Retrofit Partners I, L.P. v. Lucas Industries, 3:96 CV 1732(GLG).

• Decision Date: 30 March 1999
• Docket Number: No. 3:96 CV 1732(GLG).,3:96 CV 1732(GLG).
• Citation: 47 F.Supp.2d 256
• Court: U.S. District Court — District of Connecticut
• Parties: RETROFIT PARTNERS I, L.P. and Advanced Executive Aircraft, Inc., Plaintiffs, v. LUCAS INDUSTRIES, INC., Defendant.

Page 256

47 F.Supp.2d 256

RETROFIT PARTNERS I, L.P. and Advanced Executive Aircraft, Inc., Plaintiffs, v. LUCAS INDUSTRIES, INC., Defendant.

No. 3:96 CV 1732(GLG).

United States District Court, D. Connecticut.

March 30, 1999.

David L. Belt, William M. Bloss, Jacobs, Grudberg, Belt & Dow, P.C., New Haven, CT, for plaintiffs.

Lori J. Kremidas, Elizabeth D. Ward, Dechert Price & Rhoads, Hartford, CT, Robert A. Cohen, Rodney M. Zerbe, Dechert Price & Rhoads, New York City, for defendant.

OPINION

GOETTEL, District Judge.

This breach of contract case arises from a decision by defendant Lucas Industries, Inc. not to invest in a program, which was developed by plaintiffs Retrofit Partners I, L.P. ("Retrofit") and Advanced Executive Aircraft, Inc. ("AEA"), to retrofit turbo jet engines on Dassault Falcon 20 aircraft. Pursuant to Federal Rule of Civil Procedure 56, defendant moves for summary judgment. For the reasons discussed below, defendant's motion (Document # 47) is GRANTED.

BACKGROUND

The following facts are taken from the parties' revised Local Rule 9(c) Statements.¹

Plaintiff AEA was incorporated under Delaware law, and Thomas M. Donegan is AEA's sole shareholder. Plaintiff Retrofit was formed as a Delaware limited partnership. Retrofit's sole general partner is AEA, and its sole limited partner is Donegan.

Defendant Lucas Industries, Inc. is the U.S. subsidiary of a publicly held United Kingdom corporation involved in the international manufacture, sale, and service of, among other things, aerospace and automotive products. Lucas Industries, Inc. is a corporation duly organized and existing under Michigan law. At all times relevant to this action, its principal place of business was in Virginia. Lucas Aerospace, Inc., which was a wholly-owned subsidiary of Lucas Industries, Inc., was incorporated under Michigan law with its principal place of business in California. It merged into Lucas Industries effective December 31, 1993. Additionally, at all times relevant to this action, Lucas Aviation, Inc. was a wholly-owned subsidiary of Lucas Aerospace. For purposes of this opinion, we refer to the Lucas entities collectively as "Lucas."²

From 1966 to 1983, Dassault Aviation ("Dassault") manufactured a corporate jet, called the Falcon 20, which was equipped with two General Electric engines. In 1986, Garrett Airline Services ("Garrett"), together with Dassault, launched a program to re-engine the Falcon 20 using an engine manufactured by Garrett. The retrofitted aircraft were ready for delivery starting in June 1989. Another company, Volpar, Inc. ("Volpar"), announced a competing program in June 1989 for re-engining the Falcon 20 using two Pratt & Whitney Canada ("P & WC") 305 engines.

Beginning in 1990, Donegan also sought to promote a program for re-engining the Falcon 20. Donegan had been a consultant for Volpar's president for several years, but Donegan stopped participating in Volpar's re-engining program in October 1989 at the request of new shareholders. Similar to the Volpar program, Donegan proposed retrofitting the Falcon 20 with two P & WC 305 engines, and thus he named his program the Vantage 305 program.

Before Donegan could actually begin the retrofitting project, he was required to secure two Supplemental Type Certificates ("STCs") from the Federal Aviation Administration ("FAA"). The STCs would allow Falcon 20 aircraft to be re-engined, and they would also permit the retrofitted aircraft to operate with U.S. registry. Donegan entered into a contract with Aerotest, Inc. ("Aerotest"), dated October 1, 1990, pursuant to which Aerotest agreed to perform the engineering and development work necessary to obtain the STCs. Def.'s Ex. 24. Aerotest anticipated that the approval process would take approximately eighteen months.

To finance the Vantage 305 program, Donegan engaged the investment banking firm of Kidder, Peabody & Company ("Kidder") on October 19, 1990. Def.'s Ex. 26. The goal was to raise $12 million in capital through a private placement of limited partnership interests in Retrofit. See Kidder's Offering Memorandum dated 7/6/92 (the "Offering Memorandum"), Def.'s Ex. 47. Kidder, however, never received a binding commitment from any prospective investors. Dissatisfied with Kidder's efforts, Donegan himself wrote "hundreds of letters" to potential investors in late 1991. Yet, Donegan was also unable to obtain any investors.

On September 2, 1992 Aerotest, through its President and Chief Executive Officer Robert Laidlaw, notified Donegan that it considered itself not to be bound by the October 1990 letter agreement. See Def.'s Ex. 51. Retrofit had never made any payments to Aerotest under the terms of the October 1990 letter agreement. Aerotest therefore asserted that the agreement never became effective. Def.'s Ex. 53. Accordingly, Aerotest had never performed any engineering subcontracting work for the Vantage 305 program. As of August 29, 1992, neither Retrofit nor AEA had obtained an STC for re-engining the Falcon 20 aircraft. Consequently, Donegan began looking for someone to replace Aerotest because Aerotest had indicated it was not going to participate in the Vantage 305 program in the future. Donegan therefore needed "a development agency that [he] could depend on" for the program's technical and engineering components. Donegan Dep. at 762-63.

I. The 1992 Confidentiality and Non-Circumvention Agreement

In early September 1992, Donegan met with Charles Corradi, Lucas' then-Vice President of Business Development, to discuss the possibility of Lucas participating in the Vantage 305 program in some capacity, either by providing engineering services (i.e. taking over Aerotest's role), by investing in the program, or both. Id. at 171-72, 238; Pls.' Response ¶ 42. None of the parties, however, contemplated that Lucas would become a limited partner of Retrofit. Donegan Dep. at 237-38, 364, 367-68, 598-99; Corradi Dep. at 51-53. Donegan then submitted to Corradi a Confidentiality and Non-Circumvention Agreement (the "1992 Agreement"), which he had drafted himself without any legal assistance. On September 4, 1992, Corradi signed the agreement on Lucas' behalf without making any revisions. Def.'s Ex. 50. Under the terms of the agreement, Lucas would receive the Offering Memorandum and other proprietary information in order to evaluate its investment interest in Retrofit and to consider providing engineering and other technical services relating to the Vantage 305 program.

Meanwhile, Donegan was also speaking to representatives at Dalfort Aviation ("Dalfort") about the possibility of Dalfort purchasing the Vantage 305 program. Donegan Dep. at 150, 161-62, 272, 365-66. According to Donegan, Dalfort had expressed an interest in becoming the program's leader, but Dalfort did not have any technical development capability. Thus, Dalfort wanted to discuss with Lucas the possibility of Lucas taking over Aerotest's role as the provider of engineering services. Id. at 161. In October 1992, there was a meeting at Lucas' facility in Santa Barbara, California regarding Lucas' qualifications for supplying engineering and technical services to the Vantage 305 program. The meeting attendees included Donegan; William Ashworth, Lucas' then-Vice President of Engineering and Quality Assurance; Robert Griswell, Lucas' Vice President and General Manager; Joe Gullion, Dalfort's Chief Operating Officer; and a marketing representative from P & WC. Id. at 172-75, 315-16, 325; Ashworth Dep. at 21-22. Lucas subsequently submitted a proposal to Dalfort in November 1992 pursuant to which Lucas would provide engineering services to Dalfort in the event that Dalfort acquired the Vantage 305 program. Pls.' Ex. 7. According to plaintiffs, the proposal was satisfactory to them, Pls.' Response ¶ 58, and Donegan testified that "it was the best one I've ever seen." Donegan Dep. at 177.

Ultimately, however, Dalfort withdrew from the Vantage 305 program. Due to unrelated pending litigation between a Dalfort shareholder (the Pritzker family) and P & WC's Connecticut affiliate, P & WC did not want to do business with Dalfort and declined to offer Dalfort a draft engine purchase agreement. Donegan Dep. at 152-54; Def.'s Exs. 55, 60; see Def.'s Ex. 54, at 2. All parties agree that Lucas was not responsible for the Vantage 305 program's failure to proceed in 1992.

II. The 1993 Consultant Agreement

In early 1993, plaintiffs faced the prospect of continuing the Vantage 305 program without Dalfort's involvement. Lucas, however, was still interested in participating in a re-engining program. Griswell Dep. at 37, 40. Consequently, in February 1993, Donegan and Lucas representatives began discussing a possible acquisition of the program by Lucas. Pls.' Ex. 8; Def.'s Ex. 62; see Def.'s Ex. 71, at 2. In a February 25, 1993 letter from Donegan to Ashworth, Donegan stated that he was currently "in a position to consider Lucas stepping into Dalfort's position and moving forward.... The important thing to keep in focus is that under this scenario the Vantage 305 Falcon 20 program will become a Lucas Aviation project under your direction and control." Pls.' Ex. 8, at 1-2; Def.'s Ex. 62, at 1-2. Thus, it was contemplated that under this new approach Lucas would take over the entire program by stepping into Dalfort's shoes. Donegan would then be hired as a consultant. Donegan Dep. at 181-82, 364.

Over the next several months, the parties met numerous times to discuss issues surrounding the Vantage 305 program. See Pls.' Ex. 10 (reviewing late-May 1993 strategic planning meeting); Pls.' Ex. 11 (describing June 2, 1993 meeting with Donegan and representatives from Lucas and P & WC); Donegan Dep. at 411 (testifying about a June 1993 meeting between P & WC and Lucas at the Paris Air Show); Pls.' Ex. 13 (outlining report of June 15, 1993 meeting in Paris); Pls.' Ex. 15 (summarizing June 29, 1993 meeting in Montreal among Lucas and P & WC...