Foley & Lardner LLP announced today that it secured a victory at the U.S. Court of Appeals for the Third Circuit Court for its client, Good Times Restaurants, Inc. (Good Times), in defense of claims for breach of contract and breach of the duty of good faith and fair dealing brought by White Winston Asset Select Funds, LLC (White Winston).
White Winston originally sued Good Times in connection with the parties’ failed negotiations over the sale of a Good Times wholly-owned subsidiary. White Winston alleged that the parties had executed a binding agreement for the sale of the subsidiary to White Winston. White Winston further alleged that Good Times violated the terms of the parties’ non-binding letter of intent despite the letter explicitly stating that both parties could terminate negotiations for any reason up until the execution of the proposed agreement. Meanwhile, Good Times counterclaimed that White Winston had breached the letter of intent’s covenant not to sue, which forbade litigation over the parties’ failure to execute the stock purchase agreement.
The case was novel because it presented the court with the issue of whether a party to a non-binding letter of intent owes its counter-party a duty to negotiate in good faith when the letter unconditionally allows either side to terminate negotiations.
Foley secured the dismissal of White Winston’s claim for breach of contract at summary judgment and later convinced the U.S. District Court for the District of Delaware during a four-day bench trial that Good Times had not breached its duty of good faith and fair dealing. On January 25, 2023, the court issued a memorandum opinion and judgment in favor of Good Times.
On March 1, 2024, the court of appeals affirmed the trial court’s judgment dismissing White Winston’s claims. The court also reversed the trial court’s earlier dismissal of Good Times’ counterclaim for breach of the covenant not to sue. The court of appeals remanded Good Times’ counterclaim to the trial court for a ruling on the damages Good Times suffered as a result of White Winston’s breach.
The Foley team was led by Partner Peter Loh and Associate Davis Mosmeyer.
