                          In the
 United States Court of Appeals
              For the Seventh Circuit
                       ____________

Nos. 04-1525 & 04-1526
BAKER O’NEAL HOLDINGS, INC., and
AMERICAN PUBLIC AUTOMOTIVE GROUP, INC.,
                                        Plaintiffs-Appellees,
                             v.
DONALD E. MASSEY,
                                      Defendant-Appellant.

                       ____________
        Appeals from the United States District Court for the
         Southern District of Indiana, Indianapolis Division.
Nos. 1:02-cv-1628-DFH and 1:03-cv-0412-DFH—David F. Hamilton,
                                Judge.
                       ____________
    ARGUED NOVEMBER 3, 2004—DECIDED APRIL 5, 2005
                   ____________




  Before FLAUM, Chief Judge, and EASTERBROOK and
SYKES, Circuit Judges.
  EASTERBROOK, Circuit Judge. Baker O’Neal Holdings and
its subsidiary American Public Automotive Group (col-
lectively APAG) were formed to operate “auto malls” in which
dealers selling many different brands of automobiles would
congregate. These would be established near suburban shop-
ping malls, so that customers could buy everything from
kitchen blenders to SUVs in one stop. The business did not
succeed, and a bankruptcy proceeding has been under way
2                                     Nos. 04-1525 & 04-1526

since 1998. One adversary proceeding against James O’Neal,
the subsidiary’s CEO, ended in a judgment for more than $5
million after the bankruptcy judge concluded that he had
embezzled funds from the venture. APAG has commenced
another adversary proceeding against its former auditor,
accusing it of booking “loans” to O’Neal as assets despite
knowing that they were uncollectible. See Ernst & Young
LLP v. Baker O’Neal Holdings, Inc., 304 F.3d 753 (7th Cir.
2002) (rejecting auditor’s contention that the dispute must
be arbitrated). That claim remains to be resolved.
  A third adversary proceeding, against Donald Massey,
has produced a judgment for $2.5 million plus interest.
APAG paid that sum as a deposit toward the $300 million
purchase price of “the Don Massey Dealership Group.” When
APAG could not come up with the remaining $297.5 million,
Massey kept the deposit. APAG did sell about $4.5 million
in securities to outsiders on the spurious representation
that the Massey dealerships were in hand, but O’Neal ap-
pears to have made off with those funds. The rest of APAG’s
financing came from Baker and outside investors who pur-
chased their interests before the transaction with Massey.
  The bankruptcy judge held, and the district judge agreed,
that the $2.5 million is recoverable not only as a fraudulent
conveyance but also to avoid unjust enrichment. See 2004
U.S. Dist. LEXIS 2003 (S.D. Ind. Jan. 28, 2004). Massey, who
unlike O’Neal has the money to satisfy the judgment, has
appealed. Because the bankruptcy judge held a trial on un-
just enrichment but not on the fraudulent-conveyance theory,
and because either conclusion supports the judgment, we
bypass the fraudulent-conveyance issues. That enables us
to avoid the difficult question whether the record presents
a disputed issue of material fact about APAG’s solvency at
the time it plunked down the $2.5 million. See 11 U.S.C.
§§ 544, 550; Mich. Comp. Laws §566.35. It was insolvent if,
as the bankruptcy judge held, the investments sold to out-
siders are debt securities, but not if they are equity. They have
Nos. 04-1525 & 04-1526                                       3

the form of convertible notes, but Massey contends with
some support in the report of an accounting expert that they
should be treated as equity because conversion was the only
way for investors to obtain a return. We need not decide
whether a dispute about the characterization of investments
may be resolved on summary judgment if, as the bank-
ruptcy judge concluded, Massey would be unjustly enriched
by keeping the money. That ground for restitution applies
whether or not APAG was solvent when the transfer oc-
curred.
   Non-refundable deposits are common when purchasing
auto dealerships and other assets, such as real estate. APAG
does not argue that deposits must be revocable because a
non-refund feature turns them into “penalties” for breach of
contract. See Woodbridge Place Apartments v. Washington
Square Capital, Inc., 965 F.2d 1429 (7th Cir. 1992). Instead
it contends that the parties never concluded an agreement,
and that retaining a payment made in anticipation of a con-
tract is inequitable after the bargaining falls through. That
is a correct statement of Michigan law, which the parties agree
governs. See Michigan Educational Employees Mutual
Insurance Co. v. Morris, 460 Mich. 180, 197-99, 596 N.W.2d
142, 151-52 (1999). Massey might have responded that a
contract of sale is unnecessary if the payment is a fee for
the right to negotiate. An option for exclusive bargaining
rights is a kind of contract. Keeping an offer open, and
other bidders away, is a valuable asset for which potential
purchasers may agree to pay handsomely. But Massey does
not contend that the payment is best characterized as an
option premium. Instead, he disputes the bankruptcy judge’s
conclusion that the parties lacked a contract of sale. To
evaluate that argument, we start with the text of the hand-
written document that Massey and O’Neal signed on May
24, 1997:
4                                   Nos. 04-1525 & 04-1526

                      AGREEMENT
    This is an Agreement to Purchase stock and assets of
    the Don Massey Dealership Group. The Seller is
    Don Massey and the Buyer is James O’Neal, Jr. and
    American Public Automotive Group, Inc. Seller and Buyer
    acknowledge their knowledge of the property and stock
    related to the Agreement. (Final Agreement to follow
    this Agreement.)
    Buyers agrees to purchase all the stock and all assets of
    the Massey Group for the price of $300,000,000 00/100.
    New car inventory for cost in addition to the purchase
    price of all other assets.
        1. The purchase price shall be payable as follows:
            A.) Deposit with this Agreement $5,000,000 28
            May 97.
            B.) Additional cash of $245,000,000 on 31 July
            1997.
            C.) Seller to have option of $50,000,000 in cash
            or “Selling Book” 50,000,000 on IPO.
        2. Massey will continue as Dealer Operator until he
        decides not to do so (at such time a replacement
        acceptable to Massey, O’Neal and GM will be named).
        Technical succession arrangements subject to final
        document.
        3. Massey will provide Buyer with a copy of re-
        quired 94, 95, 96 financials on 28 May 97.
        4. Massey may cancel this Agreement and retain
        deposit if Buyer fails to perform as required in
        paragraph (1) “the money” or if GM does not grant
        approval of this transaction, funds will be returned.
        5. Massey may elect to be paid in stock of the Buyer
        at market value.
Nos. 04-1525 & 04-1526                                     5

On May 28, when the agreement called for APAG to pay
$5 million and Massey to supply the financial statements,
APAG handed over only $2.5 million, and Massey did
nothing other than accept the money. The contemplated
“Final Agreement” was never negotiated, and no stock or
assets changed hands.
  Like the bankruptcy judge and the district judge, we con-
clude that this document—which acknowledges that a defini-
tive agreement remained to be negotiated—is too sketchy.
Take the most basic questions: what did Massey agree to
sell, and how much did APAG agree to pay? Documents
omitting such vital information are not enforceable as con-
tracts under Michigan law. See, e.g., Hansen v. Catsman,
371 Mich. 79, 123 N.W.2d 265 (1963); Heritage Broadcasting
Co. v. Wilson Communications, Inc., 170 Mich. App. 812,
818-20, 428 N.W.2d 784, 787 (1988).
  This document says that “the Don Massey Dealership
Group” is the thing being sold, but there never has been any
such entity. Massey is the sole stockholder of some corpora-
tions that operate dealerships, and he is a joint investor
with Arnold Palmer and Mark McCormack in two other
dealership-owning corporations. Massey also owned, and
leased to the corporations, considerable real estate (includ-
ing buildings and fixtures). Which of these interests was
included in the transaction? The answer cannot be found in
usages of trade or other means that courts sometimes use to
complete contracts; this was a one-off bargain. See Redding
v. Snyder, 352 Mich. 241, 246, 89 N.W.2d 471, 474 (1958).
  Massey’s accounting expert, when valuing the transaction
for purposes of the fraudulent-conveyance claim, assumed
that Massey was selling everything he owned in the auto
business. But Massey himself has taken a different view. In
several affidavits Massey asserted that the agreement
covered only his Cadillac dealerships, and then only those
that he owned outright. His Buick, Pontiac, Chevrolet,
6                                    Nos. 04-1525 & 04-1526

Saturn, and Geo dealerships were outside the deal, Massey
asserted. When it became clear that this would demonstrate
that the price was impossibly high, creating insuperable
problems for Massey on the fraudulent-conveyance branch
of the case, he changed his tune and contended that the
agreement covered all dealerships except those owned jointly
with Palmer and McCormack. Massey never articulated the
third possibility—that he was selling all of his interests
in the auto business. What is more, Massey has contended
throughout that he sold only the dealerships (the franchises,
accounts, trademarks, good will, and so on) while retaining
the buildings and real estate. APAG, for its part, thought
that it was getting the whole business: all the franchises, all
the buildings, all the land, all the receivables. There was no
agreement, no “meeting of the minds” (let alone of the
words), on this subject. The “agreement” resolves none of the
central issues.
  Then there’s the question of payment. What are we to
make of the sentence: “New car inventory for cost in addi-
tion to the purchase price of all other assets”? Massey con-
tends that APAG agreed to pay for cars on hand on top of
the $300 million. His dealerships collectively held about $63
million in inventory in May 1997, so Massey submits that
the full selling price was $363 million. Yet Massey had
acquired this inventory on credit, and if APAG was buying
all of the stock in the corporations that operated the deal-
erships then it was acquiring as well the dealerships’ obliga-
tion to General Motors, which had financed the inventory. So
by Massey’s account APAG had agreed to pay twice for
vehicles on hand: once to Massey and again to General
Motors. Any document that admits of such commercial
insanity can’t be treated as definitive. There are lots of
other loose ends, but we have said enough to show that
APAG and Massey did not reach an enforceable contract.
 This conclusion does not quite wrap up the proceeding.
Unjust enrichment is an equitable doctrine, and Massey may
Nos. 04-1525 & 04-1526                                        7

have equitable defenses. The most prominent of these would
be detrimental reliance on a belief that a contract existed.
That is to say, Massey might have acted as if this were an
exclusive option and turned down other suitors until it be-
came clear that APAG would not perform. Massey made such
an argument in the bankruptcy court, which held otherwise
in findings that are not clearly erroneous. The bankruptcy
judge concluded that the other potential bidders to which
Massey referred either predated APAG or expressed their
interest after APAG departed, so that there was no reliance
and no detriment. The bankruptcy judge did, however, deduct
$32,000 from the amount of restitution to cover Massey’s
costs in preparing to perform (principally, his expense in
retaining a major accounting firm to start the process of cre-
ating properly audited financials, which would be essential
for APAG’s contemplated public offering of securities).
  According to Massey, APAG should not receive equitable
relief because O’Neal and Baker have acted with unclean
hands. See Stachnik v. Winkel, 394 Mich. 375, 230 N.W.2d
529 (1975). But the facts to which he points—principally
O’Neal’s theft from APAG and Baker’s failure to learn that
his co-venturer had a prior conviction for fraud, and to mon-
itor his conduct more closely—injured APAG’s outside
investors rather than Massey. Cf. McKeighan v. Citizens
Commercial & Savings Bank of Flint, 302 Mich. 666, 671-
72, 5 N.W.2d 524, 526-27 (1942). Massey recognized that
O’Neal had sticky fingers. He knew, as Baker did not, about
O’Neal’s prior conviction for fraud (which among other things
would have led GM to refuse to transfer the dealerships);
Massey also knew, as Baker did not, that O’Neal had bor-
rowed about $1 million from Massey earlier in the 1990s
and failed to repay. It is easier to understand the events of
May 1997 as Massey’s attempt to turn the tables on O’Neal
(or as their joint attempt to use the investors’ capital to set-
tle O’Neal’s personal debt to Massey) than as inequitable
conduct by APAG to Massey’s detriment. Allowing Massey
8                                  Nos. 04-1525 & 04-1526

to keep the deposit would harm only the innocent outside
investors, who are the chief victims of O’Neal’s misconduct.
The bankruptcy judge did not abuse his discretion or commit
clear error in concluding that the totality of circumstances
calls for restitution under Michigan law.
                                                 AFFIRMED

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                   USCA-02-C-0072—4-5-05
