Shuffle Tech International LLC v. Wolff Gaming, Inc.
Filing
125
Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 10/17/2013. Mailed notice (jdh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SHUFFLE TECH INTERNATIONAL, LLC,
an Illinois limited liability
company,
)
)
)
)
)
) Case No.11-CV–7358
)
)
)
)
)
Plaintiff,
v.
WOLFF GAMING, INC.,
a Colorado Corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
For
the
second
time
in
the
course
of
this
acrimonious
dispute over a business deal gone bad, I am asked to enter
summary judgment, this time in favor of defendant Wolff Gaming on
the only claim still pending: plaintiff’s claim that defendant
breached the parties’ Letter of Intent (the “LOI”) dated June 3,
2010.
Earlier
plaintiff’s
this
favor
contemporaneous
on
year,
its
I
granted
claim
for
document—the
“Draft
summary
a
judgment
declaration
Agreement”—was
in
that
not
a
an
enforceable contract, and that plaintiff’s only obligation to
defendant was to refund $124,940 in earnest money that defendant
advanced it while negotiations were ongoing.1
1
I also granted
I am puzzled by the dispute that has since arisen over whether
plaintiff must pay defendant this money. See DN 108, 118, and
119. The very claim on which plaintiff successfully sought
summary judgment requested, inter alia, “a judgment declaring
that Shuffle Tech’s only obligation to Wolff is to refund
summary
judgment
counterclaims.
in
plaintiff’s
favor
on
all
of
defendant’s
Shuffle Tech Intern. LLC v. Wolff Gaming, Inc., -
-- F. Supp. 2d ---, 2013, WL 2598952 (N.D. Ill. Jun. 11, 2013).
Because plaintiff’s remaining claim is likewise appropriate for
summary disposition, I grant defendant’s motion.
I.
My previous opinion summarized the background leading up to
the parties’ dispute, so I need not repeat it at length here.
To
recall, plaintiff manufactures and sells consumer-grade automatic
card shuffling machines, while defendant manufactures and sells
gaming
equipment
to
casinos
and
other
establishments.
The
parties contemplated entering into an agreement pursuant to which
plaintiff
would
financial
support
shufflers’
develop
from
exclusive
casino-grade
defendant,
distributor.
who
The
card
shufflers
would
parties
then
drafted
contemporaneous documents memorializing their plans.
at
issue
is
the
one-page
LOI,
signed
by
both
be
with
the
two,
The one now
parties,
the
entirety of which reads:
This is to confirm our mutual commitment to proceed
with the draft Development & Distribution Agreement
based on the Discussion Draft dated June 3, 2010 and
amended today as per our discussion.
Our mutual
commitment to proceed is contingent upon attorney
$124,940 advanced to Shuffle Tech as earnest money.” Corrected
Second Amended Complaint at 9 [DN 79]. Nothing in my June 11
opinion suggests that summary judgment was granted as to less
than all of this claim.
2
review and gaming authority review, and language of the
draft Agreement is subject to modification to conform
to applicable gaming law and regulation.
As evidence of Wolff Gaming’s commitment to proceed,
Wolff Gaming agrees (sic) immediately pay $100,000
toward the total $525,000 initial commitment described
in the draft Agreement.
This earnest money is to be
held by Shuffle Tech and may be used to proceed with
the project; however, in the event that a final
Agreement cannot be signed within 90 days, Wolff Gaming
may request the return of the entire $100,000 paid as
earnest money, and said earnest (sic) will be refunded
within 15 days of said request. Provided the Agreement
is signed, the earnest money will be deemed to be the
initial payment.
Please countersign this letter below to affirm that
this represents our agreement.
As I explained in my previous opinion, the parties never
reached the contemplated “final” agreement.
Defendant did not,
however, request the return of its earnest money at any time
prior
to
the
start
of
this
litigation.2
Indeed,
defendant
declined to respond to plaintiff’s multiple missives requesting
instructions for returning the earnest money, which plaintiff
sent after informing defendant, on August 1, 2011, of plaintiff’s
desire that the parties “settle all outstanding business … and go
[their] separate ways.”
Shuffle Tech, 2012 WL 2598952, at *5.
2
In fact, defendant requested the return of these funds only
after I granted summary judgment of plaintiff’s declaratory
claim, since until that point, defendant had maintained that the
“Draft” distribution agreement dated June 3, 2010, was the
parties’ final, enforceable agreement.
3
Plaintiff
asserts
that
the
LOI
is
a
“valid,
binding
agreement between the parties,” which a jury could find plaintiff
performed and defendant breached to plaintiff’s detriment.
To
prevail on this claim, plaintiff would have to prove: “(1) offer
and
acceptance,
terms,
(4)
(2)
consideration,
performance
by
the
(3)
definite
plaintiff
of
and
all
certain
required
conditions, (5) breach, and (6) damages.” Wigod v. Wells Fargo
Bank, N.A., 673 F.3d 547, 560 (7th Cir. 2012) (applying Illinois
law). Plaintiff
insists
that
the
“express terms
of
the LOI”
require defendant: 1) to commit to work in good faith towards the
completion and execution of a final Development & Distribution
Agreement;
and
authority
review
2)
to
of
seek
the
breached these duties.
and
Draft
receive
Agreement,
attorney
and
and
that
gaming
defendant
But neither the law nor the facts support
plaintiff’s theory of liability.
To begin, while it is true that a letter of intent may
create an enforceable agreement to negotiate in good faith, which
generally
prevents
the
parties
from
“renouncing
the
deal,
abandoning the negotiations or insisting on conditions that do
not conform to the preliminary agreement,” the existence and
scope of that duty “can only be determined…from the terms of the
letter of intent itself.”
A/S Apothekernes Laboratorium for
Specialpraeparater v. I.M.C. Chemical Group, Inc., 873 F.2d 155,
4
158 (7th Cir. 1989).
Despite plaintiff’s insistence that the
“express terms of the LOI” impose a duty to work in good faith
towards a final agreement, plaintiff points to no language in the
LOI that purportedly does so, nor does such a duty arise from
“broad principles dealing with the common law duty to perform
contracts in good faith.” Id. at 159.
Where an agreement “could
have been structured to require good faith negotiations or an
established framework for the negotiation process, but it did
not,” and instead “expressly contemplated that the parties may
not complete the deal,” there is no duty to negotiate in good
faith.
Citadel Group Ltd. v. Washington Regional Medical Center,
692 F.3d 580, 592 (7th Cir. 2012).
Because that is the case
here, plaintiff cannot, as a matter of law, prevail on the theory
that defendant breached the LOI by failing to return plaintiff’s
calls,
proposing
a
different
deal
from
the
one
the
parties
originally envisioned, or otherwise failing to reach a final
agreement.
Plaintiff’s
theory
that
defendant
breached
the
LOI
by
failing to seek and receive attorney and gaming authority review
is
equally
flawed
because
the
LOI
plainly
does
not
require
defendant to take these steps.
The only provision referencing
attorney
and
review
parties’
“mutual
gaming
authority
commitment
to
5
states
proceed
is
only
that
contingent
the
upon
attorney review and gaming authority review.”
This language
cannot reasonably be read to create an affirmative duty on either
party to seek and obtain such review.
The foregoing reasons are sufficient to entitle defendant to
summary judgment of plaintiff’s remaining contract claim, but
there appear to be others, too.
Although the parties focus their
arguments primarily on the last two elements of plaintiff’s claim
(breach and damages), the claim arguably falters at the gate on
the basis that the LOI is not an enforceable agreement at all
under Illinois law.
creates
the
Specifically, I am doubtful that the LOI
necessary
“mutuality
of
obligation,”
since
plaintiff’s only concrete duty is a contingent one: to return
defendant’s earnest money, upon defendant’s request, in the event
a final agreement is not signed within 90 days.
Otherwise, the
LOI provides only that plaintiff “may” use the earnest money to
proceed with the project.
I am likewise skeptical that the terms
of the LOI are sufficiently “definite and certain so that a court
can determine what the agreement was and what conduct constituted
a breach.” Bensdorf & Johnson, Inc. v. Northern Telecom Ltd., 58
F. Supp. 2d 874 (N.D. Ill. 1999) (citing Kraftco Corp. v. Kolbus,
274 N.E. 2d 153 (Ill. App. Ct. 1971)).
As defendant pointed out
in the last round of summary judgment briefing, if one reads the
LOI without reference to the contemporaneous Draft Agreement (the
6
final terms of which were never agreed upon), “one would have no
idea what the [earnest] money was for, and [plaintiff] would have
no
obligation
commitment.
what
the
to
do
anything
in
return
for
the
$525,000
There is not even any identification in the [LOI] of
parties
are
to
develop
and
distribute,
nor
any
description of any role [plaintiff] will have in the venture.”
Def.’s SJ Opp. at 10 [DN 80].
Because the parties have not
raised
current
these
defendant
is
issues
entitled
in
their
to
summary
briefs,
judgment
for
and
because
the
reasons
explained above, I need not explore these additional shortcomings
further.
In short, plaintiff’s claim for breach of the LOI
suffers from a multitude of infirmities entitling defendant to
judgment as a matter of law.
_____________________________
Elaine E. Bucklo
United States District Judge
Dated: October 17, 2013
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