987 F.2d 429 (7th Cir. 1993), 92-2512, Venture Associates Corp. v. Zenith Data Systems Corp.

Docket Nº:92-2512.
Citation:987 F.2d 429
Party Name:VENTURE ASSOCIATES CORPORATION, a Tennessee Corporation, Plaintiff-Appellant, v. ZENITH DATA SYSTEMS CORPORATION, a Delaware Corporation, Defendant-Appellee.
Case Date:March 02, 1993
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 429

987 F.2d 429 (7th Cir. 1993)






No. 92-2512.

United States Court of Appeals, Seventh Circuit

March 2, 1993

Argued Dec. 4, 1992.

As Amended March 5, 1993.

Page 430

Tobin M. Richter (argued), Donald L. Johnson, Chicago, IL, for plaintiff-appellant.

Thomas F. Bush, Jr., Saunders & Monroe, Chicago, IL, Craig A. Newman (argued), Michael D. Schissel, Arnold & Porter, New York City, for defendant-appellee.

Before CUMMINGS and CUDAHY, Circuit Judges, and LAY, Senior Circuit Judge. [*]

CUDAHY, Circuit Judge.

For almost a year, Venture Associates Corporation (Venture) and Zenith Data Systems Corporation (Zenith) attempted to negotiate a sale of the Heath Company (Heath), a subsidiary of Zenith. Following preliminary negotiations, the parties agreed to a "letter of intent," proposed by Venture, which provided that they would continue to negotiate in good faith and that the proposed sale was "subject to the preparation and execution of a mutually satisfactory Purchase Agreement." 1 Appellant's Br. at A21-A22. Negotiations progressed. In October 1991, after the parties had exchanged several drafts of a proposed

Page 431

agreement, Zenith refused to proceed unless the purchase price was increased by $3.5 million. Negotiations broke down shortly thereafter and a sale was never completed. Zenith continues to own Heath.

Venture filed suit in the United States District Court for the Northern District of Illinois alleging a breach of contract and of the promise to negotiate in good faith. Jurisdiction was properly predicated upon the diversity of citizenship between the parties. Venture averred that, even though the parties had never signed an agreement, they had "manifested mutual assent by documents and oral communications" and further alleged that Zenith was thus contractually obligated to complete the sale of Heath. Complaint p 10. Zenith moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted. Zenith attached to its motion copies of three letters referred to in Venture's complaint. Venture did not respond directly to the motion to dismiss but instead proffered its own motion to exclude the documents attached to Zenith's motion. The district court denied Venture's motion to exclude and granted Zenith's motion to dismiss. 812 F.Supp. 788 (1992). Venture appeals and we now affirm in part.

I. Motion to Exclude

Venture first argues that the district court impermissibly considered the documents appended to Zenith's motion to dismiss because they are extraneous to the pleadings and thus were not properly before the court. Venture relies upon Federal Rule of Civil Procedure 12(b), which provides in pertinent part:

If, on a motion asserting the ... failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56....

Rule 12(b) is mandatory; consequently, if documents outside of the pleadings are placed before a district court, and not excluded, the court must convert the defendant's 12(b)(6) motion to one for summary judgment and afford the plaintiff an opportunity to submit additional evidentiary material of his or her own...

To continue reading