NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 18a0090n.06
No. 15-4182
UNITED STATES COURT OF APPEALS FILED FOR THE SIXTH CIRCUIT Feb 23, 2018 DEBORAH S. HUNT, Clerk ) ALLIED ERECTING AND DISMANTLING CO., ) INC., ) ON APPEAL FROM THE ) UNITED STATES DISTRICT Plaintiff-Appellant, ) COURT FOR THE NORTHERN ) DISTRICT OF OHIO v. ) ) UNITED STATES STEEL CORPORATION, ) OPINION ) Defendant-Appellee. ) )
Before: MERRITT, MOORE, and BUSH, Circuit Judges.
JOHN K. BUSH, Circuit Judge. For decades, Plaintiff Allied Erecting and Dismantling
Co., Inc. (“Allied”), has served Defendant United States Steel Corporation (“U.S. Steel”) by
dismantling U.S. Steel’s defunct steelmaking facilities and salvaging the resulting scrap metal.
And for decades, Allied and U.S. Steel have litigated claims arising from their dismantling-work
agreements. In this action, Allied brought eight claims against U.S. Steel for breach of contract
and one for a declaratory judgment, and U.S. Steel brought three counterclaims against Allied
(the first and third for breach of contract, and the second for return of a $10 million advance
payment). On appeal, Allied argues that the district court erred in (1) granting judgment as a
matter of law for U.S. Steel as to three of Allied’s claims (Counts III, IV, and V) on statute-of-
limitations grounds; (2) granting summary judgment for U.S. Steel as to U.S. Steel’s second
counterclaim (that is, as to the $10 million advance payment); and (3) granting U.S. Steel’s Rule No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
59(e) motion to alter or amend the judgment, which reduced Allied’s damages on Count II to
zero. For the reasons that follow, we reverse as to Allied’s Counts IV and V, and we affirm in all
other respects.
I
Allied and U.S. Steel began working together in the 1980s, but this appeal traces its
origins to 1992, when U.S. Steel hired Allied to dismantle its massive Fairless Works
steelmaking facility in Fairless Hills, Pennsylvania. The parties entered into two contracts at that
time: the 1992 Construction Contract and the 1992 Final Conformed Specification (“1992
Specification”). As the Fairless facility began to undergo dismantling, so did the parties’
relationship: Allied sued U.S. Steel for additional compensation and other relief first in 1993 and
then in 2002, resulting in settlement agreements not reached until 2003 and 2004, termed the
2003 and 2004 Agreements in Principle (“2003 AIP” and “2004 AIP”), respectively.
The 2003 AIP granted Allied the exclusive right to further dismantling work at Fairless,
among other things; for its part, Allied agreed to perform certain dismantling work at Fairless at
no cost to U.S. Steel other than that Allied would acquire title to scrap recovered during the
dismantling (which Allied could then sell, subject to U.S. Steel’s right of first refusal, to generate
a profit). The 2004 AIP provided Allied with certain rights to dismantling work at sites other
than Fairless. Among other things, the 2004 AIP also contemplated manufacturing (and not only
dismantling) work, and it provided that U.S. Steel pay Allied a $10 million “non-refundable
advance payment” that U.S. Steel would recoup in the form of discounts applied to invoices for
the manufacturing work to be performed at Allied’s yet-to-be-built manufacturing facility.
The parties entered into several subsequent contracts, bringing the total number of
contracts governing the parties’ relationship to ten, none of which entirely supersedes any other.
2 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
The trial record and the district court’s orders and opinions sufficiently set forth the terms of
these contracts, which we have reviewed but which we will not detail at any greater length in this
opinion. Instead, we turn to Allied’s three questions presented and address each issue in turn.
II
Judgment as a Matter of Law as to Allied’s Counts III, IV, and V
Allied’s Counts I through VI all arise from Allied’s dismantling work at Fairless. The
parties agree that Allied engaged in substantial dismantling work, tearing down out-of-use
buildings and completing other related work at U.S. Steel’s request. In its second amended
complaint filed in June 2012, Allied asserted Counts III, IV, and V as follows:
Count III. Allied sought breach-of-contract damages under Section 3.1 of the 1992
Construction Contract arising from U.S. Steel’s alleged delays in “releasing” facilities at Fairless
to Allied so that Allied could begin dismantling them and salvaging scrap to sell. Allied alleged
numerous sources of delays including, for example, U.S. Steel’s “[f]ailing to complete necessary
predecessor work, including the relocation of necessary utilities and/or the performance of
asbestos removal, hazmat removal and/or environmental work.” 2d Amended. Compl. 18–23.
Count IV. Allied sought breach-of-contract damages under Section 10.3 of the 1992
Specification for U.S. Steel’s allegedly wrongful retention of (or indefinite indecision as to
whether to retain) certain Fairless facilities for itself, without compensation, rather than either
turning them over for Allied to dismantle or paying Allied the scrap value of such facilities. Id. at
23–25.
Count V. Allied sought breach-of-contract damages under Sections 5.2.2 and 5.2.3 of the
1992 Specification and Section III(c) of the 2003 AIP, alleging that U.S. Steel had prevented
Allied from removing certain scrap and railroad track from areas being dismantled but had
wrongly insisted that Allied dispose of creosote-containing railroad ties, when such railroad ties
3 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
were hazardous materials for which U.S. Steel was required to bear the cost of disposal. Id. at
25–27.
On motion by U.S. Steel, the district court granted judgment as a matter of law in favor of
U.S. Steel as to all three of these counts.1 The court held that Allied’s claims in all three counts
accrued in January 2007 at the latest and thus were time-barred under Pennsylvania’s four-year
statute of limitations for contract actions.
A
We review de novo the district court’s grant of judgment as a matter of law, using the
same standard that the district court should have used, i.e., that such a grant is appropriate only
when “no reasonable juror could have found for the nonmoving party.” Kiphart v. Saturn Corp.,
251 F.3d 573, 581 (6th Cir. 2001); see Fed. R. Civ. P. 50(a).
The parties generally do not dispute that Pennsylvania substantive law governs all the
claims in this diversity-jurisdiction action, except that Allied contends that the issue of when its
claims accrued is governed by federal, rather than state, law. But the case Allied cites for its
proposition, Ruff v. Runyon, 258 F.3d 498 (6th Cir. 2001), involved claims under federal law, not
state-law causes of action as here. When claims arise under state law, accrual of such claims is
governed by state law as well. See, e.g., Univ. of Pittsburgh v. Townsend, 542 F.3d 513, 523–24
(6th Cir. 2008) (applying Pennsylvania law to determine accrual date for claim arising under that
state’s law). We therefore apply Pennsylvania law in accordance with the controlling decisions
of the Pennsylvania Supreme Court. See Allstate Ins. Co. v. Thrifty Rent-A-Car Sys., Inc.,
249 F.3d 450, 454 (6th Cir. 2001). If that court has not yet addressed an issue presented, we
predict how that court would rule in light of the decisions of Pennsylvania’s intermediate
1 The court carved out the “Fox Rail” portion of Count V from its order. This portion of Count V is not part of the present appeal.
4 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
appellate courts and other “relevant data.” Ibid. (quoting Kingsley Assocs., Inc. v. Moll
PlastiCrafters, Inc., 65 F.3d 498, 507 (6th Cir. 1995)).
B
Allied advances two alternative arguments. First, Allied argues that its claims accrued in
July 2009 (such that its June 2012 complaint was timely filed within the four-year statute-of-
limitations period) rather than in January 2007 or earlier. Second, Allied argues that the district
court erred in lumping together Counts III, IV, and V; the claims in Counts IV and V, Allied
contends, were distinct and accrued at different times from Count III. Allied has failed to
demonstrate that Count III was timely asserted, so we reject Allied’s first argument. But because
Allied has pointed to evidence of record that a reasonable jury could use to conclude that U.S.
Steel wrongfully retained facilities and other materials from the scope of Allied’s work during
the four years preceding Allied’s filing of its complaint, we agree with Allied’s second argument
and therefore reverse as to Counts IV and V only.
C
Count III
Under Pennsylvania law, an action upon a contract “must be commenced within four
years.” 42 Pa. C.S.A. § 5525. The four-year clock begins at “the time the cause of action
accrued,” 42 Pa. C.S.A. § 5502(a), that is, when “the plaintiff could have first maintained the
action to a successful conclusion.” Kapil v. Assoc. of Pa. State Coll. & Univ. Faculties, 470 A.2d
482, 485 (Pa. 1983); see also Townsend, 542 F.3d at 523 (“[T]he applicable clock starts running
‘as soon as the right to institute and maintain a suit arises.’” (quoting Fine v. Checcio, 870 A.2d
850, 857 (Pa. 2005))). A party need only know that it has been damaged, not “the precise amount
or extent of the damage.” Schnelling v. Prudential Secs., Inc., No. A03-6021, 2004 WL 1790175,
at *2 (E.D. Pa. Aug. 9, 2004). And, under Pennsylvania law, determining the date of accrual is
5 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
properly the job of the court “where the facts are so clear that reasonable minds cannot differ.”
Melley v. Pioneer Bank, 834 A.2d 1191, 1201 (Pa. Super. Ct. 2003) (citation omitted).
Under Section III of the 2003 AIP and Section 3 of the 1992 Specification, Allied was
supposed to complete dismantling on each phase of the Fairless project within three years after
U.S. Steel granted authorization to begin work. The relevant phase for Count III is the
dismantling of the Sheet & Tin Facility at Fairless. Allied’s claim for damages arises under
Section 3.1 of the 1992 Construction Contract, which provides:
Should Contractor be delayed in the performance or completion of the work hereunder by Owner or by any cause beyond the control of Contractor, Owner will, at Contractor’s request, extend by written order to be signed by its Purchasing Agent the work scheduled for a period of time equivalent to any such delay. Owner will pay Contractor any additional costs and loss of revenue incurred by Contractor as a result of any such delay if such delay is caused by Owner.
Allied (the “Contractor” in the above provision) argues that U.S. Steel (the “Owner”)
caused “such delay” when it delayed the start of Allied’s work, failed to complete necessary
predecessor work, and failed to remove live utilities, among other things. These delays produced
damages, according to Allied, by increasing Allied’s cost of work and decreasing Allied’s
efficiency.
U.S. Steel argued, and the district court ruled, that based on the trial testimony of Allied’s
own principal John Ramun, U.S. Steel authorized the commencement of work on the Sheet &
Tin Facility in November 2003, and such work began in January 2004, meaning that the three-
year period in which Allied was to dismantle the facility (if there had been no delays) would
have ended in January 2007 at the latest. Allied responds that the date that matters for beginning
the three-year dismantling-performance clock was not when U.S. Steel internally authorized
Allied to commence the work but rather was in July 2006 when U.S. Steel issued an email that
6 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
Allied claims was a “notice to proceed.” Thus, according to Allied, Allied’s performance was not
due until July 2009, and it was not until July 2009 that Allied could have known whether U.S.
Steel’s actions had delayed Allied’s completion of the dismantling; Allied would therefore have
had four years from July 2009 to assert its claim, making its claim timely.
We reject Allied’s argument for a few reasons. First, the three-year time period in which
Allied was to complete dismantling work has no legal bearing on the accrual of Allied’s claim.
Allied apparently hangs its hat on the contention that its delay damages, if any, accrued only
when Allied itself was “late” in completing its dismantling work. But a deadline for Allied’s
performance is a provision for the benefit of U.S. Steel (and one that, as became clear at oral
argument, U.S. Steel had no intention of enforcing anyhow), not a provision that aids in
identifying the accrual date of a claim for harm to Allied. Moreover, harm to Allied from U.S.
Steel’s dilatory behavior would have caused Allied damages—and thus would have been
actionable—as soon as U.S. Steel delayed or disrupted Allied’s dismantling work, rather than
only at the end of Allied’s three-year time period for completing the work.
Citing Pennsylvania public-contract cases and authority from other jurisdictions, Allied
contends that its claim accrued at the earliest when its work under the contract was due to be
completed. At least in private-contract disputes, however, Pennsylvania courts do not appear to
take such an expansive view of accrual. Unless the contract at issue is “continuous” (that is, it is
“an agreement which does not fix any certain time for payment or for the termination of the
services,” Thorpe v. Schoenbrun, 195 A.2d 870, 872 (Pa. Super. Ct. 1963) (citation omitted)), a
private-contract claim in Pennsylvania generally “accrues when the contract is breached,”
Sadtler v. Jackson-Cross Co., 587 A.2d 727, 731 (Pa. Super. Ct. 1991). See PSC Info Grp. v.
Lason, Inc., 681 F. Supp. 2d 577, 588–89 (E.D. Pa. 2010). Allied’s contract with U.S. Steel at
7 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
issue here was not continuous; therefore, each claim for delay damages arose when U.S. Steel’s
alleged act of delay occurred (at the time of breach) and not when Allied’s performance under
the contract was to be completed.
The second reason we reject Allied’s position is that, even if we were to accept Allied’s
argument that the four-year statute-of-limitations period began only after Allied’s three-year
performance period ended, Allied’s claim still would be time-barred because a reasonable jury
could not conclude that Allied’s performance began later than January 2004. Ramun’s trial
testimony is dispositive here:
Q. And if I understood your testimony this morning, it was that Allied began work in January of 2004 at sheet and tin; is that right? A. Yes. Q. And I believe you even said in every part of sheet and tin, correct? A. Yes. Q. Can we pull up – A. I did dismantling work, yes, Allied did dismantling work.
Trial Tr. at 527:10–19; see also Trial Tr. 834:3–9. Allied has pointed to no responsive evidence
of record to dispute Ramun’s testimony of starting its dismantling work in January 2004, two and
a half years prior to its receipt of the July 2006 email that it claims was a “notice to proceed.”
Third, Allied’s second amended complaint itself does not point to any specific, actionable
instance of dilatory behavior by U.S. Steel that happened in June 2008 or later (i.e., within four
years of the complaint).2 Instead, the pleading sets forth facts alleging delay between January
2005 and October 2007. 2d Amended Compl. 7–8. This dearth of any pertinent allegation of
post-June 2008 delay is consistent with Allied’s failure to bring to this court’s attention any
evidence of such delay either.
2 To the extent that U.S. Steel’s uncompensated retention of facilities or materials (i.e., the subject of Counts IV and V) occurred within four years before Allied’s filing its June 2012 complaint and was also dilatory, Allied may, on remand, pursue relief for those claims on the basis of U.S. Steel’s allegedly wrongful retention of the facilities or materials.
8 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
In sum, Allied has failed to meet its burden in seeking reversal of the district court’s grant
of judgment as a matter of law as to Count III. We therefore affirm that grant of judgment for
U.S. Steel.
D
Counts IV and V
Counts IV and V are meaningfully different from Count III because Allied has pointed to
specific buildings and materials that U.S. Steel allegedly wrongly withheld from Allied’s scope
of work at Fairless. See, e.g., 2d Amended Compl. 25 (identifying “the No. 1 Tin Warehouse,
Raw Coil Structures, No. 1 Warehouse and No. 2 Warehouse”). And at trial, Allied introduced
evidence that could lead a reasonable factfinder to conclude that U.S. Steel removed such
buildings within the four-year period preceding Allied’s filing of its June 2012 complaint. See,
e.g., P-218 at 1–2 (meeting minutes dated August 19, 2009, reflect U.S. Steel’s decision to “put
on hold” the demolition of various buildings at the Sheet & Tin Facility); P-199 (meeting
minutes dated February 3, 2009); Trial Tr. 978–80 (testimony that in February 2009, buildings
T2 and T4 at the Sheet & Tin Facility were “taken back” by U.S. Steel).
Allied’s argument unfolds in a few steps: (1) as part of the parties’ deal, Allied was to
acquire ownership of all “scrap and equipment associated with various dismantling work to be
performed at the Fairless Works Sheet and Tin [F]acility,” in exchange for one dollar; (2) in
August 2004, U.S. Steel issued Purchase Order PT 85012, the terms of which were extended
through at least March 2010, granting Allied such ownership in exchange for one dollar;
(3) Allied thus “owned” the scrap from buildings within the scope of its dismantling work, and,
because Allied had commenced work at the Sheet & Tin Facility, Allied owned the scrap from
buildings within the scope of its work at that facility; (4) U.S. Steel’s “rights to remove any
complete facility from the scope of [the 1992] Specification shall terminate upon the
9 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
commencement of work at that facility by AED,” 1992 Specification at 67, para. 10.2 (emphasis
added), meaning that U.S. Steel could not remove the Sheet & Tin Facility from the scope of
Allied’s work after Allied had begun work there; (5) U.S. Steel may have had the right to remove
specific buildings from Allied’s scope of work, see id. para. 10.3, but only if U.S. Steel paid “as
compensation to [Allied] 50% of the ‘Scrap Value,’ i.e., No. 1 Heavy Melt price per gross ton for
the amount of gross tons removed”; and (6) U.S. Steel, notwithstanding these provisions, had
either removed buildings from the scope of Allied’s work at the Sheet & Tin Facility without
compensation or indefinitely placed on hold its decision as to whether to remove such buildings.
Thus, Allied’s argument goes, Allied was harmed to the extent that it could not either dismantle
the withheld buildings for salvage or receive compensation for those buildings from U.S. Steel.
In granting U.S. Steel’s motion for judgment as a matter of law, the district court treated
Counts IV and V as though they necessarily accrued at the same time as Count III, without
providing any additional reasoning as to why that would be so. A reasonable jury could have
determined, however, that U.S. Steel’s removal of specific buildings and materials from Allied’s
scope of work wrought harm that was independent of the more amorphous delay damages sought
in Count III. And a reasonable jury could have determined that U.S. Steel took such actions after
June 2008. We therefore reverse the district court’s grant of judgment as a matter of law as to
Counts IV and V and remand for further proceedings.
On remand, the district court is free to consider or reconsider other arguments presented
by U.S. Steel that may warrant the reissuance of judgment in favor of U.S. Steel as to these
counts. Specifically, U.S. Steel argued in support of its motion for judgment as a matter of law
below that, in addition to its statute-of-limitations argument, “Allied has failed to present any
evidence that it generated scrap from any of the buildings, basements, track and non-ferrous
10 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
materials that it claims to own (relating to Counts IV and V),” and U.S. Steel “object[ed] to
Allied’s expert’s use of the Measured Mile methodology for computation of damages.” R.296 at
4–5. The district court’s order granting judgment as a matter of law rested its holding solely on
statute-of-limitations grounds, but the district court did note that “all of [U.S. Steel’s other]
arguments have merit.” We decline to treat this statement as an expression of alternative
holdings, and, because these other arguments were not developed in the district court’s order, we
decline to address them on appeal. But the parties may litigate these other arguments on remand.
III
Summary Judgment for U.S. Steel as to Its Second Counterclaim
U.S. Steel’s second counterclaim against Allied arose from the 2004 AIP, pursuant to
which U.S. Steel paid Allied $10 million in July 2005 as a “non-refundable advance payment”
that U.S. Steel would recoup through discounts on Allied’s invoices for manufacturing work
during a ten-year period (subsequently extended another year, to end March 31, 2015). Allied
began construction on a manufacturing facility in Youngstown, Ohio, but never completed it; as
a result, when U.S. Steel requested assurances that Allied would complete its facility and thus
perform manufacturing work for U.S. Steel, Allied was unable to provide such assurances.
Under Pennsylvania law, a contract is repudiated when (1) a party has reasonable grounds
for insecurity with respect to the other party’s performance, (2) the party demands adequate
assurance of the other party’s performance, and (3) the other party fails to provide such adequate
assurance. See 13 Pa. C.S. § 2609; Rest. 2d (Contracts) § 251.
U.S. Steel thus argued to the district court that Allied’s failure to provide adequate
assurances amounted to a repudiation of its obligation to perform manufacturing work and that
U.S. Steel was thus entitled to a return of its $10 million advance, notwithstanding the fact that
the 2004 AIP labeled the advance “non-refundable.”
11 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
Allied disagreed, casting fault upon U.S. Steel’s delays and disruptions for Allied’s
failure to complete the manufacturing facility. The gist of Allied’s argument in this regard is that
but for U.S. Steel’s misdeeds, Allied would have had the funds and the ability to complete the
manufacturing facility. Allied also argued that the advance was flatly non-refundable even if
Allied refused to perform any manufacturing work at all.
The district court sided with U.S. Steel, relying on an instructive decision of the
Pennsylvania Supreme Court. See Wm. F. Mosser Co. v. Cherry River Boom & Lumber Co.,
138 A. 85, 88 (Pa. 1927). In Mosser, the plaintiff paid a $150,000 advance to the defendant,
which the plaintiff would recoup at the rate of one dollar per ton of tree bark delivered by the
defendant for use in the plaintiff’s tanneries. See id. at 86 (Under the contract, “[the] payment
[was] to be returned [to the plaintiff] . . . by allowing a credit of one dollar ($1.00) per ton on all
bark shipped . . . until the aggregate amount of credits so made shall amount to the advance
payment . . . or until [150,000] tons of bark shall have been delivered[.]”). The defendant failed
to perform, claiming impossibility because his trees underproduced; the defendant also claimed
that he could keep the payment in full because he had turned over all the bark he could secure
from his land and had, he argued, thereby discharged any further obligation. The court disagreed,
focusing on the nature of an advance payment as a prepayment that creates “an implied promise
to repay . . . any balance received in excess of the value of the goods forwarded.” Id. at 87.
Thus, under the logic of Mosser, notwithstanding the “non-refundable” label of the
$10 million advance payment, the district court held that Allied’s total nonperformance justified
return of the payment to U.S. Steel and granted summary judgment for U.S. Steel accordingly.
12 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
We review de novo the district court’s grant of summary judgment. See King v.
Harwood, 852 F.3d 568, 578 (6th Cir. 2017). If Allied “is able to demonstrate that there is a
genuine issue of material fact in dispute, then [U.S. Steel is] not entitled to summary judgment”
as to its second counterclaim. Ibid.
Admittedly, the contract in this case differs from Mosser to the extent that the “advance”
here, unlike that in Mosser, is expressly labeled “non-refundable.” But, as the district court held,
“the word non-refundable cannot be construed as a license to provide little or no consideration
and to still retain an advance payment.” R.174 at 37 (quoting Soroof Trading Dev. Co., Ltd. v.
GE Fuel Cell Sys., LLC, 842 F. Supp. 2d 502, 516 (S.D.N.Y. 2012) (“[T]he non-refundable fee
was paid by Soroof not as a gift but as one element in a bargained for exchange[.]”)). Notably,
though Allied takes issue with the district court’s reliance on Mosser and Soroof, Allied cites no
contrary authority whatsoever in its brief. Appellant’s Br. 50–65.
A simple illustration shows why the district court’s position is not only legally correct but
also sensible. Consider a buyer who enters into a contract to purchase a home and, at the time of
contract, tenders a “non-refundable” advance payment of a thousand dollars to the seller, who
then takes the property off the market in anticipation of its sale. Of course, if the buyer
subsequently decides not to purchase the property through no fault of the seller, the seller may
rightly keep the advance payment—it’s non-refundable, after all. But what if the seller breached
the contract by selling the house to another, or by deciding against selling it altogether? Surely
the seller could not both fail wholly to perform and yet keep the buyer’s payment, even though
the payment was styled “non-refundable.” To the contrary, the buyer would be entitled to recover
13 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
the payment on account of the non-occurrence of the constructive condition of the seller’s
performance.
So, too, here: U.S. Steel is the buyer, and Allied is the seller. It is undisputed that Allied
failed to construct its manufacturing facility and thus could not possibly perform manufacturing
work for U.S. Steel within the eleven-year term of the parties’ agreement. The parties’ choice of
words in their contracts may be questionable, and the notion that the advance payment was
recoverable despite being non-refundable may be striking, but none of this gives rise to a
question of fact. That is because Allied cannot point to evidence (whether in the contract itself or
elsewhere) that the parties intended for Allied to keep the advance payment even if Allied itself
totally breached. The district court thus rightly allowed U.S. Steel to recover its advance
payment.
Some of the discussion in the briefs and especially before the district court concerns
portions of the AIPs and subsequent agreements that are beyond the scope of the question before
us. For instance, apart from the $10 million advance payment, U.S. Steel was obligated (under
the 2004 AIP) to provide Allied with sufficient work outside of Fairless to generate $63 million
in profit margin to Allied. This work could include manufacturing work—meaning that the $10
million advance payment could have counted toward the $63 million obligation if it needed to.
But it is undisputed that it did not need to, because U.S. Steel provided well in excess of the
amount of non-Fairless work necessary to meet its $63 million obligation without counting the
$10 million advance towards the total.
Because U.S. Steel did indeed provide Allied sufficient remediation work to satisfy the
$63 million profit-margin obligation exclusive of any manufacturing work, Allied claims that it
had no obligation to make itself available to U.S. Steel to perform manufacturing work. But this
14 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
disregards the express language in the 2004 AIP that the $10 million advance payment was “[i]n
consideration of [Allied]’s agreement to perform manufacturing work . . . under non-cancelable,
long-term heavy industrial steel mill manufacturing contracts,” and that “[u]ntil the recovery of
the [$10 million] Advance Payment, each invoice for work performed under any of the
Manufacturing Contracts shall be discounted by [Allied] to permit U.S. Steel to recover the
[payment] over the 120-month term of this Agreement.” These provisions make clear that Allied
had the contractual duty to make manufacturing work available to U.S. Steel as an option for
helping satisfy the $63 million profit-margin obligation. As a result of Allied’s failure to fulfill
its duty, U.S. Steel had no choice but to use Allied only for remedial work, despite having
advanced $10 million for the express purpose of having Allied available to perform
manufacturing work. Allied’s repudiation of its promise to provide manufacturing work
prevented U.S. Steel from receiving the benefit of its bargain. We therefore affirm the district
court’s grant of summary judgment in favor of U.S. Steel.
IV
U.S. Steel’s Rule 59(e) Motion
The final issue is whether the district court erred in granting U.S. Steel’s Rule 59(e)
motion to alter or amend the judgment and thus erred in reducing Allied’s damages on Count II
to zero. In Count II, Allied sought breach-of-contract damages for U.S. Steel’s failure to hire and
compensate Allied for certain dismantling work in the basements of the Sheet & Tin Facility.
Allied’s position is that the work was part of the dismantling work to which Allied had exclusive
rights under the 2003 AIP, but, because the work involved below-grade (that is, basement-level)
dismantling, Allied was entitled to additional compensation for its completion. U.S. Steel agreed
that Allied had the right (and indeed, the obligation) to do the work, but took the position that
Allied was obligated to do it without any additional compensation. When Allied refused to do the
15 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
work without additional compensation, U.S. Steel hired a third party to do the work and then
sought to charge Allied for the amount that it had paid the third party. Allied brought Count II
against U.S. Steel for the compensation (and for the value of the scrap) that Allied would have
received if U.S. Steel had hired Allied. U.S. Steel brought its first counterclaim against Allied for
the monies paid to the third party. Both Allied’s Count II and U.S. Steel’s first counterclaim
proceeded to jury trial.
Confusingly, the jury unanimously answered both of the following interrogatories on the
verdict form in the affirmative:
1. Did Allied prove by the preponderance of the evidence that U.S. Steel breached the 2003 AlP and 2004 DSA by hiring another contractor to perform basement work that Allied should have been compensated to perform? (Check Yes or No.)
2. Did U.S. Steel prove by the preponderance of the evidence that Allied breached the 2003 AlP and 2004 DSA by refusing to perform basement work that it should have performed at no additional cost? (Check Yes or No.)
Following these answers, the jury awarded $694,067 to Allied for this breach by U.S. Steel and it
awarded $0 to U.S. Steel for this breach by Allied.
The troubling part, of course, is that by answering “yes” to the first question, the jury was
finding that Allied “should have been compensated” for the below-grade removal and
backfilling. But by answering “yes” to the second question, the jury found that Allied “should
have performed” such work “at no additional cost.” Allied moved for a declaratory judgment in
its favor based on the jury’s verdict, and Allied addressed this apparent inconsistency in the
verdict by asserting that the jury had found that Allied’s breach was immaterial (hence the $0
award to U.S. Steel) whereas U.S. Steel’s breach was material (thus justifying a damages award
for Allied). U.S. Steel responded by pointing out, correctly, that the jury had been instructed to
find no breach if a party’s nonperformance was immaterial.
16 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
The court denied Allied’s motion for the declaratory judgment, first determining that it
was bound under the Seventh Amendment to consider “the jury’s fact-findings and reasonable
inferences drawn therefrom,” and then concluding that regardless of the apparent inconsistency
in the verdict, the jury had nevertheless found that Allied had breached by failing to perform the
below-grade work at no cost, which precluded the court from entering a declaratory judgment in
Allied’s favor that Allied was entitled to compensation on such work.
Allied timely filed a notice of appeal. On the same day, U.S. Steel filed a Rule 59(e)
motion to alter or amend the judgment on the grounds that Allied should not have been entitled
to damages as to Count II when the jury found that Allied itself had breached the same
agreements that U.S. Steel had breached. According to U.S. Steel, Pennsylvania law requires a
plaintiff to “prove its own performance” in order to recover breach-of-contract damages from the
defendant, and the jury’s verdict made clear that Allied had materially breached (meaning that it
had not so performed). Thus, U.S. Steel sought to reduce Allied’s damages on Count II to zero.
The district court granted U.S. Steel’s motion to alter or amend the judgment, concluding
that under Pennsylvania law, given the jury’s finding of mutual breach, Allied was not entitled to
damages for U.S. Steel’s breach as to Count II.
Although we generally review the grant of a Rule 59(e) motion for abuse of discretion,
we review the grant of such a motion de novo when the effect of the grant was to reverse
judgment—that is, the effect is the same as if the district court had granted a renewed motion for
judgment as a matter of law in favor of U.S. Steel after the return of a verdict in favor of Allied.
See Shelby Cty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 375 (6th Cir. 2009);
17 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
cf. Johnson v. City of Memphis, 617 F.3d 864, 867 (6th Cir. 2010) (applying de novo standard of
review where Rule 59(e) motion sought review of the grant of summary judgment).
“The rule in Pennsylvania and elsewhere is that when parties to a contract each commit a
material breach, the law will give relief to neither party.” Cottman Transmission Sys., Inc. v.
Dubinsky, 550 F. Supp. 133, 136 (W.D. Pa. 1982); see also Evergreen Cmty. Power LLC v.
Riggs Distler & Co., Inc., 513 F. App’x 236, 240 (3d Cir. 2013) (“When a party seeks to enforce
a contract, or to recover damages for breach of contract, ‘that party must prove that he has
performed all of his own obligations under the contract.’” (citation omitted)); U.S. ex rel
Greenmoor, Inc. v. Travelers Cas. & Sur. Co. of Am., No. 06-cv-0234, 2009 WL 4730233, at
*49 (W.D. Pa. Dec. 4, 2009) (“To establish a breach of contract under Pennsylvania law, . . . the
party alleging breach must ‘prove that he has performed all of his own obligations under the
contract.’”).
The jury was instructed to find that Allied had breached its contractual obligation to
perform below-grade work “at no additional cost” to U.S. Steel only if Allied had materially
breached. And the jury so found. Thus, although the jury verdict appears internally inconsistent
to the extent that it also found U.S. Steel in breach of its agreement to pay Allied for the same
work, Allied cannot show that, as a matter of law, the district court was incorrect to deny
Allied’s recovery. As U.S. Steel argues, if the jury intended to find that both Allied and U.S.
Steel had materially breached the same agreement, then indeed the only inconsistency in the
verdict is the monetary award to Allied, and the correct result was the district court’s result: each
party receives zero dollars in damages from the other for these breaches. Whether another result
(such as further deliberation or a new trial) might have been preferable is neither here nor there,
18 No. 15-4182, Allied Erecting & Dismantling Co. v. U.S. Steel Corp.
for the parties contest only the district court’s grant of U.S. Steel’s Rule 59(e) motion. And that
we affirm.
V
In sum, for the reasons set forth above, we REVERSE as to Counts IV and V only, and
we AFFIRM the district court in all other respects. Accordingly, we REMAND this matter for
further proceedings consistent with this opinion.