Court Opinion

ID: 4538041
Source: CourtListenerOpinion
Date Created: 2020-06-01 17:00:40.916153+00
Date Added: 2024-06-11T12:42:36.211592
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 19-2290
R3 COMPOSITES CORP.,
                                                  Plaintiff-Appellee,
                                 v.

G&S SALES CORP.,
                                              Defendant-Appellant.
                     ____________________

         Appeal from the United States District Court for the
         Northern District of Indiana, Fort Wayne Division.
        No. 1:16-cv-00387-HAB-SLC — Holly A. Brady, Judge.
                     ____________________

     ARGUED JANUARY 22, 2020 — DECIDED JUNE 1, 2020
                ____________________

    Before WOOD, Chief Judge, and SYKES and HAMILTON, Cir-
cuit Judges.
    HAMILTON, Circuit Judge. The central issue in this case is
whether R3 Composites Corporation owes G&S Sales Corpo-
ration any additional sales commissions for work G&S did as
a representative for R3. The parties agreed on a written con-
tract. The critical term dealing with sales commissions did not
show any agreement on commission rates. It said instead that
the parties would try to agree on commission rates on a job-
2                                                   No. 19-2290

by-job, customer-by-customer basis. Everyone agrees that the
original “agreement to agree” would not have been enforcea-
ble by itself, but the parties did in fact later agree on commis-
sion rates for each customer and went forward with their
business.
    The district court granted summary judgment for manu-
facturer R3, relying primarily on the original failure to agree
on commission rates. We reverse. A reasonable jury could ﬁnd
that the later job-by-job commission agreements were gov-
erned by the broader terms of the original written contract.
The rest of the case is rife with factual disputes that cannot be
resolved on summary judgment.
I. Facts for Summary Judgment and Procedural Background
    A. The Parties and Their Agreement
    R3 molds custom ﬁberglass parts for a variety of industrial
applications. G&S was an independent sales representative
for R3. The relationship began in 2010, when R3 owner Roy
Carver III met Steven Stefani in the course of R3’s acquisition
of some hydraulic presses. In early 2011, Carver and Stefani
began to discuss the possibility of Stefani working as a sales
representative for R3. Stefani then brought in his business
contact Mark Glidden. By the end of January 2011, Glidden
and Stefani had formed G&S Sales Corp. The company, a
Michigan corporation, was owned jointly by Stefani and his
wife, Patricia Stefani. Glidden styled himself as G&S’s man-
aging partner.
    In February 2011, Carver, Stefani, and Glidden had agreed
on major parameters of their business relationship. They exe-
cuted an agreement called a “Non-Disclosure Agreement”
(“the NDA”) that expressed their mutual understanding.
No. 19-2290                                                  3

Much of the NDA governs the conﬁdential technical infor-
mation about R3’s business that Glidden and Stefani would
learn as the business relationship evolved. Various provisions
deﬁned what constituted conﬁdential information, speciﬁed
how Glidden and Stefani were to handle this information,
listed exceptions to the stated restrictions on disclosure, and
said that Glidden and Stefani would not gain any intellectual
property rights simply by virtue of the information disclosed.
   One paragraph is central here. Paragraph 12.2, “Commis-
sion,” said in full:
      If G&S obtains jobs for R3, the parties will at-
      tempt to develop an agreement whereby G&S is
      paid a commission with a guideline being a 5%
      commission with the precise commission rate to
      be negotiated on a job-by-job basis. A commis-
      sion will also be paid for any and all extensions,
      renewals, subsequent phases, or additional
      terms of any such job obtained by G&S for R3,
      the amount of which to be determined on a job-
      by-job basis. Any commissions to be paid to
      G&S in this Section 12.2 are predicated upon
      G&S fulﬁlling all of its obligations under this
      Agreement, including without limitation, those
      provisions of Section 12.3 immediate following.
Paragraph 12.3 provided in part that G&S would not interfere
with “any existing R3 jobs by attempting to transfer such
work to other molders.”
  Paragraph 13, “Termination,” provided: “Either party
may, at any time, terminate this Agreement eﬀective upon
4                                                  No. 19-2290

written notice to the other party. Notwithstanding such ter-
mination, the obligations of each party as set forth in Sections
2, 3, 4, and 12 of this Agreement shall survive termination of
this Agreement.” (Section 2 deﬁned “conﬁdential infor-
mation;” section 3 placed restrictions on use of that infor-
mation; and section 4 established that neither party could hire
employees of the other without consent for two years after the
last disclosure of conﬁdential information.) No other provi-
sions of the contract governed the commissions R3 would pay
G&S.
    After the parties signed the NDA, G&S brought a signiﬁ-
cant sales lead to R3: a company called Aquatic Bath. Over
several months, G&S and R3 worked together to win Aquatic
Bath’s business. Aquatic Bath and R3 signed a contract on July
8, 2011, with an initial term of three years. The Aquatic Bath
business seemed like a sure thing as early as May 2011. That’s
when R3’s Carver oﬀered G&S’s Glidden the position of Plant
Manager at R3’s plant so that he could work on production
for the Aquatic Bath contract. Glidden accepted the position
and began work at R3 on June 1, 2011. In a choice that seems
to lie at the heart of this lawsuit, Glidden maintained his role
at G&S while also working for R3. Stefani and Glidden dis-
cussed the potential for conﬂicts of interest, but they ulti-
mately agreed that Glidden could continue in both roles.
   The Aquatic Bath business did not prove as lucrative as R3
and G&S had hoped. In a series of emails between February
and July 2012, R3’s Carver and G&S’s Stefani debated the ap-
propriate commission rate and the prospects for the Aquatic
Bath account. They ultimately agreed to a 3 percent commis-
sion once monthly sales reached $600,000, which G&S says
No. 19-2290                                                 5

happened around March 2013. During this time, G&S contin-
ued to provide leads to R3, resulting in business from several
other customers: Janesville Acoustic, Trivector, Max Secure,
and American Stonecast. The parties agree on this much.
Their accounts diverge beginning with events in 2014.
   B. The Dispute Over Commissions and the Termination
    In 2014, Aquatic Bath, the most lucrative account, changed
its purchase order procedures. Rather than using a blanket
purchase order, as it had previously, Aquatic Bath began to
issue individual purchase orders. It also changed the way raw
materials were supplied, though the parties dispute exactly
how. R3 says its agreement with Aquatic Bath did not require
Aquatic Bath to buy materials and parts from R3. Aquatic
Bath decided to begin providing its own sheet molding com-
pound and began paying R3 only for its molding work.
Carver spoke with Glidden about paying G&S its commission
rate on only the reduced amounts Aquatic Bath paid R3 for
only the molding work—not on the full price of the products,
which would have included the costs of materials. R3 recog-
nized that the change reduced G&S’s total commissions, but
R3 says the reductions were entirely above-board because
Glidden had agreed to the change on behalf of G&S.
    G&S sees things diﬀerently, and because we are reviewing
a grant of summary judgment for R3, we must give G&S the
beneﬁt of conﬂicting evidence and reasonable inferences from
the evidence. First, G&S characterizes the 2014 R3–Aquatic
Bath purchase agreement in quite diﬀerent ﬁnancial terms. In
G&S’s telling, R3 was to buy the sheet molding compound
from Aquatic Bath (instead of receiving it for free), complete
its molding work, then sell the products back to Aquatic Bath
at full price, rather than charging only for the molding work.
6                                                  No. 19-2290

G&S contends it was entitled to commissions representing 3
percent of the full price of the ﬁnished products, not just the
price of the molding work alone. The change in buying prac-
tices was cutting its commissions by nearly 50 percent,
amounting to hundreds of thousands of dollars. Glidden, per-
haps wearing two hats at once, told G&S of the new arrange-
ment. According to G&S, though, those emails misrepre-
sented the nature of the R3–Aquatic Bath relationship, result-
ing in underreporting and underpayment of commissions.
   G&S and R3 also disagree about the calculation of com-
missions on two other accounts, for Janesville Acoustics and
Trivector. According to G&S, as these accounts’ proﬁtability
ﬂuctuated, Glidden, in his capacity as R3’s Plant Manager, be-
gan by deciding how much commission he wanted to pay
G&S each month, then instructed R3’s CFO to doctor the un-
derlying sales ﬁgures to produce the desired result. R3 does
not substantially dispute this but says that its CFO believed
that Glidden had the authority, in his capacity as G&S’s man-
aging partner (a title that Stefani disputes), to change commis-
sion rates. For purposes of R3’s summary judgment motion,
we must assume that Glidden did not have authority from
G&S to agree to these changes and did not disclose these
changes to Stefani.
    On June 24, 2015, R3 invoked the termination clause of the
NDA. G&S stopped looking for new business for R3. Under
the terms of Paragraphs 13 and 12.2 of the NDA, R3 continued
to pay commissions to G&S on existing jobs, though the par-
ties dispute whether R3 paid the appropriate amounts. G&S
reminded R3 in a July 10, 2015 letter that its commission pay-
ment obligations survived the termination of the agreement,
per the terms of Paragraph 13 of the NDA. During the year
No. 19-2290                                                   7

following termination, R3 and G&S attempted to negotiate a
new agreement but were not able to do so. Negotiations broke
down for good in September 2016. According to G&S, R3’s
payment of August 2016 was insuﬃcient and did not reﬂect
the full amount of commissions then due for May and June
2016. R3 stopped making payments altogether in September
2016.
   C. This Lawsuit
    This lawsuit began when R3 ﬁled a complaint in an Indi-
ana state court on October 21, 2016. The complaint sought a
declaratory judgment on two points: ﬁrst, that the NDA was
enforceable and that R3 had already paid all commissions due
G&S under that agreement, and second, that R3 had paid all
commissions due and would not be liable for any additional
payments even if the court found the NDA was unenforcea-
ble. G&S removed the case to federal court based on diversity
of citizenship. G&S also ﬁled counterclaims for breach of con-
tract, exemplary damages, and fees under the Indiana Sales
Commission Act, and a declaration that R3 was liable for con-
tinuing commissions under the NDA. (In the meantime,
Aquatic Bath had continued to do business with R3.)
     After time for discovery, R3 moved for summary judg-
ment on thirteen distinct issues. The ﬁrst eight dealt with var-
ious aspects of interpretation of the NDA and R3’s commis-
sion obligations under that agreement. Two covered Glid-
den’s actual or apparent authority to agree to or to initiate
modiﬁcations of commission rates or sales numbers reported
to G&S. Two pertained to G&S’s Indiana Sales Commission
Act claims. And in the last, R3 argued, in the alternative, that
the NDA was illusory and that as a result, G&S would be en-
titled to commissions on only a portion of the Aquatic Bath
8                                                    No. 19-2290

business, not the continuing orders placed after R3 termi-
nated the NDA in June 2015.
    Chief Judge Springmann granted summary judgment as
to the last issue but denied it as to the ﬁrst twelve. See R3 Com-
posites Corp. v. G&S Sales Corp., 2019 WL 979565, No. 1:16-cv-
00387-TLS (N.D. Ind. Feb. 27, 2019). The court reasoned that
it “would be unable to fashion a remedy” as to prospective
commissions due under the NDA because the agreement did
“not detail the commission rate R3 would be obligated to
pay.” The court also found, however, that the parties had nei-
ther demonstrated the existence nor the particulars of any po-
tential implied or oral contract, and that genuine issues of ma-
terial fact existed around Glidden’s dual-agent roles, so that a
trial was needed on all other issues.
    Neither side accepted that decision. G&S moved for par-
tial reconsideration, disputing the court’s determination that
the NDA was illusory. G&S also requested leave to ﬁle a sec-
ond amended counterclaim to plead the existence of, and for
recovery under, implied and/or oral commission contracts for
speciﬁc customers. R3, on the other hand, moved to amend or
modify the court’s decision, seeking for the ﬁrst time sum-
mary judgment across the board. Its new theory was that G&S
had not expressly pleaded the existence of implied and/or oral
commission contracts, which R3 argued was the only basis for
any claim by G&S after the NDA was deemed illusory.
   While those motions were pending, the case was reas-
signed to Judge Brady, who granted R3’s motions, denied
those of G&S, and entered ﬁnal judgment for R3 on all claims.
See R3 Composites Corp. v. G&S Sales Corp., No. 1:16-cv-00387-
HAB (N.D. Ind. June 5, 2019). Judge Brady found that Para-
No. 19-2290                                                     9

graph 12.2 of the NDA, governing commissions, was unen-
forceable and that any subsequent agreements, should they
exist, were separate contracts: “What G&S is really asking the
Court to do is consider subsequent agreements, and to ﬁnd
that these agreements further deﬁne the NDA’s wording re-
garding R3’s obligation to pay commission to G&S.” Judge
Brady rejected that theory, ﬁnding that the NDA’s gap could
not be ﬁlled in by the later job-by-job agreements that it antic-
ipated. She also found that G&S waited too late to seek leave
to amend its counterclaim to add what the judge viewed as a
new and distinct implied contract claim: G&S had been
“aware of the wording of the NDA from the beginning of the
litigation” and therefore could not argue that it had only be-
come aware of the need to amend its pleading when R3
moved for summary judgment. G&S has appealed.
II. Summary Judgment and the “Job-by-Job” Agreements
    We review a grant of summary judgment de novo, India
Breweries, Inc. v. Miller Brewing Co., 612 F.3d 651, 658 (7th Cir.
2010), and in this case we apply the substantive law of Indiana
to the questions of contract formation and interpretation. Id.,
citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938), and
Schindler v. Seiler, 474 F.3d 1008, 1010 (7th Cir. 2007). We view
all facts in the light most favorable to the non-moving party
and draw all reasonable inferences in its favor. Camp v. TNT
Logistics Corp., 553 F.3d 502, 505 (7th Cir. 2009). “That is, sum-
mary judgment is warranted if there are no genuine issues of
material fact with respect to the interpretation of the … agree-
ment; ambiguity with respect to a material matter precludes
summary judgment.” India Breweries, Inc., 612 F.3d at 658, cit-
ing Cherry v. Auburn Gear, Inc., 441 F.3d 476, 481 (7th Cir.
2006).
10                                                  No. 19-2290

    We begin by identifying which issues were actually at
stake at the summary judgment phase. The parties, both dis-
trict judges, and this court all agree that Paragraph 12.2 of the
NDA, quoted above, was illusory and unenforceable on its
own. The phrase “the parties will attempt to develop an agree-
ment” on commissions is an unmistakable agreement to
agree, not a binding contractual commitment. But Paragraph
12.2 does not stand on its own. The evidence shows that after
agreeing to the NDA, the parties in fact succeeded in agreeing
on job-by-job commission rates. They proceeded to honor
those agreements, at least for a time, including R3’s payments
of commissions to G&S after R3 terminated the NDA.
   One view of the evidence, needed to sustain summary
judgment for R3, is that each of those job-by-job agreements
stood by itself, independent of the original NDA. Another
view of the evidence, argued by G&S, is that the job-by-job
commission agreements were exactly what Paragraph 12.2 of
the NDA contemplated. Under that view, the NDA acted as
an umbrella agreement that supplied generally applicable
terms of the parties’ agreement (including post-termination
commissions), which were adapted to particular customers
by the job-by-job agreements. Accordingly, under the latter
view of the case, many factual disputes are material and re-
quire a trial.
   In granting summary judgment for R3, Judge Brady did
not engage with G&S’s theory on the merits. She accepted
R3’s argument that G&S had abandoned any theory based on
the job-by-job agreements. We respectfully disagree. The
grant of summary judgment to R3 was based on an abuse of
discretion in not allowing G&S to rely on the later job-by-job
commission agreements under the umbrella of Paragraph
No. 19-2290                                                       11

12.2 of the NDA. That is a perfectly viable theory under con-
tract law, and G&S did not need to amend its complaint to
pursue that theory. “Plaintiﬀs need only plead facts, not legal
theories, in their complaints.” Reeves ex rel. Reeves v. Jewel Food
Stores, Inc., 759 F.3d 698, 701 (7th Cir. 2014). We agree in es-
sence with Chief Judge Springmann’s original decision (a)
that Paragraph 12.2 of the NDA was of course not enforceable
standing alone to establish any commission rates, but (b) that
the rest of the case is rife with genuine issues of material fact.
    Paragraph 12.2 of the NDA was unenforceable in and of
itself as an agreement to agree. See, e.g., Wolvos v. Meyer, 668
N.E.2d 671, 675 (Ind. 1996) (contracts must demonstrate “in-
tent to be bound and deﬁniteness of terms,” quoting 1 Arthur
Linton Corbin & Joseph M. Perillo, Corbin on Contracts § 2.8
at 131 (rev. ed. 1993) (“Promises may be indeﬁnite …. The
more important the uncertainty, the stronger the indication is
that the parties do not intend to be bound.”). But Indiana law
also recognizes that diﬀerent writings—or writings and con-
versations, or writings and conduct, for that matter—may be
combined to create a contract that is suﬃciently deﬁnite to en-
force. See, e.g., Citizens Progress Co., Inc. v. James O. Held & Co.,
Inc., 438 N.E.2d 1016, 1021 (Ind. App. 1982) (“Indiana recog-
nizes the validity of a contract resting partly in writing and
partly in parol”); Gerdon Auto Sales, Inc. v. John Jones Chrysler
Dodge Jeep Ram, 98 N.E.3d 73, 79–80 (Ind. App. 2018) (holding
that a contract could be enforced as modiﬁed by the parties’
conduct); see also Druco Restaurants, Inc. v. Steak N Shake En-
terprises, Inc., 765 F.3d 776, 783–84 (7th Cir. 2014) (applying
Wolvos, holding that an option contract combined with a later
deal struck by the parties could be suﬃciently deﬁnite to be
enforced, and observing that “[t]he diﬀerence between an un-
enforceable ‘agreement to agree’ and a valid option contract
12                                                   No. 19-2290

depends upon intent to be bound and deﬁniteness of terms”);
Mays v. Trump Indiana, Inc., 255 F.3d 351, 358–59 (7th Cir. 2001)
(reviewing multiple letters and evidence of oral conversations
collectively to determine whether a contract was suﬃciently
deﬁnite to be enforced under Indiana law). Paragraph 12.2 of
the NDA was not enforceable by itself, but it could, as that
paragraph expressly contemplated, combine with subsequent
writings and/or conversations and/or conduct to become en-
forceable.
    This possibility was evident, as we read the record, from
the outset of the lawsuit. From the beginning of the suit, both
parties alleged the existence of the later job-by-job agreements
on commissions on particular accounts. Both parties even
framed these agreements as contemplated by, and pursuant
to, Paragraph 12.2 of the NDA. Tracing the contested aspects
of the pleadings and discovery shows why the agreement to
agree about commission terms in Paragraph 12.2 of the NDA
does not resolve the case.
   In our system of notice pleading, complaints need only
plead facts suﬃcient to put defendants on notice of the claims
against them. “[T]he federal courts require notice pleading,
not fact pleading complete with all the minutiae. A complaint
need only provide notice of a plausible claim; there is no rule
requiring parties to plead legal theories or elements of a case.”
Auto Driveaway Franchise Systems, LLC v. Auto Driveaway Rich-
mond, LLC, 928 F.3d 670, 675 (7th Cir. 2019), citing Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556
U.S. 662 (2009); see also Fed. R. Civ. P. 8(a)(2) (a viable plead-
ing must include “a short and plain statement of the claim
showing that the pleader is entitled to relief”).
No. 19-2290                                                 13

    In its brief on appeal, R3 argues that G&S always relied
exclusively on the language in Paragraph 12.2 of the NDA and
thereby limited the theories available on summary judgment.
We read the record diﬀerently. G&S’s ﬁlings consistently
treated any later agreements as to commission rates as falling
under the NDA. Paragraph 7 of its initial counterclaim, ﬁled
November 14, 2016, alleged that “G&S fully performed and
complied with the provisions of § 12 of the Agreement and
was responsible for obtaining jobs sourced to R3 which have
been generating annual sales to R3 in excess of $10 million per
year,” explicitly connecting Paragraph 12 with subsequent
business generated and the amounts due to G&S as a result.
And Paragraph 10 of the counterclaim alleged:
      R3 generally continued to pay the sales commis-
      sions to G&S which were required under the Agree-
      ment from June of 2015 through August of 2016.
      During this time period, the parties discussed
      the possibility of adjusting the sales commission
      rates for the commissionable jobs. The parties
      were unsuccessful in negotiating new commis-
      sion rates, however, and R3 then unilaterally
      stopped the payment of the required commis-
      sions in violation of the Agreement. (Emphasis
      added.)
   This paragraph, in particular, portrayed the job-by-job
commission agreements as falling under the umbrella of the
NDA, not as stand-alone contracts. This paragraph was
enough to put R3 on notice that the later job-by-job agree-
ments were part of the case using what we might call the um-
brella theory.
14                                                No. 19-2290

    R3 and Judge Brady read G&S’s later interrogatory re-
sponses as disavowing any reliance on the later job-by-job
agreements as part of the NDA. We disagree with this reading
of the responses. R3 relies most heavily on G&S’s response to
Interrogatory No. 7, which asked for the pertinent details of
any agreement between G&S and R3 other than the NDA.
G&S responded: “Defendant is not aware of any other agree-
ments at this time.”
    We understand how that answer, in isolation, might be
read as R3 argues. In responses to Interrogatory Nos. 8, 9, and
10, however, G&S’s theory was quite clear. Number 8 asked
for the particulars of any modiﬁcations to any agreements be-
tween the parties. G&S answered that the NDA was modiﬁed
orally as to the commission rate on the Aquatic Bath account.
Number 9 asked for any allegations of R3’s failure to comply
with, and/or breach of, any terms of any agreement with G&S.
G&S responded that “R3 breached § 12.2 and § 13 of the Non-
Disclosure Agreement by failing to pay G&S sales commis-
sions with those sections, including post-termination sales
commissions.” Number 10 asked for details about any conten-
tions that R3 failed to pay G&S for services rendered. G&S
answered in relevant part:
      Pursuant to § 12.2, once the job was obtained, R3
      was required to pay sales commissions to De-
      fendant on the job at the agreed-upon rate. The
      agreed-upon rate was 3% for the Aquatic [Bath]
      account, and 5% for all jobs with all other ac-
      counts. R3 was also required to pay commis-
      sions on any and all extensions, renewals, sub-
      sequent phases and additional terms of such
      jobs.
No. 19-2290                                                   15

    Taken together, the original allegations and the responses
to interrogatories make clear that G&S at all times considered
the particular commission rates negotiated for each account
to fall within the broader ambit of Paragraph 12.2 of the NDA,
even though the four corners of that document had not (yet)
speciﬁed any commission rates. In other words, G&S as-
serted, and did not disavow, its legally viable theory for treat-
ing the job-by-job commission agreements as covered by the
NDA umbrella.
    If that were not enough, and it is, R3’s own allegations re-
ﬂected that approach to the NDA and the job-by-job agree-
ments. In R3’s original complaint, Paragraph 15 alleged that
“R3 paid G&S commissions for each production contract
and/or purchase order, negotiated on a job-by-job basis, with
the commission amount varying based on each job’s proﬁta-
bility.” Paragraph 22 alleged that “R3 paid G&S commissions
for each production contract and/or purchase order sourced
by G&S, negotiated on a per job basis, with the commission
amount varying based on each job’s proﬁtability.” Paragraph
31 alleged that “R3 attempted in good faith to negotiate a rea-
sonable commission on a job-by-job basis as required by the
Agreement.” (Emphasis added.) And paragraph 49 alleged
that “G&S is not entitled to any further commissions pursuant
to the Agreement and/or any implied agreement.”
   These allegations were echoed in R3’s prayer for relief:
“WHEREFORE, plaintiﬀ, R3 Composites Corp., by counsel,
requests that, if the Court ﬁnds that the Agreement [NDA] is
unenforceable and that an implied contract exists, that the
Court enter an order ﬁnding that R3 has paid defendant, G&S
Sales Corp., all commissions to which G&S was entitled under
the implied contract; that R3 is not obligated to pay G&S any
16                                                No. 19-2290

future commissions under the implied contract; and for all
other just and proper relief.” Thus, R3’s own pleadings sig-
naled that it thought the job-by-job commission agreements
were part of the case from the beginning, and G&S certainly
never rejected that theory.
   In short, the dispute to be resolved in this case comes
down to what was framed by R3 in its initial complaint for
declaratory judgment: R3 and G&S signed an NDA contem-
plating subsequent negotiation of commission rates on partic-
ular accounts, with continuing obligations to pay surviving
the termination of the agreement. G&S went out and found
some business for R3. The two parties in fact negotiated com-
mission rates on that business, and R3 paid G&S some money.
G&S thinks R3 owes it more money. R3 thinks it has paid G&S
everything it was due. Who is right depends on disputed facts
about which customers of R3 paid it how much and on what
terms, how much R3 paid in commissions to G&S, and
whether G&S agreed to the amounts it actually received.
    “[A] contract establishes a relationship among the con-
tracting parties that goes well beyond their express promises.
The promise, or group of promises, or other bargain, is
ﬂeshed out by a social matrix that includes custom, trade us-
age, prior dealings of the parties, recognition of their social
and economic roles, notions of decent behavior, basic as-
sumptions shared, but unspoken by the parties, and other fac-
tors, most especially including rules of law, in the context in
which they ﬁnd themselves.” 1 Corbin on Contracts § 1.3, Def-
inition of the Term “Contract” (2019) (providing a “richer,
more helpful” deﬁnition of the term). “Courts construe con-
tracts from a utilitarian standpoint bearing in mind the par-
ticular business activity sought to be served.” 11 Williston on
No. 19-2290                                                  17

Contracts § 31.2 (4th ed. 2019), citing Hooks v. Samson Lone
Star, Limited Partnership, 457 S.W.3d 52 (Tex. 2015). In inter-
preting and enforcing contracts here, the law takes into ac-
count the parties’ actions and pragmatic consequences of their
agreements and actions.
    The evidence on summary judgment does not bar G&S’s
reliance on the job-by-job commission agreements under the
NDA umbrella. R3’s theory seems to be that each job was its
own agreement, bearing no relationship to the NDA. That
theory is inconsistent with at least R3’s earlier pleadings, and
we see little evidence to support it. The NDA’s language does
not support R3’s theory. It expressly contemplates such agree-
ments, and the absence of more general terms in the job-by-
job agreements weighs in favor of, and at least permits, treat-
ing each as under the general umbrella of the NDA.
    We asked the parties whether particular evidence helped
choose between the parties’ competing theories—R3’s theory
of job-by-job agreements as entirely independent of one an-
other and the NDA, or G&S’s theory that each job-by-job
agreement in eﬀect completed the open term of Paragraph
12.2 under the NDA umbrella. We were not directed to evi-
dence favoring R3’s theory. By contrast, G&S’s evidence in-
cludes the important fact that R3 acted as if each job-by-job
agreement was subject to the NDA. Recall that Paragraph 12.2
provided: “A commission will also be paid for any and all ex-
tensions, renewals, subsequent phases or additional terms of
any such job obtained by G&S for R3, the amount of which to
be determined on a job-by-job basis.” R3 continued to pay at
least some portion of the commissions due after the parties
terminated the agreement. As best we can tell, any obligation
to pay could have come only from the NDA itself, as applied
18                                                  No. 19-2290

to each job-by-job commission. There was no claim of any
other source for that continuing obligation to pay.
   The NDA shows that the parties, at minimum, contem-
plated doing business together and reaching further, more
speciﬁc agreements as to commission rates. The NDA treated
the customer-by-customer rates as the only term that re-
mained to be worked out. That price term is critical, of course,
and without later explicit or implied job-by-job agreements,
there would be no obligation to pay. But it is not diﬃcult to
read Paragraph 12.2 of the NDA as stating the parties’ agree-
ment on all other terms for those agreements, including R3’s
obligation to continue paying commissions on later sales,
even after termination of the NDA itself.
    The existence of later job-by-job commission agreements
is not in dispute. Both parties pleaded as much. In fact, lots of
business was done and lots of money changed hands. The
parties disagree on the percentage G&S was owed on partic-
ular accounts, and on the base sales amounts from which the
commissions were to be calculated. Much of the dispute
hinges not on the particulars of the NDA or the later job-by-
job agreements between R3 and G&S, but rather on whether
Glidden—the purported managing partner of G&S and sim-
ultaneous manager of R3—had the actual or apparent author-
ity to bind either party or both to modiﬁcations as to any par-
ticular customers. The factual resolution of the R3–Aquatic
Bath arrangement after 2014 is also highly relevant to the
question of whether G&S is owed any additional commission
on that account. Chief Judge Springmann recognized these is-
sues in her initial summary judgment ruling, which ad-
dressed the interpretation of the NDA, the issue of implied
No. 19-2290                                                     19

and/or oral contracts as to commissions, and Glidden’s appar-
ent agency. Though Indiana law considers mere “agreements
to agree” unenforceable, it recognizes that such agreements,
combined with evidence that the parties later reached a deﬁ-
nite agreement through further writings or conversations, can
be enforceable. Sand Creek Country Club, Ltd. v. CSO Architects,
Inc., 582 N.E.2d 872, 875 (Ind. App. 1991). The job-by-job com-
mission agreements pleaded by both parties could have com-
bined with Paragraph 12.2 of the NDA to become enforceable.
See Wildwood Industries, Inc. v. Genuine Machine Design, Inc.,
587 F. Supp. 2d 1035, 1046–47 (N.D. Ind. 2008) (applying Indi-
ana law: “valid written contract need not be in a single self-
contained document; it may consist of multiple documents so
long as the necessary elements for contract formation exist”),
citing Noble Roman’s, Inc. v. Ward, 760 N.E.2d 1132, 1138 (Ind.
App. 2002), and Johnson v. Sprague, 614 N.E.2d 585, 590 (Ind.
App. 1993). It is for the jury to decide under Indiana law the
extent of Glidden’s authority and the proper interpretation of
any commission agreements that were negotiated pursuant to
the NDA. Accordingly, summary judgment in R3’s favor
across the board was erroneous.
III. Denial of Leave to Amend
    During the second round of summary judgment brieﬁng,
G&S sought leave to amend its counter-complaint to allege
“the existence and details of an implied and/or oral contract
between the parties, and to include alternative theories of re-
covery in its Counter-Complaint based on contract implied in
law and contract implied in fact.” Judge Brady denied this
motion on the ground that it was too late and G&S had not
shown good cause for its delay, relying on our decision in Al-
ioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011) (district
20                                                    No. 19-2290

court is “entitled to apply the heightened good-cause stand-
ard of Rule 16(b)(4) before considering whether the require-
ments of Rule 15(a)(2) [are] satisﬁed”). G&S had been aware
of the NDA’s wording from the outset of the case, the court
reasoned, which should have given it suﬃcient notice that the
NDA might be held unenforceable. For its part, R3 argues that
it raised the unenforceability argument in its original com-
plaint for declaratory judgment, and that throughout the dis-
covery process, G&S explicitly disavowed reliance on any
contract other than the NDA.
    We review a denial of leave to amend a pleading for abuse
of discretion. Runnion v. Girl Scouts of Greater Chicago and
Northwest Indiana, 786 F.3d 510, 524 (7th Cir. 2015), citing Gan-
dhi v. Sitara Capital Management, LLC, 721 F.3d 865, 868 (7th
Cir. 2013). Rule 15 provides that district courts “should freely
give leave [to amend] when justice so requires.” Fed. R. Civ.
P. 15(a)(2). District courts may deny leave to amend, however,
where there is a good reason to do so: “futility, undue delay,
prejudice, or bad faith.” Kreg Therapeutics, Inc. v. VitalGo, Inc.,
919 F.3d 405, 417 (7th Cir. 2019). One party may be prejudiced
where the other has changed one of its critical legal theories
at the eleventh hour in a way that the other side could not
have foreseen. Id.
   “Although Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), require that a
complaint in federal court allege facts suﬃcient to show that
the case is plausible … they do not undermine the principle
that plaintiﬀs in federal courts are not required to plead legal
theories.” Hatmaker v. Memorial Medical Center, 619 F.3d 741,
743 (7th Cir. 2010) (citation omitted). So, as a threshold matter,
G&S need not even have sought to amend the complaint to
No. 19-2290                                                 21

include “alternative theories of recovery … based on contract
implied in law and contract implied in fact” in order to pursue
those alternative theories of recovery. The complaint, in other
words, did not dictate the legal theories G&S was permitted
to rely on later in the lawsuit.
    As noted above, in their original pleadings, both parties
pleaded the existence of implied and/or oral contracts govern-
ing commissions to be paid, and G&S’s discovery responses
did not disavow reliance on those job-by-job commission
agreements. Thus, the outcome of G&S’s motion to amend
should not have been decisive. G&S’s delay in ﬁling this un-
necessary motion to amend should have no consequence. In
denying leave to amend, the district court should not have re-
lied on G&S’s supposed lack of diligence. Its request was
prompted only because the issues for summary judgment
were erroneously narrowed in the ﬁrst place.
   The judgment of the district court in favor of R3 is
REVERSED and the case is REMANDED for further proceed-
ings consistent with this opinion.
22                                                  No. 19-2290

    SYKES, Circuit Judge, dissenting. My colleagues have con-
ceptualized this contract claim in a way that bears little
resemblance to the claim G&S Sales Corporation actually
raised and litigated below. It’s not our role to situate the case
within a viable theory of recovery; that’s the job of the
plaintiﬀ’s lawyer. (Here, G&S is the counterclaim plaintiﬀ.)
    In the district court, G&S premised its breach-of-contract
claim exclusively on the existence of an enforceable written
contract—the Non-Disclosure Agreement (“NDA”). It stuck
with that characterization of its claim for more than three
years of litigation, through the close of discovery and at the
summary-judgment phase. It wasn’t until after Judge
Springmann ruled on summary judgment that the NDA is
an unenforceable “agreement to agree” that G&S belatedly
sought to amend its complaint to add claims premised on
the existence of an enforceable oral contract or, alternatively,
an implied-in-fact contract, and to seek recovery under the
implied-in-law contract doctrines of quantum meruit and
unjust enrichment. Judge Brady reasonably rejected this
major pivot as coming far too late in the case.
   The majority accepts that the NDA is an unenforceable
“agreement to agree” but reverses Judge Brady’s order
based on a new concept of the claim: that the unenforceable
NDA + the parties’ job-by-job negotiations + the parties’
conduct = the contract. Whatever the viability of this novel
theory, it’s not how G&S litigated the claim in the district
court. True, the parties spent a lot of time developing a
record about their course of conduct after the NDA was
signed, but the signiﬁcance of that post-agreement conduct
was limited to the dispute about the enforcement of the
written contract. Notably, G&S did not argue at summary
No. 19-2290                                                  23

judgment that if the NDA was illusory and unenforceable,
then the parties nonetheless had an enforceable oral agree-
ment to pay commissions, or that their course of conduct
independently demonstrated the existence of an implied
contract, or that the evidence was suﬃcient for a reasonable
jury to ﬁnd liability under the doctrines of quantum meruit
or unjust enrichment.
    These are separate and distinct forms of contract liability,
each with its own legal elements and factual predicates.
Under Indiana law “[t]here are three general types of con-
tracts—express, implied-in-fact, and constructive.” Zoeller v.
E. Chi. Second Century, Inc., 904 N.E.2d 213, 220 (Ind. 2009).
“Express and implied-in-fact contracts are traditional con-
tracts,” but “constructive contracts”—i.e., contracts implied
in law under the doctrines of quantum meruit and unjust
enrichment—“are not contracts at all.” Id. 220–21.
    An express contract may be either written or oral;
Indiana law also recognizes the validity of contracts that are
partly written and partly oral provided that the parol evi-
dence rule does not apply and with the important caveat that
a contract partly in writing and partly oral is considered “a
mere oral contract.” Citizens Progress Co. v. James O. Held &
Co., 438 N.E.2d 1016, 1021 (Ind. Ct. App. 1982); see also Majd
Pour v. Basic Am. Med., Inc., 555 N.E.2d 155, 158 (Ind. Ct.
App. 1990). An implied-in-fact contract, on the other hand,
rests entirely on implications arising from the parties’ con-
duct. DiMizio v. Romo, 756 N.E.2d 1018, 1024 (Ind. Ct. App.
2001) (explaining that “an express contract is evidenced by
spoken or written words while an implied contract is evi-
denced by the conduct of the parties”). In contrast, a
quantum-meruit claim is available when the plaintiﬀ confers
24                                                No. 19-2290

a beneﬁt on the defendant at the latter’s express or implied
request and with the expectation of payment, if the failure to
require payment would be unjust. Woodruﬀ v. Ind. Family &
Soc. Servs. Admin., 964 N.E.2d 784, 791 (Ind. 2012). And a
claim for unjust enrichment lies when the plaintiﬀ confers “a
measurable beneﬁt” on the defendant “under such circum-
stances that the defendant’s retention of the beneﬁt without
payment would be unjust.” Zoeller, 904 N.E.2d at 220.
    It should be clear from this brief discussion that these
categories of contractual and quasi-contractual recovery are
diﬀerent and not interchangeable. Pleading a single claim for
breach of a written contract, as G&S did, is not enough to
sweep in all forms of possible contract liability that might
provide a diﬀerent basis for recovery if the written contract
claim fails. For example, the existence of an enforceable oral
agreement cannot be plausibly inferred from a complaint
that pleads only a breach of a written agreement. Nor do
allegations that the defendant breached a written agreement
support a claim for breach of an implied-in-fact contract,
which rests on inferences from conduct alone, much less a
quantum-meruit or unjust-enrichment claim. G&S itself
recognized this and hastily moved for leave to ﬁle an
amended complaint adding these new claims after Judge
Springmann ruled that the NDA is illusory and unenforcea-
ble.
   My colleagues characterize this procedural step as un-
necessary, invoking the aphorism that a complaint need not
plead legal theories. Majority Op. at 20–21. That principle
has no application here. This litigation moved well past the
pleading stage, through several years of discovery and full
summary-judgment brieﬁng. G&S consistently characterized
No. 19-2290                                                   25

its claim as one for breach of a written contract, speciﬁcally
the NDA. Our litigation system requires a plaintiﬀ to identi-
fy all legal grounds on which recovery is sought.
Rule 16(b)(3)(A) enforces this obligation through the device
of a mandatory scheduling order, a required provision of
which is a deadline for amendments to the pleadings. If G&S
wanted to raise additional grounds for recovery beyond the
written NDA—whether based on allegations of an enforcea-
ble oral contract; or a contract partly written and partly oral,
which Indiana treats as an entirely oral contract; or an
implied-in-fact contract based on the parties’ conduct; or an
entitlement to a quasi-contractual form of recovery under
quantum meruit or unjust enrichment—then it had to ﬁle an
amended complaint identifying these additional claims not
later than the deadline established in the district court’s
scheduling order. It did not do so.
    Judge Brady was therefore right to insist that G&S show
good cause for missing the deadline, as Rule 16(b)(4) re-
quires. See Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir.
2011). And she quite reasonably concluded that G&S had not
established good cause for its delay.
    G&S does not challenge Judge Brady’s refusal to revisit
Judge Springmann’s ruling that the NDA is illusory and
unenforceable. That’s an appropriate concession. The NDA
states only that the parties will “attempt to develop an
agreement” on commissions at a later point in the relation-
ship. That’s a mere “agreement to agree,” and it’s well
established that “an ‘agreement to agree’ is not enforceable
under Indiana law.” Druco Rests., Inc. v. Steak n Shake Enters.,
Inc., 765 F.3d 776, 783 (7th Cir. 2014); see also Mays v. Trump
Ind., Inc., 255 F.3d 351, 357 (7th Cir. 2001) (applying Indiana
26                                                 No. 19-2290

law); Wolvos v. Meyer, 668 N.E.2d 671, 674 (Ind. 1996) (“The
law is well established that a mere agreement to agree at
some future time is not enforceable.”).
    In sum, G&S brought a claim for breach of a written con-
tract, litigated it through summary judgment, and tried to
shift its legal basis for recovery only after that claim failed.
Judge Brady properly rejected this belated eﬀort to add new
claims so late in the litigation. We should aﬃrm.