Garry Balthes v. Concept Industries, Inc., Composite Technologies, LLC, and Shawn Eshragh ( 2012 )

Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not
be regarded as precedent or cited FILED
before any court except for the purpose Jul 17 2012, 9:06 am
of establishing the defense of res
judicata, collateral estoppel, or the law CLERK
of the supreme court,
court of appeals and
of the case. tax court
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:
CYNTHIA S. GILLARD GREGORY P. RIPPLE
ANDREW M. HICKS Miller Johnson
Warrick & Boyn, LLP Grand Rapids, Michigan
Elkhart, Indiana
MICHELLE L. QUIGLEY
Miller Johnson
Kalamazoo, Michigan
IN THE
COURT OF APPEALS OF INDIANA
GARRY BALTHES, )
)
Appellant, )
)
vs. ) No. 20A03-1111-CC-517
)
CONCEPT INDUSTRIES, INC., )
COMPOSITE TECHNOLOGIES, LLC, )
and SHAWN ESHRAGH, )
)
Appellees. )
APPEAL FROM THE ELKHART CIRCUIT COURT
The Honorable Terry C. Shewmaker, Judge
Cause No. 20C01-1009-CC-202
July 17, 2012
MEMORANDUM DECISION - NOT FOR PUBLICATION
BROWN, Judge
Garry Balthes appeals the trial court’s order entering summary judgment in favor
of Concept Industries, Inc. (“Concept”), Composite Technologies, LLC (“Composite”),
and Shawn Eshragh (Concept and Composite together, “Companies,” and Companies and
Eshragh together, “Appellees”) and against Balthes. Balthes raises two issues, which we
consolidate and restate as whether the court erred in entering summary judgment in favor
of Appellees. We affirm in part, reverse in part, and remand.
The relevant facts follow. Concept manufactures returnable packaging systems,
vacuum formed plastics and non-woven fiber products for the automotive, office
furniture and other industries. Composite performs research development services for
Concept. Companies are located in Grand Rapids, Michigan. Eshragh was the president
of Concept, David Ellis was the vice-president of Concept, and David Foote was the chief
financial officer of Concept.
In March 2007, Balthes entered into a consulting relationship with Companies and
subsequently in 2007 accepted an offer of employment from Companies. Balthes’s
employment with Companies required him to relocate his personal residence from
Elkhart County, Indiana, to Kent County, Michigan. In September 2007, to assist in the
relocation, Eshragh paid $34,500 to Balthes to be used as a down payment on a new
house in Kent County. Companies paid an additional total amount of $17,752 in the form
of mortgage payments on Balthes’s behalf on his residence in Elkhart County.
Balthes resigned his employment effective March 31, 2010, and Appellees
demanded repayment of the above amounts. Balthes and Appellees entered into a written
settlement agreement dated in June 2010 (the “2010 Settlement Agreement”) which
2
provided that the total amount loaned to Balthes by Appellees, with accrued interest,
exceeded $57,000 and that Balthes would pay Concept a total gross amount of $50,000 in
two installments. The 2010 Settlement Agreement provided that the first installment
payment would be $40,000 payable within ten days of the closing of the sale of Balthes’s
residence in Michigan or by July 15, 2010, whichever date occurred first, and the second
installment payment would be for $10,000 payable by December 31, 2010. The 2010
Settlement Agreement also included certain non-competition and non-solicitation
provisions, a provision providing that Appellees would release and discharge Balthes for
all claims related to the loaned amounts in consideration of the payments, and that the
agreement would be governed by the laws of the State of Michigan.
On or about July 15, 2010, Eshragh received a letter from Balthes accompanied by
a personal check for $5,000. In the letter, Balthes stated in part that he was hoping to
repay the full balance via a bank loan and that it was not his intention to drag out the
repayment.
On September 8, 2010, Appellees filed a complaint in the Elkhart County Circuit
Court in which Concept alleged breach of contract against Balthes and Appellees alleged
unjust enrichment against him. On October 28, 2010, Balthes, pro se, filed an answer in
which he asserted affirmative defenses and requested a trial by jury. On February 21,
2011, Appellees filed a motion for leave to amend complaint to include an allegation that
Balthes failed to make the second installment payment due on December 31, 2010 under
the 2010 Settlement Agreement, and the court granted Appellees’ motion and ordered the
amended complaint to be deemed filed. On April 26, 2011, Appellees filed a motion for
3
default judgment, and on April 29, 2011, Balthes filed a response to the motion for
default and an answer to the amended complaint.1
On May 6, 2011, while the motion for default was pending, Eshragh and Ellis met
with Balthes to discuss the possibility of Balthes performing some consulting work for
Concept in exchange for Appellees’ dismissal of the pending lawsuit. Balthes visited
Concept’s facility on May 10, 2011, and there was some additional communication
between Balthes and Eshragh, Ellis, and the parties’ attorneys during the following days.
On May 16, 2011, Appellees filed a notice of withdrawal of their motion for default
judgment, and the court ordered that the motion for default be withdrawn and Balthes’s
answer to the amended complaint be filed.
On June 29, 2011, Appellees filed a motion for summary judgment as to each
claim asserted in their amended complaint, designating evidence together with a brief in
support of the motion.2 Appellees argued that under Michigan law it is undisputed that
Balthes breached the 2010 Settlement Agreement and that Balthes has been unjustly
enriched by receiving a benefit from Appellees that he has retained. On July 27, 2011,
Balthes, pro se, filed a memorandum of law in opposition to Appellees’ motion for
1
In his response to Appellees’ motion for default, Balthes stated that prior to filing their amended
complaint Appellees asked for his consent to the motion to file the amended complaint and informed him
that even if he did not oppose the amendment, he would still have the opportunity to answer and defend
the complaint, and that from discussion with Appellees’ counsel and given that the only reason for
amending the complaint was to change the amount of money Appellees sought, he was under the
impression that he did not have to file another answer.
2
In support of their motion, Appellees designated among other things the affidavits of Eshragh
and Foote.
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summary judgment and requested that summary judgment be granted in his favor.3
Balthes argued that the parties reached a valid modification of the 2010 Settlement
Agreement on May 6, 2011 which precluded summary judgment, that an oral agreement
on May 6, 2011 was a valid and enforceable settlement agreement, and that the oral
agreement was not barred by the statute of frauds. Balthes also argued that oral promises
may be enforced under the doctrine of promissory estoppel and equitable estoppel, that
part performance may render an oral agreement enforceable under the statute of frauds,
and that “[a]ll of these factors are present in this case.” Appellant’s Appendix at 77. On
August 26, 2011, Appellees filed a response and argued that, while the parties did engage
in negotiations in an effort to come to a settlement agreement, the parties never reached a
final agreement that would modify, alter, or discharge Balthes’s duties under the 2010
Settlement Agreement, and that Balthes’s summary judgment motion should be
dismissed.4
Following a hearing, the court issued an order entering summary judgment in
favor of Appellees and against Balthes. The court found that at the hearing the parties
agreed that they had entered the 2010 Settlement Agreement and that Balthes had paid
only $5,000, leaving a balance due of $45,000, and that, accordingly, it is undisputed that
the parties entered into a valid contract which Balthes ultimately breached. The court
3
In his memorandum, Balthes designated his affidavit, in addition to other pleadings and the
evidence by Appellees.
4
In their response to Balthes’s motion for summary judgment, Appellees designated the
pleadings in the case, the materials designated in their motion for summary judgment, the supplemental
affidavit of Eshragh, the affidavits of Ellis and Gregory Ripple, counsel representing Appellees, and the
exhibits attached to those affidavits.
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stated that Balthes argued that on May 6, 2011, the parties orally modified the 2010
Settlement Agreement, and the court found in part:
The designated evidence establishes that the parties did engage in
negotiations in an attempt to come to a resolution regarding Balthes’s
breach of the [2010] Settlement Agreement; however, there was never an
agreement subsequent to the original agreement that modified or discharged
[Balthes’s] original obligation. [Appellees] concede that they met with []
Balthes on May 6, 2011 to discuss the possibility of Balthes providing
consulting services in exchange for dismissing the lawsuit. In the days
following the parties’ negotiations, several proposals for a revised
settlement agreement were presented; however, all were rejected by one or
both of the parties. On June 2, 2011, Balthes rejected the final proposed
agreement. No further negations ensued.
Id. at 9 (citations to record omitted). The court further found:
In the instant case, the designated evidence shows that the parties engaged
in negotiations in an effort to come to a subsequent settlement agreement;
however, the evidence also establishes that they never reached a final
agreement as to the essential terms of that proposed agreement. Therefore,
no subsequent contractual agreement to discharge or modify [Balthes’s]
obligations under the [2010] Settlement Agreement was ever reached. The
facts and evidence regarding [Balthes’s] breach of the Settlement
Agreement is undisputed. Accordingly, summary judgment in favor of
[Appellees] is appropriate upon the amount due under the [2010]
Settlement Agreement.
Id. at 10. The court entered judgment in favor of Appellees and against Balthes in the
amount of $45,000.
The issue is whether the trial court erred in entering summary judgment in favor of
Appellees and against Balthes. Summary judgment is appropriate only where there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of
law. Ind. Trial Rule 56(c); Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res., 756
N.E.2d 970, 973 (Ind. 2001). All facts and reasonable inferences drawn from those facts
are construed in favor of the nonmovant. Mangold, 756 N.E.2d at 973. Our review of a
6
summary judgment motion is limited to those materials designated to the trial court. Id.
We must carefully review a decision on summary judgment to ensure that a party was not
improperly denied its day in court. Id. at 974. Any doubt as to the existence of an issue
of material fact, or an inference to be drawn from the facts, must be resolved in favor of
the nonmoving party. Cowe v. Forum Grp., Inc., 575 N.E.2d 630, 633 (Ind. 1991).
A party moving for summary judgment bears the initial burden of showing no
genuine issue of material fact and the appropriateness of judgment as a matter of law.
Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 975 (Ind. 2005). If the
movant fails to make this prima facie showing, then summary judgment is precluded
regardless of whether the non-movant designates facts and evidence in response to the
movant’s motion. Id. In reviewing a trial court’s ruling on a motion for summary
judgment, we may affirm on any grounds supported by the Indiana Trial Rule 56
materials. Catt v. Bd. of Commr’s of Knox Cnty., 779 N.E.2d 1, 3 (Ind. 2002).
The fact that the parties make cross motions for summary judgment does not alter
our standard of review. Hartford Acc. & Indem. Co. v. Dana Corp., 690 N.E.2d 285,
291 (Ind. Ct. App. 1997), trans. denied. Instead, we must consider each motion
separately to determine whether the moving party is entitled to judgment as a matter of
law. Id. The entry of specific findings and conclusions does not alter the nature of a
summary judgment which is a judgment entered when there are no genuine issues of
material fact to be resolved. Rice v. Strunk, 670 N.E.2d 1280, 1283 (Ind. 1996). In the
summary judgment context, we are not bound by the trial court’s specific findings of fact
7
and conclusions of law. Id. They merely aid our review by providing us with a statement
of reasons for the trial court’s actions. Id.Before we address Balthes’s arguments, we note that the parties disagree as to the
substantive law which applies to this case. Appellees argue that the parties contractually
agreed that Michigan law would govern the interpretation of the 2010 Settlement
Agreement and that Indiana choice of law doctrine favors contractual stipulations as to
governing law. Balthes argues that the application of Indiana law to the May 6, 2011
settlement of a case pending in Indiana is reasonable under the “most intimate contacts”
rule. Appellant’s Reply Brief at 7. In support of his argument, Balthes points to the facts
that the lawsuit is in Indiana, that he was a resident of Indiana, and that some of the
services he would provide would be completed at his home in Indiana.
Choosing the appropriate state substantive law is a decision to be made by the
court of the state in which the action is pending. Kentucky Nat. Ins. Co. v. Empire Fire
and Marine Ins. Co., 919 N.E.2d 565, 575 (Ind. Ct. App. 2010) (citing Travelers Ins. Co.
v. Rogers, 579 N.E.2d 1328, 1330 (Ind. Ct. App. 1991)). Accordingly, Indiana’s choice
of law rules apply to this case. Indiana choice of law provisions generally favor
contractual stipulations as to governing law. Id. (citing Allen v. Great Am. Reserve Ins.
Co., 766 N.E.2d 1157, 1162 (Ind. 2002)).
Indiana’s choice of law rule for contract actions is the “most intimate contacts”
test. Id. (citing Schaffert by Schaffert v. Jackson Nat’l Life Ins. Co., 687 N.E.2d 230,
232 (Ind. Ct. App. 1997) (citations omitted), trans. denied). The court will consider all
acts of the parties touching the transaction in relation to the several states involved and
8
will apply as the law governing the transaction the law of that state with which the facts
are in most intimate contact. Id. (citing Hartford Acc. & Indem. Co. v. Dana Corp., 690
N.E.2d 285, 291 (Ind. Ct. App. 1997) (citing W.H. Barber Co. v. Hughes, 223 Ind. 570,
63 N.E.2d 417, 423 (1945)), trans. denied). The following are representative of the
factors to consider: (1) the place of contracting, (2) the place of negotiation, (3) the place
of performance, (4) the location of the subject matter of the contract, and (5) the
domicile, residence, nationality, place of incorporation and place of business of the
parties. Id. (citing Emp’rs Ins. of Wausau v. Recticel Foam Corp., 716 N.E.2d 1015,
1024 (Ind. Ct. App. 1999) (citing Eby v. York-Div., Borg-Warner, 455 N.E.2d 623, 626
(Ind. Ct. App. 1983) (citing RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188
(1971))), reh’g denied, trans. denied). The location of the subject matter of the contract,
also known as the principal location of the insured risk, is given greater weight than any
other single contact in determining the state of the applicable law when that risk can be
located principally in a single state. Id. It is also accorded greater significance when the
other factors do not point primarily to one forum. Id.
However, a court need only undergo the analysis above if there is a difference
between the relevant laws of the different states. Id. (citing Hartford Acc. & Indem. Co.,
690 N.E.2d at 291 (“[B]efore entangling itself in messy issues of conflict of laws a court
ought to satisfy itself that there actually is a difference between the relevant laws of the
different states.”) (citing Barron v. Ford Motor Co. of Canada Ltd., 965 F.2d 195, 197
(7th Cir. 1992), cert. denied, 506 U.S. 1001, 113 S. Ct. 605 (1992))). “If the purposes
and policies of two potential rules are the same, the forum should apply the forum law.”
9
Id.; see also Simon v. U.S., 805 N.E.2d 798, 805 (Ind. 2004) (noting that because there
was a conflict between the laws of Indiana and Pennsylvania that was “important enough
to affect the outcome of the litigation,” the Court needed to determine which State’s law
to apply). In addition, the Indiana Supreme Court has held that Indiana does not engage
in dépeçage, which is “the process of analyzing different issues within the same case
separately under the laws of different states.” Simon, 805 N.E.2d at 801. “Although
Indiana allows different claims to be analyzed separately, it does not allow issues within
those counts to be analyzed separately.” Id. (“For example, an Indiana court might
analyze a contract claim and a tort claim independently but would not separately analyze
and apply the law of different jurisdictions to issues within each claim.”).
Here, we observe that, to the extent Appellees initiated this lawsuit and alleged in
their complaint and amended complaint that Balthes was in breach of the 2010 Settlement
Agreement, the 2010 Settlement Agreement contained a provision providing that it would
“be governed and construed in accordance with the domestic law of the State of Michigan
without giving effect to any choice of law or conflict of law provision (whether of the
State of Michigan or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Michigan.” Appellant’s Appendix at 30.
Further, to the extent that Balthes argues that Indiana law may apply under the “most
intimate contacts” rule to consideration of the agreement he asserts the parties reached at
the May 6, 2011 meeting, we conclude that we need not undergo such an analysis
because, as set forth below, there are no differences between the relevant laws of
Michigan and Indiana as to the requirements of contract formation or promissory estoppel
10
that affect the outcome of the litigation in this case. See Dunn v. Meridian Mut. Ins. Co.,
836 N.E.2d 249, 251 (Ind. 2005) (noting that the relevant laws of two states appeared to
be the same and setting forth the relevant laws in both states).
We turn now to Balthes’s arguments regarding the court’s summary judgment
ruling. Balthes contends that that he and Appellees reached an oral agreement on May 6,
2011 to settle the lawsuit and that, as a result, Appellees should be compelled to abide by
its terms. Balthes argues that Appellees held out to him that, if he agreed to help improve
production lines 5, 7, and 8, they would dismiss their lawsuit, that he and Eshragh shook
hands to consummate the contract, and that this exchange established an oral contract
settling the lawsuit. Balthes further argues that there was a clear meeting of the minds
shown by Eshragh’s statements that Concept needed Balthes’s services immediately and
his statement to Foote to instruct legal counsel to dismiss the suit; that Balthes’s
immediate actions and his working with Ellis to develop a task list were in line with what
his obligations were under the May agreement; and that the parties’ conduct after May 6,
2011 demonstrates that an oral contract was formed, including that he went to work
immediately, that he had several conversations with Eshragh and Concept and spent May
10, 2011 on-site addressing production problems, and that during that time he diagnosed
problems and recommended steps to improve production.
Balthes also argues: “Concept was a happy customer and [had] an improved
production line. The immediate fixes were completed. They had what they needed. It
was then that they told [Balthes] not to come again until he signed their written
agreement, and then issued their proposed written terms to [Balthes] to tie up loose legal
11
ends” and that “[t]he written terms went well beyond the scope of what the parties agreed
to on May 6.” Appellant’s Brief at 13-14. Balthes also argues that the May 6, 2011 oral
agreement is enforceable even if it omitted certain details or failed to specify a definite
time for performance and that the agreement did specify a definite scope of services.
Balthes further contends that his reliance on Appellees’ numerous representations that an
agreement was reached estops them from denying the existence of the May 6, 2011
agreement. Balthes asserts that “[e]very action [Appellees] took toward [him] was
designed to induce [him] to rely on their promises,” that he “was assured numerous times
that they had reached a deal,” and that “[f]rom May 6 through May 10, [he] was in
constant contact with [Appellees] and was either talking with them about work or his
wife’s health.” Id. at 19. Balthes also argues, in the alternative, that genuine issues of
material fact as to the existence and terms of the May 2011 agreement preclude summary
judgment in favor of Appellees.
Appellees maintain that it is undisputed that Balthes breached the 2010 Settlement
Agreement and that the court correctly concluded that the parties did not reach an
agreement in May 2011 that would modify, alter or discharge Balthes’s duties under the
2010 Settlement Agreement. Appellees assert that the parties engaged in negotiations but
never reached a binding agreement. Appellees further argue Balthes cannot establish the
elements necessary to prevail on a theory of promissory estoppel. In his reply brief,
Balthes argues that he was not advised on May 6, 2011 that the verbal agreement settling
the lawsuit was contingent upon additional and onerous terms to be included in a
subsequent written settlement agreement, that his affidavit in the designated evidence is
12
not self serving and can defeat summary judgment, that he relies upon other designated
evidence as well as his affidavit, that the existence of a contract is a question of fact, and
that he can establish the elements necessary to prevail on a theory of promissory estoppel.
Under Michigan law, a valid contract requires mutual assent on all essential terms.
Eerdmans v. Maki, 573 N.W.2d 329, 332 (Mich. Ct. App. 1997). Mere discussions and
negotiation cannot be a substitute for the formal requirements of a contract. Id. Before a
contract can be completed, there must be an offer and acceptance. Id. Acceptance must
be unambiguous and in strict conformance with the offer. Id. A meeting of the minds is
judged by an objective standard, looking to the express words of the parties and their
visible acts, not their subjective states of mind. Kloian v. Domino’s Pizza, LLC, 733
N.W.2d 766, 771 (Mich. Ct. App. 2006). An offer is a unilateral declaration of intention,
and is not a contract. Kamalnath v. Mercy Memorial Hosp. Corp., 487 N.W.2d 499,
503 (Mich. Ct. App. 1992). A contract is made when both parties have executed or
accepted it, and not before. Id. A counter proposition is not an acceptance. Id. Mere
discussions and negotiation, including unaccepted offers, cannot be a substitute for the
formal requirements of a contract. Id. “In an appropriate case an agreement may be
enforced as a contract even though incomplete or indefinite in the expression of some
term, if it is established that the parties intended to be bound by the agreement,
particularly where one or another of the parties has rendered part or full performance.”
JW Knapp Co. v. Sinas, 172 N.W.2d 867 (Mich. Ct. App. 1969).
Under Indiana law, the basic requirements for a contract are offer, acceptance,
consideration, and a meeting of the minds between the contracting parties on all essential
13
elements or terms of the transaction. Fiederlein v. Boutselis, 952 N.E.2d 847, 856 (Ind.
Ct. App. 2011). There must be mutual assent or a meeting of the minds on all essential
elements or terms in order to form a binding contract. Bennett v. Broderick, 858 N.E.2d
1044, 1048 (Ind. Ct. App. 2006), trans. denied. To be valid and enforceable, a contract
must be reasonably definite and certain. Conwell v. Gray Loon Outdoor Mktg. Grp.,
Inc., 906 N.E.2d 805, 813 (Ind. 2009); Wenning v. Calhoun, 827 N.E.2d 627, 629 (Ind.
Ct. App. 2005) (“In order to be enforceable, a contract must be reasonably definite and
certain in its material terms so that the intention of the parties may be ascertained.”),
trans. denied. Further, “[t]he law is well established that a mere agreement to agree at
some future time is not enforceable.” Wolvos v. Meyer, 668 N.E.2d 671, 674 (Ind.
1996); see also Block v. Magura, 949 N.E.2d 1261, 1266 (Ind. Ct. App. 2011). While
parties may make an enforceable contract which obligates them to execute a subsequent
final written agreement, it is necessary that the agreement was expressed on all essential
terms to be incorporated in the document and that the document is understood to be a
mere memorial of the agreement already reached. Id. at 674-675 (citing 1 ARTHUR
LINTON CORBIN AND JOSEPH M. PERILLO, CORBIN ON CONTRACTS § 2.8 at 133-34 (rev.
ed. 1993)). We consider the parties’ “intent to be bound” as a question separate from but
related to the definiteness of terms. Block, 949 N.E.2d at 1266.
The designated evidence reveals a number of affidavits, e-mail messages, and
other documents related to the 2010 Settlement Agreement, the May 6, 2011 meeting,
and the parties’ correspondence and negotiations after the May 6, 2011 meeting. In his
affidavit, Foote stated that it was among his duties to track the loan payments to Balthes
14
and calculate the amount accruing on the loans, that as of April 30, 2010 Balthes owed a
total of $57,544.54, that Balthes voluntarily resigned his employment effective March 31,
2010, that Balthes subsequently signed an agreement promising to pay back $50,000 in
two payments, and that Balthes made one payment of $5,000 and has failed to make any
subsequent payments. In his affidavit, Eshragh stated that in 2010 Balthes and Appellees
reached an agreement to repay the amounts he owed and that he received a sole payment
from Balthes for $5,000.
In his affidavit, Balthes stated that he signed the 2010 Settlement Agreement on
the belief that he would receive a loan to make the payments to Concept stated in the
agreement upon the sale of his house in Michigan, that he did not receive sufficient funds
from the sale and was unable to get a loan to make the payments under the agreement,
and that he made a payment of $5,000. Balthes stated that in February 2011 he learned
that his wife had cancer, that he advised counsel for Appellees of this fact and of the need
for his resources to be used for her medical necessities, and that in response Appellees
asked to have a meeting. Balthes stated that on or about May 6, 2011, he drove from
Elkhart and met with Ellis, Foote, and Eshragh in Grand Rapids, Michigan, that at the
meeting he was advised that Appellees would like to find a way to use his expertise in
helping Concept get various production lines functioning better or just functioning, that
Concept specifically needed help with lines 7 and 8 so they could get these lines
operational enough to run cotton shoddy, and that Concept also needed help with line 5.
Balthes stated that Ellis described in detail what Appellees needed him to do to help
Concept to improve the production lines, namely, that Appellees needed help with lines
15
5, 7 and 8, that Ellis later suggested they may need help with lines 2 and 3, and that
Balthes was agreeable to helping Appellees with production lines 5, 7, and 8 as outlined
by Ellis, knowing that the lawsuit and claims were being dropped as stated by Eshragh.
Balthes also stated that Eshragh then restated that based on Balthes’s offer to help
Appellees, Eshragh would fully drop the suit and the claims for money owing, that
Eshragh instructed Foote to notify their lawyer to notify the courts that claims were being
dropped, and that he stood up and shook Eshragh’s hand accepting the agreement.
Balthes stated that Eshragh took him on a tour of a building, stated that he was happy the
lawsuit was over and that they had reached an agreement, and that the two again shook
hands. Balthes stated that the following day, Eshragh called him to tell him again how
relieved he was that the suit was over and that Eshragh called him a couple more times
after that to talk about general things and how his wife was doing.
Balthes’s affidavit further stated that, in reliance upon the agreement the parties
reached on May 6, 2011, he returned the following Tuesday to start work, that he met
briefly with Eshragh, Foote, and Ellis, and that Foote thought it would be a good idea to
put the parties’ agreement in writing and said he would send something to Balthes to
review. Balthes stated that he met with the production manager and some production
staff to begin his work and review and evaluate the performance of lines 7 and 8, that he
evaluated the line issues people were having, that the production team was happy he was
there and able to help, that he and the others reviewed basic fixes that Concept needed to
do to improve line performance, and that he made major suggestions for changes to lines
7 and 8 that were implemented by Concept almost immediately. Balthes stated that he
16
returned to the office with Ellis and the production team, that Eshragh wanted to make
sure that the Concept staff were following Balthes’s recommendations, and that they set
up a program for repairs scheduled to begin that Friday and Saturday with a follow-up
trip scheduled for the following week. Balthes stated that, as he left, Eshragh walked him
to the door and restated his position that the suit was forever gone and that he was very
glad he was there helping Concept, that they again shook hands, and that Eshragh called
him several times after that to confer. Balthes stated that around May 13, 2011, after he
had provided his expertise to Appellees, Ellis advised that Balthes should not come up
and do further work until a written agreement was in place and that the written agreement
that was presented to him was not representative of what the parties had agreed to in the
meeting on May 6, 2011, and included material terms that had not been discussed or
agreed to and had not been signed.
In his supplemental affidavit, Eshragh stated that Concept had been prepared to
hire a consulting firm to help improve the production and operation of its carding lines,
that he knew that Balthes could also provide these services, and that he asked his attorney
to reach out to Balthes to see if it was worth exploring this settlement avenue. Eshragh
stated that he met with Balthes on May 6, 2011, to discuss the possibility of him
performing some consulting work for Concept in exchange for dismissal of its lawsuit
and that Ellis explained the company’s needs to Balthes. Eshragh stated that, while
Balthes was agreeable to performing the work, there were details to be worked out,
including the scope and amount of work to be performed and Balthes’s obligations under
non-competition agreements with both Concept and another company. Eshragh further
17
stated that following the meeting the attorneys for both sides exchanged various
proposals, that he remembered that the issues discussed centered around the scope of
services and the terms of restrictive covenants, that Balthes rejected Appellees’ proposal
and likewise Balthes’s proposal was unacceptable to Appellees, and that the parties were
unable to reach an agreement. Eshragh also stated that on May 24 he had another
telephone conversation with Balthes in a final attempt to work out the differences and
reach an agreement, that based on that conversation he instructed his attorney to revise
Appellees’ settlement proposal and forward it to Balthes for his review, that Balthes
rejected Appellees’ final offer on June 2, 2011, and that there were no further
negotiations since that date.
In his affidavit, Ellis stated that during the May 6, 2011 meeting, he explained the
services Concept needed Balthes to provide and that he and Balthes exchanged ideas at
the meeting of possible improvement to Concept’s carding lines. Ellis stated that no
agreement was reached regarding the number of consulting hours Balthes would provide
or the scope of his services. Ellis stated that on May 9, 2011, in anticipation of the
parties reaching an agreement, he generated a task list for Balthes and proposed schedule,
that Balthes suggested that he visit Concept’s plant on May 10, 2011 to observe the
operation, that Ellis confirmed in an e-mail to Balthes that the remainder of the
consulting would have to wait because the parties were still “closing the loop” on the
settlement agreement, and that Balthes nevertheless still visited Concept’s facility on
May 10. Appellant’s Appendix at 95. Ellis further stated that on May 12, 2011, he sent
Balthes an e-mail stating that until the legal agreement had been signed he should not
18
visit the facility, that Balthes agreed and stated that he hoped the parties could reach an
agreement by that Friday, and that on May 19, 2011, Ellis received an e-mail from
Balthes regarding scheduling a visit to Concept’s plant in which Balthes wrote that “[i]n
case the legal issues get resolved this week wanted to let you know next week I only have
Tuesday open.” Id. at 96.
The designated evidence includes the May 9, May 12, and May 19, 2011, e-mail
messages referenced in Ellis’s affidavit. In the Monday, May 9, 2011 e-mail message,
Ellis wrote in part that “Tuesday is a good fit,” that “[w]e will be running Cotton Shoddy
on 7 & 8 and it will give you a good chance to see the baseline of where the machine is
performing as well as see the raw material we are running and issues it is presenting,”
that “[f]rom there we can map out a plan for how to dial in the process and equipment,”
and “[t]here was some talk in our meeting about closing the loop on some legal stuff - I’ll
leave that to [Eshragh] and [] Foote. Let’s you and I concentrate on generating a task list
and a work schedule to get it done,” and “Give me a call on my cell and let me know
what time you plan on arriving Tuesday and how long you can stay and we’ll get
started.” Id. at 97. On May 12, 2011, Ellis wrote to Balthes and stated that Foote let him
know that he is “still working through the details of your agreement with [Eshragh],” that
“[i]t probably makes sense to hold off your next visit until this is done,” and that “[w]e
are making the adjustment we discussed on Tuesday and our ship schedule has been
pushed out a little, so hopefully you guys get the legal end wrapped up without too much
impact to the overall schedule.” Id. at 98. Balthes sent a reply e-mail on May 12, 2011
stating in part: “I hope it’s done today or at least by Friday.” Id.
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In his affidavit, Ripple stated that he represented Appellees in the lawsuit, that on
May 6, 2011, Balthes met with Eshragh and other representatives of Concept and that
Eshragh informed Ripple that Balthes had agreed in principle to exchange consulting
services for a dismissal of the lawsuit pending the negotiation and execution of a
settlement agreement. Ripple stated that on May 11, 2011, he sent a draft settlement
agreement to Balthes containing Appellees’ original offer to settle, that the same day
Balthes notified him that changes needed to be made before he could agree to it,
particularly with respect to the non-competition and non-solicitation language in the
agreement, and that Balthes suggested revisions to the language. Ripple stated that, on
May 12, 2011, after consultation with Appellees, he sent an e-mail to Balthes indicating
that Appellees considered Balthes’s changes to the restrictive covenant to be a “potential
deal-breaker,” that he received no response to that e-mail message but had a conversation
with the attorney who had represented Balthes in negotiating the 2010 Settlement
Agreement, and that Balthes’s attorney reiterated Balthes’s concerns regarding the
covenants and the scope of services. Ripple stated that on May 19, 2011, counsel for
Balthes informed him that he would be providing a revised settlement agreement the
following day and that on May 20, 2011, Balthes’s counsel forwarded a “red-line”
version of the settlement agreement that incorporated Balthes’s revised changes to the
agreement. Id. at 101. Ripple stated that on May 21, 2011, he responded and
communicated Appellees’ rejection of the May 20 proposal and that Appellees countered
by stating that their original May 11 offer remained on the table until May 23, 2011.
Ripple further stated that on May 24, 2011, Balthes and Eshragh discussed the settlement
20
agreement by telephone, that Ripple forwarded to Balthes that same day a revised
settlement agreement incorporating the changes discussed on the phone, that the new
revised agreement more clearly provided the scope of the project and Balthes’s duties and
clarifications regarding travel and supplies, and that later that day Balthes informed
Ripple that he “did not commit” to any of the changes in the May 24, 2011 revised
settlement agreement and that his attorney would need to review the proposal. Ripple
stated that on June 2, 2011, he spoke with Balthes’s counsel regarding the proposed May
24, 2011 agreement, that Balthes’s counsel stated unequivocally that the “offer was
rejected” and that Balthes could not agree to the scope of services to be provided, the
restrictive covenants, and Concept’s proposed remedies in case of default. Id. at 101.
Ripple finally stated that following Balthes’s rejection of Appellees’ May 24, 2011
proposal, neither Balthes nor Appellees have made subsequent settlement offers and that
Balthes has not at any time agreed to the proposed settlement agreement provided to him.
The designated evidence includes the May 11, May 12, May 20, May 21, and May
24, 2011, e-mail messages referenced in Ripple’s affidavit. The May 11, 2011 e-mail
exchange shows that Ripple sent Balthes drafts of the settlement documents and that
Balthes informed Ripple that changes were required, that he had a long history of
working in the industry and that “[t]he restrictive provisions in the agreement basically
kills any chance for me to continue working and earn and [sic] income” and that he could
not work “under these conditions and these provision[s] will need to be changed.” Id. at
103. In an e-mail message on May 12, 2011 from Ripple to Balthes, Ripple explained
that the restrictive covenant language in section 6 of the draft agreement and
21
confidentiality provisions in section 7 are “very important to [Eshragh] and Concept,”
that the language in the draft “contains the exact same restrictions and provisions that
were included in the first [2010] Settlement Agreement you signed,” that “[s]ince that
Agreement is still in full force and effect, you are already bound by that language,” and
that Eshragh had asked Ripple to relate to Balthes that “this is a potential deal-breaker”
and that he felt “strongly about this issue.” Id. at 105.
The red-line version of the draft agreement forwarded by Balthes’s counsel to
Ripple on May 20, 2011 referenced in Ripple’s affidavit is also included in the
designated evidence. The red-line version highlighted the text of the language which
Balthes desired to revise. Balthes’s revisions included changes to the description of the
consulting services to be provided by Balthes, including language related to which party
would be responsible for certain expenses, the hours, time commitment, and location of
Balthes’s work, and the areas of his support, namely, to improve web performance related
to lines 7 and 8, finalize systems for line 5, and requirements for reassembly for lines 2
and 3. Balthes’s revisions also included changes to section 6 of the draft agreement
related to non-competition and non-solicitation.
Ripple sent an e-mail message to Balthes and his attorney on May 21, 2011,
stating that the revised terms of the revised settlement agreement were not acceptable to
Concept, that they fundamentally change the nature of the parties’ agreement, that the
2010 Settlement Agreement contained the non-competition and non-solicitation language
originally proposed by Concept in the draft agreement, that Balthes is already bound by
those restrictions, that Concept has no interest in relitigating another breach of another
22
settlement agreement if Balthes were to breach, that Concept is prepared to file a motion
for summary judgment, and that Concept remained willing to settle on the terms initially
proposed and that the offer would remain open until May 23, 2011. The May 24, 2011 e-
mail message from Ripple to Balthes, his attorney, and Foote attached further revised
draft settlement paperwork incorporating certain changes that Balthes discussed with
Estragh earlier that day, including changes related to the scope of work and how it is
measured and scope of duties and clarifications regarding travel and supplies.
The designated evidence reveals that, despite the fact that Balthes and Eshragh
shook hands and Eshragh stated his intent to have Appellees’ lawsuit dismissed, there
was not a meeting of the minds or mutual assent regarding the terms of such an
agreement and that the terms of the agreement were being discussed and negotiated
following the May 6, 2011 meeting and were never finalized or concluded. See Wolvos,
668 N.E.2d at 674 (holding that a mere agreement to agree at some future time is not
enforceable); Conwell, 906 N.E.2d at 813 (providing that to be valid and enforceable a
contract must be reasonably definite and certain). As set forth above, the designated
evidence includes affidavits and copies of e-mail messages by and between the parties
and their attorneys indicating that they were in discussions and were offering proposals
and counter-proposals regarding the particular terms to which both Balthes and Appellees
would agree, including terms which the parties stated were important related to the scope
and time commitment of the work Balthes would perform and to non-competition and
non-solicitation provisions. See Kamalnath, 487 N.W.2d at 503 (providing that a counter
proposition is not an acceptance and that mere discussions and negotiation, including
23
unaccepted offers, cannot be a substitute for the formal requirements of a contract).
Based upon the designated evidence and under the circumstances, we conclude that it is
evident that there was not a meeting of the minds on or after May 6, 2011 regarding the
terms of any proposed agreement between the parties for Balthes to perform consulting
work and in exchange for Appellees to dismiss their action against him. Accordingly, the
court did not err in entering summary judgment in favor of Appellees and against Balthes
on the issue of whether an agreement regarding the dismissal of Appellees’ action against
Balthes in exchange for the performance of certain consulting work was reached on or
after May 6, 2011. See East Porter Cnty. Sch. Corp. v. Gough, Inc., 965 N.E.2d 684 (Ind.
Ct. App. 2012) (concluding that there was not a meeting of the minds and affirming the
trial court’s entry of summary judgment).
However, we reach a different conclusion as to the propriety of summary
judgment as to Balthes’s argument of promissory estoppel. Balthes argues that his
reliance on Appellees’ representations that an agreement was reached estops Appellees
from denying the existence of the May 6, 2011 agreement. Balthes argues that it would
be unjust to allow Appellees to benefit freely from work he did on their behalf. Under
Michigan law, the elements of a promissory estoppel claim “consist of (1) a promise (2)
that the promisor should reasonably have expected to induce action of a definite and
substantial character on the part of the promisee and (3) that, in fact, produced reliance or
forbearance of that nature (4) in circumstances requiring enforcement of the promise if
injustice is to be avoided.” Zaremba Equip., Inc. v. Harco Nat’l Ins. Co., 761 N.W.2d
151, 166 (Mich. Ct. App. 2008). Under Indiana law, promissory estoppel “is a judicial
24
doctrine sounding in equity.” Brown v. Branch, 758 N.E.2d 48, 51 (Ind. 2001).
Specifically, promissory estoppel “encompasses the following elements: (1) a promise by
the promissor; (2) made with the expectation that the promisee will rely thereon; (3)
which induces reasonable reliance by the promisee; (4) of a definite and substantial
nature; and (5) injustice can be avoided only by enforcement of the promise.” Id. at 52.
The doctrine of promissory estoppel is part of the “concept by which one’s own acts or
conduct prevents the claiming of a right to the detriment of another party who was
entitled to and did rely on the conduct.” Id.
In their affidavits, Eshragh and Ellis stated that Balthes was advised at the May 6,
2011 meeting of the services needed by Concept but that no agreement was reached and
that there were details to be worked out related to the scope and amount of work and the
non-competition terms. On May 9, 2011, Ellis sent an e-mail message to Balthes stating
in part that “Tuesday is a good fit,” that “[w]e will be running Cotton Shoddy on 7 & 8
and it will give you a good chance to see the baseline of where the machine is performing
as well as see the raw material we are running and issues it is presenting,” that “[f]rom
there we can map out a plan for how to dial in the process and equipment,” and “[t]here
was some talk in our meeting about closing the loop on some legal stuff - I’ll leave that to
[Eshragh] and [] Foote. Let’s you and I concentrate on generating a task list and a work
schedule to get it done,” and “Give me a call on my cell and let me know what time you
plan on arriving Tuesday and how long you can stay and we’ll get started.” Id. at 97. On
May 11, 2011, Ripple sent an e-mail message to Balthes with drafts of the settlement
documents. Later that day, Balthes sent a reply e-mail message to Ripple stating that
25
“[t]here are some changes required,” that he had a long history of working in the
industry, and that “[t]he restrictive provisions in the agreement basically kills any chance
for me to continue working and earn and [sic] income” and that he could not work “under
these conditions and these provision[s] will need to be changed.” Id. at 103. On May 12,
2011, Ellis sent an e-mail to Balthes and stated that he was aware that Balthes was still
working through the details of the agreement and that it made sense to hold off the next
visit until after the agreement was done.
On the other hand, in his affidavit, Balthes stated that at the May 6, 2011 meeting,
he was advised that Appellees would like to find a way to use his expertise in helping
Concept get various production lines functioning better or just functioning, and that
Concept specifically needed help with lines 7 and 8 so they could get these lines
operational enough to run cotton shoddy, and that Concept also needed help with line 5.
Balthes stated that Ellis described in detail what Appellees needed him to do, namely,
that Appellees needed help with lines 5, 7 and 8, that Ellis later suggested they may need
help with lines 2 and 3, and that Balthes was agreeable to helping Appellees with
production lines 5, 7, and 8 as outlined by Ellis. Balthes stated that Eshragh stated that he
was happy the lawsuit was over and that they had reached an agreement and that he and
Eshragh shook hands. Balthes further stated that, in reliance upon the agreement the
parties reached on May 6, 2011, he returned the following Tuesday to start work, that he
met briefly with Eshragh, Foote, and Ellis, and that Foote thought it would be a good idea
to put the parties’ agreement in writing and said he would send something to Balthes to
review. Balthes stated that he met with the production manager and some production
26
staff to begin his work and review and evaluate the performance of lines 7 and 8, that he
evaluated the line issues people were having, that the production team was happy he was
there and able to help, that he and the others reviewed basic fixes that Concept needed to
do to improve line performance, and that he made major suggestions for changes to lines
7 and 8 that were implemented by Concept almost immediately. Balthes stated that
Eshragh wanted to make sure that the Concept staff were following his recommendations
and that they set up a program for repairs scheduled to begin that Friday and Saturday
with a follow-up trip scheduled for the following week. Balthes stated that, as he left,
Eshragh walked him to the door and restated his position that the suit was forever gone
and that he was very glad he was there helping Concept, that they again shook hands, and
that Eshragh called him several times after that to confer.
Based upon the designated evidence, and keeping in mind that any doubt as to the
existence of an issue of material fact or an inference to be drawn from the facts must be
resolved in favor of the nonmoving party, we conclude that there exists a material
question of fact as to Balthes’s promissory estoppel defense or claim, and accordingly
summary judgment is precluded as to this issue. We remand to the trial court for further
proceedings on this specific defense or claim and the extent, if any, to which Balthes may
be entitled to reliance damages or to an offset of his obligations under the 2010
Settlement Agreement due to the time and expertise he may have provided to Appellees
between May 6, 2011 and May 11, 2011. See Jarboe v. Landmark Community
Newspapers of Indiana, Inc., 644 N.E.2d 118, 122 (Ind. 1994) (noting that Indiana draws
a line between expectation damages and reliance damages and holding that the remedy
27
where the doctrine of promissory estoppel may be available “is limited to damages
actually resulting from the detrimental reliance”), reh’g denied; Hrezo v. City of
Lawrenceburg, 934 N.E.2d 1221, 1231 (Ind. Ct. App. 2010) (“A successful party is
entitled to reliance damages only.”), trans. denied.
For the foregoing reasons, we reverse in part the trial court’s summary judgment
ruling and remand for further proceedings consistent with this opinion on the sole issue of
Balthes’s promissory estoppel defense or claim, and in all other respects we affirm the
court’s ruling.
Affirmed in part, reversed in part, and remanded for further proceedings.
BAKER, J., and KIRSCH, J., concur.
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