M.T. Bonk Co. v. Milton Bradley Co.

• Decision Date: 16 October 1991
• Docket Number: 90-2807,Nos. 90-1678,s. 90-1678
• Citation: 945 F.2d 1404
• Parties: 34 Fed. R. Evid. Serv. 353 M.T. BONK COMPANY and Mark T. Bonk, Plaintiffs-Appellants, v. MILTON BRADLEY COMPANY and Hasbro, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1404

945 F.2d 1404

34 Fed. R. Evid. Serv. 353

M.T. BONK COMPANY and Mark T. Bonk, Plaintiffs-Appellants, v. MILTON BRADLEY COMPANY and Hasbro, Inc., Defendants-Appellees.

Nos. 90-1678, 90-2807.

United States Court of Appeals,

Seventh Circuit.

Argued Feb. 22, 1991.

Decided Oct. 16, 1991.

Elizabeth J. Guscott (argued), Chicago, Ill., for plaintiffs-appellants.

Richard G. Schultz, Steven H. Gistenson (argued), Foran, Wiss & Schultz, Chicago, Ill., for defendants-appellees.

Before CUMMINGS, RIPPLE and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Mark T. Bonk invented and marketed a board game he entitled "Play it Again Juke Box," in which players were challenged to complete a phrase from a popular song after being given a few words of the lyrics. He sent the game to a number of toy and game manufacturers, including the Milton Bradley Company and Hasbro, Inc. (Milton Bradley), in an attempt to interest them in licensing it. Milton Bradley responded and a meeting was arranged.

At that meeting, a representative of Milton Bradley explained to Bonk that products under consideration are reviewed over the course of a series of meetings to determine if they will become part of the company's product line. Between each meeting, research and development is performed, modifications or changes may be made, and advertising presentations are developed. He was also informed that during the review process Milton Bradley will begin to negotiate a licensing agreement with the inventor. Bonk was warned that a product may be removed from the review process by Milton Bradley at any time for a number of reasons and that a product can even be canceled after reaching the manufacturing stage.

When asked what rights he had to the copyrighted song lyrics used in the game, Bonk responded that, while he had not acquired the rights to the lyrics, he was entitled to use them in the game.

A copy of Milton Bradley's standard licensing agreement was sent to Bonk's attorney for review. A letter attached to the agreement stated that much of the terminology of the agreement would become part of the conditions under which Milton Bradley would license the game. The standard contract set forth the rights and obligations of the parties and contained a provision that required the inventor to warrant that the product "does not violate or infringe any rights of others."

Two months later, another representative of Milton Bradley telephoned Bonk and informed him that the game would be presented at the next meeting, although the company was concerned about the use of the copyrighted song lyrics. Nevertheless, Milton Bradley remained interested in negotiating for licensing of the game. Several factors that would be involved in the negotiations were discussed and Bonk was informed that, in the event they were to reach an agreement, Milton Bradley would expect Bonk to stop distribution of the game.

Shortly thereafter, Bonk told the company he would discuss the matter with his attorney and that he wanted his attorney involved in any subsequent negotiations for the game.

Over the next several months, Bonk's attorney negotiated with Milton Bradley to establish a licensing agreement. Milton Bradley indicated it was concerned that there were copyright violations with the song lyrics used in the game and that resolution of this issue was critical.

In the end, Milton Bradley determined that Bonk had no right to use the copyrighted song lyrics in the game under "the Fair Use Doctrine." Milton Bradley canceled all negotiations with Bonk and the game was withdrawn from the review process.

Bonk brought an action against Milton Bradley alleging breach of contract. After trial, a jury returned a verdict in favor of Milton Bradley and against Bonk. Dissatisfied with the verdict and denial of his motion for a new trial, Bonk raises several issues on appeal.

First, Bonk argues that the district court erred in denying his motion for a new trial because the verdict was contrary to the evidence which showed that he had an oral contract or, alternatively, a contract by promissory estoppel, with Milton Bradley. Second, Bonk claims that the court's limitation of his counsel's examination of a witness and related comments by the district judge denied him a fair trial. And, finally, Bonk argues that the district court erred in awarding $31,111.10 in costs to Milton Bradley.

Our review of the district court's denial of Bonk's motion for a new trial is governed by federal law, even in a diversity case. Wassell v. Adams, 865 F.2d 849, 854 (7th Cir.1989). A new trial may be granted only if the verdict is against the clear weight of the evidence, and we will reverse the district judge's decision only where there is a clear abuse of discretion. Id. Thus, we will not set aside a jury verdict if a reasonable basis exists in the record to support that verdict. Bay State Milling Company v. Martin, 916 F.2d 1221, 1226 (7th Cir.1990). In examining a jury's verdict, we view the evidence in the light most favorable to the prevailing party and the question of credibility and weight of evidence is within purview of the jury. Lippo v. Mobil Oil Corp., 776 F.2d 706, 716 (7th Cir.1985).

As a federal court sitting in diversity, we must apply state law to resolve all substantive questions. Havoco of America, Inc. v. Hilco, Inc., 799 F.2d 349, 352-53 (7th Cir.1986). The parties do not dispute that Illinois law governs here. In determining whether an oral contract exists, the trier of fact must determine whether there was a meeting of the minds between the parties with respect to the terms of an agreement and whether the parties intended to be bound to the oral agreement. Lal v. Naffah, 149 Ill.App.3d 245, 102 Ill.Dec. 806, 808, 500 N.E.2d 699, 701 (1986); Ceres Illinois, Inc. v. Illinois Scrap Processing, Inc., 114 Ill.2d 133, 102 Ill.Dec. 379, 382, 500 N.E.2d 1, 4 (1986). In order for an oral contract to be binding and enforceable, the contract terms must be definite and certain. Rybak v. Provenzale, 181 Ill.App.3d 884, 130 Ill.Dec. 852, 856, 537 N.E.2d 1321, 1325 (1989).

The evidence most favorable to Milton Bradley indicates that there was no meeting of the minds between Bonk and Milton Bradley. Although Bonk claims that he and Milton Bradley entered into an oral contract for licensing the game in their telephone conversations, it is apparent from the continuing negotiations that there was no mutual assent to the terms of an agreement and that the terms of an agreement were not definite and certain.

Moreover, the parties did not intend to be bound absent a written agreement. The negotiations indicate that a written document was contemplated as their conclusion. See Ceres, 102 Ill.Dec. at 382, 500 N.E.2d at 4. In fact, Bonk admitted that he and a representative of Milton Bradley discussed putting their agreement into writing.

Before beginning negotiations with Milton Bradley, Bonk's attorney received a copy of Milton Bradley's standard licensing agreement. The letter attached to the agreement stated that much of the terminology of the agreement would become part of the conditions under which Milton Bradley would license the game. The standard contract set forth the rights and obligations of the parties and provided that it would be the entire agreement of the parties, and that no other representation, oral or written, would be binding on the parties. During the negotiations, Milton Bradley made reference to the standard agreement.

It is also apparent from the correspondence and memoranda of Bonk's attorney that a written agreement was to be executed before the parties would be legally bound. In the writings, he referred to "the time of execution of the agreement." In addition, drafts of license agreements, prepared by Milton Bradley, were sent to Bonk's attorney and revisions of the draft contracts were discussed.

Bonk suggests that the research and development of the game during the review process indicates that Milton Bradley believed a contract existed. However, Bonk was informed during his initial meeting with the company that extensive work on the game would be conducted during the review process but that consideration of the game could be canceled at any time.

As an alternate ground, Bonk contends that a contract with Milton Bradley arose by promissory estoppel. To establish a claim based on promissory estoppel, Bonk must allege and prove that (1) Milton Bradley made an unambiguous promise to him, (2) he relied on that promise, (3) his reliance was expected and foreseeable by Milton Bradley, and (4) he relied on the promise to his detriment. Quake Const., Inc. v. American Airlines, Inc., 141 Ill.2d 281, 152 Ill.Dec. 308, 322, 565 N.E.2d 990, 1004 (1990). In addition, his reliance must have been reasonable and justifiable. Id.

Although Milton Bradley did not make an unambiguous promise to Bonk to license the game, Bonk nonetheless assumed he had a deal. After his initial contact with the representative of Milton Bradley, Bonk immediately dismantled his own company. He terminated all marketing, promotions, and manufacturing, sold a portion of the remaining inventory at a discount, did not attend an international toy fair to promote the game, and refused all other offers and proposals from third parties to purchase the rights to the game. However, Bonk's reliance was unreasonable and could not have been expected or foreseen by Milton Bradley. He was informed at the initial meeting about the review process and the possibility that a product considered for licensing could be canceled at any time during the process. Because Bonk's reliance was unreasonable, whether he relied to his detriment is irrelevant.

There is more than sufficient evidence upon which a reasonable jury could determine that no contract existed between Bonk and Milton Bradley; therefore, the trial court did not err in denying Bonk's motion for a new trial.

Bonk argues that the district court's...