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Thermice Corp. v. Vistron Corp.

argued: May 21, 1987.

THERMICE CORPORATION, APPELLEE
v.
VISTRON CORPORATION, STANDARD OIL CHEMICAL COMPANY (FORMERLY VISTRON CORPORATION), APPELLANT



On Appeal from the United States District Court for Eastern District of Pennsylvania, D.C. No. 81-1731.

Sloviter, Becker and Garth, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

This appeal arises from a district court's order which found appellant Vistron Corporation (Vistron) in civil contempt. The civil contempt order resulted from the district court's determination that Vistron had violated an earlier order of the court which had required Vistron to specifically perform its contract with appellee Thermice Corporation (Thermice). We affirm.

I.

Vistron manufactures carbon dioxide, which it sells to customers such as Thermice. On October 8, 1970, Vistron and Thermice entered into a contract wherein Vistron was to supply Thermice with carbon dioxide commencing in early 1971. The original contract provided that Vistron would supply Thermice with stated quantities of carbon dioxide at a specified price for ten years. The contract also obligated Vistron to provide the carbon dioxide for an additional five years unless either party canceled on six months written notice.

In 1979, Thermice brought an antitrust and contract damage action against Vistron in the district court. One of the issues in that action involved Vistron's attempt to get a "for cause" cancellation of the 1970 contract because of Thermice's failure to make timely payments. Thermice sought an injunction to prevent Vistron from canceling the contract. On May 15, 1981, the district court entered an order enjoining Vistron:

to specifically perform its contract with Thermice Corporation dated October 8, 1970, as amended January 1, 1977, to supply liquid and solid carbon dioxide to Thermice Corporation pursuant to the terms of said contract until the termination date set forth in the contract (December 30, 1990), or until said contract has been canceled or otherwise terminated in accordance with its provisions, or until further Order of this Court.

Appendix at 25.

As the district court order indicated, the original agreement between Vistron and Thermice had been amended on January 1, 1977. Among other things, the 1977 amendment changed the period of the contract. The 1977 amendment provided, in relevant part: "The period of the Contract as provided for in paragraph 4 thereof shall be extended for an additional ten (10) years form and after January 1, 1981, so that the period will continue until December 30, 1990, and all contract years commencing with the effective date of this amendment shall commence January 1, 1977." Appendix at 21. It is the exact nature of that change that is at issue in this appeal.

The instant action arose as a result of a letter dated April 25, 1986, which Vistron sent to Thermice. In its letter, Vistron stated that, pursuant to the contract, it was giving Thermice six months notice of its intent to cancel the contract. Thermice took the position that the period during which the contract permitted either party to unilaterally cancel without cause (after giving six months notice) had been modified by the 1977 amendment, and that this period would not begin until after December 30, 1990. On the other hand, Vistron contended that the 1977 amendment had not changed the period specified in the original contract during which either party could cancel without cause, and that such period therefore began on December 30, 1980. Thermice brought suit in the district court seeking a civil contempt order against Vistron, arguing that Vistron's attempt to cancel the contract prior to 1990 was a violation of the district court's injunctive order of May 15, 1981.

On July 16, 1986, the district court held a hearing to determine whether Vistron's letter, notifying Thermice of its attempt to cancel without cause, was in contempt of the court's May 15, 1981 injunctive order. Both parties argued their interpretation of the contract to the court. The court stated that it would accept short additional memoranda on the meaning of the contract, and indicated that is saw no need for testimony on the question. Neither party voiced any objection to this procedure.

In an opinion filed August 7, 1985, the district court concluded that the contract was clear and unambiguous, that Vistron could not cancel without cause prior to December 1990, and that Vistron's attempt to give Thermice six months notice of cancellation was in civil contempt of the May 15, 1981 order. The district court entered an order to that effect, and this appeal followed.

II.

Before considering the merits of Vistron's arguments, we must determine whether the judgment issued by the district court constitutes an appealable order. Although not briefed by either party, we cannot ignore matters that bring into question the existence of federal jurisdiction. Fassett v. Delta Kappa Epsilon, 807 F.2d 1150, 1155 (3d Cir. 1986), cert. denied, 481 U.S. 1070, 107 S. Ct. 2463, 95 L. Ed. 2d 872, 55 U.S.L.W. 3793 (U.S. 1987); Knight v. Brown Transport Corp., 806 F.2d 479, 483 (3d Cir. 1986).

In the absence of certain delineated circumstances, civil contempt orders without more are not ordinarily appealable. See generally Halderman v. Pennhurst State School & Hospital, 673 F.2d 628, 636 (3d Cir. 1982) (in banc), cert. denied, 465 U.S. 1038, 79 L. Ed. 2d 712, 104 S. Ct. 1315 (1984); Latrobe Steel Co. v. United Steelworkers, 545 F.2d 1336, 1340 (3d Cir. 1976); Cromaglass Corporation v. Ferm, 500 F.2d 601, 604 (3d Cir. 1974) (in banc). However, here it is clear that the district court's order, although titled as a contempt order, should properly be construed as a declaratory judgment.

The district court's order entered August 7, 1986 reads, in relevant part: "The plaintiff's motion for civil contempt is GRANTED, and the court finds that the defendant, Vistron Corporation . . . is in civil contempt of this Court's injunction order of May 15, 1981." Appendix at 82. Although the district court found that Vistron was in civil contempt of the court's earlier injunctive order, the court recognized that Thermice had not as of then actually terminated the contract. Appendix at 88-89. Moreover, because the district court noted that Thermice had not sustained any damages, the district court concluded that it could make no award of damages. Id. Thus, it appears that the district court's order, although styled in terms of civil contempt, was no more than a declaration that, if Vistron were to terminate the contract as it indicated it intended doing, such action would be in violation of the May 15, 1981 injunctive order.

In Interdynamics, Inc. v. Wolf, 698 F.2d 157, 164 (3d Cir. 1983) (Becker, J.), this court faced a strikingly similar factual situation. Interdynamics involved a district court's order which did not actually hold the appellant in contempt, but rather declared that the appellant would be in contempt of he proceeded to take certain actions. We held that the district court's order, although phrased as a contempt order, was actually a declaratory judgment, and we concluded that appellate jurisdiction was proper under 28 U.S.C. § 2201.*fn1 The holding of Interdynamics clearly controls the instant situation.

In the instant case, all parties recognized that Vistron had not actually terminated the contract at any time prior to the district court's contempt finding. Thermice chose not to wait until the termination actually occurred, but instead proceeded immediately to court in an attempt to prevent the termination. The district court recognized that Vistron had not actually terminated the contract, and the court properly refused to order any damages. Therefore, in accordance with the clear factual history of this case, we cannot construe the district court's order as anything nut a declaratory judgment that Vistron would be in violation of the district court's May 15, 1981 injunctive order if it were to terminate the contract without cause prior to December 30, 1990.*fn2 We conclude that the order is appealable as a final decision under 28 U.S.C. § 2201. Interdynamics, Inc. v. Wolf, 698 F.2d 157, 164 (3d Cir. 1983).

III.

The district court concluded that the contract was unambiguous, and therefore susceptible of only one reasonable construction. The question of whether the contact ...


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