The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge
MEMORANDUM OPINION AND ORDER
Fusion Capital Fund II, LLC ("Fusion") has filed a three-count Amended Complaint ("Complaint") against Millenium Holding Group, Inc. ("Millenium"), Richard Ham ("Ham") and Carla Aufdenkamp ("Aufdenkamp"), labeling its contentions under the rubrics of "Alter Ego/Piercing the Corporate Veil" in Count I, "Indemnification" in Count II and "Attorneys' Fees and Costs" in Count III. Fusion seeks a declaration of its right to recover attorneys' fees and expenses it incurred both (1) while defending itself against a prior action brought by Millenium in the United States District Court for the District of Nevada ("Nevada Litigation") and (2) in prosecuting this action. It asserts that right under two provisions of a Stock Purchase Agreement ("Agreement," referred to by the litigants as "SPA") that it entered into with Millenium on July 20, 2004.
Fusion now moves for summary judgment against Millenium*fn1 under Fed. R. Civ. P. ("Rule") 56 on Counts II and III. With that motion now fully fleshed out and briefed by the parties,*fn2 it is ripe for decision.
Summary Judgment Standard
Every Rule 56 movant bears the burden of establishing the absence of any genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to avoid summary judgment a non-movant "must produce more than a scintilla of evidence to support his position" that a genuine issue of material fact exists (Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that demonstrate a genuine issue of triable fact" (id.).
This case centers around the interpretation of contractual provisions. It is a "well-accepted principle that when contract construction is at issue, the question whether contractual terms are ambiguous or not is a question of law for the court to decide" (Houben v. Telular Corp., 231 F.3d 1066, 1072 (7th Cir. 2000)). Relatedly Utility Audit, Inc. v. Horace Mann Serv. Corp., 383 F.3d 683, 687 (7th Cir. 2004) teaches:
The interpretation of an unambiguous contract is a question of law, and therefore a dispute over the terms of an unambiguous contract is suited to disposition on summary judgment.
What follows is a summary of the facts, viewed of course in the light most favorable to non-movant Millenium. As will be seen, they pose no material issues of fact--most importantly, they negate the existence of any ambiguity in the relevant contract between the litigants.
Sometime in May 2004 or thereabout, Millenium began merger discussions with Sutura, Inc. ("Sutura") (¶10). Sutura, a private company, sought to pursue a reverse merger with a public company such as Millenium to gain access to public markets (id.). As a result of their discussions, on July 9, 2004 Sutura and Millenium executed an agreement and plan of merger ("Merger Agreement") (id.). Under the Merger Agreement (1) Millenium would absorb Sutura, with Millenium owning 10% of the surviving company's common stock and Sutura owning the other 90%, (2) Sutura's obligation to close the merger deal was conditioned in part on Millenium's having entered into definitive agreements for at least $15 million in post-Merger-Agreement financing and (3) either Millenium or Sutura could terminate their transaction if the merger was not consummated by November 30, 2004 (¶11).
In an effort to arrange for the post-Merger-Agreement financing required under the Merger Agreement, Millenium entered into its Agreement with Fusion on July 20, 2004 (¶12). Under the Agreement Fusion committed itself to purchase up to $15 million in Millenium stock, but it could terminate the Agreement (and of course that commitment) (1) if the Millenium-Sutura merger had not closed by October 31, 2004 or (2) if Fusion's stock purchases had not commenced because of Millenium's failure to satisfy certain specified conditions (id.).
As of October 31, 2004 (1) the Millenium-Sutura merger had not closed and (2) Fusion's stock purchases had not been required to commence (¶13). On November 1, 2004 Fusion therefore terminated the Agreement (id.), and on December 8, 2004 Sutura terminated the Merger Agreement because Millenium had not obtained financing from Fusion or any other party (¶14).
On September 20, 2005 Millenium filed an Amended Complaint ("Nevada Complaint") in the Nevada Litigation that it had brought in the federal district court there against Sutura and Fusion (¶15). In part the Nevada Complaint charged Fusion with (1) tortious interference with a contract and (2) conspiracy to breach an implied covenant of good faith and fair dealing in the Merger Agreement (id.). Fusion's defense of course entailed the expenditure of attorneys' fees and other expenses (¶17). On August 2, 2007 the Nevada court granted summary judgment in favor of Fusion, dismissing with prejudice all counts brought by Millenium against Fusion in the Nevada Litigation (¶16).
Two sections of the Agreement provided that Millenium would indemnify Fusion for certain expenditures, including reasonable attorneys' fees and expenses, in circumstances defined there. Agreement §8(c) specified that Millenium would indemnify Fusion for expenses, including reasonable attorneys' fees and disbursements, incurred by Fusion: as a result of, or arising out of, or relating to . . .
(c) any cause of action, suit or claim brought or made against such Indemnitee [Fusion] and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents*fn3 or any other certificate, instrument or document contemplated hereby or thereby, other than with respect to Indemnified Liabilities which directly and primarily result from the gross negligence or willful misconduct of the Indemnitee.
And under Agreement §11(p) Millenium agreed:
If . . . an attorney is retained to represent the Buyer [Fusion] in any other proceedings whatsoever in connection with this Agreement, then the Company [Millenium] shall pay to the Buyer, as incurred by the Buyer, all reasonable costs and expenses including attorneys' fees incurred ...