In the
United States Court of Appeals
For the Seventh Circuit
Nos. 10-3278 & 10-3475
P ETER D ENIL and G ERALD N ARDELLA,
Plaintiffs-Appellants,
Cross-Appellees,
v.
DEB OER, INC ., et al.,
Defendants-Appellees,
Cross-Appellants.
Appeals from the United States District Court
for the Western District of Wisconsin.
No. 09-cv-470-bbc—Barbara B. Crabb, Judge.
A RGUED A PRIL 1, 2011—D ECIDED M AY 13, 2011
Before E ASTERBROOK, Chief Judge, and B AUER and
E VANS, Circuit Judges.
E ASTERBROOK, Chief Judge. Ronald DeBoer started a
trucking business, deBoer Transportation, in 1967. He
and other members of his family managed it for 40 years,
but by 2007 he wanted to sell the business and retire.
2 Nos. 10-3278 & 10-3475
(There were then three affiliated firms: deBoer, Inc.;
deBoer Transportation Inc.; and deBoer Capital Associ-
ates Inc.; we refer to them collectively as deBoer.) After
one potential sale fell through, Peter Denil and Gerald
Nardella proposed to take over management of the busi-
ness and prepare it for sale to an outside investor within
five years. Ronald DeBoer was receptive. The parties
signed two contracts and negotiated toward a third.
The first contract was an employment agreement. It
made Denil the CEO of deBoer and Nardella the execu-
tive vice president of operations. This contract took effect
in October 2008; Denil and Nardella assumed their posi-
tions immediately. deBoer held the right to discharge
Denil and Nardella with or without cause, but if the
discharge was without cause they were entitled to
extra payments.
The second contract, a stock-purchase agreement that
also was signed in October 2008, called for Denil to buy
4% of deBoer’s stock for $500,000, and for Nardella to
buy 2% for $250,000. The closing date was April 15, 2009,
or whenever the third contract was signed, if earlier. The
parties agreed that failure to purchase the stock by
April 15, 2009, would be “cause” for terminating Denil’s
and Nardella’s employment. They also agreed that the
signing of the third contract—a buy-sell agreement,
common when outsiders acquire shares of family firms
or other closely held businesses—would be a condition
precedent to the obligation to purchase the 4% and 2%
interests. The stock-purchase contract contained a clause
in which the parties promised to use their best efforts
to conclude the buy-sell contract.
Nos. 10-3278 & 10-3475 3
The buy-sell contract was never signed, however. The
goal of this negotiation was to agree on how the pur-
chase price would be allocated if deBoer could be sold
to an outside buyer. The parties agreed that all equity
investors would receive the price they had paid for
their shares, plus interest, and that 75% of any surplus
would be distributed to the investors according to
share ownership. The remaining 25% of any surplus was
to go to members of the management team. But which
members, and how much to each? That proved to be
the sticking point. Ronald DeBoer wanted a schedule;
Denil and Nardella, however, insisted that Denil have
sole discretion to decide who received how much from
this surplus pool. Ronald DeBoer worried that Denil
would use this authority to direct the whole amount
to himself and Nardella, even though they would own
only 6% of the stock. There were some other open
issues, but we need not discuss them.
When April 15, 2009, arrived and the negotiations for
the buy-sell contract remained stalled, Denil and
Nardella might have purchased their 4% and 2% interests
anyway, and thus secured their positions, or they might
have tendered the $750,000 into an escrow. They took
neither step, and deBoer fired them, paying the benefits
that the employment contract specified for a termina-
tion with cause. They replied with this suit under the
diversity jurisdiction, seeking reinstatement (or at least
the benefits for termination without cause), the oppor-
tunity to invest in deBoer, and damages for what they
call Ronald DeBoer’s tortious interference with the two
completed contracts. deBoer filed a counterclaim, seeking
4 Nos. 10-3278 & 10-3475
damages for the cost of issuing, and then undoing, a
dividend that the firm had paid in anticipation of
the $750,000 investment. Wisconsin law controls. The
district court granted summary judgment and dismissed
the suit, rejecting both sides’ claims. 2010 U.S. Dist.
L EXIS 99404 (W.D. Wis. Sept. 22, 2010).
Plaintiffs’ principal contention is that deBoer did not
fulfil its promise to use “best efforts” to reach agreement
on a buy-sell contract. Had this contract been signed,
plaintiffs insist, they would have purchased their shares
by April 15, 2009, and would today be both investors and
managers. One difficulty with this argument is that
plaintiffs treat the best-efforts clause as a form of agree-
ment to agree, which deBoer violated by not acceding
to their position. Yet agreements to agree are not enforce-
able in Wisconsin. Dunlop v. Laitsch, 16 Wis. 2d 36, 113
N.W.2d 551 (1962); see also Skycom Corp. v. Telstar Corp.,
813 F.2d 810 (7th Cir. 1987) (an “agreement in principle”
is not enforceable in Wisconsin; only a completed
contract containing essential specifics is binding).
A best-efforts clause usually requires one party to
make appropriate investments for another’s benefit—for
example, a distributor bound to use best efforts to
promote a line of products must advertise them, hawk
them to retailers, and so on. This is not at all what “best
efforts” means when it comes to negotiation. Metropolitan
Ventures, LLC v. GEA Associates, 291 Wis. 2d 393, 717
N.W.2d 58 (2006), held that a promise to use “best ef-
forts” to persuade another party to adhere to a partner-
ship agreement was satisfied by earnest requests; it
Nos. 10-3278 & 10-3475 5
did not require one side to sacrifice its own interests
in the process.
If the best efforts undertaking is not an agreement
to agree, what might it be? The contract does not define
the phrase, and the parties themselves may not have
had any clear idea; they have not proffered any com-
munications exchanged during the negotiations. Maybe
they were thinking along the lines of a duty that labor
and management have under federal labor law: to
engage in good-faith bargaining toward a contract
with respect to those issues that employers must
discuss with unions. First National Maintenance Corp. v.
NLRB, 452 U.S. 666 (1981). This duty requires an ex-
change of proposals and obliges each side to consider
the other’s requests seriously, and to compromise when
possible, but it does not compel either side to accept the
other’s proposals. Golden State Transit Corp. v. Los Angeles,
475 U.S. 608 (1986). If that’s the meaning of this “best
efforts” clause, then both sides performed as required.
They exchanged many proposals, suggested amend-
ments, made counterproposals, and so on; the negotia-
tions lasted for six months. The fact that one final dis-
agreement—how to divide 25% of any surplus on sale
of the business—could not be bridged does not imply
that either side failed to bargain in good faith. deBoer
did not have to accept plaintiffs’ final proposal, any
more than plaintiffs had to accept deBoer’s.
Like the district court, we conclude that neither side
violated the best-efforts clause of the stock purchase
agreement. This, plus the absence of a signed buy-sell
6 Nos. 10-3278 & 10-3475
agreement, means that the stock-purchase agreement
did not require plaintiffs to buy 6% of deBoer’s stock.
Plaintiffs say that it also means that they were entitled
to keep their managerial jobs, or at least be paid the
compensation due when fired without cause. Yet the
employment contract does not contain the same condi-
tion precedent as the stock-purchase contract. The em-
ployment contract made plaintiffs’ managerial positions
contingent on their buying stock no later than April 15,
2009. They were free to buy the stock, with or without
a buy-sell agreement; they just chose not to do so.
They agreed that they could be let go for cause if they
did not pay up by April 15, 2009. Having chosen not
to pay, they can’t complain about the termination of
their managerial positions. Ronald DeBoer wanted to
ensure that the new managers’ interests were aligned
with those of other shareholders. Plaintiffs were not
entitled to retain their positions without making the
investment essential to that end.
Arguments about tortious interference with contract
are pointless. No one “interfered” with any contract;
deBoer simply enforced the contracts it had negotiated.
Plaintiffs devote a lot of space to arguing that defendants
did not act in good faith, by which they mean that
deBoer took full advantage of its rights under the con-
tracts. It was entitled to do that. “Good faith” in contract
law means honesty plus refraining from opportunistic
conduct that exploits the other side’s sunk costs. See
Market Street Associates L.P. v. Frey, 941 F.2d 588 (7th Cir.
1991); Continental Bank, N.A. v. Everett, 964 F.2d 701 (7th
Cir. 1992); PSI Energy, Inc. v. Exxon Coal USA, Inc., 17 F.3d
Nos. 10-3278 & 10-3475 7
969 (7th Cir. 1994); Venture Associates Corp. v. Zenith Data
Systems Corp., 96 F.3d 275 (7th Cir. 1996). An actor who
sulks in his dressing room mid-way through the produc-
tion of a movie is behaving opportunistically, because
the producer has spent a great deal on the film and
does not want to start over with a new actor. deBoer did
not take advantage of plaintiffs’ sunk costs; instead,
plaintiffs volunteered to start working at deBoer
knowing that the buy-sell contract had not been signed.
They could have protected themselves by waiting, and
they can’t use their own decision as the springboard
for insisting that deBoer capitulate to their contractual
proposals.
We’re mystified by plaintiffs’ arguments about the
dividend and their contention that deBoer failed to turn
over all financial information. If plaintiffs were saying
that the dividend diluted the value of their (potential)
6% interest, so that they should not be required to buy
the stock, they might have a point; likewise if they
argued that the financial information made the stock
purchase less attractive. But plaintiffs have not argued
that these events excuse them from performing; instead
they still wanted to become investors. The dividend
and belated disclosure do not support the kind of relief
that plaintiffs seek.
As for the cross-appeal: deBoer jumped the gun by
distributing the dividend before plaintiffs had made
their investment. People who count their chickens
before they hatch have only themselves to blame. The
stock-purchase agreement entitled Denil and Nardella to
8 Nos. 10-3278 & 10-3475
postpone their investment until after a buy-sell agree-
ment was in place. When deBoer balked at plaintiffs’
proposals for the buy-sell agreement, they were entitled
to walk away without investing. They did not violate
any of deBoer’s rights by doing so (and, as we have
observed already, plaintiffs were as free to reject Ronald
DeBoer’s proposals for the buy-sell agreement as he was
to reject theirs). Nothing in the stock-purchase agree-
ment requires Denil and Nardella to compensate
deBoer for expenses incurred in anticipation of a $750,000
investment or in returning to the status quo ante if the
investment did not occur. The cross-appeal strikes us as
nothing but an excuse to file a sur-reply brief to have
the last word. If we had been asked, we would have
dismissed the cross-appeal and rejected the extra brief
before the judges had been forced to waste time reading
it. See Aventis Pharma S.A. v. Hospira, Inc., 2011 U.S.
App. L EXIS 6020 (Fed. Cir. Mar. 24, 2011).
A FFIRMED
5-13-11