X Techs., Inc. v. Marvin Test Sys., Inc.
| Decision Date | 11 June 2013 |
| Docket Number | No. 12–50230.,12–50230. |
| Citation | 719 F.3d 406 |
| Parties | X TECHNOLOGIES, INCORPORATED, Plaintiff–Appellee v. MARVIN TEST SYSTEMS, INCORPORATED, doing business as Marvin Geotest, Defendant–Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
OPINION TEXT STARTS HERE
Michael W. O'Donnell (argued), Dean V. Fleming, Attorney, Rosemarie Kanusky, Blake W. Stribling, Fulbright & Jaworski L.L.P., San Antonio, TX, for Plaintiff–Appellee.
Millard Ariel Johnson (argued), Charles Patrick Waites, Johnson, Deluca, Kurisky & Gould, P.C., Houston, TX, for Defendant–Appellant.
Appeal from the United States District Court for the Western District of Texas.
Before KING, HIGGINBOTHAM, and CLEMENT, Circuit Judges.
This appeal arises from a breach of contract action. X Technologies (“X Tech”) alleged that Marvin Test Systems (“Geotest”) breached an exclusive teaming agreement to submit a teamed bid on a United States Air Force (“USAF”) solicitation for testing equipment by teaming with another partner, Raytheon, on a competing bid. X Tech contended that this Geotest–Raytheon submission, which USAF selected as the winning bid, prevented X Tech from securing the government contract with its bid. The case went to trial, and the jury found that Geotest breached an agreement with X Tech to “exclusively team to jointly pursue” the USAF solicitation. Based on the verdict, the district court entered judgment in favor of X Tech in the amount of $336,000, plus attorney's fees. Geotest challenges the district court's resolution of both parties' motions for directed verdict on certain issues at the close of evidence and the jury's finding that Geotest breached its contract with X Tech. We AFFIRM the district court's judgment.
USAF maintains its arsenal of laser-guided Paveway II bombs at Hill Air Force Base in Utah. As the base's sole Paveway II tester was old and increasingly unreliable, USAF decided to upgrade to a new testing system, the TS–217, manufactured by Geotest. USAF's procurement group, or Source Selection Authority, issued a solicitation for the upgrade project, numbered FA8224–09–R–0104. This initial solicitation was reserved for small businesses. X Tech, a small-business government contractor with experience in developing test programs for weapons systems, elected to put together a bid.
A functional tester would consist of the TS–217 hardware with modified software and data for the Paveway II's laser guidance system, which was owned by Raytheon, the Paveway II's manufacturer. Thus, in order to bid, X Tech had to secure the hardware and gain access to the software and data. X Tech decided to reverse engineer the Raytheon data. It contacted Geotest and negotiated a teaming agreement for the hardware and access to the software (as well as the rights to modify it). After X Tech and Geotest agreed orally, Geotest confirmed the agreement in writing. The relevant portion of this agreement provides:
This is an exclusive agreement between X–Tech and Geotest. X–Tech will submit Geotest's workshare as part of X–Tech's proposal as a response to this RFP. Geotest will not team up with any other company for solicitation FA8224–09–R–0104 except that Geotest may provide prices for the TS–217 tester only (without any software licenses, support or training) to other potential bidders.
Pursuant to the agreement, X Tech submitted a bid of $3.2 million with Geotest as a critical subcontractor. X Tech also submitted an alternate, nonconforming bid (using a different tester than the TS–217 specified in the solicitation) on its own.
X Tech was the only bidder at the close of the solicitation period. USAF rejected X Tech's nonconforming bid and, because its cost estimate for the project was substantially lower than X Tech's conforming bid, amended the solicitation to “full and open” to open it up to all bidders.1 In response to this amended solicitation, X Tech resubmitted its teamed bid with Geotest. Geotest also submitted a bid separately from X Tech for $2.4 million. USAF awarded Geotest the contract.
After Geotest won the contract, X Tech sued the company in state court, alleging several causes of action, including breach of contract. Its claims centered on its contention that Geotest had teamed with Raytheon in its separate bid, violating Geotest's agreement with X Tech. Geotest disputed this characterization of its separate bid and the nature of its relationship with Raytheon. It argued that it was a mere licensee of Raytheon's data, not a teammate with the company itself. Thus, Geotest contended, it merely submitted its own independent bid, which did not breach the agreement. Geotest also raised the affirmative defense that any breach on its part was excused by X Tech's submission of its own independent bid, which Geotest alleged was a prior material breach.
Geotest removed the case to federal court on the basis of diversity and moved to transfer venue from the Western District of Texas to the Central District of California, claiming that its “Terms and Conditions,” incorporated into the agreement, contained a forum selection clause for that venue. The district court found that the forum selection clause did not apply and denied the motion.
The case was tried to a jury. The jury heard evidence for and against X Tech's claim that Geotest teamed with Raytheon. This evidence included documents in Geotest's bid to USAF that characterized the Geotest–Raytheon relationship as a team and internal Raytheon emails reflecting the same understanding. It also included documents, such as Geotest's purchase order to Raytheon, which suggested that Geotest was merely licensing Raytheon's data.
The parties also proffered evidence on the issue of whether Geotest's conduct caused X Tech injury. X Tech submitted evidence that the testing system was a defense priority; that, had Geotest not bid, X Tech would have been the only bidder in the full and open solicitation; and that X Tech's bid and its confidence rating met USAF's requirements. X Tech also invited Michael Garner, the USAF contract negotiator, to speculate that if X Tech had been the sole bidder, USAF may have negotiated with X Tech to come to an agreement, which he did. In addition, X Tech provided evidence that USAF did not realize that X Tech's bid included USAF ownership of the reverse-engineered Raytheon data and argued that the jury could infer that USAF may have paid $3.2 for both the testing system and the Raytheon data. Geotest, for its part, presented Garner's personal knowledge that
At the close of evidence, Geotest filed a motion for directed verdict, arguing, among other things, that the causation element of X Tech's breach of contract claim failed as a matter of law. Geotest did not move the court to enter a directed verdict that there was insufficient evidence to support a jury finding that Geotest breached the agreement. X Tech countered with its own motion for directed verdict on Geotest's affirmative defense of prior material breach.2
With respect to Geotest's motion for directed verdict on causation, as well as other claims, the district court merely noted that “[f]act issues, however, remain for the jury on the remaining claims and accordingly the remainder of Defendants motion is denied.” The district court, however, orally granted X Tech's motion for directed verdict on Geotest's prior material breach defense.
The jury found for X Tech on the breach of contract claims. It made three specific findings relevant to the issue. The completed verdict form read:
Did Geotest and X Technologies agree to exclusively team to jointly pursue the Solicitation?
Answer “Yes” or “No.”
Answer: YES
....
Did Geotest fail to comply with the agreement?
Answer “Yes” or “No.”
Answer: YES
....
What sum of mon[e]y, if any, if paid now in cash, would fairly and reasonably compensate X Technologies for its damages, if any, that resulted from Geotest's failure to comply with the Teaming Agreement?
....
Answer: $336,000 + Atty. Fees + court costs.
Geotest filed a renewed motion for judgment as a matter of law on causation and prior material breach, which the district court denied. The district court then entered final judgment in favor of X Tech and awarded it $336,000 in damages, as well as attorney's fees. Geotest appeals.
The court reviews de novo a motion for directed verdict, applying the same standard as the district court. Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 292–93 (5th Cir.2012). “If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motion[ ] is proper.” Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc), overruled on other grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331 (5th Cir.1997) (en banc). But “if reasonable persons could differ in their interpretations of the evidence,” a determination of the issue is for the jury. Bryant v. Compass Grp. USA Inc., 413 F.3d 471, 475 (5th Cir.2005) (citation and quotation marks omitted). The facts are viewed, and inferences made, in the light most favorable to the nonmovant. Babcock, 703 F.3d at 293. “Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). In other words, “the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.” Id. (citations and quotation marks omitted). If the motion...
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