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BLENDER v. AMERICAN FEED AND FARM SUPPLY

January 6, 2005.

DAVID A. BLENDER, doing business as MUSTANG CAPITAL, LLC, Plaintiff,
v.
AMERICAN FEED AND FARM SUPPLY, INC., Defendant.



The opinion of the court was delivered by: SUZANNE CONLON, District Judge

MEMORANDUM OPINION AND ORDER

David Blender ("Blender") d/b/a Mustang Capital, LLC ("Mustang") sues American Feed and Farm Supply, Inc. ("American") for breach of contract. Specifically, Blender contends he is entitled to a $225,000 success fee and a $5000 monthly advisory fee under the parties' consulting contract. American removed this case from state court, and now moves for summary judgment under Fed.R.Civ.P. 56.

BACKGROUND

  The following facts are undisputed. Mustang provides consulting, advisory and intermediary services to locate third-party business financing sources for clients. American Facts at ¶ 2. American distributes and supplies agricultural, farm and ranch products. Id. at ¶ 3. On April 7, 2002, Mustang and American signed an agreement, providing:
FINANCING SERVICES
Advisor agrees to utilize "best efforts" in identifying, negotiating, and structuring debt and/or equity financing and/or strategic relationship(s) on behalf of The Company. The Company agrees to pay MUSTANG a cash success fee in the amount equal to three percent (3%) of any Senior Loan(s)* and five percent (5%) of any Equity* committed to The Company if The Company closes a transaction with a source whom MUSTANG interacts on behalf of The Company.
SUCCESS FEE PAYMENT
Success fees are due in full to the Advisor in the state of Illinois when the transaction is closed or funded (initially or fully). The Company authorizes the funding sources to pay MUSTANG the full success fee directly from the proceeds of any and all funding obtained as a result of MUSTANG's direct or indirect involvement.
TERMINATION PROVISIONS
This Agreement may be terminated by either party upon one party providing the other party 30 days prior written notice, however, termination of this Agreement by either party does not relinquish The Company's fiduciary responsibility and contractual obligations(s) to compensate Advisor upon successful purchase transaction, funding or additional financing with and all Advisor and non-Advisor identified lending, financing, investment, and funding sources or other such third-party financings with whom Advisor has interacted on The Company's behalf and shall remain in effect for a period of not less than one (1) year from the date of termination of this Agreement. If a transaction or an additional funding with any company, individual, or funding source with whom Advisor has interacted on The Company's behalf occurs within 12 months after the date of termination of this Agreement, the above noted success fee is immediately due and payable to Advisor.
Id. at ¶ 8; Blender Add'l Facts at Ex. 4. In addition, the agreement provided American would pay Mustang $5000 per month. American Facts at ¶ 7. Joseph Hahn, American's president, asked Blender to draft the agreement using plain language. Id. at ¶ 9. American made minor changes to the draft agreement, but never sought to add language regarding the term "interaction" as used in the agreement. Blender Add'l Facts at ¶¶ 8-9. Blender and American reviewed the termination provision language; American did not object to the language.*fn1 Id. at ¶ 13.

  Before seeking a financing lender, Blender and American prepared a financing profile for American that did not identify American by name. American Facts at ¶ 11. The profile was sent to potential funding sources; Blender was not authorized to disclose American's identity to the funding source until the funding source executed a confidentiality agreement, referred to as a Non-Disclosure Agreement ("NDA"). Id. at ¶ 12; Blender Resp. to American Facts at ¶ 12. Upon receipt of the signed NDA, Blender identified American as the client and provided American's full financial information to the potential lender. American Facts at ¶ 13. American was aware there was no language in the agreement specifying that Blender was required to have a signed NDA or identify American to the lending source to qualify for a termination success fee. Blender Add'l Facts at ¶¶ 22-23.

  In May 2002, Blender contacted Bruce Walderson, a sales representative with Textron Financial Corporation's ("Textron") Chicago office, on American's behalf. Id. at ¶ 27. Walderson's initial response to Blender's call was favorable. Id. Blender had a previous working relationship with Textron's Ft. Worth, Texas office and initially contacted that office on American's behalf. Id. at ¶ 30. Blender ultimately received Walderson's name from a sales person in the Textron Dallas, Texas office. American Facts at ¶ 15. Walderson telephoned Blender and told him to contact James St. Clair, Walderson's boss. Blender Add'l Facts at ¶ 29. Accordingly, on May 21, 2002, Blender sent an e-mail to Walderson and St. Clair and attached the profile and NDA. American Facts at ¶ 14. On September 18, 2002, Walderson and St. Clair's employment with Textron terminated. Id. at ¶¶ 17-18. Blender did not reveal American's identity to Walderson and St. Clair because they did not sign and return the NDA. Id. at ¶ 16. Blender advised American he contacted Textron on its behalf. Blender Add'l Facts at ¶ 32. American was unaware of Textron as a potential lending source until Blender identified Textron to American. Id. at ¶ 33. Between May and August 2002, Blender obtained NDAs and term sheet financing proposals from lenders other than Textron. Id. at ¶ 19. At American's request, Blender also assisted American's attempt to negotiate, structure and close financing with Sunrock Capital. Id. at ¶ 20. The Sunrock Capital loan fell through in August 2002 and did not close. Id. Blender did not identify Sunrock Capital as a potential funding source. Blender Add'l Facts at ¶ 35. American paid Blender a $170,343.32 success fee for his work on the Sunrock deal. Id. at ¶¶ 38-39. On August 12, 2002, Blender sent American a letter at American's request listing the funding sources with whom Blender had interacted on American's behalf, including a contact person and phone number for each source. American Facts at ¶ 21; Blender Resp. to American Facts at ¶ 21 and Exs. 5-6. Textron and Walderson were on the list. Blender Resp. to American Facts Ex. 6. American did not dispute the contents of Blender's list. Blender Add'l Facts at ¶ 46.

  Blender did not have an exclusive agreement with American, and American was free to use services of other consultants in its effort to secure a lender. American Facts at ¶ 10. On August 23, 2002, American signed a contract with a second loan intermediary broker, Steve Clapp of Credit Access Corporation ("CAC"), located in Denver, Colorado. Id. at ¶ 22. American's contract with CAC specifically prohibited CAC from contacting any of the sources Blender identified in his August 12, 2002 letter, so that Blender would continue to have opportunities to put together a deal for American. Id. at ¶ 23. In mid-September, the CAC contract was modified to permit CAC to seek financing from any lenders except those with whom Blender had obtained signed NDA's, or lenders with whom Blender negotiated at American's request. Id. at ¶ 24.

  On October 23, 2002, CAC contacted Gary Collins in Textron's Oswega, Oregon office; CAC and Collins compiled a written term sheet proposal from Textron to American. Id. at ¶ 25. Collins never had any contact with Blender, nor was he aware of Blender's previous contacts with Walderson. Id. at ¶ 26. American did not accept Textron's October 23, 2002 term sheet. Id. at ¶ 27.

  On October 24, 2002, American signed a consulting agreement with a third broker, Morris Anderson & Associates, Ltd. ("Morris"). Id. at ¶ 29. Robert Swett, Morris' consultant, recommended that American terminate its contract with Mustang to save $5000 per month in expenses. Id. at ¶¶ 30-31. On October 29, 2002, American sent Blender written notice that it was terminating their agreement. Id. at ¶ 32. As of October 29, 2002, none of the potential funding sources Blender contacted had any active or pending financing negotiations with American. Id. at ¶ 33. Blender stopped performing work for American shortly after receipt of the termination notice, and he did not send American an invoice for any November 2002 advisory services. Id. at ¶¶ 34-35. American paid all monthly $5000 retainer and expense invoices from April 2002 through October 31, 2002. Id. at ¶ 44.

  In November 2002, Collins' boss, who was located in Textron's Alpharetta, Georgia office, informed Collins that Swett contacted another Textron sales representative in Alpharetta regarding financing for American. Id. at ¶ 36. Collins had previously proposed a Textron terms sheet; because American was located in Collins' territory, he worked with Swett to prepare a new term sheet financing proposal. Id. American accepted Textron's November 23, 2002 term sheet financing proposal and on February 18, 2003, Textron issued financing to American. Id. at ¶¶ 37-38. Blender did not negotiate, structure or close any financing with Textron on American's behalf. Id. at ¶ 41. American paid CAC a broker's commission as a result of its obtaining the initial Collins proposal. Id. at ¶ 42. DISCUSSION

  I. Summary Judgment Standards

  Summary judgment is appropriate when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once a moving party meets its burden, the non-moving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Silk v. City of Chicago, 194 F.3d 788, 798 (7th Cir. 1999). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing the motion. Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

  II. Summary ...


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