## Facts

- NCR planned a new corporate headquarters in Dayton, Ohio and sought long-term mortgage financing, retaining a mortgage company to arrange the transaction.
- Several institutional lenders issued a mortgage loan commitment after negotiations and document exchanges.
- Lincoln requested and received a $50,000 “good faith deposit” from NCR in connection with the commitment process.
- The lenders obtained internal approvals and incorporated the contemplated NCR loan into cash-flow planning, expecting to fund from general cash flow rather than segregated funds.
- NCR later discovered it had substantial excess cash and decided to self-fund the project instead of borrowing.
- NCR informed the lenders it would not proceed with the outside financing; the lenders removed the projected loan from their planning charts.
- The lenders sued, alleging NCR had an enforceable obligation to borrow under the commitment and breached by refusing to close.

## Issues

1. Whether the commitment and related documents created an enforceable contract obligating NCR to borrow from the lenders.
2. If NCR breached, whether the lenders proved recoverable damages with reasonable certainty, and what measure of damages applied.

## Decision

- The Seventh Circuit focused on damages and held that the lenders failed to prove actual, compensable loss attributable to NCR’s decision not to borrow.
- Because the lenders planned to fund from general cash flow and did not show capital was tied up or that alternative returns were reduced, expectancy damages based on the foregone interest stream were not established.
- The court reversed or substantially reduced the district court’s damages award, limiting recovery (if any) to modest, demonstrable out-of-pocket amounts rather than large lost-profit damages.

## Legal Principles

- Contract damages require proof of actual loss with reasonable certainty; speculative or hypothetical losses are not recoverable.
- A lender seeking expectancy damages for breach of a loan commitment must show the breach caused a measurable economic loss, not merely that the loan would have produced interest.
- When funds are not segregated and remain available for other uses, the lender must present evidence that the commitment prevented comparable investments or reduced overall returns.
- In active capital markets, the ability to deploy funds elsewhere can defeat a claimed “lost opportunity” measure absent proof that substitute returns were unavailable or inferior.

## Conclusion

The court held that, even assuming NCR breached an enforceable loan commitment, the lenders could not recover substantial lost-interest damages because they did not show their capital was impaired or that the abandoned loan reduced their investment returns with the certainty required for contract damages.


Lincoln Nat'l Life Ins. Co. v. NCR Corp., 772 F.2d 315 (7th Cir. 1985)