Phoenix Mutual Life Insurance Co. v. Shady Grove Plaza Limited Partnership
United States District Court for the District of Maryland
734 F. Supp. 1181 (1990)
Needing an equity partner to unlock the rest of a $23 million construction loan, Shady Grove (defendant) signed a letter of intent with Phoenix Mutual Life Insurance (plaintiff) under which Phoenix would contribute $11.5 million for a half interest in the property; the letter expressly stated neither side was bound to any particular terms and that a final partnership agreement had to be mutually satisfactory. After the lender released the remaining funds based on the signed letter, Phoenix and Shady Grove could not agree on final partnership terms despite extended negotiations, and talks broke down with no agreement signed; Phoenix sued for breach of contract, breach of the duty to negotiate in good faith, and estoppel, and Shady Grove moved for summary judgment.
Whether, absent explicit language stating otherwise, a letter of intent constitutes a binding contract.