Garwood Packaging, Inc. v. Allen & Co., Inc.

• Decision Date: 10 August 2004
• Docket Number: No. 03-1848.,03-1848.
• Citation: 378 F.3d 698
• Parties: GARWOOD PACKAGING, INC., et al., Plaintiffs-Appellants, v. ALLEN & COMPANY, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

378 F.3d 698

GARWOOD PACKAGING, INC., et al., Plaintiffs-Appellants, v. ALLEN & COMPANY, INC., et al., Defendants-Appellees.

No. 03-1848.

United States Court of Appeals, Seventh Circuit.

Argued January 9, 2004.

Decided August 10, 2004.

Rehearing and Rehearing En Banc Denied September 20, 2004.

Appeal from the United States District Court for the Southern District of Indiana, Larry J. McKinney, Chief Judge.

Paul M. De Marco (argued), Waite, Schneider, Bayless & Chesley, Cincinnati, OH, for Plaintiffs-Appellants.

Ellen E. Boshkoff (argued), Baker & Daniels, Indianapolis, IN, for Defendants-Appellees.

Before POSNER, RIPPLE, and ROVNER, Circuit Judges.

POSNER, Circuit Judge.

This is a diversity suit, governed by Indiana law, in which substantial damages are sought on the basis of promissory estoppel. The suit pits Garwood Packaging, Inc., which created a packaging system designed to increase the shelf life of fresh meat, and its two principals, Garwood and McNamara, against Allen & Company (an investment company) and a vice-president of Allen named Martin. We shall refer to the plaintiffs collectively as "GPI" and the defendants collectively as "Allen." The district court granted summary judgment in favor of Allen and dismissed the suit.

There is a threshold question: whether GPI's appeal was timely. The notice of appeal was filed within 30 days of the entry of judgment, but the judgment had not dismissed the suit as to one of the defendants and was therefore, on its face anyway, not final and appealable. GPI then dismissed its suit against the remaining defendant and filed a new notice of appeal, but did so more than 30 days after the dismissal of that defendant had removed the cloud on the finality of the district court's judgment. The district judge granted GPI's motion to file a late notice of appeal, but failed in doing so to make a finding that GPI's tardiness had been due to "excusable neglect." A district court may extend the time for filing a notice of appeal only if the appellant demonstrates to the court's satisfaction "excusable neglect or good cause." Fed. R.App. P. 4(a)(5)(A)(ii). The ruling is regarded as discretionary, e.g., United States v. Brown, 133 F.3d 993, 996 (7th Cir.1998); Brotherhood of Ry. Carmen v. Chicago & North Western Transportation Co., 964 F.2d 684, 686 (7th Cir.1992); Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 362 (2d Cir.2003), and so when there is no indication that discretion was actually exercised, a remand is necessary unless the issue is so one-sided (which is not the case here) that it could have been resolved only one way. Cf. Prizevoits v. Indiana Bell Tel. Co., 76 F.3d 132, 133-34 (7th Cir.1996).

No remand is necessary here on a different ground, or rather grounds. One is that the notice of appeal may not have been premature, because the judgment may already have been final. The defendant who was not formally dismissed from the case at the same time as the other defendants had never been served with the complaint, and it was much too late to serve him by the time the judgment was entered against the other defendants. Since he had never become and never could become a party, the judgment that did not mention him was nevertheless final, complete, and appealable. Manley v. City of Chicago, 236 F.3d 392, 395 (7th Cir.2001); Ordower v. Feldman, 826 F.2d 1569, 1571-73 (7th Cir.1987); Federal Savings & Loan Ins. Corp. v. Tullos-Pierremont, 894 F.2d 1469 (5th Cir.1990), and cases cited there.

It might be objected that these cases conflate a good reason for entering a final decision with entry of the final decision itself. Suppose a plaintiff filed suit and then appealed the same day, before the district court even looked at the case, and defended his precipitate action by saying that he knew he would lose in the district court under circuit precedent (which he would urge the court of appeals to overrule, but which would bind the district court) and since his suit was doomed in the district court it was as if there were a final judgment and he should therefore be able to appeal immediately. But in the cases that we have cited, as in the present case, the defendant who hadn't been dismissed with the others had never actually become a party because he had never been served. The significance of the fact that he could no longer be served was that the dismissal of the suit could not be regarded as a dismissal without prejudice as to him; it was therefore securely final.

The alternative ground for regarding the decision of the district court as final and appealable is based on Rule 4(a)(2) of the Federal Rules of Appellate Procedure. The rule provides that a notice of appeal filed after the court announces its decision but before the judgment is entered shall be treated as if filed when the judgment was entered. In other words, once the decision is announced, a premature notice of appeal lingers until the final decision is entered. FirsTier Mortgage Co. v. Investors Mortgage Ins. Co., 498 U.S. 269, 111 S.Ct. 648, 112 L.Ed.2d 743 (1991); Otis v. City of Chicago, 29 F.3d 1159, 1166 (7th Cir.1994) (en banc). Here a decision was announced and a notice of appeal filed (the first notice). It took effect when, the last defendant having been dismissed, the decision became final.

So the appeal was timely and we can proceed to the merits.

GPI had flopped in marketing its food-packaging system and by 1993 had run up debts of $3 million and was broke. It engaged Martin to help find investors. After an initial search turned up nothing, Martin told GPI that Allen (Martin's employer, remember) would consider investing $2 million of its own money in GPI if another investor could be found who would make a comparable investment. The presence of the other investor would reduce the risk to Allen not only by augmenting GPI's assets but also by validating Allen's judgment that GPI might be salvageable, because it would show that someone else was also willing to bet a substantial sum of money on GPI's salvation. To further reduce its risk Allen decided to off-load half its projected $2 million investment on other investors.

Martin located a company named Hobart Corporation that was prepared to manufacture $2 million worth of GPI packaging machines in return for equity in the company. Negotiations with Hobart proved arduous, however. There were two sticking points: the amount of equity that Hobart would receive and the obtaining of releases from GPI's creditors. Hobart may have been concerned that unless the creditors released GPI the company would fail and Hobart wouldn't be able to sell the packaging systems that it manufactured. Or it may have feared that the creditors would assert liens in the systems. All that is clear is that Hobart insisted on releases. They were also important to the other investors whom Allen wanted to bring into the deal, the ones who would contribute half of Allen's offered $2 million.

Martin told Garwood and McNamara (GPI's principals) that he would see that the deal went through "come hell or high water." Eventually, however, Allen decided not to invest, the deal collapsed, and GPI was forced to declare bankruptcy. The reason for Allen's change of heart was that the investors who it thought had agreed to put up half of "Allen's" $2 million had gotten cold feet. When Allen withdrew from the deal, no contract had been signed and no agreement had been reached on how much stock either Allen or Hobart would receive in exchange for their contributions to GPI. Nor had releases been obtained from the creditors.

GPI's principal claim on appeal, and the only one we need to discuss (the others fall with it), is that Martin's unequivocal promise to see the deal through to completion bound Allen by the doctrine of promissory estoppel, which makes a promise that induces reasonable reliance legally enforceable. Brown v. Branch, 758 N.E.2d 48, 52 (Ind.2001); First National Bank of Logansport v. Logan Mfg. Co., 577 N.E.2d 949, 954 (Ind.1991); Consolidation Services, Inc. v. KeyBank National Ass'n, 185 F.3d 817, 822 (7th Cir.1999) (Indiana law); Restatement (Second) of Contracts § 90(1) (1981); 1 E. Allan Farnsworth, Farnsworth on Contracts § 2.19 (3d ed.2004). If noncontractual promises were never enforced, reliance on their being enforceable would never be reasonable, so let us consider why the law might want to allow people to rely on promises that do not create actual contracts and whether the answer can help GPI.

The simplest answer to the "why" question is that the doctrine merely allows reliance to be substituted for consideration as the basis for making a promise enforceable. First National Bank of Logansport v. Logan Mfg. Co., supra, 577 N.E.2d at 954; Workman v. United Parcel Service, Inc., 234 F.3d 998, 1001 (7th Cir.2000); Consolidation Services, Inc. v. KeyBank National Ass'n, supra, 185 F.3d at 822; Porter v. Commissioner, 60 F.2d 673, 675 (2d Cir.1932) (L.Hand, J.). On this view promissory estoppel is really just a doctrine of contract law. The most persuasive reason for the requirement of consideration in the law of contracts is that in a system in which oral contracts are enforceable — and by juries, to boot — the requirement provides some evidence that there really was a promise that was intended to be relied on as a real commitment. Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1131 (7th Cir.1997); Scholes v. Lehmann, 56 F.3d 750, 756 (7th Cir.1995); Krell v. Codman, 154 Mass. 454, 28 N.E. 578 (Mass.1891) (Holmes, J.); Lon L. Fuller, "Consideration and Form," 41 Colum. L.Rev. 799, 799-801 (1941). Actual reliance, in the sense of a costly change of position that cannot be recouped if the reliance turns out to have been misplaced, is substitute evidence that there may well have been such a promise. Consolidation Services, Inc. v. KeyBank National Ass'n, supra, 185 F.3d at 822; Yontz v. BMER Interprises, Inc., 91 Ohio App.3d 202, 632...