                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                  _____________

                                  No. 00-1762NE
                                  _____________

American Shizuki Corporation,           *
                                        *
            Appellant,                  *
                                        * On Appeal from the United
      v.                                * States District Court
                                        * for the District of
International Business Machines         * Nebraska.
Corporation,                            *
                                        *
            Appellee.                   *
                                   ___________

                         Submitted: February 12, 2001
                             Filed: May 29, 2001
                                 ___________

Before RICHARD S. ARNOLD and HANSEN, Circuit Judges, and KORNMANN,1
      District Judge.
                           ___________

RICHARD S. ARNOLD, Circuit Judge.

       American Shizuki Corporation (ASC) appeals from the District Court's2 order
granting International Business Machines (IBM) summary judgment in this diversity


      1
      The Hon. Charles B. Kornmann, United States District Judge for the District of
South Dakota, sitting by designation.
      2
      The Hon. Joseph F. Bataillon, United States District Judge for the District of
Nebraska.
case claiming promissory estoppel, negligent misrepresentation, and fraudulent
misrepresentation. We affirm.

                                           I.

       In 1988 IBM began negotiating with several companies, including ASC, for the
manufacture of plastic film capacitors to be used by IBM in its mainframe computers.
On September 2, 1988, IBM and ASC entered into a Standard Ordering Agreement
which set forth the basic contractual terms and conditions for "future purchase by IBM"
of component parts manufactured by ASC. The agreement specifically stated that it did
not obligate IBM to purchase any items from ASC, and that future Purchase Orders
"shall be [ASC]'s only authorization to manufacture Items." Moreover, the agreement
provided that neither it nor any subsequent purchase agreement or purchase order "shall
impair IBM's right to . . . procure from others . . . Items which, now or in the future,
may be competitive with those offered by [ASC]."

      By letter dated February 1, 1989, IBM conveyed to ASC "the possibility of IBM
purchasing 15,000,000 Plastic Capacitors per two consecutive twelve (12) month
periods." The letter went on to state: "This quantity is a forecast only, and represents
no commitment by IBM to purchase these quantities during or after this time period."
ASC communicated to IBM that it wanted greater assurances from IBM before ASC
made the estimated capital expenditure of $2.1 million for the equipment it would need
to manufacture the capacitors. IBM sent ASC another letter dated February 22, 1989,
expressing IBM's "intent to order" from ASC 30 million capacitors, made to IBM's
drawings, over a minimum period of two years, contingent upon the condition "[t]hat
IBM's requirements for these capacitors continue."

      In the Spring of 1989, ASC spent approximately $2.6 million to purchase the
equipment for manufacturing the plastic capacitors. By letter dated December 6, 1991,
IBM asked ASC to add a second manufacturing shift to meet IBM's anticipated demand

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for plastic capacitors in 1992. On December 18, 1991, IBM sent ASC a Letter of
Intent to confirm IBM's intention of ordering approximately 18 million plastic
capacitors in 1992, which was more than ASC's existing manufacturing capacity. The
letter projected that IBM would require 35-50 million capacitors in each of 1993 and
in 1994. ASC, however, could not justify setting up a second production shift based
on IBM's actual purchases to date, and never added a second shift. From 1990 to
March 1994, IBM purchased a total of 14,344,000 capacitors from ASC. The need for
plastic capacitors dissipated with the advent of new technology and the development
of ceramic capacitors. In June 1997, IBM informed ASC that it would no longer
purchase plastic capacitors from ASC.

      ASC filed this diversity action against IBM in June 1997, seeking $8.5 million
in damages under three theories of relief: promissory estoppel, negligent
misrepresentation, and fraudulent misrepresentation. The District Court granted IBM's
motion for summary judgment, and this appeal followed.

                                          II.

       "We review a grant of summary judgment de novo and apply the same standard
as that applied by the District Court." Clark v. Kellogg Co., 205 F.3d 1079, 1082 (8th
Cir. 2000). Summary judgment is appropriate if the evidence, viewed in the light most
favorable to the nonmoving party, demonstrates that there is no genuine issue of
material fact and that the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(c). We also review de novo the District Court's application of state law,
predicting how the highest court in the forum state would resolve the issues. Clark, 205
F.3d at 1082.

      Nebraska follows the Restatement of Contracts (Second) § 90 with regard to
promissory estoppel. Yankton Prod. Credit Assn. v. Larsen, 365 N.W.2d 430, 433
(Neb. 1985). The Restatement provides that a "promise which the promisor should

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reasonably expect to induce action . . . on the part of the promisee . . . and which does
induce such action . . . is binding if injustice can be avoided only by enforcement of the
promise."

       As the District Court noted, two key officers of ASC testified by deposition that
IBM made no oral or written promises that it would either purchase a specified quantity
of the plastic capacitors or that ASC would recover the costs of its capital expenditures.
These individuals also testified that they understood that all purchases of capacitors by
IBM would be made through purchase orders, and that IBM never made intentionally
false representations to ASC about any matter related to the capacitor project. We
believe this evidence, especially in light of the cautionary language in the Standard
Ordering Agreement and the conditional language of the February 1989 letters from
IBM quoted above, defeats ASC's claims.

       The only representations by IBM that might support ASC's claims are those in
IBM's December 18, 1991, Letter of Intent. As noted above, however, ASC did not
take any action in reliance upon this letter. ASC never added the second production
line that IBM requested. Thus the element of detrimental reliance upon a promise or
misrepresentation, an element common to all three of ASC's theories of recovery, is
lacking. See Cao v. Nguyen, 607 N.W.2d 528, 532 (Neb. 2000) (reliance is an element
of both fraudulent and negligent misrepresentation).

      Accordingly, we affirm.

KORNMANN, District Judge, dissenting.

      With all due respect, I would reverse for a jury to determine what I believe are
material issues of fact. I agree largely with the majority opinion that ASC cannot
recover based solely on the letters from IBM. However, the letter of February of 1989
spoke of an intent to order 30 million capacitors “over a minimum period of two years”,

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this to be contingent upon IBM’s requirements continuing for the items. Despite this,
it was not until March of 1994 that IBM first told ASC that, because the cost of the film
capacitors was greater than the price of ceramic capacitors, IBM would not be
purchasing the capacitors at the levels previously stated. In 1997, IBM discontinued
all purchases of the 2.5 mm capacitors. March of 1994 is, of course, outside the
minimum two year window for which the commitment was made and 30 million
capacitors had not been purchased. One could certainly conclude that, during the two
year period, IBM made no decision as to diminished lack of need for the items. If they
did come to such conclusion, the record is clear that they did not communicate it to
ASC. At a minimum, factual issues of bad faith and justifiable reliance would exist
with IBM waiting so long to act. I reject the claim of IBM that the “minimum period
of two years” does not mean two consecutive years. Common sense tells us that ASC
could not have been expected to operate the plant for one year and then shut down the
manufacturing line while waiting one or more years for IBM to place more orders in
some other unknown year.

       The district court relied on some testimony given at depositions, calling the
testimony “undisputed” to the effect that IBM made no oral or written promises that
it would either purchase a specified quantity or that ASC would recover the costs of its
capital expenditures. I do not believe the testimony is nearly so clear.

        Former executives of ASC testified. Robert Harris claimed that IBM was
making “commitments” and “initial representations that they made that never were
held.” He testified as to telephone calls and meetings during which IBM officials were
making “representations” about how much volume there would be. He talked
“numerous times” with IBM officials as to “what was coming and what we needed,
inventory items, so on and so forth . . .” While he did admit that there was no promise
to buy a certain number of units and the word “guarantee” was never used, he also
testified that IBM wanted ASC to maintain inventory levels of the product, saying to
him “something to the effect , you know, don’t worry about that, we will take it, which

                                           -5-
to me is a promise again.” He testified that IBM did not “live up to their
commitments.” He spoke of IBM verbally expressing IBM’s intentions to buy certain
volumes. He spoke of numerous telephone conferences he had with IBM officials. He
claims IBM “did not live up to their intentions of saying, we are going to buy so much
product from you.” IBM at meetings with ASC showed graphs of the volume of the
product going up over the period of years.

       Allen Tompkins also testified at a deposition. “IBM never held up their end of
the program on the usage purchase orders that were supposed to be. The original
commitments were never made.” He testified he relied in part on “knowing the people
we were working with.” They had worked on other projects with IBM. There is
evidence in the record of a course of dealing between these two companies and this is
also relevant. Tompkins said he “would say there were some verbal commitments.”
He also testified that IBM supplied false information “concerning the number of
capacitors IBM would purchase.”

        Other deposition testimony was presented by Ronald Anderson, a 30 year
employee of ASC. He spoke of an IBM “commitment they were going to buy 30
million pieces over two years.” According to Anderson, IBM “continually stated” that
these were minimum quantities. These are obviously oral communications after the
letters were written. He testified in answers to various questions as to commitments
and what he called “firm commitments” made by IBM.

       A promise is described in the Restatement of Contracts 2d, §2 (1) as “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.” I do not
believe this can be determined in the present case as a matter of law. We are, of
course, not talking about a contract here but about promissory estoppel. I fully
recognize that a mere statement of opinion or prediction of future intent will not sustain
an action for promissory estoppel. While a promise is certainly required, Nebraska

                                           -6-
recognizes the distinction between actions for breach of contract in which there is a
requirement of reasonable definiteness, and actions for promissory estoppel in which
there is the requirement of reasonable and foreseeable reliance. Foreseeable reliance
is the very nature of the remedy available. Promissory estoppel allows for damages
only as justice requires and does not attempt to provide a plaintiff with damages based
on the benefit of the claimed bargain. Reliance damages are relatively easy to
determine, whereas the determination of “expectation” or “benefit of the bargain”
damages in a contract action require more detailed proof of the terms of the contract.
See Rosnick v. Dinsmore, 457 N.W.2d 793 (Neb. 1990), Hawkins Constr. Co. v.
Reiman Corp., 511 N.W.2d 113 (Neb. 1994), and Hoffman v. Red Owl Stores, Inc.,
133 N.W.2d 267 (Neb. 1965).

      Having spent $2.3 million, it would seem that ASC relied on something. I
believe it is for a jury to decide what the course of dealing was between IBM and ASC,
what IBM said and did, when each statement was made or action taken, whether what
IBM did and said and the course of dealing would have permitted ASC to reasonably
have relied on such matters, and whether IBM should have foreseen such reliance by
ASC.

        For these reasons, I would reverse the grant of summary judgment and remand
for a trial. I respectfully dissent.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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