T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on a nd i s notpr e c e de nt * e xc e pta s pr ovi de d by N i nth C i r c ui tR ul e 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T F R O N T L I N E P R O C E S S I N G C O R P ., a N e va dac orpor a t i on, P l ai nt i ff

-c ou nt er -def

endant- A pp el l ee , v. F I R S T S T AT E B AN K O F E L DO R AD O, E L D O R A D O , I L L I N O I S , a n I llin o is c orpor a t i on, D ef

endant -c ou nt er -c l ai m ant- A p p e lla n t, v. L MA UN DE R WR I T I NG AG E NC Y, I N C. ; CH RI STO PH ER L. K I TTLER, T hi rd-party- defe nd ant- A p p el l ees. N o. 08- 35879 D . C. N o . CV 0 1 - 0 0 0 7 4 - BU - RFC ME MOR AN DU M *

F R O N T L I N E P R O C E S S I N G C O R P ., a N e va dac orpor a t i on, P l ai nt i ff

-c ou nt er -def

endant- A p p e lla n t, N o. 09- 35166 D . C. N o . CV 0 1 - 0 0 0 7 4 - BU - RFC



# FI LED JU L 30 2010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

v. F I R S T S T AT E B AN K O F E L DO R AD O, E L D O R A D O , I L L I N O I S , a n I llin o is c orpor a t i on, D ef

endant -c ou nt er -c l ai m ant- A pp el l ee , v. L MA UN DE R WR I T I NG AG E NC Y, I N C. ; CH RI STO PH ER L. K I TTLER, T hi rd-party- defe nd ant- A p p el l an t s.

A pp ea l s f

rom the U ni t ed S t at es D i stri ctC ou rt f orthe D i s tr i c tof

M ont a na R i c ha r d F . C e bul l , C hi e f D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d J ul y 12, 2010 S e a tt l e , W a s hi ngt on B efo re: R E IN H A R D T , G R A B E R , an d P A E Z , C i rcu i tJu d g es. D ef endantF i rs tS t at e B ank o f E l do ra do appeal s var i ou s i ss ues dec i ded u n fa v o ra b ly to itin co n n ec ti o n w ith P lain ti ff F ro n tl in e P ro ce ss in g C o rp o ra ti o n ’s c l a i m s a ga i ns tD e f

e nda nta nd D e f

e nda nt ’ s c ount e r c l a i m s a ga i ns tP l a i nt i f f a nd a ga i ns tT hi r d- P a r ty D e f e nda ntC hr i s t ophe rK i tt l e r . P l a i nt i f f c r os s - appe a l s the di stri ctcourt ’ s r ef

usal t o aw ar d i tatt orney f ee s, the det erm i nat i on thatP l ai nt i ff had3

w ai v ed b y co n tracti t s ri g h tt o a j u ry tri al , an d th e d i rect ed v erd i ctag ai n st P l a i nt i f f’ s ba d f a i th c l a i m . W i th the e xc e pt i on of the di s tr i c tc our t ’ s di s m i s s a l of D e f e n d a n t ’ s i n d e mn i f

i c a t i o n c o u n t e r c l a i ms w i th p r e j u d i c e , w e a f

f i rm. I. P l a i n ti ff’s C o u n t IIA W e r e v ie w d e n o v o th e d is tr ic t c o u r t’s in te rp r e ta tio n o f th e c o n tr a c t. D a v is v . Y a g e o C o rp ., 4 8 1 F .3 d 6 6 1 , 6 7 3 ( 9 th C ir . 2 0 0 7 ) . T h e d is tr ic t c o u r t d id n o t e rrin c onc l udi ng tha tthe c ontr a c tdi d nota uthor i z e the de duc t i ons de s c r i be d i n C ount I I A . A lth o u g h s e c tio n 6 .3 ( b ) p e rm its D e f e n d a n t to s u s p e n d p a y m e n ts e n tir e ly w he n P l a i nt i f

f i s i n de f aul ton a ny m a t e r i a l obl i ga t i on, the c ontr a c tdoe s not a u th o r iz e D e f

e n d a n t u n ila te r a lly to w ith h o ld d e d u c tio n s f r o m th e m o n th ly s e tt l e m e nt s a s af

orm of s e l f - he l p. W e r evi ew for abu se of di sc re t i on a di stri ctcourt ’ s i m po si t i on of a c as ed i sp o si t i v e san ct i o n . C o n n . G en . L i fe In s. C o . v . N ew Im ag es o f B ev erl y H i l l s, 48 2 F . 3d 10 91 , 10 96 (9th C i r. 20 07 ). T he di stri ctcourtcorr ec t l y det erm i ned that D ef endantvi ol at ed an order t o p rovi de a c i t at i on t o con tra ctual autho ri ty f or ea ch d is p u te d d e d u c tio n w h e n D e f e n d a n t p r o v id e d th e s a m e o v e r - in c lu s iv e b o ile rp la te c i t a t i on f ore ve ry de duc t i on. S om e of the c i t e d pr ovi s i ons ha d no pos s i bl e be a r i ng o n p a r tic u la rd e d u c tio n s , a n d th e u n if o rm ity o f th e c ita tio n p r e

ju d ic e d P la in tif

f in4

pur s ui ng i t s c l a i m s . T he di s tr i c tc our tdi d notabus e i t s di s c r e t i on by s a nc t i oni ng D e f e n d a n t. W e r e vi e w f

orc l e a re rr oradi s tr i c tc our t ’ s f a c tua l f i ndi ngs . B e r t e l s e n v. H a rr i s , 537 F . 3d 1047, 1056 ( 9th C i r . 2008) . T he di s tr i c tc our ti m pl i c i t l y f ound th a t th e $ 1 6 0 ,0 0 0 w e n t in to ar e s e rv e o th e rth a n th e W a d e C o o kR e s e rv e w h e n it a w a r de d the s um a s da m a ge s unde rboth C ount s I I A a nd I V . T ha ti m pl i c i tf i ndi ng w a s notc l e a r l y e rr one ous , a s D e f e nda ntha s c i t e d no e vi de nc e pr ovi ng tha tthe $1 60 , 00 0 w enti nt o the W ade C oo k R es erve. II. P l a i n ti ff’s C o u n t IIB D e f e nda ntc ont e nds tha tthe f unds di s put e d i n C ountI I B w e r e ge ne r a t e d by i nc r e a s i ng the M e r c ha ntD i s c ountR a t e s . A c c or di ng t o the c ontr a c t , the M e r c ha nt D i sc ou ntR at es generat ed the M er chantD i sc ou ntA m ou nt s, w hi ch const i tut ed P r o g r a m P a r tic ip a tio n F e e s . O n d e n o v o r e v ie w , D a v is , 4 8 1 F .3 d a t 6 7 3 , w e h o ld th a t s e c tio n 6 .3 ( b ) o f

th e f u lly in te g r a te d c o n tr a c t d id n o t au th o r iz e D e f e n d a n t to d e d u c t r e s e rv e s f

r o m P r o g r a m P a r tic ip a tio n F e e s . W e r e vi e w f

orabus e of

di s c r e t i on adi s tr i c tc our t ’ s de c i s i on t o a l l ow a m e ndm e ntof

ac om pl a i nt . M a de

j av. O l y m pi c P a c ke r s , L L C , 310 F . 3d 628, 635 (9th C i r. 20 02 ). D ef

endantsuff

er ed no prej ud i ce w hen the di stri ctcourtperm i tt ed th e am en d m en tw h i l e d en yi n g D efen d an t ’ s req u estt o su b m i tex p ertt est i m o n y,5

b e c a u s e th e r e s o l u t i o n o f th i s c l a i m d o e s n o ttu rn o n e x p e r tt e s t i m o n y . As expl ai ned abo ve, the w i thh ol di ng s a ti ss ue i n C ou ntII B brea ched the contra ct w he the rornotthe f

unds w e r e ge ne r a t e d f

r om the M e r c ha ntD i s c ountR a t e s . I n the abs e nc e of

pr e j udi c e , w e hol d tha tthe di s tr i c tc ourtdi d notabus e i t s di s c r e t i on by p e rm ittin g a m e n d m e n t o f th e c o m p la in t. I I I . D e f

e n d an t ’ s R ac k e t e e r i n g- I n f l u e n c e d an d C or r u p t O r gan i z at i on ( " RI CO " ) T h i r d - P a r t y Cl a i ms W e r evi ew de no vo cl ai m s c on ce rni ng the ri gh tt o d ue process . B ucki ng ham v. S ec ’ y of U . S . D ep’ tof A gri c. , 60 3 F . 3d 10 73 , 10 80 (9th C i r. 20 10 ). T he di stri ct c our tdi d notvi ol a t e D e f e nda nt ’ s due pr oc e s s r i ght s by appl y i ng the f i ndi ngs of

the b e n c h tr ia l la te rto is s u e s o n s u m m a ry ju d g m e n t. D e f e n d a n t h a d af

u ll a n d f a ir o p p o r tu n ity to litig a te th e c la im s s e t f o rb e n c h tr ia l a n d th e is s u e s th e r e in . W e r e vi e w de novo c l a i m s c onc e rni ng the r i ghtt o aj ury tr i a l . P a l m e rv. V a ld e z , 5 6 0 F .3 d 9 6 5 , 9 6 8 ( 9 th C ir . 2 0 0 9 ) , c e r t. d e n ie d , 1 3 0 S . C t. 1 2 8 2 ( 2 0 1 0 ) . D ef endantdi d n otappeal the di stri ctcourt ’ s dec i si on t o schedul e the bench tri al before the j ury tri al . T he prop ri ety of thatdeci si on m ayhave been debat abl e, cf . B ea con T heatre s, Inc. v. W es t ov er , 35 9 U . S . 50 0, 51 0-11 (195 9) (hol di ng thatl egal c l a i m s m us tbe tr i e d be f or e e qui t abl e c l a i m s e xc e pt" unde rthe m os ti m pe r a t i ve c i r c um s t a nc e s " ) , butonc e the be nc h tr i a l t ook pl a c e , the c our t ’ s f i ndi ngs bound the6

l a t e rpr oc e e di ng. " R e c ogni t i on tha ta n e qui t abl e de t e rm i na t i on c oul d ha ve c ol l a t e r a l - e s t oppe l e f

f e c ti n as ubs e que ntl e ga l a c t i on w a s the m a j orpr e m i s e of th[ e ] C our t ’ s de c i s i on i n B e a c on T he a tr e s . " P a rkl a ne H os i e ry C o. v. S hor e , 439 U . S . 322, 333 ( 1979) . O urdi c tum i n L a L onde v. C ounty of R i ve r s i de , 204 F . 3d 94 7, 95 3 n . 10 (9th C i r. 20 00 ), do es no tcom pel a di ff er entre sul t . T he di stri ctcourt di d note rrby appl y i ng i t s be nc h tr i a l f i ndi ngs t o gr a nts um m a ry j udgm e nton D efen d an t ’ s R IC O cl ai m s. W e r e vi e w f

orabus e of

di s c r e t i on adi s tr i c tc our t ’ s appl i c a t i on of the l a w of th e c a s e d o c tr in e . C o n t’l I n s . C o . v . F e d . E x p r e s s C o rp ., 4 5 4 F .3 d 9 5 1 , 9 5 4 ( 9 th C i r. 2 0 0 6 ). T h e d i stri ctco u rtab u sed i t s d i scret i o n b y i n v o k i n g l aw o f th e case w i th r e s pe c tt o f

a l s i ty , r e l i a nc e , a nd da m a ge s . I d. T he be nc h tr i a l f i ndi ngs di d not e x p lic itly o rb y n e c e s s a ry im p lic a tio n d e c id e th a t th e s ta te m e n ts w e r e " in c id e n t to a n e s s e n tia l p a r t o f

th e s c h e m e ," B r id g e v . P h o e n ix B o n d & I n d e m . C o ., 1 2 8 S . C t. 2 1 3 1 , 2 1 3 8 ( 2 0 0 8 ) ( i n t e rn a l q u o t a t i o n ma rk s o mi tt e d ) ; th a t" th e a l l e g e d RI CO vi ol at i on w as the prox i m at e c ause of the pl ai nt i ff’ s i nj ury, " A nza v. Idea l S t ee l S u p p ly C o rp ., 5 4 7 U .S . 4 5 1 , 4 5 3 ( 2 0 0 6 ) ; o rth a t D e f e n d a n t h a d b e e n " in

ju r e d in [i t s] bu si ness or prop erty by the cond uctconst i tut i ng the vi ol at i on , " S edi m a, S . P . R . L . v . Im rex C o . , 4 7 3 U . S . 4 7 9 , 4 9 6 (1 9 8 5 ). H o w ev er, th e erro r w as h arm l ess be c a us e the gr a ntof

s um m a ry j udgm e ntw a s pr ope r . S e e G or don v. V i r tum undo,Co u n s e l s t a t e d a to r a l a r g u me n tth a tth e u n p a i d c l a i ms w e r e th e o n l y RI CO 1 da m a ge s a nd, i n a ny e ve nt , othe rpos s i bl e the or i e s of da m a ge s m e nt i one d i n the b r ie f in g f a il a s w e ll. 7 I nc . , 575 F . 3d 1040, 1047 ( 9th C i r . 2009) ( hol di ng tha tac ourtm a y a f f i rm agr a nt of sum m ary j ud gm enton any groun d sup po rt ed by the re cord). W e r e vi e w de novo adi s tr i c tc our t ’ s gr a ntof s um m a ry j udgm e nt . L ove l l v. C ha ndl e r , 303 F . 3d 1039, 1052 ( 9th C i r . 2002) . S um m a ry j udgm e nti n f a vorof Pl a i n t i f f w a s p r o p e rb e c au s e n o r a t i o n a l j u r o rc o u l d f i n d th a tth e a l l e g e d RI CO vi ol a t i ons pr oxi m a t e l y c aus e d the unpa i d i ns ur a nc e c l a i m s . A tthe be nc h tr i a l , the 1 di s tr i c tc our tf

ound tha tP l a i nt i f

f di d notunde r - r e por tm e r c ha nt s ortr a ns a c t i on vol um e , norf

a i l t o pa y i ns ur a nc e pr e m i um s . T hus , a ny i ns ur a nc e l os s e s w e r e not caused di re ct l y by K i tt l er ’ s a ct i on s. F urtherm ore, no ra t i on al j ury c ou l d fi nd that i nd uci ng D ef

endantt o ent erand rem ai n i n the contra ctprox i m at el y c ause d D e f e nda nt ’ s l os s e s . S e e H ol m e s v. S e c . I nve s t orP r ot . C orp. , 503 U . S . 258, 273 (199 2). I V . De f

e n d a n t ’ s F r a u d Co u n t e r c l a i ms W e r e vi e w f

orc l e a re rr oradi s tr i c tc our t ’ s f a c tua l f i ndi ngs a nd de novo a d istrict co u rt’s leg al co n clu sio n s. B er telsen , 5 3 7 F .3 d at 1 0 5 6 . T h e d istrict co u rt’s i m p l i ci tfi n d i n g th atn o p ersu asi v e ev i d en ce w as p resen t ed t o d em o n strat e fal si ty, r e c e ip t, o re f

f e c t w a s n o t c le a r ly e rr o n e o u s . T h e d is tr ic t c o u r t w a s e n title d to8

di s c ountthe c r e di bi l i ty of R on R e a vi s , a nd M i c ha e l C onn t e s t i f i e d tha the di d not know i f the doc um e nt s tha the s a w ha d be e n s e ntt o D e f e nda nt . F ur the rm or e , the di s tr i c tc our tdi d note rri n c onc l udi ng tha tt e s t i m ony aboutw he n D e f e nda nt l ea rned of the fa l si ty of the do cum ent s di d n otsupp orta f i nd i ng of detri m ent al r e lia n c e . T he di stri ctcourtdi d n otcl ea rl y e rri n d i sr egar di ng the pend i ng i nsurance c l a i m s a s da m a ge s be c aus e , a tthe t i m e of tr i a l , the i ns ur e rha d notde ni e d the cl ai m s. A ny al l eged err or i n d i sr egar di ng the costof the no n-fr aud l i t i gat i on as pot e nt i a l da m a ge s w oul d ha ve be e n ha rm l e s s . T he a l l e ge d f r aud di d not p ro x i m at el y cau se th e co n tractsu i t . S ee C i ty o f C h i cag o v . M i ch . B each H o u s. C o o p ., 6 9 6 N .E .2 d 8 0 4 , 8 1 1 ( I ll. A p p . C t. 1 9 9 8 ) . T h e d is tr ic t c o u r t d id n o t c le a r ly e rri n f i ndi ng tha tthe di s t or t i on of the ba r ga i ni ng pr oc e s s di d notc ons t i tut e f r aud d a m a g e s . C f

. G ia m m a n c o v . G ia m m a n c o , 6 2 5 N .E .2 d 9 9 0 , 1 0 0 1 ( I ll. A p p . C t. 1 9 9 3 ) ( a c c e p tin g s u c h d a m a g e s u n d e rth e " u n u s u a l c ir c u m s ta n c e s " o f th e c a s e ) . T he di s tr i c tc our tdi d notc l e a r l y e rri n f i ndi ng tha tthe a l l e ge d f r aud di d not p r o x im a te ly c au s e th e F D I C s a n c tio n . B e c au s e th e d is tr ic t c o u r t d id n o t e rrin fi n d i n g th atth e l o sses al l eg ed b y D efen d an tw ere n o treco v erab l e frau d d am ag es, any e rr or i n the di stri ctcourt ’ s abstra ctconcl usi on abou tthe ci rc um st ance s und er9

w hi ch the ov er st at em entof a c om pany’ s f i nanci al po si t i on coul d d am age a reci p i en tw o u l d h av e b een h arm l ess. V . P reju d g m en t In terest W e r evi ew for abu se of di sc re t i on an aw ar d o f pre j ud gm enti nt er es t . O ak H arbo r F re i gh tL i nes, Inc. v. S ea rs R oebu ck & C o. , 51 3 F . 3d 94 9, 95 4 (9th C i r. 2008) ; s e e a l s o F r e und v. N y c om e d A m e r s ha m , 347 F . 3d 752, 762 ( 9th C i r . 2003) (hol di ng thatfe dera l l aw go verns the st andard of revi ew i n d i vers i ty c as es ). U nd er I l l i noi s l a w , agood- f

a i th di s put e " w oul d notpr e c l ude a n a w a r d [ of pr e j udgm e nt i nt e r e s t ] f

orac l a i m br oughtunde raw r i tt e n i ns trum e nt . " M i c h. A ve . N a t ’ l B a nk o f C h i. v . E v a n s , I n c ., 5 3 1 N .E .2 d 8 7 2 , 8 8 1 - 8 2 ( I ll. A p p . C t. 1 9 8 8 ) . T he di s tr i c tc our tdi d notabus e i t s di s c r e t i on i n a w a r di ng pr e j udgm e nt i nt e r e s ton C ountI I A . T he di s c r e pa nc y be tw e e n the da m a ge s c l a i m e d i n the c om pl a i nta nd the da m a ge s a w a r de d— he r e , 21% of the da m a ge s c l a i m e d— i s not so grea tas t o m ake the dam ages i ncapabl e of e as y c al cul at i on . C f. L yon M et al P r ods . , L . L . C . v. P r ot . M ut . I ns . C o. , 747 N . E . 2d 495, 510 ( I l l . A pp. C t . 2001) (hol di ng thatdam ages w er e notcapabl e of e as y c al cul at i on w hen d i ff er ence be tw e e n the da m a ge s a w a r de d a nd the da m a ge s c l a i m e d w a s 92% of the a m ount c la im e d ) .10

N ordi d the di s tr i c tc our tabus e i t s di s c r e t i on by a w a r di ng pr e j udgm e nt i nt er es ton C ou nt s I IB and IV . T he am ou nt s of dam ages on ea ch coun tw er e s pe c i f i e d i n the c om pl a i nt

— de s c r i be d a s adol l a rf i gur e f orC ountI I B a nd a s the e n t i r e b a l a n c e o f

ap a r t i c u l a ra c c o u n th e l db y De f e n d a n tf o rC o u n tI V. V I . De f

e n d a n t ’ s I n d e mn i f

i c a t i o n Co u n t e r c l a i ms W e r e vi e w de novo the di s tr i c tc our t ’ s l e ga l c onc l us i ons . B e r t e l s e n, 537 F . 3 d at1 0 5 6 . D efen d an t ’ s i n d em n i fi cat i o n co u n t ercl ai m s w ere u n ri p e b ecau se they " re st [e d] up on cont i ng entfuture e vent s" thatm i gh tno thave occurre d as ant i ci pat ed or atal l . T exas v. U ni t ed S t at es , 52 3 U . S . 29 6, 30 0 (19 98 ) ( i nt ernal quot a t i on m a rks om i tt e d) . A tthe t i m e of the tr i a l , D e f

e nda ntha d noty e tr e a l i z e d a l os s on the pe ndi ng i ns ur a nc e c l a i m s , a nd tha tl os s m i ghtne ve rha ve oc c urr e d. T he di s tr i c tc our tl a c ke d s ubj e c t - m a tt e rj ur i s di c t i on a nd w a s r e qui r e d t o di s m i s s the c l a i m s r a the rtha n a dj udi c a t e the m . R i c ha r ds on v. C i ty of H onol ul u, 124 F . 3d 1 1 5 0 , 1 1 6 0 ( 9 th C ir . 1 9 9 7 ) . T h e d is m is s a ls s h o u ld h a v e b e e n w ith o u t p r e ju d ic e . S e e A s s ’ n of

A m . M e d. C ol l s . v. U ni t e d S t a t e s , 217 F . 3d 770, 785 ( 9th C i r . 2000) (m od i fy i ng the di sm i ss al of an un ri pe cl ai m t o a di sm i ss al w i tho utprej ud i ce because e vent s " m ayhave prog re ss ed . . . t o a po i ntw here pl ai nt i ff s’ cl ai m s a re ri pe") . W e r em and for the di stri ctcourtt o m od i fyi t s di sm i ss al s s o thatthey a re w ith o u t p r e

ju d ic e .11

V I I . P l ai n t i f

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i t s R i gh t t o Ju r y T r i al W e r evi ew de no vo a party’ s e nt i t l em entt o a j ury tri al . P al m er , 56 0 F . 3d at 968. T he di s tr i c tc our tc orr e c t l y de t e rm i ne d tha tP l a i nt i f f ha d w a i ve d i t s r i ghtt o a j ury tr i a l on a l l i t s c l a i m s . S e c t i on 14. 8 of the c ontr a c ti s br oa dl y w or de d, a nd n o th in g its te x t s u g g e s ts th a t it is lim ite d to d is p u te s a r is in g u n d e rth e c o n tr a c t. M or e ove r , e ve n c ons trui ng the w a i ve rna rr ow l y , the j ury - tr i a l w a i ve rpr ovi s i on c a nnotbe c ons true d a s be i ng i m pl i c i t l y l i m i t e d by the pr e c e di ng s e nt e nc e . P a r a c or F in ., I n c . v . G e n . E le c . C ap ita l C o rp ., 9 6 F .3 d 1 1 5 1 , 1 1 6 6 n .2 1 ( 9 th C ir . 1 9 9 6 ) . P l a i nt i f f w a i ve d the i s s ue w he the rthe j ury - tr i a l w a i ve rw a s know i ng a nd vol unt a ry by notr a i s i ng the i s s ue i n i t s ope ni ng br i e f on c r os s - appe a l . W a r f i e l d v. A l ani z, 56 9 F . 3d 10 15 , 10 28 n. 9 (9th C i r. 20 09 ). V I I I . P la in t if

f’ s B a d - F a it h C la im W e r e vi e w de novo adi s tr i c tc our t ’ s gr a ntof di r e c t e d ve r di c t . A m a r e l v. C o n n e ll, 1 0 2 F .3 d 1 4 9 4 , 1 5 1 7 ( 9 th C ir . 1 9 9 7 ) . T h e d is tr ic t c o u r t d id n o t e rrin concl ud i ng thatno re as on abl e j ury c ou l d d ec i de on thi s r ec ord thatD ef endantac t ed in b a d f a ith b y d e n y in g a ll ap p lic a tio n s f r o m P la in tif

f b e g in n in g in A p r il 2 0 0 1 . P l a i nt i f f’ s c i t e d e vi de nc e e s t abl i s he s onl y tha tD e f e nda nta c c e pt e d appl i c a t i ons f r om a nothe rc om pa ny i n the m onths l e a di ng up t o A pr i l 2001, nottha tD e f e nda nt c o n tin u e d to d o s o a f

te rD e f e n d a n t b e g a n w in d in g u p its p r o g r a m .12

U nd erIl l i no i s l aw , there i s no g oo d-fa i th d uty t o exerci se contra ctual di s c r e t i on r e a s onabl y unl e s s the c ontr a c tgr a nt s di s c r e t i on. M i d- W e s tE ne r gy C o n s u lta n ts , I n c . v . C o v e n a n t H o m e , I n c ., 8 1 5 N .E .2 d 9 1 1 , 9 1 6 ( I ll. A p p . C t. 2004) . T hus , the di s tr i c tc our tdi d note rrbyc onc l udi ng tha ti m pr ope rw i thhol di ng o f f u n d s a n d m is r e p r e s e n ta tio n a s to th e r e g u la to ry r e q u ir e m e n ts f o rr e s e rv e s c o u ld no tsupp orta bad-f

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u n d e rs ta te la w , M ille rv . S a f e c o T itle I n s . C o ., 7 5 8 F .2 d 3 6 4 , 3 6 9 ( 9 th C ir . 1 9 8 5 ) . T h e d is tr ic t c o u r t d id n o t e rrb y r e f u s in g to a w a r d a tto rn e y f e e s u n d e rth e c o n tr a c t. B oth P l a i nt i f

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f by p r e v a ilin g o n th r e e c o n tr a c t c la im s a n d D e f e n d a n t b y a v o id in g s ig n if ic a n t liab ility o n o th er co n tractcl ai m s, o n th e fi rsto f w h i ch P l ai n t i ff cl ai m ed d am ag es i n ex cess of $5 m i l l i on. S e e P e l e t on, I nc . v. M c G i ve rn’ s I nc . , 873 N . E . 2d 989, 995 ( I l l . A pp. C t . 2007) ( a f

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e e s w he n " e a c h s i de pr e va i l [ e d] on a s i gni f i c a nti s s ue " ) ; s e e a l s o R a f f e l v. M e da l l i on K i t c he ns of M i nn. , I nc . , 139 F . 3d 11 42 , 11 47 (7th C i r. 19 98 ) ( af fi rm i ng deni al of contra ctual att orney f ee s und er Il l i no i s l aw w hen the pl ai nt i ff w on dam ages bu tthe defendantavoi ded g re at er d a m a g e s ) . A F F IR M E D ; R E M A N D E D w ith in stru ctio n s to d ism iss D ef en d an t’ s in d e m n if ic a tio n c o u n te r c la im s w ith o u t p r e ju d ic e .