928 F.3d 631
7th Cir.2019Background
- Finish Line granted Division Six an exclusive right (2001 Agreement) to buy Finish Line’s aged and customer-returned merchandise; Paragraph 9 set an 18-month term from March 1, 2001 with a single automatic 18-month renewal if no third-party offer arose within six months of term end.
- In 2002, the parties signed a letter amendment extending the term three years (to Aug. 31, 2005) and providing a single automatic three-year renewal if no third-party offer arose “within six months of the end of said extended term.” The letter served as the amendment.
- The 2002 amendment automatically renewed once to extend the contract to Aug. 31, 2008.
- In 2008, Finish Line sent another letter extending the term five years (Sept. 1, 2008–Dec. 31, 2013) and reaffirming other contract terms; this 2008 amendment contained no automatic-renewal provision.
- Finish Line continued shipments into 2014 but later began dealing with others; Division Six sued in 2017 claiming the contract automatically renewed one more time after Dec. 2013. The district court dismissed for failure to state a claim; the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Agreement automatically renewed after Dec. 31, 2013 | Division Six: the amendments and language "adding language" create a perpetuating/self-renewal scheme or at least permit one final 3-year automatic renewal after 2013 | Finish Line: each automatic-renewal clause applies only to the specific term it references; 2008 amendment contains no automatic renewal so contract ended in 2013 | The court held no renewal occurred after 2013; each renewal clause applied only to the specific term it modified and 2008 amendment contained no automatic extension. |
| Whether the contract is ambiguous such that extrinsic evidence may be considered | Division Six: wording (e.g., "adding language") is ambiguous and supports considering conduct (shipments in 2014) to show intent | Finish Line: language is unambiguous; ordinary meaning controls and extrinsic evidence is inadmissible | The court held the contract unambiguous; extrinsic evidence (continued shipments) is irrelevant. |
| Preservation / reviewability of the post-2013-renewal theory | Division Six raised the specific “one final renewal” argument in a Rule 59(e) motion after the dismissal | Finish Line conceded the argument is preserved for appeal; district court had discretion to address it | The court reviewed de novo and rejected the Rule 59(e)-based argument on the merits. |
Key Cases Cited
- O’Boyle v. Real Time Resolutions, Inc., 910 F.3d 338 (7th Cir.) (standards for de novo review of dismissal)
- Wood v. Mid‑Valley Inc., 942 F.2d 425 (7th Cir.) (choice‑of‑law acknowledgement)
- Tender Loving Care Mgmt., Inc. v. Sherls, 14 N.E.3d 67 (Ind. Ct. App.) (unambiguous contract: plain meaning; no extrinsic evidence)
- Louis & Karen Metro Family, LLC v. Lawrenceburg Conservancy Dist., 616 F.3d 618 (7th Cir.) (treatment of extrinsic evidence for ambiguous contracts)
- Cincinatti Life Ins. Co. v. Beyrer, 722 F.3d 939 (7th Cir.) (standard for Rule 59(e)—manifest error required)
- Gerhartz v. Richert, 779 F.3d 682 (7th Cir.) (preservation of issues raised first in Rule 59(e) if district court considers them)
- Vincennes Univ. ex rel. Bd. of Trs. v. Sparks, 988 N.E.2d 1160 (Ind. Ct. App.) (when disagreement does not create ambiguity)
- THQ Venture v. SW, Inc., 444 N.E.2d 335 (Ind. Ct. App.) (ordinary meaning of contract language)
- Evan v. Poe & Assocs., Inc., 873 N.E.2d 92 (Ind. Ct. App.) (courts may not add unagreed contract provisions)