Rockwood v. SKF USA Inc.

United States Court of Appeals
For the First Circuit

No. 11-1105

ROBERT ROCKWOOD and ROXANA MARCHOSKY,

Plaintiffs, Appellants,

v.

SKF USA INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph N. Laplante, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella and Selya, Circuit Judges.

Christopher R. Pudelski, with whom Law Offices of Christopher
R. Pudelski, was on brief for appellants.
David Richman, with whom Matthew Williams, Pepper Hamilton
LLP, Peter G. Callaghan, and Preti Flaherty Beliveau & Pachios,
PLLP, were on brief for appellee.

June 28, 2012
 TORRUELLA, Circuit Judge. Plaintiffs-Appellants Robert

Rockwood ("Rockwood") and Roxanna Marchosky ("Marchosky")

(collectively, "Appellants") appeal the district court's grant of

summary judgment to Defendant-Appellee SKF USA Inc. ("SKF").

Appellants allege that they agreed to personally guarantee certain

loans in reliance on promises by SKF to invest in a joint business

venture and to purchase Appellants' company. When SKF failed to

deliver on these alleged promises, Appellants were left with

millions of dollars in repayment obligations. Appellants sued SKF

on a promissory estoppel theory, but the district court rejected

their claim and granted summary judgment to SKF. After careful

consideration, we affirm.

I. Background

A. Appellants and SKF Meet

We recount the facts in the light most favorable to the

Appellants, who were the non-moving party below. See Agusty-Reyes

v. Dep't of Educ., 601 F.3d 45, 48 (1st Cir. 2010).

Appellants were the co-founders and sole shareholders of

Environamics, Inc. ("Environamics"), a Delaware corporation based

in New Hampshire. Until its failure, described infra, Environamics

designed, manufactured, and sold pumps and sealing devices for

various applications. In April of 2003, after defaulting on a

commercial loan, Environamics was left with a $1.5 million debt to

Pioneer Capital ("Pioneer"). During the fall of 2003, Environamics

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solicited potential investors and/or purchasers in order to raise

money to satisfy its debt to Pioneer. In addition, Environamics

and Pioneer discussed converting some of Environamics's debt to

Pioneer into an equity position for Pioneer.

In September of 2003, however, a savior appeared -- or so

it seemed. SKF1 learned that Environamics had developed and

patented a "universal power frame," a device that SKF had been

trying to develop for some time. Appellants met with Timothy

Richards ("Richards"), vice president of SKF, to discuss a possible

relationship between SKF and Environamics. Two weeks after this

meeting, Richards called Rockwood and told him that "SKF had

decided to move very rapidly toward a possible acquisition of

Environamics." During conversations over the next few weeks,

Richards repeatedly expressed SKF's interest in acquiring

Environamics.

During this period, Environamics began to share

confidential business information with SKF. In addition, Richards

told Appellants that in view of SKF's planned acquisition,

Environamics should cease seeking out new distribution channels for

its products. Appellants complied with this request. Appellants

also ceased looking for other opportunities for financing to pay

off the debt to Pioneer.

1
SKF is a subsidiary of AB SKF, a Swedish company.

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B. Agreements Between Appellants and SKF

On January 14, 2004, Appellants entered into an "Option

Agreement" with SKF. The Option Agreement gave SKF "an irrevocable

option to purchase all, but not less than all, of the outstanding

shares of [s]tock" in Environamics. The parties also executed a

"Buy-Sell Agreement" that made SKF the "exclusive marketer and

reseller" of Environamics's pumps and related products; the Buy-

Sell Agreement also made Environamics the exclusive supplier of

such products to SKF.

SKF's option to buy Environamics was to last for fifteen

months. In addition, the Option Agreement called for the parties

to try in good faith to negotiate a nine-month extension if SKF

could not reach a target of selling $10 million of Environamics

products annually under the Buy-Sell Agreement. The Option

Agreement had an "exercise price" of $9 million, to be adjusted for

Environamics's outstanding debt and any remaining obligations

between SKF and Environamics. SKF was also to pay Appellants a

royalty of ten percent of SKF's gross profits on sales of

Environamics products for a seven-year period.

The Option Agreement contained a clause stating that it,

combined with the Buy-Sell Agreement, "constitutes the entire

agreement and supersedes all prior agreements, conversations,

understandings and negotiations, both written and oral, between the

parties with respect to the subject matter hereof." The Option

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Agreement also provided that it was governed by Pennsylvania law

"without regard to the laws that are applicable under conflicts of

laws principles." The Buy-Sell Agreement contained a similar

choice-of-law clause.

C. Wells Fargo Loan

After the parties signed the Option and Buy-Sell

Agreements, SKF paid Environamics $2 million, which Environamics

used to pay off the loan to Pioneer. Pursuant to the Buy-Sell

Agreement, Environamics officially terminated its relationships

with all of its distributors. SKF effectively took control of

shipping and marketing for Environamics products, the SKF brand

name appeared on Environamics's products and marketing materials,

and SKF provided the manufacturer's warranty on Environamics's

products.

Environamics required additional financing to keep up its

day-to-day operations. Initially, Richards and SKF attempted to

obtain the necessary financing for Environamics. On February 27,

2004, Richards sent a letter to DSI Investment Banking Services

(the "DSI Letter") in which he stated: "[t]he value of SKF's

corporate commitment to [the Environamics venture] is estimated to

exceed $10 million over the next year to fifteen months." In March

of 2004, however, Richards informed Rockwood that SKF would not be

in a position to provide additional financing and that Appellants

themselves would need to obtain the necessary financing. SKF

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insisted, however, that Environamics obtain loans, rather than

selling shares of stock, because SKF did not want any other entity

to own Environamics shares.

After Appellants initially were unable to find a lender,

Richards telephoned a contact at a Massachusetts branch of Wells

Fargo and asked his contact to speak with Appellants about

obtaining a loan. After Wells Fargo twice denied financing,

Richards gave Rockwood a letter dated March 5, 2004 (the "March 5,

2004 Letter") that Rockwood was to give to Wells Fargo in support

of a loan application. This letter, written on SKF letterhead,

outlined the "resources and assets [SKF] [had] committed to [its]

recently negotiated joint venture with Environamics." The letter

stated, inter alia, that "the value of SKF's corporate commitment

to this venture is estimated to exceed $10 [million] over the next

year to fifteen months." In analyzing the risk of a loan to

Appellants, Wells Fargo noted that there was no guarantee that SKF

would buy Environamics; specifically, Wells Fargo recognized that

if the $10 million sales target in the Buy-Sell Agreement was not

met, SKF might not exercise its option. Ultimately, Wells Fargo

agreed to extend a $3,000,000 line of credit to Environamics, but

only if Appellants personally guaranteed the loan.

Appellants were hesitant to personally guarantee the

loan, and they expressed this concern to Richards. Appellants

claim that in three separate conversations in or around April of

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2004, Richards assured them that SKF would buy Environamics. As

discussed below, exactly what Richards said is the subject of

considerable confusion. After these conversations, Appellants

agreed to personally guarantee the Wells Fargo loan.

D. Breakdown of Relations Between Environamics and SKF

By October of 2004, it became clear that the

SKF/Environamics venture would not meet the $10 million sales

target under the Buy-Sell Agreement. Appellants blamed this

shortfall on SKF's failure to make sufficient effort to sell

Environamics products, while SKF blamed it on weaker than expected

market demand. At this point, SKF informed Appellants that it

would not proceed with an acquisition under the Option Agreement.

SKF claimed, however, that it had not cancelled the Option

Agreement, and invoked its obligation to negotiate an extension to

the option period. In addition, SKF offered to purchase

Environamics on new terms, including a royalty for Appellants and

a smaller up-front payment than the $9 million specified in the

Option Agreement.

Appellants rejected SKF's new offer in January of 2005.

In addition, Rockwood told Richards that as far as the Appellants

were concerned, the Option Agreement "no longer exist[ed]." The

parties continued to negotiate a possible acquisition by SKF

throughout the next few months, during which time Rockwood

repeatedly expressed Appellants' view that the Option Agreement was

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no longer applicable. By the end of 2005, negotiations had broken

down completely.

In the spring of 2007, Wells Fargo declared Environamics

to be in default on its loan. Environamics filed for bankruptcy

protection in the Bankruptcy Court for the District of New

Hampshire. In September of 2007, the Bankruptcy Court awarded

control of Environamics to Wells Fargo. Appellants are now

responsible for roughly $5 million in personal guarantees on the

Wells Fargo loan.

E. Procedural History

In March of 2008, Appellants filed a 29-count complaint

against SKF in the state court of New Hampshire. Appellants were

initially represented by Marchosky, who is an attorney. SKF

removed the action to the U.S. District Court for the District of

New Hampshire. Appellants filed a First Amended Complaint and

later a Second Amended Complaint. The Second Amended Complaint

included a promissory estoppel claim, the thrust of which was that

Appellants took out the Wells Fargo loan in reliance on two

promises by SKF: (1) that SKF would "exercise its option under the

terms of the Option Agreement"; and (2) that SKF would "expend $10

million on its Environamics sales effort and put numerous sales

people in the field." The Second Amended Complaint also included

breach of contract claims and claims under New Hampshire's unfair

trade practices statute.

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 On July 31, 2009, SKF filed a motion for summary judgment

(the "First Summary Judgment Motion"). SKF argued, inter alia,

that (1) there was no evidence of a promise by SKF to buy

Environamics or to invest $10 million in the sales effort; (2) the

alleged promises were unenforceable as a matter of law due to lack

of specificity; and (3) Appellants could not have reasonably relied

on the promises due to the lack of specificity and to the existence

of written agreements covering the same subject matter. At a

hearing on SKF's motion, the district court instructed the

Appellants to file affidavits stating "the time, place, and

specific content" of SKF's alleged promises. On November 2, 2009,

Appellants both submitted affidavits (the "First Summary Judgment

Affidavits"). These Affidavits described, among other things, the

three telephone conversations with Richards that took place in or

around April of 2004. According to Appellants, during these

conversations, Richards told Appellants that: (1) they should "not

worry about taking out the Wells Fargo loan because SKF was buying

their stock in Environamics under the Option Agreement"; (2) "SKF

was going to exercise its option under the Option Agreement and buy

the company"; and (3) the president of SKF's service division, Don

Poland, "had confirmed . . . SKF would buy the company under the

Option Agreement." The Affidavits also stated that Richards told

Appellants on multiple occasions that SKF would invest $10 million

in the effort to sell Environamics products. On November 3, 2009,

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the district court denied SKF's First Summary Judgment Motion in a

one-line order, stating that "[f]acts material to the resolution of

the motion remain in dispute."

In July of 2010, Appellants, through new counsel, moved

for leave to file a Third Amended Complaint in order to "set forth

a more detailed and thorough factual basis for their promissory

estoppel claim." Appellants claimed that their new allegations

were "tied to the larger and more general promise, 'Don't worry, we

are buying your company.'" SKF objected to the proposed amendment

as untimely, since discovery had already closed and the summary

judgment deadline had already passed. SKF also argued that

Appellants were judicially estopped from claiming a "more general"

promise to buy Environamics because, in response to SKF's First

Summary Judgment Motion, Appellants had characterized SKF's promise

as a promise to buy Environamics on the terms of the Option

Agreement. In response to SKF's objection, Appellants pledged that

if they were allowed to amend their complaint, "they would not

pursue claims for breach of contract or that specifically arise in

connection with the Option Agreement" (emphasis added). Appellants

also proposed that SKF be allowed to file a renewed summary

judgment motion to challenge the new promissory estoppel theory.

The district court granted Appellants' motion to amend in

a written order on August 24, 2010. The court rejected SKF's

judicial estoppel argument because it found that "[i]t is not

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logically impossible that SKF could have engaged in certain conduct

toward the [Appellants] that caused them to believe it was buying

their company under the Option Agreement, and other conduct toward

the [Appellants] that caused them to believe SKF was buying their

company on some other terms." However, as Appellants had

suggested, the court permitted SKF to file a renewed summary

judgment motion to challenge the new promissory estoppel theory.

In addition, in a footnote, the court held that the promissory

estoppel claim in the Third Amended Complaint "no longer relies on

SKF's alleged commitment to expend $10 million in a sales campaign

for Environamics products . . . ." Appellants did not object to

any aspect of the district court's ruling.

SKF filed its new motion for summary judgment ("Second

Summary Judgment Motion") on September 8, 2010. In support of

their opposition to this motion, Rockwood and Marchosky again

submitted affidavits (the "Second Summary Judgment Affidavits").

Both of these affidavits mentioned the phone calls with Richards in

April of 2004. However, unlike the First Summary Judgment

Affidavits, which stated that Richards promised that SKF would buy

Environamics under the Option Agreement, the Second Summary

Judgment Affidavits simply stated that Richards said that SKF "had

committed to buying Environamics." The Second Summary Judgment

Affidavits gave no indication that the Option Agreement was

discussed at all during the April 2004 calls.

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 The district court granted SKF's motion on December 17,

2010. See Rockwood v. SKF USA Inc., 758 F. Supp. 2d 44 (D.N.H.

2010). The court accepted, "for present purposes," Appellants'

claim that New Hampshire law applied to the case. Id. at 56. The

court noted that in support of their motion for leave to file their

Third Amended Complaint, Appellants had waived their theory that

SKF promised to buy Environamics under the Option Agreement. Id.

at 57. Thus, the court focused on Appellants' new theory, which

was that SKF had promised to buy Environamics on some other,

unspecified terms. The court held that under New Hampshire law,

Appellants could not have relied on any promises expressed in SKF's

words or conduct prior to the signing of the Option Agreement

because any promises were superseded by the Option Agreement

itself. Id. at 59-61. The court then addressed the Appellants'

reliance on statements and conduct by SKF that occurred after the

execution of the Option Agreement.

First, the court considered Richards's alleged assurances

during the April 2004 calls that SKF would buy Environamics. The

court noted that the Appellants' Second Summary Judgment Affidavits

advanced a different characterization of Richards's statements

during the April 2004 calls than that offered in the First Summary

Judgment Affidavits. The First Summary Judgment Affidavits claimed

that Richards said that SKF would buy Environamics under the terms

of the Option Agreement, while the Second Summary Judgment

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Affidavits stated that Richards simply said SKF would buy

Environamics, without specifying the terms. Since Appellants had

relied on their earlier characterization of Richards's statements

in order to defeat SKF's First Summary Judgment Motion, the court

held that Appellants were judicially estopped from now claiming

that Richards had conveyed a more general promise. Id. at 61-63.

The court further held that even if judicial estoppel did not

apply, Appellants could not rely on the contradiction between the

First and Second Summary Judgment Affidavits in order to create a

triable issue of fact regarding what Richards said. See id. at 63

("'[A] party opposing summary judgment may not manufacture a

dispute of fact by contradicting his earlier sworn testimony

without a satisfactory explanation of why the testimony has

changed.'" (quoting Abreu-Guzmán v. Ford, 241 F.3d 69, 74 (1st Cir.

2001))). Finally, the court held that Appellants could not

reasonably have interpreted Richards's statements as anything other

than a promise to buy Environamics under the Option Agreement, a

theory that Appellants had waived. Id. at 63-64.

The district court also rejected Appellants' argument

that there was a triable issue of fact regarding whether SKF's

business conduct manifested a promise to buy Environamics.

Appellants contended that SKF "usurp[ed]" Environamics by using SKF

sales personnel to sell Environamics products and by identifying

Environamics products as SKF products in marketing materials.

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However, the district court noted that the Buy-Sell Agreement

contemplated exactly this type of relationship between SKF and

Environamics. Id. at 64. Furthermore, the court noted that the

Option Agreement was in place when SKF began selling Environamics

products pursuant to the Buy-Sell Agreement. Therefore, the court

held that even if Appellants could reasonably have interpreted

SKF's conduct as conveying a promise, they could only have

interpreted the promise as a promise to buy the company under the

Option Agreement. However, the Appellants had waived this theory

of the case when they filed their Third Amended Complaint. Id. at

64-65.

The district court entered judgment in SKF's favor on

December 21, 2010. This appeal followed.

II. Discussion

Appellants argue that the district court erred when it

interpreted the Third Amended Complaint as abandoning any

promissory estoppel argument based on a promise by SKF to invest

$10 million in the effort to sell Environamics products.

Appellants then argue that the district court erred in granting

summary judgment to SKF.

The parties also dispute which state's law, New

Hampshire's or Pennsylvania's, applies in this case. In ruling on

SKF's Second Summary Judgment Motion, the district court assumed

the applicability of New Hampshire law. On appeal, SKF argues that

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Pennsylvania law should apply. We need not resolve this dispute,

however, because our ultimate result would be the same under either

state's law. See Steinke v. Sungard Fin. Sys. Inc., 121 F.3d 763,

775 (1st Cir. 1997) (declining to resolve choice of law dispute

"because 'the outcome is the same under the substantive law of

either jurisdiction'" (quoting Lambert v. Kysar, 983 F.2d 1110,

1114 (1st Cir. 1993))). We therefore assume, without so deciding,

that New Hampshire law applies in this case, and proceed

accordingly.2

A. Abandonment of Claim That SKF Promised to Invest $10 Million

In its order granting Appellants' motion for leave to

file their Third Amended Complaint, the district court noted that

Appellants abandoned any promissory estoppel claim based on SKF's

alleged promise to invest $10 million in the effort to sell

Environamics products. Appellants now argue that this statement

was incorrect. However, Appellants never raised this issue with

the district court after the court entered its order granting leave

to amend. Our case law is clear that "arguments not raised in the

2
Appellants also challenge an order by the district court
sanctioning them for discovery violations. The district court
found that Rockwood had deleted certain computer files that the
court had ordered preserved. As a sanction, the court ruled that,
should the case go to trial, an adverse inference would be drawn
against Rockwood's credibility. Because we affirm the district
court's ruling on summary judgment, we need not rule on Appellants'
challenge to the discovery sanction.

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district court cannot be raised for the first time on appeal."

Sierra Club v. Wagner, 555 F.3d 21, 26 (1st Cir. 2009).

Appellants contend that they could not have pressed their

claim relating to the alleged promise to invest $10 million in

their opposition to SKF's Second Summary Judgment Motion because by

that point, the district court had already ruled (incorrectly, they

contend) that they had waived this claim. However, this argument

misses the point. If Appellants objected to the district court's

characterization of their Third Amended Complaint, they could have

raised their objection with the district court in some form, e.g.,

through a motion for reconsideration. See D.N.H. R. 7.2(e)

(specifying procedures for filing motions for reconsideration). It

is Appellants' failure to object in any way to the district court's

conditioning of its order granting leave to amend on the

abandonment of the claim that resulted in its waiver. Cf.

Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 31 (1st Cir. 1996)

("[T]his court from time to time has refused to permit appellants

to take advantage of supposed oversights that had not been called

to the district court's attention by way of a timeous motion to

reconsider.").

B. Whether Summary Judgment Was Appropriate

We review a district court's grant of summary judgment de

novo, "resolving all evidentiary conflicts and drawing all

reasonable inferences in favor of the nonmoving party." Kuperman

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v. Wrenn, 645 F.3d 69, 73 (1st Cir. 2011). "Summary judgment is

appropriate when there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law."

Cortés-Rivera v. Dep't of Corr. & Rehab. of P.R., 626 F.3d 21, 26

(1st Cir. 2010). "[W]e are not married to the trial court's

reasoning but, rather, may affirm on any independently sufficient

ground made manifest by the record." Cahoon v. Shelton, 647 F.3d

18, 22 (1st Cir. 2011). We must reverse the grant of summary

judgment, however, if we find that the nonmovant has "established

a genuine issue of material fact that a reasonable jury could

resolve in their favor." Collins v. Univ. of N.H., 664 F.3d 8, 19

(1st Cir. 2011) (quoting Coffin v. Bowater, Inc., 501 F.3d 80, 97

(1st Cir. 2007) (internal quotation mark omitted).

"The nonmovant may defeat a summary judgment motion by

demonstrating, through submissions of evidentiary quality, that a

trialworthy issue persists." Iverson v. City of Bos., 452 F.3d 94,

98 (1st Cir. 2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317,

322-24 (1986)). However, "a conglomeration of 'conclusory

allegations, improbable inferences, and unsupported speculation' is

insufficient to discharge the nonmovant's burden." DePoutot v.

Raffaelly, 424 F.3d 112, 117 (1st Cir. 2005) (quoting Medina-Muñoz

v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)).

Rather, "the party seeking to avoid summary judgment 'must be able

to point to specific, competent evidence to support his claim.'"

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Soto-Ocasio v. Fed. Express. Corp., 150 F.3d 14, 18 (1st Cir. 1998)

(quoting August v. Offices Unltd., Inc., 981 F.2d 576, 580 (1st

Cir. 1992)).

The New Hampshire Supreme Court has adopted the

definition of promissory estoppel from Section 90 of the

Restatement (Second) of Contracts. See Marbucco Corp. v. City of

Manchester, 632 A.2d 522, 524 (N.H. 1993) (stating that even if

plaintiff's contract claim failed, it might still prevail on a

promissory estoppel theory, and citing Section 90). Under the

Restatement, "[a] promise which the promisor should reasonably

expect to induce action or forbearance on the part of the promisee

or a third person and which does induce such action or forbearance

is binding if injustice can be avoided only by enforcement of the

promise." Restatement (Second) of Contracts § 90 (1981).3

3
The elements of a promissory estoppel claim under Pennsylvania
law are similar. See Crouse v. Cyclops Indus., 745 A.2d 606, 610
(Pa. 2000) ("In order to maintain an action in promissory estoppel,
the aggrieved party must show that 1) the promisor made a promise
that he should have reasonably expected to induce action or
forbearance on the part of the promisee; 2) the promisee actually
took action or refrained from taking action in reliance on the
promise; and 3) injustice can be avoided only by enforcing the
promise." (citing Restatement (Second) of Contracts § 90)). The
choice of law dispute between the parties concerns the level of
specificity of the promise that is required to support a promissory
estoppel claim. SKF contends that Pennsylvania law requires a
promise to meet a certain specificity threshold, and further
contends that the alleged promise in this case fails this
requirement. Appellants urge us to apply New Hampshire law, which
they claim has no specificity requirement. We need not consider
whether there is in fact any difference between New Hampshire and
Pennsylvania law regarding the specificity issue because
Appellants' claim fails under either standard.

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 Here, because Appellants waived their claim that SKF

promised to invest $10 million in the sales effort, we focus on the

question of whether there is a triable issue of fact regarding

SKF's alleged promise to buy Environamics. Appellants do not

dispute that they waived the theory that SKF promised to exercise

its option under the Option Agreement. Nor do Appellants dispute

that they could not have relied on any promise by SKF to buy

Environamics that occurred prior to the signing of the Option

Agreement. The question before us, therefore, is whether,

resolving all evidentiary conflicts and drawing all reasonable

inferences in favor of Appellants, there is sufficient evidence to

survive summary judgment of a promise by SKF to buy Environamics on

terms other than those of the Option Agreement that was made after

the execution of the Option Agreement.

Appellants claim that there is evidence of both words and

conduct by SKF that constituted a promise to buy Environamics. For

the former, Appellants point to Richards's alleged assurances

during the April 2004 calls. For the latter, Appellants point to

Richards's actions to facilitate the Wells Fargo loan. However,

the district court held that Appellants were judicially estopped

from characterizing Richards's statements during the April 2004

calls as expressing a promise to buy Environamics on terms other

than those of the Option Agreement. Thus, in determining whether

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the evidence creates a genuine issue of material fact, we must

first decide whether the district court's judicial estoppel ruling

was correct.

1. Application of Judicial Estoppel

We review a district court's application of judicial

estoppel for abuse of discretion. See Perry v. Blum, 629 F.3d 1,

8 (1st Cir. 2010). Under this standard, we accept the district

court's findings of fact unless they are clearly erroneous, but we

review questions of law de novo. Id. A mistake of law is a per se

abuse of discretion. Id. We apply the deferential abuse of

discretion standard to judicial estoppel rulings even though we

review summary judgment rulings de novo. See Guay v. Burack, 677

F.3d 10, 15 (1st Cir. 2012) ("the abuse of discretion standard is

appropriate even when reviewing a judicial estoppel ruling on a

motion for summary judgment" (citing Alt. Sys. Concepts, Inc. v.

Synopsys, Inc., 374 F.3d 23, 31 (1st Cir. 2004))).

Judicial estoppel is used "'to prevent a litigant from

pressing a claim that is inconsistent with a position taken by that

litigant either in a prior legal proceeding or in an earlier phase

of the same legal proceeding.'" Id. at 16 (quoting Alt. Sys.

Concepts, 374 F.3d at 32-33). "Where one succeeds in asserting a

certain position in a legal proceeding, one may not assume a

contrary position in a subsequent proceeding simply because one's

interests have changed." Id. (citing New Hampshire v. Maine, 532

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U.S. 742, 749 (2001)). The purpose of the doctrine is to protect

the integrity of the courts. Id. Even if the earlier statement

that was later contradicted was made in good faith, a party is not

automatically shielded from judicial estoppel. Id. There are two

conditions for the application of judicial estoppel. "'First, the

estopping position and the estopped position must be directly

inconsistent, that is, mutually exclusive.'" Id. (quoting Alt.

Sys. Concepts, 374 F.3d at 33). "'Second, the responsible party

must have succeeded in persuading a court to accept its prior

position.'" Id.

Here, on the first factor, the district court found that

Appellants took two directly inconsistent positions regarding what

Richards told them during the April 2004 calls. In their First

Summary Judgment Affidavits, Appellants clearly stated multiple

times that Richards told them that SKF would buy Environamics under

the Option Agreement. In their Second Summary Judgment Affidavits,

however, Appellants simply stated that Richards told them that "SKF

had committed to buy Environamics," without any mention of the

Option Agreement. The district court held that these affidavits

directly contradicted each other on a critical factual point, i.e.,

what promise Richards conveyed to Appellants during the April 2004

calls. We agree. As to the second factor, it is clear that

Appellants had "succeeded in persuading [the district court] to

accept," id. at 9, at least for summary judgment purposes, their

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earlier position that Richards said SKF would buy Environamics

under the Option Agreement; the district court denied SKF's First

Motion for Summary Judgment after Appellants submitted their First

Summary Judgment Affidavits.

Appellants protest that the district court's ruling was

barred by the "law of the case" doctrine. The law of the case

doctrine has two branches; the one relevant in this case provides

that "a court ordinarily ought to respect and follow its own

rulings, made earlier in the same case." Ellis v. United States,

313 F.3d 636, 646 (1st Cir. 2002) (citing Arizona v. California,

460 U.S. 605, 618 (1983)). Appellants contend that, in granting

their motion to amend their complaint, the district court rejected

this very same judicial estoppel argument that it then adopted in

its ruling on the Second Summary Judgment Motion. However, this

argument is based on a mischaracterization of the district court's

order granting leave to amend.

In opposition to Appellants' motion to amend their

complaint, SKF argued that Appellants were judicially estopped from

asserting a new theory (that SKF made a "general" promise to buy

Environamics) because it contradicted the original theory (that SKF

promised to buy Environamics under the Option Agreement). The

district court rejected this argument because it held that the two

theories were not contradictory, since SKF could have engaged in

certain conduct that caused Appellants to believe one promise and

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other conduct that caused the Appellants to believe a different

promise. According to Appellants, this ruling was the law of the

case on the judicial estoppel question. However, the judicial

estoppel issue before the district court on the Second Summary

Judgment Motion was distinct from the issue raised in SKF's

opposition to the motion to amend. The question on the Second

Summary Judgment Motion was not whether Appellants' two theories

were contradictory, but whether Appellants' factual assertions

regarding what Richards said in April 2004 were contradictory.

There was never any prior "ruling" on this latter question by the

district court; indeed there could not have been, because

Appellants' change in their factual position was not apparent until

they filed their Second Summary Judgment Affidavits. Therefore,

the "law of the case" doctrine is inapplicable here. See United

States v. Matthews, 643 F.3d 9, 12-13 (1st Cir. 2011) (law of the

case doctrine posits that a prior decision should govern the "same

issue[]" later in the case (emphasis added)).

Appellants also contend that if there is a contradiction

between the First and Second Summary Judgment Affidavits, this

simply creates a credibility issue that should have been left to

the jury to resolve. However, our case law is clear that "a party

opposing summary judgment may not manufacture a dispute of fact by

contradicting his earlier sworn testimony without a satisfactory

explanation of why the testimony is changed." Abreu-Guzmán, 241

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F.3d at 74. Thus, even if judicial estoppel did not apply,

Appellants would not be permitted to rely on the contradiction

between their First and Second Summary Judgment Affidavits to

create an issue for the jury.

2. Whether the Remaining Evidence Creates an Issue for
Trial

Although Appellants are barred from relying on their

testimony regarding Richards's promises during the April 2004 calls

to support their claim that SKF promised to buy Environamics, they

also contend that other evidence in the record supports their

claim. We thus consider whether the other evidence in the record

is sufficient to enable Appellants to avoid summary judgment.

Appellants point to the deposition testimony of Allen

LeBoeuf ("LeBoeuf"), Environamics's Director of Marketing, who

participated in one of the April 2004 calls with Richards. LeBoeuf

testified that during this call, Richards said that SKF "had

decided to buy the company," but that no terms were discussed

during the call. There are two ways to interpret LeBoeuf's

testimony, neither of which helps Appellants. LeBoeuf's testimony

could be interpreted to mean that Richards said SKF promised to buy

Environamics on the terms of the Option Agreement. However,

Appellants expressly waived this theory. Alternately, LeBoeuf's

testimony could be interpreted to mean that Richards said that SKF

promised to buy Environamics on some other terms. However, as

discussed above, Appellants are judicially estopped from

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characterizing Richards's statements during the April 2004 calls in

this manner.

Appellants also contend that SKF represented to Wells

Fargo that it would definitely buy Environamics. However, there is

no evidence in the record to support this contention. David

McIlroy ("McIlroy"), the President of Commercial Credit at Wells

Fargo in Boston, Massachusetts, testified at his deposition that

Richards told him that SKF's "hope" was to buy the company "after

a period of time." However, McIlroy also testified that Richards

never said that SKF had definitely decided to buy the company.

Moreover, as the district court noted, in reviewing Appellants'

loan application, Wells Fargo recognized the risk that SKF would

not buy Environamics if it could not meet the sales target

contemplated in the Buy-Sell Agreement. Rockwood, 758 F. Supp. 2d

at 50-51.

We find that there is no "specific, competent evidence,"

Soto-Ocasio, 150 F.3d at 18, of any promise made by SKF to buy

Environamics on terms other than those of the Option Agreement on

which Appellants could reasonably have relied. Therefore, we

conclude that the district court correctly granted summary judgment

to SKF.4

4
Appellants claimed in the district court that SKF's actions in
carrying out the Buy-Sell Agreement conveyed a promise to buy
Environamics, but they do not repeat that claim here.

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III. Conclusion

The judgment of the district court is AFFIRMED. Costs

are granted to Appellee.

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