ACA Computer Integrators, Inc. v. Cubuc Transportation

Filing 25

Magistrate Judge Judith G. Dein: ORDER entered. MEMORANDUM OF DECISION AND ORDER allowing 17 Defendant's Motion for Summary Judgment. (Dambrosio, Jolyne)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

ACA COMPUTER
INTEGRATORS, INC.,
Plaintiff,
v.
CUBIC TRANSPORTATION
SYSTEMS, INC.,
Defendant.

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CIVIL ACTION
NO. 10-11926-JGD

MEMORANDUM OF DECISION AND ORDER ON
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
March 28, 2012
DEIN, U.S.M.J.
I. INTRODUCTION
The defendant, Cubic Transportation Systems, Inc. (“Cubic”), is a party to a
contract with the Massachusetts Bay Transportation Authority (“MBTA”), pursuant to
which Cubic issues CharlieCards and CharlieTickets to MBTA customers and provides
related services. In order to fulfill its contract with the MBTA, Cubic was also party to a
separate subcontract with the plaintiff, ACA Computer Integrators, Inc. (“ACA”), a
Disadvantaged Business Enterprise (“DBE”), pursuant to which ACA provided technical
maintenance services concerning the CharlieCards and CharlieTickets systems. The
subcontract with ACA assisted Cubic in meeting its goal of 12% DBE participation, as
provided for in Cubic’s contract with the MBTA.

On April 6, 2010, in compliance with the notice requirements of the subcontract,
Cubic notified ACA that its subcontract would not be renewed. Instead, Cubic replaced
ACA with another DBE, which performed ACA’s work and additional work. In
response, ACA brought this action, alleging that Cubic breached its contract with the
MBTA, and breached the warranty of good faith and fair dealing implied in Cubic’s
contract with the MBTA, by failing to renew ACA’s contract.1 There is no contention
that Cubic violated its subcontract with ACA.
The matter is presently before the court on the “Defendant Cubic Transportation
Systems, Inc.’s Motion for Summary Judgment.” (Docket No. 17). Cubic contends that
it is entitled to summary judgment because ACA cannot establish that it was an intended
third-party beneficiary of the contract between Cubic and the MBTA, or that Cubic’s
conduct in refusing to renew its subcontract with ACA constituted a breach of that
agreement. As detailed herein, this court finds that the undisputed facts and circumstances concerning the contract between the MBTA and the defendant demonstrate that
ACA was not an intended beneficiary of that agreement. Therefore, and for all the
reasons detailed below, Cubic’s motion for summary judgment is ALLOWED.

1

These contract-based claims are the only claims remaining. ACA voluntarily withdrew
its claim for fraud and, on March 17, 2011, this court dismissed ACA’s claim that Cubic violated
Mass. Gen. Laws ch. 93A. (Docket No. 16).

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II. STATEMENT OF FACTS2
The following facts are undisputed unless otherwise indicated.
In May 2007, the MBTA entered into a contract (“Contract”) with ERG Transit
Systems (“ERG”), under which ERG agreed to provide services necessary to process and
fulfill orders from MBTA customers for electronic fare media cards known as
“CharlieCards” and “CharlieTickets.” (DF ¶ 1; Def. Ex. A at Recitals and ¶ 1). ERG and
the MBTA agreed that the Contract would remain in effect for three years beginning on
June 1, 2007, with three successive options to extend the term, upon mutual agreement by
the parties, for additional one year periods. (Def. Ex. A. ¶ 1). In 2009, ERG assigned its
rights under the Contract to Cubic. (DF ¶ 4).
The plaintiff, ACA, has never been a party to the Contract. (DF ¶ 6). Rather, in
2007, ERG entered into a separate subcontract (“Subcontract”) with ACA under which
ACA agreed to provide technical maintenance services to the CharlieCards and
CharlieTickets systems. (DF ¶ 2). As detailed below, ACA continued to perform work
under the Subcontract after the Contract was assigned to Cubic in 2009. However, in
April 2010, Cubic notified ACA that it would not be renewing the Subcontract.
2

The facts are derived from: (1) Cubic’s Statement of Undisputed Facts, which is set
forth on pages 3 through 6 of its Memorandum in Support of Motion for Summary Judgment
(Docket No. 17-1) (“DF”); (2) the exhibits attached to the Declaration of Sterrett Brandt (Docket
No. 17-2) and attached to Cubic’s Reply Memorandum in Support of Motion for Summary
Judgment (Docket No. 24) (“Def. Ex. __”); (3) the plaintiff’s statement of Disputed Material
Facts set forth on pages 4 through 8 of the plaintiff’s Objection and Opposition to Defendant’s
Motion for Summary Judgment (Docket No. 22) (“PF at p. __”); and (4) the exhibits attached to
the plaintiff’s Objection and Opposition to Defendant’s Motion for Summary Judgment (Docket
No. 22) (“Pl. Ex. __”).

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In this action, ACA is not alleging that Cubic breached any of its obligations under
the Subcontract. (DF ¶ 19). Instead, ACA claims that it was an intended beneficiary of
the Contract between Cubic and the MBTA, and that Cubic’s refusal to renew the
Subcontract in 2010 constituted a breach of Cubic’s obligations under its Contract.
Details Regarding the Contract Between ERG and the MBTA
Pursuant to the Contract between ERG and the MBTA, ERG was authorized to
“engage subcontractors to perform services pursuant to this Agreement” as long as certain
conditions were met, including that the MBTA receive prior written notice of ERG’s
intent to hire a subcontractor, and that the MBTA have the right to reasonably withhold
its consent to the engagement. (DF ¶ 12; Def. Ex. A ¶ 19.2). It further provided in
relevant part that “[i]f the MBTA consents to the use of a subcontractor, then . . . [ERG]
remains obligated under this Agreement for the performance of the subcontracted
services, notwithstanding the MBTA’s consent to the use of a subcontractor,” and that
“the MBTA has no obligations to the subcontractor and the subcontractor has no rights or
remedies against the MBTA[.]” (DF ¶ 13; Def. Ex. A ¶ 19.2.1). Thus, ERG remained
responsible for the performance of services that it delegated to subcontractors such as
ACA, and such subcontractors acquired no rights against the MBTA by virtue of their
agreements with ERG.
It is undisputed that ACA has been certified by the Massachusetts State Office of
Minority and Women Business Assistance (“SOMWBA”) as a DBE, and that ERG had a
goal of at least 12% DBE participation in connection with its work under the Contract.
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(DF ¶ 3; Def. Ex. B at 2-3, 7). Thus, the Contract specifically provided in relevant part
as follows with respect to the use of DBEs on the MBTA project:
23.1.5 Disadvantaged Business Enterprise
[ERG] shall cooperate with the MBTA in implementing this Agreement obligations concerning Disadvantaged Business Enterprise
(“DBE”) utilization in this Agreement. [ERG] shall also cooperate
with the MBTA and the federal government in reviewing [ERG’s]
activities relating to this Provision. This Provision is in addition to
all other equal opportunity employment requirements of this Agreement. The MBTA shall make all determinations of compliance or
non-compliance with the requirements of this Provision and the
appropriate consequences of non-compliance . . . .
Stated Goal
The “stated goal” is those elements of work under this Agreement
performed by qualified Disadvantaged Business Enterprises for
amounts totaling not less than 12% of the Agreement price.
(Def. Ex. A ¶ 23.1.5; see also DF ¶ 7; PF at p. 7).
The 12% DBE participation goal was consistent with the policy of the MBTA, and
with regulations promulgated by the United States Department of Transportation
(“DOT”), which were aimed at providing DBEs with equal opportunities to participate in
DOT-assisted agreements. (See Def. Ex. E ¶ 1.1; PF at pp. 4-5). As set forth in the
MBTA’s Request for Proposals for the CharlieCards and CharlieTickets project, the
MBTA’s policy aimed to accomplish the following objectives:
1.1.1. Ensure nondiscrimination in the award and administration
of DOT-assisted agreements;
1.1.2. Create a level playing field on which DBEs can compete
fairly for DOT-assisted agreements;
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1.1.3. Ensure that the DBE program is narrowly tailored in
accordance with applicable law;
1.1.4.

Ensure that only firms that fully meet 49 CFR Part 26
eligibility standards are permitted to participate as
DBE’s;

1.1.5. Help remove barriers to the participation of DBE’s in DOT
assisted agreements; and
1.16. Assist in the development of firms that can compete
successfully in the marketplace outside the DBE program.
(Id.; see also 49 C.F.R. § 26.1).
The Contract specified that the MBTA would only accept DBEs which had been
certified by one of four methods, including through the SOMWBA. Consequently, ACA,
which had been certified through SOMWBA, was qualified to perform work in connection
with the Contract, and was eligible to benefit from the MBTA’s DBE policy and from the
12% DBE participation goal. (See DF ¶ 8; Def. Ex. A ¶ 23.1.5). However, nothing in the
Contract’s DBE provisions required ERG to engage a particular DBE or DBEs in order to
achieve that goal. (See Def. Ex. A ¶ 23.1.5).
The DBE provisions contained in the Contract incorporated as Schedule 23.1.5
certain DBE-related documents that ERG had submitted to the MBTA in connection with
its bid to perform work under the Contract. (Def. Ex. A ¶ 23.1.5; Def. Ex. B; PF at p. 7).
The forms contained in Schedule 23.1.5 reflect the fact that ERG had contacted five DBEs
regarding the Contract, and had selected ACA as the DBE subcontractor that it proposed
to use to reach the 12% DBE participation threshold. (See Def. Ex. B at 3, 8, 11). How-6-

ever, nothing in the bid documents attached to the Contract indicate that ERG was
precluded from selecting an alternative DBE. To the contrary, the MBTA’s Request for
Proposals for the project indicated that changes or substitutions of DBE firms identified in
the bid submissions could be made, subject to the MBTA’s review and written approval.
(Def. Ex. E ¶ 1.5.3).
Pursuant to the Contract, the MBTA alone was to “make all determinations of
compliance or non-compliance with the requirements of [the DBE] Provision and the
appropriate consequences of non-compliance.” (Def. Ex. A ¶ 23.15). Accordingly, the
MBTA was responsible for monitoring ERG’s compliance with the DBE requirements,
and ERG was required to “submit and update quarterly reports summarizing the total DBE
value for this Agreement.” (DF ¶ 9; Def. Ex. A ¶ 23.1.5). Moreover, the Contract
provided that, “[i]f at any time the MBTA has reason to believe that [ERG] is in violation
of its obligations under [the DBE] Provision, or has otherwise failed to comply with [the
DBE] Provision, the MBTA may, in addition to pursuing any other available legal remedy,
commence proceedings, which may include sanctions.” (DF ¶ 10; Def. Ex. A ¶ 23.1.5).
There is no evidence in the record that the MBTA objected to the decision not to renew
ACA’s Subcontract.
The Contract also contained a number of representations and warranties. Significantly, ERG warranted that “[it] has not and will not take any actions that: (i) create, or
purport to create, any obligation on behalf of the MBTA, or (ii) grant, or purport to grant,
any rights or immunities to any third party under the MBTA’s intellectual property or
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proprietary rights.” (DF ¶ 14; Def. Ex. A ¶ 27.1.7). The MBTA likewise warranted that
“the MBTA has not and will not take any actions that: (i) create, or purport to create, any
obligation on behalf of [ERG], or (ii) grant, or purport to grant, any rights or immunities to
any third party under [ERG’s] intellectual property or proprietary rights.” (DF ¶ 15; Def.
Ex. A ¶ 27.2.2).
The Contract further provided that it would be governed by Massachusetts law, and
that exclusive jurisdiction would lie in the State or Federal Courts of Massachusetts. (DF
¶ 17; Def. Ex. A ¶ 31.1). Additionally, the Contract contained an integration clause,
which provided that
[t]his Agreement, including the exhibits attached hereto, sets forth the
entire understanding and agreement of the Parties and supersedes any
and all oral or written agreements or understandings between the
Parties as to the subject matter of this Agreement. It may be changed
only by a writing signed by both Parties. Neither Party is relying
upon any warranties, representations, assurances or inducements not
expressly set forth herein.
(PF at p. 8; Def. Ex. A ¶ 31.13). The term “Parties” is specifically defined in the Contract
to mean ERG and the MBTA. (Def. Ex. A ¶ 22.23).
Cubic’s Decision Not to Renew the Subcontract with ACA
In 2009, ERG assigned its rights and obligations under the Contract to Cubic. (DF
¶ 4). Thereafter, ACA continued to perform technical maintenance services for the
CharlieCards and CharlieTickets systems pursuant to the Subcontract. (DF ¶ 5). However, on April 6, 2010, Cubic notified ACA that it would not be renewing the Subcontract.
(DF ¶ 18). This notice was in conformity with the contract terms governing non-renewal,
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and ACA does not contend that Cubic breached the Subcontract by the manner in which it
did not renew ACA’s Subcontract.
Joseph Kelley, the MBTA manager responsible for administering the Contract, was
told by ACA that it was being replaced moments before an MBTA Board of Directors
meeting on April 7, 2010 held to determine if the MBTA should renew Cubic’s Contract.
(Kelley Dep. (Def. Ex. F) at 30-32). At the meeting, Kelley reported on the status of the
Contract, including who were the current DBEs, and what percentage Cubic had obtained
of its DBE goal. (Id. at 28-29, 43-46). Kelley did not mention that ACA was being
replaced because it was not relevant to the decision whether to renew Cubic’s Contract;
rather, the concern was whether the Contract was being performed and whether Cubic was
meeting its DBE goal. (Id. at 27-29, 31-32, 43-45). There is no evidence in the record
that anything was done at the meeting which would have required Cubic to continue to use
ACA as a subcontractor on the project.
In a letter dated May 12, 2010, Cubic formally notified the MBTA that it had
selected a different DBE, RL Controls, to continue the work that ACA had been performing on the MBTA project and perhaps take on additional work. While Cubic questioned
whether the MBTA’s consent was needed for the non-renewal, it nevertheless provided
information about RL Controls. (Def. Ex. C at 2). On May 17, 2012, the MBTA
confirmed that its DBE compliance officer had received Cubic’s letter, and informed
Cubic that the compliance officer “has cleared the replacement” of ACA with RL

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Controls. (DF ¶ 22; Def. Ex. D). Accordingly, it is undisputed that the MBTA approved
Cubic’s decision to end its engagement of ACA. (Def. Ex. F at 63-64).
Additional factual details relevant to this court’s analysis are provided below where
appropriate.
III. ANALYSIS
A.

Summary Judgment Standard of Review

Summary judgment is appropriate when the moving party shows, based on the
discovery and disclosure materials on file, and any affidavits, “that 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). “[A]n issue is ‘genuine’ if it ‘may reasonably be resolved in favor
of either party.’” Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008) (quoting
Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990)). “A fact is material only if it
possesses the capacity to sway the outcome of the litigation under the applicable law.” Id.
(quotations, punctuation and citations omitted).
The moving party bears the initial burden of establishing that there is no genuine
issue of material fact. See Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st
Cir. 2010). If that burden is met, the opposing party can avoid summary judgment only by
providing properly supported evidence of disputed material facts that would require trial.
LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir. 1993), cert. denied, 511 U.S.
1018, 114 S. Ct. 1398, 128 L. Ed. 2d 72 (1994). Accordingly, “the nonmoving party ‘may
not rest upon mere allegation or denials of his pleading,’” but must set forth specific facts
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showing that there is a genuine issue for trial. Id. (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202 (1986)). The court must
view the record in the light most favorable to the non-moving party and indulge all reasonable inferences in that party’s favor. See Vineberg, 548 F.3d at 56. “If, after viewing the
record in the non-moving party’s favor, the Court determines that no genuine issue of
material fact exists and the moving party is entitled to judgment as a matter of law,
summary judgment is appropriate.” Walsh v. Town of Lakeville, 431 F. Supp. 2d 134,
143 (D. Mass. 2006).
B.

Count I: Claim for Breach of Contract

In Count I of its complaint, ACA claims that Cubic breached its Contract with the
MBTA by failing to renew its Subcontract with the plaintiff, and “[b]y engaging in
intentional misrepresentation to the MBTA about plaintiff’s participation as a DBE
subcontractor[.]” (Compl. (Docket No. 1) ¶¶ 27-33). As an initial matter, there is no
evidence that Kelley, or anyone acting on Cubic’s behalf, made any misrepresentation to
the MBTA concerning ACA’s participation as a subcontractor, and it is undisputed that
the MBTA approved the non-renewal of ACA and its replacement by RL Controls.
Moreover, ACA’s claim for breach of contract must fail because it has no rights under the
MBTA\Cubic Contract. Because ACA was not a party to the Contract between Cubic and
the MBTA, it “must be a third-party beneficiary to recover under the [C]ontract. To
recover as a third-party beneficiary, [ACA] must show that it was an intended beneficiary
and not merely incidental.” Rymes Heating Oils v. Springfield Terminal Ry., 265 F.
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Supp. 2d 147, 151 (D. Mass. 2003) (internal quotations omitted), aff’d, 358 F.3d 82 (1st
Cir. 2004). For the reasons that follow, this court concludes that ACA cannot make the
requisite showing based on the undisputed facts in the record. Therefore, Cubic is entitled
to summary judgment with respect to the breach of contract claim.
“An intended third-party beneficiary is one to whom the contracting parties
intended to give the benefit of the promised performance.” Id. However, the fact that a
party “derive[s] a benefit from a contract between others does not make [that party an]
intended third-party beneficiar[y] and does not give [it] the right to enforce that agreement.” Cumis Ins. Soc’y, Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 464, 918
N.E.2d 36, 42 (2009). Rather, “[u]nder Massachusetts law, a contract does not confer
third-party beneficiary status unless the ‘language and circumstances of the contract’ show
that the parties to the contract ‘clear[ly] and definite[ly]’ intended the beneficiary to
benefit from the promised performance.” Id. at 466, 918 N.E.2d at 44 (quoting Anderson
v. Fox Hill Vill. Homeowners Corp., 424 Mass. 365, 366-67, 676 N.E.2d 821 (1997))
(alterations in original). In the instant case, the undisputed facts concerning the language
and circumstances of the Contract at issue demonstrate that the parties to that agreement
had no intention of conferring third-party rights upon ACA.
It is clear from the language and circumstances of the Contract that the purpose of
the DBE provisions was to satisfy the DOT’s and the MBTA’s policy of providing DBEs
with opportunities to participate in DOT-assisted projects, and not to confer on such
parties a right to enforce the Contract. The Contract expressly provided that the MBTA
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would have no obligations to any subcontractors engaged by the general contractor, and
that any such subcontractors would have “no rights or remedies against the MBTA[.]” (DF
¶ 13; Def. Ex. A ¶ 19.2.1). Furthermore, both the MBTA and ERG warranted that they
had not and would not take any actions that would “create, or purport to create, any
obligation on behalf of the [other].” (DF ¶¶ 14,15; Def. Ex. A ¶¶ 27.1.7, 27.2.2). Rather
than manifesting an intent to bestow third-party rights upon ACA, or any other DBE, the
parties to the Contract expressed a clear intent to preclude third-party claims. Under such
circumstances, ACA cannot be considered an intended beneficiary of the Contract under
Massachusetts law. See Lakew v. Mass. Bay Transp. Auth., 65 Mass. App. Ct. 794, 799,
844 N.E.2d 263, 267-68 (2006) (finding that plaintiff was not an intended third-party
beneficiary where contractual arrangement anticipated the interests of third-parties, but
purpose was “not to confer on such parties a right to enforce the contract”); Volpe Constr.
Co., Inc. v. First Nat’l Bank of Boston, 30 Mass. App. Ct. 249, 256-57, 567 N.E.2d 1244,
1249 (1991) (“if two contracting parties expressly provide that some third party who will
be benefited by performance shall have no legally enforceable right, the courts should
effectuate the expressed intent by denying the third party any direct remedy.” (Quotations
and citation omitted)).
The language and circumstances of the Contract relating specifically to the use of
DBEs also demonstrate that the contracting parties were concerned with meeting the 12%
DBE participation goal and not with conferring benefits, much less third party rights, upon
any DBE in particular. For example, but without limitation, the Contract required ERG to
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assist the MBTA in implementing “obligations concerning [DBE] utilization[,]” and
established a specific goal for the work to be performed “by qualified [DBEs.]” (Def. Ex.
A ¶ 23.1.5). It also provided that the MBTA would accept DBEs which were certified by
one of four different methods, and that ERG was responsible for submitting “quarterly
reports summarizing the total DBE value for this Agreement.” (Id.). However, nothing in
the DBE provisions or in the bid documents attached to the Contract required ERG or
Cubic to engage ACA, rather than an alternative DBE, as a subcontractor to perform work
required under the Contract. Thus, there was “no ‘clear and definite’ intent embodied in
the [Contract] to benefit [ACA], as Massachusetts law requires.” Rymes Heating Oils,
265 F. Supp. 2d at 151.
The plaintiff argues that the evidence shows that “ERG relied very heavily on the
experience and background of ACA and intended that ACA would benefit from the
MBTA/ERG relationship.” (Pl. Opp. Mem. (Docket No. 22) at 7). In particular, ACA
points out that under the Contract, ERG was “bound by the forms submitted during the bid
process,” including the forms in which ERG made a “representation to the MBTA that
[ERG] intended to hire ACA.” (Pl. Opp. Mem. (Docket No. 22) at 7). While the Contract
language does bind the contractor to the forms submitted during the bid process, including
a Letter of Intent in which ERG represented that it would be using ACA to perform work
on the project (see Def. Ex. B at 8), it is clear from the bid documents that ERG, and later
Cubic, was not precluded from terminating ACA’s engagement and substituting ACA for
another DBE. As noted above, the MBTA’s Request for Proposals for the project
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acknowledged that the DBE firms could be changed, subject to the MBTA’s review and
written approval. (Def. Ex. E ¶ 1.5.3.). The MBTA also recognized that DBE subcontractors could be terminated during the course of the Contract, and obligated the contractor
to make “good faith efforts to find another DBE subcontractor to substitute for the original
DBE and immediately notify the MBTA in writing of its efforts to replace the original
DBE.” (Id. ¶1.8.). Accordingly, the circumstances of the Contract demonstrate that the
contracting parties had no intention of binding ERG, and later Cubic, to its selection of
ACA as its DBE subcontractor.
ACA argues in support of its contention that it is an intended third party beneficiary
that during the deposition of the MBTA manager, Joseph Kelley, Kelley agreed that the
MBTA’s DBE program benefits both the MBTA and the DBE. (Pl. Opp. Mem. at 6). To
the extent such testimony is relevant, it does not alter this court’s determination that ACA
was not an intended third-party beneficiary of the Contract. As described above, the fact
that a third-party “derive[s] a benefit from a contract between others does not make [it an]
intended third-party beneficiar[y] and does not give [it] the right to enforce that agreement.” Cumis Ins. Soc’y, Inc., 455 Mass. at 464, 918 N.E.2d at 42. Furthermore, during
his deposition, Kelley testified that the Contract required Cubic to comply with the 12%
DBE participation goal, but it did not impose any obligation upon Cubic to use ACA as its
DBE subcontractor. (See Def. Ex. F at 36-37). Therefore, Kelley’s testimony provides
further support for the conclusion that ACA was an incidental rather than an intended
beneficiary.
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The plaintiff nevertheless points to the fact that Kelley mentioned ACA to the
MBTA Board during the April 7, 2010 meeting as evidence that Cubic was bound to use
ACA under the Contract. However, there is no indication that anything said at the Board
meeting modified the Contract terms, which precluded a third party from obtaining any
rights vis-à-vis the MBTA. Moreover, there is no record support for ACA’s argument that
the Board relied on the selection of ACA as a subcontractor. Rather, Kelley testified that
to the extent ACA was mentioned it was just to identify it as the current DBE, and further
that the Board was “approving [Cubic], but not any of their particular subcontractors.”
(See Def. Ex. F at 29, 46). These facts, and the fact that the MBTA subsequently affirmed
the replacement of ACA with RL Controls, establish that ACA was not an intended thirdparty beneficiary under the Contract between Cubic and the MBTA. Consequently, the
plaintiff cannot prevail on its breach of contract claim, and, therefore, the defendant is
entitled to summary judgment with respect to Count I of the complaint.3
C.

Count II: Claim for Breach of the Implied Covenant
of Good Faith and Fair Dealing

In Count II of its complaint, ACA alleges that “[b]y intentionally misrepresenting
the participation of ACA as a DBE subcontractor in its contract renewal with the MBTA
and, concurrently, firing Plaintiff without disclosure to the MBTA Defendant unfairly

3

Because ACA’s breach of contract claim is premised on its status as an intended thirdparty beneficiary, and this court has determined that no such status existed, it is not necessary to
consider Cubic’s argument that “[e]ven if the Court were to assume ... that ACA was an intended
third party beneficiary of the Contract, which it was not, ACA would still not be able to establish
that Cubic committed a breach.” (Def. Mem. at 12).

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frustrated ACA from the benefit of its inclusion as an intended third party beneficiary to
the Cubic-MBTA contract[.]” (Compl. ¶ 35). The plaintiff further claims that “[s]uch
intentional misrepresentation was undertaken for the purpose of reducing Defendant’s cost
and constitutes a breach of the covenant of good faith and fair dealing.” (Compl. ¶¶ 3437). To the extent Count II is based on Cubic’s alleged misrepresentation or failure to
disclose information to the MBTA, as detailed above there is no record support for this
contention. Moreover, this claim is nullified by the fact that Cubic obtained the MBTA’s
express approval to replace ACA with an alternative DBE subcontractor. (See DF ¶ 22;
Def. Ex. D). Perhaps even more significantly, however, ACA’s ability to prevail on its
claim for breach of the implied covenant of good faith and fair dealing is dependent upon
a showing that it was an intended third-party beneficiary under the Contract between
Cubic and the MBTA. Because the plaintiff cannot make such a showing, Cubic is
entitled to summary judgment with respect to this claim as well.
“‘Every contract implies good faith and fair dealing between the parties to it.’”
T.W. Nickerson, Inc. v. Fleet Nat’l Bank, 456 Mass. 562, 569-70, 924 N.E.2d 696, 703
(2010) (quoting Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471, 583
N.E.2d 806 (1991) (additional citation omitted). “The covenant of good faith and fair
dealing requires that ‘neither party shall do anything that will have the effect of destroying
or injuring the right of the other party to the fruits of the contract.’” Id. at 570, 924
N.E.2d at 704 (quoting Anthony’s Pier Four, Inc., 411 Mass. at 471-72, 583 N.E.2d 806)

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(additional citation omitted). However, as the Massachusetts Supreme Judicial Court has
explained,
the scope of the covenant is only as broad as the contract that governs
the particular relationship. It cannot create rights and duties not
otherwise provided for in the existing contractual relationship, as the
purpose of the covenant is to guarantee that the parties remain faithful
to the intended and agreed expectations of the parties in their
performance.
Id. (internal quotations and citations omitted).
As Massachusetts law defining the implied covenant illustrates, the duty of good
faith and fair dealing arises out of the relationship between parties to a contract, and “is
shaped in each context by the nature of the contractual relationship.” Id. at 573, 924
N.E.2d at 706. Where, as here, the plaintiff was not a party to the contract at issue, and
cannot prove that it was an intended third-party beneficiary under that contract, it cannot
recover for breach of the implied covenant of good faith and fair dealing. See Rymes
Heating Oils, 265 F. Supp. 2d at 151 (no implied contractual duty of good faith and fair
dealing is owed to a non-party to a contract unless it is a third-party beneficiary under the
contract). Therefore, Cubic’s motion for summary judgment will be allowed with respect
to Count II.
IV. CONCLUSION
For all the reasons detailed herein, this court finds that ACA was not an intended
beneficiary under the Contract between the defendant and the MBTA, and that therefore,
its claims for breach of contract and breach of the implied covenant of good faith and fair
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dealing must fail. Accordingly, the “Defendant Cubic Transportation Systems, Inc.’s
Motion for Summary Judgment” (Docket No. 17) is ALLOWED.

/ s / Judith Gail Dein
Judith Gail Dein
United States Magistrate Judge

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