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Question: Prime Finish paints and finishes plastic parts. In 2004, Herbert-Jones became an independent sales representative responsible for developing sales for Prime Finish and formed Cameo to serve this purpose. ITW supplies automotive parts to automakers. After being contacted by Cameo, ITW expressed interest in contracting with Prime Finish to paint and decorate ITW's automotive parts. During negotiations between Prime Finish and ITW, in which Herbert-Jones was a participant, Prime Finish explained that its financial position was not strong, and its facilities were currently not capable of handling the volume of production ITW needed. ITW, Cameo, and Prime Finish decided that ITW would guarantee a sufficient volume of business to justify the installation of a new Prime Finish paint line. Cameo offered to provide the capital for the line to facilitate this arrangement. The parties then entered into two contracts. The fi rst was the Supply Agreement between ITW and Prime Finish, in which Prime Finish agreed to paint and decorate parts ITW provided. It recognized that Prime Finish "will be investing in a new paint line to meet [ITW's] requirements," and ITW agreed to provide a sufficient number of parts to sustain certain revenue levels for Prime Finish. The Supply Agreement was to last four years and stated that ITW would have to pay a penalty if it terminated the contract early.
Cameo was not a party to and is not mentioned in the Supply Agreement between Prime Finish and ITW. The second contract was the Production Service Agreement between Prime Finish and Cameo, which stated that "Cameo will fund and place in service at Prime Finish a 2-booth paint-line and fixture painting equipment," which were both to be operated by Prime Finish. The paint line would enable Prime Finish to complete ITW's orders, and the Production Agreement stated that "all ITW projects are to run through this line." Prime Finish agreed to "pay Cameo a royalty of 7% of Prime Finish invoiced parts that are base-coated and/or clear-coated through this line." ITW was not a party to the Production Agreement, but the contract stated that "Cameo hereby agrees and acknowledges that Cameo drafted and agrees to the terms and conditions set forth in the Product Supply Agreement between Prime Finish and ITW." Herbert- Jones obtained loans on behalf of Cameo and invested his own money to arrange the $1.6 million needed to fund the new paint line. Several months after signing the Production Agreement, Cameo and Prime Finish executed a Modification Agreement, which stated that any penalty payment received by Prime Finish pursuant to the Production Supply Agreement between Prime Finish and ITW would be paid to Cameo. ITW terminated the Supply Agreement early. Prime Finish sued ITW, and Cameo intervened, asserting its rights under the contract and to the early termination penalty. Prime Finish and ITW then moved for summary judgment against Cameo, arguing that Cameo lacked standing because it was not a party to the Supply Agreement and was not an intended creditor beneficiary. The district court agreed that Cameo lacked standing and granted summary judgment for ITW. Cameo appealed. Explain what you believe happened on appeal and why.
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