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Arabian Support & Serv. Co. v. Textron Systems Corporation, 19-1377P (2019)

Court: Court of Appeals for the First Circuit Number: 19-1377P Visitors: 4
Filed: Nov. 20, 2019
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the First Circuit No. 19-1377 ARABIAN SUPPORT & SERVICES COMPANY, LTD., Plaintiff, Appellant, v. TEXTRON SYSTEMS CORPORATION, Defendant, Appellee. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Patti B. Saris, U.S. District Judge] Before Lynch, Selya, and Lipez, Circuit Judges. Martin F. Gaynor III, with whom Haig V. Kalbian, D. Michelle Douglas, William P. McGrath, Jr., Kalbian Hagerty LLP, Nicholas D. Stellakis, and Hunto
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          United States Court of Appeals
                        For the First Circuit


No. 19-1377

              ARABIAN SUPPORT & SERVICES COMPANY, LTD.,

                        Plaintiff, Appellant,

                                  v.

                     TEXTRON SYSTEMS CORPORATION,

                         Defendant, Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Patti B. Saris, U.S. District Judge]


                                Before

                       Lynch, Selya, and Lipez,
                            Circuit Judges.


     Martin F. Gaynor III, with whom Haig V. Kalbian, D. Michelle
Douglas, William P. McGrath, Jr., Kalbian Hagerty LLP, Nicholas D.
Stellakis, and Hunton Andrews Kurth LLP were on brief, for
appellant.
     John A. Tarantino, with whom Nicole J. Benjamin and Adler
Pollock & Sheehan P.C. were on brief, for appellee.


                          November 20, 2019
          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


                              - 2 -
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


                                   - 3 -
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


     1    Offsets are "the practice by which the award of defense
contracts by foreign governments or companies is conditioned upon
commitments from the defense contractor to provide some form of
compensation to the purchaser."    Textron 
I, 855 F.3d at 2
n.1
(internal quotation marks omitted).     An "offset waiver" occurs
when the purchaser-country agrees to waive the seller-company's
offset obligation. See Textron 
II, 368 F. Supp. 3d at 218
. If a
waiver does not occur, the seller-company must perform its offset
obligation. The district court noted that Saudi regulations appear
to require pre-approval by the Saudi government of the seller-
company's plan to fulfill its offset obligation before the signing
of a supply contract. 
Id. An "offset
credit" is earned by the
seller-company when it develops an offset project, which will be
performed in the future, that the purchaser-country determines
will satisfy the offset obligation. See 
id. 2 All
of the consulting agreements also included a
provision stating that "any and all services rendered by CONSULTANT
to the COMPANY shall be deemed to have been given pursuant to this
Agreement and no additional payments [besides approved travel
expenses] shall be due to or paid to CONSULTANT. . . . The parties
agree that CONSULTANT shall not receive any compensation or
commission based in any manner whatsoever on the volume of sales
of the COMPANY products and/or services procured or received" under
this Agreement.



                               - 4 -
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




      3   Under the draft proposed agreement, which was never
executed, ASASCO would have been "entitled to receive a fee of X
percent (X%) of the value of an Offset Waiver" provided Textron
was satisfied that the offset was waived irrevocably, or to "X
percent (X%) of the value of an Offset Credit obtained through
successful execution of an Offset Project entered into with
ASASCO."


                                   - 5 -
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


     4    If the final agreement was a government-to-government
sale, rather than a contract directly between Textron and the Saudi
government, Blenheim would receive two percent.
     5    Boyamian explained the decision to extend the agreement
on a no-fee basis in an email to Textron employees that stated:
"Effective September 1st, 2008, [Textron] stopped paying ASASCO
the monthly consultancy fee because, [Textron] through Blenheim,
an offset service provider company based in UK, has an offset
service providing agreement with ASASCO for [Textron] business
offset requirements in Saudi Arabia." The following day, Boyamian
forwarded this email to Al-Tassan.


                                     - 6 -
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



        6 The agreement between Blenheim and ASASCO stated that if
Textron paid a fee into "the Escrow Account" pursuant to the OSA,
then ASASCO would be entitled to 75% of that fee.        (Only the
agreement between ASASCO and Blenheim referred to an escrow account
-- the OSA did not specify that Textron had to pay the fees into
an escrow account.) The agreement would be terminated when the
OSA "terminated for any reason."


                                     - 7 -
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


       7  Textron asserts that in February or March 2012, a Textron
employee informed Al-Tassan that the OSA had been terminated.
ASASCO, however, asserts that Al-Tassan was not informed by Textron
until September 2013. Despite this assertion, on May 30, 2012,
Al-Tassan emailed his assistant and noted that "Blenheim is out of
the picture."


                                         - 8 -
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




                                     - 9 -
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 matter of law.              Fed. R. Civ. P. 56(a).             As a

federal    court    sitting    in    diversity,        we    apply    Massachusetts

substantive law.       Mulder v. Kohl's Dep't Stores, Inc., 
865 F.3d 17
, 20 (1st Cir. 2017).             We conclude that the district court

correctly entered summary judgment for Textron, and we affirm based

largely on its analysis.        We add the following additional comments

as to several aspects of the appeal.

A.   Mass. Gen. Laws Ch. 93A Claim

            ASASCO argues that the district court erred in granting

summary judgment to Textron on its chapter 93A claim for two

different reasons.      First, ASASCO argues that the district court

"misapplied     the    legal        standard"     as        articulated    by    the

Massachusetts      Supreme    Judicial    Court    (SJC)       in    Kuwaiti   Danish


                                      - 10 -
Computer Co. v. Digital Equipment Corp., 
781 N.E.2d 787
(Mass.

2003).    It says that a case relied on by the district court, Roche

v.   Royal   Bank   of   Canada,   
109 F.3d 820
  (1st   Cir.   1997),   is

inconsistent with the SJC's later Kuwaiti Danish decision.             ASASCO

secondly argues the district court mistakenly concluded that the

"core of the misleading conduct" did not occur "primarily and

substantially within the commonwealth."          Mass. Gen. Laws ch. 93A,

§ 11.     In the circumstances of this appeal, this inquiry is a

question of law.     Kuwaiti 
Danish, 781 N.E.2d at 797
.

             In Kuwaiti Danish, the SJC stated that "a judge should,

after making findings of fact, and after considering those findings

in the context of the entire § 11 claim, determine whether the

center of gravity of the circumstances that give rise to the claim

is primarily and substantially within the Commonwealth."               
Id. at 799.
    ASASCO focuses on the SJC's language that this analysis

"should not be based on a test identified by any particular factor"

because use of a factor-based test tends "to shift the focus of

inquiry away from the purpose and scope of c. 93A."             
Id. ASASCO argues
that the district court erred when it cited

to the factors outlined in this court's earlier decision in Roche.

The Roche factors look to where the defendant committed the alleged

deception, where the plaintiff was deceived and acted upon the

deception, and where the plaintiff was harmed.           
Roche, 109 F.3d at 829-31
.      The district court did not apply Roche in a manner


                                   - 11 -
inconsistent with Kuwaiti Danish.      Rather, it carefully considered

the nature of each alleged instance of misconduct, as well as the

number of alleged instances, in the context of the entire claim

and in doing so, performed the "fact intensive" analysis required

by the SJC.        Kuwaiti 
Danish, 781 N.E.2d at 798
.         Contrary to

ASASCO's argument, the district court did not "narrowly and rigidly

construe[] the facts."

             Secondly, there was no error when the district court

concluded that Massachusetts was not the "center of gravity."

ASASCO points to evidence that Textron itself is in Massachusetts

and   that   the    email   communications   to   Al-Tassan   and   ASASCO

originated in Massachusetts. The cases ASASCO relies on are easily

distinguished.8      Unlike those cases, this case involves alleged




      8   ASASCO relies on three cases where courts have rejected
defendants' arguments that the allegedly deceptive conduct in the
case did not occur "primarily and substantially within the
commonwealth."   These cases are factually dissimilar from the
present case. See Controlled Kinematics, Inc. v. Novanta Corp.,
No. 17-cv-11029, 
2017 WL 5892200
, at *1-3, *5 (D. Mass. Nov. 29,
2017) (denying defendant's motion to dismiss where the allegedly
deceptive practices and communications originated in Massachusetts
and plaintiff was harmed in California but where plaintiff did not
allege that misleading conduct occurred anywhere besides these two
locations); Auto Shine Car Wash Sys., Inc. v. Nice 'N Clean Car
Wash, Inc., 
792 N.E.2d 682
, 686 (Mass. App. Ct. 2003) (concluding
that trial judge correctly found that Massachusetts was the center
of gravity because both the deception and harm occurred in
Massachusetts); Trematerra v. Major League Lacrosse, LLC, No.
SUCV201701140BLS2, 
2017 WL 6601553
, at *1-2, *4 (Mass. Super. Ct.
Oct. 13, 2017) (denying defendant's motion to dismiss where
defendant's   headquarters   and  the   source   of  the   alleged
misrepresentations were in Massachusetts but where defendant did


                                  - 12 -
deceptions that occurred almost entirely outside of Massachusetts.

ASASCO    asserts    that    it   was    misled    at       meetings       with   Textron

officials in Egypt, France, and Saudi Arabia.                    We see no error in

the district court's analysis.           The chapter 93A, section 11 claims

were properly disposed of on summary judgment.

B.    ASASCO's Other Claims

              As to ASASCO's claims of error in entry of judgment

against its fraudulent inducement, intentional misrepresentation,

negligent        misrepresentation,              and         quasi-contract/implied

contract/promissory         estoppel     claims,       we    affirm    the    entry    of

summary judgment based on the district court's reasoning.                          A few

bedrock principles of Massachusetts contract law require this

result.     First, the district court correctly stated that "ASASCO

cannot    now   assert     that   it    reasonably          relied    on    promises   of

compensation in the form of a commission for assisting in selling

the cluster bombs," Textron 
II, 368 F. Supp. 3d at 227-28
, when

the   terms     of   all   five   written    consulting          agreements        flatly

prohibited any payment to ASASCO based on commission from the

weapons sale. See Masingill v. EMC Corp., 
870 N.E.2d 81
, 89 (Mass.

2007) ("It is unreasonable as a matter of law to rely on prior

oral representations that are (as a matter of fact) specifically

contradicted by the terms of a written contract.").


not make any in-person misrepresentations to plaintiff in any other
location).


                                        - 13 -
          As    to    ASASCO's    alternate    claims   that,      apart    from

commission,    it    was    entitled   to    compensation    as    to     offset

provisions, the district court correctly concluded that "there is

no evidence in the record that Al-Tassan was promised compensation

of six percent of the total SFW sale . . . even if ASASCO did not

acquire a waiver or offset credits."          Textron 
II, 368 F. Supp. 3d at 228
(emphasis added).         The court properly found Textron never

represented to ASASCO that ASASCO would receive offset-related

compensation   even    if    ASASCO    did   not   secure   from    the    Saudi

government an offset waiver or offset credits.          Going beyond that,

it is undisputed that ASASCO never obtained a waiver or secured

Saudi government approval for an offset project, nor did it even

complete a formal offset project proposal after the 2011 rejection.

          ASASCO reframes its argument in terms that a jury could

conclude that Textron denied ASASCO the "opportunity" to provide

offset services or secure a waiver, quoting our earlier opinion in

Textron I.     Textron 
I, 855 F.3d at 8
n.9.            ASASCO argues that

because it put forth "several offset proposals that [Textron] could

have used once the Supply Contract was signed," the parties

"understood and intended that ASASCO would not be able to perform

any of those proposals and be paid for them until the Supply

Contract was signed," and Textron then declined to extend the

consulting agreement once it signed the Supply Contract, Textron

deprived ASASCO of this "opportunity."


                                   - 14 -
             ASASCO was not denied the "opportunity" to secure offset

services.      ASASCO's own evidence is that Textron gave it the

opportunity to discuss proposed offset projects with Textron.    But

the Saudi government has never approved any of these offset

proposals.     Further, ASASCO does not dispute that it failed to

come up with any formal offset proposals after its 2011 proposal

was rejected by the Saudi government.

             The unjust enrichment/quantum meruit claim goes nowhere.

Under Massachusetts law, courts generally "will not grant quantum

meruit recovery arising from a contingent fee contract where the

contingency has not occurred."      Liss v. Studeny, 
879 N.E.2d 676
,

683 (Mass. 2008). Here, the two contingencies were (1) the signing

of the Supply Contract and (2) ASASCO's achievement of a waiver or

offset credits.      The second, necessary contingent event never

happened.

             Affirmed.   Costs are awarded to Textron.




                                 - 15 -

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