Opinion ID: 779029
Heading Depth: 2
Heading Rank: 2

Heading: Misleading Inventory Reports

Text: 19 Second, HD claims that it was an abuse of discretion to reject its argument that it detrimentally relied on misleading and inaccurate inventory information sent to it by SNA's outside broker Rich. According to HD, these reports showed that SNA's inventory was minimal or nonexistent and that SNA was no longer producing any nut products. Thus, HD asserts that it was in error to grant summary judgment on HD's equitable estoppel defense; or alternatively, that the district court erred in failing to consider HD's defense that SNA engaged in bad faith. Further, HD claims that it was error to find that it failed to preserve its mend-the-hold defense in the pretrial order. 1
20 We find HD's equitable estoppel defense waived because at no time in HD's two-page statement of its equitable estoppel defense before the bankruptcy court did HD theorize that as a basis for this defense that it relied on misleading weekly inventory reports. See In re Kroner, 953 F.2d 317, 319-20 (7th Cir.1992). Rather, in the pretrial order, HD claimed equitable estoppel as a defense because SNA led HD to believe through silence that SNA would not enforce the contracts. Further, HD's alternative argument that it was error to fail to consider whether SNA acted in bad faith is also waived because the first time HD attempts to support this theory (by claiming that it relied on misleading weekly inventory reports) is on appeal. See id. 21 In any event, even if HD had preserved these two arguments in the pretrial order, we would still be unpersuaded by HD's appeal as we find no clear error in the factual determinations accepted by the district court. See Thomas v. General Motors Acceptance Corp., 288 F.3d 305, 307 (7th Cir.2002). Based on the recommended findings the district court expressly found that SNA maintained the ability to meet HD's contractual requirements in October 1994, thereby implicitly rejecting HD's argument that certain weekly inventory reports from that time period suggested otherwise. This finding is supported by the testimony of Rich, who explained that the reports referenced by HD only reflected finished goods in inventory that were boxed, tested by outside microbiological laboratories, stamped, and ready for delivery. These reports, however, did not reflect unfinished product or product delivered on the date of the report. As HD has shown no clear error, we decline to reverse the district court on appeal.
22 HD also claims that it preserved its mend-the-hold defense in the pretrial order. We have previously noted that a pretrial conference and a pretrial order are vital parts of the procedural scheme created by the Federal Rules of Civil Procedure. See Gorlikowski v. Tolbert, 52 F.3d 1439, 1443 (7th Cir.1995). Further, [b]ecause the parties rely on the pretrial conference to inform them precisely what is in controversy, the pretrial order is treated as superceding the pleadings and establishes the issues to be considered at trial. Id. at 1443-44. Moreover, the whole purpose of pretrial conferences and orders is to clarify the real nature of the dispute at issue[;] a claim or theory not raised in the pretrial order should not be considered by the fact-finder. Id. at 1444 (quotations omitted). While this result may seem harsh, pretrial orders help to prevent protracted litigation due to changing theories and arguments such as those that we are encountering in this case. 23 HD claims that it preserved its mend-the-hold defense in paragraph 25 of the pretrial order and in its fourth affirmative defense. Paragraph 25 of HD's Pretrial Order Statement of Uncontested Issues of Fact provides: 24 Whether SNA filed a motion to dismiss the counterclaim in the first adversary and asserts that the alleged pecan contract was rejected by operation of the plan of reorganization, that no contract was created, or in the alternative, that the alleged contract was a series of divisible installment contracts based on separate purchase orders and invoices. 25 Nowhere in this paragraph did HD preserve a mend-the-hold defense. Further, HD's fourth affirmative defense in its answer mentions judicial estoppel, not a mend-the-hold defense. See Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357, 363 (7th Cir.1990) (distinguishing between judicial estoppel and the mend-the-hold defense). In any event, even if HD had mentioned a mend-the-hold defense in its affirmative defenses, as we explained above, a pretrial order supercedes the pleadings and a defense not raised in a pretrial order is deemed waived. See Gorlikowski, 52 F.3d at 1444.