168th and Dodge v. Rave Reviews Cinemas

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-3063
___________
168th and Dodge, LP, a Nebraska *
Limited Partnership, fka Brown *
Investment Partnership, LTD; Red *
Development of West Dodge, LLC, *
a Missouri Limited Liability Company, *
*
Appellants, *
* Appeal from the United States
v. * District Court for the
* District of Nebraska.
Rave Reviews Cinemas, LLC, a *
Texas Limited Liability Corporation, *
*
Appellee. *
___________
Submitted: June 13, 2007
Filed: August 31, 2007
___________
Before MELLOY, SMITH, and GRUENDER, Circuit Judges.
___________
SMITH, Circuit Judge.
Red Development of West Dodge, LLC and 168th and Dodge, L.P (collectively
"RED") filed suit against Rave Reviews Cinemas, LLC ("Rave") for breach of express
contract, breach of implied contract, and promissory estoppel. Rave filed a motion to
dismiss RED's complaint. The district court1 granted Rave's motion to dismiss with
respect to the express contract claim but denied Rave's motion to dismiss with respect
to the implied contract claim and the promissory estoppel claim. Thereafter, Rave filed
a motion for summary judgment on the remaining claims. The district court2 granted
Rave's motion for summary judgment on the implied contract claim and promissory
estoppel claim. RED appeals, arguing that the district court erred in granting Rave's
motion to dismiss the express contract claim and in granting Rave's motion for
summary judgment on the implied contract claim and the promissory estoppel claim.
In addition, RED argues that the district court erred in affirming the clerk of the
district court's taxation of costs. We affirm.
I. Background
We recite the facts in the light most favorable to RED, the nonmoving party.
Ruminer v. Gen. Motors Corp., 483 F.3d 561, 562 (8th Cir. 2007).
RED is a commercial property development company. Rave owns and operates
a chain of movie theaters. Previously, RED and Rave collaborated on the construction,
operation, and lease of a theater project in Fort Wayne, Indiana, known as the
Jefferson Pointe Project. In March 2002, RED submitted a request for plat approval
to the Omaha City Planning Department to begin development of Village Pointe, an
outdoor shopping center, located near 168th and Dodge Street in Omaha, Nebraska.
The Omaha City Planning Board recommended conditional approval of the plat. At
that time, the plat did not include plans for a movie theater complex.
1
The Honorable Thomas M. Shanahan, United States District Judge for the
District of Nebraska.
2
Judge Shanahan was assigned to this case when it was filed and decided the
motion to dismiss. Subsequently, the case was reassigned to the Honorable Joseph F.
Bataillon, Chief Judge, United States District Court for the District of Nebraska.
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In April 2002, Rave contacted RED about a proposal to build a theater complex
at Village Pointe. Later that month, Tom Stephenson, President and Chief Executive
Officer of Rave, and Bob Painter, Chief Operating Officer of Rave, traveled to Omaha
to tour the site with RED representatives. From March through June 2002, RED and
Rave exchanged plans and discussed the proposal to build the theater complex. On
June 25, 2002, at Rave's request, RED sent Rave a site plan and proposal for Village
Pointe, which included a movie theater complex.
In September 2002, RED revised and submitted to the Omaha City Planning
Board a Village Pointe plat that included a movie theater complex. On September 18,
2002, RED bought an additional 14.67 acres of land to incorporate the movie theater
complex into Village Pointe. The sales agreement provided that RED had a 90-day
due diligence period to "inspect and review the Due Diligence items." Additionally,
the agreement obligated RED to "obtain written evidence that the City of Omaha has
adopted . . . a comprehensive zoning ordinance allowing the use of the Real Estate for
retail purposes . . . and that the Real Estate has received final plat approval from the
Omaha City Council . . . ."
On October 3, 2002, at Rave's request, RED faxed Rave the June 25, 2002 letter
of intent. In a follow-up letter from Painter to RED dated October 29, 2002, Painter
expressed his belief that Rave was "in agreement on most of all of the major issues"
set forth in the June 25, 2002 term sheet. Painter concluded the letter by stating, "I
look forward to moving on to the completion of the lease documentation, which we
can then take to our Board for final discussion and approvals—which, as you know
from Jefferson Pointe, is our final step in the approval process."
The principal dispute in this case is the meaning and effect of a five-page
"Letter of Intent" dated November 13, 2002. RED sent the "Letter of Intent" to Rave
detailing the proposed terms of a lease between the parties. On November 26, 2002,
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the parties executed the letter of intent. The introductory paragraph provides as
follows:
The purpose of this letter is to express the intent of Lessor to earnestly
investigate and work in good faith toward an agreement whereby the
Lessor would lease to Lessee the property described herein upon the
terms detailed below. Although this letter is binding on the parties as to
terms herein detailed, should the transaction contemplated occur, this
shall not be construed as either a lease agreement or an option to lease.
Until a definitive agreement (the "Lease") is executed, this shall serve
only to detail the terms and conditions which would control these parties
in a subsequent agreement should one be executed. If the following
terms and conditions are acceptable to the Lessee, please sign below
indicating your agreement to the same. As soon as this Letter of Intent
is fully executed by both parties, we will proceed to draw up the Lease
in accordance with the Letter of Intent.
On November 26, 2002, Painter also sent a letter to Rehorn, a RED principal,
which accompanied the signed letter of intent. The letter provided, in relevant part:
I have also sent a copy [of the letter of intent] to [our attorney] and told
him that we all agree that this lease should basically mirror the Jefferson
Pointe lease and that he should expect some communications from
Richard Katz to begin the drafting of the lease for Omaha as soon as
possible.
As I told you, it is my intent to get our presentation completed in the next
few weeks so that we can get this deal in front of the Board by the end
of the year, or early January, for their review and approval or comments.
Early after the first of the new year [2003], I would want to get Terry
Parish [Rave's Vice President of Construction] together with your
construction people for a visit to the site and his preliminary prep work
on his construction contract so that we are ready for a pad delivery date
from you by late May and a construction start date by early June.
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Following a public hearing on December 4, 2002, the Omaha City Planning
Board recommended approval of RED's rezoning plan and revised plat, which
included the movie theater complex. At a December 30, 2002 meeting between
Rehorn and Stephenson, Rehorn, on behalf of RED, advised Stephenson of the
approved plat. Rehorn also told Stephenson that RED was going to incur additional
significant expenses to accommodate a Rave theater complex at Village Pointe. These
expenses included purchase of the additional property and $594,616 for removal of
a gas line. Stephenson, for Rave, replied to Rehorn that the Village Pointe project was
a "done deal."
By mid-January 2003, the deal was not done—no written lease had been
executed. RED pushed Rave to close the deal. When Rave asked about the urgency
of signing the lease, RED indicated that its financing package depended on obtaining
a signed lease with Rave. The parties continued negotiations in February and March
2003. During this time, RED began talks with Douglas Theaters as a possible
replacement for Rave.
On March 22, 2003, Rave informed RED that it did not intend to build and
lease a theater at Village Pointe and that Rave's board had rejected the agreement. In
August 2003, RED entered into a contract with Douglas Theaters for construction of
the movie theater complex. RED subsequently sued Rave alleging various contract
theories. After the district court dismissed the various claims, the instant appeal
ensued.
II. Discussion
On appeal, RED asserts that the district court erred in: (1) granting Rave's
motion to dismiss the express contract claim; (2) granting Rave summary judgment
on the implied contract claim; (3) granting Rave summary judgment on the
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promissory estoppel claim; and (4) affirming the clerk of the district court's taxation
of costs.
A. Express Contract Claim
First, RED argues that the district court erroneously dismissed RED's express
contract claim because "the terms of the letter of intent were sufficiently definite to
demonstrate an objective intent to be bound in contract." According to RED, the letter
of intent bound Rave to the terms set forth in that letter. "[A]ny subsequent
'agreement' between the parties would represent nothing more than a mere formality."
RED contends that subsequent actions by RED and Rave evince a clear intent to be
bound by the terms of the letter of intent.
"We review the grant of a motion to dismiss de novo, taking all well pleaded
factual allegations as true and drawing all reasonable inferences in favor of the
plaintiff." Katun Corp. v. Clarke, 484 F.3d 972, 975 (8th Cir. 2007). The parties agree
that Nebraska substantive law governs this diversity case. See Diesel Power Equip.,
Inc. v. Addco, Inc., 377 F.3d 853, 856 (8th Cir. 2004). Nebraska courts consider
whether a contract exists to be a question of law. Id. (citing Neb. Nutrients, Inc. v.
Shepherd, 626 N.W.2d 472, 499 (Neb. 2001); Solar Motors, Inc. v. First Nat'l Bank
of Chadron, 545 N.W.2d 714, 720–21 (Neb. 1996)).
Under Nebraska law, to recover for breach of express contract, "the plaintiff
must plead and prove the existence of a promise, its breach, damage, and compliance
with any conditions precedent that activate the defendant's duty." Phipps v. Skyview
Farms, Inc., 610 N.W.2d 723, 730 (Neb. 2000). To establish an express contract under
Nebraska law, a definite proposal and absolute and unconditional acceptance must
exist. Diesel, 377 F.3d at 856 (citing Viking Broad. Corp. v. Snell Publ'g Co., 497
N.W.2d 383, 385 (Neb. 1993)). Additionally, a "meeting of the minds" must occur at
every point, with nothing left open for future agreement. Id. (citing Cimino v. FirsTier
Bank, N.A., 530 N.W.2d 606, 614 (Neb. 1995)). "'A contract is not formed if the
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parties contemplate that something remains to be done to establish contractual
arrangements or if elements are left for future arrangement.'" Id. (quoting Neb.
Nutrients, Inc., 626 N.W.2d at 499). "An informal agreement may be binding, despite
the parties' intentions to enter a formal agreement at a later time, only if the later,
formal agreement contains no new provisions not contained in or inferred from the
prior informal agreement." Id. at 857 (citing Reynolds & Maginn v. Omaha Gen. Iron
Works, 180 N.W. 584, 586 (Neb. 1920)).
We consider the Viking Broad. Corp case to be on point and controlling with
respect to the existence of an express contract. In Viking, a Utah corporation filed an
action to force a Nebraska corporation into a merger based on a letter of intent
prepared by the Utah corporation and signed by both corporations. 497 N.W.2d at
383–84. In describing the "nature of the controversy" before it, the Nebraska Supreme
Court quoted the Seventh Circuit, stating:
"We have a pattern common in commercial life. Two firms reach
concord on the general terms of their transaction. They sign a document,
captioned 'agreement in principle' or 'letter of intent,' memorializing
these terms but anticipating further negotiations and decisions—an
appraisal of the assets, the clearing of a title, the list is endless. One of
these terms proves decisive, and the deal collapses. The party that
perceives itself the loser then claims that the preliminary document has
legal force independent of the definitive contract."
Id. at 385 (quoting Empro Mfg. Co., Inc. v. Ball-Co Mfg., Inc., 870 F.2d 423, 424 (7th
Cir. 1989)). According to the Viking court, the issue of whether a letter of intent
constitutes an enforceable contract is one of law. Id. at 386. "In keeping with [its]
rules that intent in the realm of contract law is to be viewed objectively, not
subjectively, and that in order to establish an express contract there must be a definite
proposal and an unconditional and absolute acceptance thereof," the court held that
the letter of intent "was so cursory, indefinite, and conditional as to fail as a matter of
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law to establish an objective intent on the part of the parties to be bound thereby." Id.
(internal citations omitted). The court noted that the letter of intent—which involved
a $14 million transaction:
recite[d] in numbered paragraph 1 that it is with [the Nebraska
corporation's] consent that an agreement and plan of merger would be
entered into; it declare[d] in the same paragraph that certain [of the
Nebraska corporation's] assets, only some of which [were] specified,
would not be included in the transaction; and further, it acknowledge[d]
in numbered paragraph 6 that the merger might not be consummated.
Id. Based on these findings, the court held that no factual issues existed, entitling the
Nebraska corporation to judgment as a matter of law. Id.
In reaching its decision in Viking, the Nebraska Supreme Court extensively
relied on the Seventh Circuit's Empro decision. In Empro, the prospective purchaser
of a business's assets filed suit, contending that the letter of intent obligated the seller
to sell only to the prospective purchaser. The purchaser sent the seller a three-page
letter of intent to purchase the assets. 870 F.3d at 424. The letter of intent stated that
"[t]he general terms and conditions of such proposal (which will be subject to and
incorporated in a formal, definitive Asset Purchase Agreement signed by both
parties)." Id. The letter of intent also stated that "'[the prospective purchaser's]
purchase shall be subject to the satisfaction of certain conditions precedent to closing,
including, but not limited to' the definitive Asset Purchase Agreement and, among five
other conditions, '[t]he approval of the shareholders and board of directors of [the
prospective purchaser].'" Id. The parties signed the letter of intent. Id. When the
prospective purchaser learned that the seller was negotiating with another party, it
filed suit, arguing that the letter of intent bound the seller. Id.
On appeal, the Seventh Circuit explained that "[p]arties may decide for
themselves whether the results of preliminary negotiations bind them, but they do this
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through words." Id. (internal citation omitted). In rejecting the prospective purchaser's
argument, the court explained:
A canvass of the terms of the letter [the prospective purchaser] sent does
not assist it, however. "Subject to" a definitive agreement appears twice.
The letter also recites, twice, that it contains the "general terms and
conditions," implying that each side retained the right to make (and stand
on) additional demands. [The prospective purchaser] insulated itself from
binding effect by listing, among the conditions to which the deal was
"subject," the "approval of the shareholders and board of directors of [the
prospective purchaser]." The board could veto a deal negotiated by the
firm's agents for a reason such as the belief that [the seller] had been
offered too much (otherwise the officers, not the board, would be the
firm's final decisionmakers, yet state law vests major decisions in the
board). The shareholders could decline to give their assent for any reason
(such as distrust of new business ventures) and could not even be
required to look at the documents, let alone consider the merits of the
deal.
Id. at 425. The court concluded that the prospective purchaser "made clear that it was
free to walk." Id. at 425–26.
Finally, the court commented on letters of intent generally, stating:
Letters of intent and agreements in principle often, and here, do no more
than set the stage for negotiations on details. Sometimes the details can
be ironed out; sometimes they can't. Illinois . . . allows parties to
approach agreement in stages, without fear that by reaching a
preliminary understanding they have bargained away their privilege to
disagree on the specifics. Approaching agreement by stages is a valuable
method of doing business.
Id. at 426.
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Here, the letter of intent expressly states that it "shall not be construed as either
a lease agreement or an option to lease." The letter of intent was not definite, as it
contemplates that a "definitive agreement" may be executed in the future.
Furthermore, the letter was expressly conditional, as it stated that the terms and
conditions detailed in the letter would control the parties "in a subsequent agreement
should one be executed." This same language also indicates, as did the letter of intent
in Viking, that an agreement might not be consummated at all. Also, as in Empro,
Painter's letter accompanying the signed letter of intent indicated that board approval
was necessary before Rave could enter a definitive agreement. In the absence of such
a definitive lease agreement, no express contract exists.
B. Implied Contract Claim
Second, RED asserts that the district court erroneously found that the statute of
frauds bars its implied contract claim. According to RED, the Nebraska Statute of
Frauds permits either a signed lease, notes, or memoranda signed by the party to be
charged to satisfy the writing requirement. RED claims that numerous writings exist
signed by Rave to satisfy this requirement.
This court reviews de novo a district court's grant of summary judgment. Huber
v. Wal-Mart Stores, Inc., 486 F.3d 480, 482 (8th Cir. 2007). "Summary judgment is
appropriate when the evidence and reasonable inferences, viewed in the light most
favorable to the non-moving party, show no genuine issue of material fact exists and
the moving party is entitled to judgment as a matter of law." Id.An implied contract is one that "arises from mutual agreement and intent to
promise, when the agreement and promise have simply not been expressed in words.
An implied contract arises where the intention of the parties is not expressed but
where the circumstances are such as to show a mutual intent to contract." Turner v.
Fehrs Neb. Tractor & Equip. Co., 609 N.W.2d 652, 659 (Neb. 2000). "The
determination of the parties' intent to make a contract is normally a question of fact.
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Such intent is to be gathered from objective manifestations—the conduct of the
parties, language used, or acts done by them, or other pertinent circumstances
surrounding the transaction." Kaiser v. Millard Lumber, Inc., 587 N.W.2d 875, 882
(Neb. 1999) (internal citation omitted). No implied contract can exist "where there is
an express agreement between the parties relative to the same subject-matter." Acton
v. Schoenauer, 236 N.W. 140, 141 (Neb. 1931) (holding that implied contract did not
arise between father and daughter in care for father's wife because the evidence
conclusively established that "there was a refusal to contract to pay for the services
even on the part of the defendant's wife").
Section 36-105 of the Nebraska Revised Statutes provides that "[e]very contract
for the leasing for a longer period than one year, or for the sale of any lands, shall be
void unless the contract or some note or memorandum thereof be in writing and
signed by the party whom the lease or sale is to be made." To satisfy § 36-105, the
memorandum must (1) be "signed by the party to be charged or by his or her agent
actually or apparently authorized to do so"; (2) state "each party to the contract either
by his or her own name, or by such a description as will serve to identify him or her,
or by the name or description of his or her agent"; (3) state "the land, goods or other
subject matter to which the contract relates"; and (4) state "the terms and conditions
of all promises constituting the contract and by whom and to whom the promises are
made." Pallas v. Black, 414 N.W.2d 805, 809 (Neb. 1987) (internal quotations and
citation omitted).
"The memorandum required by the statute of frauds must contain the essential
terms of the contract." Reifenrath v. Hansen, 206 N.W.2d 42, 44 (Neb. 1973). Section
36-105:
clearly contemplates that the . . . memorandum thereof in writing, shall
contain within itself all of the essential elements which go to make up a
contract, and, when essential elements of the contract are lacking, the
contract must fail, because essential elements cannot be supplied by
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parol testimony. The very purpose of the statute was to prevent such
contracts from resting in parol.
Kubicek v. Kubicek, 186 N.W.2d 923, 926 (Neb. 1971).
Here, the subject of the purported implied contract is a 20-year lease for an
interest in real estate. Without question, such a contract is subject to the statute of
frauds. RED asserts that the series of writings that satisfy the statute of frauds are (1)
the letter of intent; (2) the November 26, 2002 letter from Painter; and (3)
correspondence from Rave's attorney to RED.
As we previously explained, the letter of intent is not an express contract, and
neither can it support an implied contract. A contract cannot be implied if it is against
the declaration of the party to be charged or against the intention of the parties. See
17 Am. Jur. 2d Contracts § 13 ("A contract cannot be implied in fact if it is against the
declaration of the party to be charged or against the intention or understanding of the
parties, if the evidence is inconsistent with its existence or if there is an express
contract between the same parties that covers the same subject matter."). Here, the
letter of intent explicitly states that no binding agreement exists until a definitive
agreement is executed by the parties. Finding an implied contract in the present case
would contradict the parties expressed intent as reflected in the plain language of the
letter of intent. See Budget Mktg., Inc. v. Centronics Corp., 927 F.2d 421, 426 (8th
Cir. 1991) (stating that finding an implied duty "would contradict the express
disclaimer of the letter of intent").
Likewise, Painter's letter dated November 26, 2002, does not satisfy the statute
of frauds. Implying such a contract from the letter would be against Rave's intention
or understanding and is thus prohibited. In the letter, Painter merely expressed his
future intentions, stating that "it is my intent to get this presentation completed in the
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next few weeks so that we can get this deal in front of the Board by the end of the
year, or early January, for their review and approval or comments" and
[e]arly after the first of the new year, I would want to get [Rave's Vice
President of Construction] together with your construction people for a
visit to the site and preliminary prep work so that we are ready for a pad
delivery date from you by late May and a construction start date by early
June.
(Emphasis added).
For support, RED relies on selected portions of the statement; however, we
must read the statement in its entirety. RED notes Painter's statement that "we all
agree that this lease should basically mirror the Jefferson Pointe lease." But the
statement goes on to say that his attorney should merely "expect some communication
from Richard Katz to begin the drafting of the lease for Omaha as soon as possible."
(Emphasis added). The remainder of this statement illustrates the indefiniteness of
Painter's understanding."[C]are should be taken not to attach promissory and
contractual effect to what was at the time merely an expression of intention
concerning future action." Thomas v. Kearney Little League Baseball Ass'n, 558
N.W.2d 842, 846 (Neb. App. 1997) (internal quotations and citation omitted).
Similarly, the correspondence from Rave's attorney, either alone or combined
with the aforementioned writings, is insufficient to satisfy the statute of frauds. In the
correspondence, Rave's attorney indicated that Rave needed to get the lease signed
prior to their financing, which was to occur in January or February 2003. In addition,
Rave's attorney informed RED that Rave wanted to "move quickly towards
execution." Nothing in this correspondence deviates from the understanding expressed
in the parties' letter of intent. The goal was to work towards a definitive lease
agreement. The parties never reached that goal. On this record, RED cannot transform
the parties' incomplete negotiations into a finished lease agreement.
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Therefore, we hold that RED's implied contract claim fails as a matter of law,
as no writing exists to satisfy the statute of frauds.
C. Promissory Estoppel Claim
Third, RED argues that the district court erred in granting summary judgment
to Rave on RED's promissory estoppel claim. Specifically, RED contends that the
district court erroneously found, as a matter of law, that RED did not establish a
promise upon which it could reasonably rely. RED asserts that whether a promise has
been made or reasonably relied are questions of fact for a jury to decide. Moreover,
RED contends that the district court also erroneously ruled that the statute of frauds
bars RED's promissory estoppel claim.
The Nebraska Supreme Court defines "promissory estoppel" as:
"(1) A promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person and
which does induce such action or forbearance is binding if injustice can
be avoided only by enforcement of the promise. The remedy granted for
breach may be limited as justice requires."
Yankton Prod. Credit Ass'n v. Larsen, 365 N.W.2d 430, 433 (Neb. 1985) (quoting
Restatement (Second) of Contracts § 90 at 242 (1981)).
Promissory estoppel requires evidence that the promisor made a "promise" to
the promisee. A statement of opinion or future intent is insufficient to give rise to a
promise. Maxwell, Inc. v. Kenney Deans, Inc., No. A-98-930, 1999 WL 731846, at *5
(Neb. App. Sept. 21, 1999) (unpublished) (quoting 4 Richard A. Lord, Williston on
Contracts, § 8:5 at 96 (4th ed.1992)); see also City of St. Joseph v. Sw. Bell Tel., 439
F.3d 468 (8th Cir. 2006) ("A supposed promise that is 'wholly illusory' or a mere
expression of intention, hope, desire, or opinion, which shows no real commitment,
cannot be expected to induce reliance.") (internal quotations and citation omitted). In
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addition, "'[p]romissory estoppel cannot be based on preliminary negotiations and
discussions or an agreement to negotiate the terms of a contract.'" Id. at *5 (quoting
Keil v. Glacier Park, Inc., 614 P.2d 502, 506 (1980)) (alteration in Maxwell).
Promissory estoppel also requires that the promisee's reliance on the promise
be reasonable and foreseeable. Rosnick v. Dinsmore, 457 N.W.2d 793, 800 (Neb.
1990). For example, in Abbound v. Michals, 491 N.W.2d 34 (Neb. 1992), the court
held that the plaintiffs' reliance on the defendant's oral representations was not
reasonable because, as licensed real estate agents and brokers, the plaintiffs knew that
contracts for commission must be in writing under state law. Id. at 42 (discussing
reasonable reliance in a claim for fraudulent misrepresentation); see also Weiner v.
Hazer, 430 N.W.2d 269, 272 (Neb. 1988) ("Weiner was a licensed real estate broker,
charged with knowledge of § 36-107 concerning the necessity of a written contract for
a specified real estate commission. Under the circumstances, Weiner could not in good
faith rely on an oral contract for payment of a real estate commission to a broker.").
The statute of frauds may bar a plaintiff's claim for promissory estoppel. See
Farmland Serv. Coop, Inc. v. Klein, 244 N.W.2d 86, 89 (Neb. 1976). In Farmland, the
plaintiff sought damages for the defendants' breach of an oral agreement to sell 90,000
bushels of corn to the purchaser. Id. at 88. According to the plaintiff, the defendants
knew that the plaintiff would rely on the defendants' agreement and immediately enter
into resale agreements with other parties. Id. The defendants denied the existence of
the contract and moved for summary judgment, arguing that because the alleged
agreement was an oral agreement for the sale of goods above $500, the alleged
contract was not enforceable under the statute of frauds. Id. The district court granted
the motion for summary judgment, concluding that the plaintiff's action was barred
by the statute of frauds. Id.
On appeal, the plaintiff argued that equity would not permit the defendants to
use the statute of frauds as a shield for their wrongdoing. Id. at 89. To support this
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argument, the plaintiff relied on Hecht v. Marsh, 181 N.W. 135 (Neb. 1920), in which
the court stated:
"Equity will not allow the statute of frauds to be used as an instrument
of fraud, and will decree specific performance or hold the maker of a
parol contract estopped from denying it when the other party, by virtue
of it, and under and in pursuance of it, has so far acted as that it would
be aiding in a fraud to permit the contract to be repudiated. And what
equity would do our courts of law, under proper allegations, will also
do."
Id. (quoting Hecht, 181 N.W. at 137 (internal quotations and citation omitted)). The
Farmland court explained that, in Hecht, the seller of land refused to sign the contract
until the buyer put up forfeit money as evidence of good faith. Id. "To induce the
seller to waive the requirement, the broker orally agreed to waive his commission if
the transaction was not completed. When the contract was not performed, the broker
sued for his commission." Id. The court in Hecht held that equity would not permit the
broker to use the statute of frauds as "an instrument of fraud." Id. Thus, the principle
announced in Hecht was:
Where a party to a written contract within the statute of frauds induces
another to waive some provision upon which he is entitled to insist and
thereby change his position to his disadvantage because of that party's
inducement, the inducing party will be estopped to claim that such oral
modification is invalid because not in writing.
Id. at 89–90. The Farmland court, however, determined that Hecht was inapplicable
to the case before it, stating:
It is clear to us that the mere breach or violation of an oral agreement
which is specifically covered by the statute of frauds by one of the
parties thereto or the mere denial of an agreement or refusal to perform
it is not of itself a fraud either in equity or in law for which the court
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should give relief. The mere pleading of reliance on the contract to his
detriment should not be sufficient to permit a party to assert rights and
defenses based on a contract barred by the statute of frauds. If he were
permitted to do so, the statute of frauds would be rendered meaningless
and nugatory. The mere failure to perform an oral contract within the
statute where no relation of trust and confidence exists does not
constitute fraud authorizing the right to relief. In Hecht v. Marsh, supra,
the broker induced the seller to waive specific provisions of a written
contract and his oral agreement to waive his fee. To have permitted the
broker to have used the statute on his oral inducing agreement would
have constituted a fraud on the seller.
Id. at 90. The court further explained that "promissory estoppel usually applies only
in cases where there is a promise or representation as to an intended abandonment by
the promisor of a legal right which he holds or will hold against the promisee," as was
the situation in the Hecht case. Id. According to the court, such an interpretation
"gives full effect to the statute of frauds rather than rendering it nugatory. . . ." Id.
In the present case, we conclude that no "promise" exists in the letter of intent
upon which RED could rely because, as a matter of law in Nebraska, promissory
estoppel cannot be based on the parties' agreement to negotiate the terms of the lease
agreement.
In addition, even if we accepted RED's argument that Stephenson's comment
that the lease agreement was a "done deal" qualifies as a sufficient promise, we would
nevertheless hold, as a matter of law, that RED could not reasonably rely on such a
promise. As in Abbound, both RED and Rave are sophisticated business entities
charged with knowledge of the statutory requirement that contracts that cannot be
completed within one year must be in a writing signed by the party to be charged.
Because RED should know that a 20-year lease for an interest in real estate must be
in writing, it cannot now argue that it reasonably relied on Stephenson's oral assurance
that the lease agreement was a "done deal."
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Furthermore, assuming that a promise existed and that RED reasonably relied
on that promise, RED's promissory estoppel claim would still be barred by the statute
of frauds. As in Farmland, nothing in the record indicates that Rave orally "induced"
RED to waive a legal right that it held against Rave. Thus, Rave is not estopped from
raising the defense of statute of frauds.
As previously explained, no writing satisfied the statute of frauds. Therefore,
RED's promissory estoppel claim fails.
D. Taxation of Costs
Finally, RED argues that the district court erred in upholding the taxation of
costs as awarded by the clerk of the district court because the clerk erroneously
allowed Rave to recover objectionable expenditures. These included such items as
expedited transcripts, rough drafts of depositions, ASCII computer disks of
depositions, copies of discovery depositions that Rave did not use in support of its
motion for summary judgment, excessive airfare and hotel expenses for witnesses
whom Rave did not depose, and other costs that are not recoverable. According to
RED, the total amount of taxable costs must be reduced to $8,285.51.
We review the awarding of costs for abuse of discretion. Martin v.
DaimlerChrysler Corp., 251 F.3d 691, 695 (8th Cir. 2001).
Federal Rule of Civil Procedure 54(d)(1) provides:
(d) Costs; Attorneys' Fees.
(1) Costs Other than Attorneys' Fees. Except when express provision
therefor is made either in a statute of the United States or in these rules,
costs other than attorneys' fees shall be allowed as of course to the
prevailing party unless the court otherwise directs; but costs against the
United States, its officers, and agencies shall be imposed only to the
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extent permitted by law. Such costs may be taxed by the clerk on one
day's notice. On motion served within 5 days thereafter, the action of the
clerk may be reviewed by the court.
Section 1920 of 28 U.S.C. permits a judge or clerk of court to tax as costs "fees
of the clerk and marshal, fees of the court reporter, fees and disbursements for printing
and witnesses, fees for copies of necessary papers, docket fees, and compensation of
court-appointed experts and interpreters." Brisco-Wade v. Carnahan, 297 F.3d 781,
782 (8th Cir. 2002). "[F]ederal courts are bound by the limitations set out in section
1920." Id. (internal quotations and citation omitted) (finding that the district court
abused its discretion in taxing a mediator's fee against the defendant officials in a §
1983 action brought by a pro se prisoner because: (1) the Eastern District of Missouri
Local Rules did not permit prisoner civil rights cases to be referred for mediation; (2)
§ 1920 did not list mediation fees as taxable costs; (3) while Rule 54(d) gave the
district court discretion to award costs to the prevailing party, it gave the court no
explicit authority to tax costs against the prevailing party).
"A prevailing party is presumptively entitled to recover all of its costs." In re
Derailment Cases, 417 F.3d 840, 844 (8th Cir. 2005). The losing party bears the
burden of overcoming the presumption that the prevailing party is entitled to costs,
meaning that the losing party must "suggest a rationale under which the district court's
actions constitute an abuse of discretion." Janis v. Biesheuvel, 428 F.3d 795, 801 (8th
Cir. 2005).
The Bill of Costs Handbook for the District of Nebraska provides that, inter
alia, the following are taxable: (1) fees of the court reporter for a deposition or trial
"if the taking of the deposition was reasonably necessary at the time it was taken, even
though it may not have been used at trial"; (2) fees for witnesses whose depositions
are used at trial or in support of a motion; and (3) fees for service of summons and
subpoena.
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A review of Rave's index of evidence in support of its motion for summary
judgment reveals that Rave did cite all of the challenged depositions in support of its
summary judgment motion. Therefore, we hold that the district court did not abuse its
discretion in approving the clerk of the district court's taxation of costs.
III. Conclusion
Accordingly, we affirm the judgment of the district court.
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