Court Opinion

ID: 2819791
Source: CourtListenerOpinion
Date Created: 2015-07-23 17:01:52.967091+00
Date Added: 2024-06-11T12:17:59.654076
License: Public Domain

In the

     United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 13-2005
TROVARE CAPITAL GROUP, LLC,
                                                  Plaintiff-Appellant,

                                 v.

SIMKINS INDUSTRIES, INC., et al.,
                                               Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 08 C 3133 — Robert W. Gettleman, Judge.
                     ____________________

    ARGUED SEPTEMBER 15, 2014 — DECIDED JULY 23, 2015
                     ____________________

   Before FLAUM, KANNE, and SYKES, Circuit Judges.
    KANNE, Circuit Judge. Trovare Capital Group, LLC
(“Trovare”) sought to purchase an affiliated group of family-
owned companies (collectively “Appellees”). The parties ex-
ecuted a Letter of Intent (“LOI”) that previewed their nego-
tiations toward the sale. The LOI included a provision re-
quiring Appellees, if they terminated negotiations in writing
before a certain date, to pay Trovare a breakup fee. Trovare
alleged that Appellees intentionally scuttled the deal prior to
2                                                         No. 13-2005

the termination date, and then engaged in sham “negotia-
tions” to avoid paying the breakup fee. After a bench trial,
the district court concluded that Appellees had not terminat-
ed negotiations before the termination date, and that Trovare
was therefore not entitled to the breakup fee. Trovare ap-
peals that judgment. We affirm.
                            I. BACKGROUND
   This diversity case involves a failed business transaction
between Appellees and Trovare. Appellees are an affiliated
group of family-owned enterprises that manufacture and
import cardboard boxes. 1 At the relevant times, Leon Sim-
kins was the controlling shareholder of the businesses.
Randy Cecola was Trovare’s sole member.
    After decades at the helm, Simkins began to look toward
retirement. Because none of his children were interested in
running the family business, Simkins sought a buyer for the
companies. Appellees engaged Mesirow Financial, Inc.
(“Mesirow”) to act as broker, and through Mesirow, Trovare
expressed interest in the purchase. After a lengthy negotia-
tion, Trovare and Appellees executed the LOI on May 23,
2007. The LOI set forth the parties’ intention to negotiate an
asset purchase agreement (“APA”) that would govern the
sale. The parties then attempted to negotiate the APA over a
period of months.
   The majority of the LOI was explicitly nonbinding, but it
did include several binding terms. At issue here, Paragraph

1 The affiliated companies are Simkins Industries, Inc., Harvard Folding
Box Co., Inc., Linden-Summer Realty Co., Inc., and South Union Compa-
ny, Inc.
No. 13-2005                                                 3

14, which was binding, provided that “[i]f … the Seller pro-
vides to Buyer written notice that negotiations toward a de-
finitive asset purchase agreement are terminated, then Seller
shall pay Buyer a breakup fee of two hundred thousand dol-
lars ($200,000).” In another, nonbinding provision, the LOI
set a “termination date” of September 30, 2007, after which
time neither party would be obligated to pursue the sale.
    The parties engaged in protracted and contentious nego-
tiations following the LOI’s signing. On August 21, 2007,
over a month before the September 30 termination date,
Trovare sent Appellees a letter demanding payment of the
$200,000 breakup fee. Trovare alleged that Appellees had in-
ternally decided that they no longer wished to pursue the
sale, and therefore had terminated negotiations. All parties
agree that Appellees never issued a written notice of termi-
nation—an event that concededly would have triggered the
breakup fee provision of the LOI.
    Instead, according to Trovare, in order to avoid becoming
liable for the breakup fee, Appellees were at that time engag-
ing in sham, pretextual “negotiations.” In doing so, Trovare
argued, Appellees were putting forward bad faith communi-
cations as a means of providing the appearance of good faith
bargaining. Appellees, on the other hand, insisted that bona
fide negotiations were ongoing, and they reiterated their de-
sire to complete the sale. Following Trovare’s demand letter,
communications continued to pass between the two parties
through November 2007. Ultimately, however, the deal was
never consummated.
   Trovare continued to demand the breakup fee, and Ap-
pellees continued to insist that no termination had occurred
before the termination date (and thus that no breakup fee
4                                                 No. 13-2005

was owed). Trovare eventually filed suit in the Northern Dis-
trict of Illinois alleging breach of contract, seeking damages
in the amount of the $200,000 breakup fee. The district court
granted summary judgment for Appellees. We reversed and
remanded the case for further proceedings. We concluded
that genuine disputes of material fact existed as to two is-
sues: (1) whether Appellees had in fact ended negotiations
prior to the termination date; and (2) if so, whether Appel-
lees in bad faith refused to issue a written notice of termina-
tion.
    On remand, the district court held a bench trial in which
it reviewed submissions and heard testimony from multiple
witnesses. Much of the testimony concerned the history of
communications between the parties. We will not recite the
entire lengthy history of those communications; suffice it to
say, the negotiations were contentious. We focus here on the
areas of discussion that were central at trial and to the dis-
trict court’s decision.
   A few topics, which we discuss below, were of particular
importance: due diligence; “Phase II” environmental studies
(“Phase IIs”); and a “termination email” dictated by Simkins.
We treat these in turn.
    A. Due Diligence
    Two nonbinding paragraphs of the LOI referenced the
due diligence previewed by the parties. Paragraph 9 speci-
fied that:
    Completion of this transaction would be subject to
    conditions precedent to Buyer’s obligations to close as
    agreed to by the parties, including … completion by
    Buyer and its advisors of a due diligence investigation
No. 13-2005                                                       5

   satisfactory to it, in its sole discretion, of the Business’
   assets, prospects and other relevant information, in-
   cluding validation of relationships with key clients
   and approval by Buyer’s Board.
Paragraph 10 provided that:
   Seller will provide Buyer and its representatives rea-
   sonable access to the books, records, financial state-
   ments, properties, personnel, key suppliers, and key
   customers of the Business. Seller will provide blind
   customer order history, volumes and related infor-
   mation to Buyer. … Buyer and Seller will coordinate
   and mutually agree upon the timing, scope and con-
   tent of any customer interaction.
    As negotiations proceeded, two types of due diligence
became central to the parties’ discussions. First, Trovare
sought to conduct its own diligence. Appellees’ Chief Finan-
cial Officer, Anthony Battaglia, testified that he provided
Trovare with “historical financial records for the carton
plants at Simkins Industries, balance sheets, P&Ls, sales by
location … blind customer lists [and] … inventory listings.”
He characterized the information provided as “your stand-
ard information that you would use in the due diligence
process.” Battaglia also provided both unaudited and audit-
ed financial statements. In addition, Cecola visited all of the
facilities that were implicated in the sale. Trovare indicated,
however, that it wanted to receive customer lists in order to
validate Appellees’ relationships with key clients.
    Second, Trovare represented to Appellees that in order to
issue a funding commitment letter, the bank that was financ-
ing the non-real estate portion of the transaction would need
6                                                        No. 13-2005

to conduct its own diligence. The evidence indicates that,
from the outset, Trovare notified Appellees that the purchase
would be a financed transaction. Trovare represented that
both debt and equity financing were possible avenues that it
might pursue to fund the purchase.
    Trovare had approached TCF Bank about providing fi-
nancing for the non-real estate portion of the purchase, and
Andrew Harlan, vice president of commercial lending for
TCF, testified to the bank’s involvement in the deal. Harlan
testified that, as a standard practice in this type of transac-
tion, the bank would conduct its own due diligence investi-
gation. Apparently at Appellees’ request, TCF prepared a
generic field audit list, informing Appellees of the areas of
inquiry it would need to examine in its diligence process.
One element of that inquiry concerned “customer valida-
tion.” During that process, the bank would contact existing
customers to confirm outstanding debts to Appellees, in or-
der to verify Appellees’ accounts receivable representations.
Harlan testified that TCF would not have issued a commit-
ment letter or provided financing without conducting its
field audit. 2
    At trial, a number of Appellees' witnesses testified that
they viewed the diligence requests as excessive. Steve
Gadon, Appellees’ attorney and primary negotiator,3 charac-
terized the customer invoice verification as “a fraud audit.”

2 Cecola had also himself expressed interest in verifying customer ac-
counts through direct, non-blind customer interaction.
3 The evidence suggests that another individual, Barry Brant, took over
lead negotiating responsibilities in or around September 2007.
No. 13-2005                                                 7

He believed that to request such an audit was to intimate
that Appellees “were a bunch of crooks.”
    In addition to Appellees’ opinion that the requested dis-
closures were unreasonable, they were also concerned about
revealing the identities of their customers to an entity that
they viewed as a competitor. Cecola already owned a busi-
ness engaged in the cardboard box industry, and Appellees
were hesitant to disclose sensitive information before a deal
had been reached.
    This appears to have left Trovare and Appellees at an im-
passe: Trovare asserted that it couldn’t get a commitment let-
ter without the requested diligence, and Appellees asserted
that they wouldn’t allow diligence by a competitor without a
commitment letter (or perhaps a signed APA). Cecola testi-
fied that eventually he dropped his personal request for cus-
tomer interaction, stating that he was willing to accept his
bank’s diligence in order to try to secure a deal. The bank’s
diligence, however, was never completed.
   B. Phase II Studies
    The asset purchase pursued by the parties included a
number of manufacturing facilities. Trovare made clear from
the outset that it was concerned, unsurprisingly, about po-
tential environmental liability and remediation costs arising
from the real estate at issue. Both parties agreed that so-
called “Phase I” environmental studies (“Phase Is”) would
be commissioned and paid for by Trovare. This agreement is
memorialized in Paragraph 6 (a nonbinding provision) of the
LOI. The Phase Is involved a “paper review” of the real es-
tate at issue. Using public records, the Phase Is aimed to
8                                                 No. 13-2005

track the history of the properties, identifying whether there
were any areas of potential environmental concern.
    Trovare had always maintained that if the Phase Is so in-
dicated, Phase IIs would be necessary. Generally speaking, a
Phase II entails the physical inspection of a property, includ-
ing measures such as soil and water sampling. The LOI is
silent on the issue of Phase IIs, so a number of matters re-
mained for negotiation, including financial responsibility for
the Phase IIs, timing, and selection of the analyst. Trovare
also represented to Appellees that its bank would not pro-
vide financing for the real estate without the Phase IIs.
   Shortly after execution of the LOI, Trovare completed the
Phase Is. The Phase Is indicated that Phase IIs would be nec-
essary for all of Appellees’ properties, and Trovare promptly
notified Appellees, through Mesirow, of that fact. Battaglia
indicated to Trovare that a Phase II study consultant would
be selected in mid-June and that studies would begin imme-
diately thereafter. Appellees seem to have made further rep-
resentations about promptly conducting the Phase IIs,
though we need not discuss them at length.
    At the same time, however, Appellees were concerned
about financial liability that might arise from the results of
the Phase IIs. Gadon testified about those concerns at trial.
According to him, Appellees would have been required to
turn over to the government the results of the Phase IIs. Ap-
pellees were concerned that if the Phase IIs (and the relevant
statutory regimes) indicated a need for remediation, Appel-
lees would be on the hook for those costs if the deal with
Trovare didn’t materialize. Both parties opined that such
costs might reach into the millions of dollars.
No. 13-2005                                                  9

    So Appellees, contradicting their earlier statements, be-
gan representing to Trovare that they needed to receive at
least a conditional showing of financing before they would
order the Phase IIs. Gadon testified that “to do it before you
know you’ve got a deal to me seemed to be ludicrous. I
wanted to know I had a deal or at least the making of a deal
before we spent the money.” At least in internal emails, if not
external representations to Trovare, Appellees formulated
the position that the Phase IIs would not be completed be-
fore an APA was signed.
    Trovare, on the other hand, represented to Appellees that
it would be impossible to secure even a conditional offer of
financing without the Phase IIs. Trovare continued to insist
that the Phase IIs be completed prior to the signing of the
APA. It appears that Trovare did not provide Appellees with
any written verification that their real estate lender, whose
identity remains unclear, indeed required the Phase IIs. No
real estate lender testified at trial. Gadon testified that at
some point in the later phases of negotiation, in either Au-
gust or September, he “did concede and say, okay, we’ll do it.
I just got tired of arguing about it and said, okay, we’ll do a
Phase II. We didn’t do it, but we got close to it.” The Phase
IIs were never completed.
   C. The Simkins Email
    On August 2, 2007, Simkins’s secretary, Barbara Camera,
sent an email to Barry Brant, one of Appellees’ advisors and
negotiators. The email stated, “Leon just called me and said
to tell you that he definitely does not want to go through
with the Trovare transaction. He has intentions of operating
with his children in charge.” Appellees do not dispute that
this email was sent, or that Simkins made the statement ref-
10                                                No. 13-2005

erenced in the email. Simkins did not issue a subsequent
email or other written communication retracting that state-
ment. Appellees did not communicate the contents of this
email to Trovare.
    Trovare sees this e-mail as a smoking gun. Trovare ar-
gued at trial that it constituted a definitive termination of
negotiations between the parties. Trovare argued that com-
munications between the parties after this point proceeded
without Simkins’s authorization, and therefore were not bona
fide negotiations.
    Brant testified at trial that after giving Simkins a few
days to “cool off,” he spoke to Simkins about the negotia-
tions. Brant stated that he had assumed Simkins sent the
email in anger because something “set him off,” likely con-
tentious negotiations following a July 27 conference call with
Trovare. He also believed that Simkins was upset as a result
of operating under some misconceptions concerning the
deal. Brant testified that he expressed his opinion to Simkins
that going through with the Trovare deal represented the
best financial option for both the Simkins family and the
company. Brant testified that after their conversation, he un-
derstood that he was to continue negotiating the APA, and
that he did in fact continue to negotiate on Simkins’s behalf.
    Gadon also testified that he communicated with Simkins
following the email, which had been forwarded to him by
Brant. He outlined to Simkins the reasons why Simkins
should continue to pursue the sale to Trovare. Gadon testi-
fied that after those communications, it was his understand-
ing that he still had the authority to negotiate on Simkins’s
behalf, and that he did so.
No. 13-2005                                                   11

    At the conclusion of the trial, the district court found in
favor of Appellees. It concluded that negotiations continued
up to and beyond the September 30 termination date, and
that Appellees participated in those negotiations in good
faith. Therefore, the court held, Appellees had not terminat-
ed negotiations, and Trovare was not entitled to the termina-
tion fee.
                           II. ANALYSIS
    Following a bench trial, we review findings of fact for
clear error. Levenstein v. Salafsky, 414 F.3d 767, 773 (7th Cir.
2005). We review mixed questions of fact and law (that do
not involve constitutional rights) for clear error. Id. A finding
of fact is clearly erroneous “only when the reviewing court is
left with the definite and firm conviction that a mistake has
been committed.” Carnes Co. v. Stone Creek Mech., Inc., 412
F.3d 845, 847 (7th Cir. 2005).
    This was undoubtedly a close case for the district court,
but we conclude that the court did not commit clear error in
finding that Appellees continued to engage in bona fide nego-
tiations through the LOI’s termination date.
    All parties agree that Illinois law governs this diversity
dispute, and that Paragraph 14 constituted an enforceable
contractual obligation between the parties. As we noted in
our prior opinion in this case, this paragraph “contained a
condition precedent to [Appellees’] enforceable duty to pay
the breakup fee: their provision of written notice that negoti-
ations toward a definitive asset purchase agreement [were]
terminated.” Trovare Capital Grp., LLC v. Simkins Indus., Inc.,
646 F.3d 994, 998 (7th Cir. 2011) (internal quotation marks
omitted).
12                                                 No. 13-2005

     Trovare concedes that Appellees did not send a written
notice of termination, and therefore did not satisfy the condi-
tion precedent to payment of the breakup fee. Trovare relies
instead on the implied covenant of good faith and fair deal-
ing imposed on parties to a contract under Illinois law. See
Seip v. Rogers Raw Materials Fund, L.P., 948 N.E.2d 628, 637
(Ill. App. Ct. 2011) (stating “[t]he duty of good faith and fair
dealing is implied in every contract and requires a party
vested with contractual discretion to exercise it reasonably,
and not arbitrarily, capriciously, or in a manner inconsistent
with the reasonable expectations of [the] parties” (quoting
Kirkpatrick v. Strosberg, 385 N.E.2d 781 (Ill. App. Ct. 2008))).
This implied covenant applies in circumstances where one
party has complete control over the occurrence of a condi-
tion precedent, and the covenant seeks to prevent that party
from behaving “arbitrarily, capriciously, or in a manner in-
consistent with the reasonable expectations of the parties.”
Midwest Builder Distrib., Inc. v. Lord & Essex, Inc., 891 N.E.2d
1, 26 (Ill. App. Ct. 2007).
    In this case, Appellees had complete control over the oc-
currence of the condition precedent—providing written no-
tice of termination to Trovare. In order to prove a violation of
the implied covenant of good faith and fair dealing, Trovare
would have to show that Appellees caused the non-
occurrence of the condition, so that they would not have to
pay the breakup fee. In other words, Trovare must show that
Appellees (1) had no intention of completing the deal, but (2)
continued sham negotiations, rather than providing written
notice of termination. Trovare tries to make the required
showing by pointing to several pieces of evidence, which we
address in turn.
No. 13-2005                                                  13

   A. The Simkins Email
    Trovare argues that Simkins’s August 2 email proves the
first point, that Appellees had, at least by that date, decided
to end negotiations. Trovare argues that any communica-
tions that occurred after this date cannot be classified as bona
fide negotiations, because Simkins’s email shows that Appel-
lees had no real intention of seeing them through, particular-
ly as Simkins never retracted his statement expressly in writ-
ing. The district court disagreed, and we find no clear error
in its conclusion.
    In short, the district court credited the testimony of both
Brant and Gadon regarding whether negotiations continued
after the Simkins email. The court found that “Gadon coun-
seled Mr. Simkins, according to his testimony, which I be-
lieve because it makes perfect sense[.] [H]e counseled [Sim-
kins] to calm down, because everybody was frustrated at
that point in early August of 2007, and to continue negotiat-
ing with the plaintiff, because they had to sell the business.”
The district court also concluded that “it was really Mr.
Gadon and Mr. Brant who sort of filled in all the holes …
that painted this picture a lot more clearly to me and con-
vinced me that Simkins never terminated his desire to nego-
tiate an asset purchase agreement.”
    The district court did not clearly err when it held that
Simkins’s August 2 email did not spell the end of negotia-
tions or of Appellees’ desire to continue them in good faith.
We give great deference to a trial court’s determination of
credibility. See Carnes, 412 F.3d at 848 (stating “[w]e also af-
ford great deference to the trial court's assessment of witness
credibility; indeed, we have stated that a trial court's credi-
bility determination can virtually never amount to clear er-
14                                                No. 13-2005

ror” (internal quotation marks omitted)). The court found
both Brant’s and Gadon’s testimony credible concerning
Simkins’s state of mind when he sent the email, his intent to
continue negotiations, and the scope of Brant’s and Gadon’s
authority to negotiate on Simkins’s behalf. We see no evi-
dence that would mandate a finding of error on that credibil-
ity determination.
    In addition, circumstantial evidence supports the district
court’s conclusion. The evidence established that Simkins
was aware that communications continued to pass between
Appellees and Trovare after the email was sent. He contin-
ued to engage Mesirow to broker the deal. And he asked
Brant to take over primary responsibility for negotiations in
or around September, apparently because negotiations had
become either too contentious or too slow with Gadon. Had
Simkins intended to terminate negotiations on August 2, we
can only assume he would have stepped in to stop negotia-
tions when he saw that they were continuing.
   Because we cannot disturb the court’s credibility finding,
and because the finding is supported by ample record evi-
dence, we find no clear error in the court’s conclusions re-
garding the August 2 email and Simkins’s intention to go
forward in good faith.
     B. Appellees’ Course of Conduct
    Trovare next argues that Appellees’ course of conduct
makes evident that Appellees had, prior to September 30,
decided to end negotiations. Trovare contends that Appel-
lees imposed impossible conditions on Trovare in order to
prevent it from securing funding—thereby scuttling the deal.
In particular, Trovare contends that Appellees’ positions re-
No. 13-2005                                                 15

garding due diligence and the Phase IIs made a deal impos-
sible, and that Appellees intended such an outcome.
   The district court concluded that Appellees’ course of
conduct constituted bona fide negotiation, not pretextual
sham negotiations. Once again, we find no clear error in the
court’s conclusion.
      1. Due Diligence
    It is undisputed that Appellees refused to provide the full
scope of due diligence information that Trovare requested.
Trovare argues that Appellees knew that Trovare could not
secure financing without the diligence items it requested. So,
Trovare argues, Appellees refused to provide that infor-
mation (imposing an impossible condition) in order to im-
pair Trovare’s access to financing. That, in turn, would scut-
tle the deal. Appellees argue, on the other hand, that they
(1) considered Trovare’s requests to be unreasonable; and
(2) viewed Trovare as a competitor in the cardboard box
market, and were therefore particularly sensitive about dis-
closing information such as customer lists.
   First, while some aspects of the due diligence process
were described in nonbinding LOI provisions, many of the
details remained for further negotiation. Appellees were not
required to acquiesce to any and all diligence items request-
ed by Trovare or its lender, so a certain amount of bargaining
was undoubtedly expected by both parties.
    As events unfolded, Appellees were not satisfied with
some of the diligence items that Trovare requested. Gadon
testified that he believed that at least the “field audit” por-
tions of Trovare’s (or the lender’s) requests were excessive
and were tantamount to calling Appellees “a bunch of
16                                                No. 13-2005

crooks.” Trovare counters by pointing to trial testimony that
indicated that other individuals, such as Harlan from TCF
Bank, considered the diligence requests to be reasonable. But
that testimony does nothing to undermine Gadon’s conten-
tion that he, negotiating on behalf of Simkins, considered the
requests unreasonable.
    The district court did not make a factual finding as to
whether the diligence requests were reasonable. The court
stated that “Appellees provided audited financial state-
ments, and yet Mr. Cecola wanted apparently to verify some
of those audited financial statements to actually trace cash
receipts into bank accounts and that sort of thing, which I
think the seller’s people thought was a bit too much.” So the
district court credited Gadon’s testimony that he believed the
requests to be unreasonable. That belief constitutes a plausi-
ble explanation for why Appellees opposed the scope of
Trovare’s requests—an explanation other than the supposi-
tion that Appellees were stringing along false negotiations.
    Second, the district court concluded that Trovare and
Appellees were indeed competitors. It “credit[ed] Appellees’
evidence that the plaintiff and the defendant were competi-
tors, at least in some of the markets that they competed in.”
As such, the court concluded that Appellees were justified in
their heightened sensitivity to disclosing customer infor-
mation. The district court concluded that “the defendant in
good faith objected to the plaintiff’s contacting its customers
and employees directly.”
    In short, the district court credited Appellees’ explana-
tions as to why they opposed the scope of Trovare’s request-
ed diligence. Necessarily, then, the court rejected Trovare’s
argument that Appellees refused due diligence requests in
No. 13-2005                                                  17

order to scuttle the deal. Instead, the court concluded that
“[t]his was something that never got resolved. It might have
gotten resolved if they had gotten closer to the negotiation of
an agreement.” Record evidence supports the district court’s
conclusions, and we cannot find them to be clearly errone-
ous.
      2. Phase IIs
    The Phase IIs loomed large both in the parties’ negotia-
tions and in the trial testimony. Trovare argues here that, as
with the due diligence, Appellees refused to conduct the
Phase IIs in order to impair Trovare’s access to financing, and
thereby scuttle the deal. Appellees argue that they refused to
perform the Phase IIs until they received at least a condi-
tional financing commitment. This was in an effort to mini-
mize their financial liability for environmental remediation,
should the deal fall through.
    The district court’s findings on the Phase II issue are not
entirely clear. The court did not mention the Phase IIs prior
to reaching its holding that no termination had occurred. Af-
ter concluding that Simkins did not terminate negotiations
prior to September 30, the court made the following state-
ment:
   One more word before I finish, and that is about this
   environmental study issue, which a lot of testimony
   and evidence was presented. Mr. Cecola testified that
   his financing bank always demanded the Phase II,
   and that because he didn’t get the Phase II, that frus-
   trated and basically killed his ability to finance the
   deal.
18                                                  No. 13-2005

     But Andrew Harlan, who was the banking witness
     presented by the [defendant], testified, he was at TCF
     Bank, testified that that bank did not demand a Phase
     II, because they weren’t financing the real estate. So
     there is a definite inconsistency between that testimo-
     ny and Mr. Cecola’s, which really calls Mr. Cecola’s
     credibility into question.
    Trovare argues that this statement by the district court
constitutes clear error and calls for reversal. Trovare argues
that the court misunderstood either the nature of Harlan’s
testimony or Cecola’s representations and made a clearly er-
roneous factual finding. As the court itself noted, TCF Bank
was not providing the real estate financing, so it did not re-
quire the Phase IIs. Cecola never represented that it did. In-
stead, he represented that another bank—the one financing
the real estate—demanded the Phase IIs. Therefore, Trovare
argues, Cecola’s credibility could not properly have been
called into question by Harlan’s testimony.
    We agree with Trovare that Harlan’s testimony, as far as
we can tell, should have had no impact on Cecola’s credibil-
ity. However, this statement by the district court does not
constitute clear error requiring reversal, for the following
reasons. First, it seems to us that the Phase II issue had little
or no bearing on the district court’s reasoning or conclusion
as to termination. The court mentions the Phase IIs after
reaching its holding, and we have no reason to believe that
the court’s “[o]ne more word” influenced its already estab-
lished view on the question of termination.
    Second, Trovare does not establish that the only reasona-
ble explanation for Appellees’ refusal to conduct the Phase
IIs was a desire to scuttle the deal. Appellees put forward a
No. 13-2005                                                 19

plausible explanation as to their reluctance—their possible
financial liability for remediation—and Trovare’s arguments
do not render that explanation implausible.
    To be sure, Appellees’ actions relative to the Phase IIs
give us some pause. At best, Appellees changed their negoti-
ation position regarding the Phase IIs, and at worst, they en-
gaged in misrepresentation about whether the Phase IIs
would occur. After Battaglia represented that Appellees
would begin the Phase II process, Gadon then represented
on multiple occasions that no Phase IIs would be completed
until after an APA had been signed. This was a position that
Trovare indicated would be a deal-breaker. Gadon also testi-
fied, however, that he ultimately “got tired of arguing about
it,” and indicated that Appellees would do the Phase IIs pri-
or to signing an APA.
   The district court credited Gadon’s testimony, and
Trovare does not establish that the district court was clearly
erroneous.
                        III. CONCLUSION
    In sum, we conclude that the district court did not clearly
err when it concluded that Appellees continued negotiations
in good faith through September 30, 2007. Accordingly, we
AFFIRM the judgment of the district court.