Cosgrove v. Bartolotta

• Citation: 1998 WL 407709,150 F.3d 729
• Decision Date: 22 July 1998
• Docket Number: 97-3023 and 97-3322,Nos. 97-2903,s. 97-2903
• Parties: 135 Lab.Cas. P 33,703 Barry C. COSGROVE, Plaintiff-Appellant, Cross-Appellee, v. Joseph BARTOLOTTA and Mary-Bart, LLC, doing business as Bartolotta's Lake Park Bistro, Defendants-Appellees, Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 729

150 F.3d 729

135 Lab.Cas. P 33,703

Barry C. COSGROVE, Plaintiff-Appellant, Cross-Appellee, v. Joseph BARTOLOTTA and Mary-Bart, LLC, doing business as

Bartolotta's Lake Park Bistro,

Defendants-Appellees, Cross-Appellants.

Nos. 97-2903, 97-3023 and 97-3322.

United States Court of Appeals, Seventh Circuit.

Argued May 15, 1998.

Decided July 22, 1998.

Maureen A. McGinnity, Michael J. Aprahamian (argued), Foley & Lardner, Milwaukee, WI, for Plaintiff-Appellant in Nos. 97-2903 & 97-3023.

Michael J. Aprahamian (argued), Foley & Lardner, Milwaukee, WI, for Plaintiff-Appellant in No. 97-3322.

Kathryn A. Keppel, Patrick J. Knight (argued), Gimbel, Reilly, Guerin & Brown, Milwaukee, WI, for Defendants-Appellees.

Before POSNER, Chief Judge, and FLAUM and DIANE P. WOOD, Circuit Judges.

POSNER, Chief Judge.

A jury awarded the plaintiff damages of $135,000 in a diversity suit governed by Wisconsin law. The damages were broken down as follows: $117,000 for promissory estoppel, $1,000 for misrepresentation, and $17,000 for unjust enrichment. In response to the defendants' motion under Fed.R.Civ.P. 59(e) to alter or amend the judgment, the judge rendered judgment for the defendants on the promissory estoppel claim on the ground that the plaintiff had failed to prove reliance; but he let the jury's verdict stand with respect to the other claims. Later he denied the plaintiff's motion for costs, on the ground that the plaintiff had failed to recover the minimum amount in controversy fixed in the diversity statute. 28 U.S.C. § 1332(b). Both sides appeal (the plaintiff appeals from the order denying costs as well as from the order amending the judgment). The appeals present issues both of common law and of federal procedure.

The principal defendant is Joseph Bartolotta, but his company--Mary-Bart, LLC--is also named as a defendant; and in a diversity case, whenever there is an unconventional party (that is, someone or something other than either a natural person suing in his own rather than a representative capacity, or a business corporation) a jurisdictional warning flag should go up. In the case of a regular corporation, the owners' state of citizenship is irrelevant to whether there is the required complete diversity; but in the case of a partnership, it is crucial. The citizenship of a partnership is the citizenship of the partners, even if they are limited partners, so that if even one of the partners (general or limited) is a citizen of the same state as the plaintiff, the suit cannot be maintained as a diversity suit. Carden v. Arkoma Associates, 494 U.S. 185, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990); Northern Trust Co. v. Bunge Corp., 899 F.2d 591, 594 (7th Cir.1990).

Mary-Bart is neither a partnership nor a corporation, but a "limited liability company." Wis. Stat. Chapter 183. This animal is like a limited partnership; the principal difference is that it need have no equivalent to a general partner, that is, an owner who has unlimited personal liability for the debts of the firm. See generally Larry E. Ribstein & Robert R. Keatinge, Ribstein and Keatinge on Limited Liability Companies (1998). Given the resemblance between an LLC and a limited partnership, and what seems to have crystallized as a principle that members of associations are citizens for diversity purposes unless Congress provides otherwise (as it has with respect to corporations, in 28 U.S.C. § 1332(c)(1)), Carden v. Arkoma Associates, supra; United Steelworkers of America v. R.H. Bouligny, Inc., 382 U.S. 145, 152-53, 86 S.Ct. 272, 15 L.Ed.2d 217 (1965); Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314, 317 (7th Cir.1998), we conclude that the citizenship of an LLC for purposes of the diversity jurisdiction is the citizenship of its members. That does not defeat jurisdiction in this case, however, because Mary-Bart, LLC has only one member--Mr. Bartolotta, who is not a citizen of the same state as the plaintiff.

Another threshold issue concerns the scope of our review of the judge's denial of the defendants' motion under Fed.R.Civ.P. Rule 59(e). They had moved for a directed verdict (or as it is now called, "judgment as a matter of law") at the end of the trial, before the jury retired to deliberate. The judge took the motion under advisement and after the jury brought in its verdict he denied the motion and entered judgment for the plaintiff. The defendants filed their Rule 59(e) motion within ten days after the entry of judgment. The ground of the motion was identical to the ground of the defendants' motion for a directed verdict, so that in effect the defendants were asking for reconsideration of the denial of their motion for a directed verdict. The district judge, as we said, granted the motion in part, on the ground that the plaintiff had failed to prove an essential element of his promissory estoppel claim.

Cosgrove argues that the only way the defendants could get such relief was to renew their motion for a directed verdict in the form of a motion under Fed.R.Civ.P. 50(b) for judgment notwithstanding the verdict. That is the standard way, all right. Lambie v. Tibbits, 267 F.2d 902, 903 (7th Cir. 1959); Greer v. United States, 408 F.2d 631, 635 (6th Cir.1969). And the only grounds for a Rule 59(e) motion, as the plaintiff points out, are newly discovered evidence, an intervening change in the controlling law, and manifest error of law. LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir.1995); Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.Cir.1996) (per curiam); Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 91 n. 3 (1st Cir.1993). But the entry of a judgment against the party that was entitled to judgment as a matter of law--the predicate for granting a motion for judgment notwithstanding the verdict--could easily be thought a manifest error. Anyway we cannot believe that any consequences should flow from a mislabeling of the defendants' postjudgment motion, if that is how it should be regarded, as we doubt. The motion was filed within the time limit for a 50(b) motion (which is the same as that for a 59(e) motion--ten days after entry of judgment) and it contained the information required for a 50(b) motion. That was good enough; captions do not control. Cf. Herzog Contracting Corp. v. McGowen Corp., 976 F.2d 1062, 1065 (7th Cir.1992); Kladis v. Brezek, 823 F.2d 1014, 1017 (7th Cir.1987); Scottish Heritable Trust, PLC v. Peat Marwick Main & Co., 81 F.3d 606, 610 (5th Cir.1996).

This brings us to the merits of the appeals. Bartolotta wanted to open a new restaurant in Milwaukee. He asked a family friend--Barry Cosgrove--for help. The help sought was a $100,000 loan from Cosgrove plus Cosgrove's business and legal advice, Cosgrove being an experienced corporate lawyer. Bartolotta promised Cosgrove not only to repay the loan with interest within three years but also to give him a 19 percent ownership interest in the restaurant. Armed with Cosgrove's pledge of the $100,000 loan, Bartolotta was able to obtain the bank financing that he needed for the venture. In reliance on the promise of a share in the ownership of the restaurant, Cosgrove assisted Bartolotta in negotiating the lease of the restaurant premises and the loan from the bank, and it was on Cosgrove's advice that the venture was organized in the form of an LLC. But Cosgrove never actually made the loan and was never given an ownership interest in the restaurant. For after all the arrangements were complete, and though Cosgrove was willing and able to make the loan, Bartolotta obtained alternative financing and cut Cosgrove out of the deal. The restaurant opened and was a success, so the ownership interest that Cosgrove would have gotten had Bartolotta not reneged on his premise has turned out to be worth something; hence this lawsuit.

We have stated the facts as favorably to Cosgrove as the record permits, as we must do in deciding whether it was error for the district judge to take the promissory estoppel case away from the jury. Cosgrove's evidence was vigorously contested, but there was enough to enable a reasonable jury to find the facts that we have summarized. It is true that the jury found against Cosgrove on his breach of contract claim, but this was not inconsistent with its finding promissory estoppel. Cosgrove and Bartolotta never worked out the exact terms under which Cosgrove would receive a share in the restaurant, so the jury could reasonably find that there was no contract even if it believed his testimony about the promise made to him and the services that he performed in reliance on the promise. Promissory estoppel is an alternative basis to breach of contract for seeking damages from the breakdown of a relation. If there is a promise of a kind likely to induce a costly change in position by the promisee in reliance on the promise being carried out, and it does induce such a change, he can enforce the promise even though there was no contract. U.S. Oil Co. v. Midwest Auto Care Services, Inc., 150 Wis.2d 80, 440 N.W.2d 825, 828 (1989); Skycom Corp. v. Telstar Corp., 813 F.2d 810, 817 (7th Cir.1987) (applying Wisconsin law).

Buried in our capsule summary of the law of promissory estoppel is an important qualification: the reliance that makes the promise legally enforceable must be induced by a reasonable expectation that the promise will be carried out. A promise that is vague and hedged about with conditions may nevertheless have a sufficient expected value to induce a reasonable person to invest time and effort in trying to maximize the likelihood that the promise will be carried out. But if he does so knowing that he is investing for a chance, rather than relying on a firm promise that a reasonable person would expect to be carried out, he cannot plead promissory estoppel. See Major Mat Co. v. Monsanto Co., 969...