMPANY, ]
BRANDONISIO CONSTRUCTION ]
CORPORATION, et al., ]
Defendants, Third Party ]
Defendants-Appellees, ]
Cross-Appellees, ]
Nos. 01-1711 & 01-2310 Page 2
and ]
]
ARTLOW SYSTEMS and G.A. BLOCKER ]
GRADING CONTRACTOR, INCORPORATED, ]
Third Party ]
Defendants-Appellees. ]
The following are before the court:
1. PETITION FOR REHEARING, filed on February 26, 2003, by counsel for Nabisco, Inc.
2. PETITION FOR REHEARING, filed on February 26, 2003, by counsel for American
Warehouse Co., Inc.
3. MOTION FOR CLARIFICATION, filed on February 25, 2003, by counsel for Catellus
Development Corp.
On consideration of the petitions for rehearing, all members of the original panel have
voted to DENY the petitions for rehearing.
Accordingly, the petitions for rehearing are DENIED.
The slip opinion issued in the above-entitled case on February 12, 2003, is hereby
amended as follows:
On page 7, in the last paragraph, omit the following section: “Although Nabisco spent more to
address the contamination than it was entitled to recover from AUL, Nabisco accepted this risk
when it contracted to hold AUL responsible for a maximum of $1 million for breaching this term.
Nabisco cannot circumvent this bargained-for limitation by suing in tort for those disappointed
commercial expectations addressed in the contract. See Moorman, 435 N.E.2d at 450. Its
negligence claim against AUL is therefore barred by the economic loss doctrine.”
Replace this section with the following: “Although Nabisco spent a considerable amount to
address the contamination, these damages were contemplated in the contract. See Moorman, 435
N.E.2d at 450. Nabisco’s negligence claim against AUL is therefore barred by the economic loss
doctrine.”
On the top of page 3, omit the following sentence: “Under the warehouse agreement, AUL's
liability for any damage to Nabisco's property was limited to $1 million per occurrence.”
On p.14, omit the following sentence: “Thus, the district court’s ruling requiring mandatory
arbitration for Catellus’s breach of warranty claims is reversed and the issue of whether there was
a valid assignment of Central’s rights to Catellus is remanded for further proceedings.”
Nos. 01-1711 & 01-2310 Page 3
Replace that sentence with the following: “Additionally, if the district court finds that the express
warranties in Artlow and Brandonisio’s work letters were issued to Catellus and that Catellus
validly assigned those rights, Central has a right to maintain breach of express warranty claims
against Artlow and Brandonisio based on those letters. Thus, the district court’s ruling requiring
mandatory arbitration for Catellus’s breach of warranty claims is reversed and the issues of
whether there was a valid assignment of Central’s rights to Catellus and whether the express
warranties in the work letters were issued to Catellus are remanded for further proceedings.”
IT IS FURTHER ORDERED that the petition for clarification is granted.
The slip opinion is amended as follows:
On p. 16, after the sentence “Therefore, AUL has stated a valid third-party beneficiary claim
under Illinois law.”, add the following section:
“However, because the tenant lease between Central and Catellus contains an arbitration clause
and the Federal Arbitration Act governs here, we affirm the district court’s finding that AUL’s
claim against Catellus is subject to arbitration. See Draper v. Frontier Ins. Co., 638 N.E.2d 1176,
1179 (Ill. App. Ct. 1994) (“[A] third-party beneficiary to a contract has no greater rights than the
party under which she claims.”); Johnson v. Noble, 608 N.E.2d 537, 541 (Ill. App. Ct. 1992)
(applying the third-party beneficiary doctrine to an arbitration agreement governed by the Federal
Arbitration Act); see also Cent. States, Southeast & Southwest Areas Pension Fund v. Gerber
Truck Serv., Inc., 870 F.2d 1148, 1151 (7th Cir. 1989) (“Third-party beneficiaries usually take
contracts as they find them.”).”
On p. 16 in the conclusion, omit the phrase “REVERSE the judgment of the court regarding
AUL’s third-party beneficiary claims.”
Replace this phrase with the following: “REVERSE in part and AFFIRM in part the judgment of
the court regarding AUL’s third-party beneficiary claims.”