In the

United States Court of Appeals

For the Seventh Circuit

Nos. 10-3278 & 10-3475

PETER DENIL and GERALD NARDELLA,

Plaintiffs-Appellants,

Cross-Appellees,

v.

DEBOER, INC., et al.,

Defendants-Appellees,

Cross-Appellants.

Appeals from the United States District Court

for the Western District of Wisconsin.

No. 09-cv-470-bbc—Barbara B. Crabb, Judge.

ARGUED APRIL 1, 2011—DECIDED MAY 13, 2011

Before EASTERBROOK, Chief Judge, and BAUER and

EVANS, Circuit Judges.

EASTERBROOK, Chief Judge. Ronald DeBoer started a

trucking business, deBoer Transportation, in 1967. He

and other members of his family managed it for 40 years,

but by 2007 he wanted to sell the business and retire.
2 Nos. 10-3278 & 10-3475

(There were then three affiliated firms: deBoer, Inc.;

deBoer Transportation Inc.; and deBoer Capital Associates Inc.; we refer to them collectively as deBoer.) After

one potential sale fell through, Peter Denil and Gerald

Nardella proposed to take over management of the business and prepare it for sale to an outside investor within

five years. Ronald DeBoer was receptive. The parties

signed two contracts and negotiated toward a third.

The first contract was an employment agreement. It

made Denil the CEO of deBoer and Nardella the executive vice president of operations. This contract took effect

in October 2008; Denil and Nardella assumed their positions immediately. deBoer held the right to discharge

Denil and Nardella with or without cause, but if the

discharge was without cause they were entitled to

extra payments.

The second contract, a stock-purchase agreement that

also was signed in October 2008, called for Denil to buy

4% of deBoer’s stock for $500,000, and for Nardella to

buy 2% for $250,000. The closing date was April 15, 2009,

or whenever the third contract was signed, if earlier. The

parties agreed that failure to purchase the stock by

April 15, 2009, would be “cause” for terminating Denil’s

and Nardella’s employment. They also agreed that the

signing of the third contract—a buy-sell agreement,

common when outsiders acquire shares of family firms

or other closely held businesses—would be a condition

precedent to the obligation to purchase the 4% and 2%

interests. The stock-purchase contract contained a clause

in which the parties promised to use their best efforts

to conclude the buy-sell contract.
 Nos. 10-3278 & 10-3475 3

The buy-sell contract was never signed, however. The

goal of this negotiation was to agree on how the purchase price would be allocated if deBoer could be sold

to an outside buyer. The parties agreed that all equity

investors would receive the price they had paid for

their shares, plus interest, and that 75% of any surplus

would be distributed to the investors according to

share ownership. The remaining 25% of any surplus was

to go to members of the management team. But which

members, and how much to each? That proved to be

the sticking point. Ronald DeBoer wanted a schedule;

Denil and Nardella, however, insisted that Denil have

sole discretion to decide who received how much from

this surplus pool. Ronald DeBoer worried that Denil

would use this authority to direct the whole amount

to himself and Nardella, even though they would own

only 6% of the stock. There were some other open

issues, but we need not discuss them.

When April 15, 2009, arrived and the negotiations for

the buy-sell contract remained stalled, Denil and

Nardella might have purchased their 4% and 2% interests

anyway, and thus secured their positions, or they might

have tendered the $750,000 into an escrow. They took

neither step, and deBoer fired them, paying the benefits

that the employment contract specified for a termination with cause. They replied with this suit under the

diversity jurisdiction, seeking reinstatement (or at least

the benefits for termination without cause), the opportunity to invest in deBoer, and damages for what they

call Ronald DeBoer’s tortious interference with the two

completed contracts. deBoer filed a counterclaim, seeking
4 Nos. 10-3278 & 10-3475

damages for the cost of issuing, and then undoing, a

dividend that the firm had paid in anticipation of

the $750,000 investment. Wisconsin law controls. The

district court granted summary judgment and dismissed

the suit, rejecting both sides’ claims. 2010 U.S. Dist.

LEXIS 99404 (W.D. Wis. Sept. 22, 2010).

Plaintiffs’ principal contention is that deBoer did not

fulfil its promise to use “best efforts” to reach agreement

on a buy-sell contract. Had this contract been signed,

plaintiffs insist, they would have purchased their shares

by April 15, 2009, and would today be both investors and

managers. One difficulty with this argument is that

plaintiffs treat the best-efforts clause as a form of agreement to agree, which deBoer violated by not acceding

to their position. Yet agreements to agree are not enforceable in Wisconsin. Dunlop v. Laitsch, 16 Wis. 2d 36, 113

N.W.2d 551 (1962); see also Skycom Corp. v. Telstar Corp.,

813 F.2d 810 (7th Cir. 1987) (an “agreement in principle”

is not enforceable in Wisconsin; only a completed

contract containing essential specifics is binding).

A best-efforts clause usually requires one party to

make appropriate investments for another’s benefit—for

example, a distributor bound to use best efforts to

promote a line of products must advertise them, hawk

them to retailers, and so on. This is not at all what “best

efforts” means when it comes to negotiation. Metropolitan

Ventures, LLC v. GEA Associates, 291 Wis. 2d 393, 717

N.W.2d 58 (2006), held that a promise to use “best efforts” to persuade another party to adhere to a partnership agreement was satisfied by earnest requests; it
 Nos. 10-3278 & 10-3475 5

did not require one side to sacrifice its own interests

in the process.

If the best efforts undertaking is not an agreement

to agree, what might it be? The contract does not define

the phrase, and the parties themselves may not have

had any clear idea; they have not proffered any communications exchanged during the negotiations. Maybe

they were thinking along the lines of a duty that labor

and management have under federal labor law: to

engage in good-faith bargaining toward a contract

with respect to those issues that employers must

discuss with unions. First National Maintenance Corp. v.

NLRB, 452 U.S. 666 (1981). This duty requires an exchange of proposals and obliges each side to consider

the other’s requests seriously, and to compromise when

possible, but it does not compel either side to accept the

other’s proposals. Golden State Transit Corp. v. Los Angeles,

475 U.S. 608 (1986). If that’s the meaning of this “best

efforts” clause, then both sides performed as required.

They exchanged many proposals, suggested amendments, made counterproposals, and so on; the negotiations lasted for six months. The fact that one final disagreement—how to divide 25% of any surplus on sale

of the business—could not be bridged does not imply

that either side failed to bargain in good faith. deBoer

did not have to accept plaintiffs’ final proposal, any

more than plaintiffs had to accept deBoer’s.

Like the district court, we conclude that neither side

violated the best-efforts clause of the stock purchase

agreement. This, plus the absence of a signed buy-sell
6 Nos. 10-3278 & 10-3475

agreement, means that the stock-purchase agreement

did not require plaintiffs to buy 6% of deBoer’s stock.

Plaintiffs say that it also means that they were entitled

to keep their managerial jobs, or at least be paid the

compensation due when fired without cause. Yet the

employment contract does not contain the same condition precedent as the stock-purchase contract. The employment contract made plaintiffs’ managerial positions

contingent on their buying stock no later than April 15,

2009. They were free to buy the stock, with or without

a buy-sell agreement; they just chose not to do so.

They agreed that they could be let go for cause if they

did not pay up by April 15, 2009. Having chosen not

to pay, they can’t complain about the termination of

their managerial positions. Ronald DeBoer wanted to

ensure that the new managers’ interests were aligned

with those of other shareholders. Plaintiffs were not

entitled to retain their positions without making the

investment essential to that end.

Arguments about tortious interference with contract

are pointless. No one “interfered” with any contract;

deBoer simply enforced the contracts it had negotiated.

Plaintiffs devote a lot of space to arguing that defendants

did not act in good faith, by which they mean that

deBoer took full advantage of its rights under the contracts. It was entitled to do that. “Good faith” in contract

law means honesty plus refraining from opportunistic

conduct that exploits the other side’s sunk costs. See

Market Street Associates L.P. v. Frey, 941 F.2d 588 (7th Cir.

1991); Continental Bank, N.A. v. Everett, 964 F.2d 701 (7th

Cir. 1992); PSI Energy, Inc. v. Exxon Coal USA, Inc., 17 F.3d
 Nos. 10-3278 & 10-3475 7

969 (7th Cir. 1994); Venture Associates Corp. v. Zenith Data

Systems Corp., 96 F.3d 275 (7th Cir. 1996). An actor who

sulks in his dressing room mid-way through the production of a movie is behaving opportunistically, because

the producer has spent a great deal on the film and

does not want to start over with a new actor. deBoer did

not take advantage of plaintiffs’ sunk costs; instead,

plaintiffs volunteered to start working at deBoer

knowing that the buy-sell contract had not been signed.

They could have protected themselves by waiting, and

they can’t use their own decision as the springboard

for insisting that deBoer capitulate to their contractual

proposals.

We’re mystified by plaintiffs’ arguments about the

dividend and their contention that deBoer failed to turn

over all financial information. If plaintiffs were saying

that the dividend diluted the value of their (potential)

6% interest, so that they should not be required to buy

the stock, they might have a point; likewise if they

argued that the financial information made the stock

purchase less attractive. But plaintiffs have not argued

that these events excuse them from performing; instead

they still wanted to become investors. The dividend

and belated disclosure do not support the kind of relief

that plaintiffs seek.

As for the cross-appeal: deBoer jumped the gun by

distributing the dividend before plaintiffs had made

their investment. People who count their chickens

before they hatch have only themselves to blame. The

stock-purchase agreement entitled Denil and Nardella to
8 Nos. 10-3278 & 10-3475

postpone their investment until after a buy-sell agreement was in place. When deBoer balked at plaintiffs’

proposals for the buy-sell agreement, they were entitled

to walk away without investing. They did not violate

any of deBoer’s rights by doing so (and, as we have

observed already, plaintiffs were as free to reject Ronald

DeBoer’s proposals for the buy-sell agreement as he was

to reject theirs). Nothing in the stock-purchase agreement requires Denil and Nardella to compensate

deBoer for expenses incurred in anticipation of a $750,000

investment or in returning to the status quo ante if the

investment did not occur. The cross-appeal strikes us as

nothing but an excuse to file a sur-reply brief to have

the last word. If we had been asked, we would have

dismissed the cross-appeal and rejected the extra brief

before the judges had been forced to waste time reading

it. See Aventis Pharma S.A. v. Hospira, Inc., 2011 U.S.

App. LEXIS 6020 (Fed. Cir. Mar. 24, 2011).

AFFIRMED

5-13-11