Weigel Broadcasting Co. v. TV-49, Inc.

TV-49, Inc. (defendant), a television station, signed a letter of intent (LOI) agreeing to negotiate the sale of TV-49 to Weigel Broadcasting Co. (Weigel) (plaintiff) under certain conditions. The LOI described the proposed terms for the sale as nonbinding, and it stated that the parties agreed to draft and execute a definitive purchase agreement within 40 days. The LOI provided that upon signing the LOI, TV-49 would cease negotiations with other parties. Weigel alleged that TV-49 failed to comply with Weigel’s requests for required documents during the 40-day negotiation period. A few days before the August 23 expiration of the 40-day negotiation period, Weigel sent TV-49 a draft purchase agreement. TV-49 did not respond until after the 40-day period had expired. The parties argued over certain terms in the agreement, and Weigel indicated that Weigel would no longer be interested in the transaction if TV-49 did not comply with certain requirements. On October 4, TV-49 notified Weigel of its decision not to comply with certain requirements and of its start of negotiations with another purchaser. Weigel sued TV-49 for breach of contract, arguing that the LOI was binding and that the parties were required to negotiate exclusively with one another in good faith. Weigel argued that TV-49 failed to negotiate in good faith because it failed to provide Weigel with the required documentation and began negotiations with a third party. Weigel sought specific performance in the form of continued negotiations and an injunction barring TV-49 from selling to another purchaser or, alternatively, damages. TV-49 moved for summary judgment, arguing that the LOI was nonbinding and did not impose duties on either party.