Background
Peters Broadcast Engineering, a small Indiana telecommunications company, contracted with Crown Castle USA to perform construction work on cell tower sites. To perform the work, Peters Broadcast engaged PEM Consulting Group and individual Philip Miller. In May 2019, Chris Smith (a former employee) proposed a preliminary agreement between himself, Peters Broadcast, and PEM, with Peters Broadcast keeping 10% of purchase orders and PEM handling field crews and equipment. The May 5 email was labeled “the first draft” and Mr. Peters testified no agreement existed at that time.
Despite lacking a final written contract, PEM and Smith began work immediately. PEM obtained a $149,999.99 loan and paid Smith’s crews approximately $36,000 between May and July. Peters Broadcast also supplied equipment and paid crews. In July, Mr. Peters and Mr. Miller met and discussed Miller’s resources and ability to fund the project. The parties continued negotiating throughout summer, with Peters Broadcast sending two payments to PEM ($46,365.50 in July and $6,000 in August). The first payment was charged back; the second was not requested by PEM but retained. By September, the relationship deteriorated. Crown Castle eventually terminated its agreement with Peters Broadcast, citing poor work quality. Peters Broadcast sued in 2021.
The Court’s Holding
The Seventh Circuit affirmed summary judgment for PEM and Miller on all counts. The court first addressed the breach of contract claim. Under Indiana law, a preliminary agreement can be enforceable if the parties agree to all essential terms with the intent to be bound. Here, however, the parties never reached agreement on essential terms. While both testified that the compensation structure was 10% to Peters Broadcast and 90% to PEM, Mr. Miller testified he could accept or refuse purchase orders on a site-by-site basis, whereas Mr. Peters believed PEM had committed to completing all Crown Castle orders. No testimony clarified when a preliminary agreement was allegedly made or what its exact terms were. The parties’ subsequent conduct added confusion rather than clarity: PEM completed some work and provided some equipment, but Peters Broadcast also supplied equipment and paid crews. The court rejected Peters Broadcast’s argument that once prima facie evidence of a contract appears, the opposing party must prove disavowal, finding instead that Peters Broadcast never made a prima facie showing of contract formation.
The fraud claims failed for a different reason than breach of contract. Mr. Miller allegedly represented in July that he had sufficient personal resources and owned trucks capable of completing the work. These representations were false—Miller used a $149,999.99 loan and trucks leased by Knudson, L.P.—but Peters Broadcast could not have reasonably relied on them. PEM and Miller were already actively working on Crown Castle sites before July, and Mr. Peters testified he had relied on Smith’s representations in May, not Miller’s. Additionally, the record contained no evidence of how many sites PEM worked on after the July statements, making it impossible for a jury to find reliance. Even if remaining in the business relationship could constitute reliance, there was insufficient evidence to support such a finding.
The unjust enrichment claim also failed. Peters Broadcast’s first $46,365.50 payment was charged back, conferring no net benefit. Regarding equipment and crew payments, there was no evidence that PEM requested these expenses or impliedly requested them through its conduct. The August $6,000 payment, while not charged back, was also unsolicited. When considered against PEM’s documented $36,000 in project expenses and Peters Broadcast’s $118,000 in Crown Castle revenue for the completed work, retaining the $6,000 was not unjust. The court found nothing inequitable about the payment given the overall economics.
Key Takeaways
- Parties who begin preliminary negotiations and performance without finalizing essential contract terms cannot later enforce an alleged agreement; courts will not supply missing terms even when some performance has occurred.
- Fraud claims based on statements made after a plaintiff is already engaged in dealings with the defendant face a significant reliance obstacle; temporal sequence matters in establishing reasonable reliance.
- Unjust enrichment requires showing the defendant requested the benefit conferred or that equity demands restitution despite the overall transaction economics; unsolicited payments do not automatically trigger restitution obligations.
- Parties communicating with third parties about legitimate unpaid invoices for completed work have justification for such communications and cannot be held liable for tortious interference merely for seeking payment.
Why It Matters
This decision reinforces foundational contract law: courts will not rescue parties who fail to memorialize essential deal terms, even when substantial performance has begun. For businesses that subcontract work or engage multiple vendors, the holding underscores the importance of finalizing written agreements on all material points before commencing work. The agreement need not be elaborate, but it must resolve central questions about each party’s obligations—here, whether one party had discretion to accept or decline jobs, or whether all work was mandatory.
The fraud analysis is equally important. The court made clear that temporal sequence defeats reliance: if you accept a party into your business venture before they make allegedly fraudulent statements, you cannot credibly claim you relied on those statements. Additionally, the parties’ equivocal post-statement conduct undermined any inference of reliance. Finally, the tortious interference ruling confirms that seeking payment for work performed is a legitimate business reason that protects communications with third parties from liability—a practical rule that allows unpaid contractors to pursue collection without fear of counterclaims, provided they act based on legitimate grievance rather than malice.