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Universal Truckload, Inc. v. Dalton Logistics, Inc.

United States Court of Appeals, Fifth Circuit

January 3, 2020


          Appeal from the United States District Court for the Southern District of Texas

          Before DAVIS, STEWART, and ELROD, Circuit Judges.


         Universal Truckload appeals an adverse judgment following a jury trial. Because Universal Truckload fails to demonstrate reversible error, we AFFIRM.


         Appellee Dalton Logistics is a shipping broker. Dalton spearheads its clients' large-scale shipments of heavy-duty freight such as oil-field equipment and rigs. Two of Dalton's former clients-Helmerich & Payne International Drilling Co. and Hess Corporation-are co-appellees in this appeal. H&P and Hess hired Dalton to coordinate the transportation of disassembled oil rigs. Dalton outsourced the trucking to appellant Universal Truckload. Dalton owed Universal Truckload $1.9 million for the trucking services it provided. Dalton never paid Universal Truckload for its services and Universal Truckload sued Dalton, H&P, and Hess.

         On the surface, this case seems simple: Party A provided shipping services to Party B, and Party B never paid. But many of the key issues in this case turn on another part of the story. In response to Universal Truckload's lawsuit, Dalton counterclaimed, alleging that Universal Truckload had promised to purchase Dalton but never fully finalized the deal, instead stringing Dalton along for over a year. Dalton says that it entered into the shipping contracts with H&P and Hess entirely at Universal Truckload's direction and that Universal Truckload had even told Dalton not to pay the debt owed to Universal Truckload on these projects. Dalton complains that it spent all of its cash-burning every last asset-at Universal Truckload's direction with constant assurances that the purchase would soon be finalized. Dalton's legal theory, successful at the district court, was promissory estoppel: Dalton spent millions in reliance on the ultimately broken promise that Universal would take over soon. The facts comprising Dalton's counterclaim are detailed below.

         In March of 2013, Dalton lost a lucrative contract. Without that business, Dalton struggled financially. Dalton's executives had to decide whether they should restructure the entire company to stay afloat or take the profits and unwind the company completely. Dalton's executives settled on the latter. President Dick Meredith and Vice President of Operations Jack Robison planned to take their profits, close their operations in North Dakota, and return to Texas. As part of closing shop, Dalton contacted Universal Truckload, whom they regularly worked with, and told Universal Truckload to take its trucks out of North Dakota because Dalton would no longer be needing them. However, instead of taking the trucks back, Universal Truckload's president, Marc Limback, expressed interest in buying Dalton. Dalton was open to the idea but told Universal Truckload that the deal would need to happen quickly because Dalton lacked the cash sufficient to last long on its own.

         Dalton, who had "already shut [the] company down," "cranked it back up" at Universal Truckload's request. Universal Truckload sent Dalton an Indication of Interest Letter and then Don Cochran, president of Universal Truckload's parent company, and Limback came to North Dakota in April to see Dalton's operations in person. Dalton claims that since the initial conversation regarding purchasing Dalton, Limback and Cochran were in near-constant communication with Dalton about the purchase, routinely giving assurances that a deal would be finalized soon.

         On May 31, 2013, Universal Truckload officers met with Dalton officers in Detroit, Michigan. Dalton alleges that at this meeting, it reminded Universal Truckload that time was of the essence considering Dalton's dwindling financial resources. Dalton alleges that Universal Truckload responded to this with an offer to buy Dalton for $25 million, but Universal Truckload claims that this agreement was never made.

         Shortly after the May 31 meeting, Universal Truckload became embroiled in internal political upheaval. A new merger left the old officers- who had promised to purchase Dalton-at odds with the new officers-who allegedly did not want the deal. Dalton claims that it continued to remind Cochran that it was running low on cash and needed the deal done quickly and that Cochran continually reassured Dalton that the deal was almost finalized. These assurances that the deal would eventually work out allegedly continued for months, all while Dalton continued to deplete its resources to keep the company operational for Universal Truckload's promised buyout.

         In August 2013, Dalton sent financial statements to Universal Truckload. Three weeks later, Universal Truckload sent Dalton an Asset Purchase Agreement offering $10.3 million upfront with a potential two-year earn-out totaling $24.3 million. Dick Meredith called Cochran to object to the new terms and Cochran agreed that this was not the deal Universal Truckload and Dalton had struck in May. Cochran assured Dalton that he would be able to get the executives at Universal Truckload to agree to get something done.

         In early 2014, Cochran allegedly urged Dalton to "[i]ncrease [its] revenue" by "getting outside help, other cranes, other trucks and so forth, to be able to . . . help us do more rigs." Dalton did not have enough cash to pay Universal Truckload for trucks so Universal Truckload increased Dalton's credit limit and provided the trucks on credit.

         Eventually, after eighteen months, Universal Truckload executives overruled Cochran, demanded Dalton repay the $1.9 million, and called Dalton's bond. At this point, Dalton had no money to repay Universal Truckload as it had been paying to keep the company afloat for over eighteen months. Dalton, which was valued at $5.7 million in April of 2013, now had no assets, and instead owed Universal Truckload $1.9 million.

         Universal Truckload sued Dalton, H&P, and Hess to recover the unpaid bills. It brought the same claims against each defendant, alleging breach of contract, breach of quasi-contract, and breach of a sworn account. It argued that all defendants were liable for Dalton's debt under theories of equitable subrogation, agency, and ratification. Dalton counterclaimed alleging breach of contract and, in the alternative, promissory estoppel.

         Hess moved for summary judgment on all of Universal Truckload's claims against it. The district court granted Hess's motion and determined that Universal Truckload's breach of contract claim failed as a matter of law because Universal Truckload failed to present any evidence that Hess consented to the terms of a shipping contract with Universal Truckload. Universal Truckload's other claims against Hess also failed as Universal Truckload "failed to cite, nor [could the district court find], a single case holding that a shipper is liable to a carrier of freight without some sort of contract existing between the parties."

         Universal Truckload's claims against H&P were partially dismissed at summary judgment. On H&P's motion, the district court dismissed Universal Truckload's claims alleging H&P was liable to Universal Truckload for the loads Universal Truckload subcontracted out. The remaining claims- regarding the loads Universal Truckload moved itself-proceeded to trial. At the close of a week-long trial, the jury found that Universal Truckload had no contract with H&P, and therefore, Universal Truckload could not recover from H&P.

         All of Universal Truckload's claims against Dalton, and Dalton's crossclaims against Universal Truckload, proceeded to a jury trial. The jury found that Dalton should recover under a promissory estoppel theory. Dalton was awarded $5.7 million in reliance damages-the difference between the amount of cash it had on hand before Universal Truckload's promise and the "zero" balance in its bank account when Universal Truckload called its bond. The jury awarded Universal Truckload the $1.9 million in freight charges that Dalton owed. The court, however, concluded that the $1.9 million was incurred in reliance on Universal Truckload's promises and therefore awarded Dalton a $1.9 million offset against Universal Truckload's breach of contract claim.


         Universal Truckload raises four issues on appeal, asking this court to: (1) reverse the judgment for Dalton because there was not sufficient evidence to support Dalton's claim of promissory estoppel; (2) reverse the district court determination that the $1.9 million awarded to Universal Truckload for breach of contract be offset because it was entered solely in reliance on Universal Truckload's promise; (3) reverse the judgment in favor of H&P and award Universal Truckload the freight charges for Universal Truckload's transportation of H&P's freight; and (4) reverse the grant of summary judgment in favor of Hess and award Universal Truckload the freight charges owed by Hess.[1]


         The jury awarded $5.7 million to Dalton. After the jury verdict, Universal Truckload sought a JMOL reversing that award. The district court denied that motion and now Universal Truckload asks this court to reverse the district court's denial of the JMOL, in effect reversing the jury verdict. Universal Truckload advances three arguments for reversal. First, Universal Truckload asserts that it never promised to purchase Dalton. Second, even if it did promise to purchase Dalton, Universal Truckload claims Dalton's reliance on the promise was unreasonable. And third, even if Dalton had a viable promissory estoppel theory, Universal Truckload contends that there was insufficient evidence that Dalton spent $5.7 million in reliance on Universal Truckload's promise. Because there was sufficient evidence to conclude Universal Truckload made a promise, Dalton reasonably relied on the promise to its detriment, and that reliance caused Dalton $5.7 million in damages, we affirm the district court's denial of the JMOL and the jury verdict on Dalton's promissory estoppel claim.

         The parties contest the standard of review applicable to the challenge of the denied JMOL. Universal Truckload argues that it preserved this issue in the district court through its Rule 50(a) motion and renewed Rule 50(b) motion. It therefore asks this court to review its arguments de novo. See Foradori v. Harris, 523 F.3d 477, 485 (5th Cir. 2008) (explaining that this court reviews "de novo the district court's denial of a motion for judgment as a matter of law, applying the same standard as the district court" (quoting Int'l Ins. v. RSR Corp., 426 F.3d 281, 296 (5th Cir. 2005)). However, in its Rule 50(a) motion, Universal Truckload did not challenge any promissory estoppel theories. Its Rule 50(a) motion pertained to: insufficient evidence of a valid contract, insufficient evidence of benefit-of-the-bargain damages, and insufficient evidence of reliance damages. After the verdict, in its Rule 50(b) motion, Universal Truckload raised arguments about promissory estoppel. But, we have explained that a "Rule 50(b) motion is technically only a renewal of the Rule 50(a) motion," and therefore, the movant "cannot assert a ground that was not included in the original motion." In re Isbell Records, Inc., 774 F.3d 859, 867 (5th Cir. 2014) (alterations and internal quotation marks omitted) (quoting Mozingo v. Correct Mfg. Corp., 752 F.2d 168, 172 (5th Cir. 1985)). Dalton correctly asserts that Universal Truckload's arguments that a promise was not made or reasonably relied upon, raised for the first time in the Rule 50(b) motion, are not preserved. We therefore review them for plain error. See Seibert v. Jackson Cty., 851 F.3d 430, 435 (5th Cir. 2017).

         Universal Truckload's argument that there was insufficient evidence to support the $5.7 million jury verdict was preserved in its Rule 50(a) motion and renewed in its Rule 50(b) motion. It is therefore reviewed de novo. Streber v. Hunter, 221 F.3d 701, 730 (5th Cir. 2000). However, the standard under which it is reviewed is itself deferential to the trial court, drawing "all reasonable inferences and resolv[ing] all credibility determinations in the light most favorable to the nonmoving party." Foradori, 523 F.3d at 485; see also id. (noting that "unless there is no legally sufficient evidentiary basis for a reasonable jury to find as the jury did" this court must uphold the verdict (internal quotation marks and citation omitted)); Seibert, 851 F.3d at 434-35.


         Under the Erie doctrine, this court must apply substantive state law in diversity jurisdiction cases. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). Here, the parties agree that Texas law applies. The elements of promissory estoppel in Texas are: "(1) a promise, (2) reliance thereon that was foreseeable to the promisor, and (3) substantial reliance by the promisee to his detriment." J.D. Fields & Co. v. U.S. Steel Int'l, 690 F.Supp.2d 487, 503-04 (S.D. Tex. 2009); see also MetroplexCore, L.L.C. v. Parsons Transportation, Inc., ...

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