In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-3889

FABRIKO ACQUISITION CORPORATION,

Plaintiff-Appellant,

v.

DEAN PROKOS, STEVEN SORENSON, &

GREEN LAKE MARINAPROPERTIES, LLC,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Eastern District of Wisconsin.

Nos. 05 C 644 & 05 C 645—Lynn Adelman, Judge.

____________

ARGUED OCTOBER 26, 2007—DECIDED JULY 29, 2008

____________

Before POSNER, FLAUM, and ROVNER, Circuit Judges.

ROVNER, Circuit Judge. This lawsuit arose out of a

commercial real estate transaction that was never completed. The plaintiff, Fabriko Acquisition Corporation

(“Fabriko”), brought this diversity action against defendants Green Lake Marina Properties (“Green Lake Marina”), its managing partner Dean Prokos, and Wisconsin

lawyer Steven Sorenson. The facts leading up to the

proposed transaction are complex, and will be set forth

only insofar as is necessary for resolution of this appeal.
2 No. 06-3889

Essentially, Fabriko alleges that Prokos and Green Lake

Marina entered into a contract to purchase property in

Green Lake, Wisconsin, and failed to act in good faith to

comply with the financing contingency in the contract, with

the result that the transaction was never completed. The

Green Lake property at issue was owned by Alton

Prillaman, but Fabriko had a separate agreement with

Prillaman which gave it the exclusive right to market the

property and entitled it to a share of the purchase price.

Sorenson had represented Prillaman and Fabriko, Inc. (as

distinguished from Fabriko Acquisition Corp., which is

referred to as Fabriko here, and which acquired the

stock of Fabriko, Inc.) in an earlier transaction which

resulted in that division of rights between Prillaman and

Fabriko, and with the consent of the parties, Sorenson

served as a facilitator and dual agent in connection

with the transaction at issue in this lawsuit. In December

2003, Green Lake Marina offered to purchase the Green

Lake property for $850,000 contingent upon obtaining

financing and upon an environmental inspection. Green

Lake Marina initially considered the property as a potential boat dealership to compete with the Shoreline Marina

dealership (“Shoreline”) located directly across the street.

The Green Lake property contained a large warehouse

building which would have to be developed into a dealership. The offer was accepted, with Prillaman to receive

$270,000 and Fabriko to receive $580,000. With the consent of Prillaman and Fabriko, Green Lake Marina began

storing boats on the property rent-free. The deal ultimately

was not completed, ostensibly because of an inconclusive

environmental inspection and inability to obtain financing.

In April 2004, however, Green Lake Marina with

Sorenson as its agent, again offered to purchase the prop-
No. 06-3889 3

erty contingent on it obtaining financing. Fabriko feared

that Green Lake Marina was attempting to deal solely

with Prillaman to cut it out of the deal, and filed a lawsuit against Sorenson and Prokos in federal court in

Virginia seeking to enjoin the transaction. Fabriko also

alleged that Sorenson had revealed confidential information in attempting to facilitate the deal between Green

Lake Marina and Prillaman. In order to settle the suit,

Green Lake Marina and Prillaman agreed to add Fabriko

as a party to the April 2004 contract and to allocate the

purchase price in the same way specified in the December

contract. The amended contract retained the financing

contingency clause. The deal again was not completed because Green Lake Marina was unable to obtain financing.

Fabriko then reinstated the lawsuit and in September 2004,

filed a second lawsuit alleging breach of the April 2004

contract. The Virginia court consolidated the suits and

transferred them to the Eastern District of Wisconsin.

The defendants sought summary judgment, which the

district court granted. The district court began by noting

the serious procedural lapses by Fabriko in litigating

the case. First, Fabriko failed to respond to Sorenson’s

request for admissions. Pursuant to Fed. R. Civ. P. 36(a),

a party served with a written request to admit the truth

of matters within the scope of discovery has thirty days to

file an answer or objection, or the matters are deemed

admitted. Furthermore, Fed. R. Civ. P. 36(b) provides that

“[a] matter admitted under this rule is conclusively established unless the court, on motion, permits the admission

to be withdrawn or amended.” Because Fabriko failed to

respond to the request for admission and that admission

was never withdrawn or amended with the court’s permission, the matters in the request to admit were conclusively established.
4 No. 06-3889

Moreover, Fabriko failed to respond to the defendants’

proposed finding of facts as required under Civil Local

Rule 56.2(b) of the Eastern District Court of Wisconsin,

in that Fabriko responded only in undifferentiated narrative form, without identifying paragraphs and without

specific citations to evidentiary materials in the record.

Fabriko now protests that it subsequently submitted a

response broken down by paragraphs, but those responses still failed to cite to the record, often mischaracterized that record, and relied on inadmissible

evidence. We have held that a district court is entitled to

demand strict compliance with such rules for responding

to a motion for summary judgment, and that a court does

not abuse its discretion when it opts to disregard facts

presented in a manner inconsistent with the rules. Ciomber

v. Cooperative Plus, Inc., 527 F.3d 635, 642 (7th Cir. 2008).

As a result of those procedural lapses, the district

court deemed admitted the following facts:

Sorenson did not disclose confidential information to

Prokos in an effort to cut Fabriko out of any interest

it might have in the proceeds of sale of the commercial [Green Lake] property . . . .”; “at no time after

Green Lake [Marina] executed the Offer would its

bank, National Exchange Bank (the ‘bank’) have

extended financing to purchase the Property on the

terms of the April Offer;” “[t]he Bank had security

interests in all of Prokos’[s] and Green Lake [Marina]’s

assets, making it impossible for Green Lake [Marina] to

obtain financing for the Property in April 2004 and

thereafter from any lender, including Bank;” and

“[Fabriko] was ultimately a party to the April Offer and

thus was not cut out of any deal to purchase the

Property.
No. 06-3889 5

Those facts that are deemed admitted, along with the

dearth of evidence presented by Fabriko in support of its

claim, doom the case. Fabriko argues that the district

court erred in determining that there was no evidence

that Green Lake Marina could obtain financing and that

there was no evidence that Green Lake Marina and Prokos

did not act in good faith. Fabriko argues that it submitted sufficient evidence to raise an issue of fact as to

whether Green Lake Marina could have obtained financing to complete the purchase. That contention is

merely an effort to avoid the impact of the admissions. The

district court properly deemed admitted that at no time

after the offer was extended would the bank have

financed the deal, and also admitted that the bank had

security interests in all of the Prokos and Green Lake

Marina’s assets, thus making it impossible for them to

obtain financing from any other lender. Those facts are

conclusively established for purposes of this case, and

Fabriko cannot now attempt to rebut them with other

evidence.

Fabriko argues, however, that Green Lake Marina and

Prokos never sought to obtain that financing, so even if

the financing ultimately would have been denied, it

remains that they did not make a good faith effort to obtain it. Setting aside the obvious problem of whether

one could establish a violation of a contract based on the

failure to pursue a futile effort at obtaining financing,

Fabriko has failed to establish a genuine issue of fact as

to the good faith efforts. Fabriko relies on the deposition of

David Moody who was the banker in charge of the loans

for Green Lake Marina and Prokos. The deposition,

however, established that they in fact sought to obtain

financing for the deal, but that they were unable to

obtain it. Moody made clear that Prokos initially ap-
6 No. 06-3889

proached him regarding financing for the purchase of the

Green Lake property to be used as a dealership, but

Moody indicated that he had many concerns about such

a project and concerns about the bank’s ownership of

that particular property if the endeavor failed. Moody

indicated that after the Shoreline deal presented itself,

the bank was willing to finance that whereas it would not

have financed the Green Lake property because the Shoreline deal had so many positives lacking in the Green Lake

one, including that it was an established, reputable dealership with no need for renovation costs associated with the

Green Lake property. Moody further stated that Prokos

continued to seek financing for the Green Lake property

even as he pursued the Shoreline deal, because he wanted

to use the property for the storage of boats. The deposition

taken as a whole therefore reveals a continual effort by

Prokos and Green Lake Marina to obtain financing to

purchase the Green Lake property. Fabriko’s reliance on

isolated statements taken out of context are insufficient to

establish a genuine issue of fact.

Fabriko also appears to believe that financing would

have been available for the deal if Prokos and Green

Lake Marina had not decided to purchase the Shoreline

dealership in May 2004. Moody made clear in the deposition that the Shoreline deal was a much better financial

situation. It was already operating as a dealership, had

an established reputation and a long history in the area,

had exclusive rights to a desirable line of top-end boats,

and the management had agreed to stay on to help run

the operation. In contrast, the Green Lake property

would have required renovations to transform it from a

warehouse to a dealership, and would lack the existing

customer base, physical layout, and product line that

Shoreline provided. Therefore, the ability to finance the
No. 06-3889 7

Shoreline deal in the same time period does not indicate

that the Green Lake deal could have been financed. The

uncontradicted evidence from Moody is that the bank

considered the Shoreline deal to be a good financial

transaction, but would not finance the Green Lake one.

Even though Green Lake Marina wanted to establish

the dealership in the Shoreline location, it retained interest in the Green Lake property because the warehouse

could be used to store boats in winter. Moody made

clear, however, that the bank would not finance that

transaction, particularly in light of substantial cost overruns that emerged around that time on another Green

Lake Marina project.

Fabriko’s claim is unclear, but ultimately appears to

rest on the belief that Green Lake Marina and Prokos

somehow were precluded from entering into any other

business transactions during the financing contingency

period that would adversely affect their desirability to

lenders. Here, Green Lake Marina planned to open a

boat dealership across from Shoreline with the goal of

competing directly against Shoreline, but Green Lake

Marina was subsequently given the more enticing opportunity to purchase competitor Shoreline, thus avoiding that competition entirely. There is nothing in the

contract that precludes the parties to the contract from

considering that or any other business transactions, and

no evidence that the bank would have funded the deal

even absent the Shoreline transaction. Nor does Fabriko

present any caselaw supporting its theory. It is not the

job of this court to develop arguments for appellants. See

Kramer v. Banc of America Securities LLC, 355 F.3d 961, 964

n.1 (7th Cir. 2004); United States v. Berkowitz, 927 F.2d 1376,

1384 (7th Cir. 1991) (“undeveloped arguments, and argu-
8 No. 06-3889

ments that are unsupported by pertinent authority, are

waived”). In fact, there is a noticeable dearth of case

support throughout the brief. Fabriko has presented no

evidence of bad faith here, and the district court properly

granted summary judgment.

Fabriko also contends that the district court erred in

imposing a sanction in the amount of $2,500 on Fabriko’s

counsel under Federal Rule of Civil Procedure 11. Sorenson

sought that sanction in the district court arguing that the

case against him was frivolous. Fabriko claimed that

Sorenson revealed confidential information to Green

Lake Marina regarding the sale price that would be acceptable to Prillaman for the Green Lake property. Fabriko

contended that as a result, it sustained losses equal to the

difference between the amount orally offered for the

property, and the substantially lower amount set forth in

the written contracts of December 2003 and March 2004. As

the court pointed out, however, the contingencies in the

written contract were never fulfilled and therefore the

transaction did not take place. Thus, there is no damage

caused by the alleged actions here because the transaction

was never completed for the unrelated reason of the

inability to obtain financing.

Although Sorenson informed Fabriko of the causation

problem in a letter and subsequently in a formal motion

for sanctions, Fabriko did not take advantage of the 21-

day window to withdraw or correct the claim. Under

Rule 11(c)(2), a motion for sanctions that is served on a

party cannot be filed or presented to the court if, within

21 days of service, the offending party withdraws or

appropriately corrects the challenged paper claim, defense, contention or denial. Fabriko did not take advantage of that 21-day opportunity to withdraw or
No. 06-3889 9

amend its frivolous claim against Sorenson, and instead

ignored the issue to its detriment. The district court

appropriately found that plaintiff’s counsel “clearly

failed to investigate the law or the facts or both when it

maintained the suit against Sorenson after being put on

notice of the problems with its case.” We review a district court’s imposition of sanctions under Rule 11 for abuse

of discretion, Cuna Mut. Ins. Soc’y v. Office & Prof’l Employees Int’l Union, Local 39, 443 F.3d 556, 560 (7th Cir. 2006),

and find no such abuse here. We note in passing that in

addition to reiterating the merits of its meritless case,

Fabriko in arguing the inappropriateness of the sanction

focuses solely on the knowledge it had as of the date of its

filing of the case. Under Rule 11, however, an attorney

violates Rule 11 in maintaining a claim that is unwarranted

by existing law or has no reasonable basis in fact, and that

applies to claims presented to the court “whether by

signing, filing submitting, or later advocating it.” Fed. R.

Civ. P. 11(b). Fabriko continued to advocate a claim that

had no legal basis and refused to alter or withdraw it when

that deficiency was pointed out to it. That conduct warranted Rule 11 sanctions.

The decision of the district court is AFFIRMED. 

USCA-02-C-0072—7-29-08