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June 15, 1997

NOVECON, LTD., et al., Plaintiffs,

The opinion of the court was delivered by: OBERDORFER

 This case involves a failed real estate venture in Sofia, Bulgaria. Plaintiff Novecon, Ltd. ("Novecon") has brought suit against defendants Bulgarian-American Enterprise Fund ("BAEF") and two of its principal officers, Frank Bauer and Nancy Schiller. Novecon alleges primarily that BAEF breached an investment contract by failing to come forth with any promised funding. Currently pending are cross-motions for summary judgment. For the reasons stated below, the Motion for Summary Judgment filed by BAEF will be granted in part and denied in part, and the Motion for Summary Judgment filed by Novecon will be denied.



 Novecon is a private investment firm that specializes in structuring new business ventures in Eastern Europe. Plaintiff Richard W. Rahn is the President and CEO of Novecon. In 1991, Novecon and its Bulgarian partner, Mirpex Co., formed a joint venture called Southern Park Development ("SPD"), in order to develop a real estate project in Sofia, Bulgaria. The SPD Project anticipated purchasing two parcels of land from a Bulgarian family -- the Batsovs -- and then using that land to build a residential, commercial, and parking complex. In November 1992. Novecon approached BAEF in order to request funding for the SPD Project.

 BAEF is a not-for-profit corporation that was established by Congress to promote private sector development and entrepreneurship in Bulgaria. BAEF was authorized to disburse up to $ 55 million for investment in Bulgaria. Frank Bauer is the President and CEO of BAEF. Nancy Schiller is the Managing Director of BAEF's office in Chicago, Illinois.


 Subsequently, in May and June 1993, BAEF and Novecon exchanged correspondence on four different occasions. Novecon alleges that those four documents comprise the basis for a binding, enforceable contract. The documents are listed as follows:

(1) a Letter dated May 20, 1993 from Schiller to Ronald D. Utt, the managing director of Novecon;
(2) a reply Telefax dated June 1, 1993 from Utt to Schiller;
(3) a Letter dated June 3, 1993 from Schiller to Utt; and
(4) a reply Telefax dated June 3, 1993 from Utt to Schiller.

 Each of those communications will be considered in detail.

 First, the May 20, 1993 letter from Schiller to Novecon announced that BAEF was "prepared to move forward on the terms outlined in this letter." See Utt Aff. Ex. 10. The letter then stated that BAEF contemplated "a narrower oversight role for SPD than earlier anticipated." Id. at 2. Instead of managing the entire project, SPD would simply be compensated for reaching certain specified goals (e.g., signing of the land sale contract, delivery of unencumbered title, transfer of title, securing zoning amendments and building permits, etc.). BAEF would be the principal party responsible for "changing the design of the building" and "serving as property manager for the development." Id. at 3. The letter also stated that the compensation arrangement would be "contingent on the signing of a definitive agreement. " Id. at 2 (emphasis added).

 In response, Utt sent a telefax to Schiller dated June 1, 1993. The telefax proposed one amendment to the May 20 offer. Novecon sought to "rearrange the milestones" for which SPD would be compensated. See Utt Aff. Ex. 11. Other than that one change, however, none of the remaining terms of the offer were altered. At that point, the parties appeared ready to reach an understanding.

 Also on June 1, 1993, however, Schiller was notified of an incident at the BAEF office in Sofia, Bulgaria. Apparently, three Bulgarian women had come into the office, claiming to be members of the Batsov family and asserting an ownership interest in the second parcel of land, known as Phase II. They stated that Alexander Batsov -- the person with whom SPD had been negotiating -- was not authorized to represent them in any attempted sale of that land.

 Accordingly, on June 3, 1993, Schiller telefaxed a letter to Novecon raising two issues. See Utt Aff. Ex. 12. First, the June 3 letter proposed yet another fee structure for the compensation of SPD. The letter stated that the revised fee structure would be "included in our request to the Fund's Board for final approval . . ." Id. (emphasis added). Second, the letter stated that:

To our great concern, we have been informed by our Sofia office of a rather surprising development. Ms. Lilyana Batsova and two relatives stopped by the BAEF office to discuss Phase II of the project. They claim to have ownership interest in Phase II and have communicated to us that Mr. [Alexander] Batsov has not consulted with them, nor has he been granted the authority to represent them. It was not clear that they yet own the land or that they would work together.
If this is the case, I am sure you realize that the BAEF will not pursue this investment. . . . The BAEF will consent to extending our negotiations until June 15, 1993 by which time we will expect certified documentation of the sign off of all heirs to both Phase I and II. If evidence is not received by June 15, 1993, the BAEF will rescind its offer to negotiate and terminate its discussions with SPD.

 Id. at 2 (emphasis added).

 On June 3, 1993, Utt replied in a telefax to Schiller, stating that:

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