719 F.3d 891 (8th Cir. 2013), 12-2829, InCompass IT, Inc. v. XO Communications Services, Inc.

Docket Nº:12-2829, 12-2868.
Citation:719 F.3d 891
Opinion Judge:SMITH, Circuit Judge.
Party Name:INCOMPASS IT, INC.; HLI, L.L.C., Plaintiffs-Appellants v. XO COMMUNICATIONS SERVICES, INC.; XO Communications, L.L.C., Defendants-Appellees. InCompass IT, Inc.; HLI, L.L.C., Plaintiffs-Appellees v. XO Communications Services, Inc.; XO Communications, L.L.C., Defendants-Appellants.
Attorney:Erick G. Kaardal, argued and on the brief, Minneapolis, MN, for appellants/cross-appellees. Charles Kenneth Maier, argued and on the brief and Kelly W. Hoversten, on the brief, Minneapolis, MN, for Appellees/Cross-Appellants.
Judge Panel:Before WOLLMAN, MURPHY, and SMITH, Circuit Judges.
Case Date:June 26, 2013
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 891

719 F.3d 891 (8th Cir. 2013)

INCOMPASS IT, INC.; HLI, L.L.C., Plaintiffs-Appellants

v.

XO COMMUNICATIONS SERVICES, INC.; XO Communications, L.L.C., Defendants-Appellees.

InCompass IT, Inc.; HLI, L.L.C., Plaintiffs-Appellees

v.

XO Communications Services, Inc.; XO Communications, L.L.C., Defendants-Appellants.

Nos. 12-2829, 12-2868.

United States Court of Appeals, Eighth Circuit.

June 26, 2013

Submitted: May 15, 2013.

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[Copyrighted Material Omitted]

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Erick G. Kaardal, argued and on the brief, Minneapolis, MN, for appellants/cross-appellees.

Charles Kenneth Maier, argued and on the brief and Kelly W. Hoversten, on the brief, Minneapolis, MN, for Appellees/Cross-Appellants.

Before WOLLMAN, MURPHY, and SMITH, Circuit Judges.

SMITH, Circuit Judge.

InCompass IT, Inc. and HLI, LLC (collectively, " InCompass" ) filed suit against XO Communications Services, Inc. and XO Communications, LLC (collectively " XO" ), asserting a single claim of promissory estoppel based on a former XO employee's alleged oral promise to enter into a multi-year lease with InCompass. Following a bench trial, the district court 1 entered

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judgment in XO's favor. On appeal, InCompass asserts that the district court erred in granting XO's motion to strike InCompass's jury trial demand. We affirm the district court's grant of XO's motion to strike InCompass's jury trial demand.2

I. Background

This promissory-estoppel action arises from " XO's then-General Manager John Unger['s] verbal[ ] agree[ment] to sign a triple-net 20-25 year lease for approximately 20,000 square feet (including the construction of a 5,000 square foot addition) at a rate of $22 per square foot." InCompass, IT, Inc. v. XO Commc'ns. Servs., Inc., Civil No. 10-3864 (SRN/JJG), 2012 WL 512401, at *1 (D.Minn. Feb. 15, 2012) (unpublished).

In its first amended complaint, InCompass alleged that it was " looking to relocate its office space." In turn, Unger informed Tim Lambrecht, InCompass CEO and HLI co-owner, that XO needed additional space. " On learning that XO [ ] was looking to buy or rent a building for expansion purposes, Lambrecht told Unger that he had already looked at a 20,000-square-foot building at 300 2nd Street N.W. in New Brighton that would meet XO['s] needs but had ruled it out as being too large and too expensive for InCompass alone...." Unger then suggested " that XO[ ] could rent data center space in such a building." " Unger and Lambrecht discussed XO['s] data center requirements such as where the building should be located within the Twin Cities and environs and how big the building should be." Then,

[o]n June 9, 2006, HLI entered into an agreement to purchase the 300 2nd Street N.W. building for $1,600,000 with the knowledge that the purchase agreement contained an out-clause called the " condition date" of August 8, 2006, which permitted HLI to back out of the purchase agreement for any reason and get a full refund of its $20,000 escrowed down payment.

Over a week later, on June 19, 2006, Unger, Lambrecht, and HLI co-owner Joseph Hanson toured the building. Then, on July 27, 2006, after touring three other buildings, " Unger told Lambrecht and Hanson that the previously-toured 300 2nd Street N.W. building was the best bet."

The complaint then alleged that Unger agreed to lease 25,000 square feet of HLI's building for a period of 25 years. The alleged agreement included provisions for substantial renovation of a portion of the structure and assurances that the agreement would be put in written form before the end of the year. According to InCompass, XO never followed through on Unger's alleged oral promise; as a result, InCompass filed the instant suit for promissory estoppel, alleging that

37. XO[ ] made a clear and definite promise to rent data center space in the 300 2nd Street N.W. building prior to its purchase by HLI and, for all practical purposes, InCompass.

38. It was reasonably foreseeable to XO[ ] that HLI and InCompass would rely on XO['s] promise.

39. In making that promise, XO[ ] intended to induce HLI and InCompass to rely on that promise and proceed to purchase the 300 2nd Street N.W. building.

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40. In reliance on XO['s] promise, HLI and InCompass purchased and guaranteed the purchase of the 300 2nd Street N.W. building even though InCompass' business required a building of only about 4,000 square feet and either costing about $500,000 or renting for about $5,500 per month.

41. As a direct and proximate result of their reliance on XO['s] promise, HLI and InCompass suffered and continue to suffer severe damages well in excess of $75,000.

In response, XO " assert[ed] that the statute of frauds bars the alleged oral agreement because, under Minnesota law, contracts that are for a lease of more than one year must be in writing." InCompass IT, Inc., 2012 WL 512401, at *1. It is undisputed that the " alleged lease agreement was never reduced to a finalized writing." Id.

In its complaint, InCompass " demand[ed] a jury trial on all issues in this case which are triable to a jury." XO moved to strike InCompass's jury trial demand, " argu[ing] that because [Incompass] [was] using promissory estoppel to avoid application of the statute of frauds, [its] claim sound[ed] in equity." InCompass IT, Inc., 2012 WL 512401, at *1. Therefore, XO asserted that InCompass " ha[d] no right to a jury trial in this action." Id. In response, InCompass claimed that it was " not using promissory estoppel to avoid application of the statute of frauds." Id. Instead, InCompass argued that its " promissory estoppel claim is a matter of detrimental reliance, calling for a legal...

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