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Arabian Support & Services Company, Ltd. v. Textron Systems Corp.

United States District Court, D. Massachusetts

March 11, 2016




During the relevant times, Arabian Support & Services Company, Ltd. (ASASCO) was a consulting firm based in Riyadh, Saudi Arabia.[1] ASASCO held itself out as a facilitator of munitions sales to the Saudi government. Textron Systems Corporation, a major U.S. defense contractor, is a Delaware corporation with a business presence in Massachusetts. Blenheim Capital Partners, which is not a party to the lawsuit, is a United Kingdom consultancy that formulates “offset solutions” - local investments required of foreign contractors by many arms-procuring countries as a ticket of admission for doing business locally. The issue in this case is whether ASASCO can compel a former client (Textron) to pay a commission promised by a nonparty (Blenheim) that had agreed to provide Textron with offset services.[2]

ASASCO alleges that for nearly a decade it assisted Textron in the marketing and sale of sensor fuzed weapons (“cluster bombs”) to Saudi Arabia.[3] The relationship between Textron and ASASCO was governed by a Consulting Agreement entered in March of 2005. The Agreement, which was subsequently modified and renewed in certain nonmaterial respects, expired in 2013. Under the terms of the Agreement, Textron was to pay ASASCO a fixed consulting fee (which was reduced substantially over the life of the contract). Each iteration of the Agreement included a clause limiting ASASCO’s remuneration to the consulting fee alone.[4] In 2011, an integration clause was inserted into the Agreement stating that “[T]his Agreement constitutes the entire agreement of the parties 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 . . . based on any oral representations, statement, promise or agreement.” Dkt. #71-3 at 107.

ASASCO alleges that notwithstanding the written Agreement, Textron promised repeatedly that it would pay it a percentage of any successful sale in addition to the consulting fee.[5] Specifically, ASASCO alleges that Textron intended to use money generated through the offset obligations to funnel commission payments to ASASCO. In 2006, Textron engaged Blenheim to craft an “offset solution” for a sale of cluster munitions to Saudi Arabia. ASASCO alleges that it collaborated with Textron and Blenheim over the next two years in drafting two contracts, one between Textron and Blenheim (the Offset Services Agreement (OSA) finalized in February of 2008), and a separate subcontracting agreement between ASASCO and Blenheim (finalized in April of 2009).

Under the OSA, Textron promised Blenheim a percentage of the sale of munitions in exchange for its servicing of the offset obligations. The OSA prohibited Blenheim from hiring any subcontractor other than ASASCO without Textron’s written consent. ASASCO was not a party to the OSA.

Under Blenheim’s subcontractor agreement with ASASCO, to which Textron was not a party, Blenheim agreed to pay ASASCO 75% of any fee paid by Textron into “the Escrow Account.” Dkt. # 23-2 at 11. The Agreement stated that the Escrow Account would be created “as soon as practicable, ” and that the OSA between Blenheim and Textron would be modified to channel all payments from Textron directly into the Escrow Account.[6] Id. at 12. The Blenheim-ASASCO Agreement also stated that the contract would expire automatically if the OSA were to be terminated “for any reason.” Id. at 4. Finally, the Agreement contained an integration clause stating that the writing “embodies and sets forth the entire agreement and understanding of the parties and supersedes all prior oral or written agreements, understandings or arrangements relating to the subject matter of this Agreement.” Id. at 16.[7] In 2008, before the Blenheim-ASASCO Contract was finalized, Textron ceased paying ASASCO’s monthly consulting fee without any objection forthcoming from ASASCO.

On January 18, 2011, Textron and Blenheim entered into an Offset Services Framework Agreement intended to replace the OSA. In January of 2012, Textron and Blenheim formally terminated the OSA, thus triggering the termination of the subcontracting agreement between Blenheim and ASASCO. Blenheim subsequently ceased communicating with ASASCO, although ASASCO claims it remained unaware that its contract with Blenheim had been terminated.

ASASCO alleges that it had continuing discussions with Textron regarding potential offsets arrangements through 2011, and continued to lobby Saudi Arabia on Textron’s behalf. In December of 2011, Textron and Saudi Arabia agreed to the terms of the cluster bomb sale. Textron promptly notified ASASCO of the agreement. The sale was finalized in August of 2013. On August 29, 2013, Textron notified ASASCO that the Consulting Agreement, which was due to expire in two days, would not be renewed.

On July 15, 2015, ASASCO brought this lawsuit against Textron claiming breach of contract (Count I), tortious interference with contractual relations (Count II), and violations of the Massachusetts Unfair Business Practices statute, Gen. Laws ch. 93A (Count III). ASASCO alleges that Textron “paid Blenheim directly in breach of the Offset Services Agreement’s requirement that any such payments be made to an escrow account.” Compl. ¶ 42. ASASCO also alleges that Textron breached the OSA by terminating it without the consent of ASASCO as a third-party beneficiary. Finally, ASASCO claims that Textron, by improperly terminating the OSA, induced Blenheim to breach its separate contract with ASASCO.

Textron responded with a motion to dismiss for failure to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). Textron further maintained that ASASCO’s claim for tortious interference with contractual relations was barred by the statute of limitations. On October 1, 2015, this court notified the parties of its intent to convert the motion to dismiss pursuant to Fed.R.Civ.P. 12(d) into a motion for summary judgment under Fed.R.Civ.P. 56. The court authorized limited discovery pertaining to ASASCO’s knowledge of the termination of the OSA, the authenticity of the Consulting Agreement, and the preclusive effect, if any, of its terms, particularly the integration clauses.


Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Summary judgment shall not be granted if the evidence is “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the initial burden of establishing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

ASASCO’s claim for breach of contract is based on the allegation that it was a third-party beneficiary of the OSA between Textron and Blenheim and that Textron and Blenheim terminated the OSA without notice to it and without its permission. “[W]hen one person, for a valuable consideration, engages with another, by simple contract, to do some act for the benefit of a third, the latter, who would enjoy the benefit of the act, may maintain an action for the breach of such engagement.” Rae v. Air-Speed, Inc., 386 Mass. 187, 195 (1982) (quoting Brewer v. Dyer, 7 Cush. 337, 340 (1851)). It is also true that one need not be the intended beneficiary of every provision of a contract to have a discrete enforceable contractual right as a third party. The James Family Charitable Found. v. State Street Bank and Trust Co., 80 Mass.App.Ct. 720, 725 (2011). However, the third party may maintain an action only “for the breach of such engagement, ” that is, for the failure of one of the signatories to perform the contractually promised act. Rae, 386 Mass. at 195.

With respect to the OSA entered by Textron with Blenheim, ASASCO was the intended beneficiary in only one respect. Blenheim was prohibited from hiring any subcontractor other than ASASCO to work on the cluster bomb sale to Saudi Arabia. There is no dispute of fact but that Blenheim did hire ASASCO and that no other subcontractor was hired during the life of the OSA. In other words, ...

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