Court Opinion

ID: 9474005
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:45:22.13344+00
Date Added: 2024-06-11T17:43:51.170645
License: Public Domain

KRUPANSKY, Circuit Judge,
dissenting.
For the reason that the majority opinion misconstrues the law applicable to three major issues presented in this appeal, I am compelled to dissent.
This action was initiated by the plaintiff Fluid Power pursuant to a theory of promissory estoppel as recognized by the Ohio Supreme Court in McCroskey v. State, 8 Ohio St.3d 29, 456 N.E.2d 1204, 1206 (1983). Fluid Power maintained that it had reasonably relied to its detriment upon a promise by Racine to establish it as a Racine distributor. Racine’s defense asserted that initially it had made no “promise” to Fluid Power but had merely expressed intentions, desires or plans to make it a distributor. In the alternative, Racine urged that if any promise to make Fluid Power its distributor were made, such promise was conditioned upon both the' termination of Racine’s relationship with its existing distributor, Dynamic Technology, and the execution of a written agreement with Fluid Power. The jury returned a verdict in favor of Fluid Power and assessed damages of $47,500.
At the conclusion of the evidence, the defendant requested the following jury instruction:
If you find from a preponderance of the evidence that Defendant did make a definite and certain offer on March 22, 1982, which it intended to be binding, then you must next determine whether that offer was conditional. Defendant denies that it made an offer on March 22, 1982, but if it did then such an offer was conditional upon the termination of the agreement with Dynamic Technology and the execution of a written contract with Plaintiff. If you find that Defendant’s offer of March 22, 1982, was conditioned upon either of the foregoing then you must return a verdict for Defendant.
The requested instruction accurately articulated § 91 of the Restatement of Contracts 2d which provides:
If a promise within the terms of §§ 82-90 is in terms conditional or performable at a future time the promissor is bound thereby, but performance becomes due only upon the occurrence of the condition or upon the arrival of the specified date.
The trial court refused the requested instruction and stated that its general jury charge incorporated language that adequately informed the jury of the relevant issues joined by the evidence and the law applicable thereto. The trial court further stated that the requested jury instruction as it related to the issue of “conditional promise” would “be misleading to the jury.”
The majority, having conceded that the conditional nature of the promise between the parties had been properly joined by the pleadings and the evidence, the accuracy of the defendant’s requested charge, and that *99the requested charge would not confuse the jury, nevertheless concluded that the jury instruction, as given by the trial court, when taken as a whole, adequately informed the jury of the relevant considerations by which to evaluate the central factual dispute of Racine’s defense. Blackwell v. Sun Electric Corp., 696 F.2d 1176, 1181 (6th Cir.1983).
An examination of the jury instruction as given discloses no language that addresses the issue of conditional promise either directly, indirectly, by inference or otherwise.
The reasoning of the majority to support its conclusion that the jury instruction, as given, adequately informed the jury of the proper considerations by which to evaluate the central factual dispute joined by Racine’s “conditional promise” defense is:
The trial court did instruct the jury that Racine would only be liable if any promise it made to Fluid Power had “reasonably and forseeably included reliance” by the plaintiff. Racine’s alleged liability arose from actions Fluid Power claimed to have taken in reliance upon the March 22 discussions both without confirming that Racine had cancelled Dynamic Technology, and without executing its own distribution agreement with Racine. If the jury had accepted Racine’s version of the March 22 discussions, this instruction would necessarily have resulted in a finding that Fluid Power’s reliance was not reasonable or foreseeable because Dynamic Technology was not cancelled and Fluid Power had not contracted with Racine.
Initially, the controlling language of the hypothecation, i.e. “reasonably and foresee-ably induced reliance” is taken out of context by the majority opinion. In its entirety, the charge reads:
The legal doctrine that must be used in your deliberations is the ancient doctrine of promissory estoppel and I’ll tell you what that means. Ohio law holds that a promise orally or in writing which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or on the part of the third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.
Ohio law holds that there are four elements you must consider in deciding whether promissory estoppel applies. These are, first, a promise clear and unambiguous in its terms. Second, reliance by the parties to whom the promise is made. Third, the reliance must be both reasonable and foreseeable. And fourth, the party asserting the estoppel must be injured by the reliance.
Now, you should first decide, if a clear and unambigious promise was made by the Defendant on March 22nd, 1982.
If no promise was made or if you find those March 22nd, 1982, discussions were merely tentative or preliminary business negotiations then you must find for the Defendant. In considering this question 'it is not necessary that you find from the evidence that the Defendant made statements including the words — I’m sorry, includes words such as, quote “we promise”. A promise is an offer which is definite and certain which the offeror intends to be binding. It is your function as jurors to decide the intent of the parties.
If, on the other hand, you find a promise made, you must then ask whether that promise reasonably and foreseeably induced reliance on the part of the Plaintiff. You must also decide if that reliance actually caused injury to the plaintiff.
When read in context, it is apparent that the controversial language of the jury instruction was directed to the issue of “promissory estoppel” and not “conditional promise”. The words “whether that promise reasonably and foreseeably induced reliance on the part of the Plaintiff” defines an element necessary to prove a cause of action arising in “promissory estoppel.” Secondly, the reasoning of the majority is nothing less than speculation.
It is conceded that the instruction as delivered by the trial court adequately and *100properly addressed the issue of promissory estoppel. The fatal flaw in the instruction was the critical omission of an explication of the possible conditional nature of defendant’s “promise” which was admittedly joined in issue by the defense offered by Racine, i.e., that its promise of a distributorship to Fluid Power was conditioned upon termination of the existing distributorship with Dynamic Technology and/or execution of a written agreement. Section 91 of the Restatement of Contracts 2d, by its own terms directly mandates an instruction on conditional promises as requested by defendant in the case at bar.
It has long been recognized that a party is entitled to a specific instruction on his theory of the case if there is evidence to support it and a proper request for the instruction is made; therefore, where, as here, the general jury instruction failed to incorporate the thrust of the requested instruction, failure to give the requested instruction is error. United States v. McGuire, 744 F.2d 1197, 1201 (6th Cir.1984); Clayton v. Burston, 493 F.2d 429, 432 (5th Cir.1974); Bolden v. Kansas City Southern Railway Co., 468 F.2d 580, 581 (5th Cir.1972); Gillentine v. McKeand, 426 F.2d 717, 724 (1st Cir.1970); Townsend v. Postashnick, 414 F.2d 64 (6th Cir.1969); Megarry Brothers, Inc. v. United States, 404 F.2d 479, 489 (8th Cir.1968).
Thus, contrary to the majority’s determination that the omission of this instruction was harmless, I find this error to have seriously impacted defendant’s substantive rights by essentially depriving Racine of a defense which, if adequately presented to the jury, could have affected its verdict.
In my view, the erroneous charge to the jury compels reversal of the jury decision and remand for a new trial. See, e.g., R.G. Group Inc. v. The Horn & Hardart Co., 751 F.2d 69, 78-79 (2d Cir.1984) (under promissory estoppel theory, no “clear and unambiguous promise” established where grant of franchise was conditioned on the execution of a written contract); Gruen Industries, Inc. v. Biller, 608 F.2d 274, 281 (7th Cir.1979) (conditional promise alleged was not a reasonable basis for reliance and thus not a proper basis for estoppel); Pacific Cascade Corp. v. Nimmer, et al., 25 Wash.App. 552, 608 P.2d 266 (1980) (conditional promise can serve as basis of estop-pel claim only if condition is satisfied prior to action taken in reliance on that promise).
Defendants’ also assign error to the trial court’s refusal to give one of two requested instructions limiting one element of Fluid Power’s damages to the one year term of the controversial proposed distributorship agreement. As the majority correctly observes, the damages recovered by a plaintiff in an action predicated upon promissory estoppel should not place the promisee in a better position due to the breach than he may have been in had the promise been fulfilled. Gruen Industries, Inc. v. Biller, 608 F.2d 274, 281 (7th Cir.1979). In the instant case, even if Fluid Power had secured the distributorship agreement as anticipated in April, 1982, that agreement, by its own terms, would have expired 14 months thereafter, i.e., June 30, 1983. While fully cognizant of that fact, plaintiff negotiated a 75-month lease for the larger facility, and the amount awarded by the jury obviously reflected the additional expenditures incurred over the entire life of the lease. Thus, the trial court’s failure to limit damages to June 30, 1983, permitted the plaintiff to be placed in a better position than it would have if the promise had been fulfilled.
The majority opinion after having recognized the applicable law enunciated in Gruen Industries, Inc. v. Biller, 608 F.2d 274, 281 (7th Cir.1979), and after having conceded the term of the proposed contract as 14 months, proceeded to ignore both the law and the facts to again speculate by stating that “the jury could have concluded that Racine’s alleged promise to establish Fluid Power as its distributor involved a commitment far exceeding fourteen months.” It would have been equally logical for the majority to speculate that the proposed distributorship contract would have been terminated at the end of fourteen months because of a lack of perform-*101anee. The conjectures of the majority notwithstanding, it appears that defendant’s requested instruction limiting damages to the term of the proposed contract would have given direction to the jury consistent with the pronouncements of Gruen Industries, Inc. and foreclosed a verdict that placed the defendant in a better position as a result of the alleged breach than it would have been had the promise been kept and the contract executed.
Finally, I cannot concur with the majority’s determination that the self-serving testimony of Fluid Power’s president, Daniel Kallmyer, was sufficient to establish what its rent would have been had it retained its former premises. By its own terms, FRE 803(3) does not apply to situations, such as the one at bar, where the declarant’s statement of intent is used “to prove the fact remembered or believed” — in this case to prove the specific amount of Fluid Power’s future rent at its original location. Rather, as the cases which the majority relies upon demonstrate, Rule 803(3) is properly utilized in cases where intent per se is at issue.
For example, in United States v. Williams, 704 F.2d 315 (6th Cir.1983), it was incumbent upon the government to prove defendant’s intent to possess cocaine in order to obtain a conviction for attempted possession of the illegal substance. Defendant therefore sought to use Rule 803(3) to permit a witness to relate statements defendant allegedly made to her concerning his intent to utilize large sums of cash found on his person for certain legal purposes rather than for the purchase of cocaine. Similarly, in Detroit Police Officers’ Assn. v. Young, 608 F.2d 671 (6th Cir.1978), a critical issue was whether particular police department employment practices were the result of intentional racial discrimination against certain officers thereby making FRE 803(3) applicable.
In contrast, the intent of Kallmyer’s landlord as to rent increases in the instant case was irrelevant as to the resolution of the dispute between plaintiff and defendant herein. Rather, the landlord’s out-of-court statements were used to prove a fact, i.e. the exact amount of future rents which served as the basis for calculating damages. Viewed from the proper perspective, Kallmyer’s testimony in this respect was proscribed rather than permitted by the express language of Rule 803(3) and case law interpreting the rule. Because it was incumbent upon plaintiff to prove damages through the admission of competent evidence, see Agricultural Services Ass’n Inc. v. Ferry-Morse Seed Co., 551 F.2d 1057, 1072 (6th Cir.1977), the use of Kall-myer’s improperly admitted hearsay testimony cannot support the jury award. The plaintiff’s failure to meet its burden to adduce competent proof of damages constituted reversible error. See, e.g., Baumer v. Franklin County Distilling Co., 135 F.2d 384, 390 (6th Cir.1943) (Ohio law does not permit recovery of speculative damages).
In view of the foregoing, I would reverse and remand for a new trial.