Firestone Financial Corp. v. John Meyer

Citation: Not availableDocket: 17-1611

Court: Court of Appeals for the Seventh Circuit; January 31, 2018; Federal Appellate Court

Original Court Document: View Document

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Firestone Financial LLC sued John R. Meyer for default on loans, with Meyer representing himself and asserting promissory estoppel as a defense and counterclaim. Following a previous appeal (Firestone Fin. Corp. v. Meyer, 796 F.3d 822), the district court granted summary judgment to Firestone. Meyer appealed twice, leading to the consolidation of the appeals. The court affirmed the summary judgment in appeal 17‐1611, determining that Meyer failed to prove the elements of promissory estoppel, and dismissed appeal 17‐1712 as duplicative. 

Background details reveal that Meyer, a disbarred lawyer, owned three companies involved in laundry services and had received four loans totaling approximately $250,000 from Firestone, which later merged with Firestone Financial LLC. The loans primarily financed purchases from Dolphin Laundry Services, another of Meyer’s companies. The lawsuit arose from a failure to repay loans, with Meyer and his companies arguing that Firestone had verbally promised a larger line of credit, which they claimed harmed them when the promised financing did not materialize. The district court ruled against Meyer, finding his claims implausible and concluding that no financial institution would orally commit to significant loans for a startup. Meyer’s counterclaim was initially dismissed, but the appeal court reversed this dismissal, citing misapplication of legal standards by the district court.

Meyer admitted to failing to make payments as outlined in four promissory notes to Firestone and clarified his promissory-estoppel defense, which hinged on a promise from McAllister that Firestone would finance JHM’s equipment purchases while establishing a line of credit. He also introduced a new defense, alleging that Firestone sold over 300 laundry machines in a commercially unreasonable manner, specifically to Pangea Ventures for $40,000, rather than to a buyer who could assume the service contract. The district court granted summary judgment in favor of Firestone, finding Meyer’s reliance on McAllister’s promise unreasonable and noting his failure to provide adequate evidence of damages, such as bank statements or invoices. The court also dismissed Meyer’s claim regarding the sale of the machines as unsubstantiated. Meyer was ordered to pay $427,131 to Firestone. Following this, Meyer filed a notice of appeal and a motion to amend the findings, which was denied as procedurally improper. He subsequently filed an amended notice of appeal, which consolidated the appeals regarding the summary judgment and the denial of his post-judgment motion. The court dismissed the second appeal as duplicative since Meyer did not raise new arguments. The applicable state law for Meyer’s promissory-estoppel defense was debated, with the court agreeing to apply Massachusetts law, although noting that the choice of law would not significantly affect the outcome. Meyer contended the district court erred in granting summary judgment, arguing he had a reasonable expectation that Firestone would finance equipment purchases under the same terms as prior loans.

Meyer must provide evidence to overcome summary judgment on his defense and counterclaim, demonstrating that: (1) Firestone made a clear promise of unlimited funding; (2) he reasonably relied on this promise; and (3) he experienced damages as a result. The court concluded that Meyer could not prove these elements. 

Firstly, Meyer failed to show that McAllister made an unambiguous promise of unlimited funding under the same terms as previous loans, as the loans differed in amount and interest rates. The variations in loan terms suggest that there was no clear, enforceable promise for identical, unlimited loans. 

Secondly, regarding reliance, Meyer argued that Dolphin's purchase of machines was based on McAllister's promise. However, he guaranteed the first two loans prior to the promise and the fourth loan afterward, failing to establish that the promise influenced his decisions. Any reliance on the promise for the third loan was deemed unreasonable, particularly given Firestone’s established review process for large loans, which contradicts the idea of an unlimited line of credit. Additionally, any misunderstanding Meyer had should have been clarified during the underwriting of the third loan.

Lastly, Meyer did not provide sufficient evidence of damages, claiming "several million dollars" in harm without business records to substantiate this. His assertion that lost records hindered his case does not relieve him of the burden to prove damages, as a jury would be left to speculate. 

Meyer also claimed that Firestone did not mitigate its damages by improperly selling collateral, but he failed to rebut the presumption of commercial reasonableness under Massachusetts law. His valuation of the collateral lacked a factual basis, as it was grounded in conjecture rather than evidence.

Consequently, due to the failure to prove all three required elements, the district court's judgment is affirmed, and the second appeal is dismissed as duplicative.