Rockwood, et al. V. SKF USA, Inc.

2010 DNH 213

Opinion

Rockwood, et al. V. SKF USA, Inc. CV-08-168-JL 12/17/10 UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Robert Rockwood and Roxana Marchosky

v. Civil No. 08-cv-168-JL Opinion No. 2010 DNH 213 SKF USA Inc.

OPINION AND ORDER

This bitter dispute over a failed deal to buy a company

raises questions about the reach of the promissory estoppel

doctrine. The plaintiffs, Robert Rockwood and Roxana Marchosky

claim that the defendant, SKF USA Inc., "through its cumulative

words, conduct, and acts of assurance, manifested an intention

purchase" the company they owned, Environamics, Inc. The

plaintiffs further allege that they reasonably relied on this

"promise" to their detriment--most seriously by guaranteeing a

bank loan to Environamics on which it eventually defaulted,

resulting in foreclosure, repossession of the company's assets,

and the plaintiffs' $5 million personal liability to the bank

after SKF ultimately declined to buy the company.

SKF has moved for summary judgment on this claim, arguing

that its "words and conduct" never amounted to an enforceable

promise to buy Environamics but that, in any event, the

plaintiffs could not have reasonably relied on that promise in the face of their written agreement with SKF that gave it the

option to buy Environamics, instead of committing it to do so.

This court has jurisdiction over this matter between the

plaintiffs. New Hampshire citizens, and SKF, a Pennsylvania-based

corporation, under 28 U.S.C. § 1331(a)(1) (diversity).

Following oral argument, SKF's motion is granted. Even if

the plaintiffs are right that New Hampshire law applies, it does

not allow recovery in promissory estoppel where the parties have

an enforceable agreement that expressly conflicts with the

alleged promise. Here, the option agreement was enforceable and,

by its very nature, expressly conflicted with any promise by SKF

obligating it to buy Environamics. Furthermore, the plaintiffs

could not have reasonably relied on the "words and conduct"

allegedly constituting that promise, because nearly all of it

occurred before the parties entered into the option agreement,

which by its express terms superseded "all prior agreements,

conversations, understandings, and negotiations" between the

parties. Though the plaintiffs point to one set of statements

SKF allegedly made after entering into the agreement--when they

say they were told not to worry about guaranteeing the loan,

because SKF had committed to buy Environamics--they could not

have reasonably relied on that as a promise by SKF to do anything

other than to buy the company pursuant to the option agreement.

Indeed, that was how they had characterized the very same

2 statements in successfully opposing an earlier summary judgment

motion by SKF. But the plaintiffs have since expressly

disclaimed that theory, so they cannot avoid summary judgment on

their promissory estoppel claim based on these alleged comments.

Finally, the plaintiffs' argument that a joint venture existed

between SKF and Environamics is incorrect as a matter of law and

ultimately irrelevant to their promissory estoppel claim anyway.

I. Applicable legal standard

Summary judgment is appropriate where the "pleadings, the

discovery and disclosure materials on file, and any affidavits

show that there is no genuine issue as to any material fact and

that the movant is entitled to a judgment as a matter of law."

Fed. R. Civ. P. 56(c)(2). Under this rule, "[o]nce the moving

party avers an absence of evidence to support the non-moving

party's case, the non-moving party must offer 'definite,

competent evidence to rebut the motion.'" Meuser v. Fed. Express

Corp., 564 F.3d 507, 515 (1st Cir. 2009) (guoting Mesnick v. Gen.

Elec. C o ., 950 F.2d 816, 822 (1st Cir. 1991)).

In ruling on a motion for summary judgment, the "court must

scrutinize the record in the light most flattering to the party

opposing the motion, indulging all reasonable inferences in that

party's favor." Mulvihill v. Top-Flite Golf Co., 335 F.3d 15, 19

(1st Cir. 2003). The following facts are set forth accordingly.

3 II. Background

A. Factual history

1. They meet

Rockwood and Marchosky each owned half of the stock of

Environamics, a corporation that, until its demise, designed,

manufactured, and sold pumps and sealing devices from its

headguarters in Hudson, New Hampshire. Rockwood, an engineer by

training, has worked in the industry for 35 years, and served as

the company's president and chief executive officer; Marchosky,

who has more than 30 years' experience as an attorney, served as

the company's vice president and general counsel. Among the

company's innovations was a system for retrofitting the "power

end" of a pump made by any manufacturer with an improved

component made by Environamics, enhancing performance and

extending product life.

In April 2003, Environamics was in difficult financial

straits after defaulting on its obligations to an outside lender,

who had secured the appointment of a receiver over the company's

affairs until it posted $1.5 million as security for its debt.

Fortuitously--or at least it seemed at the time--Environamics

happened to get a sales call from SKF, one of its vendors, in

September 2003, during which the salesman announced SKF's hopes

to develop a power end "that could fit on anybody's pump." After

4 learning of this, Rockwood called SKF to inform it that

Environamics "had already developed and patented" that very

technology. A sit-down meeting between the plaintiffs and SKF,

including its vice president, Timothy Richards, soon followed.

SKF is the United States subsidiary of AB SKF, a Swedish

corporation that is the world's largest manufacturer of ball

bearings, which are an essential component of industrial pumps.

2. The courtship

Two weeks after the parties met, Richards called Rockwood to

tell him that "SKF had decided to move very rapidly toward a

possible acguisition of Environamics." During regular

conversations with Rockwood over the next few weeks, Richards

"continually expressed that SKF was moving as fast as possible to

acguire Environamics." Then, at meetings in November 2003, the

plaintiffs and Richards discussed the structure of the potential

deal as well as post-acguisition financial and operational

details. In one of the meetings, Richards said that "in view of

SKF's planned acguisition, Environamics should cease seeking out

and opening new distributorship accounts," which the company did.

Environamics also "held off pursuing other opportunities" for

financing in light of "SKF's statements and [its] demonstrated

desire to acguire" the company. In early December 2003, in fact,

Richards dissuaded Rockwood from pursuing a proposal from

5 Environamics's lender to convert its debt into an equity

position, arguing that "SKF had committed to buying Environamics

and had no interest in sharing equity with anyone." Instead,

Richards invited Rockwood to submit a "wish list" of his

company's cash-flow needs that would allow it to "bridge the gap

until the deal could get finalized in January 2004."

In response, Rockwood asked SKF for $250,000 within the next

week, and an additional $4 million within the following month,

explaining that the parties' agreement to cease "opening stocking

distributors . . . has eliminated revenues for Environamics

during [the] interim period[] until we join forces." SKF

immediately provided Environamics with the requested $250,000,

which Richards described to Rockwood as ensuring "that

Environamics ceased any further conversations with any other

potential suitors and to buy time while [SKF] worked out the

remainder of the acquisition deal." Richards also said "he

didn't think the $4 million request would be any problem since

SKF had committed to buying Environamics." Rockwood says that in

reliance on these statements he "ceased any further discussions

with [Environamics's lender] about an equity deal."

As it turned out, the request for $4 million did present a

problem, because SKF's vice president of finance was not "willing

to risk more" than $2 million, in the form of a prepayment for

products to be supplied by Environamics. In a meeting in mid-

6 December 2003, though, Richards--joined by another SKF executive,

Donald Poland--assured Rockwood that the "$2 Million payment was

just an initial step in the relationship and that SKF's

commitment to buy Environamics had not wavered." After

delivering the bad news about Rockwood's funding reguest, in

fact, Richards repeatedly told him, "don't worry," "we want

Environamics," and "we are buying Environamics."

Richards subseguently asked the plaintiffs for certain

"items we reguire to proceed to the next stage of our proposed

partnership," including information on the products comprising

the purchase order to be used to generate SKF's $2 million

payment to Environamics. When Rockwood asked what products SKF

wanted, Richards responded that it did not matter, because the

purchase order "was in fact just a method to get needed cash to

Environamics in connection with SKF's planned acguisition."

Indeed, after Rockwood provided the reguested list of $2 million

in Environamics products, they were never delivered to SKF, but

remained in the Environamics warehouse. Thus, the plaintiffs

say, "SKF was not 'purchasing' inventory as it now claims but was

channeling funds to Environamics in furtherance of its inevitable

acguisition" (footnote omitted).1

1The plaintiffs also point to a number of communications among SKF employees throughout late 2003 which, as the plaintiffs now characterize them, show SKF's "lust[] for Environamics technology and patents" (formatting altered). There is no

7 3. The engagement

Despite how they now say they understood the tenor of their

dealings with SKF to that point, on January 14, 2004, the

plaintiffs entered into an "Option Agreement" with SKF that, as

its title suggests, did not make the acguisition "inevitable,"

but rather gave SKF "an irrevocable option to purchase all, but

not less than all, of the outstanding shares of [s]tock" in

Environamics. On the same day, SKF and Environamics entered into

a "buy-sell agreement" making SKF the "exclusive marketer and

reseller" of Environamics pumps and related products and, in

essence, making Environamics the exclusive supplier of those

products to SKF.

SKF's option to buy Environamics under the option agreement

was to last for 15 months after its execution, subject to a

reguirement that the parties try in good faith to negotiate a 9-

month extension if "in the event circumstances arise which may

reguire additional time to achieve the sales targets contemplated

by the parties under the buy-sell agreement" (capitalization

omitted). Specifically, the option agreement provided that, "if

it becomes apparent during the option term that the annual rate

of resale of [Environamics] products by [SKF] under the buy-sell

indication, however, that the plaintiffs became aware of those communications at any point before receiving them in discovery after they commenced this lawsuit.

8 agreement is less than $10 million, the parties will enter into

good faith negotiations to extend the option term for an

additional period of up to nine months" (capitalization and

parenthetical omitted).

The option agreement set an "exercise price" of $9 million,

minus Environamics's debt, and adjusted by the difference between

any outstanding obligations between SKF and Environamics. The

option agreement also provided that, if the option were

exercised, SKF would pay the plaintiffs a 10 percent royalty on

its gross profits on Environamics products for a 7-year period.

The option agreement stated that it (together with, in relevant

part, the buy-sell agreement) "constitutes the entire agreement

and supersedes all prior agreements, conversations,

understandings and negotiations, both written and oral, between

the parties with respect to the subject matter hereof." It also

provided that it "shall be governed and construed in accordance

with the laws of the Commonwealth of Pennsylvania, without regard

to the laws that are applicable under conflicts of laws

principles." The buy-sell agreement contained a nearly identical

choice-of-law clause.

The exclusivity provisions of the buy-sell agreement were to

last as long as the option agreement gave SKF to exercise its

option to buy Environamics (though each party had the right to

terminate the buy-sell agreement earlier). The buy-sell

9 agreement allowed SKF to demand that the products supplied by

Environamics include SKF's bearings, and "to label or otherwise

mark or identify the [p]roducts . . . with the 'SKF' brand."

The buy-sell agreement also provided that nothing in it "shall

constitute or imply any promise or intention by [SKF] to (i) make

any eguity investment in, or advancement of any loans to,

[Environamics] or (ii) reguire [SKF] to make any minimum amount

of purchases of [p]roducts from" Environamics. Finally, the buy-

sell agreement cautioned that "[t]he relationship of the parties

under this Agreement shall be and at all times remain one of

independent contractors and not principal and agent, partners, or

joint venturers."

The plaintiffs charge that, despite this language, SKF

"repeatedly held itself out to [them] and third parties as being

in a joint venture with Environamics." But, with the exception

of the letter Richards gave Rockwood to deliver to Wells Fargo,

discussed infra, the plaintiffs have not come forward with any

evidence of communications from SKF to them, or other

Environamics personnel, describing the relationship as a joint

venture.2 The plaintiffs have supplied two e-mails from SKF

2The plaintiffs also rely on notes, taken by an SKF employee at one late January 2004 meeting with the plaintiffs, that state "message to customer must include a strong point about our continued working together --> joint venture sends the correct message." But the notes do not attribute that comment to anyone at the meeting (if in fact it was a comment, as opposed to the uncommunicated thoughts of the note-taker himself).

10 personnel to its customers referring to its "joint venture

marketing agreement with Environamics," but there is no evidence

that the plaintiffs saw those e-mails at any point before

commencing this litigation.

After making SKF the exclusive distributor of its products

through the buy-sell agreement, Environamics terminated its

relationships with all of its other distributors in late January

2004. SKF then "directed" that Rockwood and Environamics's

director of marketing, Allen LeBoeuf, "accompany [SKF's] sales

personnel to Environamics['s] existing and potential customers

for the purpose of announcing the joint venture, delivering the

marketing materials, and transferring customer accounts to SKF."

The plaintiffs claim that these marketing materials--which

consist of a series of one-page advertisements--"removed the

Environamics brand name from Environamics pumps." While the pump

pictured in each of the ads has a label bearing the name "SKF,"3

the accompanying copy refers to the "Environamics power frame

cartridge." Yet, as the plaintiffs point out, SKF takes credit

in the copy for having "imagined" the power end upgrades that

were in fact invented by Rockwood, and passes off, as its own,

testimonials from Environamics's customers. SKF also placed its

3The entire text of the label on the pumps pictured in the ads is unclear in the versions of these materials submitted by the plaintiffs, but SKF's interrogatory answers explain that the labels read "SKF Eguipped."

11 name on the shipping papers and warranties for Environamics

products (though, like the marketing materials, the warranties

referred to the products by the "Environamics" name).

Rockwood says that he assented to this "transfer" to SKF of

"whatever independent goodwill Environamics had with [its]

customers" based on "Richards' assurances that SKF's acguisition

of Environamics was a 'done deal.'" But Rockwood does not

identify any particular communications from Richards to that

effect, aside from his numerous alleged comments that preceded

the execution of the option agreement.

In the meantime, Richards told Rockwood that he "needed to

go to the marketplace in search of financing for Environamics,"

though Rockwood "knew full well that Environamics[], alone, did

not have the sales or revenue to support" it. Rockwood told

Richards of this concern— and of Rockwood's disappointment that

"no additional funding can be provided by SKF, particularly in

view of [the] cancellation of distributors" necessitated by the

exclusive buy-sell arrangement, to Richards.

Rockwood nevertheless attempted to borrow money from, among

other banks. Wells Fargo, to which Rockwood had been "connected"

by Richards. After Wells Fargo "twice declined to extend the

reguested financing," Richards said he would "talk to" the bank,

and went on to provide Rockwood with a letter to give to Wells

Fargo. This communigue, on SKF letterhead, described itself as

12 an "outline of the resources and assets we have committed to our

recently negotiated joint venture with Environamics." The letter

stated that SKF had "launched the new partnership with an

investment of $2.2 [million]," and that the "value of SKF's

corporate commitment to this venture is estimated to exceed $10

[million] over the next year to fifteen months."

In reviewing Environamics's credit application. Wells Fargo

representatives spoke to Richards, who described Environamics's

pumps as "revolutionary" and stated that "with or without

Environamics and its management, SKF wants this technology."4 In

line with this comment. Wells Fargo did not believe that SKF had

irrevocably committed to buying Environamics, but understood that

the companies had "signed a joint venture agreement, in which

once sales hit a $10 [million] annual run rate, SKF will buy

Environamics" and recognized the risk that the "[s]ales do not

materialize, and SKF does not exercise its option." Wells Fargo

4The plaintiffs make much of Richards's deposition testimony that "the last thing I did with respect to the loan from Wells Fargo was to make the introduction over the phone" at the outset of the process (though he also testified that he "followed up with [Wells Fargo] expressing SKF's technical interest in the [Environamics] product throughout the course of the summer" of 2004). Even if there is a conflict between that testimony and Wells Fargo's loan file, however, whether "SKF was the driving force behind the Wells Fargo financing" (as the plaintiffs contend) makes no difference to the outcome of the pending summary judgment motion. There is no indication that they knew, prior to their alleged detrimental reliance, about SKF's involvement with the loan (aside from Richards's saying he would "talk to" the bank). See infra Part III.B.l.

13 also noted that outside valuation firms had assessed the worth of

Environamics's patents at $18 million, and the liquidation value

of its inventory at about $2 million.

Based on this information. Wells Fargo agreed to extend a

$3,000,000 line of credit to Environamics--but only if Rockwood

and Marchosky personally guaranteed the loan. Rockwood recalls

that he was "concerned about" this requirement and, on three

separate occasions in April and May 2004, expressed those

concerns to Richards. In response, Richards told Rockwood,

"don't worry about the loan and guarantee because SKF had

committed to buy Environamics." Richards added that "he had

specifically spoken with SKF Service Division President Donald

Poland, who confirmed SKF's commitment."5 Rockwood recalls that

"[i]n reliance on the steps already taken to that point and on

SKF's conduct, assurances, and promises," he and Marchosky

executed the guarantees necessary for the loan from Wells Fargo.

51he plaintiffs point to an April 2004 e-mail to Poland from Steve Irvine, SKF's vice president of strategic marketing, which they characterize as confirming "SKF's view of the inevitability of the deal." But even if this is a reasonable characterization (which is doubtful, considering that the e-mail actually discusses dissension within SKF as to whether "the acquisition of Environamics [is] a prudent investment"), there is no indication that the plaintiffs ever saw this e-mail at any time before they, presumably, received it in discovery in this lawsuit.

14 Wells Fargo approved the loan.6 Environamics, "as directed"

by SKF, then "spent down the funds building up the inventory SKF

reguired and funding" Rockwood's and LeBoeuf's "travels in

support of the SKF sales force." By October 2004, however, it

had become clear that Environamics would not achieve $10 million

in sales for that year (under the option agreement, this

shortfall reguired the parties to engage in good-faith

negotiations to extend the option period). The plaintiffs blame

the shortfall on SKF's failure to "use its ordinary sales efforts

to sell Environamics products." They further allege that this

"weak sales effort by SKF" failed to generate enough cash to make

any of the monthly payments on the Wells Fargo loan.

4. The breakup

SKF informed the plaintiffs in October 2004 that it had

decided not to go forward with an acguisition of Environamics

6In opposing SKF's first motion for summary judgment in this case, see infra Part II.B.2, the plaintiffs relied on a version of Richards's letter to Wells Fargo on which Rockwood claims to have written back, "We did it Tim! Thanks to this letter, but more importantly your confirmation that SKF is definitely buying Environamics, we got the loan from Wells Fargo" (capitalization corrected). At his deposition, Rockwood could not recall how he transmitted this note to Richards--who testified that he did not recall receiving it--and the document itself bears no indication that it was transmitted by any means (though Marchosky testified that she personally placed it in an envelope and mailed it). But the court need not consider the significance (if any) of this document because the plaintiffs do not rely on it in opposing the present summary judgment motion.

15 under the option agreement. SKF proposed to purchase the company

on other terms, viz., an up-front payment of $5.8 million

(including $1.2 million to cover its accounts payable) plus a

royalty on the next seven years' of sales.7 At the same time,

however, SKF noted that it had "not cancelled" the option

agreement, invoking its "obligation to negotiate in good faith an

extension to the option period." In January 2005, Rockwood

rejected SKF's new proposal and, for good measure, stated that,

"as far as the original acguisition agreement is concerned, that

no longer exists."

Rockwood repeated these sentiments in late March and early

April 2005, stating that the plaintiffs were "not open to

revisiting or reinstating the original agreement" and that "SKF

no longer has the option to purchase" Environamics. Yet the

parties continued to negotiate, eventually resulting in a "letter

of interest" from SKF to the plaintiffs in late April 2005. This

letter expressed the parties' "desire to enter into a binding

agreement" for SKF to purchase Environamics "on a debt-free

basis" for $14 million, less $500,000 in "additional financial

support" from SKF while the deal was finalized.

7There is a dispute over the terms of this offer--Rockwood recalls that all of Environamics's debt would have been subtracted from the up-front payment, while SKF insists otherwise--but ultimately this disagreement is immaterial.

16 The plaintiffs responded by asking for additional time to

consider the proposal, which SKF granted, and ultimately, by

asking to change certain terms. Eventually, on June 13, 2005,

after extending the deadline for acceptance several more times,

SKF forwarded the plaintiffs a version of the letter of intent

that "incorporated any and all [proposed] revisions that would

. . . comply with SKF policies and practices" and, as such, was

"the final version" as far as SKF was concerned. This version

increased the "additional financial support" that SKF could

potentially provide during the signing period to $1.5 million,

with $1 million of that sum to be deducted from the price.

This version of the letter of interest provided that it

would expire if the plaintiffs did not return a countersigned

copy by 5 p.m. on June 17, 2005. Rockwood says that, after

receiving this version, he "called up Richards and informed him

that the terms . . . were acceptable and that [the plaintiffs]

would be signing"--as well as that Rockwood's "mother was ill and

in the hospital in Boston and [he] would not be able to sign

until" June 17, the deadline. The plaintiffs do not say what, if

anything, Richards said in response, but at around 3:30 p.m. on

June 17--in a particularly stark illustration of the rule that

the offeror is master of the offer--Richards told the plaintiffs

by fax and e-mail that the letter of interest was withdrawn.

17 In withdrawing the letter, and deciding "to defer pursuing

an acguisition of Environamics," SKF nevertheless expressed its

interest in "continuing its commercial representation of

[Environamics] products" on a non-exclusive basis. Yet SKF

informed the plaintiffs in September 2005 that its relationship

with Environamics was over--by that point, the option agreement

and, as a conseguence, the buy-sell agreement, had expired months

ago, on April 15, 2005. SKF did make one last offer to purchase

Environamics in late October 2005, for $7 million less any debt,

including not only $1.5 million to be advanced during any

negotations, but also the more than $3 million Environamics owed

to Wells Fargo at that point, having drawn down the entire line

of credit. The plaintiffs did not accept. By December 2005, the

parties' relationship had become marred by cross-allegations of

bad faith, including Rockwood's charge that SKF was withholding

information on orders it had received for Environamics products.

5. The fallout

Wells Fargo declared Environamics to be in default of the

loan and, by the spring of 2007, had demanded possession of the

collateral, which constituted essentially all of the company's

assets, including its intellectual property. Wells Fargo then

brought suit against Environamics and the plaintiffs in

Massachusetts Superior Court seeking to collect on the loan and

18 guarantees, as well as a preliminary injunction entitling Wells

Fargo to possession of the collateral. Wells Fargo Bus. Credit

v. Environamics Corp., No. 07-1890-B (Mass. Super. C t . May 7,

2007). After the Superior Court issued the preliminary

injunction, though, Environamics filed for bankruptcy protection

in the Bankruptcy Court for the District of New Hampshire. In re

Environamics Corp., No. 07-11338 (Bkrtcy. D.N.H. June 27, 2007).

This resulted in the automatic stay of the Superior Court lawsuit

against Environamics, see 11 U.S.C. § 362(a)(1), but, ultimately,

the Bankruptcy Court awarded control of the company to Wells

Fargo, which proceeded to take possession of the Environamics

facility and its contents in September 2007.

In January 2008, Wells Fargo sold the repossessed

Environamics assets to a third party for $479,000. The Superior

Court later entered summary judgment for Wells Fargo on its

claims against the plaintiffs under the guarantees, but was

recently reversed in part by the Massachusetts Appeals Court.

That court ruled that a genuine issue of material fact existed as

to whether Wells Fargo's sale of the collateral was commercially

reasonable under the Uniform Commercial Code, but otherwise

affirmed the Superior Court's order. See Wells Fargo Bus. Credit

v. Environamics Corp., 934 N.E.2d 283 (Mass. Ap p . C t . 2010).

19 B. Procedural history

1. Earlier versions of the complaint

In March 2008, the plaintiffs, represented by Marchosky,

filed a 39-count complaint against SKF in Rockingham County

Superior Court. SKF removed the action to this court, see 28

U.S.C. § 1441, and outside counsel soon appeared on behalf of the

plaintiffs. Following a motion to dismiss by SKF, see Fed. R.

Civ. P. 12(b)(6), the plaintiffs filed--with leave of court and

SKF's assent--a first amended complaint in just five counts.

Further motion practice resulted in a second amended complaint,

also in five counts, though the plaintiffs agreed not to seek

damages under one of those counts, eguitable estoppel.

The claims for relief in the second amended complaint were:

• breach of contract, in the form of SKF's agreements that it would (1) "exercise its option under the terms of the Option Agreement in exchange for the agreement by [the plaintiffs] to take out and personally guarantee the Wells Fargo loan" and (2) "expend $10 million on its Environamics sales effort and put numerous sales people in the field";

• promissory estoppel, in that--in reliance on these promises--the plaintiffs "acted to their detriment by taking out and personally guaranteeing the Wells Fargo loan";

• violation of the New Hampshire Consumer Protection Act, in the form of these "false promises," as well as SKF's "efforts to pressure [the plaintiffs] to accept a lower price" for Environamics, "SKF's refusals to provide information" and "misrepresentations regarding its sales and sales efforts," its "withholding of orders and threats to cancel orders," its "threats to violate the Buy-Sell agreement," and its "other actions"; and

20 • through these same actions, violation of the covenant of good faith under the option agreement.

The second amended complaint, like its prior versions,

demanded trial by jury.

2. SKF's first motion for summary judgment

In due course, SKF moved for summary judgment, arguing,

inter alia, that (1) there was no evidence that the alleged

promises had even been made, (2) regardless, the alleged promises

were unenforceable as a matter of law for lack of specificity,

and (3) no rational factfinder could conclude that the plaintiffs

reasonably relied on the alleged promises, due to both their lack

of specificity and the presence of a written agreement covering

the same subject. The plaintiffs responded, in relevant part,

that they had "testified extensively that if they took out and

personally guaranteed the Wells Fargo loan, SKF would buy their

stock in Environamics pursuant to the option agreement," which

"establishes all of the specifics regarding the contract."

At oral argument on the motion, counsel for SKF pointed to

an exchange from Rockwood's deposition where he was asked,

"you're saying that the promise they made to you was to exercise

the option agreement?" and responded, "Not exercise the option

agreement. They said they would definitely buy the company."

Asked by the court to explain this statement, counsel for the

21 plaintiffs stated that this testimony, "read in context of his

many other statements in the record," was simply "shorthand" for

"this was an agreement to buy as per the terms of the option"

agreement. Counsel for the plaintiffs also guoted another

portion of Rockwood's deposition where, asked "When Mr. Richards

told you . . . that SKF was definitely going to buy the company,

what did you understand the terms of the purchase to be?"

Rockwood responded, "The terms of the purchase was [sic] still

what was stated in the original acguisition," i.e. "as per the

terms of the option agreement."

Ultimately, the court (Barbadoro, J.) ordered each of the

plaintiffs to file an affidavit stating "the time, place and

specific content" of the communications comprising SKF's alleged

oral promise to exercise the option. Judge Barbadoro also

identified, as another potential problem with the plaintiffs'

claims, whether they had "repudiated this alleged oral contract"

because "they made very clear" to SKF in late 2004 and early 2005

that "they weren't going to tender the stock . . . under the

terms of that deal," but suggested that SKF had not sufficiently

presented that argument in its summary judgment papers.

Each of the plaintiffs went on to submit an affidavit, in

response to Judge Barbadoro's order, that described three

telephone conversations between them and Richards in or around

April 2004. These affidavits recount that Richards told the

22 plaintiffs they should "not worry about taking out the Wells

Fargo loan because SKF was buying their stock in Environamics

under the Option Agreement," that "SKF was going to exercise its

option under the Option Agreement and buy the company," and that

the president of SKF's service division, Poland, "had confirmed

. . . . SKF would buy the company under the Option Agreement."

Judge Barbadoro then denied SKF's motion for summary judgment in

a margin order, ruling that "[f]acts material to the resolution

of the motion remain in genuine dispute." Order of Nov. 3, 2009.

3. Sanctions and new counsel

Just after this ruling. Magistrate Judge Muirhead granted,

in part, SKF's motion to compel certain discovery from the

plaintiffs. Order of Nov. 5, 2009. In particular. Judge

Muirhead ordered the plaintiffs to "physically produce[]" their

personal laptop computers, which bore stickers identifying them

as property of Environamics, "so that the hard drive may be

mirror-imaged." Though the plaintiffs did so, SKF's inspection

of the laptops revealed that a number of files had been recently

deleted from Rockwood's computer and a program capable of making

deleted files unrecoverable had been recently accessed on both

plaintiffs' computers. SKF filed a motion for sanctions, arguing

that this conduct amounted to spoliation of evidence and a

violation of the discovery order so as to warrant dismissal of

23 their case. Judge Barbadoro later granted another motion SKF had

filed, to strike the jury demand from the plaintiffs' second

amended complaint, based on a clause in the option agreement that

each party "waives any right it may have to a trial by jury in

respect of any litigation directly or indirectly arising out of

or relating to the agreement or the transactions contemplated

hereby." 200 9 DNH 184.

Before SKF filed its motion for sanctions, it had confronted

the plaintiffs' counsel with the evidence supporting the motion

at a meeting at which they were expecting to receive a settlement

offer. This prompted the plaintiffs' counsel to file a motion

for leave to withdraw from the representation, arguing that,

while they had resolved to remain in the case until receiving the

anticipated offer, they had long harbored irreconcilable

differences with the plaintiffs, including "a fundamental

difference about how to proceed." They also filed a motion to

continue the trial, which was less than two months away at that

point. Both SKF and the plaintiffs themselves objected to the

withdrawal, and SKF also objected to any continuance. Judge

Barbadoro then recused himself from the case, resulting in its

reassignment to the undersigned.

To resolve the then-pending motions, this court held an in­

chambers conference, including a portion in which the plaintiffs

and their counsel were heard ex parte, followed by an on-the-

24 record hearing in open court. The court (Laplante, J.) granted

both the withdrawal and the continuance, giving the plaintiffs 60

days to find successor counsel. With the benefit of an extension

of that deadline, the plaintiffs eventually did so.

D. The third amended complaint

Through new counsel, the plaintiffs filed a motion to amend

their complaint to add allegations in support of the promissory

estoppel count so, they explained, "it is tied to the larger and

more general promise, 'Don't worry, we are buying your company.'"

SKF objected to the proposed amendment as untimely (because both

the discovery cut-off and the summary judgment deadline had

already passed) and barred by judicial estoppel (because, at the

summary judgment hearing before Judge Barbadoro, the plaintiffs

had essentially abandoned this theory of promissory estoppel in

favor of one based on SKF's alleged oral promises to buy

Environamics pursuant to the terms of the option agreement).

In response, the plaintiffs explained that their former

promissory estoppel claim was "solely based on [SKF's] verbal

promise to buy Environamics pursuant to the terms of the Option

Agreement" while their proposed new promissory estoppel claim was

"independent of and not reliant upon the existence of the Option

Agreement." Instead, their new claim "allege[d] a broad array of

words and conduct over a course of several months" that amounted

25 to a promise to buy Environamics— and an enforceable one at that.

The plaintiffs maintained that "where the promise is, in whole or

in part, implied by conduct, the requisite specificity for the

promise is less than if the promise is purely verbal." Thus, the

plaintiffs argued, their proposed amended promissory estoppel

claim was neither inconsistent with its antecedent version, so as

to give rise to judicial estoppel, nor futile.

The court allowed the proposed amendment, subject to two

proposals the plaintiffs had made: first, that they would forego

any "claims for breach of contract or that specifically arise in

connection with the Option Agreement" and, second, that the court

could "revisit" SKF's summary judgment motion based on the

amendment. See Order of Aug. 24, 2010. These proposals, the

court reasoned, would lessen any prejudice that SKF would suffer

as a result of the late amendment. At the court's direction, the

parties later agreed upon a schedule for briefing SKF's motion

for summary judgment on the amended promissory estoppel claim,

and have submitted memoranda (including a reply and sur-reply)

and supporting exhibits accordingly.

The court subsequently granted SKF's motion for sanctions in

part. 2010 DNH 171. Because SKF had not convincingly shown that

the plaintiffs had intentionally or negligently destroyed

relevant evidence, the court ruled that their conduct did not

warrant dismissing the case. Id. at 2-3. Yet the court also

26 ruled that Rockwood's "intentional deletion of files, combined

with [his] use of file-cleaning software on both his and

Marchosky's laptops after SKF filed its motion to compel their

production, supports drawing an adverse inference against

Rockwood's credibility as a witness at any trial on the merits in

this matter," where the court would serve as the factfinder. Id.

Ill. Analysis

In moving for summary judgment on the plaintiffs' amended

promissory estoppel claim, SKF renews two of the arguments it

made in moving for summary judgment on the plaintiffs' former

promissory estoppel claim: (1) they lack evidence of a promise

by SKF to buy Environamics that is sufficiently specific to

enforce under Pennsylvania law, which governs their claim by

virtue of the choice-of-law clauses in the parties' agreements

and (2) in any event, they could not have reasonably relied on

such a promise as a matter of law, particularly in the face of

their written agreement giving SKF the option to buy

Environamics, rather than irrevocably committing it to do so.

Because this second argument is correct, this court need not

reach any aspect of the first argument.

The court will accept, for present purposes, the plaintiffs'

contentions that New Hampshire law both governs their amended

promissory estoppel claim and allows recovery for an "indefinite

27 or unclear" promise. Contrary to the plaintiffs' suggestions,

though, the New Hampshire version of the promissory estoppel

doctrine does not simply allow the enforcement of promises "as

justice reguires." There are other limitations on its reach, two

of which are implicated here. First, only "a promise reasonably

understood as intended to induce action is enforceable by one who

relies on it to his detriment or to the benefit of the promisor."

Panto v. Moore Bus. Forms, Inc., 130 N.H. 730, 738 (1988) (citing

Restatement (Second) of Contracts § 90 (1981)). Promissory

estoppel thus protects only "reasonable reliance" on the part of

the promisor. Marbucco Corp. v. City of Manchester, 137 N.H.

629, 633 (1993); see also Kaechele v. Nova Info. Sys., Inc., 2001

DNH 174, 7. Second, "in all instances, application of promissory

estoppel is appropriate only in the absence of an express

agreement" on the same subject, unless that agreement is somehow

unenforceable in contract. Great Lakes Aircraft Co. v. City of

Claremont, 135 N.H. 270, 290 (1992).

As fully explained infra, these limitations are fatal to the

plaintiffs' amended promissory estoppel claim. First, there was

an agreement between the parties dealing with SKF's purchase of

Environamics: the option agreement which, by its very nature,

did not commit SKF to buy Environamics, but simply gave it the

right to do so. The plaintiffs have not suggested that this

agreement was unenforceable. New Hampshire's version of the

28 promissory estoppel doctrine, then, does not allow them to

enforce the alleged promise to purchase Environamics, which is at

odds with the express provisions of the option agreement.

Second, and relatedly, even if the very existence of the

option agreement does not doom the plaintiffs' promissory

estoppel claim, its terms necessarily prevent the plaintiffs from

showing a genuine issue as to whether they could have reasonably

relied on any other alleged promise by SKF to buy Environamics.

The vast majority of the "words, conduct, and acts of assurance"

allegedly comprising that promise occurred prior to the parties'

execution of the option agreement. But that agreement expressly

provided that it and the buy-sell agreement "constitute[d] the

entire agreement and supersedes all prior agreements,

conversations, understandings and negotiations, both written and

oral, between the parties with respect to the subject matter

hereof." This clause--contained in an agreement which, by its

very nature, did not obligate SKF to buy Environamics--makes the

plaintiffs' purported reliance on any prior "promise" to the

contrary unreasonable as a matter of law.

The plaintiffs also point to certain post-agreement behavior

by SKF as evincing a promise to buy Environamics, principally

Richards's statements not to "worry about the loan and guarantee

because SKF had committed to buy Environamics." But the

plaintiffs cannot avoid summary judgment on their new promissory

29 estoppel claim based on those statements. Given the existence of

the option agreement at that point, they could not have

reasonably relied on those statements as a promise to buy

Environamics on any other terms and, in amending their promissory

estoppel claim, they waived any theory that SKF promised to

exercise the option agreement. Moreover, in avoiding summary

judgment against them on that theory, the plaintiffs

characterized those very same statements as a promise to buy

Environamics pursuant to the option agreement, so they cannot

characterize them differently now. Finally, the plaintiffs'

argument that SKF entered into a joint venture with Environamics

is both irrelevant to the reasonableness of their reliance and

incorrect as a matter of law.

A. Promissory estoppel in the face of an enforceable agreement

The New Hampshire Supreme Court discussed the reach of the

promissory estoppel doctrine in Great Lakes Aircraft:

Traditionally, courts have applied promissory estoppel in order to enforce promises when consideration is lacking . . . . More recently, however, its application has been expanded to enforce promises underlying otherwise defective contracts and promises made during the course of preliminary negotiations. In some instances it has been employed to provide a remedy for reliance upon offers subseguently withdrawn. But, in all instances, application of promissory estoppel is appropriate only in the absence of an express agreement. It serves to impute contractual stature based on an underlying promise, and to provide a remedy to the party who detrimentally relies on the promise.

30 135 N.H. at 290 (citations omitted; emphasis added). New

Hampshire, then, adheres to a principle that, as one court has

observed, "enjoys near-universal acceptance in American

jurisdictions:" promissory estoppel is not available in the case

of an express, enforceable agreement between the parties covering

the same subject-matter. Paisley v. Riggs Bank, N.A., 372 F.

Supp. 2d 61, 71 (D.D.C. 2005).8

Here, as SKF points out, the plaintiffs do not dispute the

enforceability of the option agreement: in contrast to the

situations, catalogued in Great Lakes Aircraft, which might

justify applying promissory estoppel, the option agreement was

not "defective" for lack of consideration, or because

negotiations never progressed beyond the preliminary stage, or

because the offer was withdrawn after reliance but before formal

acceptance. 135 N.H. at 290. The plaintiffs also do not dispute

that the option agreement, which gave SKF the option to buy

Environamics, covered precisely the same subject as SKF's alleged

promise to buy Environamics— and, by its very nature.

8See also, e.g., All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862, 869 (7th Cir. 1999) (applying Wisconsin law); Gen. Aviation, Inc. v. Cessna Aircraft Co., 915 F.2d 1038, 1042 (6th Cir. 1990) (applying Michigan law); Jhaver v. Zapata Off-Shore C o ., 903 F.2d 381, 385 (5th Cir. 1990) (applying Texas law); Alliance Grp. Servs., Inc. v. Grass! & Co., 406 F. Supp. 2d 157, 168 (D. Conn. 2005); Kleinberg v. Radian Grp., Inc., 2002 WL 31422884, at *9 (S.D.N.Y. Oct. 29, 2002).

31 contradicted that alleged promise. C f . Glasshouse Sys., Inc. v.

Int'l Bus. Machs. Corp., ___ F. Supp. 2d ___ , No. 08-2831, 2010

WL 4104664, at *10 (E.D. Pa. Oct. 19, 2010) (denying summary

judgment against a promissory estoppel claim, despite the

parties' enforceable agreement, because the agreement did not

cover the subject-matter of the promises); HealthNow N.Y., Inc.

v. APS Healthcare Bethesda, Inc., No. 05-612, 2006 WL 659518, at

*7 (N.D.N.Y. Mar. 10, 2006) (refusing to dismiss a promissory

estoppel claim despite the parties' enforceable written agreement

because the alleged promises did "not contradict" the agreement).

Nor--aside from their unsupported characterizations of New

Hampshire's promissory estoppel doctrine as marked by

"discretion" and "flexibility"--do the plaintiffs offer any

reason to believe that this state would allow promissory estoppel

claims in the face of enforceable agreement to the contrary.

Indeed, Great Lakes Aircraft expressly holds that, "in all

instances," such claims are not "appropriate." 135 N.H. at 290.

Refusing to enforce promises inconsistent with an

enforceable written agreement, moreover, is in keeping with the

fundamental principle of New Hampshire law that "courts cannot

make better agreements than the parties themselves entered into

or rewrite contracts merely because they might operate harshly or

ineguitably." Livingston v. 18 Mile Point Drive, Ltd., 158 N.H.

619, 623-24 (2009) (guotation marks omitted). Here, allowing the

32 plaintiffs to enforce SKF's alleged promise to buy Environamics

would not only rewrite the option agreement, but fundamentally

transform it into a stock purchase agreement, which is simply not

the bargain the parties struck. Promissory estoppel does not

permit "circumvention of carefully designed rules of contract

law" in the name of "eguity." All-Tech Telecom, 174 F.3d at 869.

Furthermore, even if those rules themselves posed no formal

barrier to applying promissory estoppel in the face of an

enforceable written agreement, there is the closely related

problem that "reliance on a promise cannot be reasonable when it

is completely at odds with the terms of a written agreement

covering the same transaction." Paisley, 372 F. Supp. 2d at 71

n.5; see also, e.g., DDCLAB Ltd. v. E.I. DuPont de Nemours & Co.,

No. 03-3654, 2005 WL 425495, at *6 (S.D.N.Y. Feb. 18, 2005);

Kleinberg, 2002 WL 31422884, at *10. In fact, the court of

appeals has endorsed the view that the "conflicting content" of a

promisor's oral and written statements to a promisee generally

makes it unreasonable for him "to rely on either statement":

Confronted by such a conflict a reasonable person investigates matters further; he receives assurances or clarification before relying. A reasonable person does not gamble with the law of the excluded middle, he suspends judgment until further evidence is obtained. Explicit conflict engenders doubt, and to rely on a statement the veracity of which one should doubt is unreasonable. The law does not supply epistemological insurance. Nor does it countenance reliance on one of a pair of contradictories simply because it facilitates the achievement of one's goal.

33 Trifiro v. N.Y. Life Ins. Co., 845 F.2d 30, 33-34 (1st Cir.

1988); see also Sands v. Ridefilm Corp., 212 F.3d 657, 664 (1st

Cir. 2000) ("It was unreasonable for the plaintiff to rely on the

alleged oral representations because of the express written word"

to the contrary).9

Those observations are right on the mark here. Whatever SKF

may have communicated to the plaintiffs about its intentions

toward Environamics, through "words, conduct, and acts of

assurance" or otherwise, the fact remains that the parties also

entered into a detailed written agreement which did not obligate

SKF to buy Environamics, but merely conveyed the option to do so.

In light of the express provisions of that agreement--indeed, in

light of its very nature--the plaintiffs could not, as a matter

of law, have reasonably relied on the contrary promise that SKF

was "buying the company." See, e.g., Trifiro, 845 F.2d at 33-34.

The existence of an enforceable agreement between the parties

that expressly covered the same subject as SKF's alleged promise

(and expressly contradicted its terms) entitles SKF to summary

judgment on the amended promissory estoppel claim. See Great

Lakes Aircraft, 135 N.H. at 290.

9Though these cases applied Massachusetts law, their observations as to commercial reasonableness carry weight beyond the borders of the Commonwealth.

34 B. Unreasonable reliance

1. Pre-agreement statements and conduct

Even if the very existence of the option agreement did not

doom the plaintiffs' amended promissory estoppel claim, its

integration clause would still have prevented the plaintiffs from

reasonably relying on nearly all of the "words, conduct, and acts

of assurance" allegedly constituting SKF's promise to buy

Environamics. Consistent with its holdings, just discussed, that

reliance on conflicting oral and written statements is

unreasonable, the court of appeals has also observed that

"[w]here a written statement conflicts with a prior oral

representation, reliance on the oral representation is generally

held to be unreasonable." Coll v. PB Diagnostics Sys., Inc., 50

F.3d 1115, 1124 (1st Cir. 1995) (emphasis added) (applying

Massachusetts law). This rule has particular force where that

written statement takes the form of a fully integrated contract

between the promisor and the promisee, i.e., providing that it

constitutes the entire agreement between them. See, e.g.. Vision

Graphics, Inc. v. E.I. Du Pont de Nemours & Co., 41 F. Supp. 2d

93, 99-100 (D. Mass. 1999)10. Where the plaintiff has thus

10See also, e.g., Yorktowne Urology, P.C. v. Neuisys, LLC, No. 10-644, 2010 WL 3328067, at *3 (M.D. Pa. Aug. 23, 2010); McVickers McCook, LLC v. Wal-Mart Stores, Inc., No. 09-7523, 2010 WL 3283044, at *6 (N.D. 111. Aug. 12, 2010); Bradley v. Kryvicky, 57 4 F. Supp. 2d 210, 223 (D. Me. 2008); Mann v. GTCR Goldner Rauner, L .L .C ., 425 F. Supp. 2d 1015, 1036 (D. Ariz. 2006).

35 manifested his assent to the absence of other agreements with the

defendant, continued reliance on the defendant's prior promises—

which, if enforced, would produce just such an agreement— is

simply unreasonable as a matter of law.11 See, e.g.. Mack v.

Earle M. Jorgensen Co., 467 F.2d 1177, 1179 (7th Cir. 1972)

(applying Wisconsin law).

In light of its statement that, again, "application of

promissory estoppel is appropriate only in the absence of an

express agreement," Great Lakes Aircraft, 135 N.H. at 290, there

is no reason to think the New Hampshire Supreme Court would not

follow this well-established rule. The plaintiffs have offered

no authority or argument to the contrary and do not even address

this point in their briefing.12 Moreover, they conceded at oral

argument that SKF's pre-agreement statements did not form any

basis for reliance. So, the evidence of SKF's "words, conduct.

“ Some courts have reasoned instead that, in the face of a fully integrated written agreement, reliance on prior inconsistent promises is barred by the parol evidence rule. See, e.g., Bradley, 574 F. Supp. 2d at 223-24 (citing cases) . But resolving the present summary judgment motion does not reguire this court to choose between these two rationales for barring promissory estoppel claims based on representations made prior to a fully integrated agreement covering the same subject. It is enough to point out that such claims are not permitted.

“ They do not dispute, then, that the option agreement represented a complete integration under New Hampshire law. See, e.g., Behrens v. S.P. Constr. Co., 153 N.H. 498, 504 (2006) ("Though not dispositive, an integration clause is evidence that the parties intended the writing to be a total integration.").

36 and acts of assurance," prior to the parties' execution of the

option agreement, that allegedly manifested a promise to buy

Environamics, see Part II.A.2, supra, fails to create a genuine

issue of fact as to whether the plaintiffs could have reasonably

relied on any such promise. See, e.g.. Vision Graphics, 41 F.

Supp. 2d at 100 ("where the written contract contains an

integration clause, conflicting oral assurances about future

behavior cannot provide the evidentiary fuel" to sustain a

promissory estoppel claim) (citing Coll, 50 F.3d at 1124-25) .

This is doubly true of the plaintiffs' evidence of pre­

agreement communications--internal to SKF--that assertedly

demonstrate its "lust[] for Environamics technology and patents."

See note 1, supra. Not only did those communications occur prior

to the execution of the fully integrated option agreement, but

they also, so far as the record reflects, never reached the

plaintiffs. These internal communications therefore could not

have formed part of any promise on which they reasonably relied.

After all, "a promise is a manifestation of intention to act or

refrain from acting in a specified way," Restatement (Second) of

Contracts § 2(1), and "the phrase 'manifestation of intention'

. . . means the external expression of intention as distinguished

from undisclosed intention," id. cmt. b.

37 2. Post-agreement statements and conduct

As further support for their promissory estoppel claim, the

plaintiffs point to certain alleged words and deeds by SKF

subsequent to the execution of the option agreement--principally

Richards's statements not to "worry about the loan and guarantee

because SKF had committed to buy Environamics." While the

integration clause, which applied only to "prior agreements,

conversations, understandings and negotiations," would not reach

these alleged statements, they still do not create a genuine

issue of fact as to whether the plaintiffs reasonably relied on

any promise by SKF.

As SKF justifiably complains, the plaintiffs advanced a much

different characterization of Richards's alleged comments, and

their understanding of those comments, in response to its first

summary judgment motion. When SKF argued that any alleged

promise underlying the plaintiffs' promissory estoppel claim was

insufficiently specific to be enforceable, the plaintiffs pointed

to their deposition testimony about SKF's statements that "if

they took out and personally guaranteed the Wells Fargo loan, SKF

would buy their stock in Environamics pursuant to the option

agreement" (emphasis added), which itself supplied the necessary

specifics. See Part II.B.2, supra. Discussion of this testimony

at oral argument on the motion resulted in an order for the

plaintiffs to file affidavits stating "the time, place and

38 specific content" of the communications comprising the alleged

promise. In response, the plaintiffs filed affidavits stating

that, in a series of telephone calls in and around April 2004,

Richards repeatedly told them that "SKF was going to exercise its

option under the Option Agreement and buy the company" (emphasis

added). The court then denied SKF's summary judgment motion.

But now, in response to SKF's second summary judgment

motion, the plaintiffs characterize those very same conversations

with Richards as manifesting a promise not to "worry about the

loan and guarantee because SKF had committed to buy

Environamics," i.e., without reference to the option agreement.

This recharacterization was necessitated, of course, by the

plaintiffs' intervening shift in their promissory estoppel

theory: instead of arising out of SKF's alleged promises to

"definitely exercise its option to purchase Environamics stock

pursuant to the terms of the Option Agreement," as articulated in

the second amended complaint, it now arises out of "the larger

and more general promise, 'don't worry, we are buying your

company,'" as articulated in the third amended complaint.13

13This recharacterization, in turn, was presumably necessitated by Judge Barbadoro's concerns, expressed at the hearing on SKF's first summary judgment motion, that the plaintiffs had repudiated any agreement by SKF to buy Environamics pursuant to the option agreement. See Part II.B.2, supra.

39 This about-face cannot save the plaintiffs from the second

summary judgment motion, for at least three reasons. To start

with, "[t]he doctrine of judicial estoppel generally prevents a

party from prevailing in one phase of case on an argument and

then relying on a contradictory argument to prevail in another

phase." Redeford v. U.S. Airways, Inc., 589 F.3d 30, 38 (1st

Cir. 2009) (guotation marks omitted). In their responses to the

first and then to the second motion for summary judgment, the

plaintiffs have offered contradictory characterizations of

Richards's alleged statements to them in and around April 2004:

first, they claimed he said that SKF would buy Environamics

pursuant to the option agreement, and now they claim he said only

that SKF would buy Environamics, without specifying further.

As the court recognized in allowing the plaintiffs to amend

their promissory estoppel claim over SKF's judicial estoppel

argument, "[i]t is not logically impossible that SKF could have

engaged in certain conduct toward the plaintiffs that caused them

to believe it was buying their company under the Option

Agreement, and other conduct toward the plaintiffs that caused

them to believe SKF was buying their company on some other

terms." Order of Aug. 24, 2010. It i_s logically impossible,

though, that the very same conduct, i.e., Richards's statements

in an around April 2004, reasonably caused the plaintiffs to

believe that SKF was doing both.

40 This is not to say that, if Richards did in fact promise

that SKF would buy Environamics pursuant to the option agreement,

the plaintiffs might not have reasonably taken other statements

or conduct by SKF as the "larger, more general promise" they now

assert. But see id. (suggesting that, under such circumstances,

"relying on either promise was not particularly reasonable");

Part III.A, supra (discussing the problem of reliance on

inconsistent statements). On this theory, as the plaintiffs

argued in support of their motion to amend, they could have taken

Richards's statements to corroborate the "larger, more general

promise" to buy Environamics that had been manifested through

other words or deeds. But without evidence of other words or

deeds on which the plaintiffs could have reasonably relied, they

are left to argue that SKF promised to buy Environamics based

solely on statements they previously argued were a promise to

exercise the option agreement.

Those arguments are in direct confict. See, e.g.. Patriot

Cinemas, Inc. v. Gen. Cinemas Corp., 834 F.2d 208, 214 (1st Cir.

1987) (judicial estoppel arises when a party "adopts inconsistent

positions on combined guestions of fact and law"). Furthermore,

there is no guestion that the plaintiffs "prevailed" against

SKF's first motion for summary judgment by characterizing

Richards's statements as a promise to buy Environamics pursuant

to the option agreement. As discussed in Part II.B.2, supra,

41 they offered this characterization in response to SKF's argument

that any claimed promise was too indefinite to enforce, as well

as Judge Barbadoro's order to file affidavits detailing the

alleged statements so that he could properly consider that

argument. After receiving those affidavits, of course, he denied

the motion for summary judgment, so "[t]here is no guestion but

that the . . . court bought what [the plaintiffs were] selling

the first time around." Alt. Sys. Concepts, Inc. v. Synopsys,

Inc., 374 F.3d 23, 34 (1st Cir. 2004) .

Nor is there any guestion that, if they were allowed to

recharacterize Richards's alleged statements in response to SKF's

second summary judgment motion, the plaintiffs would gain the

sort of "unfair advantage" that judicial estoppel serves to

prevent. See id. Faced with an argument that SKF's alleged

promises to buy Environamics were too vague, the plaintiffs

sought to fill that gap with Richards's explicit promises to

exercise the option. But now, faced with an argument that they

repudiated the option agreement, see note 13, supra--to say

nothing of their express waiver of any claims "that specifically

arise in connection with the Option Agreement" as a condition of

getting leave to amend their promissory estoppel claim, see part

II.B.4, supra--they seek to divorce Richards's statements from

the option agreement altogether. Judicial estoppel bars the

plaintiffs from relying on this "revisionist" version of

42 Richards's alleged statements to avoid summary judgment again.

Alt. Sys. Concepts, 374 F.3d at 34.

Second, even if judicial estoppel did not apply, the

testimony they offer in support of their amended promissory

estoppel claim conflicts with the testimony they offered in

support of their prior promissory estoppel claim. As already

noted, the plaintiffs' affidavits submitted in response to Judge

Barbadoro's order attested that Richards had said, in a series of

telephone calls in and around April 2004, "not to worry about

taking out the Wells Fargo loan because SKF was buying their

stock in Environamics under the Option Agreement," that "SKF was

going to exercise its option under the Option Agreement and buy

the company," and that the president of SKF's service division,

Poland, "had confirmed . . . . SKF would buy the company under

the Option Agreement." See Part II.B.2, supra. But the

plaintiffs' affidavits submitted in response to the present

summary judgment motion attest, in describing the very same

conversations, that Richards said that "SKF had committed to buy

Environamics"--omitting any reference to the option agreement.

The court of appeals has "repeatedly held that a party

opposing summary judgment may not manufacture a dispute of fact

by contradicting his earlier sworn testimony without a

satisfactory explanation of why the testimony has changed."

Abreu-Guzman v. Ford, 241 F.3d 69, 74 (1st Cir. 2001). The

43 plaintiffs do not even acknowledge, let alone attempt to explain,

the shift in their testimony about what Richards told them in and

around April 2004. Thus, the plaintiffs' new versions of those

conversations--in which Richards allegedly made promises to

purchase Environamics by reassuring them that "SKF had committed

to buying" it but without referring to the option agreement--do

not create a genuine issue as to whether the plaintiffs could

have reasonably relied on any such promise. See id.

Third, even putting aside what might be classified as the

formal problems occasioned by the plaintiffs' attempts to change

their version of what Richards promised them does not eliminate

the substantive problem with their reliance on that alleged

promise: it could not have been reasonably understood as a

promise to do anything other than to exercise the option pursuant

to the option agreement. Whether or not Richards made reference

to that agreement during his conversations with the plaintiffs in

and around April 2004, the agreement was in place at that point,

having been signed just three months earlier. In that context,

there was only one way to reasonably understand any statement by

Richards that "SKF had committed to buying Environamics," i.e.,

that SKF had committed to buying Environamics pursuant to the

option agreement (which, of course, is precisely what the

plaintiffs argued in response to the first summary judgment

motion). But as the plaintiffs would now have it--and need to

44 have it, since, again, they have expressly disclaimed any theory

of recovery that arises out of the option agreement--they

reasonably understood Richards's statements as part of a "larger,

more general promise" to buy Environamics on some other terms.

No rational finder of fact could accept that. So the plaintiffs'

latest version of what Richards told them, even if taken at face

value, does not create a genuine issue as to whether they

reasonably relied on any alleged promise by SKF.

Aside from Richards's statements, the only other actions the

plaintiffs have identified as manifesting the alleged promise,

and which occurred after the execution of the option agreement,

were part of SKF's efforts to market Environamics products.14

The plaintiffs complain that these efforts (which included the

visits by SKF sales personnel to Environamics customers, the use

of SKF forms in filling Environamics orders, and the

dissemination of marketing materials identifying Environamics's

products as SKF's, see Part II.A.3, supra) accomplished a

"usurpation" of their company. The court agrees with SKF,

though, that these actions were contemplated by the buy-sell

agreement--if not by its express terms, then by its very nature

14The plaintiffs also point to some of SKF's internal communications during this time frame, see notes 2, 4, 5, supra, but, again, they did not see those communications until after they filed this lawsuit, so they could not have comprised part of any promise on which the plaintiffs reasonably relied. See Part III.B .1, supra.

45 in appointing SKF as the exclusive distributor of Environamics

products.

So, while the plaintiffs argue that SKF's marketing

materials provide "vivid evidence . . . that it was SKF's

conscious plan for Environamics to forego its independent

identity" and, presumably, be acguired by SKF, in reality the

buy-sell agreement specifically entitled SKF to reguire

Environamics to eguip its pumps with SKF bearings, and to mark

those pumps with an "SKF" label. The fact that SKF depicted the

pumps with just such a label in the marketing materials, then,

could not have reasonably been taken as a promise that SKF would

buy Environamics. Indeed, it is difficult to see how the parties

would have realistically carried out the exclusive buyer-seller

relationship effected by the agreement--under which Environamics

could sell its products only through SKF, and SKF could not sell

such products unless they were made by Environamics--without

these kinds of measures.15

Moreover, even if the plaintiffs perceived a deeper

significance in this behavior, as they now claim, the only

significance could have been that SKF would exercise its option

15Ihe same goes for the other behavior identified by the plaintiffs in their surreply, e.g., insisting that Environamics borrow money and spend it to pay its suppliers. The only intention this could reasonably evince is that Environamics remain able to manufacture the products to be distributed by SKF under the buy-sell agreement.

46 to buy Environamics. Again, the option agreement was already in

place when this behavior occurred (and, not coincidentally, the

exclusivity provisions of the buy-sell agreement had the same

duration as SKF's right to exercise the option). Thus, even if a

rational factfinder could conclude that SKF's actions exceeded

what was contemplated by the buy-sell agreement, as the

plaintiffs maintain, no rational factfinder could identify any

promise in that behavior besides a promise to buy Environamics

under the option agreement. But, as just discussed, the

plaintiffs have withdrawn any claim based on such a promise in

favor of a claim based on a "larger, more general" one. They

cannot avoid summary judgment on that claim, even if there is a

dispute over whether SKF's marketing campaign went overboard.

3. Other arguments for reasonable reliance.

The plaintiffs also make two other arguments in an attempt

to avoid summary judgment due to their lack of proof of

reasonable reliance. First, they argue that "SKF should be

estopped from asserting that the Plaintiffs' reliance on its

cumulative words and conduct was unreasonable" because their

"detrimental reliance was occasioned by SKF's design and

direction," citing Appeal of Cloutier Lumber Co., 121 N.H. 420

(1981). But Cloutier (which dealt with eguitable, not

promissory, estoppel) holds simply that estoppel arises when "one

47 party has knowingly made representations upon which the other has

reasonably relied to his detriment." Id. at 422 (emphasis

added). The case does not hold--as the plaintiffs seem to be

saying--that estoppel can arise simply because the defendant

intends for the plaintiff to rely on the defendant's

representations, even if it would be unreasonable to do so.

So, while it may be fair to infer, particularly from the

circumstances surrounding Richards's alleged statements not to

"worry about the loan and guarantee because SKF had committed to

buy Environamics," that SKF wanted the plaintiffs to rely on its

statements, that intent does not itself turn the statements into

actionable promises. The plaintiffs have provided no authority

for the contrary notion, i.e., that the defendant's intent for

the plaintiff to rely on a promise allows the plaintiff to

recover even if his reliance was unreasonable. As already

discussed, reasonable reliance is an essential element of

promissory estoppel under New Hampshire law. See Marbucco, 137

N.H. at 633; Kaechele, 2001 DNH 174, 7.

Second, the plaintiffs argue at length that SKF effectively

entered into a joint venture relationship with Environamics,

creating "an independent fiduciary obligation" which rendered the

plaintiffs' reliance "even more reasonable." The court can

accept neither the premise nor the conclusion of this argument.

Joint venturers indeed owe each other fiduciary duties, see Miami

48 Subs Corp. v. Murray Family Trust, 142 N.H. 501, 513 (1997)

(citing 46 Am. Jur. Joint Ventures § 33 (1994)), including "good

faith and full disclosure," id. But "[a]n agreement or contract

is essential to the creation of the relation between joint

venturers, since a joint venture may exist only by voluntary

agreement of the parties and cannot arise by operation of law."

46 Am. Jur. 2d Joint Ventures § 9 (2006) (footnotes omitted).

Thus, while "[t]he existence of a joint venture may be inferred

from facts and circumstances demonstrating that the parties in

fact undertook a joint enterprise . . . , the existence of a

different type of express contract would in itself be

inconsistent with a claimed relationship of joint venture by

implication." Id. (footnotes omitted).

Here, of course, "a different type of express contract"

existed, namely, the buy-sell agreement, which specifically

provided that "[t]he relationship of the parties under this

Agreement shall be and at all times remain one of independent

contractors and not principal and agent, partners, or joint

venturers." No rational factfinder could conclude that, despite

the express agreement between SKF and Environamics that they were

not creating a joint venture, that was in fact what they agreed

to do. There is, as always, the theoretical possibility that the

parties implicitly agreed to modify both the buy-sell agreement

and its clause preventing such unwritten modifications, cf. Prime

49 Fin. Grp., Inc. v. Masters, 141 N.H. 33, 37 (1996), but the

plaintiffs have not come forward with evidence to turn that

theoretical possibility into a genuine issue of fact.

Indeed, the record reflects that SKF uttered the words

"joint venture" to the plaintiffs only once, in the letter

Richards gave Rockwood to assist in procuring financing. See

Part II.A.3, supra. This fails to show the meeting of the minds

essential to the oral modification of the buy-sell agreement

which is in turn essential to the existence of a joint venture

despite that agreement's provision to the contrary. See Guaraldi

v. Trans-Lease Grp., 136 N.H. 457, 461 (1992).

Nor, as SKF points out, have the plaintiffs assembled any of

the other evidence courts generally use in determining the

existence of a joint venture by implied agreement, e.g., the

contribution of assets to a common undertaking, a joint property

interest in the subject of the venture, a shared right to

participate in its management, an expectation of and a right to

share in profits, and a duty to share in losses. See, e.g.,

Petricca Dev. Ltd. P'ship v. Pioneer Dev. Co., 214 F.3d 216, 222

(1st Cir. 2000) (applying Massachusetts law). Without any such

proof, SKF's " [m]erely calling the relationship a joint venture

. . . does not make it so." Optimum Techs., Inc. v. Henkel

Consumer Adhesives, Inc., 496 F.3d 1291, 1249 (11th Cir. 2007)

(applying Georgia law). The plaintiffs have not shown a genuine

50 issue of fact as to the existence of a joint venture between SKF

and Environamics.

Furthermore, even if SKF and Environamics had agreed to

enter into a joint venture, the plaintiffs have not explained how

that made it reasonable for them to rely on SKF's alleged

promises to buy Environamics in the face of an express agreement

to the contrary. The plaintiffs seem to be saying that SKF, by

acting like it was buying Environamics but ultimately not

following through, breached the fiduciary duty owed as a joint

venturer. Their claim, however, is for promissory estoppel, not

breach of fiduciary duty, and needless to say they cannot be

allowed to amend their complaint yet again--well past the

deadline for amendments, and in the face of SKF's second summary

judgment motion--to assert such a claim. See, e.g., O'Connell v.

Hyatt Hotels of P.R., 357 F.3d 152, 155-56 (1st Cir. 2004). In

any event, the plaintiffs could never have brought a claim

against SKF for breach of fiduciary duty, because if SKF owed

that duty to anyone, it was their alleged co-venturer

Environamics, not the plaintiffs individually, as they

acknowledged at oral argument.

Finally, even if there had been a fiduciary relationship

between SKF and the plaintiffs themselves, "[t]here is no

guestion that someone's claimed reliance on representations--even

those made by a fiduciary--must be reasonable" to support an

51 estoppel claim. Siegel v. Braver, No. 10-541, 2010 WL 1883459,

at *2 (N.D. 111. May 11, 2010); see also, e.g., Brant v.

Principal Life & Disability Ins. Co., 50 Fed. Appx. 330, 332 (8th

Cir. 2002) (affirming dismissal of an estoppel claim arising out

of a fiduciary's representations for want of "evidence showing

reasonable and detrimental reliance"); J. Geils Band Emp. Benefit

Plan v. Smith Barney Shearson, Inc., 76 F.3d 1245, 1258 (1st Cir.

1996) (ruling that the parties' fiduciary relationship did not

excuse the plaintiff's failure to use the reasonable diligence in

its affairs with the defendant that would toll a claim against it

under the discovery rule). So the plaintiffs' joint venture

theory, even if taken at face value, does not substitute for a

showing of the reasonable reliance necessary to prevail on their

promissory estoppel claim.16

IV. Conclusion

For the foregoing reasons, SKF's second motion for summary

judgment17 is GRANTED. While the motion is directed only at the

plaintiffs' amended promissory estoppel claim, they acknowledged

16If anything, the fact that the plaintiffs thought SKF had entered into a joint venture with Environamics tends to make their reliance on claimed promises of an acquisition less reasonable, since a joint venture is a completely different form of corporate transaction. C f . Petricca, 214 F.3d at 222 (distinguishing between the relationship created by an option to purchase and a joint venture).

17Document no. 187.

52 at oral argument that this claim represents their "whole case" at

this point. In light of this concession--which is consistent

with the court's view of the relationship of the promissory

estoppel claim to the other counts left in the third amended

complaint--the clerk shall enter judgment for SKF accordingly and

close the case.

SO ORDERED.

Joeeph N. Laplante United States District Judge

Dated: December 17, 2010

cc: Donald C. Crandlemire, Esg. Steven M. Gordon, Esg. William E. Aivalikles, Esg. David Richman, Esg. Gregory A. Moffett, Esg. Matthew R. Williams, Esg. Peter G. Callaghan, Esg. Alexander J. Walker, Esg.