Inter-Mountain Threading, Inc. v. Baker Hughes Tubular Services, Inc., INTER-MOUNTAIN

• Decision Date: 10 June 1991
• Docket Number: No. 90-139,INTER-MOUNTAIN,90-139
• Citation: 812 P.2d 555
• Parties: THREADING, INC., a Wyoming Corporation, Appellant (Plaintiff), v. BAKER HUGHES TUBULAR SERVICES, INC., a Delaware Corporation, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 555

812 P.2d 555

INTER-MOUNTAIN THREADING, INC., a Wyoming Corporation, Appellant (Plaintiff), v. BAKER HUGHES TUBULAR SERVICES, INC., a Delaware Corporation, Appellee (Defendant).

No. 90-139.

Supreme Court of Wyoming.

June 10, 1991.

Jeffrey C. Gosman, Casper, for appellant.

W.W. Reeves of Reeves & Murdock, Casper, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

GOLDEN, Justice.

In this appeal we consider the doctrine of promissory estoppel in the context of preliminary negotiations in a commercial transaction. We also take the opportunity to caution members of the practicing bar who appear in this court that we expect compliance with our rules of appellate procedure. Our warning in this regard appears in the latter part of this opinion.

A jury returned a verdict finding that Baker Hughes Tubular Services, Inc. (Baker Hughes), on December 30, 1987, made a promise to Inter-Mountain Threading, Inc. (IMT) that if it would set up a facility for the manufacture of premium thread flush connections on pipe used in the oil and gas industry, then Baker Hughes would conduct an exclusive business relationship with IMT in the form of either a manufacturing The trial judge granted Baker Hughes' motion for a judgment notwithstanding the verdict (JNOV). W.R.C.P. 50(b). On appeal from that judgment, IMT raises this issue:

agreement or a licensing agreement; that Baker Hughes should reasonably have expected its promise to induce action on the part of IMT; that Baker Hughes' promise did induce IMT to change its position in reliance on the promise; that Baker Hughes did not keep its promise; and that IMT suffered $100,000 damages because Baker Hughes did not keep its promise.

Whether the evidence in this case is such that without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion reasonable persons could have reached in setting aside the jury verdict and granting judgment notwithstanding the verdict.

Baker Hughes identifies these issues:

1. Whether the Court correctly determined that enforcement of the promise was not required to avoid injustice.

2. Whether the promise allegedly made by Appellee was sufficiently clear and unambiguous to support a verdict based on promissory estoppel.

3. Whether Appellant took some action or forbearance of a definite and substantial character in reasonable reliance upon a promise made by Appellee.

4. Whether any significant change in position by Appellant was reasonably foreseeable by Appellee.

5. Whether Appellant sustained any compensable damage as a result of reliance upon any promise made by Appellee.

6. Whether the action was brought in the name of the real party in interest. ¹

We affirm.

FACTS

Baker Hughes, a Delaware corporation, with offices in Houston, Texas, possesses technical information necessary to cut threads on oil field pipe which results in a flush connection. The product is referred to as "premium threads." The technical information relating to these threads includes plans, specifications, and computer programs used in computer operated lathes which cut the threads into the ends of the pipe.

Baker Hughes historically granted rather limited authority to anyone in the United States to cut its premium threads. At one time it had, under the provisions of a manufacturing agreement, conducted business with Grey-Mak, Inc., which operated a threading facility in Casper, Wyoming.

Richard A. Bonander was president of his own company called Inter-Mountain Pipe, which sold pipe. This company acquired pipe with unthreaded ends and paid others to cut threads on it before resale. In 1987, Bonander began planning the formation of a company to cut threads. This company would thread the pipe that Inter-Mountain Pipe acquired.

Greg Breed, a friend of Bonander's and a skilled machinist with special training in the operation of computerized lathes, was quality assurance manager at Grey-Mak where Inter-Mountain Pipe had most of its threads cut. He had the training and experience necessary to set up a thread-cutting facility.

In the fall of 1987, Bonander and Breed discussed the formation of a thread cutting facility. Bonander was looking around for financing. In November, he applied to the Casper Area Economic Development Alliance for a loan to purchase a state of the art computerized lathe costing $100,000. Breed was looking around for equipment.

On December 15, 1987, Breed quit his job at Grey-Mak and, within a day or two In their search for equipment, Bonander and Breed located several lathes. To hold one in Denver until he could travel there to inspect it, Bonander sent in a deposit. He also located a Mori-seikis computerized lathe in Houston, being brokered by a fellow named Starling. Bonander told Starling he was looking for a particular brand, either a Mazak or a Mori-seikis. Breed located a Mazak in Louisiana. Bonander and Breed traveled to Louisiana to inspect the Mazak; they did not like it as it was in poor condition. They went to Houston and inspected Starling's Mori-seikis which they found to be in good condition. They did not make a commitment to buy that lathe at that time; they returned to Casper.

went to work for Inter-Mountain Pipe. Bonander told him he wanted to put together the threading facility they had been discussing. Breed began investigating locations and continued looking for equipment. On December 16 or 17, Breed called Jerry Haygood, Baker Hughes' manager of manufacturing and engineering, to inform him he had left Grey-Mak, was working for a fellow interested in starting up a threading facility in Casper, and was interested in talking to Baker Hughes about cutting premium threads. When Breed worked for Grey-Mak, he had become acquainted with Haygood. Haygood told Breed that the person in Baker Hughes he should talk to was David Douglas, manager of the premium thread product line.

Breed received a call from Haygood, telling Breed that he had spoken favorably of Breed to Baker Hughes' Douglas. He gave Breed Douglas' telephone number. Breed called Douglas who said he would like to meet with him. Breed checked on travel arrangements and called Douglas to arrange a meeting on December 30. Breed told Bonander about his contact with Douglas, and they agreed they should make a deposit on Starling's lathe. On December 21, Bonander sent Starling a $10,000 deposit on the lathe.

On December 30, at a breakfast meeting in Houston attended by Breed, Haygood, and Douglas, a conversation occurred on which IMT's promissory estoppel claim hinges. Initially, they engaged in small talk. They talked about the threading market and Breed's experience. The conversation turned to the types of agreement under which Baker Hughes did business with a thread cutting facility. From employment with Grey-Mak, Breed was familiar with the toll manufacturing type of agreement; he was unfamiliar with the licensing type of agreement. They did not agree on the terms of either a licensing agreement or a manufacturing agreement. Douglas offered to send Breed sample copies of each for him to consider. Breed told Douglas and Haygood that he was looking at a computerized lathe in Houston, but was unsure if it would cut premium threads. Although they discussed percentages of prices or money that IMT would pay to Baker Hughes under either type of agreement, there was no agreement on these matters. They did not discuss the duration of any agreement. Although they discussed products, they did not agree on which products an agreement in either form would cover. Although they discussed the subject of liability, they did not agree as to which party would assume liability for product defects under either form of agreement. They did not agree on the price IMT would have to pay for the transfer of technology; in fact, the subject of transfer fees was never mentioned. There was no agreement on what percentage of the sales price of pipe sold IMT would pay to Baker Hughes. Breed did not discuss IMT's marketing plan with Douglas. They did not discuss when IMT expected to have its threading facility operational. There was no discussion about whether Baker Hughes would wait indefinitely for IMT to establish its facility. Breed assumed that any deal with Baker Hughes would be in writing.

According to Breed, at the conclusion of the meeting, "Mr. Douglas told me that if I could go back to Casper and put a facility together that met Baker Hughes' requirements, that we would do a deal, the deal meaning either a licensing agreement or toll manufacturing agreement." During cross-examination, Breed testified that Douglas had told him "if we could get a After the meeting Breed and Haygood toured Baker Hughes' operation, had lunch, and then went to Starling's to look at the lathe that Breed and Bonander wanted. After they checked out the lathe, the only discussion Breed and Haygood had was that Haygood said it was a good machine and the tolerances on it were very tight.

                plant put together that would meet Baker Hughes specifications, and after they inspected it, we would have a deal."   Then, Breed reiterated that Douglas' words were "we can do a deal."   Breed characterized Douglas' words as a "leaving remark."
                

After Breed and Haygood parted company, Breed called Bonander in Casper and reported on the day's events. Breed returned to Casper. Bonander called Starling to inform him he wanted to buy the lathe. By January 4 or 5, 1988, Bonander had arranged a lease agreement to finance the purchase of the lathe and other equipment. On January 22, 1988, IMT's articles of incorporation were filed with the secretary of state's office.

By letter dated January 27, 1988, Douglas sent Breed, as he said he would, two types of agreement. In the letter, Douglas stated, in pertinent part, "Review these so that we may determine the most beneficial arrangement for both our companies. Neither document is submitted...