T he H ono rabl e Char l es N. Cl eve rt, Chi efJ udge ofthe  Uni t ed S t at es Dis t ri c tCourt f or the Eas t er n Di s t ri c tofW i s c ons i n, s i t t i ng by des i gna t i on. 

## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 10

- 2778 T ROVARE C APIT AL G R OUP, LLC , P laint if f-A ppell ant, v.
S IMK INS I NDUSTRIE S, I NCO RPORATE D , et a l., D efend a nts-A pp ellees.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 08 C3133

—Robert W . G ettleman, Judg e.
A RGUED A PRI L 12, 2011

— D ECI DE D J UL Y 20, 2011

Befo re K ANNE an d E VANS, C ircu it Judges , a nd C LEV ERT, D i s t r i ctJudg e .  K ANN E , Cir cu i tJudg e . T r o v a r e Ca pi t a lGr o up , LL C ( “ Tr o v a r e ” ) wa s i nt e r e s t e d i n b uy i ng the a s s e t s a nd r eal2 N o. 10

- 2778 proper ti es ofS i m ki ns Ind ustr i es, Inc. , and i ts affi l i ate s H ar vard Fol ding Box Co. , Inc. ; Li nd en- Sum m erReal ty Co. , Inc. ; and So uth U ni on Com pany, Inc. ( col l ecti vel y, th e “De fen dan ts ”)
. The pa r ti es e xecute d a l et te r o fi nt en t (“L O I”) in w h ich th ey u n d er to ok t o n eg ot iat e a sa le be f o r e a spe ci fi ed dat e. Neg o ti at i o ns f al te r ed, a nd the sal e nev erto ok pla ce. Tro var e s ub se q uentl y s ued to re cove r a “ bre ak- up fee” it cl ai m ed w as owed i t under th e LOI
. The di stri ctc o ur t det er m i ne d tha t no b r ea k

- up fee obli gation h ad b e e n triggered and grante d sum m ary j udg m en t i n the De fenda nt s’ f av o r . Be ca us e g enui ne i ssues o fm ate ri alfactper si st as to w hetheractual nego ti ations h ad term inated , w e reverse t h e entry of sum m ary j ud gm ent a nd r em and the ca se f orfurtherpro ceedi ngs.

I. B ACK GR OUN D A n abor ted busi ness tr ansact i on underl i es thi s di ver si ty case . In O cto ber20 06, Leon S i m ki ns, co ntro l l i ng shar eho l derf o r the f ami l y - o wned e nt er pr i se s co m pr i singthe Defen dan ts , de ci ded to s el lthe Defendant s’ a ss et s an d re alpro perti es. S i m ki ns eng age d M esi ro w Financi al, Inc. (“M esirow ”) to act a s t h e De fend an ts’ broker. Trova re bec am e interest ed in p urc ha sing th e D efend an ts’ p r op erti es , a nd

— th ro u gh its so le m em b er , Ra n d y C ec ola

— i t co ntacte d M esi ro w to beg i n nego ti ati ons. Trov ar e a nd t h e Defendants exe cuted thei r LO Io n M ay 23, 20 07, set ti ng f or th the i ntenti ons ofbo th par ti es to nego ti ate to w ar d Trova re ’ s purchas e o f the Defe nd ants’ as se ts an d p ro p er ty
. W h ile th e L O I w as p re d om in at ely non-bi nd i ng, i t di d obl i gat e the par ti es to cer tain ter m s.N o. 10

- 2778 3

Paragraph 14 re ad in full : “Ifthe Sel le r or an y o ther s hare- 1 holder ofSel le r breache s paragrap h 13 ofthi s le tt er or the Sel le r pr ov i de s t o Bu yer wr i t t e n no t i c e tha tn e go t i a t i on s t owa r d a defi n iti ve ass et pu rchas e agree m ent are t erm inat ed, then Se l l ers hal l pay Buyera bre akup fee oft wo hundr ed thous and d o lla rs ($2 0 0 ,00 0 ).” Forexam ple , the parti es agre ed i n Para gr aph 13 t o a 90 -d ay ex c lu siv ity p er iod in w h ich th e D efe n d an ts w ou ld pu rs ue a sal e on ly w i th Tro var e. Par agr aph 14 pr ovi ded th a tthe De fe nd a nt s wo ul d o we T r o v a r e a $ 2 0 0 , 000 “b re ak- up fee” i ftheyei therbr eached the excl usi vi ty pe riod orpro vi ded Tro var e wri tte n noti ce o fthei r unil ater al ter m i nati on ofnego ti ati ons. The LOI seta “Term i na- 1 ti on Date” o fS eptem ber30 , 20 07, afterwh i ch nei ther partywould be obl i gat ed to furtherpursue the s al e. The parti es agr eed to use their b est r eas onabl e e ff or ts to f aci l i tat e thei r nego ti ati ons and res p ec ti ve obl i gat i ons. Forexam ple , Tro var e nee ded to co nd u c t d ue di l i gence i nv e s t i g a t i o ns , v a l i da t e the De fe nd a nt s ’ r e l a t i o ns hi ps w i th ke y c l i ents, and sec u re fi nanci ng f orthe pu rchas e. The Defe nd ants eve ntual l y w oul d hav e to provi d e a cces s to th eir r eco rds, custo m er s, and f aci l i ti es to al l ow fo r the due di l i gence i nv es tig ati ons. Both par ti es knew that envi ro nm entalstud i es w oul d be nece ssary and that, i fan i ni ti al( Phase I ) stud y r eco m m ended a m or e in-depth study, a m or e co stl y s eco nd ( Phas e II) stud y would be re q u ire d be for e a n y s ale of th e p ro p er tie s. T h e L O I d id no t, ho we ver, as si g n e i th erpa r tyr es po ns ibi l i tyf o r c o nd u c tin g P h as e II stu d ies o r an y re q u ire d rem ed iat ion s; it l e ftth o s e ma t t e r s t o n e g o t i a t i o n . P a r a g r a p h 9 r e c i t e d s o me4 N o. 10

- 2778 condi ti ons prece dent to t h e co m ple ti on o fthe tr ansac tio n, i n c l u d in g t h e c om p let ion of d u e d ilige n c e in ve st igat i ons to Trov ar e’ s s ati sf acti on, the nego ti ati on o f an A sset P urc ha s e A greem en t (“A PA ”), and Trova re’s re cei pt offi nanci alco m m i tm ents fro m l enders. Shor tl y a fterthe LO Iwas executed, Trov ar e co m ple ted th e Pha se Is tu dy an d pr o m ptly i nform ed M es i r o w and th e D efend an ts th at Ph ase IItesting w ou ld be n e c e ssary f or al l of the Defe nd ants’ proper ti es. A nt h on y B att agl i a, the De fen dan ts ’ CF O, i ndi ca te d tha t a Pha se I Ic o ns ul ta nt w oul d be s el ecte d i n m i d-J une 200 7 a nd t h at studie s w oul d begin i m m edi ate l y there after
. E vid ence al so sugges ted thatthe Defe nd ants m ade furtherr ep resenta
ti ons about conducti ng Ph ase IIstud i es. These re prese ntations n otw ithsta nd ing, th e stu d ies w ere nev er un d erta k en . In f ac t, a n int erna le m ai li ndi ca te d tha t th e Defen dan ts ’ ne g o ti at i on p osi ti o n was tha t Pha se I It es ting wo u l d n o tb e c o mme n c e d u n t i la ft e r a d e a lw a s c o mp leted, despi te Trov ar e’ s cl earst ate m ents that Phase I I stu d ies w ere re qu ired before it w ou ld p roceed a nd before l en der s woul d c o m m i t to fi na nc i ngthe t r an sa ct i o n. A t s om e point duri ng neg oti ati ons, the Defe nd ants be g ani nv es ti g at i ngthe i r o wn po te nt i all i ab i l i ti es ari si ng fro m a sa le, w h ich th ey ca l l ed “e x it c os ts ” o r “t ail ite m s.” T h es e in c lu d ed p en sio n fu n d in g ob liga tio n s, u n ion n ot ificati ons an d n ego ti ati ons, and potent i alenvi ro nm ental re m edi ati on s. The exi t co sts bec am e a co ncer n f or th e Defen dan ts , b utthe e xt en t o fth eir i nfl ue nc e i n the nego ti ati ons i s uncle ar . Trov ar e ar gues that these costs a c t ua l l y po i s o ne d the de a l, l e a di ng the De fe nd a nts t o ter m i nate nego ti ati ons.N o. 10

- 2778 5 F o l l o wi nga J ul y 2 7, 2 00 7, co nfer en ce c al lb etwee n the parti es d iscussing an A PA draft, S i m ki ns co nfe rr ed w ith m em b er s of h is fa m ily re ga rd in g t h e s ale . Th e fa m ily m embe r s, i nc l udi ng S i m k i ns , ex pr es se d co nc erns abou t th e a bil i tyt o c l o se a f av o r ab l e dea la nd di sa g r ee m en t ove r the v al ue s ofthe Defe nd ants’ as set s a nd pote nti al l i ab i l i ti es . As inf o r m at i o n abo utthe f ami l y ’ s co nc erns r ea c h e d C e c o l a , T r o v a r e ’ s c o u n s e l i n f o r me d h i m th a tt he Defe nd ants’ c ounsel, S tev e Gadon, had com m unica ted te r m s co nt r adi ct i ng th ose ag r ee d t o b y S i m k i ns i n the J ul y 2 7 co nfer en ce c all

. Ce co l a be g ant o fea r tha t th e Defe nd ants’ nego ti ating ag ents ei therl acke d author i ty oract ed w i thout Si m ki ns’ s know l edge a nd o ver si ght. Cecol a r equeste d to negotia te dir ectly with Si m ki ns to deter m in e exactl y where nego ti ati ons sto od. S i m ki ns, an g ry o ve r the i r e ns ui ngc o nv er sa ti o n, ha d a n e m ai ls en t to hi s n e g o t i a t o r s o n Aug us t2 , 2 0 0 7 : “ Le o n j us tc a l l ed m e [secretary] and said to tellyou [a c c o u nt an t/ad visor] th athe de fi ni te l y do es no t wantt o go thr o ug h wi ththe Tr o va r e Tr an sa ct i o n. He h as i nt en ti o ns o fo per at i ng w i th hi s chi l dren i n char ge. ” N ei therthi s e m ai lnor Sim kins’ s e xpresse d i ntenti on was co m m unica ted to Tr o v a r e du r i ngthe LO I ’ s p e r i o d. Trov ar e, unaw ar e o fS i m ki ns’ s dec re e, co nti nued i ts att em pts to r each a dealwith the Defendants. A tto rney Gado n r es po nde d t o Trova r e’ s at te m pts b y l i st i ngthe D efe n d an ts ’ n on -n eg ot iab le p oin ts , i n c l u d i n g t h eir r efus alt o perf o r m Ph as e I Ii ns pec ti o ns b efo r e th e cl osing date, thei r re fus alto exte nd the Term i nati on Date ( w hi ch e ffecti vel y pr ecl ud ed the i nspecti ons, gi ven6 N o. 10

- 2778 thei r du ra ti on) , and thei r re fusalto al l ow val i dati on o f th eir custo m err el ati ons unti laftercl osing. S oo n ther eafter, however , G ad on not ed that these dem ands had not b e e n appro v e d b y S i mkins a nd s ug g e s t e d tha tp e r ha ps P h as e II in sp ec tio n s c ou ld p ro c ee d so th at T ro v a r e co u ld m eetl ender- und er w ri ti ng r equi re m ents. Gadon noti fi ed M es irow a nd al lnego ti ato rs thatthe A PA would not be dr afte d unt i la fte r the i ns pec ti o ns wer e co m pl et e an d afterhe ha d a l ender com m i tm ent l ett erfro m Trovar e. Ye t Tr o va r e ha d i nf o r m ed Gado n tha t th e i ns pec ti o ns an d APA wer e pr er equi si te s to l en derc o ns i der at i o n. F ur the r, l a t e r de po s i t i o ns s ho we d tha tS i mkins had a l r e a d y d e t e r mi n e d h e w o u l d r e fus e a n y l e n d e r c o mm i tm ent l ett erand w oul d i nsi st on a cas h tr ansacti on

— a co nd i ti on that Tr ova re had al w ays m ade cl ear w as a d eal-breaker. M es i r o w empl o y ee s ha d b egun que st io ni ngthe si ncer i ty ofthe D efend ants’ nego ti ati ons. One em plo yee sen t an inte rna l em ailasking ifthe D efend an ts w ere goin g t o tel lTro var e that i t wouldn’ t a l l ow d ue di l i gence i nvest i gat ion s and i fthe Defe nd ants w er e g oi ng to p reven t investigat io n s b y every p oten tial bu yer. Bat t a g l i a , th e D e fe n d a n t s ’ C F O , a d mi t t e d l y h a d b e g un avo i ding cal l s from M esi ro w and Tro var e. W hen noti fi ed on Au gust 13, 20 07, o fthe unreso l vabl e t i m i ng and se

que nc i ngi ssues o fthe APA , Ph as e I Ii ns pec ti o ns , a nd l ender com m i tm ent l ett er, ano therM esi ro w em plo yee o bs er ved , “ Thi s i s dea d. ” Lat ere m ai l s pr e- dat i ngthe Term i nati on Date i ncl ud ed si m i l arst ate m ents. Deter m i ni ng tha t the D efend ants had m ade i t i m possibl e t o c l o s e a d e a l, T r o v a r e s e n ta l e t t e r d e ma n d i ngN o. 10

- 2778 7 paym ent o fthe $200 , 000 bre ak- up fee on Au gust 21, 20 07. G adon r esponded w i th a re fusaland fi ve poi nts that Tr o va r e ne eded to agr ee t o f o r the pa r ti es t o c o nt i nue nego ti ati ons. These poi nts inc lu ded r est ri cti ons on custom erand em plo yee acc ess duri ng due dil i gence i nvestiga tio ns, no decrea ses i n the pri ce o fsa l e, and evi dence ofa l ender’ s uncondi ti ona l fi nanci alco m m i tm ent. W he n Ga do n sou g htt o f o l l o w up wi thTr o va r e’ s co uns e lr e g a r di ngthe s e de man ds , h e fur the r de man de d a w rit te n rele as e fro m th e L O I. Com m uni ca ti o ns

— and, ther ef or e, purport ed nego ti ati o ns

— continued betw een Tr ova re and the Defe nd ants i nto N ovem b er 20 07, wellbey ond the S eptem ber30 Term i nati on Date. T he Defendants’ ag ents consi dered i nter nalpro posal s in the fi rs t w eekof Octobe r, and Gadon conta cted Ceco l a about unreso l ved poi nts fro m ea rli er c o mm unica t i o ns i n the s e c o nd we e k

. Ce c o l a r e s po nd e d, detai l i ng co ncer ns with w hat he vi ew ed as i m possibi l i ti es i n th e deal

. In l ate N ove m ber, a new pro posal( w hi ch funda m en ta l l y di ffer ed fr o m th at co nt empl at ed bythe L O I) aro s e , bu t n o d ea l w as ev er co n su m m at ed . Sign ific an tly , Sim kin s n ev er co m m u n ica te d a c h an ge in h is st a n c e to eith er th e D efe n d an ts or T ro va re . A s fo re to ld byhi s Augus t 2 emai l, S i m k i ns t ran sfer r ed hi s co ntr o l l i ng i nt er es ts i n th e Defen dan ts to hi s ch i l dr en, and hi s s on be cam e the pre si dent ofthe hol ding com pany. Trov ar e s ued the D efe n dants i n div er si ty f oran a l l ege d bre ach o fco ntra ct, se eking the $2 00, 000 bre ak- up fee because the Defe nd ants al l ege dlyknew orsho uld have k no wn th at no tr an sa ct i o n woul d be r ea ch ed be f o re the8 N o. 10

- 2778 Term i nati on Date. Tro var e cl ai m ed that the Defendants’ p u rp or te d n eg ot iat ion s lac ke d a u th or ity from th eir p rin c ipal, S i m ki ns, a n d were ther ef or e m er el y di l ato ryta cti cs to av oid liab ility u n d er P ar ag ra p h 14 of th e L O I. It cl ai m ed that the Defe n d ants re fused, i n vi ol ati on o f thei r du ty ofgo od f ai th and f air d ea ling, to i ssue a w r i t t e n n ot ice of th eir te rm in at ion in o rd er to av oid payi ng the penal ty. The Defe n d an ts m ove d fo r sum m ar y j ud gm ent a fter disc ove ry, ar gui ng tha t the par ti es had m er el y t ake n st ro n g a n d co n t e n tio u s n eg ot iat ion p os itio n s, th at all c o mm un i c a t i o ns b e t we e n the m ha d r e pr e s e nt e d g o o df ai th neg oti ati ons, and that thos e neg oti ati on s conti nued afterthe Term i nati on Date. The di str i ct c ourtag re ed w i th the Defendants that“the u nd i sputed f acts dem onst ra te th at[ th ey ] di d no t te r m i na te nego ti at i o ns . . . a nd i nde ed co nt i nue d ne g o ti at i o ns i n g o o d f ai th beyon d th e term i na ti o n da te
. ” I t g r an te d the De fen dan ts ’ mot i o n, and Trova re appeal s that fi nalj ud gm ent.

II. A NA LYSIS “W e r evi ew the dist ric t cour t’ s g ra nt o fsum m ar y j ud gm ent deno vo , co nstr uingal lf acts and drawin g all re aso n ab le in fer en c es in f a vo r of th e n on m ov in g p ar ty .” Su th erl a nd v. Wal-M art Store s, Inc. , 63 2 F
. 3d 990, 99 3 ( 7th Cir
. 20 11)
. Tro var e a rgues that r eco rd ev i dence

— p ro p er ly const rued i n i ts f avor

— re quir es us to r eve rs e the di str i ct c ourt ’ s e n tr y of s um m ar y j ud gm ent. I t a rgues th ata t r i ali s ne ce ss ar y t o de te r m i ne w he the r the De fen d an ts ow e a br ea k-u p fee u n d er P ar ag ra p h 14 of th e L O I.N o. 10

- 2778 9

B ec a u se th is is a d iv er sit y ac tio n, w e a p p ly Ill in o is c h o ic e-o f- 2 law rules to determ ine the app li cable subst anti ve law. S t o r ie v. Randy’s Aut o S al es , LLC, 58 9 F .3d 87 3 , 87 9 (7t h C ir . 20 0 9 ). Paragraph 1 8 o fthe LO I s tat es : “This le tt er s hall be gov erned b y the in tern al law s of the St a t e o f Illino is w itho u t reg ard to c onfl i c tofl aws . ” Neither par t y no w cha l l en ge s i t s adopt i on ofI l l i noi s s ubs t ant i ve l aw, an d we wil l appl y i tac c ordi ngl y. Se e Khan v
. BDO Se i dma n, LLP , 94 8 N .E.2d

. 13 2, 148 ( Ill. A p p . C t. 2 0 1 1 ). The parti es agr ee that Para gr aph 16 m ade Par agr aph 14 part ofan e nfo rce abl e co ntra ct b etween them

. T h e di str i ct c ourtc or re ctl y no ted thatPar agr aph 14 c ontained a c on d itio n p re c ed en t t o th e D efe n d an ts ’ en for c ea b le du ty to pay the bre ak- up fee: thei r provi si on of “w ri tte n not ice that ne g o tiations tow ard a definitive asset p urch ase ag r ee m en t ar e te r m i na te d. ” Con ce di ngtha t no wri tt enno ti ce was pr o vi d ed , Tr o va r e fel lb ac ko n the i m pli ed cov enant of good f ai th and f ai r deal i ng i m posed o n p a r t i es t o a c o n t r a c tu n d e r I l l i n o i s l a w. Se eSe ip v . 2 Rog e rs Ra w M a t e r i a l s F u n d, L
. P. , 94 8 N .E .2d 62 8, 63 7-3 8 (Ill. A p p . C t. 20 11 ); Sc hwin de rv. Aus t i n Bank of Chi cago , 80 9 N
. E. 2d 18 0, 1 93 ( I l l

. App. Ct
. 2 00 4)
. Thi s i m pl i ed co ve na nt extends t o c ircum sta nces w here o ne par ty has co m ple te contr olo verthe occur re nce o fa c on d i ti on pre cedent, p ro h ibit in g t h e con tr ollin g pa rt y fro m ac tin g c ap ric iou sly an d failin g t o t a ke affirm at ive st ep s t o s at isfy th e c on d itio n . M idwestBu il derD is tr ib. , Inc. v. Lord & Essex, Inc. , 89 1 N
. E. 2d 1, 2 6 ( I l l

. App. Ct
. 2 00 7)
. T he di st r i ctc o ur t ac cura tely a rt i cul ate d how Tro var e co uld pre vai lunder i ts th eo r y : “ pl ainti ffwoul d ha ve t o pr o ve tha t defen dan t10 N o. 10

- 2778 ha d i n f ac t dec i ded to te rm in at e ne g o ti at i o ns dur i ng the t er m o fthe LO I, but re fused to i ssue the no ti ce o f te rm in at ion in b ad fait h .” The appropri ate question o n appeal i s whether Trov ar e intro du ced evi dence fro m w hi ch an obj ecti ve tr ier of fac t c ou l d co n c lu d e t h at n eg ot iat ion s h ad , in f act, te rm i nated a nd thatwri tte n noti ce there ofwas del iber ate l y withhel d. I fge n u ine i ssues o fm ate ri alf act p e r s i s to n th e s e p o i n t s , t he d i s t r i c tc o u r t ’ s e n t r y o fs u mm ary j ud gm en t w as inap p rop riate . Fed

. R. Civ. P. 56(a); Suthe r l and, 63 2 F.3d a t 993. The di str i ct c ourtco ncl ud ed that no s uch i ssues per si ste d, as i t was undisputed that Trov ar e a nd the Defe nd ants kept tr adingpro posal s a t l e a s ti n t o O c t o b e r 2 0 0 7
. T h e di s t r i c tc o u r te n t e r e d s u mm ar y j udg m en t f o r th e Defen dan ts, st at i ng th atno th i ng i n the r ec o r d s ug g es te d the y wer e si m pl y s tr i ng i ng Tr o va r e al o ngt o a vo i d a ny b r ea k

- up fee o bl i g at i o n. W e cannot agr ee. Ifn ego ti ati ons had indeed te rm i nated i n thi s ca se, the Defe nd ants’ r efusalto i ssue a wr i tte n noti fi cati on o fthatfactto avo i d tri gge ring the i r du ty to p ay th e b re ak -u p fee likely co n st itu te d ba d fait h

. See M i dwes t Bui l de r Dis t r i b
. , Inc. , 89 1 N .E .2d at26 . W h ile it i s c l e a r th a tc o mmu n i c a t i o n s c o n t i n u e d i n t o N o v e mbe r 2 00 7, whethe r the y c o ns ti tu te d a ctua lne g o ti at i o ns i s uncl ear . Giv en thatthe outco m e o fthi s l i ti gat i on turns on cl ass i fi cati on o f o ngoing co m m unica ti ons as nego ti ati ons, acc urat e cl ass i fi cati on i s ce rt ai nl y m ate ri al. A nd as r eco rd ev i dence shows thatthi s m ate ri alf act re m ai ns i n dis pu te

— an d that the Defe nd ants m ay have been onl y pr ete xtual l y “ ne go ti ating”

— sum m ar y j ud gm ent was i napp ro pri ate i n thi s ca se.N o. 10

- 2778 11 S i m k i ns c l ea r l y c o nv ey ed h is s ta te o fmin d r eg ar di ng the po t e nt i a l s a l e o f the De fe nd a nt s ’ a s s e t s and pr o per ti es to Trov ar e in hi s di ctat ed m ess age o fA ugust 2 , 20 07 : he “ defi ni te l y ” di d no t w an t to g o thr o ug h wi ththe tr an sa c tio n, p re fer rin g to tr an sfe r op er at ion s to h i s c h ildr en . De spi te the De fen dan ts ’ c onces si o ns tha t su cha defini ti ve concl usi on bythe pri n c i pal co uld co nsti tute te r m i na ti o n, ( Appel l ee ’ s B r . a t 27 ) , a nd tha t S i m k i ns alo n e h ad co n tr ol of t h e t er m in at ion d ec isio n, th ey m in im i ze the i m porto f t h e em ai l

. They c hara cter i ze i t a s ani r r el ev an t “o utbur st ” an d a r g ue tha t i t di d no t co ntain an e xpli ci t e dictto cea se nego ti ati ons orto thr ow a “monk eywre nc h” i nt o the ne g o ti at i o ns . Theya r g ue that Si m ki ns ev en per sonal l y partici pated i n l ate r nego t i a t i o ns , s ho wi ngtha tn o t e r mi na t i o n o c c ur r e d. T h e o n ly ev id en c e o f h is s u b se q u e n t p ar tic ip at ion is a sing l e l et te r da te d Augus t 28 , 2 00 7, i n whi chS i m k in s w rote th athe was “ st i l lpr epa r ed to make a de al, ” but con d iti one d any con side ration of tha t d e al on Trova re’s capi tul ati on t o fi ve dem ands i n Gad on’ s lettero f A ugust 2 1. Iftho se fi ve dem ands w er e del iber ate l y desig n ed to p re c lu d e a n y p os sib ility of c l o s i n g t h e d ea l, n o th i n gi n th e Au g u s t2 8 l e t t e r nec es s a r i l y s h o ws Si m ki ns’ s intent to n ego ti ate , and the l ett erwould be e n t i r e l y c o n s i s t e n twi th Si mk i n s ’ s n e v e r - wi th d r a wn m ess age o f A ugust 2
. A r ati onaltr i ero ff act coul d rea

sonab l y c oncl ud e fro m the desi gnat ed ev i dence that th e D efe nda nt s’ pr i nc i pala nd de ci si o n- m ak erha d c o nclusiv e ly de term ined that he w ou ld n o l ong er cons ider a sa le t o T ro va re . If h e h ad , th e d et er m in at ion effe c tiv ely12 N o. 10

- 2778 ter m i nated bo th the negot iatio ns and hi s neg oti ato rs ’ author i ty. T rovar e a cknowle dges that i t e xchanged com m unica

tions an d prop osals w ith t h e D efend an ts after Si m kins’s A u gu st 2 em ail

— i n d ee d , e ven a fterthe Term i nalDate. Bu t i t chal l enges the dist ri ct c ourt ’ s char acte ri zation of thos e co m m unica ti ons as nego ti ati ons. I fS i m ki ns’ s e rs tw hi l e a gents l acke d the autho ri ty to tr ulynegotia te on hi s be ha lf, the c o m m uni ca ti o ns b etwee n the m a nd Trov ar e m ay have been

— at best

— at te m p ts t o d ra w th eir pri nci pal bac k into consi deri ng a f avo rabl e deal

. But by i nter preting the evi dence i n Trov ar e’ s f avo r, a rati onal tr i ero ffact c o ul d c o nc l ude tha t th e co m m uni ca ti o ns w er e a c tu ally ba d -fait h fac ad es d es ign ed to av o id l i abi l i ty f orthe bre ak- up fee. Fo r exam ple , Batta gl i a had al re ady m i sr epres en ted to T ro va re th at P h as e II in sp ec t i o n s w er e u n d er w ay , w h ile th e Defen dan ts ha d no t an d m i g htha ve ne ve r i nte nde d to co m m i ss i o n th em. Lat er c o m m uni ca ti o ns ne ve r r emedi ed th es e m i sr epr es en ta ti o ns . In a ddi ti o n, Gado n’ s A ugus t 21 l et te r de m an ded fi ve c o nc es si o ns fro m T ro va re th at D efe n d a n ts kn ew w ou ld likely p r e c l u d e T r o v a r e fr o m s e c u r i n gfi n a n c i n g ; h i s S e p t e mbe r 5 l et te r a l so d em an ded a r el ea se fr o m the LOIa nd any l i abi l i ti es und eri t. The Defendants now spin these tw o l et te r s as mer e ha r d b ar g aini ng . Buttha t i s no t th e onl y per m i ssibl e infe re nce, and w e m ust dra w al lr easonab l e infe re nces i n Trov ar e’ s f avo r at thi s s tag e. These l ett er s were prece ded byem ai l s fro m the Defe nd ants’ c o u n s e lr e mi n d i n gS i mk i n s ’ s a g e n t s t o a v o i d b r e ac hi ngN o. 10

- 2778 13 th e i r d u t y o fg o o d f a i tha n d a s k i n gth e m t o r e v i e w a chro nol ogyo fev en ts c om pil ed to “s how go od f ai th nego ti ati ons” i n case T ro var e s ued fo r the penal ty. A f actfi nd er cou ld reason ably i nfer t h at G ad on’s letters w ere p re te x tu al. Even the bro ker s at M esi ro w appear to have c on c l ud ed that the c om m unica ti ons no l onge r bor e neg oti ati on potenti al

. A pp ar entl y h avi ng dete rm i ned that nego ti ati ons w er e frust ra ted bythe D efendants, M i chaelS i m on i nquir ed on S eptem ber5, 20 07, “I s e ver y b uyergo i ng to be be t old thattheycan’ t do dil i gence [ si c ] ?” On A ugust 1 4, 2007, Bi l lH or nell w rote, “W e’ re j ust about dead on Tr o va r e/ S i m kins

. Le o n n ev ert r us te d the b uy er, s o he i nsi ste d on nego ti ating an [A P A ] befor e g i vi ng the o k o n fi nal[ du e dil i gence . ] ” Ind eed, j ust four days a fter Si m ki ns’ s “ outbur st” f or eswearing anydealwith Tr ova re , S i m o n de sc r ibe d the de al as “[d] ea d a s dea d c anb e. ” The Defe nd ants ar gued aga i nst m aking anyi nfe re n c es fr o m the se e m ai l s, s ta tingtha t th ei r c ha r ac te r i za ti o ns w er e fl atl y c ontr ad ict ed by sta tem ents fro m a deposi ti on ofa M esi ro w superi or . But such co ntra dict i on g oes to the wei ght o fthe evi dence, an inapp ro pr iat e consi derati on a t the sum m ar y j ud gm ent s tag e. W e co ncl ud e that m ateri alquesti ons off act persi ste d as t o wh e the r a c t ua ln e g o t i a t i o ns c o nt i nu e d a ft er S i m k i ns ’ s appa r en t te r m i na ti o n up to a nd b ey o nd the Term i nati on Date. The ev i dence atlea st sugge sts that m isr ep re se n ta tio n s a n d ins ist en c e o n im p os sib l e co n d iti ons o cc ur r ed. Ei th erc o ul d c o ns ti tu te a b r ea cho fthe Defen dan ts ’ duty t o ne g o ti at e i n g o o d f ai thunde r the14 N o. 10

- 2778 L O I. Se e, e . g. , A /S A po thek ernes La b. for Sp ecia lpra epa rater v. I. M
. C
. Ch em . Grp., Inc. , 87 3 F
. 2d 155, 15 8 (7t h Ci r. 19 89) (“[A ] p ar ty m igh t b r e ac h its ob liga tio n to ba rg ain in goo d fa ith b y unre aso nabl y insi sting o n a c ondit i on outsi de the sco pe ofthe parti es’ pre l i m i naryag re em en t, especi al l y where such i nsistence i s a thi nl y di sgui sed p retex t for scotc hin g the de al .

. . . ”). Th e d istri ct cou rt er r ed, the r efor e, i n c o nc l udi ngtha t no th i ngi n the re c or d co u ld su gg es t t h at th e D efe n d an ts w er e s im p ly str i ngi ng Tro var e a l ong to avo i d the br eak

- up fee. Fi nal l y, we note that nei therTro var e no r the Defendants re q u es te d a j u ry tria l, so th e d is tr ict co u rtw ill l ike ly hearthi s ca se i n a b ench tr i alo n re m and. W e r eco gni ze that “[ i ] fo n a c er tain re cor d a di str i ct c ou rt bel i eve s a p a r t y i s e nt i t l e d t o s u mma r y j u d g me n t, th e n th e s a me c o u r t, i fr e qu i r e d t o c o n d u c ta b e n c h t r i a lo n th a ts a me r e c o r d, w i l lp r o b ab l y d e c i d e th e c a s e f o r th a ts a me party
. ” P atton v. M FS/Sun L if e F in. D is tr ibs
. , Inc. , 48 0 F
. 3d 478, 48 4 ( 7th Ci r. 20 07)
. Ind ee d , a substa nti alam ount o f r ec o r d e vi den ce s ug g es ts tha t th e Defendan ts wer e en ga ge d in b o n a fid e n eg ot iat ion s, in c lu d in g b ot h th eir co nt i nue d e ng ag emento fa n a r r ayo fa tt o r ne y s, a cc o untant s, an d other s ( w hi ch w oul d be co stl y a s a m er e f acade) and al so the l ack ofa n y expli ci t di re cti ons fro m Sim kin s t o s to p th e p u rp or te d n eg ot iat ion s d e sp ite h is aw ar eness o fthem

. On the c urr ent r eco rd, the dist ri ct cour t m i ght c oncl ud e that no b re ac h o fthe du ty ofgo od f a i th a nd f a i r de a l i ngi n ne g o t i a t i o ns o c c ur r e d. Butwe si m ul ta ne o usly w ar ne d i n Patt on th at“ th e w i nner ofa bench tr i alm i ght b e uncer tain e ven thoughN o. 10

- 2778 15 no new evi dence w i l lbe prese nted. ” Id. at48 4 n. 2. Give n the f actualco m ple xi ti es

— i ncl ud i ng the effect of S i m k i ns ’ s st at ements o n h i s ag en ts ’ a utho r i tya nd the a c c ur a t e c l a s s i fi c a t i o n o fc o mm un i c ati o ns a s b o na fi de nego ti ati ons orem pty f acades

— an d th e is su es of cr ed ibi l i tyi nheren t inthi s ca se , a ddi ti o na le vi den ce i n the form of testim ony m ay be presen ted on rem an d . Furth er, the di str i ct c ou rt ’ s o rderunder r evi ew di d not

— on i ts face, atl eas t

— we i g h c o mpe t i nge v i de nc e . Whe n i tdoes wei g h the e vi den ce , i t m ayr ea cha di ffer en t co nc l us i o n. Forthes e r eas on s, w e “ cannot saywith c er tainty ho w the di str i ct c ourtwil lr eso l ve thi s ca se on r em and,” i d. , s o re m and rem ai ns the appropr i ate r em edy.

III. C ON CLU SI ON The di st r i ctc o ur t er r ed i n d eterm i ni ngtha t no g enui ne iss u es of m at er ial fa c t re m ain ed to be res olv ed i n th is bre ach o fco ntra ct c ase . A ccor dingl y, we R EV ERSE i ts e nt r y o fs um m a r y j ud g men ta nd R EMA ND the case f or furtherpro ceedi ngs.

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