Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

An Indiana medical transport company executed a software licensing agreement with the plaintiff to replace its dispatch and billing software. The software did not work as the Indiana company expected, so it attempted to exercise an option to terminate the agreement. Plaintiff sued and the Indiana company counter-claimed fraud. A magistrate dismissed the fraud claim and awarded plaintiff damages on the breach of contract claim and attorney's fees. The Seventh Circuit affirmed the decisions on fraud and breach of contract, but vacated the damages award and remanded. A party is not required to disclaim every departure from earlier proposals made during negotiations to avoid liability for fraud; there was no termination option. The plaintiff terminated the contract by locking the software, so the computation of damages was incorrect. The court ordered reconsideration of attorney fees, noting that the contract language did not appear to allow fees for defense of the fraud claim.

Wanting to retire from the trucking business, the owner entered into employment contracts so that the plaintiffs would act as CEO and vice president and a stock purchase agreement. The relationship broke down while they were negotiating a buy-sell agreement. The owner fired the plaintiffs and paid benefits specified in the employment contract. The plaintiffs did not purchase stock or place $750,000 into an escrow, as they were entitled to do to secure their position. The district court ruled in favor of the owner. The Seventh Circuit affirmed, holding that neither party violated a clause in the stock purchase contract that required that they use "best efforts" to enter into a buy-sell agreement. The plaintiffs retained the right to purchase stock, but chose not to do so, which entitled the owner to terminate their employment. The owner took full advantage of his rights under the contracts, but did not exploit the plaintiffs.