In late 2006, Leon Simkins decided to sell the family owned folding carton business and its affiliates, in which he was a controlling shareholder. He engaged Mesirow Financial to act as broker. Trovare Capital Group was interested and contacted Mesirow. In late May of 2007, Simkins and Trovare entered into a letter of intent ("LOI"). The agreement was generally nonbinding but did give Trovare a 90-day exclusivity period and obligated Simkins to pay a $200,000 fee if it breached the exclusivity period or gave Trovare written notice of a unilateral termination of the negotiations. The LOI included a termination date of September 30, 2007, after which neither party any obligations. Shortly afterward, the negotiations went south. Trovare's environmental consultant concluded that all real properties involved needed further environmental testing. Simkins and his family became more and more concerned about their own liabilities that would arise from a sale. At one point, Simkins told his own negotiating team that he did not want to go through with the deal. Although the parties continued to communicate, both Mesirow and Trovare began doubting the sellers’ sincerity. Trovare even demanded the breakup fee as early as August. After the communications stopped, Trovare brought suit against Simkins for the $200,000 fee. Judge Gettleman (N.D. Ill.) granted summary judgment to the defendants, concluding that the undisputed facts established that they did not terminate the negotiations and that they negotiated in good faith. Trovare appeals.

In their opinion, Circuit Judges Kanne and Evans and District Judge Clevert reversed and remanded. The Court quickly dispensed with Trovare's argument that it was entitled to the contractual $200,000 fee. The LOI imposed that obligation on the sellers only if they breached the exclusivity period or gave written notice of the termination of negotiations. Neither occurred here. Trovare also alleged, however, a breach of the implied covenant of good faith and fair dealing. The Court noted that Trovare could prevail on that claim if it proved that the sellers had decided to terminate negotiations but simply refused to provide a written notice. The Court disagreed with the district court that the undisputed record showed continued good faith negotiations beyond the termination date. The Court concluded that a reasonable trier of fact could conclude that the continued communications were not actually negotiations. The Court pointed to several parts of the record, including: a) Simkins’ statement that he “definitely" did not want to consummate the deal, b) Simkins later willingness to negotiate only if Trovare agreed to five demands, and c) the sellers’ misrepresentations that the second phase environmental inspections had already begun. Summary judgment for the defendants was error.