Flight Concepts Limited Partnership v. The Boeing Company

Facts

Ps modified the Lockheed T-33 aircraft to produce a plane, the Skyfox, envisioned as a low-cost, multiple-role aircraft that would meet the military needs of developing countries as well as the United States. Ps explored potential marketing options, and eventually gave D the exclusive right to produce and sell the airplane worldwide. After meeting several times the parties entered into a series of agreements. In a Memorandum of Understanding, signed April 2, 1985, the parties agreed to enter into an exclusive teaming arrangement to develop a marketing strategy for Skyfox. The memorandum specifically denied the project, to be pursued in phases, was a partnership. The Memorandum terminated by its own terms on July 1, 1985, and on that date, the parties entered into another agreement to continue the feasibility study. The parties negotiated a Proprietary Data Exchange Agreement, effective November 1, 1985, to protect the confidentiality of their technical data. That agreement denied the existence of 'a joint venture, partnership or other formal business organization' between the parties. The License Agreement gave D 'an exclusive, worldwide right and license to utilize Licensor's Know-How and the inventions of Licensed Patents in the manufacture, use and sale of licensed product(s) and any and all other substantial rights.' Under Article X, D reserved 'the right to terminate the Agreement by giving P sixty (60) days notice in writing of such termination, and upon expiration of said sixty (60) days this Agreement shall automatically be terminated.' The agreement could also be terminated by mutual written consent of the parties. Article XIII relieves D from any obligation to produce or sell the Skyfox. D was under no obligation whatsoever to produce and/or sell Licensed Product(s) and/or any product utilizing Licensor's Know-How during any part of the term of this License Agreement, and the License Agreement shall not be terminated by P for D's failure to produce and/or sell Licensed Products and/or any product utilizing Licensor's Know-How. The final subparagraph of the Agreement, under Article XIV, General Provisions, states: This Agreement embodies the entire understanding between the parties as to a Patent and Know-How License and there are no prior representations, warranties, or agreement between the parties relating hereto except for other agreements in writing entered into or which may be entered into between D and P and this Agreement is executed and delivered upon the basis of this understanding. No alteration, waiver, or change in any of the terms hereof subsequent to the execution hereof claimed to have been made by any representative of either party shall have any force or effect unless in writing signed by the parties hereto or their duly authorized agents or representatives. Ps brought suit alleging fraud in the inducement, misrepresentation, and concealment; breach of the covenant of good faith and fair dealing; and breach of fiduciary duty. P claims D fraudulently induced them to form the contract by promising to invest $25 to $60 million in the Skyfox program when D never intended to spend its own money converting the aircraft. P alleges that D misrepresented its commitment to the project by failing to inform the Skyfox Group that it had plans to develop Project Vision, a plane projected to have similar uses and that it had access to classified information on government procurement plans. The claims for breach of implied covenant of good faith and fair dealing and breach of fiduciary duty arise from the same facts. The district court granted summary judgment to D on all counts, from which P appeals.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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