Opinion ID: 2981683
Heading Depth: 5
Heading Rank: 1

Heading: Finder’s Fee Provisions

Text: The Finder’s Fee Provisions together state the following: (1) that “[n]o broker or finder has acted for Buyer or its Affiliates in connection with [the APA],” (2) that “no broker or finder retained by Buyer . . . is entitled to any brokerage or finder’s fee,” and (3) that “[n]o representation or warranty by Buyer in [the APA] . . . contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein . . . not misleading.” -8- Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al. APA §§ 5.2.4 & 5.2.6. The district court found that Invacare paid McDaniel a $30,000 consulting bonus, which “had all of the characteristics of a finder’s fee” and which “[Invacare] internally referred to . . . as a finder’s fee.” The record supports these conclusions. Invacare’s internal documents referred to the flat bonus as a finder’s fee. The Invacare point man for the acquisition, Mike Will, recognized the bonus as a finder’s fee and inquired internally whether it may require disclosure. Drawing all reasonable inferences from these facts in the plaintiffs’ favor, reasonable minds could conclude that Invacare violated the representations in the Finder’s Fee Provisions by promising a “finder’s fee” to McDaniel, who aided as a “finder.” Invacare protests that the district court never specifically identified McDaniel as a “finder,” but the language of the district court opinion suggests otherwise. After noting the Black’s Law Dictionary definition of “finder’s fee” as “[t]he amount charged by one who brings together parties for a business opportunity,” the district court found that “McDaniel introduced Underwood and Naylor to the Defendants”—i.e., acted as a finder by bringing the parties together. Furthermore, while Invacare may have paid the flat fee in lieu of McDaniel’s usual revenuedependent quarterly bonus due to accounting reasons, the court correctly found that the defendants’ accounting rationale does not necessarily preclude the payment from counting as a finder’s fee. (Analogously, if a child usually receives a weekly allowance but receives a birthday present in lieu of the allowance on the week of her birthday, the present would not, for that reason, cease to be a birthday present.) The timing of the payment shortly before the close of sale and the atypical flat payment structure independent of future revenue could lead to the inference that the payment served -9- Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al. as a reward for McDaniel’s role in facilitating the Naylor deal, rather than the usual reward for growing rental revenue. From these facts, a reasonable mind drawing all inferences in plaintiffs’ favor could conclude, as the district court did, that Invacare offered McDaniel a finder’s fee, both in name and in function. Invacare’s attempts to limit the Finder’s Fee Provisions to circumstances of unfair “surprise” also fail as contrary to the provisions’ plain language. Even if, as Invacare insists, parties usually agree to such prohibitions against finder’s fees only because they want to foreclose “someone coming out of the woodwork claiming [entitlement] to a fee,” the plain language of the agreement provides no exceptions for lack of surprise. Granted, the district court recognized that “Underwood knew McDaniel was consulting for Defendants, Underwood knew McDaniel’s compensation was the bonus or fee based on his growth of Defendants’ rental revenue, [and that] Underwood expected McDaniel to be paid a bonus based on growing the revenue of Naylor in the event that Defendants purchased Naylor.” Even so, it could reasonably infer from the circumstances that Invacare’s promise of a flat bonus created an “entitle[ment]” to a “finder’s fee.” The district court need not credit Invacare’s one-sided explanation that Underwood’s awareness of some aspects of McDaniel’s incentives with Invacare falls outside of the “typical[] use[]” of finder’s fee provisions. Whether or not Underwood reasonably relied on the absence of a direct link between McDaniel’s pay incentives and the Naylor acquisition when accepting a purchase price, the payment still falls under the plain meaning of “finder’s fee.” And where no ambiguities exist, we need not resort to construing provisions against the drafter. Invacare breached the Finder’s Fee Provisions by promising - 10 - Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al. McDaniel a finder’s fee in lieu of his usual profit-based quarterly bonus, regardless of its accountingrelated motives for paying the fee.