GARY FEINERMAN, District Judge.
Ken Levin, a literary agent, brought this suit in the Circuit Court of Cook County, Illinois, against his former client, author Alex Grecian. Count I of the complaint
Levin has moved for summary judgment on Count I of his complaint and on each of Grecian's counterclaims. Doc. 56. The motion is granted in part and denied in part. Summary judgment is granted to Levin as to Grecian's counterclaims for breach of contract and breach of fiduciary duty. But Levin's declaratory judgment claim and Grecian's declaratory judgment claims (the first of which mirrors Levin's declaratory judgment claim) shall proceed to trial along with the claim in Count II of Levin's complaint.
The following facts are stated as favorably to Grecian, the non-movant, as the record and Local Rule 56.1 allow. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.2012). In considering Levin's motion for summary judgment, the court must assume the truth of those facts, but it does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir.2012).
Before proceeding, the court notes that Levin's unauthorized reply to Grecian's Local Rule 56.1(b)(3)(B) response to Levin's Local Rule 56.1(a)(3) statement misunderstands the local rules. Doc. 68 at 1-34. Where Grecian's Local Rule 56.1(b)(3)(B) response denies Levin's Local Rule 56.1(a)(3) assertions of material fact, Grecian includes brief factual statements to support the denials, with citations to relevant portions of the record. Over and over, and citing Miller v. Ameritech Corp., 2005 WL 2266614, at *1 (N.D.Ill. Sept. 14, 2005), Levin complains of these responses with the boilerplate assertion that "Grecian's response ... should be deemed an admission and the excess information and argument contained within it should be stricken. The party responding to a 56.1 statement may not include additional facts in its response to the movant's statement of material fact." E.g., Doc. 68 at ¶ 8. Levin badly misreads Miller, which use the phrase "additional facts" in the sense meant by Local Rule 56.1(b)(3)(C), which requires the party opposing summary judgment to submit "a statement ... of any additional facts that require the denial of summary judgment." In that context, the phrase "additional facts" does not mean all facts other than the facts asserted by the movant's Local Rule 56.1(a)(3) statement, but rather only those additional facts that are not intended to show that the movant's asserted facts are disputed. Local Rule 56.1(b)(3)(B) provides that the
Levin and Grecian's relationship began in August 2004, when Grecian sent Levin an email seeking advice about a proposal Grecian expected to receive regarding his work "The Impossible Snowman." Doc. 64 at ¶ 5. The two exchanged several emails and ultimately entered into the Agreement, which has an effective date of November 1, 2004. Id. at ¶¶ 6-7. Levin was impressed by Grecian's work and admits that Grecian was the only client in Levin's 39-year career that Levin took on without a referral. Doc. 68 at ¶ 78. The Agreement made Levin "the sole and exclusive representative of all of the rights to the Properties," with "Properties" defined to mean the novels, graphic novels, and other comic art works "which are or have been created or controlled by Alex Grecian in whole and in part as of and after the Effective Date [of the Agreement] and all sequels and spin-offs of same." Doc. 58-6 at 2. Levin agreed to "work with [Grecian] to formulate strategies to develop and `take out' Properties for print publication, movie, television, and/or video game development." Id. at 2-3. In return, the Agreement provided that Levin "shall have an interest of 15% in any non-comic art writing or print publication (novels, screenplays, etc.), and in third party print publishings of comic art Properties." Id. at 4. The Agreement's initial term was seven years, ending November 2011, and it provides for automatic renewal for additional four-year periods unless Grecian sends a notice of termination to Levin "at least six months before the end of the Term." Id. at 5-6. The Agreement is and
Between October 2004 and December 2011, when Levin and Grecian's relationship came to an end, the two exchanged approximately 781 emails, of which 271 were sent by Levin. Id. at ¶ 11. Around 2007, Grecian authored a series of comic books called Proof; the series was published that same year. Id. at ¶ 12. Levin claimed to have pitched the idea of a television series or movie based on Proof to Sony, the Spike television channel, Whoopi Goldberg, Samuel L. Jackson, and the principals of a development company called Kickstart Entertainment. Id. at ¶ 13. The proposed deal would have paid Levin $45,000 to $75,000 per year to act as a "passive producer." Doc. 68 at ¶ 110. Grecian believes that Levin was willing to offer Proof only to potential producers who would pay Levin such a fee, and that this led the producers to reject the proposal. Id. at ¶ 112. No television series ever materialized, and Grecian received no money from Levin's efforts. Id. at ¶ 111. Several times during their relationship, Levin suggested to Grecian that they should co-write something together; Grecian did not accept these proposals, but he admits that he was not harmed by them. Doc. 64 at ¶ 76. Until some six-and-a-half years into the parties' relationship, when The Yard was finished and sold to a publisher in mid-2011, Levin never sold any of Grecian's works. Doc. 68 at ¶ 83. The parties dispute the extent to which the sale of The Yard was attributable to Levin's efforts; the court expresses no view on that point.
In early 2010, Levin and another literary agent, Seth Fishman, agreed to undertake a "joint initiative" to create a graphic novel comprised of several authors' works and to promote it to publishers. Doc. 64 at ¶¶ 15-17, 20-21. Levin introduced Fishman to Grecian's works, and Levin and Fishman decided to pitch Grecian's idea for a graphic novel called The Yard to publishers in New York. Id. at ¶¶ 19, 22-25, 29-32. At Levin and Fishman's meetings with the publishers, Levin took the lead in presenting the material and spoke favorably and enthusiastically about The Yard. Id. at ¶¶ 33-34. After the meetings, Levin came up with the idea that Grecian should write The Yard as a regular prose novel rather than as a graphic novel; Levin and Fishman jointly proposed this to Grecian, who agreed. Id. at ¶¶ 35, 37. As Grecian wrote The Yard, Levin and Fishman provided him with feedback on his drafts, but the parties disagree about how substantive and helpful Levin's feedback was; Grecian testified at deposition, and the court accepts for purposes of this motion, that the feedback was in "the nature or typos and such" rather than addressing plot or style. Id. at ¶ 38.
Levin referred to Fishman as his "coagent for THE YARD." Doc. 68 at ¶ 85. In October or November 2011, Levin sent Fishman a letter that suggested a split between them of the 15 percent commission for The Yard:
Id. at ¶ 87. Levin testified at deposition that had this provision gone into effect between himself and Fishman, Fishman would receive two-thirds of Fishman's typical 15 percent literary agent fee (that is, 10 percent) and Levin would receive one third (5 percent), and that Levin would apply that 5 percent against the 15 percent
Levin or Fishman submitted an incomplete version of The Yard to an editor at Mulholland Books, an imprint of the publisher Little, Brown. Doc. 64 at ¶¶ 40, 43. Mulholland offered Grecian $10,000 for the book, and Levin and Fishman advised Grecian to reject the offer because they thought the book was worth much more. Id. at ¶¶ 43-45. Grecian completed the first draft of The Yard in May 2011, and Levin and Fishman sent the draft to thirteen publishers. Id. at ¶¶ 49-50. Fishman conducted an auction, and one of the offers, from Putnam Publishing, was a $500,000 guaranteed advance for the North American publishing rights to The Yard and one sequel. Id. at ¶¶ 53-55. Levin and Fishman recommended that Grecian accept this offer, and he ultimately did so. Id. at ¶ 56.
In July 2011, Grecian, Levin, and Fishman met in person to discuss the book deal for The Yard and possible deals for other books that Grecian had written or would write in the future. Id. at ¶¶ 61-63. The finalization of the deal for The Yard took several months, and in September 2011 Grecian emailed Levin to express his concern about the delays and to say that he wanted to be paid by the end of the year. Id. at ¶ 67.
Grecian was not always satisfied with his relationship with Levin. In November 2008, Grecian wrote Levin this email with the subject line "What happened to you?":
Doc. 68 at ¶ 80. Also in 2008, Grecian asked Levin to release him from the Agreement because Grecian believed that Levin had lost interest in him and had failed to promote his works adequately. Id. at ¶ 81. Levin refused to release Grecian and said "he would work harder." Ibid. Grecian testified at deposition that, prior to mid-2011, which is when The Yard was finished and sold, "Levin had not done anything directly or concretely to assist me in my career, which was the reason for our relationship." Id. at ¶ 82.
That said, other evidence would permit a reasonable factfinder to conclude that Grecian thought that Levin was a good agent. In February 2010, Grecian wrote this email to a comic book artist:
Doc. 64 at ¶ 28. In December 2010, Grecian sent Levin and Fishman an email saying, "You've both been encouraging and helpful." Id. at ¶ 46. In March 2011,
Around October 20, 2011, Levin and Grecian discussed the commissions that Levin and Fishman would be paid from the sale of The Yard. Doc. 68 at ¶ 90. Levin stated his view that he was entitled to a 15 percent commission and that Fishman would receive a further 10 percent, meaning that Grecian would pay a total commission of 25 percent. Ibid. Grecian responded: "You and Seth [Fishman] co-agent for me on my Putnam deal. I'm very grateful to you both, but an agent's fee is generally fifteen percent and I was under the impression that you and Seth would split that fee." Id. at ¶ 91. Grecian noted that Levin's proposal would require him to pay "a whopping twenty-five percent of my earnings... gone before I see a cent," and said "that's unacceptable." Ibid. Levin responded, "Let me give some thought to your email, as you did, and get back to you, probably tomorrow," but the record contains no evidence that Levin ever got back to Grecian. Id. at ¶ 92. Fishman told Grecian that "[t]he total commission that comes off your books is per usual, 15%. Anything more than that would be criminal!" Id. at ¶ 97.
On December 21, 2011, Grecian fired Levin. Doc. 64 at ¶ 70. (Although the Agreement's initial term had expired in November 2011, it had automatically renewed for an additional four-year term because Grecian had not sent a notice of termination at least six months prior to the initial term's end. Doc. 58-6 at 5-6.) On the same day, Grecian's attorney sent Levin a letter asserting that Levin had "failed to perform [his] obligations under [the] Agreement." Doc. 64 at ¶¶ 71-72. Grecian took the position that he owed Levin only a 5 percent commission from the sale of The Yard and offered him that much. Doc. 64 at ¶ 73; Doc. 68 at ¶ 93. Around a week later, Levin filed this suit. Doc. 68 at ¶ 93; Doc. 1-2. Fishman has since sold the rights to the third and fourth novels in the series that started with The Yard for a further $500,000; Levin did not participate in that deal. Doc. 68 at ¶¶ 115-116.
Grecian removed the suit to this court. Doc. 1. The removal was proper under 28 U.S.C. §§ 1441 and 1446 because the case falls within the court's original jurisdiction under § 1332(a) and because Grecian is not a citizen of Illinois, the state in which the action was filed, see § 1441(b)(2). Levin is a citizen of Illinois, Grecian is a citizen of Kansas, and the amount in controversy exceeds § 1332(a)'s $75,000 threshold because the sales as to which Levin claims a 15 percent commission exceed
As indicated above, Levin seeks summary judgment on Count I of his complaint and on Grecian's four counterclaims. The Agreement does not contain a choice-of-law provision. Grecian suggests that the court apply Illinois law, Doc. 65 at 2 n. 1, and Levin is silent as to choice of law but consistently cites Illinois case law. Under these circumstances, the court will apply Illinois law. See Gould v. Artisoft, Inc., 1 F.3d 544, 549 n. 7 (7th Cir.1993) ("Where the parties have not identified a conflict between the two bodies of state law that might apply to their dispute, we will apply the law of the forum state — here, Illinois.").
Count I of Levin's complaint seeks a declaratory judgment that the Agreement remains a valid and enforceable contract and that it requires Grecian to pay Levin a 15 percent commission. There is no dispute that the Agreement, at the time it was executed in 2004, was a valid and enforceable contract that entitled Levin to a 15 percent commission. But Grecian offers four independent grounds for holding that Levin cannot enforce the Agreement: (1) Levin materially breached the Agreement by failing to represent Grecian effectively, thereby excusing Grecian from performing his own obligations under the Agreement; (2) Levin failed to work with Grecian to "formulate strategies" to develop his works, as required by § 2 of the Agreement; (3) Levin failed to keep Grecian "informed," as required by § 3 of the Agreement; and (4) Levin was required by § 4 of the Agreement to get pre-approval from Grecian in certain situations but failed to do so. Doc. 64 at ¶ 75. The first ground is sufficient to preclude summary judgment for Levin, and so the other grounds need not be considered. In considering the first ground, the court will address Levin's response that even if Levin had materially breached the Agreement, Grecian waived the breach by continuing to accept Levin's services throughout the contract term.
Grecian says that he does not have to pay Levin any commission under the Agreement because Levin himself had already materially breached the contract, rendering it unenforceable, by failing to effectively represent Grecian and his works. Under Illinois law, a "party cannot sue for breach of contract without alleging and proving that he has himself substantially complied with all the material terms of the agreement," and so "a material breach of a contract will excuse the other party's performance." Costello v. Grundon, 651 F.3d 614, 640 (7th Cir.2011) (internal quotation marks omitted); see also Elda Arnhold & Byzantio, LLC v. Ocean Atl. Woodland Corp., 284 F.3d 693, 700 (7th Cir.2002) (same). Thus, the question is whether a reasonable factfinder could conclude that Levin indeed breached the Agreement and, if so, that the breach was material. To determine whether a breach is material, a court applying Illinois law must ask "whether the matter, in respect to which the failure of performance occurs, is of such a nature and of such importance that the contract would not have been made without it." Arrow Master, Inc. v. Unique Forming Ltd., 12 F.3d 709, 715 (7th Cir.1993) (quoting Haisma v. Edgar,
The contractual duty at issue was Levin's duty to use his best efforts to promote and sell Grecian's work to publishers and others, such as movie producers. Levin acts as if Grecian's argument is that Levin had a contractual obligation to succeed in selling Grecian's books; Levin correctly points out that the Agreement imposes no such obligation. Doc. 57 at 11 ("This fails because Paragraph 1 of the Agreement does not oblige Levin to complete the sale of any works."); Doc. 67 at 2 ("Nothing in paragraph 1 says that Levin is obligated to actually `sell' Grecian's Properties that Levin agreed to represent."). But Levin misunderstands Grecian's argument, which is not that Levin had a duty to make sales, but merely that Levin had a duty to use his best efforts to make sales. Grecian points to Levin's failure to make any sales not as a breach in itself, but merely as evidence that Levin did not exercise his best efforts: "Mr. Levin agreed in Paragraph 1 of the Agreement to be my agent, but he failed to effectively represent me, a fact best demonstrated by the fact he never sold a single one of my works during seven years, while Mr. Fishman sold The Yard for $500,000 in less than a year." Doc. 57 at 11 (quoting Doc. 64 at ¶ 75). The court will address Grecian's actual argument, not the argument that Levin wishes Grecian had made.
The Agreement does not refer to any "best efforts" duty explicitly, but § 1 makes Levin "the sole and exclusive representative of all of the rights to the Properties." Doc. 58-6 at 2. That provision brings this case within the scope of Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 118 N.E. 214 (N.Y.1917) (Cardozo, J.), which read an implicit duty on the part of an exclusive representative "to use reasonable efforts to bring profits and revenues into existence," id. at 92, 118 N.E. 214. "Without an implied promise, the transaction cannot have such business efficacy as both parties must have intended that at all events it should have." Id. at 91, 118 N.E. 214 (internal quotation marks omitted). "The doctrine announced in Wood v. Lucy is the law of Illinois." Bonner v. Westbound Records, Inc., 76 Ill.App.3d 736, 31 Ill.Dec. 926, 394 N.E.2d 1303, 1309 (1979). "A best-efforts clause, which contract law reads into exclusive dealerships, protects the seller from the dealer's exploiting the position that the exclusivity conferred (because it has eliminated competition from other dealers) by failing to promote the seller's product vigorously." Classic Cheesecake Co. v. JPMorgan Chase Bank, N.A., 546 F.3d 839, 846 (7th Cir.2008) (citing Wood).
Levin concedes that "an exclusive representative has an obligation to make reasonable efforts to effectuate the purposes of a contract," Doc. 67 at 4, and he does not appear to deny the indisputable fact that a principal purpose of the Agreement was for Levin to turn Grecian's creative output into money by selling it to publishers. Levin argues, rather, that he did work hard to promote Grecian's career and that his efforts ultimately paid off with the sale of The Yard for a substantial sum. It may be true that Levin satisfied the Agreement's implicit best efforts requirement. As described above, there is much evidence that Grecian was happy with Levin's performance as his agent, including in the final two years of the Agreement's term, 2010 and 2011. Levin also developed the idea that Grecian should write The Yard as a prose novel rather than as a
On the other hand, there is evidence that casts doubt on whether Levin was exercising his best efforts throughout the Agreement's duration. There is Grecian's 2008 email to Levin complaining that Grecian was "frustrated" because Levin had failed to get results by promoting Proof and had not been returning Grecian's calls or emails. Doc. 68 at ¶ 80. Grecian stated that "[w]e're past the halfway point on my contract now and nothing seems to have happened with anything," and he asked Levin to release him from the contract. Ibid. The fact that the parties exchanged 781 emails and that only 271 were sent by Levin, Doc. 64 at ¶ 11, implies that Grecian sent the other 510, a lopsided ratio consistent with the picture Grecian paints of Levin as a disengaged and often unresponsive agent. Levin admits that although he was very impressed with the quality of the work that Grecian sent him at the start of their relationship in 2004, Doc. 68 at ¶ 78 — which a reasonable factfinder could take to mean that the work had commercial potential and should not have been too difficult to sell — he failed to sell any of Grecian's work for nearly seven years, id. at ¶ 83. When Levin finally sold The Yard, it was with Fishman's help, and the parties dispute their respective contributions to the sale — a reasonable factfinder could think the deal was mainly attributable to Fishman, who conducted the actual auction that led to Putnam's offer. So, although the Agreement did not obligate Levin to actually succeed in selling anything, a reasonable factfinder could find the admitted quality of Grecian's work and the speed with which The Yard was sold once Fishman was brought onboard, combined with Levin's failure to sell any of Grecian's work before then, to be persuasive evidence that Levin did not exercise his best efforts.
The general rule applicable in federal court holds that "whether a party has committed breach of contract is a question of fact." Arrow Master, Inc., 12 F.3d at 714 (internal quotation marks omitted). For the reasons given above, whether Levin breached the Agreement's best efforts obligation cannot be resolved on summary judgment. The general rule also holds that "the question of whether or not a particular breach of a contract is material is a question of fact." Winforge, Inc. v. Coachmen Indus., Inc., 691 F.3d 856, 868 (7th Cir.2012) (internal quotation marks omitted). The record likewise prohibits the materiality question from being resolved on summary judgment, at least in Levin's favor. And because a material breach by Levin would excuse Grecian's performance of his obligations under the Agreement, Levin is not entitled to summary judgment on Count I of his complaint.
Not so fast, Levin says; he submits that Grecian waived any argument that Levin had breached the Agreement by failing to assert that breach when it occurred and, instead, continuing to accept Levin's services under the contract, meaning that Grecian's performance is not excused even if Levin did materially breach. "Waiver is defined as the intentional relinquishment of a known right." Ryder v. Bank of Hickory Hills, 146 Ill.2d 98, 165 Ill.Dec. 650, 585 N.E.2d 46, 49 (1991). The party claiming a waiver of a breach of contract must prove that the non-breaching
Levin relies on Delta Consulting, which affirmed summary judgment on waiver grounds, but that decision is not controlling because the evidence of waiver in that case was indisputable. Randle was a construction company hired by a school district to build a high school. Disputes arose between Randle and the school district, the disputes caused delays, and the delays caused Randle to lose money. Id. at 1135. So Randle hired Delta, a consultancy, to prepare a "Request for Equitable Adjustment" — a request to be paid $1.6 million in additional fees to cover the losses — to submit to the school district. Ibid. After the school district rejected that request, Delta prepared and submitted a second request, which was also rejected, and Delta charged Randle some $144,000 for Delta's services — far more than Delta's $34,000 preliminary estimate. Id. at 1135-36. Randle paid Delta's invoices for several months, amounting to over $62,000, and submitted to the school district both of the requests that Delta had prepared, and when Randle ultimately sued the district, it asked Delta to hold off on collecting the balance of Delta's $144,000 invoice. Id. at 1136. A few months later, Randle conducted an internal audit and sent Delta a letter to confirm the amount it owed Delta; Delta responded with the correct amount. Ibid. Finally, "roughly a year later," Delta sought payment from Randle, and Randle for the first time "responded that it was not satisfied with Delta's performance and should not be charged for inadequate work." Ibid. Delta sued for payment under the contract, Randle countersued for breach of contract on the ground that Delta had failed to perform adequately and sought return of the $62,000 that Randle had already paid, and the district court granted summary judgment to Delta, holding that "Randle impliedly waived its right to damages for Delta's alleged breach by paying, and not contesting," the first $62,000 of the $144,000 invoice. Id. at 1137. The Seventh Circuit affirmed the district court's ruling, explaining:
Id. at 1141 (citation omitted).
The evidence of waiver in this case does not come close to approaching the evidence in Delta Consulting. The only evidence cited by Levin is that Grecian continued to employ Levin throughout the period when (Grecian now claims) Levin was in breach for failure to fulfill his best efforts obligation. Levin argues: "Grecian admits that he knew of Levin's alleged non-performance under the Agreement. He even says that, in 2008, he asked to be let out of the Agreement early. In response to Grecian's request, Levin allegedly promised to work harder. Thereafter, Grecian continued to allow Levin to work for him and accepted the benefits of Levin's work. In particular, as discussed above, Grecian allowed Levin to expend substantial effort on The Yard that Grecian admits was to his benefit." Doc. 67 at 10-11 (citations omitted).
Reasonable factfinders could draw varying inferences and conclusions from the record, including that although Grecian wanted Levin to be more active in promoting his books, he did not have a clear idea of what Levin's implicit "best efforts" obligation was under the Agreement and so did not know whether Levin had breached that obligation or whether he had a valid legal claim against Levin. In particular, the fact that Grecian asked to be released from the Agreement but did not sue for rescission when Levin refused suggests that Grecian was thinking in terms of an ideal and mutually beneficial business relationship between Levin and Grecian and not in terms of their respective legal obligations. If Grecian did not know that Levin's inaction was potentially a material breach, then he could not have knowingly waived his right to assert that breach. See Costello, 651 F.3d at 641 (the party claiming waiver has the burden to prove that the other party knew of its right to assert that the party claiming waiver had breached the contract); Ryder, 165 Ill.Dec. 650, 585 N.E.2d at 49 (defining waiver as "the intentional relinquishment of a known right") (emphasis added). Levin therefore has not presented the sort of unequivocal evidence of a knowing and intentional waiver that the case law requires, and so the court cannot say for summary judgment purposes that Grecian waived his contractual right to have Levin exercise his best efforts to promote and sell Grecian's literary output. See Wald v. Chi. Shippers Ass'n, 175 Ill.App.3d 607, 125 Ill.Dec. 62, 529 N.E.2d 1138, 1147-48 (1988) ("if the facts necessary to constitute waiver are in dispute or if reasonable minds might differ as to inferences to be drawn from undisputed evidence, then the issue becomes a question of fact"); Smith v. Sturgeon, 35 Ill.App.3d 750, 342 N.E.2d 420, 421 (1976) ("Whether the [plaintiff's] continued acceptance of ... past due payments without a demand for more prompt payment constitutes waiver of a provision[] in the contract is a question of fact.").
Grecian's first counterclaim alleges that Levin breached his obligations under the Agreement and seeks damages for that breach. Doc. 8 at p. 15. As discussed in the previous section, the court cannot say at the summary judgment stage that Levin did not breach the Agreement, and so it will assume for purposes of this counterclaim that Levin breached. Nonetheless, Levin is entitled to summary judgment on the contract counterclaim because Grecian has failed to submit sufficient evidence of damages.
Of particular significance here, the Seventh Circuit has held that, "to survive a motion for summary judgment on a breach of contract claim, the plaintiff must provide a basis upon which lost profits may be calculated to a reasonable certainty." Id. at 636. Thus, Grecian must present not only evidence from which a reasonable factfinder could conclude that he indeed sustained damages, but also a basis upon which his damages "may be calculated to a reasonable certainty." Levin is entitled to summary judgment because Grecian has failed to present a reasonable basis for computing his damages despite having been put on notice that Levin viewed the absence of damages as a ground for summary judgment. Doc. 57 at 15 ("Levin should be granted summary judgment for the reasons discussed at length above, including lack of damages.").
Grecian asserts that "the subsequent actual sales of Grecian's books [The Yard and its sequel, The Black Country, as well as two further sequels sold for a further $500,000] by Fishman establish a `reasonable basis for computing [the] damages' which resulted from Levin's failure, over a seven-year period, to sell a single one of Grecian's books." Doc. 65 at 10. But Grecian does not explain how this is so. Does Grecian believe he was damaged because Levin did not sell The Yard as quickly as he should have, or because Levin failed to sell other books of Grecian's that have thus far not been published? Grecian does not say, but the court will consider both alternatives.
If Grecian could establish that Levin should have sold The Yard more swiftly for the same $500,000 he received from Putnam, then Grecian's loss would be the time value of Grecian's cut of that money over the period between when Levin first should have sold the work (had he been exercising his best efforts) and the time when it was in fact sold to Putnam. But Grecian does not suggest that Levin should have sold The Yard more swiftly, and there is no evidence that he could have done so had he tried harder. The first draft of The Yard was finished in May 2011, at which time it was quickly sent out to potential publishers. Doc. 64 at ¶¶ 49-50. The auction was conducted, and Grecian received Putnam's $500,000 offer that same month. Id. at ¶ 53 ("On May 12, 2011, Fishman conducted the auction."). And recall that Little, Brown's Mulholland
The other potential damage theory turns on the losses sustained from Levin's failure to sell any of Grecian's other works. Under that theory, Grecian's damages are the amounts for which Levin would have sold the books had he met his best efforts obligation under the Agreement. Doc. 68 at ¶ 83 (noting that Levin did not sell any of Grecian's works other than The Yard). But Grecian fails to provide the requisite "reasonable basis for computation of those damages" under that theory. To do so, he would have to point to one or more works that he had written prior to or during the contract period, provide some ground from which a reasonable factfinder could conclude that the works would have been sold had Levin worked harder at promoting them — for instance, evidence that persons with the relevant expertise viewed them as being of publishable quality or of quality similar to specific works by other authors that were published, or actual publication offers received after the contract period for Grecian's other works — and provide some ground for computing the amount he might have been paid had those books found a publisher, perhaps by reference to the amounts paid by publishers during that period for books of the same genre by authors of similar renown, along with evidence on other factors that influence pricing.
Grecian has not attempted to do any of this. Although there is evidence that he had written several other novels, Grecian does not identify any one novel in particular and say that it was of saleable quality or that Levin should have sold it. And Grecian certainly provides no evidence that any such novel would have had success comparable to The Yard's. Levin's Local Rule 56.1(a)(3) statement mentions a "work" called "The Impossible Snowman" that existed when the Agreement was executed. Doc. 58 at ¶ 5. But there is no evidence as to what sort of "work" it was — the Agreement treated novels, comic books, and other works differently, Doc. 58-6 at 3-4, and the value of The Yard as a comparator is that much weaker if "The Impossible Snowman" was not also a novel. The Agreement itself references five other "literary and/or comic art properties" along with "The Impossible Snowman," but it provides no details on them except that one was "a novel in development." Doc. 58-6 at 8. The parties' Local Rule 56.1 statements provide no indication that this work, or any of the others listed, was ever finished.
Paragraph 23 of Levin's Local Rule 56.1(a)(3) statement asserts that Levin "forwarded ... Grecian's most recent draft of two unpublished prose novels to Fishman." Doc. 58 at ¶ 23. This reference is not evidence that Levin should have sold the novels. Grecian's Local Rule 56.1(b)(3)(B) response says about those novels, Joyride and Paradise Flats, that Fishman thought the drafts "were clearly saleable" and made positive comments about them. Doc. 64 at ¶ 23. Grecian's response that the drafts "were clearly saleable" is entirely extraneous to the Levin's straightforward assertion in ¶ 23 that he "forwarded Proof and Grecian's most recent draft of two unpublished prose novels to Fishman," a fact that Grecian admits is "[u]ncontroverted." The court therefore will disregard the portion of Grecian's response that references what Fishman thought of the novels. See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643-44 (7th Cir.2008) (affirming the district
Paragraph 36 of Levin's Local Rule 56.1(a)(3) statement and ¶ 37 of Grecian's Local Rule 56.1(b)(3)(B) response refer to the fact that Grecian "had previously written two prose novels, but they had never been published," Doc. 64 at ¶¶ 36-37, but there is no evidence that the novels were saleable, much less that they were comparable to The Yard. Paragraph 39 of Levin's statement states that "Levin and Fishman also repeatedly provided feedback to Grecian on drafts of portions of other works, including one called Paradise Flats," Doc. 58 at ¶ 39, which again is not evidence that Paradise Flats could have sold. Paragraphs 62 and 63 refer to a disagreement between Levin and Fishman as to "two other books that Grecian had previously authored," Collision and Paradise Flats; apparently "Levin recommended going with a different publisher [than Putnam] for those books, but Fishman wanted to take them to Putnam Publishing." Id. at ¶¶ 62-63. This implies that Levin and Fishman thought they might be able to sell those works as of July 2011, id. at ¶ 61, after Putnam had made the offer for The Yard, or at least that they thought that they should try to do so, but it does not suggest that Levin could have sold them prior to then if he had been exercising his best efforts. And even if Grecian had pointed to other completed novels, the court could not assume, in the absence of evidence, that they could have been sold for an amount anywhere near the $500,000 figure garnered by The Yard. The mere fact that The Yard sold so quickly and for so much, while none of Grecian's earlier works had sold, would not compel a reasonable factfinder to conclude that the earlier works were of similar commercial value.
For these reasons, Grecian has not "provide[d] a basis upon which lost profits may be calculated to a reasonable certainty," as precedent required him to do to avert summary judgment. TAS Distributing Co., 491 F.3d at 636. Although the discussion of Grecian's contract counterclaim could end here, it bears mention that the court's disposition of that counterclaim finds additional support in the "new business rule."
"Under Illinois law, a new business generally has no right to recover lost profits. This element of damages is recoverable only if the business was previously established." Stuart Park Assocs. L.P. v. Ameritech Pension Trust, 51 F.3d 1319, 1328 (7th Cir.1995). Here, Grecian was not "previously established" as a novelist at the time that Levin failed to sell his works. Thus, Grecian "was not in the position of the bestselling author who can prove from his past success that his new book, which the defendant fails to promote, would have been likely — not certain, of course — to have enjoyed a success comparable to that of the average of his previous books if only it had been promoted as promised. That would be like a case of a new business launched by an entrepreneur with a proven track record." MindGames, Inc. v. Western Publ'g Co., 218 F.3d 652, 658 (7th Cir.2000).
Although Grecian could be said to have become established subsequently, with the sale of The Yard, there is (again) no evidence that The Yard was so similar to his previous works as to make them the same "business." In Stuart Park Associates, a Seventh Circuit decision applying the new business rule, a partnership created to develop a plot of land sued potential investors who had refused to advance the partnership
Ibid. The same result is warranted here given the absence of any evidence that Grecian's unpublished works were similar enough to The Yard that The Yard could provide a basis for predicting how the other works would have fared commercially had Levin exercised his best efforts to sell them.
Grecian points to three cases where courts have found evidence of subsequent business activity to be adequate proof of lost profits. Doc. 65 at 9-10. Those cases — with a combined length of over 90 pages, which Grecian cites in their entirety rather than providing pin cites — are not on point, for the plaintiff in all three would have received the profits from a business over the course of a certain period had he not been wrongfully deprived of the business during that period. See Fishman v. Estate of Wirtz, 807 F.2d 520 (7th Cir. 1986); Malatesta v. Leichter, 186 Ill.App.3d 602, 134 Ill.Dec. 422, 542 N.E.2d 768 (1989); Rhodes v. Sigler, 44 Ill.App.3d 375, 2 Ill.Dec. 626, 357 N.E.2d 846 (1976). The decisions reasonably allowed the profits actually earned by the business over the same (or a similar) time period to prove, to a reasonable degree of certainty, the amount that the plaintiff would have received but for the breach of contract or other wrongful act. In this case, for example, had somebody stolen the draft of The Yard and falsely presented it to publishers as his own work, leading the thief to receive the $500,000 Putnam deal, then of course Grecian, after proving that he had the legal rights to the novel, would be entitled to argue that he would have received just as good a deal for the book as the thief had; although this would not necessarily be true, since perhaps the thief was a better negotiator or had better contacts in the industry, it would likely meet the "reasonable certainty" standard. See MindGames, Inc., 218 F.3d at 658 ("some degree of speculation is permissible in computing damages, because reasonable doubts as to remedy ought to be resolved against the wrongdoer") (internal quotation marks omitted). But the three decisions cited by Grecian do not support the assumption that his other books were of the same value as The Yard absent any evidence that they are comparable to that novel in any way beyond having been written by the same man.
As indicated above, "to survive a motion for summary judgment on a breach of contract claim, the plaintiff must provide a basis upon which lost profits may be calculated to a reasonable certainty." TAS Distributing Co., 491 F.3d at 636. Because Grecian has failed to do this, Levin is entitled to summary judgment on Grecian's breach of contract counterclaim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("The moving party is `entitled to judgment as a matter of law' because the nonmoving
In his second counterclaim, Grecian alleges that Levin breached the fiduciary duty he owed Grecian as his agent by engaging in self-dealing to Grecian's detriment. Doc. 8 at pp. 15-16. "Self-dealing, conflicts of interest, or even divided loyalties are inconsistent with fiduciary responsibilities." Howell v. Motorola, Inc., 633 F.3d 552, 566 (7th Cir.2011). Grecian points to three alleged acts of self-dealing: (1) Levin "repeatedly encouraged Grecian to agree to make Levin his co-writer on projects"; (2) "Levin appeared interested only in making pitches to publishers that Levin appeared to have some ownership or other interest in"; and (3) "Levin was also interested in promoting his own film and movie business, and even cut himself in on a purported TV option Levin claimed to have sold for PROOF." Doc. 8 at p. 16. Levin does not dispute that he owed Grecian a fiduciary duty, but he contends that the undisputed facts show that he did not breach that duty.
With respect to the first alleged breach, Grecian concedes that he was not harmed in any way by Levin's alleged requests that they co-write something, Doc. 64 at ¶ 76, and his summary judgment brief does not even mention this allegation. Accordingly, Grecian has forfeited any claim based on this alleged breach. See Witte v. Wis. Dep't of Corr., 434 F.3d 1031, 1038 (7th Cir.2006) (holding that the non-movant forfeits arguments not raised in his brief opposing summary judgment).
With respect to the second alleged breach, Grecian's testimony that "Levin appeared interested only in making pitches to publishers that Levin appeared to have some ownership or other interest in" is not sufficient evidence of self-dealing to get past summary judgment. Indeed, it is no evidence at all, for Grecian's statement is so vague as to be without meaning — it hedges twice with the qualification "appeared" — and it does not specify any publishers in which Levin had "some ownership or other interest" or describe what interest he had. The record does not indicate that Levin had any financial interest in any publisher, and Grecian does not say what sort of "other interest" Levin had in any of the publishers he dealt with.
With respect to the third alleged breach, Grecian's argument that Levin improperly sought to get himself a "passive producer" title with yearly pay of $45,000 to $75,000 when he tried to get a television or movie deal for Proof is undermined by the Agreement itself. Section 6.C of the Agreement provides:
Doc. 58-6 at 4-5 (emphasis added).
By its plain terms, § 6.C permitted Levin to act and take money as a passive producer so long as he met certain requirements, and Grecian does not suggest that those requirements were not met. Because Levin was acting pursuant to an express authorization in the Agreement, he could not have breached fiduciary duties that existed as a result of the relationship created by that Agreement. See LID Assocs. v. Dolan, 324 Ill.App.3d 1047, 258 Ill.Dec. 592, 756 N.E.2d 866, 880 (2001) ("Under Illinois law, a general partner will not be deemed in breach of his fiduciary duties where he has complied with an express authorization in the partnership agreement."). Section 6.C amounted to a consent by Grecian to Levin's acting as a producer and receiving money in that capacity, and an agent cannot be liable for a breach of fiduciary duty where he has acted in keeping with his principal's express consent. See McNamara v. Johnston, 522 F.2d 1157, 1165-66 (7th Cir.1975) ("fundamental fairness requires, that as between agent and principal, an agent cannot be held liable for the use of the principal's property in an unlawful manner when it is reasonable to infer that the principal authorized the agent's conduct"); Kohler v. Leslie Hindman, Inc., 1995 WL 89015, at *6 (N.D.Ill. Feb. 24, 1995) ("there can be no breach of fiduciary duty where, as here, the agent's acts are authorized by the principal").
Because none of Grecian's fiduciary duty arguments has merit, Levin is entitled to summary judgment on the fiduciary duty counterclaim.
Grecian's third counterclaim seeks a declaratory judgment that Levin, by materially breaching the Agreement, relieved Grecian of any obligation to perform under the Agreement by paying Levin's commission. Doc. 8 at pp. 16-17. This counterclaim is the mirror image of Levin's claim for a declaratory judgment that Grecian remains bound by the Agreement. As shown above, the record would allow a reasonable factfinder to find for either party on this issue. As such, summary judgment is inappropriate on this counterclaim.
Grecian's fourth counterclaim seeks a declaration that, assuming the Agreement remains binding, Levin is entitled to only a 5 percent commission on the publication of The Yard rather than the 15 percent promised by the Agreement because Levin agreed with Fishman and Grecian that Levin would take only 5 percent of any publishing proceeds for that work and its sequel, leaving the other 10 percent to Fishman. Doc. 8 at p. 17. In his summary judgment brief, Grecian makes two distinct arguments for limiting Levin to a 5 percent commission. The first is that Levin and Fishman contracted between them for Levin to receive 5 percent and Fishman 10 percent, and that Grecian is a third-party beneficiary of this contract and may therefore enforce its terms against Levin. The second is that, regardless of
Whatever the merits of the first argument, the second is sufficient to preclude summary judgment. "The general rule is that where a person by his or her statements and conduct leads a party to do something that the party would not have done but for such statements and conduct, that person will not be allowed to deny his or her words or acts to the damage of the other party. Equitable estoppel may be defined as the effect of the person's conduct whereby the person is barred from asserting rights that might otherwise have existed against the other party who, in good faith, relied upon such conduct and has been thereby led to change his or her position for the worse." Geddes v. Mill Creek Country Club, Inc., 196 Ill.2d 302, 256 Ill.Dec. 313, 751 N.E.2d 1150, 1157 (2011) (citations omitted). "Under Illinois law, the test used to evaluate an estoppel claim is whether, considering all the circumstances of the specific case, conscience and honest dealing require that a party be estopped." In re Krueger, 192 F.3d 733, 740 (7th Cir.1999) (brackets and internal quotation marks omitted). The party asserting estoppel must show the following elements:
Id. at 740-41 (quoting Hubble v. O'Connor, 291 Ill.App.3d 974, 225 Ill.Dec. 825, 684 N.E.2d 816, 825 (1997)). As the Supreme Court of Illinois has elaborated:
Geddes, 256 Ill.Dec. 313, 751 N.E.2d at 1157-58 (citations and internal quotation marks omitted).
That Grecian expected to pay only 15 percent total, and that this expectation was reasonable, is made clear for summary judgment purposes by the email that Grecian sent to Levin in response to Levin's demand for a 15 percent cut for himself: "You and Seth [Fishman] co-agent for me on my Putnam deal. I'm very grateful to you both, but an agent's fee is generally fifteen percent and I was under the impression that you and Seth would split that fee." Id. at ¶ 91. If Grecian thought that he would owe only 15 percent total, a factfinder could reasonably conclude that he relied on this supposition when he allowed Levin and Fishman to work together, rather than, say, making it an explicit condition of Fishman's assisting Levin that the two would split the 15 percent commission that would otherwise go to Levin alone. Such reliance would obviously have been detrimental since, assuming Levin's views of the Agreement are correct, Grecian obligated himself to pay 10 percent more than he would have otherwise been obligated to pay. Moreover, a reasonable factfinder could believe that Levin was aware of Grecian's misconception and intentionally refrained from correcting it until The Yard had sold, by which point it was too late for Grecian to seek a better deal with Levin and Fishman. Because Levin would be estopped from seeking more than a 5 percent commission under those facts, and because a reasonable factfinder could find that those were indeed the true facts, Levin is not entitled to summary judgment on this counterclaim.
For the reasons stated above, Levin's summary judgment motion is granted in part and denied in part. Summary judgment is granted as to Grecian's counterclaims for breach of contract and breach of fiduciary duty. But Levin's declaratory judgment claim, Grecian's mirror-image declaratory judgment claim, and Grecian's claim that Levin is estopped from demanding more than a 5 percent commission shall proceed to trial along with Levin's claim for anticipatory breach of contract.
