Insight Health Corp. v. Marquis Diagnostic Imaging, LLC

[Editor’s Note: The casebook excerpt largely covers discussion of RREF BB Acquisitions, LLC v. MAS Properties, LLC, 2015 WL 3646992 (N.C. Super. Ct. 2015), rather than Insight Health Corp. v. Marquis Diagnostic Imaging, LLC itself.] Insight Health Corporation (Insight) (plaintiff) filed suit against Marquis Diagnostic Imaging of North Carolina (MDI-NC) (defendant) for breach of contract arising from an asset-purchase agreement. The matter came before the North Carolina Superior Court on the issue of whether MDI-NC could add an additional counterclaim against Insight for breach of a duty to negotiate in good faith. Such a claim was founded on a recent decision in RREF BB Acquisitions, LLC v. MAS Properties, LLC. In the RREF decision, the trial court found that a contract to negotiate in good faith could be supported by North Carolina law. In the RREF case, which concerned roughly $5 million in bank loans to a real estate company, the parties met to restructure their existing agreement. The parties basically agreed on most of the terms to revise the loans, with the bank sending a term sheet to the real estate company. The parties shook hands to acknowledge the apparent agreement reached. Shortly thereafter, the real estate group sent a revised term sheet to the bank. The bank then stopped communicating with the real estate company and sold the loans in question. The real estate company alleged in its suit that by suddenly walking away from negotiations and not advising that the term sheet was a final offer, the bank had breached a duty to negotiate in good faith. The bank filed a motion for summary judgment, and the court denied that motion, finding that a reasonable jury could find that a duty to continue negotiating was imposed by a contractual agreement of the parties.