Phoenix Mutual Life Insurance Co. v. Shady Grove Plaza Limited Partnership

Shady Grove Plaza Limited Partnership (defendant) purchased a parcel of land for which they secured a loan commitment of more than $23 million from Citicorp Real Estate, to be used for construction. Citicorp released more than $7 million to Shady Grove, but refused to release additional funds until Shady Grove secured an equity partner. Thereafter, Phoenix Mutual Life Insurance Company (plaintiff) offered to contribute $11.5 million in exchange for a one-half interest in the property. Phoenix provided Shady Grove with a draft letter of intent, which was subsequently revised by the parties a number of times before it was finally executed by both Phoenix and Shady Grove. The letter of intent provided that neither party was obligated to accept any particular partnership terms and that any partnership agreement eventually reached must be satisfactory to both parties prior to finalization. Based on the signed letter of intent, Citicorp released the remaining loan funds to Shady Grove. Thereafter, Phoenix and Shady Grove began disagreeing on the terms of the final partnership agreement. Despite lengthy negotiations and bargaining, neither Phoenix nor Shady Grove was willing to compromise on the outstanding issues. Negotiations ceased and no partnership agreement was signed. Phoenix filed suit against Shady Grove for breach of contract on various theories, including breach of the duty to negotiate in good faith and estoppel. Shady Grove moved for summary judgment.