Impossibility Counts: Seventh Circuit Mandates Consideration of Restatement § 766A Tortious-Interference Theory and Affirms Comity to Foreign Administrative Decisions

Introduction

Avanzalia Solar, S.L. v. Goldwind USA, Inc., No. 23-1345 (7th Cir. July 22, 2025) is a complex cross-border business dispute that required the United States Court of Appeals for the Seventh Circuit to examine three doctrinal flashpoints:

Whether federal courts should extend comity to the decisions of a Panamanian administrative agency (ASEP).
Whether those administrative findings preclude relitigation in U.S. courts under collateral estoppel (issue preclusion).
How Illinois tort law defines and proves tortious interference with contract or business expectancy.

The court affirmed the district court’s rulings on comity and collateral estoppel, but vacated summary judgment on the tortious-interference claims and remanded for further proceedings. Crucially, the Seventh Circuit held that district courts sitting in diversity must evaluate the “impossibility theory” of tortious interference embodied in Restatement (Second) of Torts § 766A—an avenue the lower court overlooked. This clarification constitutes the decision’s most significant doctrinal contribution.

Summary of the Judgment

Comity: The Seventh Circuit upheld the district court’s decision to defer to ASEP’s July 2017 order because the foreign proceeding was procedurally sound and no actionable fraud tainted the outcome. The appellate court confirmed that comity determinations are reviewed for abuse of discretion, but legal errors embedded in that discretion are reviewed de novo.
Collateral Estoppel: Applying Illinois law, the panel held that ASEP’s determination that Avanzalia had violated Panamanian regulations (thereby justifying Goldwind’s initial refusal to sign an access agreement) satisfied the elements of issue preclusion and barred claims premised on pre-2017 delays.
Tortious Interference:
- The district court properly rejected Avanzalia’s § 766-style claim (which requires wrongful inducement of a third party) because Goldwind’s alleged conduct was directed at Avanzalia itself, not at Avanzalia’s contract partners.
- However, Illinois recognizes a separate “impossibility” theory under Restatement § 766A—where the defendant wrongfully prevents the plaintiff’s own performance rather than inducing the third party’s breach. Because the district court ignored this pathway, the Seventh Circuit vacated the grant of summary judgment as to post-access-agreement delays and remanded for analysis under § 766A.

Analysis

1. Precedents Cited

United States v. Kashamu, 656 F.3d 679 (7th Cir. 2011) – Articulates modern comity doctrine: deference to foreign judgments when procedures are fair and no strong U.S. policy is offended.
Hilton v. Guyot, 159 U.S. 113 (1895) – Early comprehensive treatment of comity; mentioned to frame the fraud exception debate.
Derr v. Swarek, 766 F.3d 430 (5th Cir. 2014) & Wilson v. Marchington, 127 F.3d 805 (9th Cir. 1997) – Illustrate circuit split on whether fraud mandates refusal or merely permits refusal to honor foreign judgments.
Scholwin v. Johnson, 498 N.E.2d 249 (Ill. App. Ct. 1986) & Havoco of Am., Ltd. v. Sumitomo Corp. of Am., 971 F.2d 1332 (7th Cir. 1992) – Illinois cases adopting Restatement § 766A and its “prevention/impossibility” approach.
George A. Fuller Co. v. Chicago College of Osteopathic Medicine, 719 F.2d 1326 (7th Cir. 1983) & McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674 (7th Cir. 2014) – Exemplify traditional § 766 analysis requiring conduct directed at third parties.
Nowak v. St. Rita High School, 757 N.E.2d 471 (Ill. 2001) & American Family Mut. Ins. Co. v. Savickas, 739 N.E.2d 445 (Ill. 2000) – Set the Illinois test for collateral estoppel.

2. Court’s Legal Reasoning

Comity Analysis
- The panel treated comity as a discretionary doctrine reviewed for abuse of discretion, citing Ingersoll.
- Although the parties disputed whether fraud automatically defeats comity, the court sidestepped the doctrinal split by finding that Avanzalia failed to prove fraud.
- Each of the four alleged misrepresentations failed on waiver, irrelevance, or insufficiency grounds; thus no reason existed to deny recognition of ASEP’s order.
Collateral Estoppel
- Illinois requires identity of issues, privity, and a final merits judgment. Only identity of issues was disputed.
- ASEP’s conclusion that Avanzalia breached regulatory prerequisites made Goldwind’s refusal “justified”; that identical issue forecloses a U.S. tort claim predicated on unjustified delay.
- The “new evidence” exception (UEP companies’ 2014 agreement) failed because the evidence was not essential, could have been discovered, and Illinois routinely gives preclusive effect to administrative decisions.
Tortious-Interference Framework
- The district court analyzed only Restatement § 766 (inducement of third-party breach). The Seventh Circuit emphasized that Illinois also follows § 766A (impossibility theory).
- Under § 766A, liability attaches when the defendant’s wrongful acts prevent the plaintiff from performing, leading to loss of the contract—even if the defendant never communicated with the third party.
- The panel remanded so that the district court can examine whether Goldwind’s alleged obstruction after the 2017 access agreement made it impossible for Avanzalia to fulfil:
  1. Its connection-construction obligations under the access contract and ETESA certificate.
  2. Its power-purchase agreements signed in 2017-2018.
  The court explicitly excluded two categories (lapsed ASEP licence and spot-market sales) because they were not contracts or were mere expectancies.

3. Potential Impact of the Decision

Tortious Interference Litigation in Illinois – Litigants can no longer assume that pleading only § 766 is sufficient; defendants must now defend against both theories. Plaintiffs alleging obstruction—rather than inducement—gain a clarified doctrinal foothold.
Cross-Border Energy Projects – The affirmation of comity and preclusion for foreign administrative rulings provides developers and equipment suppliers with clearer expectations: they cannot relitigate technical-regulatory findings in U.S. courts once a capable foreign regulator has spoken.
Standard of Review Clarity – By expressly labeling comity determinations as “discretionary decisions reviewed for abuse of discretion,” but with legal questions reviewed de novo, the opinion provides a roadmap for future appellate briefs.
Fraud Exception Debate – While the court avoided choosing between “mandatory” or “permissive” fraud exceptions, its thorough discussion signals that the Seventh Circuit is aware of the circuit split and may address it squarely in a future case with stronger evidence of fraud.

Complex Concepts Simplified

Comity: An informal international courtesy whereby U.S. courts respect foreign governmental decisions if the foreign process was fair and the outcome doesn’t offend U.S. public policy.
Collateral Estoppel (Issue Preclusion): Once a court (or qualified administrative agency) finally decides an issue, the same parties cannot dispute that specific issue again in later litigation.
Restatement (Second) of Torts § 766: Traditional tortious interference: defendant intentionally induces a contract partner (third party) to breach.
Restatement (Second) of Torts § 766A: “Impossibility” variant: defendant’s wrongful acts prevent the plaintiff from performing, causing the contract to fail—even with no inducement aimed at the other contracting party.
Administrative Deference vs. Arbitration: Illinois gives preclusive effect to administrative decisions (not just arbitral awards) when the agency acted within its authority and guaranteed basic procedural fairness.

Conclusion

Avanzalia Solar v. Goldwind USA is a multifaceted precedent that simultaneously:

Reaffirms the Seventh Circuit’s willingness to grant comity to well-functioning foreign administrative bodies, strengthening predictability in international commercial regulation.
Clarifies that foreign administrative findings can collaterally estop U.S. tort claims when identical issues are re-raised.
Most significantly, mandates that Illinois federal courts analyze tortious-interference claims under both Restatement §§ 766 and 766A. By elevating the “impossibility” theory, the court expands plaintiffs’ toolkit and cautions defendants against focusing solely on inducement of third-party breach.

Future litigants should plead and defend tortious-interference allegations in Illinois with § 766A squarely in mind and should recognize that foreign regulatory rulings, when procedurally robust, will likely bind U.S. proceedings. The decision thus harmonizes cross-border dispute resolution and fine-tunes Illinois interference doctrine—an outcome of practical importance for energy developers, multinational corporations, and litigators alike.