855 F.3d 1
1st Cir.2017Background
- ASASCO, a Saudi company, served as a low-fee consultant to Textron from 2005–2013 while discussions occurred about Textron selling sensor-fuzed weapons to Saudi Arabia and related offset obligations.
- Consulting agreements paid modest retainers ($10,000 initially, later reduced to $500) and included an integration clause stating no other oral representations would create obligations.
- Textron negotiated an Offset Services Agreement (OSA) with Blenheim in 2008; Blenheim and ASASCO later signed a subcontract giving ASASCO a share of Blenheim fees, conditioned on an escrow that never was created.
- Textron and Blenheim mutually terminated the OSA in late 2011; ASASCO alleges it was not informed and continued to provide services, believing it would receive offset-related compensation.
- After the Saudi weapons deal was finalized in August 2013, Textron terminated its consulting relationship and stated it was unaware of any outstanding obligations; ASASCO sued alleging breach (third-party beneficiary), tortious interference, and Chapter 93A misrepresentation.
- The district court granted summary judgment to Textron, finding no contractual breach and concluding the other claims failed; the First Circuit affirmed as to contract and tort claims but vacated as to the Chapter 93A misrepresentation claim and remanded for further proceedings and potential amendment/discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Textron breached the OSA as a third-party beneficiary | ASASCO says it was an intended beneficiary and Textron’s termination of OSA deprived it of promised offset fees | Textron says it fulfilled contractual obligations; OSA allowed termination and did not require escrow payments to ASASCO | No breach: OSA did not obligate Textron to ASASCO and termination was permitted |
| Whether Textron tortiously interfered with ASASCO’s Blenheim relationship | ASASCO says Textron’s conduct dissolved its offset opportunity and interfered with its contract | Textron says ASASCO’s contract with Blenheim made its rights contingent on OSA and Textron owed no duty to preserve that relationship | No tort relief: ASASCO had contractually contingent rights and Textron had no duty to maintain OSA |
| Whether integration clause bars fraud/misrepresentation claims | ASASCO says offset promises were separate from consulting contract and induced reliance despite integration clause | Textron contends the integration clause precludes reliance on any oral promises | Integration clause not dispositive: misrepresentation/Chapter 93A claim may proceed because offset discussions could be separate and reliance could be reasonable |
| Whether summary judgment dismissal of Chapter 93A was proper and whether discovery/amendment should have been allowed | ASASCO sought leave to amend and additional discovery to develop misrepresentation claims | Textron argued claims fail as a matter of law given contract outcome; district court denied further discovery | First Circuit vacated summary judgment as to Chapter 93A, remanded for further proceedings, and allowed ASASCO opportunity to amend and for the district court to consider discovery |
Key Cases Cited
- Rando v. Leonard, 826 F.3d 553 (1st Cir. 2016) (standard of review for summary judgment)
- Kenda Corp. v. Pot O'Gold Money Leagues, Inc., 329 F.3d 216 (1st Cir. 2003) (integration clause does not automatically bar fraud claims)
- HSBC Realty Corp. (USA) v. O'Neill, 745 F.3d 564 (1st Cir. 2014) (reliance may be reasonable after long history of performance)
- Incase Inc. v. Timex Corp., 488 F.3d 46 (1st Cir. 2007) (deceptive acts actionable if they cause a party to act differently)
- Lambert v. Fleet Nat'l Bank, 865 N.E.2d 1091 (Mass. 2007) (stringing along inducing detrimental reliance can violate Chapter 93A)