Arabian Support & Servs. Co. v. Textron Sys. Corp.

• Decision Date: 20 November 2019
• Docket Number: No. 19-1377,19-1377
• Parties: ARABIAN SUPPORT & SERVICES COMPANY, LTD., Plaintiff, Appellant, v. TEXTRON SYSTEMS CORPORATION, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

943 F.3d 42

ARABIAN SUPPORT & SERVICES COMPANY, LTD., Plaintiff, Appellant,

v.TEXTRON SYSTEMS CORPORATION, Defendant, Appellee.

No. 19-1377

United States Court of Appeals, First Circuit.

November 20, 2019

Martin F. Gaynor III, Boston, MA, with whom Haig V. Kalbian, D. Michelle Douglas, William P. McGrath, Jr., Kalbian Hagerty LLP, Washington, DC, Nicholas D. Stellakis, and Hunton Andrews Kurth LLP, Boston, MA, were on brief, for appellant.

John A. Tarantino, with whom Nicole J. Benjamin and Adler Pollock & Sheehan P.C., Providence, RI, were on brief, for appellee.

Before LYNCH, SELYA, and LIPEZ, Circuit Judges.

LYNCH, Circuit Judge.

The international arms trade provides the background for this appeal. Arabian Support & Services Co. ("ASASCO"), a Saudi Arabian consulting company, sued Textron Systems Corporation ("Textron"), a Massachusetts-based defense contractor, on various Massachusetts state law claims. Underlying them all was the assertion that Textron represented that ASASCO's compensation for assisting Textron in securing the sale of sensor fuzed weapons ("SFWs") to Saudi Arabia would include payments resulting from ASASCO's efforts to obtain an "offset waiver" or "offset credits" for Textron associated with that sale. That payment allegedly would be a fee and/or a percentage of the final Textron contract with Saudi Arabia.

ASASCO's 2017 amended complaint asserted violation of Massachusetts General Laws chapter 93A, fraudulent inducement, intentional misrepresentation, negligent misrepresentation, quasi-contract/implied contract/promissory estoppel, and quasi-contract/unjust enrichment/quantum meruit. We affirm the district court's entry of summary judgment for Textron, relying largely on the district court's able opinion. Arabian Support & Servs. Co. v. Textron Sys. Corp., 368 F. Supp. 3d 211 (D. Mass. 2019) ( Textron II ).

I.

In recounting the facts, we rely in substantial part on the district court's opinion and our prior decision, Arabian Support & Services Co. v. Textron Systems Corp., 855 F.3d 1 (1st Cir. 2017) ( Textron I ). We describe the key events over the parties' thirteen-year relationship in chronological order.

A. Facts

Textron was interested in selling SFWs to Saudi Arabia. The relationship between Textron and ASASCO largely developed through the interactions of Mansour Al-Tassan, ASASCO's President, and Avedis Boyamian, Textron's Director of Middle East Business Development. Starting in 2001, Al-Tassan and Boyamian discussed various methods of paying ASASCO for its assistance in furthering a SFW sale, including through a fixed monthly fee or through the formation of a joint venture.

In March 2004, Textron engaged the International Law Firm in Riyadh to ensure that its contemplated relationship with ASASCO would be legal under Saudi law. On July 8, 2004, Robert Kemp, Textron's General Counsel, inquired about the legality of paying ASASCO "on a commission basis." The International Law Firm advised Kemp on September 1, 2004, that such a relationship had a "significant risk" of being prohibited under Saudi law.

On September 28, 2004, Boyamian and Al-Tassan met in Cairo. Boyamian told Al-Tassan that Textron was willing to pay ASASCO up to five percent of the value of the SFW deal but that the agreement between the companies must conform to U.S. and Saudi law. ASASCO alleges that on November 6, 2004, at a meeting in Saudi Arabia, Boyamian represented to Al-Tassan that Textron would use "offsets"¹ in order to pay ASASCO lawfully for its services if Textron obtained the SFW sales contract with Saudi Arabia.

In 2005, Textron and ASASCO executed the first of what would be five consulting agreements. The first three agreements, each lasting one year during the time period from 2005 to 2008, provided ASASCO with a monthly retainer of $10,000 for its services regarding the sale of Textron's SFWs to the Royal Saudi Air Force.²

Throughout 2006, Boyamian and Al-Tassan further discussed the opportunity for ASASCO to receive compensation for its assistance with any offset projects. Textron's position with ASASCO was that "[a]ll such activity must result in Saudi Gov't approval of offset projects, grant credits/or waive requirement."

In June 2006, Textron sent ASASCO a draft offset provider agreement.³ Later at deposition, Boyamian described the offset discussions and the consulting agreements as "totally separate." On June 26, 2006, Boyamian also forwarded Al-Tassan internal Textron emails that ordered that ASASCO's business with Textron be recorded separately as "two books" -- one for the proposed offset agreement and one for a renewal of the consultant agreement. Textron and ASASCO never formalized a written offset agreement.

In February 2008, Textron entered into an Offset Services Agreement ("OSA") with Blenheim Capital Partners ("Blenheim"), a company based in the United Kingdom. If Blenheim helped Textron (1) obtain an irrevocable waiver within six months "after the date of the execution of the Supply Contract" or (2) meet its offset obligations, Textron would pay Blenheim six percent of the contract price.⁴ Under the OSA, Blenheim could subcontract with ASASCO, but it needed Textron's written consent to use any other subcontractor. Boyamian sent Al-Tassan a draft of this agreement in June 2007, before the agreement's finalization.

On June 21, 2007, Al-Tassan, Boyamian, Textron's Offset Manager, and a representative from Blenheim met in Paris. Al-Tassan asserts that Boyamian represented at this meeting that ASASCO would receive six percent of the Supply Contract under the "offset arrangement."

On September 4, 2008, Textron and ASASCO extended the third consulting agreement, but on a "no-fee basis."⁵ This arrangement lasted until August 31, 2009.

On April 6, 2009, Blenheim and ASASCO finalized a subcontract in which ASASCO would assist Blenheim in securing either an offset waiver or offset credits. Under the agreement, ASASCO was only entitled to additional compensation if offset credits or an offset waiver were achieved pursuant to the OSA.⁶ In August 2009, Textron and ASASCO entered a fourth consulting agreement effective September 1, 2009, through August 31, 2011, which gave ASASCO a $500 monthly retainer.

In May 2011, Textron's new Director of Business Offsets, Stephen Fogarty, advised Textron to terminate the OSA with Blenheim, describing the six percent fee as "excessive." By this time, Al-Tassan had left Saudi Arabia because a Saudi civil judgment had entered against him and a subsequent civil warrant had issued in June 2010 for his arrest in Saudi Arabia.

While the OSA was still in effect in July 2011, Textron submitted a proposed offset project, developed by ASASCO, to the Saudi Economic Offset Committee. A Saudi official responded the next day rejecting the proposal, stating that it did not align with the Committee's priorities and did not provide sufficient detail.

It is undisputed that, after this rejection, ASASCO never completed another formal offset project proposal for Textron. In the fall of 2011, Textron and Al-Tassan continued to discuss possible offset projects over email, but no formal proposal ever materialized.

Textron and ASASCO also entered into a fifth consulting agreement, effective September 1, 2011, which contained an integration clause.

In November 2011, Textron sent Blenheim a letter stating that the parties had agreed to mutually terminate the OSA. Blenheim signed the letter on January 12, 2012.⁷

On January 3, 2012, Boyamian emailed Al-Tassan to inform him that the U.S. government and Saudi Arabia had executed a "Letter of Offer and Acceptance," which finalized the terms of the sale of the SFWs, and to offer a "[congratulations] to all of us." No formal contract entered at this time. Through 2012, Textron continued working with ASASCO to set up meetings with Saudi officials. On August 16, 2012, Textron and ASASCO extended the fifth consulting agreement, including its integration clause, through August 31, 2013.

On August 20, 2013, the U.S. Department of Defense announced that Textron had been awarded the contract to provide SFWs to Saudi Arabia for a total price of $640,786,442. The announced contract terms included $89,222,000 for Textron in offset costs. On August 29, 2013, Textron emailed ASASCO that it would not renew the fifth consulting agreement and stated that Textron was "not aware of any outstanding obligations between the parties."

Textron signed a Letter of Agreement ("LOA") with the Saudi Arabian Economic Offset Program on June 9, 2014, agreeing that Textron's offset obligation would be 40% of the SFW contract. The LOA further stated that Textron's commitment of 40% would be included in the "Offset Memorandum of Agreement which will be signed by Textron" and the Economic Offset Program.

By the time of this appeal, Textron and Saudi Arabia had not entered into an Offset Memorandum of Agreement, and Textron had kept the $89.2 million it received for offset costs. Saudi Arabia had not waived the offset requirements. And ASASCO had never delivered an offset project that was approved by Saudi Arabia.

B. Procedural History

ASASCO filed suit against Textron on July 15, 2015, alleging breach of contract, tortious interference, and violation of Massachusetts General Laws chapter 93A. The district court granted summary judgment to Textron on all counts and the First Circuit affirmed as to the breach of contract and tortious interference counts but vacated the summary judgment as to ASASCO's chapter 93A claim. Textron I, 855 F.3d at 3.

On June 21, 2017, ASASCO filed an amended complaint making the claims described earlier. On March 19, 2019, the district court granted Textron's motion for summary judgment on all counts.

II.

We review the district court's entry of summary judgment de novo. Town of Westport v. Monsanto Co., 877 F.3d 58, 64 (1st Cir. 2017). Summary judgment is appropriate when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a...