Appeal from the United States District Court for the Eastern District of Pennsylvania.
Seitz, Chief Judge, Higginbotham and Sloviter, Circuit Judges.
Plaintiff appeals from the district court's sua sponte entry of summary judgment for the defendant, entered before responses to discovery requests were filed, without notice to the parties that disposition on the merits was being considered, and without a hearing. Because the district court's action departed from the orderly procedures required and contemplated by the Federal Rules of Civil Procedure, we reverse.
Plaintiff Davis Elliott International, Inc. (Davis), an exporter of goods to foreign countries, sued Pan American Corp. (Pan American), alleging that it had contracted with Pan American, a freight forwarder and carrier, to ship hardware to plaintiff's customer in Nigeria; that Pan American represented that the goods would be containerized; that Pan American failed to containerize the goods; and that as a result merchandise was lost and plaintiff sustained damages of $18,000. The complaint alleged common law breach of contract or, alternatively, a violation of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§ 1300-15 (1976 & Supp. V 1981). Federal jurisdiction was predicated on diversity of citizenship. Defendant denied the substantive allegations of the complaint, and interposed 26 affirmative defenses including the one year statute of limitations set forth in COGSA, 46 U.S.C. § 1303 (1976).
A month after the answer was filed, the district court filed a Pre-trial Report and Order, which set forth the status of settlement negotiations and directed the parties to submit Pre-trial Memos and Proposed Findings of Fact and Conclusions of Law. Plaintiff's Pre-trial Memo was due approximately two weeks from the date of the Order and defendant's was due one week thereafter. Shortly after those documents were filed, plaintiff filed a Brief in Support of Liability and defendant filed a Memorandum in Support of the Applicability of the Carriage of Goods by Sea Act. Plaintiff represents that these briefs, which the parties agreed to file, were requested by the court in aid of settlement discussions. Brief for Appellant at 9. It is undisputed that there were two pre-trial conferences in addition to telephone communications with the district court relating to possible settlement. The parties also filed discovery requests. Defendant sought documents and plaintiff filed a Motion for Letters Rogatory. There were no substantive responses to these discovery requests. No motion for summary judgment was filed, nor were the parties advised that the district court was considering summary judgment. Nonetheless, shortly after the filing of the briefs, the district court entered a judgment in favor of the defendant and against the plaintiff, and in the accompanying memorandum opinion held that plaintiff's claims are covered by COGSA and are also time barred by its application. Davis Elliott International, Inc. v. Pan American Container Corp., 546 F. Supp. 1068 (E.D. Pa. 1982).
Neither the order nor the opinion of the district court states under which provision of the Federal Rules of Civil Procedure judgment was entered. It is apparent that judgment could not have been a dismissal for failure to state a claim or a judgment on the pleadings since the court considered matters, such as the bill of lading, which were outside the pleadings. We therefore construe the order as one granting summary judgment. In its opinion, the district court stated that "the parties agree that they have concluded their presentation of the case by the pleadings, memoranda filed by them and that there is no further evidence to be presented to the court and the matter is ripe for adjudication." Id. at 1069. Appellant disputes this statement and we find nothing on the record to support it. Indeed in reading plaintiff's brief filed in the district court in support of its theory of liability, it is apparent that plaintiff believed the case was not ready for adjudication since that brief referred to "what Plaintiff intends to prove at trial", App. at 41a; and stated that the plaintiff intended to file a motion asking defendant to produce a "legible reproduced facsimile" of the bill of lading, App. at 53a.
The procedure followed by the district court in this case is almost identical to that which it followed and which was disapproved in Bryson v. Brand Insulations, Inc., 621 F.2d 556 (3d Cir. 1980), where we reversed its entry of pretrial judgment. In Bryson also, the district court had stated that the parties had agreed to submit the case on the pleadings, a statement this court rejected after a review of the record. Id. at 558-59.
In Bryson, in language equally applicable here, we commented on the necessity of giving notice to the parties under Fed. R. Civ. P. 56. Judge Hunter, speaking for the court, stated:
A summary judgment procedure under Fed. R. Civ. P. 56 has its own protections against unwarranted pretrial dismissal of an action. Rule 12 (b) requires that "all parties . . . be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Preterm, Inc. v. Dukakis, 591 F.2d 121, 134 (1st Cir.); cert. denied sub nom. Baird v. Pratt, 441 U.S. 952, 99 S. Ct. 2181, 60 L. Ed. 2d 1057 (1979); Sims v. Mercy Hospital of Monroe, 451 F.2d 171, 173 (6th Cir. 1971). To exercise the right to oppose summary judgment, a party must have notice. Here, however, no notice was given. Although the court may dismiss the action at its own instance, it must first provide Bryson an opportunity to oppose an entry of summary judgment against him.
Here, as in Bryson, plaintiff "had no prior knowledge that the court was considering judgment on the pleadings or summary judgment." Id. Here, as in Bryson, "without notice, [plaintiff] had no reasonable opportunity to present to the court material relevant to a Rule 56 proceeding." Id. Here, as in Bryson, "because the procedure of Rule 56 requiring an opportunity to present pertinent material, which presumes notice to the party so that he may take advantage of the opportunity, was not followed, the entry of judgment must be reversed." Id.; see also Crown Central Petroleum Corp. v. Waldman, 634 F.2d 127 (3d Cir. 1980).
Defendant relies on United States v. Fisher-Otis Co., 496 F.2d 1146 (10th Cir. 1974), to support its contention that notice and hearing were not required in this case. That case is inapposite because the parties there had agreed to submit the particular legal issue to the court for resolution on the basis of stipulated facts. Id. at 1151-52. In this ...