## Facts

- Insight Health Corp. operated an MRI imaging center in Asheville, North Carolina.
- Marquis Diagnostic Imaging of North Carolina, LLC (MDI-NC) operated a competing MRI facility and previously leased an MRI machine from a third party (Alliance).
- In 2011–2012, Insight and MDI-NC discussed Insight’s possible acquisition of MDI-NC’s assets.
- The parties executed a June 12, 2012 letter of intent (LOI) stating it was a non-binding expression of mutual intent regarding a potential $2.1 million asset purchase.
- MDI-NC alleged the contemplated purchase price depended on MDI-NC terminating its Alliance lease and entering a new MRI services arrangement with Insight.
- MDI-NC terminated the Alliance lease and entered into a multi-year MRI agreement under which Insight supplied MRI equipment and services and MDI-NC made scheduled monthly payments.
- After the LOI and MRI agreement, Insight reduced its acquisition offer from $2.1 million to $250,000, citing a valuation error; MDI-NC refused.
- Roughly two years into the MRI agreement, MDI-NC ceased operations, sold its assets to another buyer for less than $2.1 million, and stopped making payments under the MRI agreement.
- Insight sued for breach of the MRI agreement and related claims; MDI-NC asserted counterclaims and sought leave to amend to add a claim that Insight breached a duty to negotiate in good faith arising from the LOI and subsequent dealings.

## Issues

1. Whether North Carolina law permits an enforceable contract to negotiate in good faith, including in the LOI context, if ordinary contract-formation requirements are met.
2. Whether MDI-NC’s proposed counterclaim for breach of a duty to negotiate in good faith was futile as a matter of law given the LOI’s non-binding language.
3. What role the implied covenant of good faith and fair dealing and a “wrongful intent” requirement play in claims based on negotiation duties.

## Decision

- The court held that an agreement to continue negotiating in good faith can be enforceable under North Carolina law if it satisfies contract-formation requirements (including mutual assent, consideration, and sufficiently definite terms).
- The court distinguished between a non-binding LOI as to consummating the transaction and a potentially binding promise governing the negotiation process.
- The court allowed MDI-NC to amend in part to assert a breach-of-duty-to-negotiate-in-good-faith counterclaim, concluding the claim was not futile at the pleading/amendment stage.
- The court emphasized that a breach of the implied covenant of good faith and fair dealing requires wrongful intent to deprive the other party of contractual benefits, not mere mistake or hard bargaining.

## Legal Principles

- Agreements to negotiate in good faith are not categorically unenforceable; they are enforceable only if the alleged negotiation duty itself constitutes a contract under North Carolina law.
- The implied covenant of good faith and fair dealing applies to contracts and requires that neither party intentionally acts to deprive the other of the benefits of the agreement.
- A good-faith/fair-dealing breach requires wrongful intent; negligence, error, or ordinary changes in business judgment are insufficient without intentional deprivation.
- A document labeled “non-binding” may still support a binding obligation regarding negotiations if the parties’ language and conduct show mutual assent and definite, enforceable terms for that obligation.
- Courts separate (a) enforceability of a duty to negotiate from (b) enforceability of a duty to close the contemplated transaction.

## Conclusion

The court recognized that North Carolina law can enforce a contract-based duty to negotiate in good faith when contract-formation elements and definite terms are shown, and it permitted amendment to plead such a claim despite non-binding LOI language, while stressing that ultimate liability depends on proof of a binding negotiation commitment and wrongful intent.


Insight Health Corp. v. Marquis Diagnostic Imaging of N.C., LLC, 2016 WL 5890390 (N.C. Bus. Ct. 2016)