796 F.3d 822 (7th Cir. 2015), 14-3075, Firestone Fin. Corp. v. Meyer

Docket Nº:14-3075
Citation:796 F.3d 822
Opinion Judge:Ripple, Circuit Judge.
Party Name:FIRESTONE FINANCIAL CORP., Plaintiff-Appellee, v. JOHN R. MEYER, Defendant-Appellant
Attorney:For Firestone Financial Corp., Plaintiff - Appellee: Alex Darcy, Charles Randall Woolley II, Attorney, Askounis & Darcy, P.C., Chicago, IL. John R. Meyer, Defendant - Appellant, Pro se, Hinsdale, IL.
Judge Panel:Before WOOD, Chief Judge, and CUDAHY and RIPPLE, Circuit Judges.
Case Date:August 10, 2015
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
SUMMARY

JHM rents commercial laundry machines to Chicago-area apartment buildings. Firestone made four loans to JHM, totaling $254,114.99. JHM defaulted on each. Firestone sued. JHM filed an answer, asserting a counterclaim of promissory estoppel, alleging that after Firestone’s first two loans to JHM, Firestone vice president McAllister had represented that his company “wanted to expand [its]... (see full summary)

 
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796 F.3d 822 (7th Cir. 2015)

FIRESTONE FINANCIAL CORP., Plaintiff-Appellee,

v.

JOHN R. MEYER, Defendant-Appellant

No. 14-3075

United States Court of Appeals, Seventh Circuit

August 10, 2015

Submitted May 15, 2015 [*]

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:13-cv-07241 -- Milton I. Shadur, Judge.

REVERSED AND REMANDED.

For Firestone Financial Corp., Plaintiff - Appellee: Alex Darcy, Charles Randall Woolley II, Attorney, Askounis & Darcy, P.C., Chicago, IL.

John R. Meyer, Defendant - Appellant, Pro se, Hinsdale, IL.

Before WOOD, Chief Judge, and CUDAHY and RIPPLE, Circuit Judges.

OPINION

Ripple, Circuit Judge.

This case arises from a series of loans made by Firestone Financial Corporation (" Firestone" ) to JHM Equipment Leasing Company (" JHM" ). After JHM defaulted on the loans, Firestone filed suit against JHM, John R. Meyer (JHM's owner), and two of Mr. Meyer's other companies to collect on the debt. The defendants filed an answer denying the allegations of breach, asserting a counterclaim of promissory estoppel, and raising various affirmative defenses. Relying on Federal Rule of Civil Procedure 12(b)(6), the district court dismissed the defendants' counterclaim as implausible and later awarded summary judgment to Firestone on its claim against Mr. Meyer. Mr. Meyer now appeals both the district court's dismissal of his counterclaim as well as the court's grant of summary judgment to Firestone. For the reasons set forth in this opinion, we reverse both decisions and remand this case for further proceedings.

I

BACKGROUND

Firestone is a finance company incorporated under the laws of Massachusetts with its principal place of business in that state. JHM is an Illinois corporation that rents commercial laundry machines to apartment building owners in Chicago and its suburbs. Mr. Meyer owns and operates JHM and two related companies, J H Meyer Enterprises, Inc. (" Meyer Enterprises" ) and Dolphin Laundry Services, Inc. (" Dolphin" ). Mr. Meyer is an Illinois citizen, residing in Hinsdale, Illinois; his three companies are all incorporated in Illinois and have their principal place of business in that state.

Between June 2012 and June 2013, Firestone made four separate loans to JHM, totaling $254,114.99. Each loan was secured by JHM's laundry equipment and guaranteed by Meyer Enterprises, Dolphin, and Mr. Meyer.

Between June and August of 2013, JHM defaulted on each of its four loans. Shortly afterward, Firestone filed this diversity action in the district court against Mr. Meyer and his three companies, alleging claims for breach of contract, breach of guaranty, replevin, and detinue.

The defendants filed an answer, denying the allegations of breach and asserting a counterclaim of promissory estoppel. In this counterclaim, the defendants alleged that in November 2012, after Firestone's first two loans to JHM, Firestone vice president Dan McAllister had represented that his company " wanted to expand [its] investment in the laundry business," and that it " would create a $500,000 line of credit" to fund the defendants' equipment purchases in 2013.1 This promise, according to the defendants, " induced JHM into purchasing equipment" that it would not otherwise have purchased.2 Consequently, when Firestone later reneged on this promise, JHM was left unable to pay for its newly purchased equipment. As a result, JHM's equipment supplier (Maytag) refused to sell laundry equipment to any of Mr. Meyer's three companies, resulting in substantial losses to the defendants.

The defendants' answer also raised four affirmative defenses, including that of promissory estoppel and prior breach of contract. These latter two defenses were based on the same factual allegations as the defendants' counterclaim.

In February 2014, Firestone moved to dismiss the defendants' counterclaim under Rule 12(b)(6). The company submitted that the claim was implausible because it was premised on " the unheard of position that Firestone, a corporation with nearly 50 years in business, [would make] a handshake deal to loan half a million dollars to a start up business to be secured after the fact." 3

Shortly thereafter, defense counsel withdrew from the case. In the following month, the defendants did not obtain substitute counsel. As a result, Firestone moved for an entry of default judgment against the three corporate defendants, submitting that they were required to have legal counsel under Illinois law. The court granted Firestone's motion and entered default judgment against the three corporate defendants. The court's judgment did not address the defendants' counterclaim.

The district court held a status hearing on the remaining claims in April 2014. The court started the hearing by discussing the defendants' efforts to obtain substitute counsel. Mr. Meyer informed the court that he was working to obtain counsel and that his corporate codefendants would have representation within approximately one week. In response, Firestone asserted that the defendants were taking too long to obtain counsel and that the court should rule on its pending motion to dismiss. Having apparently forgotten about this motion, the court replied, " Well, wait just a minute. Let me get the chambers file. You are right, I have given Mr. Meyer a lot of leeway." 4 After reviewing the motion and hearing argument from Mr. Meyer, the court granted Firestone's motion to dismiss, ruling that the defendants' counterclaim was facially implausible.

Shortly afterward, Firestone moved for summary judgment on its remaining breach of guaranty claim against Mr. Meyer. Regarding Mr. Meyer's...

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