Court: Court of Appeals for the Seventh Circuit; January 31, 2018; Federal Appellate Court
Firestone Financial initiated a lawsuit against John Meyer, who served as a guarantor for defaulted loans tied to his company, J H M Equipment Leasing Company (JHM). Meyer, representing himself, employed promissory estoppel as both a defense and counterclaim. Following a previous appellate decision, the district court granted summary judgment in favor of Firestone. Meyer appealed twice, leading to the consolidation of the appeals. The appellate court affirmed the judgment in one appeal, determining that no reasonable jury could find that Meyer met the necessary elements for promissory estoppel. The other appeal was dismissed as duplicative.
Meyer, a disbarred lawyer and owner of three Illinois companies, obtained loans from Firestone totaling approximately $250,000 to finance JHM's operations. Firestone maintained a security interest in JHM's assets, and both Meyer and his companies guaranteed these loans. The dispute arose when Firestone sued JHM for default and Meyer for breaching the loan guarantees. The defendants claimed that Firestone's Vice President had promised a $500,000 line of credit and that until it was established, Firestone would finance equipment purchases under the same terms as previous loans. They alleged that Firestone's failure to provide additional financing led to significant financial losses.
After procedural developments, including the withdrawal of the defendants' attorney and a default judgment against the corporations, the district court dismissed Meyer's counterclaim and ruled in favor of Firestone. The court found Meyer's claims lacking plausibility, asserting that a financial firm would not make substantial oral commitments to a startup. However, upon appeal, the dismissal of the counterclaim was reversed due to misapplication of legal standards. On remand, Meyer admitted to not making the required payments and clarified that his defense relied on the alleged promise from McAllister regarding financing.
Meyer claimed that Firestone sold over 300 laundry machines in a commercially unreasonable manner, specifically alleging that the machines should have been sold to a buyer capable of taking over the existing contract with JHM, rather than to Pangea Ventures, LLC for $40,000. The district court granted summary judgment in favor of Firestone, ruling that Meyer's reliance on McAllister’s purported promise of additional funding was unreasonable and that he failed to substantiate his damages due to a lack of financial records. The court dismissed Meyer’s argument regarding the commercial reasonableness of the sale as undeveloped. Meyer was ordered to pay $427,131. He subsequently filed an appeal and a motion to amend the judgment, which the court denied as procedurally improper and on the merits. Meyer’s second appeal, which addressed the denial of his post-judgment motion, was found duplicative and dismissed. The court noted a choice-of-law issue regarding which state's law governed Meyer’s promissory-estoppel defense, ultimately agreeing that Massachusetts law applied. Under both Illinois and Massachusetts law, Meyer needed to provide evidence of an unambiguous promise from Firestone, reasonable reliance on that promise, and resulting damages to succeed in his claim. The court concluded that Meyer did not meet this burden, and thus upheld the summary judgment.
Meyer fails to demonstrate that McAllister made a clear promise of unlimited funding on identical terms to prior loans, as the first two loans had different amounts and interest rates, and the third loan involved different terms, including a longer repayment period. The variability in loan terms undermines the existence of an unequivocal promise for unlimited loans. Additionally, Meyer’s claim that Dolphin purchased machines from Maytag based on McAllister's promise faces two issues: evidentiary and legal. Meyer guaranteed the first two loans prior to the alleged promise and the fourth loan after being informed that Firestone would not issue more loans. Thus, any reliance on the promise concerning the third loan was unreasonable, especially since Firestone had a formal review process for its line of credit. Furthermore, Meyer provided insufficient evidence linking Firestone's alleged promise to significant damages, claiming his business records were lost due to theft and account closure, which does not absolve him of his evidentiary responsibilities. Lastly, Meyer's argument concerning Firestone's mitigation of damages through the sale of collateral is unconvincing, as he has not rebutted the presumption of commercial reasonableness under Massachusetts law and lacks reliable documentation to support his valuation claims. Consequently, all elements of Meyer’s defense and counterclaim are unsuccessful, leading to the affirmation of the district court's judgment and dismissal of the duplicative appeal.
