Major Mat Co. v. Monsanto Co.

• Decision Date: 05 August 1992
• Docket Number: No. 91-3639,91-3639
• Citation: 969 F.2d 579
• Parties: MAJOR MAT COMPANY, Plaintiff-Appellant, v. MONSANTO COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 579

969 F.2d 579

MAJOR MAT COMPANY, Plaintiff-Appellant, v. MONSANTO COMPANY, Defendant-Appellee.

No. 91-3639.

United States Court of Appeals, Seventh Circuit.

Argued June 4, 1992.

Decided Aug. 5, 1992.

John K. Brendel (argued), Brookfield, Wis., for plaintiff-appellant.

William H. Levit, Jr., Michael B. Apfeld, Michael Ash (argued), Godfrey & Kahn, Milwaukee, Wis., for defendant-appellee.

Before BAUER, Chief Judge, RIPPLE, Circuit Judge, and WOOD, Jr., Senior Circuit Judge.

BAUER, Chief Judge.

In this diversity action, Major Mat Company ("Major Mat"), a manufacturer of golf tee mats, appeals from the district court's entry of summary judgment against it in favor of Monsanto Company ("Monsanto"), its source for the principal component of the mats. For the following reasons, we affirm.

I.

Among the products Monsanto manufactures is a particular variety of artificial turf, S-54 AstroTurf, that it installs on athletic playing fields. The S-54 artificial surface is uniquely Monsanto's. During the time period relevant to this inquiry, after fulfilling its athletic field installation contracts, Monsanto annually would be left with between 100,000 and 300,000 square feet of S-54 remnants. Having no use of its own for these remnants, Monsanto sold them for use by others at $1.75 per square foot.

Leon Storm has a background that includes experience in running golf driving ranges. Dissatisfied with commercially available golf tee mats, Storm experimented with various materials hoping to construct a more sturdy mat. In the fall of 1982 he purchased a quantity of S-54 remnants from Monsanto. With it, he fabricated a golf tee mat that he felt was far superior to anything already on the market. He tested it on his driving range in Florida, and others agreed with his assessment. The Clearwater Sun gave the mat a full write-up, claiming it excelled. Two things occurred next, and their sequence is unclear from the record: the business moved to Wisconsin, and Storm, Tom Major, and two others formed a partnership, Major Mat. They then went into production, placing several orders for S-54 with Monsanto in rapid succession. Because only S-54 produced the desired results, Storm thought it would be wise to ensure a continuous supply by entering into a contract with Monsanto. In April 1983, Storm asked Lynda Smith, the remnant salesperson with whom he had been dealing, who he should talk to about a contract for S-54. She referred him to Douglas Fleck. Fleck's primary responsibility at Monsanto was to administer the installation contracts for artificial turf, but he also was in charge of remnant sales.

Before Storm followed up, Fleck called him in June. He was curious about what Major Mat was doing with all the remnants it purchased because, he said, Monsanto had a constant need to sell them and was always looking for an outlet for them. He said other purchasers included contractors who install playgrounds for McDonalds. Storm was reluctant to tell Fleck how Major Mat used the remnants, but did inquire if Monsanto would enter into a contract with Major Mat for the purchase of Monsanto's entire remnant supply.

He said to me, Mr. Storm, we have so many remnants there's no way you could buy our entire supply of remnants. I, then, said to him, well, I'm concerned with keeping a constant supply of remnants because we are going to be doing what we're doing in large numbers. He said, well, wonderful, you can rest assured that we will have an unending supply of remnants.

Storm Deposition ("Dep."), at 10-11. Only then did Storm tell Fleck that Major Mat used the remnants in the production of golf tee mats, and noted that he hoped Monsanto wouldn't manufacture its own mats. Fleck responded not to worry, Monsanto is a supplier of products, not a fabricator. Both apparently were satisfied that this telephone call settled each of their concerns because neither followed up with a written communication. For his part, Storm understood Fleck to have promised that Major Mat could purchase its S-54 requirements at the remnant price of $1.75 per square foot in perpetuity, and that Monsanto would not compete with Major Mat in the golf tee mat market. He also believed, as a result of this conversation, that the onus was completely on Monsanto--Major Mat was under no obligation to make any purchases of S-54.

Major Mat continued to purchase large quantities of S-54 from Monsanto, and enjoyed commercial success with its golf tee mat. The partners, however, continued to be concerned about the supply of S-54. During a telephone conversation between Major and Fleck sometime in the fall of 1983 or early in 1984, Major again sought reassurance of the continued availability of S-54. Fleck told Major not to worry, they always had plenty, but even if they were to run out of remnants, Major Mat could purchase newly milled carpet. So all was well for several years.

Things changed. In July 1985, Major learned from a customer that Monsanto was about to market its own golf tee mat. He contacted Lynda Smith and asked what she knew about this development. She knew nothing about it, but said she would ask Fleck if he knew anything. After she talked to Fleck, Smith called Major to report that Fleck also knew nothing about Monsanto developing its own mat, and suggested that it must be a mistake. In January 1986, however, at the P.G.A. show in Orlando, Florida, Major learned that it was no mistake. Monsanto had its own golf mat.

Also in January 1986, Monsanto formed a wholly owned subsidiary, AstroTurf Industries ("AstroTurf"), based in Dalton, Georgia. AstroTurf assumed the manufacture of Monsanto's artificial turf products, including its golf tee mat line. At a slow but steady pace, the quantity of S-54 remnants available to Major Mat began to decrease. On one occasion, all that was available was blue S-54, not the standard green. On another, all Major Mat could purchase was S-64, which, although it was the preferred green color, was of a lesser quality for Major Mat's purposes. Eventually, the quantities of S-54 that Major Mat needed simply were unavailable. Major Mat continued to press for a contract. Ultimately, on September 10, 1986, AstroTurf's Vice President, Ed Milner, wrote to Major Mat to offer first-run S-54, at $4.00 per square foot, for a minimum quantity of 50,000 square feet per year for at least three years. But that would have resulted in a doubling of the price of Major Mat's product to its customers, and competing against the Monsanto mat manufactured at almost a quarter of the cost. Major Mat refused to accept those terms.

Without the necessary S-54 artificial turf, Major Mat ceased production. Consequently, it could no longer take new orders for mats and, in effect, went out of business. On April 2, 1987, Major Mat filed a complaint against Monsanto in the Circuit Court of Waukesha County, Wisconsin. Monsanto timely removed the case to the United States District Court for the Eastern District of Wisconsin and then moved to dismiss the complaint. In response, Major Mat filed an amended complaint containing seven separate theories of recovery: (1) promissory estoppel; (2) misrepresentation; (3) conspiracy; (4) violation of the Wisconsin Fair Dealership Law; (5) federal racketeering; (6) state racketeering; and (7) unjust enrichment.

After both sides conducted thorough discovery, Monsanto moved for summary judgment. On October 11, 1991, the district court granted Monsanto's motion in an opinion delivered from the bench. Major Mat filed a timely notice of appeal. It argues that the district court erroneously entered summary judgment against it on its promissory estoppel, misrepresentation, and unjust enrichment claims.

II.

To succeed on a motion for summary judgment, the movant bears the burden to identify for the court, from among all the material of record, the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); FED.R.CIV.P. 56(c). This court reviews de novo a district court's grant of summary judgment, drawing all reasonable inferences in favor of the nonmoving party. Whetstine v. Gates Rubber Co., 895 F.2d 388, 392 (7th Cir.1990).

Major Mat claims that Douglas Fleck's statement to Leon Storm in the June 1983 telephone conversation that "you can rest assured we will have an unending supply of remnants" constituted a promise on which Major Mat relied when it went into golf tee mat production. It argues that because it raised genuine issues of material fact regarding all of the elements of promissory estoppel, the district court erroneously entered summary judgment against it. In Wisconsin, to prevail on a theory of promissory estoppel a plaintiff must show (1) that the promise was one that the promisor reasonably should have expected would induce action or forbearance of a definite and substantial character on the part of the promisee; (2) that the promise did induce the required action or forbearance; and (3) that injustice can be avoided only by enforcing the promise. Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267, 275 (1965). The first two elements are questions of fact ordinarily resolved by a jury, and the third a question of policy left to the court. Id. So our first inquiry is was there a promise, one which Monsanto reasonably should have expected would induce Major Mat to take action or forbear from doing so.

A promise is a manifestation of intent by the promisor to be bound, and is to be judged by an objective standard. RESTATEMENT (SECOND) OF CONTRACTS § 2, cmt. b (1981 rev. ed.). Mere predictions or statements of opinion are not promises supportive of a promissory estoppel cause of action. Werner v. Xerox Corp., 732 F.2d 580, 583 n. 1 (7th Cir.1984). Whether a reasonable person in the position of the plaintiff would conclude that the defendant's statement was a commitment or a mere prediction is a question of fact...