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Arabian Support & Services Co. Ltd. v. Textron Systems Corp.

United States Court of Appeals, First Circuit

April 19, 2017

ARABIAN SUPPORT & SERVICES CO., LTD., Plaintiff, Appellant,
v.
TEXTRON SYSTEMS CORP., Defendant, Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS Hon. Richard G. Stearns, U.S. District Judge.

          Haig V. Kalbian, with whom D. Michelle Douglas, Kalbian Hagerty LLP, Martin F. Gaynor III, Nicholas D. Stellakis, and Manion Gaynor & Manning LLP were on brief, for appellant.

          Edwin John U, with whom John A. Tarantino, Brian R. Birke, Adler Pollock & Sheehan P.C., Eugene F. Assaf, Erin C. Johnston, Ronald K. Anguas, Jr., and Kirkland & Ellis LLP were on brief, for appellee.

          Before Lynch, Lipez, and Thompson, Circuit Judges.

          LIPEZ, Circuit Judge.

         In this diversity action, Arabian Support & Services Co. ("ASASCO"), a Saudi Arabian business, seeks compensation for assisting Textron Systems Corporation in its efforts, over a number of years, to complete a deal to sell sensor fuzed weapons ("SFWs") to the Saudi government. ASASCO claims that Textron failed to abide by a promise to supplement the modest fees paid under the parties' written consulting agreements through an "offset" arrangement linked to the weapons sale.[1] The district court granted summary judgment for Textron on all of ASASCO's claims after allowing limited discovery and declining to provide ASASCO an opportunity to amend its complaint.

         Although we agree that ASASCO's contract and tort claims are not viable, we conclude that the district court erroneously dismissed ASASCO's Chapter 93A misrepresentation claim based solely on the failure of the contract claim. See Mass. Gen. Laws Ann. ch. 93A, § 11. Textron offers no persuasive alternative rationale to support the court's ruling. Hence, ASASCO is entitled to proceed with its claim that Textron engaged in an unfair business practice by procuring ASASCO's agreement to low-fee consulting contracts with the promise of a future offset benefit and then, after successfully signing the weapons deal, disclaiming any additional financial obligation to the Saudi company. Accordingly, we vacate the summary judgment in part and remand for further proceedings on ASASCO's misrepresentation theory.

         I.

         We will not review in full the parties' lengthy relationship, which developed largely through interactions between Mansour Al-Tassan, ASASCO's president, and Avedis Boyamian, Textron's Director of Middle East Business Development. As the history is well known to both parties, we choose here to recount only those facts pertinent to our decision.

         A. The Consulting Agreements

         For three-plus years -- from March 2005 through August 2008 -- Textron and ASASCO signed successive consulting contracts providing ASASCO with a monthly retainer of $10, 000. Beginning September 1, 2008, the consulting contract was extended in increments of one to three months on a no-fee basis. That arrangement continued for a year, until a new two-year agreement was signed that set ASASCO's monthly retainer at $500. The $500 fee remained in place through subsequent contract extensions until August 31, 2013, at which point Textron terminated the consulting arrangement. In the email sent on August 29 notifying ASASCO that Textron had elected to end the relationship, the company spokesperson stated that Textron was "not aware of any outstanding obligations between the parties."

         Each of the consulting contracts between 2005 and 2011 contained a provision stating that the parties agreed 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 [other than for approved travel expenses] shall be due to or paid to CONSULTANT." However, the 2011 agreement for the first time contained an expanded version of this no-other-payments statement, providing that the specified compensation was "the exclusive remuneration to be paid by the COMPANY" for "the services provide[d] by CONSULTANT." The 2011 agreement also featured an integration provision:

This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings, written or oral. Each party hereby waives the right to assert any claim against the other, its employees, customers or assigns, based on any oral representations, statement, promise or agreement whether made before or after the date of this Agreement.

         B. The Offset Dialogue

         Through the years of their consulting relationship, beginning no later than May 2006, [2] Textron and ASASCO regularly discussed the opportunity for additional compensation to ASASCO through its involvement in offset projects that were an anticipated requirement of the Saudi weapons deal. The record also contains internal Textron emails indicating that ASASCO's anticipated offset activity -- and compensation -- would be independent of the consulting agreement. This correspondence includes a draft "Offset Services Agreement" prepared by Textron in June 2006, an email from Boyamian to Al-Tassan that month stating that Textron was "in the process of getting the Offset Provider Agreement approved, " and, on the same day, an internal Textron email asking that "two books" be started for the company's business with ASASCO ("one for a new offset agreement with Asasco, and one for a renewal of the consultant agreement").[3]

         Textron and ASASCO never entered into a written offset agreement. Instead, in February 2008, Textron and Blenheim Capital Partners Limited signed an Offset Services Agreement ("OSA") that permitted but did not require Blenheim to subcontract with ASASCO -- although no other subcontractor could be used without Textron's "prior written consent." Six months later, in an internal email dated September 8, Boyamian told colleagues at Textron that, "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 email also reported ...


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