Although GlobalNet urges that the quoted exemption should be
read as requiring that the entity earning the contingent fee must
also be the procuring cause of the loan (G. Mem. 19-20), once
more it is guilty of seeking to engraft language that just does
not appear--this time into a statute rather than into the
Agreement .*° Here the text of the Act says no such thing--all
that it requires is that the broker’s fee be contingent on the
loan being successfully procured. GlobalNet’s strained statutory
interpretation to the contrary, Broadmark clearly meets the Act's
eriterion for exemption: Its fee was contingent on GlobalNet’s
completion of a transaction with a party that Broadmark had
introduced.

In sum, both facets of GlobalNet’s Loan Brokers Act defense
have failed. And with that failure, its Rule 56 motion loses.

Conclusion

There is no genuine issue of material fact here (something
that is confirmed in a way by the very existence of the parties'
cross motions), and Broadmark is entitled to judgment as a matter
of law. Broadmark’s motion for judgment on the pleadings as to
liability is granted, while GlobalNet’s Rule 56 motion is denied.

With those issues having been resolved, Broadmark is

entitled to damages stemming from GlobalNet’s breach of the

1° No reported decisions in Illinois have construed any

provisions of the Act.

13


(Valles Decl. §4).? That inquiry came to a dead end by the end
of November (id. 48).

Next, on December 7 Broadmark submitted a terms sheet to
GlobalNet proposing a direct equity investment in GlobalNet by
Crescent International Ltd. (“Crescent”) (G. Ex. E). Less than
two weeks later (on December 18) the parties entered into the
five page single-spaced typewritten Agreement, under which
Broadmark agreed to attempt on a nonexclusive basis to obtain
capital for GlobalNet (Agreement at 1):

through any legal means, including without limitation,

the following (together, a “Transaction”): (1) equity

financing, (2) debt financing, and (3) merger,
acquisition, business combination, or purchase and sale
of assets.

Under the Agreement (id. §1.a):

If the Company [GlobalNet] consummates a Transaction

involving equity financing or debt financing of any

nature with a Party or Parties introduced to the

Company through Broadmark within twenty four (24)

months prior to the closing of such transaction, then

the Company shall pay a fee to Broadmark....

Importantly, the Agreement defined the concept of an
“introduction” by Broadmark this way (id. 2):

For the purposes of this Agreement a party shall be

considered to have been “introduced to the Company

through Broadmark” if such a party was introduced to

the Company by Broadmark, its agents or employees, or
if the Transaction between the Company and such party

3 GlobalNet has provided a declaration by its Chief
Financial Officer Pedro Valles as an unnumbered exhibit to its
motion for summary judgment. That declaration is cited “Valles
Decl. q--.”


by GlobalNet (or uncovered by this Court's added research) even
hints that a Washington court would insert any judicially crafted
additional requirement of the type proffered by GlobalNet into an
integrated written contract such as the one here.

One other issue bears only brief treatment: GlobalNet's
contention (its Mem. 9-10) that Broadmark's Rule 12(c) motion
must be rejected because GlobalNet has “denied” that Broadmark
introduced Crescent to GlobalNet (Answer §§1, 11, 14 and 15) and
that Broadmark performed its obligations under the Agreement
(Answer §12). On that score GlobalNet fails because it has
itself made plain that those denials are not at all factual in
nature, but are instead nothing more than legal conclusions based
on GlobalNet's now-rejected view of the law. With the conceptual
foundation of those asserted “denials” having been removed, the
denials themselves collapse into the resulting pit. Such
nominal, but now meaningless, disputes cannot and do not stave
off judgment on the pleadings.

on the face of the Agreement, then, GlobalNet is liable to
Broadmark for a commission for (1) Broadmark's having introduced
Crescent as a potential GlobalNet investor and (2) Crescent's
later having become an investor in fact. That being so,
Broadmark is entitled to judgment as a matter of law on the issue
of liability unless GlobalNet can escape that result based on the

affirmative defenses it has raised--defenses that also form the


Broadmark’s Motion
Broadmark contends that it is entitled to judgment on the
pleadings because GlobalNet has admitted all of the elements of a
breach of contract under Washington law: (1) there was a valid
contract between the two parties, (2) the contract was breached

and (3) the breach caused damages to Broadmark (see, €.g., Lehrer

vy. State of Washington, 5 P.3d 722, 727 (Wash. App. 2000)). To
support that argument Broadmark directs attention to GlobalNet’s
Answer, in which GlobalNet admitted (1) the existence of the
Agreement, (2) its December 2000 receipt of a terms sheet from
Broadmark containing a proposal for up to a $20 million
investment by Crescent in GlobalNet, (3) its having obtained
financing from Crescent in early 1991 and again in April 2001 and
(4) that, if Broadmark had indeed introduced Crescent to
GlobalNet, GlobalNet would owe Broadmark compensation under the
Agreement (B. Mem. 1).

GlobalNet responds by asserting that the December 7, 2000
terms sheet submitted by Broadmark did not qualify as an
“introduction” of Crescent under the Agreement (G. Mem. 9-18).
To that end GlobalNet argues that Broadmark has failed to
demonstrate that Crescent was “ready, able and willing” to go
forward with the investment at the time Broadmark submitted the
terms sheet or that Broadmark was the “procuring cause” of the

transactions that were ultimately consummated a few months later.


arose from or was made possible by Broadmark, its
agents or employees.

No immediate results were generated for GlobalNet during the
next few weeks, and in early January 2001 GlobalNet entered into
a letter agreement with another investment banking firm, J.P.
Carey, Inc. (“Carey”) to seek the placement of up to $15 million
in shares to be sold by GlobalNet (Valles Decl: 417 and Ex. J).
That agreement with Carey did not replace or terminate the
Broadmark Agreement (which it will be recalled was nonexclusive),
but under the circumstances that ensued that proves irrelevant to
the issue of Broadmark's rights (see n.4).

Carey in turn then came up with a number of potential
investors, including Crescent (Valles Decl. §18). After Crescent
then invested $500,000 in GlobalNet (id.), it continued
negotiations looking to a new debt investment in addition to that
(ia. §19). And in April Crescent purchased a $2 million
debenture and made a $250,000 equity investment in GlobalNet (id.
20). Broadmark now contends that GlobalNet is liable for a fee
under the Agreement because it first introduced Crescent to

GlobalNet in December 2000.‘

4 For that purpose it is also irrelevant that GlobalNet has

paid compensation to Carey for its role in the GlobalNet-Crescent
transactions. In disputes of this type, which are based on
contractual undertakings rather than on common law principles of
“procuring cause,” a principal simply cannot complain if it turns
out to have obligated itself to pay commissions to more than one
broker under the terms of different or successive brokerage
agreements that it has voluntarily entered into.

5


end-run motivation to GlobalNet, for the Agreement's language is
plain indeed: Broadmark’s submission of the Crescent terms sheet
to GlobalNet fits comfortably into the first of the two
alternative definitions of “introduction.”

GlobalNet attempts to bolster its position by citing to
several Washington cases,® but to no avail. While Washington
courts do discuss “ready, able and willing” buyers and procuring
causes, none does so in the context of a direct one-to-one
agreement between the principal and the claimant broker in which
the latter claims under an express contractual alternative that
does not implicate either of those concepts. Washington courts
interpret any fully integrated written contract on its face

(DePhillips v. Zolt Constr. Co., 959 P.2d 1104, 1108 (Wash. 1998)

and cases cited there), and there can be no dispute here that the
Agreement between Broadmark and GlobalNet fits that
characterization--that the parties intended it as a final

expression of their understandings. Nothing in any case cited

6 ‘Though the text analysis here applies with equal force to
the several Illinois cases also cited by GlobalNet, it is
unnecessary to discuss them in light of the Agreement's express
provision that Washington law applies.

6 Agreement §15 sets out an explicit and all-inclusive
integration clause. It is also worth noting that nothing even
remotely approaching a contract of adhesion (such as, for
example, the typical real estate brokerage agreement) is at issue
here--instead the two sophisticated parties negotiated the
specific and highly detailed terms of the Agreement (Valles Decl.
quis).


Minuto Order Fors: (06/97)

United States District Court, Northern District of Illinois

me of Assigned Ju i iting Judge i
nny agitate Judes Milton 1, Shadur “than signed Judge
CASE NUMBER 01 C 3855 DATE 10/26/2001
CASE Broadmark Capital Corp. vs. Globalnet, Inc.
TITLE

of the motion being presented}

[In the following box (a) indicate the party filing the motion, c.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

COFRCP4(m) OGeneral Rule21 OOFRCP41(a)(1) Oi FRCP41(a}(2).

November 7 at 8:45 a.m.

dal) gf [For further detail see order attached to the original minute order.]

MOTION:

DOCKET ENTRY:

ql) a Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer brief due___

(4) o Ruling/Hearingon__ set for__at

(5) Qa Status hearing[held/continued to] [set for/re-set for] on setfor_ ss at_
(6) oO Pretrial conference[held/continued to] [set for/re-set for]on__setfor_____at___.
(YD o Trial[set for/re-set for] on at

(8) oO {Bench/Jury trial] [Hearing] held/continued to__at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

ao) of {Other docket entry] Enter Memorandum Opinion and Order. Broadmark’s motion for judgment
on the pleadings as to liability is granted, while GlobalNet’s Rule 56 motion is denied. With those issues
having been resolved, Broadmark is entitled to damages stemming from GlobalNet’s breach of the
Agreement. Because the exact extent of the investments made by Crescent remains unclear from the
submission to this point, the ultimate scope of relief remains to be determined. A status hearing is set for

No notices required, advised in open court.

Ne ices required.
io notices required. umber of notices

“Number

Document

VY | Notices mailed by judge’s staff.

oct 30 200

Notified counsel by telephone. date docketed

Docketing to mail notices

&

Copy to judge/magistrate judge. bags iat

Mail AO 450 form. dequty initials

10/29/2001

date mailed notice

courtroom = i HoT 29 PA GBS
SN deputy’s on
initials

Date/time received in 7
central Clerk’s Office mailing deputy initials

aoe



Broadmark introduction must also have postdated the execution of
the Agreement.

What remains, then, is GlobalNet’s contention that it is
entitled to summary judgment because Broadmark violated the
Illinois Loan Brokers Act of 1995 (“Act,” 815 ILCS 175/15-1 to
175/15-100’) by failing to register as required by the Act, thus
rendering the entire agreement void (G. Mem. 18-20).® In that
regard,, even if it is assumed that the financing Crescent
provided qualifies in whole or in part as a loan under the terms
of the Act,® GlobalNet still faces at least two insurmountable
obstacles that preclude a successful invocation of that defense.
Neither requires extensive treatment.

For one thing, GlobalNet's argument that Broadmark is

7 Citations to the Act will take the form “Section --,”
omitting the prefatory “815 ILCS 175/."

® Broadmark attempts to dispatch that defense by invoking
the “mend the hold” doctrine. This opinion need not explore the
applicability or inapplicability of that common law doctrine, for
it has never been applied (or even cited) by a Washington court.
And in that regard Insolia v. Philip Morris Inc., 216 F.3d 596,
607 (7 Cir. 2000) typifies the frequent reminders from our
Court of Appeals that the federal courts' role in diversity cases
is not to enter uncharted state law waters in an effort to expand
the horizons of the common law.

9 Act §5.10 defines “Loan” as “any agreement to advance

money or property in return for the promise to make payments for
the money or property.” According to Valles Decl. §20,
Crescent's funding comprised a $2 million debenture (hence a
“loan”) and “$215,000 in equity” (normally not within the loan
concept), while Crescent's earlier transaction was described in
Valles Decl. 9418 as a “$500,000 investment” (again an unusual
label if a true loan were involved).

11


predicate for its Rule 56 motion and are therefore dealt with in
the next section of this opinion.
GlobalNet’'s Motion

GlobalNet raises two arguments to support its summary
judgment motion. One--that its introduction of Crescent on
December 7, 2000 was not made within the scope of the Agreement
because the Agreement was not signed until December 18--was
rejected by this Court orally in the course of an October 2, 2001
hearing. Just by way of a brief recapitulation to make this
opinion more self-contained, once again the question in that
respect involves the meaning and operation of an unambiguous
provision of an integrated agreement--this time the description
of the triggering event in Agreement J1.b: GlobalNet's
consummation of any one of a number of financing arrangements (a
defined “Transaction”) “with a Party or Parties introduced to
[GlobalNet] through Broadmark within twenty four (24) months
prior to the closing of such transaction.” By the express terms
of that provision, Broadmark's possible right to compensation for
any such GlobalNet Transaction requires a look backward to see
(1) whether the other party had indeed been “introduced to
{GlobalNet] through Broadmark” and, if so, (2) whether that
introduction antedated the closing of the transaction by less
than 24 months. Again nothing would justify this Court (or any

other) in adding a judge-manufactured condition that the

10


But that argument fails to address the controlling terms of
the Agreement. What is totally absent from the Agreement is any
requirement that an investor be “ready, able and willing” at the
time of the introduction.® Nor does it require that Broadmark be
a “procuring cause” of the ultimate investment. Instead the
Agreement unambiguously anticipates exactly the type of
“introduction” that occurred here--the earlier-quoted Agreement
2 states in the disjunctive the concepts of such an introduction
on the one hand and, on the other hand, a GlobalNet Transaction
(a defined term) that has been triggered by Broadmark's active
participation. And of course the former alternative has an
obvious purpose in any nonexclusive brokerage arrangement: It
eliminates the possibility (all too familiar to those in that
trade) that a principal may become aware of a prospective buyer
or investor through the broker and then enter into a deal
directly, asserting that no compensation is due to the broker
because it was not the “procuring cause” in the common law sense.

It is unnecessary for present purposes to ascribe any insidious

5 Indeed, the detailed provisions of the Crescent terms
sheet submitted by Broadmark cause GlobalNet's contention on that
score to border on the frivolous--if it does not in fact cross
that border. When major financial investment transactions of an
undefined nature (something that both the Agreement and
GlobalNet's later agreement with Carey make abundantly plain) are
contemplated, and where due diligence requirements must be
satisfied in any event before any such transaction can be
contemplated, the Crescent terms sheet is typical of the serious
initial expression of interest that, when pursued, can ripen into
a deal.


Washington (B. Mem. 6, G. Mem. 11). That does not necessarily
resolve the choice of law issue, for a federal court sitting in
diversity applies the conflict of laws rules of the forum state
to determine the applicable substantive law. Here Illinois
courts respect choice of law clauses such as that in the
Agreement so long as “the law chosen is not contrary to

Illinois’s fundamental public policy” (Fulcrum Fin. Partners v.

Meridian Leasing Corp., 230 F.3d 1004, 1011 (7th Cir. 2000)).

Neither litigant has argued that the application of
Washington law to the interpretation of the Agreement would
violate the fundamental public policy of Illinois, and this Court
independently finds no reason for so concluding. This opinion
therefore looks to Washington law for the rules of decision.

Facts

GlobalNet is an international voice, data and internet
services provider, while Broadmark is an investment banking firm
(G. St. §1-2).2 In late October 2000 Broadmark first
communicated with GlobalNet to determine whether the latter was

interested in pursuing a merger with one of Broadmark’s clients

2 This opinion cites to GlobalNet’s LR 56.1(a) statement of
facts as “G. St. J--” and to Broadmark’s response as “B. Resp.
q--,” although where a G. St. assertion is not controverted a
citation to that statement ordinarily suffices. Those same “G.”
and “B.” abbreviations are employed in referring to the parties’
exhibits and memoranda.


Agreement. Because the exact extent of the investments made by
Crescent remains unclear from the submissions to this point, the
ultimate scope of relief (the compensation due to Broadmark)
remains to be determined. Accordingly, a status hearing is set
for 8:45 a.m. November 7, 2001 to discuss the necessary

procedures and timetable to that end.

Chibi. Jviadee

Milton I. Shadur
Senior United States District Judge

Date: October 26, 2001

14


the reasons stated in this memorandum opinion and order,
Broadmark's motion is granted while GlobalNet’s is denied.

Standards for Decision

Rule 12(c) motions, like those for summary judgment, are
designed to achieve a resolution of claims on their merits.
Unlike a summary judgment motion, however, Rule 12(c) permits
consideration of only the complaint, the answer and written

instruments attached as exhibits (Northern Ind. Gun & Outdoor

Shows, Inc. v. South Bend, 163 F.3d 449, 452 (7th Cir. 1998)).

Familiar principles impose on movants under both Rule 12(c)

(Northern Ind. Gun, 163 F.3d at 452) and Rule 56 (Celotex Corp.

v. Catrett, 477 U.S. 317, 322-23 (1986)) the burden of
establishing the absence of a genuine issue of material fact.

For that purpose this court must “read[ ] the record in the light
most favorable to the non-moving party,” although it “is not
required to draw unreasonable inferences from the evidence” (St.

Louis N. Joint Venture v. P & L Enters., 116 F.3d 262, 265 n.2

(7th Cir. 1997)). And as Pipitone v. United. States, 180 F.3d

859, 861 (7th Cir. 1999) has quoted from Roger v. Yellow Freight

Sys., Inc., 21 F.3d 146, 149 (7th Cir. 1994):
A genuine issue of material fact exists only when a
reasonable jury could find for the party opposing the
motion based on the record as a whole.

Both parties agree that the choice of law provision in

Agreement §17 calls for application of the laws of the State of


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

BROADMARK CAPITAL CORPORATION,

)

INC., )
)
Plaintiff, )

)

v. ) No. 01 C 3855

)
GLOBALNET, INC., )
)

Defendant. )

MEMORANDUM OPINION AND ORDER

Broadmark Capital Corporation, Inc. (“Broadmark”) has filed
a diversity-of-citizenship breach of contract action against
GlobalNet, Inc. ("GlobalNet”).? Broadmark alleges that GlobalNet
has refused to fulfill its obligations under the parties'
December 18, 2000 letter agreement (“Agreement”) relating to
GlobalNet's search for added financing. According to Broadmark,
a third party that it had introduced to GlobalNet later became a
source of such funding, but GlobalNet has refused to compensate
Broadmark according to the terms of the Agreement.

Broadmark has moved for judgment on the pleadings on the
issue of liability under Fed. R. Civ. P. (“Rule”) 12(c), and
GlobalNet has both responded to that motion and filed its own
Rule 56 cross-motion for summary judgment. With both motions

having been fully briefed, they are ripe for disposition. For

1 Broadmark is a Washington corporation with its principal
place of business in Washington, GlobalNet is a Nevada
corporation with its principal place of business in Illinois and
the amount in controversy is far in excess of $75,000.

KY


subject to the Act because it attempted to broker a loan for an
Illinois resident in Illinois (G. Mem. 19) is an impermissible
attempt to avoid GlobalNet's own deliberate contractual joinder
in the choice of Washington's substantive law as the source of
rules of decision governing the Agreement. GlobalNet provides no
caselaw whatever to support that assertion, nor does it (or can
it) even argue that some fundamental Illinois public policy
requires the parties' choice of law provision to be disregarded
or overridden. To the contrary, Illinois courts have enforced
choice of law provisions even when the foreign law is arguably
inconsistent with an Illinois statute, so long as fundamental
public policy considerations are not implicated (see such cases
as Mastrobuono v. Shearson Lehman Hutton, Inc., 20 F.3d 713, 719
(7th Cir. 1994), rev’d on other grounds, 514 U.S. 52 (1995)).
Indeed, it would flout the terms of the Act itself to urge
that some purported Illinois public policy would be undermined by
enforcing the Agreement--the second hurdle that GlobalNet cannot
overleap. That is so because even if the Act were potentially
applicable, Broadmark would have no obligation to comply with its
registration requirement. Section 80(a) (5) specifically exempts
from registration “[a]ny person whose fee is wholly contingent
on the successful procurement of a loan from a third party and to
whom no fee, other than a bona fide third party fee, is paid

before the procurement.”

12