226 F.3d 798 (7th Cir. 2000)
Acequia, Inc., Plaintiff-Appellant,v.Prudential Insurance Company  of America, Defendant-Appellee.
No. 99-4051
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 15, 2000Decided September 1, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 1100--Elaine E. Bucklo, Judge.
Before Flaum, Chief Judge, and Cudahy and Evans,  Circuit Judges.
Cudahy, Circuit Judge.


1
Acequia, Inc., an Idaho  family farming operation, obtained a $4 million  loan from Prudential in 1977. The security for  the loan was Acequia's 7,600 acres of farm property. The note was to mature on March 15,  1992. In 1981, Acequia defaulted on the loan.  Prudential began foreclosure proceedings, but  Acequia filed for bankruptcy protection. For the  next two years, Acequia worked on a  reorganization plan; Prudential approved this  Bankruptcy Plan (the Plan) and the bankruptcy  court confirmed it in 1984. But the two companies  continued feuding, and in 1987, Acequia sued  Prudential in Idaho state court because of a  dispute regarding the terms of the promissory  note required by the Plan. This dispute ended in  a 1989 Settlement Agreement, under which  Prudential and Acequia agreed to extend the  deadline for Acequia to repay Prudential. The  Settlement Agreement called for the parties to  execute an amended and restated promissory note,  which they did. Prudential maintains that as part  of the Settlement Agreement, it agreed to  transform the loan into a non-recourse loan  secured only by the land. Under the Settlement  Agreement parcels of land could be sold by  Acequia, but only at minimum prices and under  other prescribed conditions. It is unclear from  the record exactly what recourse Prudential  originally had against Acequia, but there is no  dispute that under the new Settlement Agreement,  Prudential does not have in personam recourse  against Acequia for the unpaid portion of the  loan.


2
The parties are again in court because Acequia  contends that Prudential has improperly allocated  the proceeds of its land sales to Acequia's debt,  and that due to the misapplication of funds,  Prudential's books show Acequia owing too large  an amount. Consequently, because the Settlement  Agreement sets a minimum sale price for the farm  parcels based on the amount of remaining debt,  Acequia maintains that Prudential is asking it to  sell the parcels for unreasonably high prices  that the market will not bear. The basis for  Acequia's charge of improper accounting is  language in the Bankruptcy Plan directing the  application of farmland proceeds. That language  is not identical to the provision governing the  application of proceeds in the subsequent  Settlement Agreement. Acequia has labelled its  complaint "breach of contract," and both parties  treat the Settlement Agreement as a contract. See  Appellant's Br. at 14; Appellee's Br. at 17. They  debate the question whether the Settlement  Agreement must be read in conjunction with the  Bankruptcy Plan "as a single contract." See  Appellant's Br. at 14. Notably, the Settlement  Agreement was hammered out independent of the  bankruptcy court, but the bankruptcy court later  approved it after it had been challenged by an  equity security holder. See In re Acequia, 996  F.2d 1223 (9th Cir. 1993) (table), 1993 WL 219865,  *2. While in other contexts, plans and agreements  adopted pursuant to a declaration of bankruptcy  might be viewed as something other than  contracts, we agree with the parties that it is  reasonable to treat them as contracts here, where  they capture a negotiated agreement between two  parties which fixes the rights and obligations of  each. Our task, therefore, is one of contract  interpretation. We must decide how to read the  two provisions and whether based on that reading  Prudential has acted improperly in applying the  terms of the Settlement Agreement.


3
There is one other issue namely, whether the  court erred in granting summary judgment for  Prudential on all eight of Acequia's claims even  though Prudential's motion for summary judgment  asked for a resolution only of "the accounting  issue." The court determined that none of  Acequia's claims was viable in light of its  favorable ruling for Prudential on the accounting  issue. It therefore granted summary judgment on  all of the claims.

I.  Breach of Contract

4
The key issue in this case is what to make of  apparently conflicting language in the Bankruptcy  Plan and the Settlement Agreement. In order to  understand the language, we must review the  structure of the Settlement Agreement. As of  1989, when the parties entered that agreement,  Acequia owed $3.5 million in principal and $1  million in interest to Prudential. The Settlement  Agreement states that


5
Acequia's existing Plan indebtedness will be set  at $4,500,000 as of July 1, 1989, (representing  a liquidated, principal balance of $3,500,000 and  a liquidated accrued but unpaid interest balance  of $1,000,000 under the existing Plan as of June  30, 1989), with interest to be earned thereon  from and after July 1, 1989 (the "Loan"). As used  hereinafter in this Agreement, "principal" shall  refer to all or any portion of the Loan balance,  as the case may be, and "interest" shall refer to  interest accruing on the Loan balance from and  after July 1, 1989.


6
Appellee's App., Tab 1 at 1.


7
The amended note executed pursuant to the  Settlement Agreement specifically states that  "[t]he indebtedness evidenced by this Amended  Note represents a liquidated principal balance of  $3,500,000 and a liquidated accrued but unpaid  interest balance of $1,000,000 under the Original  Note, under the Plan as of July 1, 1989  (collectively the "Loan Balance")." See  Appellee's App., Tab 2 at 1. The Settlement  Agreement defined the $3.5 million principal  balance as "Segment A" of what had become the  loan balance and the $1 million interest portion  as "Segment B" of the loan balance.


8
Additionally, it is important to understand the  Settlement Agreement's terms regarding the sale  of Acequia's farm land. The Agreement permits  Acequia to voluntarily sell farm land, but  requires the company to secure a minimum price  for each parcel. The minimum price is defined in  the Settlement Agreement. It consists of two  components. The first, "Release Value," is a  fixed amount the parties agreed to. The second,  "Release Interest Component" is the "proportional  share of current and accrued interest allocable  to that Release Value." Appellee's App., Tab 1 at  4. Consequently, the more interest has accrued on  Acequia's total indebtedness, the higher the  Release Interest Component on any parcel of farm  land, and the higher the Total Release Price.


9
This background brings us to the contract  dispute. Acequia contends that Prudential should  have been applying more of the proceeds of its  farm land sales to interest than it has been. The  dispute came to a head in 1995 and 1996. Acequia  missed its scheduled June 1995 payment of  $425,000. It then stated that it intended to sell  several parcels of land. Prudential approved the  sales, they were completed in 1996, and Acequia  netted $1.4 million. Acequia contended the money  should be devoted first to cure the default, then  to satisfy the 1996 annual payment and then to  prepay sums thereafter coming due. Instead,  Prudential applied the entire $1.4 million to the  Segment A or Segment B debts and the associated  interest, as called for in the Settlement  Agreement. It applied none of the funds to the  1995 or 1996 annual payments, meaning that  Acequia's accrued interest continued to rise.  Acequia then complained that Prudential had been  improperly applying land sale proceeds since  1990, during a period when annual payments  consisted of interest only. As a result, Acequia  charges that over the years, the total interest  on its indebtedness had been improperly inflated,  impermissibly driving up the Release Interest  Component and ultimately the Total Release Price  for every parcel of land it wishes to sell.  Because Acequia has been unable to fetch these  "inflated" prices for the land, Prudential has  not approved the land sales. See Appellant's  Reply Br. at 3. Acequia concluded that Prudential  was thereby throwing up a roadblock to its  repayment of the debt.


10
While it may seem to a casual observer that  Prudential's allocation method is designed merely  to prolong Acequia's indebtedness, Prudential  maintains that the Settlement Agreement did not  permit it to apply the sale proceeds to Acequia's  defaults. And Prudential seems to defend the  Settlement Agreement as the only way to prevent  Acequia from squandering the land--Prudential's  only collateral--to meet immediate obligations  and then running out of funds when remote  principal payments start coming due. See  Appellee's Br. at 13. Prudential also refutes  Acequia's contention that the Settlement  Agreement did not permit it to meet the demands  for annual payments with the land sale proceeds.  According to Prudential, Acequia was free to use  any proceeds in excess of the Total Release Price  of the land to meet its annual obligations. See  Appellee's Br. at 25.


11
In order to determine whether Prudential has  improperly applied the proceeds of the farm land  sales, we must review the two provisions that  arguably apply to this question. Section 4.01 of  the Bankruptcy Plan, entitled "Sales of Land"  states that "[t]he funds required to implement  the Plan will be derived from rental income and  from sales of land presently owned by the  Debtor." It then specifies that


12
As long as there remains unpaid any Interest  Arrearage owed to Prudential as part of the  Prudential Secured Claim, the entire amount of  Net Proceeds from any sales of property subject  to Prudential's mortgage will be paid over to  Prudential and applied against the Interest  Arrearage. . . . Once the Interest Arrearage has  been satisfied . . . [p]ayments made to  Prudential shall be applied first to unpaid  accrued interest on the Prudential Note and then  to principal.


13
Appellee's App., Tab 3 at 11-13.


14
On the other hand, the Settlement Agreement  provides that:


15
The Total Release Price received by Prudential  with respect to such sale shall be applied as  follows


16
(x) the Release Value received with  respect to such sale shall be applied against the  Loan balance constituting a portion of, Segment  A if the sale is of a parcel comprising a portion  of Parcel A Property, or Segment B if the sale is  of a parcel comprising a portion of Parcel B  Property, and (y) the Release Interest Component  received with respect to such sale shall be  applied against the current and/or accrued  interest (whether or not then due) allocable to  the Loan balance being repaid under clause x  above.


17
Appellee's App., Tab 1 at 5.


18
The district court reasoned that the Settlement  Agreement provision was clear and unambiguous,  and therefore, did not require an examination of  the Bankruptcy Plan or extrinsic evidence to lend  meaning to its provisions. Acequia now asserts  that the district court erred by failing to apply  the rules of contract interpretation recognized  in Idaho, and therefore reached the wrong  conclusion. Among the extrinsic evidence Acequia  wanted the district court to consider was a Ninth  Circuit opinion holding that the Settlement  Agreement was not an impermissible modification  of the Bankruptcy Plan. The other key extrinsic  evidence was the fact that Acequia's 1995, 1996  and 1997 land sales required approval by the  Bankruptcy Court. Acequia stated in its motions  seeking approval of those sales that it intended  to distribute the proceeds of sale "in accordance  with the terms of the Plan and the Agreements  between Acequia and Prudential in the same manner  as contemplated by Section 4.01 of the Plan."  Appellant's App., Tab L., Ex. 1, Paras. 2, 7.  Prudential endorsed the sales, and the bankruptcy  court authorized Acequia "to distribute the  proceeds of said sales as set forth in the  Motion." Appellant's App., Tab L., Ex. 1, Paras.  5, 10.


19
The parties engage in some halfhearted back-and-  forth about whether or not Acequia waived the  choice of law issue by failing to cite Idaho  caselaw in its pleadings below. But these  pleadings cited few cases, and the district court  did not cite a single case or explicitly identify  whether it was applying Idaho or Illinois  contract principles in analyzing the case. So  there was no need for Acequia to press the issue  at that stage. Additionally, the Settlement  Agreement clearly states that Idaho law is to  apply to any dispute arising under it. See  Appellee's App., Tab 1 at 9. So we think Acequia  may argue on appeal that the district court erred  by failing to apply the Idaho rules of contract  interpretation. However, it seems to us that  Acequia is not really concerned so much with the  court's choice of law as with the court's  application of the rules of contract  interpretation. The district court relied on the  tried and true rule that if a contract is  unambiguous, reference to extrinsic evidence is  not permitted. See Appellee's App., Tab 4 at 5  (August 11, 1999 hearing on motion for summary  judgment). The district court found the later  document, the Settlement Agreement, unambiguous,  and therefore did not rely on the earlier  document or on extrinsic evidence to interpret  the Settlement Agreement. But there were two  agreements between these parties, and the  subsequent contract did refer to, and in some  provisions strive for consistency with, the  first. In such a circumstance, we are willing to  grant Acequia that an equally unexceptionable  rule of contract interpretation--related  documents must be read together--might have been  applied before the court analyzed whether the  contract at issue was ambiguous. See, e.g.,  Murphy v. Keystone Steel & Wire Co., 61 F.3d 560,  565 (7th Cir. 1995). One could argue that only  after determining whether the two documents could  be read together, or whether the latter  superseded the former, could the court determine  whether the resulting contract was ambiguous.


20
So the district court may have glossed over a  nicety of contract interpretation. But even the  Idaho law Acequia cites would not have altered  the district court's conclusion that the second  contract governed, and was unambiguous. According  to the Idaho Supreme Court, "'a new contract with  reference to the subject matter of a former one  does not supersede the former and destroy its  obligations, except in so far as the new one is  inconsistent therewith, when it is evident from  an inspection of the contracts and from an  examination of the circumstances that the parties  did not intend the new contract to supersede the  old, but intended it as supplementary thereto.'"  Silver Syndicate, Inc. v. Sunshine Mining Co.,  101 Idaho 226, 235 (1979) (emphasis added). In  Silver Syndicate, two parties signed a mining  contract in 1943, and a dispute later arose. The  next year, they entered a second contract  designed to settle the dispute. The 1944 contract  specifically referred to the earlier contract,  and specifically stated that it was meant to  resolve uncertainties that the two parties had  with respect to the first contract. The 1943  contract had created a 400-foot wide zone within  which one party could mine another party's land.  The court determined that because the 1944  contract referred to and relied on the 1943  contract, "it is clear that the parties did not  intend to rescind it in its entirety." Silver  Syndicate, 101 Idaho at 235. Because the 1943 and  1944 provisions did not contradict one another,  both applied. The court concluded that reading  both contracts together resulted in ambiguity  regarding the parties' intentions about the 400-  foot zone. The court therefore examined extrinsic  evidence to determine the meaning of the  contract. Acequia contends that the district  court should have followed the same path in the  present case.


21
But the present case is distinguishable from  Silver Syndicate because the two documents here  are contradictory and cannot be read together.  Contradiction is found where terms in two  documents cannot both be given effect. For  instance, in Costello v. Watson, an early  contract granted one party a 10 percent interest  in land to be developed by the other party, and  a later contract was silent about the 10 percent  interest. 111 Idaho 68, 72 (Idaho App. Ct. 1986).  The Idaho court did not find the two contracts  contradictory, so it read them together. See id.  In contrast, an Idaho bankruptcy court held that  where an initial contract for the financed  purchase of furniture did not create a purchase  money security interest, and a subsequent  contract for additional furniture did create a  PMSI for both the earlier-purchased items and the  later-purchased items, the later and  contradictory agreement indicated "an intent to  replace the prior [one]." In re Butler, 160 B.R.  155, 159 (D. Idaho 1993).


22
In the present case, the Settlement Agreement  specifically refers to and relies on the  Bankruptcy Plan. One provision specifies that  mutual releases upon the closing of the  settlement will be conducted in a method  "consistent with the Plan." See Appellee's App.,  Tab 1 at 7. But reading the two together, it is  clear that as in In re Butler, the second  contract, in the matter of applying land sales  proceeds, contradicts the first and indicates an  intent to replace it. The Bankruptcy Plan  specified that proceeds of Acequia's land sales  would be allocated first to the interest  arrearage as of 1984, then to interest accrued  thereafter and finally to principal. The  Settlement Agreement takes a wholly inconsistent  approach.


23
Recall that the Settlement Agreement essentially  bundled the principal and interest owed as of  1989. The Settlement Agreement referred to that  collective debt as the "loan," and the Amended  Note referred to it as the "loan balance."  Interest was then charged from 1989 forward on  the collective debt known as the loan balance.  The parties elected to apply different interest  rates to the portion of the loan balance  reflecting pre-1989 principal and to the portion  reflecting pre-1989 interest. Therefore, the two  components of the loan balance were labeled  "Segment A" and "Segment B." All of Acequia's  land parcels were assigned as security for either  the Segment A or Segment B portion of the loan  balance. The Settlement Agreement stated that the  Total Release Price obtained for any parcel sold  would be broken down into a Release Value  Component and a Release Interest Component. The  value component would be applied against either  Segment A or Segment B, depending on the segment  to which the parcel was assigned. And the  interest component would be applied against the  current and/or accrued interest allocable to the  segment of the loan balance to which the property  was assigned.


24
For example, if Acequia sold a parcel  designated as security for Segment A (the pre-  1989 principal), the release value portion of the  sale price would be allocated against the pre-  1989 principal, and the release interest portion  of the sale price would be allocated against the  post-1989 interest accrued or accruing on that  pre-1989 principal. If Acequia sold a parcel  designated as security for Segment B (pre-1989  interest), the release value portion of the sale  price would be allocated against the pre-1989  interest, and the release interest portion of the  sale price would be allocated against the post-  1989 interest on that pre-1989 interest.


25
As we see it, the Settlement Agreement's  complex and comprehensive scheme contradicts--and  therefore revokes--the simple "interest  arrearage, interest, principal" payment scheme  called for in the Bankruptcy Plan. The two  documents cannot stand together. Therefore,  Silver Syndicate dictates that the Settlement  Agreement amounts to a partial rescission of the  Bankruptcy Plan. Acequia maintains that the only  purpose of the Settlement Agreement scheme is to  differentiate between Segment A properties and  Segment B properties, and that once a sold  property is categorized as Segment A or Segment  B, the proceeds of the sale must first pay down  the interest on that segment of the loan before  they can be used to pay down the principal.  Acequia bolsters this argument by noting that the  relevant provision of the Settlement Agreement  does not refer to "principal" or "interest," and  therefore cannot be said to change the "interest arrearage, interest, principal" hierarchy  established in the Bankruptcy Plan. This  interpretation ignores paragraphs 2, 8 and 9 of  the Settlement Agreement. In those passages, the  parties specified that Segment A represented pre-  1989 principal and Segment B represented pre-1989  interest. When one plugs in "pre-1989 principal"  or "pre-1989 interest" for "Segment A" or  "Segment B," respectively, it becomes entirely  clear that the Settlement Agreement contradicts  the Bankruptcy Plan's "interest arrearage,  interest, principal" hierarchy. The Settlement  Agreement specifically calls for a portion of the  proceeds of Segment A properties to be allocated  to the pre-1989 principal (Segment A of the loan  balance) at the same time as a portion of those  proceeds are allocated to the post-1989 interest  accruing on that principal. So the Settlement  Agreement clearly does not require that all  interest must be paid before any principal may be  paid.1 Such a stark contradiction with the  Bankruptcy Plan's provisions must be interpreted  as a revocation. Therefore, the district court  was ultimately correct that the Settlement  Agreement, which could not be read together with  the Plan, was unambiguous. The court correctly  refused to examine extrinsic evidence. Prudential  clearly followed the terms of the Settlement  Agreement in applying the proceeds of the farm  land sales.


26
Additionally, even if the district court should  have examined the extrinsic evidence, we are not  convinced it would have changed the outcome.  First, Acequia seems to find persuasive an  unpublished opinion in which the Ninth Circuit  rejected the challenge of an equity security  holder (a husband who split his shares with his  co-owner wife after their divorce) to the  adoption of the Settlement Agreement. See In re  Acequia, Inc., 996 F.2d 1223 (9th Cir. 1993)  (table), 1993 WL 219865. The husband filed a  motion to terminate the Settlement Agreement,  arguing that it constituted an impermissible  modification of the Plan, in violation of section  1127 of the Bankruptcy Code. The court focused  primarily on whether the extension of the  maturity date for the amended note, as called for  in the Settlement Plan, was a modification. See  id. at *2. The Bankruptcy Code permits changes to  reorganization plans if the changes are designed  to effectuate the plan. See id. But  "modifications" of plans that are not meant to  help implement the ultimate goals of the plan are  not allowed. See id. Extending the maturity date  of the note was necessary to effectuate the broad  goals of the Plan, and was consistent with the  plan, the court concluded. See id. Therefore, the  court held, it was not an impermissible  modification of the Plan. See id. The district  court viewed the Ninth Circuit opinion as holding  that the Settlement Agreement permissibly  modified the Bankruptcy Plan, while Acequia  viewed the opinion (along with the opinion of the  district court that it affirmed) as holding that  the Settlement Agreement did not change the  Bankruptcy Plan. We don't think the Ninth Circuit  opinion is relevant, regardless how it is  interpreted. It dealt with the maturity date of  the note, not the change in terms regarding  allocation of land sale proceeds. And it applied  rules derived from the Bankruptcy Code, not from  Idaho contract law. So the Ninth Circuit opinion  is not persuasive evidence that Section 4.01 was  not modified.


27
We do not, by the way, think the Ninth Circuit  opinion raises any issue preclusion problems.  Issue preclusion occurs when, after an issue that  was necessary to the outcome of a previous suit  was fully litigated in that suit, a litigant  tries to revive it in a separate suit involving  a different party. See Parklane Hosiery Co., Inc.  v. Shore, 439 U.S. 322, 326 n.5 (1979). The Ninth  Circuit resolved only the narrow question whether  extension of the amended note's maturity date was  such a wholesale modification that it violated  the Bankruptcy Code. The determination of that  issue did not bar the district court in the  present case from deciding the very different  question whether the Settlement Agreement's  allocation of land sale proceeds was a rescission  of Section 4.01 of the Bankruptcy Plan. Notably,  no party in the present case has contended that  the Settlement Agreement's modification of the  Bankruptcy Plan's land sale allocation scheme  amounts to an impermissible modification under  the Bankruptcy Code. Instead, the parties save  their fire for the common-law issue of whether  Prudential breached the terms of the parties'  contract by applying the proceeds as it did.


28
Acequia also offers as evidence its motions  asking the Bankruptcy Court to approve the 1995,  1996 and 1997 land sales. In those motions, it  stated that it intended to distribute the  proceeds of sale "in accordance with the terms of  the Plan and the Agreements between Acequia and  Prudential in the same manner as contemplated by  Section 4.01 of the Plan." Appellant's App., Tab  L., Ex. 1, Paras. 2, 7. Prudential endorsed the  sales, and the bankruptcy court authorized  Acequia "to distribute the proceeds of said sales  as set forth in the Motion." Appellant's App.,  Tab L., Ex. 1, Paras. 5, 10. Therefore, Acequia  argues, both the Bankruptcy Court and Prudential  agreed with the proposition that even after the  Settlement Agreement was executed, the Plan  provisions for allocating land sale proceeds  still applied. We do not take that view. First,  the motion specifically refers to both the Plan  and the Agreement, suggesting that the Plan  provisions no longer stood alone. Second, while  all parties appeared to agree in these documents  that Acequia would turn over the money to  Prudential according to the dictates of Section  4.01, the documents do not specifically state  that Prudential will allocate the money to the  various segments of the indebtedness as called  for in Section 4.01.


29
Finally, Acequia offers us the opinion of an  Idaho magistrate judge ruling in a parallel  foreclosure suit pending in Idaho. The magistrate  judge denied Acequia's motion for summary  judgment in the Idaho action, reasoning that it  was unclear how the changes incorporated in the  Settlement Agreement affected the integrity of  the Plan, and concluding that "[t]hese types of  issues are best resolved at trial." See  Appellant's Br. at 24. As the district court  correctly noted, its grant of summary judgment  preceded the Idaho magistrate judge's  recommendation. Therefore the magistrate judge's  recommendation is in no way binding. Moreover, it  is instructive that because Acequia was the party  moving for summary judgment, the Idaho magistrate  judge's recommendation essentially rejected  Acequia's position that the Settlement Agreement,  as a matter of law, did not rescind Section 4.01  of the Bankruptcy Plan. So in reality, the  magistrate judge's recommendation is not an  endorsement of Acequia's position, and therefore  is not persuasive as extrinsic evidence of how  the two contracts should be synthesized.

II.  Grant of Summary Judgment

30
Having determined that Prudential's accounting  method was sound, the district court granted  summary judgment for Prudential on all of its  claims. Prudential's motion for summary judgment  requested that the court grant summary judgment  "on the accounting issues arising from and  alleged in each claim for relief in Acequia's  Second Amended Complaint." This is a slightly odd  request for summary judgment, in that it does not  specifically request relief on any particular  claim, and appears to stop short of specifically  requesting relief on all the claims.


31
A district court is permitted to enter summary  judgment sua sponte if the losing party has  proper notice that the court is considering  granting summary judgment and the losing party  has a fair opportunity to present evidence in  opposition. Simpson v. Merchants Recovery Bureau,  171 F.3d 546, 549 (7th Cir. 1999). For instance,  in Simpson, we held that the district court  improperly granted summary judgment for a  defendant. In that case, the plaintiff verbally  mentioned during a conference with the opponent  and the judge that she might amend her complaint  to outline a different theory against the  defendant. The court asked both sides to submit  cases on the new theory, and the defendant  submitted a detailed statement of facts, legal  argument, affidavits and exhibits. Based on this  filing, the district court entered summary  judgment in favor of the defendant. We concluded  that the plaintiff had no notice summary judgment  was under consideration, and therefore the court  erred in granting it. In contrast, we have stated  that where one defendant succeeds in winning  summary judgment on a ground common to several  defendants, the district court may also grant  judgment to the non-moving defendants, if the  plaintiff had an adequate opportunity to argue in  opposition. See Malak v. Associated Physicians,  Inc., 784 F.2d 277, 280 (7th Cir. 1986).


32
In the present case, seven of Acequia's eight  claims, namely breach of contract, breach of duty  of good faith, tortious interference,  interference with the business advantage,  defamation, disparagement of commercial business  and violation of the Illinois Consumer Fraud Act,  rely explicitly on the allegation that Prudential  misapplied to principal Acequia payments that  should have been devoted to interest. Acequia  alleges that Prudential thereby drove up the  Total Release Price required for the land, and  obstructed Acequia's business, giving rise to the  breach of contract, breach of duty of good faith,  tortious interference, interference with business  advantage and Illinois Consumer Fraud Act claims.  Relatedly, Acequia alleges that Prudential  informed third parties that Acequia had defaulted  on its obligations, giving rise to the defamation  and disparagement of commercial business claims.  So, if Prudential properly applied the funds,  then it was entitled to a higher release price on  the land, and was correct in telling third  parties that Acequia had defaulted. Therefore,  resolution of the accounting issue in  Prudential's favor inevitably meant that Acequia  would lose on those seven counts. While the  motion for summary judgment did not explicitly  request relief on the seven counts, the obvious  inference was that success on the "accounting  issue" would amount to success on those seven  counts. For this reason, we are not sure we can  characterize the district court's grant of  summary judgment on those counts as a sua sponte  grant of summary judgment. The court was--albeit  indirectly--asked to grant summary judgment on  those counts.


33
Moreover, even if we were to say this grant of  summary judgment was sua sponte, we do not think  it was improper. Acequia, the losing party, had  proper notice that the court was being asked to  consider the accounting issue, and should have  known based on its familiarity with the complaint  that a ruling favorable to Prudential would spell  doom for seven of its eight claims. Malak states  that a holding common to all defendants may  result in summary judgment for all defendants,  even if fewer than all of them moved for summary  judgment. In the present case, the district court  reached a holding common to seven of Acequia's  claims, and even though Prudential did not  explicitly request summary judgment on all seven  claims, the district court merely reasoned  logically in stating that the common holding  defeated the seven claims. Further, as required  in Simpson and Malak, Acequia had an ample  opportunity to present evidence on the accounting  issue. Not only did it submit memoranda of law  and affidavits from its officers explaining their  understanding of the Settlement Agreement's  terms, Acequia's attorney engaged in a lengthy  colloquy with Judge Bucklo in which the attorney  was allowed to develop her contractual theory. So  both requirements were met for entry of summary  judgment sua sponte. See Simpson, 171 F.3d at  549.


34
The single count that does not depend  explicitly on the outcome of the accounting issue  is the fraud count, in which Acequia alleges that  Prudential misrepresented the import of the  Bankruptcy Plan and the Settlement Agreement,  intending all the while to apply the funds so as  to drive up the accrued interest and block  Acequia's land sales. At the hearing in which the  district court indicated it would grant summary  judgment for Prudential on every count, Acequia  maintained that the fraud claim was independent  of the accounting issue and therefore  inappropriate for summary judgment. The trial  court expressed skepticism about the viability of  the fraud claim, noting that Acequia could not  have been defrauded by Prudential's verbal  representations if the contract clearly spelled  out how land sale proceeds were to be accounted  for. Nevertheless, the court gave Acequia two  days to submit authority for the proposition that  Prudential's verbal assurances amounted to fraud.  So Acequia had notice that summary judgment was  under consideration, as required by Simpson.  Despite this notice, Acequia submitted nothing.


35
Moreover, the court sent the case back to the  magistrate judge for further confirmation that no  outstanding accounting issues remained. Though  the court did not expressly give Acequia the  opportunity to re-argue its fraud position to the  magistrate judge, the fact remains that the  district court did not hastily enter the summary  judgment against Acequia.  Acequia knew that the  district court planned to enter summary judgment  at the conclusion of the magistrate's review, and  did not take advantage of its opportunity to  persuade the district court or the magistrate  judge that summary resolution of the fraud claim  was ill-considered.


36
Acequia complains that because the magistrate  judge had limited discovery to the accounting  issue, it was not able to point to a genuine  issue of material fact to preclude the entry of  summary judgment on the fraud count. Under other  circumstances, this might violate the requirement  of Simpson that the losing party have an  opportunity to present evidence favorable to its  position. But the trial court clearly indicated  that if Acequia could show as a matter of law  that it might prevail on the fraud count under  the facts it alleged, the court would hold off on  summary judgment and let Acequia develop further  evidence. So Acequia's hands were not tied by the  lack of evidence available to it.


37
In sum, we think the district court was  ultimately correct that Prudential properly  applied the proceeds of the farm land sales to  either interest or principal, as called for in  the Settlement Agreement, and we Affirm that  decision. We also think the trial court acted  properly in granting summary judgment on all  eight claims, and Affirm that decision as well.



Notes:


1
 This is so regardless whether one defines  "principal" as the principal that had accumulated  as of the 1989 Settlement Agreement (Acequia's  preference) or as the entire $4.5 million  designated the "loan balance" in the 1989  Promissory Note (the district court's  preference). Under either definition, when a  Segment A parcel is sold, principal will be paid  contemporaneously with interest. The only time  the definition will make a difference is when a  Segment B parcel is sold. If one defines  "principal" only as pre-1989 principal, then  paying down the pre-1989 interest represented by  Segment B constitutes an interest payment,  whereas if one defines "principal" as pre-1989  principal and interest, then paying down the pre-  1989 interest represented by Segment B  constitutes a principal payment. This distinction  is not relevant, however, because the fact  remains that the Settlement Agreement  specifically calls for the pre-1989 principal--  which both parties agree is properly defined as  principal--to be paid simultaneous with interest.  So regardless how one defines "principal" under  the Settlement Agreement, the Agreement abrogates  the Bankruptcy Plan's "interest arrearage,  interest, principal" hierarchy.


