___________
No. 95-2958
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Simmons Poultry Farms, Inc., *
*
Appellant *
* Appeal From the United
v. * States District Court for the
* Southern District of Iowa
Dayton Road Development Company *
d/b/a Carriage House Meat and *
Provision Company, Inc., *
*
Appellee. *
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Submitted: January 10, 1996
Filed: April 25, 1996
___________
Before RICHARD S. ARNOLD, Chief Judge, BOWMAN, Circuit Judge, and JONES,*
Senior District Judge.
JONES, Senior District Judge.
Dayton Roads Development Company d/b/a Carriage House Meat and
Provision Company, Inc. ("Carriage House") brought this action against
Simmons Poultry Farms, Inc. ("Simmons") on a turkey processing venture.
The case was tried to a jury on the theories of breach of contract and
promissory estoppel. The jury returned a verdict in favor of Carriage
House in the amount of $96,794.00 on the promissory estoppel claim. The
District Court denied Simmons' post-trial motion for judgment as a matter
of law and Simmons now appeals that decision. We reverse.
*
The HONORABLE JOHN B. JONES, Senior District Judge, United
States District Court for the District of South Dakota, sitting by
designation.
I. Factual Background
In the summer of 1990 representatives from Carriage House and Hubbard
Foods, Inc. ("Hubbard") began discussing a business venture to process
turkey into cutlets, tenders, chops and cold cuts (hereinafter called "the
project"). Hubbard was to supply the raw meat and market the end products
while Carriage House was to process and package the turkey for a fee.
Prior to an agreement being reached on this venture, Simmons bought out
Hubbard in September of 1990 and continued the negotiations on this venture
with Carriage House.
The principal individuals involved in the negotiations were Mr. Ron
Ketcham, President of Hubbard; Mr. Jeff Lea, Hubbard's sales manager; Mr.
Marvin Walter, Chairman of the Board of Directors of Carriage House; and
Mr. Joe Cooper, Director and Plant Manager of Carriage House. Following
the buy-out of Hubbard by Simmons, Ketcham continued as an employee for 90
days and was then replaced by general manager Mr. Mike Morris in November
of 1990. Lea also remained as a transitional employee and was principally
in charge of marketing the project. Mr. Craig Ford investigated the types
of equipment needed and researched the market for the project while serving
as a consultant on the project and being compensated by both Carriage House
and Simmons.
The negotiations were conducted both orally and in writing. Walter
testified that although he personally participated in some of the
conversations with Simmons, Cooper as the plant manager was principally in
charge of the project. On September 14, 1990, Cooper wrote to Ketcham
stating that Carriage House was definitely interested in going forward with
the project. The letter informed Ketcham the cost of the equipment for the
project to be purchased by Carriage House would be approximately $350,000.
Cooper further explained that Carriage House would need a minimum of 2.6
million pounds of product per year, consisting of 20,000 to 30,000 pounds
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for the first ten weeks of production and 50,000 pounds per week
thereafter. Ketcham did not respond in writing to this letter.
Cooper wrote a memorandum to Walter on November 6, 1990 to report the
results of a meeting held on November 2, 1990 between Cooper, Ketcham and
Lea.1 Walter incorporated this memorandum into
1
The memorandum provides as follows:
November 6, 1990
TO: Marvin J. Walter
FROM: Joe Cooper
RE: Meeting with Hubbard/Simmons co.
Ron ketcham and Jeff Lee
Friday, November 2, 1990
Ron Ketchem was extremely positive about going forward with
the turkey project with modified atmosphere equipment with
outside co-packer such as Carriage House.
They would guarantee an arrangement for at least one year with
a 90 day notice of termination.
Hubbard/Simmons would like to get started immediately with the
possibility of having product to test market Jan. 1, 1991.
They are very positive about this project leading into other
items which would lend itself to a stronger and more feasible
relationship between Carriage House and Hubbard/Simmons.
On the downside, Hubbard/Simmons would probably agree to take
over the modified atmosphere packaging equipment if there
actually was a termination after 15 months.
Ron K. felt the Jewell facility was totally adequate for start
up and was quite impressed that it was ready daily to produce
in. He did indicate that he would be surprised with start up
that we, Carriage House and Hubbard/Simmons, would not outgrow
the present facility very quickly.
Ron K. showed some concern that the Carriage House-
Hubbard/Simmons project would be carrying the entire overhead
and indicated he would have no problem with Carriage House co-
packing with the same equipment to customers outside
Hubbard/Simmons basic upper midwest marketing area. Also that
we could start up immediately processing and marketing the
3
a letter he wrote to Ketcham on November 12, 1990 informing Ketcham that
Carriage House was ready to proceed with the project.2
food service items through Hubbard/Simmons and/or on our own.
Ron K. did indicate there would be no guarantee on tonnage by
the quarter, and that if they were to commit, it would be less
than our suggested 50,000 lbs/week. However, at the same time
he indicated they are conservative and it could be more.
2
The letter provides as follows:
Dear Ron:
In line with your recent visit to Ames and the discussions you
held with Joe Cooper that were confirmed in Joe's attached
memo to me, we are now ready to move ahead on the project.
Although I personally feel a relationship of this nature
should be based on a formal contract with minimal guarantees,
we are nevertheless going to purchase the necessary equipment
and proceed to prepare for production.
We currently anticipate we will be ready to produce retail
product in a modified gas flushed package around January 1,
1991. We expect to start producing the various
institutionally packed items as soon as we receive appropriate
labeling and packaging information from you.
At this time, we will plan to produce and sell under the
Carriage House corporate arrangement and will not be forming
a new corporation to handle this business.
Bill Staley will be working under the direction of Joe Cooper
at our Jewell, Iowa plant. Craig Ford will be assisting us on
this project but will not be part of our permanent management
team. The length of his involvement and the degree we will
employ him in this project depends upon our joint agreement to
continue to share in his expenses ....
Should you chose at this point to make any of this a more
formal agreement, please let me know. In lieu of that, we
simply will act on the basis of the attached memo and trust
that all will go well.
Sincerely,
Carriage House Meat and Provision Co., Inc.
4
Ketcham responded to Walter's letter on November 14, 1990.3
Carriage House purchased the necessary equipment in early 1991 and
was ready to being processing turkey in April of 1991. However, Simmons'
efforts to market the end products of the project were unsuccessful.
Simmons therefore did not supply and Carriage House did not process any
significant amount of turkey using the equipment purchased by Carriage
House for the project. Simmons paid one-half of Carriage House's expenses
relating to the project from May of 1991 to June of 1992.
Marvin J. Walter
3
The letter provides as follows:
Dear Marv:
Thank you for your letter of November 12th reaffirming your
decision to move forward with the processing/packaging of our
new turkey products. With everyone's participation, this can
develop into a significant growth opportunity for both of our
companies.
I have reviewed the November 6th letter to you from Joe Cooper
and the only item that I would have some objection to is the
fifth paragraph in which Joe says that, "Hubbard/Simmons would
probably agree to take over the modified atmosphere packaging
equipment if there actually was a termination after 15
months." As Jeff Lea and I recall the conversation, our
statement was that if the project was successful to the point
where it made economic sense for Simmons to process/package
these products ourselves, we would certainly consider
purchasing the modified atmosphere packaging equipment from
Carriage House if a suitable purchase arrangement could be
reached.
Jeff Lea and I will continue to work closely on this project
and we will be in touch with Joe Cooper.
Cordially,
Ronald D. Ketcham
General Manager
5
Carriage House brought this action in March of 1993 claiming Simmons
had guaranteed that after an initial start-up period it
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would supply 50,000 pounds of turkey per week for processing and packaging
by Carriage House. During trial Carriage House claimed damages in the
amount of $1,237,464 for out-of-pocket expenses and lost profits. The jury
awarded $96,794 to Carriage House.
II. Standard of Review
We review de novo the district court's denial of a motion for
judgment as a matter of law, using the same standards as the district
court. Smith v. World Insurance Co., 38 F.3d 1456, 1460 (8th Cir. 1994)
(citations omitted). We have explained that:
A motion for judgment as a matter of law presents a legal question
to the district court and this court on review: "whether there is
sufficient evidence to support a jury verdict." White v. Pence, 961
F.2d 776, 779 (8th Cir. 1992). We view the "evidence in the light
most favorable to the prevailing party and must not engage in a
weighing or evaluation of the evidence or consider questions of
credibility." Id. Judgment as a matter of law is appropriate only
when all of the evidence points one way and is "susceptible of no
reasonable inference sustaining the position of the nonmoving party."
Id.
Keenan v. Computer Assoc. Int'l, Inc., 13 F.3d 1266, 1268-69 (8th Cir.
1994).
III. Decision
To establish liability on the basis of promissory estoppel, the
plaintiff must establish three essential elements:
(1) A clear and definite agreement;
(2) Proof that the party seeking to enforce the agreement reasonably
relied upon it to his detriment; and
(3) A finding that the equities support enforcement of the agreement.
Uhl v. City of Sioux City, 490 N.W.2d 69, 73 (Iowa App. 1992)
7
(citations omitted). The jury found Carriage House established these
elements.
The Iowa courts have not explicitly defined "a clear and definite
agreement," but the Supreme Court of Iowa compared and contrasted three
cases involving this element. National Bank of Waterloo v. Moeller, 434
N.W.2d 887, 889 (Iowa 1989) (discussing In re Estate of Graham, 295 N.W.2d
414, 418-19 (Iowa 1980); Johnson v. Pattison, 185 N.W.2d 790, 795-97 (Iowa
1971); Miller v. Lawlor, 66 N.W.2d 267, 272-75 (Iowa 1954)). The Moeller
court explained:
By way of distinguishing these cases, we observe that Miller, and
Pattison, unlike Graham, demonstrated a clear understanding by the
promisor that the promisee was seeking an assurance upon which he
could rely and without which he would not act. See Miller, 245 Iowa
at 1155, 66 N.W.2d at 274. This dual emphasis on clarity and
inducement parallels the Restatement (Second) definition of an
agreement for purposes of promissory estoppel as "[a] promise which
the promisor should reasonably expect to induce action ... on the
part of the promisee." Restatement (Second) of Contract § 90 (1981).
434 N.W.2d at 889.
Simmons admits it had an agreement with Carriage House whereby
Simmons would supply raw turkey meat, Carriage House would process and
package it and Simmons would market the end products. Simmons, however,
claims there is not sufficient evidence in the record from which a
reasonable juror could find by a preponderance of the evidence that Simmons
made an oral guarantee to supply 50,000 pounds of turkey per week to
Carriage House for processing following an initial start-up period. Rather
Simmons asserts the 50,000 pounds per week figure was a goal that all
parties hoped to achieve and even surpass. We agree with Simmons and find
the evidence is not susceptible to a reasonable inference that the parties
had a clear and definite agreement containing a poundage guarantee by
Simmons.
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The evidence in the record does not point toward the existence of a
poundage guarantee by Simmons, rather it points toward the
existence of a 50,000 pound per week goal or projection by the parties.
The only evidence of such a guarantee is the testimony of Walter who stated
in a general manner that Simmons made a poundage guarantee at some
unidentified point in time. Walter identified Ron Ketcham and Jeff Lea as
the individuals that "indicated to us" that 50,000 pounds per week "would
be the minimum." Appellant's Appendix, p. 71. Walter does not identify
to whom such an "indication" was made or when it was allegedly made. There
is no evidence of an actual conversation wherein an individual representing
Simmons stated to someone representing Carriage House that Simmons would
guarantee Carriage House would receive 50,000 pounds of turkey per week to
process and package. When considered in light of the documentary evidence
Walter's testimony is not susceptible to a reasonable inference that a
clear and definite agreement containing a poundage guarantee existed
between the parties.
Although Walter testified he would not have proceeded with the
project without a poundage guarantee from Simmons, there is no evidence
that Simmons was aware of this information. Rather, Walter informed
Simmons in his November 12, 1990 letter that Carriage House was going
forward with the project despite not having a formal contract with minimal
guarantees. See footnote 2, supra. Therefore, Simmons did not have "a
clear understanding" that Carriage House "was seeking an assurance upon
which [it] could rely and without which [it] would not act." Moeller, 434
N.W.2d at 889.
Cooper, the individual principally in charge of the project for
Carriage House, never testified that anyone from Simmons made a poundage
guarantee. Rather he testified the "input" he was getting from Jeff Lea
was that 50,000 pounds per week "was probably on the light side."
Appellant's Appendix, p. 110. Cooper spoke in
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terms of "projections" rather than "guarantees" when asked whether Simmons
made a poundage guarantee. Id. at 118. Cooper's testimony is not
susceptible to a reasonable inference that Simmons made a poundage
guarantee to Carriage House.
The written communications between the parties establish that Simmons
refused to guarantee 50,000 pounds per week. The November 6, 1990
memorandum written by Cooper, Carriage House's principal negotiator in this
project, stated that Ketcham would not make a poundage guarantee and even
if Simmons did it would be less than the 50,000 pounds per week suggested
by Carriage House. See footnote 1, supra. Walter incorporated this
memorandum in his November 12, 1990 letter in which he informed Ketcham
that Carriage House was going forward with the project and would be
purchasing the necessary equipment. See footnote 2, supra. Walter stated
in this letter that Carriage House would act on the basis of the Cooper
memorandum and he acknowledged that Carriage House was proceeding without
a formal contract containing minimal guarantees. Id. The written
communications between the parties points only toward the nonexistence of
a poundage guarantee on the part of Simmons.
As we have found insufficient evidence to support the jury's finding
of a clear and definite agreement, it is not necessary to discuss the two
remaining elements of a promissory estoppel claim.
IV. Conclusion
For the reasons set forth above, we reverse the district court and
grant Simmons' motion for judgment as a matter of law.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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