In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-3561
188 LLC,
Plaintiff-Appellant,
v.
TRINITY INDUSTRIES, INCORPORATED,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 7993—Suzanne B. Conlon, Judge.
____________
ARGUED JUNE 7, 2002—DECIDED AUGUST 1, 2002
____________
Before BAUER, POSNER and RIPPLE, Circuit Judges.
RIPPLE, Circuit Judge. 188 LLC (“188”), which leases rail-
road tanker cars, appeals from decisions of the district
court dismissing Count 1 of its second amended complaint
under Federal Rule of Civil Procedure 12(b)(6) and deny-
ing 188 leave to amend its complaint to add a Count 2.
188’s complaint alleged that Trinity Industries breached
its contract to repair some of 188’s tanker fleet. The district
court held that 188’s suit was barred by a limitation of rem-
edies provision, which it held was part of the contract as
a matter of law. On appeal, 188 contends that the limitation
of remedies provision was never a part of the contract; it
2 No. 01-3561
also submits that the district court erred in denying 188
leave to amend its complaint to add Count 2. For the rea-
sons set forth in the following opinion, we affirm in part,
reverse in part and remand this case to the district court for
further proceedings.
I
BACKGROUND
A.
188 is in the business of leasing railroad tanker cars. 188
and Trinity negotiated a contract under which Trinity
would repair approximately 168 of 188’s tankers. The con-
tract consisted of two documents: 1) a January 10, 2000 let-
ter proposal from Trinity to 188 that detailed the services
to be performed and the price of the services (“Term Sheet”
or “January 10 letter”); 2) a letter from 188 to Trinity dated
February 15, 2000 (“February 15 letter”), and signed by the
parties on February 17, 2000. The February 15 letter specifi-
cally incorporated the Term Sheet and added several clar-
ifications. On the first page of the Term Sheet was the fol-
lowing statement: “Sales of all services and materials are
subject to the general terms and conditions on the reverse
side.” R.35, Ex.A, Ex.1.
The parties dispute what, if anything, actually was on
the reverse side of the Term Sheet. In its second amended
complaint, which is the subject of this appeal, 188 alleged
that the reverse side of the Term Sheet was blank. Trinity
argued that “Trinity Railcar Repair General Terms and
Conditions Form 4,” contained the terms and conditions
referenced on the first page of the Term Sheet, and that
188 was bound by those terms whether Form 4 was printed
on the back of the Term Sheet or not. R.35, Ex.A, Ex.2.
No. 01-3561 3
Form 4 contains a limitation of remedies provision that,
were it part of the contract, would have barred the relief
188 sought in its second amended complaint. The form is
a one-page document consisting of four sections denomi-
nated by roman numerals. Section II is entitled “Warranty.”
R.35, Ex.A, Ex.2. It begins by stating: “Trinity’s standard
limited warranty set forth below shall be applicable to any
repair services performed.” Id. In further relevant part,
Section II states:
TRINITY’S LIABILITY FOR ANY AND ALL LOSSES
AND DAMAGES RESULTING FROM ANY CAUSE
WHATSOEVER, INCLUDING TRINITY’S NEGLI-
GENCE, ALLEGED DAMAGES OR DEFECTIVE
GOODS, IRRESPECTIVE OF WHETHER SUCH
DEFECTS ARE DISCOVERABLE OR LATENT,
SHALL BE LIMITED TO THE REPAIR OR REPLACE-
MENT AT THE ELECTION OF TRINITY, AT TRIN-
ITY’S RAILCAR REPAIR SHOP OR AT A SHOP
SELECTED BY TRINITY, OF ANY PART OR PARTS
OF ANY CAR (A) THAT SHALL, WITHIN ONE
YEAR AFTER DELIVERY OF SUCH CAR, BE RE-
TURNED TO TRINITY WITH TRANSPORTATION
CHARGES PREPAID AND (B) THAT TRINITY’S
EXAMINATION SHALL DISCLOSE TO ITS SATIS-
FACTION TO HAVE BEEN SO DEFECTIVE. IN
NO EVENT, INCLUDING THE CASE OF A CLAIM
FOR NEGLIGENCE, SHALL TRINITY BE LIABLE
FOR INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES. . . . AS A MATERIAL INDUCEMENT
TO TRINITY TO ENTER INTO AND PERFORM
THIS AGREEMENT, AND AS A MATERIAL POR-
TION OF THE CONSIDERATION TO BE RE-
CEIVED BY TRINITY FOR THE PERFORMANCE
OF THE WORK DESCRIBED IN THIS CON-
TRACT, CUSTOMER HEREBY AGREES THAT
TRINITY SHALL HAVE NO LIABILITY TO CUS-
4 No. 01-3561
TOMER FOR INDIRECT, SPECIAL OR CONSE-
QUENTIAL DAMAGES ARISING FROM A BREACH
OF THIS CONTRACT BY TRINITY, A BREACH OF
WARRANTY EXPRESSLY SET FORTH IN THIS
CONTRACT, OR FROM ANY CAUSE ARISING
FROM THIS CONTRACT.
Id. (capitalization and bold print in original).
B.
A brief recitation of the procedural history of this action
will provide needed context for the resolution of the issues
before us.
188’s initial complaint was filed on December 20, 2000.
Trinity moved to dismiss, and the district court suggested
that 188 amend its complaint. 188 followed this advice
and, with the permission of the court, filed an amended
complaint on April 2, 2001. This first amended complaint
included a breach-of-contract count that corresponds to
Count 1 at issue in this appeal. With respect to Form 4, the
first amended complaint alleged: “Plaintiff has performed
all of the covenants and conditions of said contract, having
specifically excluded from the contract Trinity Railcar Re-
pair General Terms and Conditions—Form 4, with De-
fendant’s consent.” First Amended Complaint ¶ 5, R.35,
Ex.A. In this complaint, 188 also alleged violations of the
Illinois Consumer Fraud Act and tortious interference with
contractual relations. Trinity moved to dismiss the first
amended complaint, and the district court granted the
motion, without prejudice.
188 then filed a motion for leave to file a second amended
complaint, this time with two counts, both alleging breach
of contract. In the second amended complaint, Form 4 was
addressed tangentially in Count 1 and directly in Count 2.
In Count 1, the complaint alleged: “Although the bottom
No. 01-3561 5
of the first page of Exhibit B states that other ‘general
terms and conditions’ are ‘on the reverse side. . . .,’ no
other terms or conditions were on the reverse side of Ex-
hibit B or otherwise were attached to the document trans-
mitted (by facsimile or mail delivery), nor communicated
in any other way to Plaintiff at the time of the formation
of the Contract.” Second Amended Complaint ¶ 8. In
Count 2, the complaint alleged: “However, even if the gen-
eral terms and conditions submitted by Defendant and
attached as Exhibit C hereto were part of the contract,
those designated ‘Warranty’ provisions do not apply to
Plaintiff’s damages for breach of the Contract. . . .” Second
Amended Complaint ¶ 16. The district court granted the
motion to amend with respect to Count 1, but denied it
with respect to Count 2 on the ground that “Count II does
not actually state an additional contract claim, but rather
raises new arguments as to why 188 was not bound by
Trinity’s general terms and conditions.” July 9, 2001 Order.
Trinity then moved to dismiss Count 1 under Rule 12(b)(6).
The district court granted Trinity’s motion and dismissed
Count 1 with prejudice. Relying on an earlier decision of
the Northern District of Illinois, the court concluded that
the reference to “general terms and conditions” on the first
page of the Term Sheet was sufficient to incorporate Form
4 into the parties’ contract. The district court further con-
cluded that the limitation of remedies provision barred
the relief sought in Count 1 of the second amended com-
plaint. 188 appealed both the dismissal of Count 1 and the
denial of leave to amend its complaint to add Count 2.
II
DISCUSSION
The district court dismissed Count I of 188’s second
amended complaint because of 188’s “failure to state a claim
6 No. 01-3561
upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).
Specifically, the court held that Form 4 was a part of the
parties’ contract and that, consequently, Form 4’s limita-
tion of remedies provision barred 188’s claim. We review
this determination de novo. See Help at Home, Inc. v. Med.
Capital, L.L.C., 260 F.3d 748, 752 (7th Cir. 2001).
A.
We first address 188’s contention that the district court
should not have considered Form 4 at all. 188 argues that,
because it neither attached Form 4 to Count 1 of its com-
plaint nor referenced Form 4 in Count 1, the district court
could not consider Form 4 on a motion to dismiss. 188
contends that the district court should have either converted
the motion to a motion for summary judgment and per-
mitted additional evidence, or ignored Form 4 altogether.
Federal Rule of Civil Procedure 10(c) provides that “[a]
copy of any written instrument which is an exhibit to a
pleading is a part thereof for all purposes.” Fed. R. Civ. P.
10(c). It is also well-settled in this circuit that “documents
attached to a motion to dismiss are considered part of the
pleadings if they are referred to in the plaintiff’s complaint
and are central to his claim. Such documents may be
considered by a district court in ruling on the motion to
dismiss.” Wright v. Assoc. Ins. Cos. Inc., 29 F.3d 1244, 1248
(7th Cir. 1994). “[T]his is a narrow exception” to the general
rule that when additional evidence is attached a motion
to dismiss, “the court must either convert the 12(b)(6)
motion into a motion for summary judgment under Rule
56 . . . or exclude the documents attached to the motion to
dismiss and continue under Rule 12.” Levenstein v. Salafsky,
164 F.3d 345, 347 (7th Cir. 1998). While narrow, this excep-
tion is “aimed at cases interpreting, for example, a con-
tract.” Id.
No. 01-3561 7
Form 4 fits within this narrow exception. The contract
appended to the second amended complaint contains
the statement: “Sales of all services and materials are sub-
ject to the general terms and conditions on the reverse
side.” R.35, Ex.A, Ex.1. Trinity argued in its motion to dis-
miss that Form 4 provided those terms and conditions
referenced in the parties’ contract. Although, as we shall
discuss below, there remain factual issues as to whether
Form 4 actually was incorporated into the contract, the
district court properly considered the document. The pur-
pose of the exception is to prevent parties from surviv-
ing a motion to dismiss by artful pleading or by failing to
attach relevant documents. See Beddall v. State St. Bank &
Trust Co., 137 F.3d 12, 17 (1st Cir. 1998). If Form 4 was
indeed on the reverse side of the parties’ contract or other-
wise was incorporated into it, then Form 4 is relevant
and was properly considered. Trinity, by attaching Form 4
to its motion to dismiss, in effect alleged that 188 had
included with its complaint only those portions of the
contract beneficial to 188. The district court needed to view
Form 4 to understand the nature of the dispute between the
parties. Consequently, the district court did not err in
considering Form 4.
B.
We turn now to Trinity’s contention that 188 admitted
the applicability of Form 4 and that it is bound by that
admission. Specifically, Trinity submits that, because 188
admitted that it was aware of Form 4’s terms in its first
amended complaint, it was bound by this admission and
could not allege that it was unaware of Form 4 in its second
amended complaint. Trinity cites no specific authority for
this proposition; it simply points to cases holding that
parties are bound by admissions and allegations in their
8 No. 01-3561
pleadings. See, e.g., Soo Line R.R. Co. v. St. Louis S.W. Ry.
Co., 125 F.3d 481, 483 (7th Cir. 1997); Keller v. United States,
58 F.3d 1194, 1198 n.8 (7th Cir. 1995). What Trinity does
not discuss is the applicable rule when, as here, the plain-
tiff has amended his complaint and the alleged admission
was made in a now-superseded pleading.
When a party has amended a pleading, allegations and
statements in earlier pleadings are not considered judi-
cial admissions. See Moriarty v. Larry G. Lewis Funeral Dirs.
Ltd., 150 F.3d 773, 777-78 (7th Cir. 1998). “An amended
pleading ordinarily supersedes the prior pleading. The
prior pleading is in effect withdrawn as to all matters not
restated in the amended pleading and becomes functus
officio.” Nisbet v. Van Tuyl, 224 F.2d 66, 71 (7th Cir. 1955).
Under some circumstances, a party may offer earlier ver-
sions of its opponent’s pleadings as evidence of the facts
therein, but they are not judicial admissions, and the
amending party may offer evidence to rebut its super-
seded allegations. See DePaepe v. Gen. Motors Corp., 141 F.3d
715, 719 (7th Cir. 1998); Nisbet, 224 F.2d at 71. We express
no opinion about whether 188’s earlier pleadings would
be admissible on remand. Cf. DePaepe, 141 F.3d at 719
(stating that decision to admit or exclude superseded
pleadings was within district court’s discretion). 188’s first
amended complaint was superseded by Count 1 of its sec-
ond amended complaint; 188 is not bound by the factual
allegations made in the earlier pleading.
C.
We review the district court’s grant of a Rule 12(b)(6)
motion de novo. See Help at Home, Inc. v. Med. Capital, L.L.C.,
260 F.3d 748, 752 (7th Cir. 2001). We construe the pleadings
in the light most favorable to 188. See id. The question is
No. 01-3561 9
a simple one: As a matter of law, is Form 4 a part of the
parties’ contract? The district court answered that ques-
tion in the affirmative, drawing on the principle of con-
tract law that contracts may incorporate other documents
by reference, and the parties are bound by those other
documents. The district court held that the contract’s in-
corporation clause—“Sales of all services and materials
are subject to the general terms and conditions on the
reverse side,”—made Form 4 an enforceable part of the
parties’ contract. On this point, we are in respectful dis-
agreement with the district court. At this point in the lit-
igation, we cannot conclude that, as a matter of law, Form
4 was incorporated into the contract.
In this case, when the district court’s jurisdiction is based
on diversity of citizenship of the parties, we apply the
1
law of Illinois. Under Illinois law, a document is incor-
porated by reference into the parties’ contract only if the
parties intended its incorporation. See Wilson v. Wilson,
577 N.E.2d 1323, 1329 (Ill. App. Ct. 1991). “For a contract
to incorporate all or part of another document by refer-
ence, the reference must show an intention to incorpo-
rate the document and make it part of the contract.” Id.
Illinois requires that incorporation be clear and specific.
See, e.g., Kirschenbaum v. Northwestern Univ., 728 N.E.2d
752, 762 (Ill. App. Ct. 2000) (“Contracts which specifically
incorporate other documents by reference are to be con-
strued as a whole with those other documents.”); Jago v.
Miller Fluid Power Corp., 615 N.E.2d 80, 82 (Ill. App. Ct. 1993)
(“The parties to a contract may incorporate by reference
another document if that intention is clearly shown on
1
Although, at one point in the district court proceedings, Trinity
submitted that Texas law was applicable, the parties do not dis-
pute, at this point, the applicability of Illinois law.
10 No. 01-3561
the face of the contract.”). The party seeking to enforce
the terms of an allegedly incorporated document “must
show . . . an intention to incorporate the document and
make it a part of the contract.” Arneson v. Bd. of Trustees,
McKendree Coll., 569 N.E.2d 252, 256 (Ill. App. Ct. 1991).
When the contract incorporates a specific document by
name, both parties are on notice and are bound by the
terms of that document. See J.M. Process Sys., Inc. v. W.L.
Thompson Elec. Co., 578 N.E.2d 264, 267 (Ill. App. Ct. 1991);
Wilson, 577 N.E.2d at 1329-30; Ridgeview Constr. Co. v. Am.
Nat’l Bank & Trust Co., 563 N.E.2d 986, 990 (Ill. App. Ct.
1990). However, when the contract does not refer to a
specific document but to terms located somewhere on
the contract document itself, whether those terms are
incorporated is a question of fact about the parties’ intent
and cannot be answered simply by reference to the contract
documents. See Landmark Structures, Inc. v. F.E. Holmes &
Sons Constr. Co., 552 N.E.2d 1336, 1342-43 (Ill. App. Ct.
1990).
With these principles in mind, we turn to the facts of
the present case. What we know from the pleadings and
the contract documents, read in the light most favorable
to 188, is that the parties agreed on February 17, 2000, to
a contract, the terms of which were described in two letters:
the Term Sheet and the February 15 letter. The first page
of the Term Sheet contained a statement that: “Sales of all
services and materials are subject to the general terms and
conditions on the reverse side.” R.35, Ex.A, Ex.1. 188 alleges
that “no other terms or conditions were on the reverse
side of Exhibit B or otherwise were attached to the docu-
ment transmitted (by facsimile or mail delivery), nor com-
municated in any other way to Plaintiff at the time of the
formation of the Contract.” Second Amended Complaint
¶ 8. We must accept this allegation as true for the purpose
of evaluating Trinity’s Rule 12(b)(6) motion.
No. 01-3561 11
On this record, we cannot say that Form 4 was incorpo-
rated into the parties’ contract as a matter of law. There is
no incorporation clause that resolves this dispute in favor
of Trinity. Indeed, the February 15 letter states that “[t]he
1/10/00 proposal and terms of this letter are the final terms
of our agreement.” R.35, Ex.A, Ex.1. Neither the “1/10/00
proposal” nor the February 15 letter refers to Form 4 or to
“Trinity Railcar Repair General Terms and Conditions” by
name. See id. The incorporation clause on the face of the
Term Sheet does not specifically refer to Form 4 or any
specific set of terms and conditions. There is also no copy
of the contract in the record that has Form 4 or any other
list of terms and conditions printed on the back of the
Term Sheet.
In Landmark, the plaintiff, Landmark Structures, con-
tracted with the defendant, Holmes, to provide prefabri-
cated wall panels to Holmes for its use in the construc-
tion of three apartment complexes. See Landmark, 552
N.E.2d at 1336-37. Holmes was displeased with the quality
of Landmark’s products and refused to pay on the ground
that the panels were nonconforming. See id. at 1337. Land-
mark sued, and Holmes brought a counterclaim. After a
bench trial, the trial court ruled in favor of Holmes. See id.
On appeal, Landmark argued that Holmes’ counterclaims
were barred by a disclaimer of warranties printed on the
back of the first page of the parties’ contract. See id. at 1342.
Landmark produced a copy of the contract with the lim-
itation provision printed on the back and the statement:
“PER ‘CONDITION OF SALE’ REVERSE SIDE” printed
on the front page. Id. at 1337-38 (emphasis in original).
Holmes produced a copy of the contract with the reverse
side of the first page left blank. See id. at 1338, 1343.
The question in Landmark, as here, was whether the
terms on the reverse side of Landmark’s copy of the con-
12 No. 01-3561
tract were intended by the parties to become part of the
contract. See Landmark, 552 N.E.2d at 1342. The trial court
had heard testimony from Holmes’ president that, when
he examined and signed the contract, there were no addi-
tional terms on the reverse side of the first page. See id.
at 1342-43. Holmes’ president further testified that his
copy of the contract appeared to be a photocopy of Land-
mark’s and that there had been no negotiation over any
disclaimer of warranties. See id. at 1343. On these facts, the
Illinois Appellate Court concluded that “[t]he trial court
could have determined from the evidence that Holmes
had no knowledge of the disclaimer of warranties, or rea-
son to believe that such a disclaimer existed, at any time
prior to and during the execution of the contract . . . .” Id.
Thus, Holmes could not be held to contractual terms of
which it was unaware and over which it had not negotiated.
See id.
As in Landmark, this case presents a disputed issue of
fact that cannot be resolved by reference to 188’s com-
plaint and the contract documents before the court. In
Landmark, it could not be determined simply from the
face of Landmark’s copy of the contract that the dis-
claimer of warranties had received the assent of both
parties. Here, there remain factual questions about wheth-
er the parties ever agreed that Form 4 was incorporated
into the contract. Resolution of this issue may require that
the district court address a variety of subsidiary factual
issues: when was Form 4 transmitted from Trinity to 188;
what negotiations, if any, took place concerning Form 4’s
incorporation into the contract; and whether there were
additional documents exchanged by the parties between the
January 10 Term Sheet and the February 15 letter that
cemented the parties’ contract. In short, at this pleading
stage, there is no intention to incorporate Form 4 that is
“clearly shown on the face of the contract.” Jago, 615 N.E.2d
at 82. Indeed, this case is more problematic than Land-
No. 01-3561 13
mark. In Landmark, the party urging incorporation was at
least able to produce a copy of the contract with the dis-
puted terms printed on the reverse side. The record be-
fore us in this case contains no such document, and Trinity
has not claimed that one exists. The pleadings and the
contract itself simply do not resolve these factual concerns.
The cases relied upon by the district court and urged
as the relevant precedent by Trinity do not support the
district court’s resolution of this case at the pleadings stage.
For example, in Andren & Associates v. Scitex American
Corporation, No. 95 C 276, 1995 WL 669109 (N.D. Ill. Nov. 8,
1995), the case that formed the precedential foundation
of the district court’s decision, the sales agreement stated
that “the transaction is ‘pursuant to IRIS’s standard Terms
and Conditions of Sales, attached, together with pricing
and delivery terms which are accepted by Buyer.’ ” Andren,
1995 WL 669109 at *2. The plaintiff claimed that it had never
seen the Terms and Conditions and, thus, that they were
not part of the contract. The court determined that there
was no factual dispute about whether the Terms and
Conditions were incorporated by reference because “[t]he
Sales Agreement explicitly provides that Andren accepted
those additional terms” and Andren had not challenged
the authenticity of the Sales Agreement. Id. at *2. The
court in Andren also distinguished Landmark: “In contrast
to the contract in Landmark, the Sales Agreement here
explicitly referred to a specific document the terms of which
were to govern the sale, not just to general ‘conditions’
which may or may not appear on the reverse side of the
page.” Id. at *3. Like Landmark, and unlike Andren, the Term
Sheet does not refer to a specific document, but rather
to any terms appearing on the reverse side.
Even without the specific Illinois case law on point,
general principles of contract interpretation would require
reversal. “Sales of all services and materials are subject
14 No. 01-3561
to the general terms and conditions on the reverse side,”
with nothing written on the reverse side, cannot be read
to incorporate explicitly any specific document. For exam-
ple, the Term Sheet might be a preprinted form, with the
generic statement at the bottom of the first page that any
additional terms specific to a particular contract will be
written on the back. Or the statement might evidence the
parties’ intent to incorporate some terms but, given the
ambiguities in the contract, it cannot support the incorpo-
ration of any specific terms at the Rule 12(b)(6) stage. The
face of the contract simply does not incorporate Form 4
to the degree of certainty necessary to resolve this case
at this procedural juncture.
D.
Finally, we address whether the district court erred in
denying leave to amend the complaint to add Count 2.
Count 2, subtitled, “Alternative Contract Claim,” alleged,
in pertinent part, that “even if the general terms and
conditions submitted by Defendant and attached as Ex-
hibit C hereto were part of the contract, those designated
‘Warranty’ provisions do not apply to Plaintiff’s damages
for breach of the Contract . . . .” Second Amended Com-
plaint, ¶ 16. The district court held that Count 2 “does not
actually state an additional contract claim, but rather raises
new arguments as to why 188 was not bound by Trinity’s
general terms and conditions.” July 9, 2001 Order.
“Rule 15(a) provides that leave to amend a pleading
shall be freely given when justice so requires.” Brunt v. Serv.
Employees Int’l Union, 284 F.3d 715, 720 (7th Cir. 2002).
However, this right is not absolute, and we think that the
district court was on solid ground in refusing permission
to make this particular amendment. Count 2 of 188’s sec-
ond amended complaint did not state a new claim; rather,
No. 01-3561 15
as the district court held, Count 2 was simply an additional
argument supporting 188’s breach-of-contract claim un-
der Count 1. Cf. Archer Daniels Midland Co. v. Hartford Fire
Ins. Co., 243 F.3d 369, 374 (7th Cir. 2001) (affirming the
district court’s decision to deny leave to amend and stat-
ing: “Complaints need not plead law, so why four claims
that differ only in the legal formulation for a single griev-
ance?”). The district court acted within its discretion in
denying 188 leave to amend its complaint to add Count 2.
Conclusion
The district court properly considered Form 4 in decid-
ing Trinity’s Rule 12(b)(6) motion. However, 188 made
no binding judicial admission that Form 4 was a part of
the parties’ contract. The district court erred in concluding
that, as a matter of law, Form 4 was a part of the parties’
contract. The district court did not abuse its discretion
in denying 188 leave to amend its complaint to add a sec-
ond count. Accordingly, the decision of the district court
is AFFIRMED in part, REVERSED in part, and the case is
REMANDED for further proceedings consistent with this
opinion. 188 may recover its costs in this court.
AFFIRMED IN PART, REVERSED IN PART
and REMANDED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-97-C-006—8-1-02