                  NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 16a0625n.06

                                             No. 16-3419
                                                                                     FILED
                                                                                Nov 28, 2016
                          UNITED STATES COURT OF APPEALS                    DEBORAH S. HUNT, Clerk
                               FOR THE SIXTH CIRCUIT

FARMERS’ ETHANOL LLC,                            )
                                                 )
       Plaintiff-Appellant,                      )
                                                 )
v.                                               )
                                                      ON APPEAL FROM THE UNITED
                                                 )
                                                      STATES DISTRICT COURT FOR THE
BOUNTY MINERALS, LLC,                            )
                                                      SOUTHERN DISTRICT OF OHIO
                                                 )
       Defendant-Appellee.                       )
                                                 )
                                                 )



BEFORE:        DAUGHTREY, CLAY, and COOK, Circuit Judges.

       MARTHA CRAIG DAUGHTREY, Circuit Judge. In this diversity action for breach of

contract, plaintiff Farmers’ Ethanol LLC, appeals the district court’s grant of judgment on the

pleadings to defendant Bounty Minerals, LLC. Farmers’ Ethanol argues that letters of intent

executed by the parties comprise an enforceable agreement for Bounty Minerals’s purchase of

certain oil and gas rights from Farmers’ Ethanol. In the alternative, Farmers’ Ethanol argues that

it is entitled to recover damages under a theory of promissory estoppel predicated on Bounty

Minerals’s silence in the face of an alleged duty to speak. For the reasons discussed below, we

affirm the judgment of the district court.

                     FACTUAL AND PROCEDURAL BACKGROUND

       The complaint in this case alleged the following: After a period of negotiation, Farmers’

Ethanol and Bounty Minerals agreed to and signed letters of intent that discussed “proposed
No. 16-3419
Farmers’ Ethanol v. Bounty Minerals

transactions” in which Bounty Minerals would purchase oil and gas interests from Farmers’

Ethanol. Among other provisions, one of the letters of intent stated:

       After the execution of this letter of intent, Bounty shall have seven days to
       conduct a preliminary review of title and evaluate the Properties. During the
       initial review period, Farmers’ shall provide Bounty copies of deeds and other
       title information and documentation regarding title to the Properties to Bounty. If
       after the initial review period, Bounty wants to proceed with the acquisition of the
       oil and gas interest, Bounty shall prepare an oil and gas deed and order for
       payment in the forms attached . . . and present them to Farmers’ for review and
       approval.

The letters of intent also stated that “Bounty acknowledges that Farmers’ may choose to satisfy

one or more liens or claims from proceeds of this transaction.”

       After the initial review period elapsed, Bounty Minerals did not prepare the deeds and

orders for payment. Approximately one month after the signing of the letters of intent, Bounty

Minerals told Farmers’ Ethanol that a price reduction from what was reflected in the letters of

intent would induce it to purchase the oil and gas interests. Farmers’ Ethanol declined to reduce

the price; subsequently, Bounty Minerals informed Farmers’ Ethanol that an outstanding

$600,000 civil judgment and judgment lien against the real property prevented it from going

forward with the proposed transaction. In the following months, Bounty Minerals continued to

maintain that the civil judgment and lien were an impediment to closing.

       Ultimately, Farmers’ Ethanol informed Bounty Minerals that it would satisfy the

judgment (along with a $400,000 premium that the judgment creditor required in order to enter

an escrow agreement requested by Bounty Minerals).          Without hearing back from Bounty

Minerals, Farmers’ Ethanol then did so and subsequently sent electronic copies of documents

satisfying the judgment and releasing the lien, which Bounty Minerals agreed to forward to its

legal counsel for review.



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       A month or so later, Farmers’ Ethanol contacted Bounty Minerals about the closing it

anticipated would occur several weeks thereafter. Counsel for Bounty Minerals subsequently

told Farmers’ Ethanol that it did not believe that it was obligated to purchase the mineral

interests and that no closing was planned.

       Farmers’ Ethanol initiated suit against Bounty Minerals in Ohio state court, alleging

breach of contract and promissory estoppel (among other claims). With regard to the cause of

action for breach of contract, Farmers’ Ethanol alleged that the letters of intent constituted a

binding contract for the sale of the oil and gas interests to Bounty Minerals. Farmers’ Ethanol

also alleged that Bounty Minerals’s failure to give notice that it would not close the deal even if

the judgment lien was satisfied estopped Bounty Minerals from “claiming that it ha[d] no

obligation to perform its contracts.” Bounty Minerals removed the case to federal district court

and moved for judgment on the pleadings on all claims.

       The district court granted Bounty Minerals’s motion, finding that Farmers’ Ethanol failed

to state a claim for breach of contract because there was no binding agreement and that Farmers’

Ethanol failed to state a claim for promissory estoppel by silence because it did not articulate any

duty under which Bounty Minerals would be required to speak. Farmers’ Ethanol now appeals.

                                          DISCUSSION

Standard of Review

       We review an entry of judgment on the pleadings under Federal Rule of Civil Procedure

12(c) using the same de novo standard of review that applies to a motion to dismiss for failure to

state a claim. Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir. 2008). All well-

pleaded material allegations of the party opposing the motion must be taken as true; the motion

may be granted only if the moving party nevertheless is entitled to judgment as a matter of law.


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Farmers’ Ethanol v. Bounty Minerals

Id.; see also Florida Power Corp. v. FirstEnergy Corp., 810 F.3d 996, 1000 (6th Cir. 2015). In

order to survive a motion for judgment on the pleadings, a plaintiff’s complaint must meet the

plausibility standard announced by the Supreme Court in Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007). See Tucker, 539 F.3d at 550 (citing Sensations, Inc. v. City of Grand

Rapids, 526 F.3d 291, 295 (6th Cir. 2008)). Because this case is in federal court under diversity

jurisdiction, Ohio substantive law applies.

The “Initial Review Period” Clause

       Farmers’ Ethanol argues that the letters of intent constitute a binding contract and that the

“initial review period” clause was in fact a satisfaction clause requiring Bounty Minerals to fill

out the deeds and purchase the oil and gas interests unless it was dissatisfied with the title or the

properties. Farmers’ Ethanol argues that Bounty Minerals breached this purported satisfaction

clause because it refused to close the transaction in bad faith. We disagree.

       As we have noted in a previous opinion dealing with relevant state law:

       Under Ohio law, when confronted with an issue of contract interpretation, a
       court’s role is to give effect to the intent of the parties. To that end, courts should
       examine the contract as a whole and presume that the intent of the parties is
       reflected in the language of the contract. . . . When the language of a written
       contract is clear, a court may look no further than the writing itself to find the
       intent of the parties. Courts may examine extrinsic evidence to ascertain the
       parties’ intent only if the contract is ambiguous.

Eastham v. Chesapeake Appalachia, L.L.C., 754 F.3d 356, 361 (6th Cir. 2014) (internal

quotation marks, alterations, and citations omitted) (emphasis added). A contract is ambiguous if

it cannot be given a definite legal meaning or if the relevant provision “is susceptible of more

than one reasonable interpretation.” Id.

       In this case, the plain language of the “initial review period” clause is unambiguous, and

it unambiguously is not a satisfaction clause.        Such clauses generally condition a party’s


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Farmers’ Ethanol v. Bounty Minerals

performance of its duty on its satisfaction with how the other party has performed. By contrast,

the “initial review period” term in the letters of intent simply stated that Bounty Minerals was

free to purchase the rights at issue “[i]f . . . [it] wants to,” granting it unfettered discretion about

whether to proceed with the sale.

        In its brief on appeal, Farmers’ Ethanol’s discussion of why it believes the “initial review

period” clause is a satisfaction clause rests on faulty reasoning:

        [T]he ‘initial review period’ term did [make one party’s performance dependent
        upon the other party’s performance]. Farmers obligation under the [letters of
        intent] to convey the Oil and Gas Rights to Bounty was dependent upon Bounty
        providing the completed deeds and orders for payment after the ‘initial review
        period.’ If Bounty was satisfied with the properties and manifested that
        satisfaction by presenting Farmers with completed deeds and orders for payment,
        then Farmers was obligated to execute the deeds to convey the Oil and Gas Rights
        to Bounty.       Thus, Farmers performance was contingent upon Bounty’s
        performance.

        Farmers’ Ethanol’s explanation of why it believes a satisfaction clause exists makes clear

that the obligation actually runs in the opposite direction in terms of what would be necessary to

bind Bounty Minerals to perform. Leaving aside the fact that what Farmers’ Ethanol has argued

more closely resembles the fulfillment of a condition precedent (and not an obligation under a

satisfaction clause), there is a clear non-sequitur in its reasoning. It is true that if Bounty

Minerals were satisfied with the title work, it could choose to execute the deeds, but it was

Farmers’ Ethanol (not Bounty Minerals) that the language purports to bind. The fact that the

“initial review period” clause appears after language requiring Farmers’ Ethanol to provide

“deeds and other title information and documentation regarding title to the Properties” does not

limit the scope of Bounty Minerals’s discretion or transform the provision into a satisfaction

clause dependent upon the quality of Farmers’ Ethanol’s title.




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Farmers’ Ethanol v. Bounty Minerals

        A review of the language of the letters of intent makes clear that what they embody is

merely an offer of sale. Had Bounty Minerals offered some consideration to Farmers’ Ethanol

for its promise to sell its rights at the rates specified in the letters of intent, the letters of intent

could have formed an enforceable option contract. On their face, the letters of intent clearly

reflect a promise by Farmers’ Ethanol to sell the oil and gas interests to Bounty Minerals “[i]f

after the initial review period, Bounty wants” to buy them. The non-circumvention clause in the

letters of intent (requiring Farmers’ Ethanol not to engage with other prospective buyers) further

bolsters this interpretation.       But there is no promise by Bounty Minerals to complete the

purchase. Therefore, any agreement reached is, at most, a unilateral contract binding Farmers’

Ethanol only.1

        What is left, then, are letters of intent that embody an offer to sell, which Bounty

Minerals could choose to accept or reject as it wished. In the letters, Bounty Minerals promised

nothing except to prepare the deeds if it wished to consummate the transaction proposed; it

thereby retained the ability to decide whether to purchase the oil and gas rights, and Farmers’

Ethanol may not now force the sale or recover damages. See Langley v. DaimlerChrysler Corp.,

407 F. Supp. 2d 897, 917 (N.D. Ohio 2005), aff’d, 502 F.3d 475 (6th Cir. 2007) (observing that a

contract is illusory when the promisor retains an unlimited right to determine the nature or extent

of its performance; such an agreement may not be enforced or damages sought for its breach).




1
  “A contract is an ‘option’ if the optionholder has the right, but not the obligation, to compel performance by the
other contract party ‘if he chooses.’” Blanchard Valley Farmers Coop., Inc. v. Carl Niese & Sons Farms, Inc.,
758 N.E.2d 1238, 1243 (Ohio Ct. App. 2001). Hence, an option contract “bind[s] one side without binding the
other.” Four Howards, Ltd. v. J & F Wenz Rd. Invest., L.L.C., 902 N.E.2d 63, 71 (Ohio Ct. App. 2008). If (as it
appears from the record) Bounty Minerals did not give consideration for the option to purchase the oil and gas
rights, Farmers’ Ethanol would have been free to rescind the offer. Thus, the letters of intent may not form any
enforceable agreement. See Plikerd v. Mongeluzzo, 596 N.E.2d 601, 606 (Ohio Ct. App. 1992).


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Farmers’ Ethanol v. Bounty Minerals

       Although it is true that courts should avoid an interpretation of a contract that would

render its promises illusory, Tackett v. M & G Polymers USA, LLC, 811 F.3d 204, 208 (6th Cir.

2016), the language of the letters of intent in this case is clear and unambiguous: Bounty

Minerals was required to purchase the rights only if it chose to do so. The letters of intent do not

delimit the criteria on which a decision to purchase could be premised. And, further, because the

writings in this case are styled as letters of intent rather than as a contract, it is obviously less

troubling to conclude that no enforceable contract was created.

Intent to be Bound

       Farmers’ Ethanol contends that, even if the “initial review period” clause is not a

satisfaction clause, the district court erred in granting judgment on the pleadings because whether

the parties intended to be bound by the letters of intent is a question of fact for a jury. Farmers’

Ethanol’s primary authority for this proposition is our decision in Arnold Palmer Golf Co. v.

Fuqua Industries, Inc., 541 F.2d 584 (6th Cir. 1976).

       In Arnold Palmer Golf, which arose in the context of summary judgment, the parties

executed a “memorandum of intent” that “serve[d] to confirm the general understanding” that the

parties “ha[d] reached” regarding the acquisition of Arnold Palmer Golf stock by Fuqua

Industries, in exchange for the acquisition of a Fuqua Industries subsidiary’s stock by Arnold

Palmer Golf and for management services by Fuqua Industries. Id. at 586. The memorandum

“contained detailed statements concerning . . . the form of the combination, the manner in which

the business would be conducted, the loans that Fuqua agreed to make to Palmer, and the

warranties and covenants to be contained in the definitive agreement,” among other things. Id.

The memorandum also included two provisions upon which the obligations of the parties would

be conditioned: first, that the preparation of the definitive agreement would be satisfactory to


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Farmers’ Ethanol v. Bounty Minerals

both parties and their counsel and, second, that the definitive agreement would be approved by

the Fuqua Industries board of directors. Id. at 586–587. On appeal, we were asked to determine

whether the parties intended to enter a binding agreement for the transaction itself when they

executed the memorandum.

       As we stated, “both parties must have a clear understanding of the terms of an agreement

and an intention to be bound by its terms before an enforceable contract is created.” Id. at 587.

The question whether an enforceable contract is created “is merely one of expressed intention.

If their expressions convince the court that they intended to be bound without a formal

document, their contract is consummated, and the expected formal document will be nothing

more than a memorial of that contract.”          Id. at 587–88 (quoting 1 Corbin on Contracts,

§30 (1963). We noted, “At bottom, the question whether the parties intended a contract is a

factual one, not a legal one, and, except in the clearest cases, the question is for the finder of fact

to resolve.” Id. at 588.

       The holding in Arnold Palmer Golf does not affect the outcome of this case. First, the

question for the finder of fact is the intent to be bound, not the interpretation of an agreement’s

language. As discussed above, the letters of intent in this case are unambiguous; even if there

were an intent by the parties to be bound to the terms of the letters of intent, Bounty Minerals

would be bound only to provide a deed to Farmers’ Ethanol if it wanted to purchase the property.

Because “[i]t is well established that the construction and interpretation of contracts is a matter

of law to be determined by the court,” Four Howards, Ltd. v. J&F Wenz Rd. Invest., L.L.C.,

902 N.E.2d 63, 72 (Ohio Ct. App. 2008) this case need not be remanded for consideration by a

finder of fact. Second, given the illusory nature of the letters of intent, this case is one of those

“clear[] cases” contemplated by Arnold Palmer Golf as being capable of resolution by the court.


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       Farmers’ Ethanol also points to the ruling in Arnold Palmer Golf that, in order to

determine whether the parties manifested an intention to be bound by the terms contained in a

writing, “the entire document and relevant circumstances surrounding its adoption must be

considered.” Id. at 589. Farmers’ Ethanol argues that this language requires the court to

consider Bounty Minerals’s behavior in suggesting an alternative price and then retreating from

that suggestion as evidence that it believed it was bound by the letters of intent.

       But that argument is equally unavailing. In Arnold Palmer Golf, the dispositive language

in the memorandum—that “Fuqua will transfer” stock, that the “principal office of Palmer will

be moved,” and that “Fuqua agrees to advance” a payment, as well as the circulation of a press

release by Fuqua Industries stating that the two companies “have agreed to cooperate in an

enterprise” in the golfing industry—evinced an intent to be bound by its terms. Id.

       The evidence in this case, on the other hand, shows that there was a “proposed”

transaction, and the only potentially unqualified language in the letters of intent is that Bounty

Minerals will execute a deed if it desires to do so. Moreover, with regard to Bounty Minerals’s

attempt to alter the price for the rights, Farmers’ Ethanol’s pleadings make it no less likely that

Bounty Minerals, after choosing not to proceed with the proposed transaction contemplated in

the letters of intent, sought to establish negotiations for a different, new sale of rights for a

different price—well after the seven-day review period had elapsed.

Promissory Estoppel

       Under Ohio law, a claim for promissory estoppel exists when a plaintiff has shown a

clear and unambiguous promise; reliance upon that promise that is reasonable and foreseeable;

and injury as a result of the reliance. McCarthy v. Ameritech Pub., Inc., 763 F.3d 469, 486–87

(6th Cir. 2014). “The word ‘promise’ connotes some sort of commitment on the part of the


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promisor.” Id. at 487. A promise is “a manifestation of intention to act or refrain from acting in

a specified way, so made as to justify a promisee in understanding that a commitment has been

made.” Id. (quoting Dailey v. Craigmyle & Son Farms, LLC, 894 N.E.2d 1301, 1307 (Ohio Ct.

App. 2008)).

        Farmers’ Ethanol bases its claim on a theory that Bounty Minerals was silent in the face

of a duty to speak. Specifically, Farmers’ Ethanol claims that Bounty Minerals was obligated to

notify Farmers’ Ethanol that it would not close the proposed sale even if the judgment lien on the

property was cleared. According to Farmers’ Ethanol, that obligation arose from a duty to

“negotiate in good faith.”

        Both parties focus their arguments concerning this cause of action on whether Bounty

Minerals had a duty to speak. But there is fundamental problem with this theory of estoppel:

Bounty Minerals’s conduct must rise to the level of a promise to purchase the oil and gas rights if

the judgment lien were satisfied. If its conduct does not amount to a promise, no promissory

estoppel is available.2

        Farmers’ Ethanol’s complaint alleges that “Bounty expressed concern that a $600,000

civil judgment and a corresponding judgment lien against Farmers’s real property were obstacles

to closing the transaction”; that “Bounty continued to repeatedly insist over the next two months

that the Lien precluded it from closing the transaction”; that “Bounty continued to complain that

the Lien was an obstacle to closing the transaction, and continued to cite the existence of the

Lien to justify its refusal to complete its title work”; that Bounty Minerals said it “was prepared

to ‘walk away’ from the deal if Farmers’ Ethanol did not acquiesce to its demand that it be

2
  Farmers’ Ethanol’s claim seems closer to equitable estoppel than to promissory estoppel. However, equitable
estoppel is only a defense, and not a cause of action, under Ohio law. See Ford Motor Credit Co. v. Ryan,
939 N.E.2d 891, 921 (Ohio Ct. App. 2010) (holding that a claim was for equitable estoppel rather than promissory
estoppel because it involved a “misrepresentation, not a promise” and noting that “equitable estoppel is a defense to
a legal or equitable claim, while promissory estoppel is a cause of action”).

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permitted to contact the judgment creditor”; that “Bounty . . . informed Farmers it would not

commission the title work until the issue of the Lien was resolved” and “indicated” to Farmers’

Ethanol that it should pay the lien; that Farmers’ Ethanol informed Bounty Minerals it would

satisfy the judgment in full—with no response from Bounty Minerals; and that Farmers’ Ethanol

notified Bounty Minerals once it had satisfied the judgment and stated that Farmers’ Ethanol

“look[ed] forward to the successful completion of your title work within sixty days.”

         But nowhere does Farmers’ Ethanol allege that Bounty Minerals had promised to close

the deal if the lien were satisfied. From the complaint it is evident that Bounty Minerals did not

represent that the judgment and lien were the exclusive obstacles to closing the sale or promise to

purchase the rights if the lien were satisfied. As a result, Bounty Minerals’s silence when

confronted with Farmers’ Ethanol’s statement that it would clear the judgment lien in this

context does not create a promise to do so. Indeed, the complaint makes clear that title work had

never been undertaken or completed.

         Even taking all well-pleaded facts in Farmers’ Ethanol’s complaint as true, it is not

plausible to conclude that Bounty had promised to complete the transaction if Farmers’ Ethanol

satisfied the lien, much less that such a promise was clear and unambiguous.3 Regardless of

whether Bounty Minerals had a duty to speak, the promissory-estoppel claim fails.

                                                CONCLUSION

         For the reasons set out above, we find no reversible error and AFFIRM the judgment of

the district court.


3
  A recent ruling by the Ohio Court of Appeals suggests that the promise may be one that the promisor “should
reasonably expect to induce action or forbearance” and need not be “clear and unambiguous.” A N Bros. Corp. v.
Total Quality Logistics, LLC, 59 N.E.3d 758, 775 (Ohio App. 2016) (holding that the trial court’s failure to require a
jury to find alleged promises clear and unambiguous was not clear error because, despite court’s consistent
requirement of a clear and unambiguous promise, the Restatement as adopted by the Ohio Supreme Court did not
include that language). Even under this standard, Farmers’ Ethanol’s claim fails.

                                                        -11-
