CHINA FALCON FLYING LIMITED v. DASSAULT FALCON JET CORP.
Filing
124
OPINION. Signed by Judge Kevin McNulty on 05/08/2018. (ek)
Case 2:15-cv-06210-KM-MAH Document 124 Filed 05/09/18 Page 1 of 30 PageID: 4645
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CHINA FALCON FLYING LIMITED,
Civ. No. 15-62 10 (KM) (MAH)
Plaintiff,
OPINION
V.
DASSAULT FALCON JET CORP.,
Defendant.
KEVIN MCMJLTY, U.S.D.J.:
Dassault Falcon Jet Corporation (“Dassault Jet”) engaged China Falcon
Flying Limited (“China Falcon”), owned and led by its principal Cheung
“Michelle” Wang, to promote specific models of its Falcon series of aircraft in
the Chinese business jet market. In return, China Falcon would receive a
commission or finder’s fee of about 2%—2.S% for each sale made in that
market. The parties dispute the commissions on four sales of Falcon aircraft in
China. Dassault Jet now moves for summary judgment in its favor. For the
foregoing reasons, I will grant Dassault Jet’s motion for summary judgment as
to the claims of breach of contract for the sales of s/n 721, s/n 212, and s/n
244, but deny the motion as to the breach of contract claim for s/n 141. I will
also deny Dassault Jet’s motion for summary judgment as to the claims for
breach of the implied covenant of good faith and fair dealing, but grant its
motion for summary judgment as to the claims of unjust enrichment and
quantum meruit.
1
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Summary of Facts1
I.
On September 1, 2009, China Falcon and Dassault Jet entered into a
Finder’s Fee Agreement (“FFA”), which would expire on December 31, 2009.
(Def. St.
¶
1; P1. Resp.
¶
1.) Under this agreement, China Falcon would earn a
2.5% commission2 on the sale of certain Falcon aircraft to two companies,
Minsheng Bank and DeerJet. (DeL St.
¶
2; P1. Resp.
¶
2.) The agreement
contained language stating that this commission percentage could “be reduced
proportionally, if the sale occur[redj at a price less than [Dassault Jet]’s current
list price.” (Def. St.
¶
3; P1. Resp.
¶
3.) The agreement also conditioned the
eligibility of China Falcon to receive a commission on certain events:
(a) the buyer had to “enter into and sign a binding and enforceable
contract of sale with [Dassault Jet] for the purchase of one or more new Falcon
aircraft on or before December 31, 2009”; and
I
Record items cited repeatedly will be abbreviated as follows:
AC
Redacted Amended Complaint (ECF No. 78/113)
=
Tor. Decl.
Declaration of John M. Torriello re: Motion for Summary
Judgment by Defendant and Exhibits (ECF nos. 99—100)
=
Defendant’s Statement of Material Facts Not in Dispute
Pursuant to Local Civil Rule 56.1 (ECF no. 103)
Def. St.
=
Def. Br.
=
P1. Opp.
=
P1. Reap.
P1. St.
Memorandum of Law in Support of Defendant’s Motion for
Summary Judgment (ECF no. 104)
Plaintiffs Memorandum of Law in Opposition to
Defendant’s Motion for Summary Judgment (ECF no. 109)
=
=
Klein Decl.
=
Def. Reply
=
DeL Resp.
=
Plaintiffs Response to Defendant’s State of Material Facts
Not in Dispute (ECF no. 109, ex. 38, pp. 2—17)
Plaintiffs Supplemental Statement of Dispute Material
Facts Pursuant to Local Civil Rule 56.1 (ECF no. 109, ex.
38, pp. 17—38)
Declaration of Sarah Klein, Esq. and Exhibits (ECF no. 109)
Reply Memorandum of Law in Further Support of
Defendant’s Motion for Summary Judgment ECF no. 117)
Defendant’s Response to Plaintiffs Supplemental State of
Disputed Material Facts (ECF no. 118)
The parties use the terms “fmder’s fee” and “commission” interchangeably to
describe the concept of collecting a percentage of the sale price of an aircraft.
2
2
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(b) “the buyer who enters into the contract of sale must [1] complete the
acquisition,
[21
fully pay for and [3] take title to the aircraft in accordance with
the terms of the contract.” (Def. St.
¶
4; P1. Resp.
¶
4 ([bracketed] numbers
added.)
China Falcon disputes, however, that the parties actually acted in
accordance with these provisions. It claims that through a course of dealing it
was understood that China Falcon became eligible to receive its commission
upon the completion of condition (a), supra, only (i.e., the signing of the
purchase agreement) only. (P1. Resp.
¶11
3—4.) The parties also dispute China
Falcon’s exact role in the execution of purchase agreements and the events
after the signing those agreements. (P1. St.
¶f
13—14; Def. Resp.
¶
13—14.)
The FFA was first amended in January 2010. That amendment extended
the duration of the FFA to December 31, 2011, if either Minsheng Bank or
DeerJet purchased five Falcon aircraft before June 30, 2010. (Def. St.
P1. Resp.
¶
¶1J
¶1J
5, 7;
5, 7.) If not, the FFA would expire on December 31, 2010. (Def. St.
7; P1. Resp.
¶
7.) China Falcon claims it was not aware of the condition
governing termination at the time of the amendment’s signing. (P1. St.
¶
1.)
The parties amended the FFA a second time on January 26, 2011. (Def.
St.
¶
9; P1. Resp.
¶
9.) This Second Amendment to the FFA dropped DeerJet as
one of the two specified purchasers, leaving only Minsheng Bank. (Def. St.
10; P1. Resp.
¶
¶
10.) Dassault Jet points to the language of the Second
Amendment, which replaced the 2.5% commission with a flat fee of $732,500
for the sale of s/n3 101 and a 2.5% commission on the sale of s/n 133. (Def.
St.
¶
11; see also Tor. Decl., Ex. 5,
§
II.) As to aircraft other than s/n 101 and
s/n 133, the Second Amendment left the prior terms and conditions
unchanged, and specifically provided that the agreement would stay in force
The term “s/n” denotes the last few digits of the serial number associated with
a specific jet in the Chinese market sold by Dassault Jet. Because this is the
designation used for those aircraft in the moving papers, I will do the same.
3
3
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until December 31, 2011 (as agreed in the First Amendment). (Tor. Decl., Ex. 5,
§
III.)
Ms. Cheung claims that she did not read this Second Amendment but
admits she “voluntarily” signed it after Dassault had signed it. (Def. St.
P1. Resp.
¶
¶
13;
13.) Ms. Cheung also asserts that she was not able to read English
at the time and that the Second Amendment as orally described to her was
different from the agreement as written. (P1. Resp.
¶
13.) “It’s only a standard
agreement,” she testified, “and it’s such a big company. I have a trust in the
company.” (Id.) China Falcon alleges that “at all relevant times” and
“[a]ccording to the parties’ course of dealing” China Falcon would continue to
earn a 2.5% commission for all sales to Minsheng and “each of its ‘special
purpose venture’ subsidiaries.” (P1. Resp.
¶
11; see also P1. St.
¶
2.)
Concurrently, on September 2, 2009, China Falcon and Dassault Jet
entered into a Sales Representation Agreement (“SRA”), with an expiration date
of December 31, 2010. Under the SRA, China Falcon would earn a 2%
commission upon the sale of any aircraft model from a specified list of models
to private companies in the People’s Republic of China (other than Minsheng
Bank or DeerJet, which were covered by the FFA). (Def. St.
¶
¶11
18—20; P1. Resp.
18—20.) To qualify for this commission, the sale had to result
“predominantly and primarily” from China Falcon’s services. (DeL St.
Resp.
¶
¶
21; P1.
21.) The parties subsequently amended the SRA four separate times,
with the fourth amendment extending the SRA until December 31, 2013. (Def.
St.
¶
23; P1. Resp.
¶
23.)
The issues in this lawsuit involve the commissions for the sale of four
aircraft. Those aircraft are designated s/n 721; s/n 212; s/n 244; and s/n 141.
China Falcon claims that, regardless of the “technical” language of the
agreements, the parties conducted themselves at all relevant times with the
understanding that China Falcon would earn a 2.5% commission on sales to
Minsheng and Deerjet, while earning a 2% commission on all other sales. (P1.
St.
¶
8.) China Falcon claims moreover that this “understanding” between the
4
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parties survived the expiration of the relevant written agreements and is
documented by email communications between them. (See P1. St.
¶J
11—13.)
I review the facts as to each of the four aircraft sales at issue.
a. s/n 721
On June 26, 2013, De Hong Capital Co. Ltd. signed a contract with
Dassault Jet to purchase s/n 721 for $27 million. (Def. St.
¶
24; P1. Resp.
¶
24.) S/n 721 is a model 7200s airplane manufactured by Dassault Jet. (Def.
St.
¶
25; P1. Resp.
¶
25.) This model was not listed in the SRA. (SeeTor. Decl.,
ex. 2 at 2 (“[Dassault Jet] is engaged in marketing and selling new Falcon 7X,
Falcon 900 LX/DX, and Falcon 2000DX/LX.”).) Dassault Jet contends that this
sale does not fall within the SRA, and that China Falcon, by signing a separate
agreement specific to the sale of s/n 721, agreed to a flat $200,000 commission
for this sale. (Def. St.
¶
26; Tor. Decl., Ex. 9, at 3.) China Falcon instead claims
that the parties contemplated that this sale would fall within the SRA, entitling
it to a larger, 2% commission. (P1. Resp.
¶
commission to be at least a $540,260. (AC
26.) China Falcon calculates that 2%
¶
35.)
At the time, the parties apparently disputed China Falcon’s entitlement
to a finder’s fee. China Falcon claims that it pursued “this customer” for three
years in an attempt to close the sale and invested more than $200,000 in its
efforts to do so. (P1. St.
¶
35.) Dassault Jet counters that the transaction-
specific contract governing s/n 721 settled any dispute and that they paid
China Falcon $200,000 according to that agreement. (Def. Br. at 2.)
b. s/n 212
On September 13, 2011, Minsheng Guilong (Tianjin) Aviation Leasing
[“Minsheng Tianjin”J, a subsidiary of Minsheng, signed a purchase agreement
for s/n 163. (Def. St.
¶
35; P1. Resp.
¶
35; P1. St.
¶
48; Def. Resp.
¶
48.)
However, Minsheng Tianjin failed to take delivery of s/n 163. (Def. St.
Resp.
¶
¶
36; P1.
36.)
On September 3, 2013, Minsheng Jiayi Leasing (Fenglong) [“Minsheng
Jiayi”], another Minsheng subsidiary, signed an agreement with Dassault Jet to
5
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purchase a second aircraft, s/n 212, for $49.65 million. (Def. St.
¶
38; P1. St.
¶
50; Def. Resp.
¶
¶
38; P1. Resp.
50.) China Falcon and Dassault Jet entered into
an agreement [the “s/n 212 Agreement”] on April 24, 2014, which specified
that China Falcon would receive a $150,000 fee for this sale of s/n 212. (Def.
St.
¶
40; P1. Resp.
¶
40; Tor. Decl., ex. 12,
§
III.) At the time of the signing of
the s/n 212 Agreement, Ms. Cheung believed the fee offered by Dassault Jet
was unfair. (Def. St.
¶
44; P1. Resp.
¶
44.) She claims that she signed the
agreement to receive $150,000 only because she believed that China Falcon
would otherwise get nothing at all. (P1. St.
¶
93.)
China Falcon contends that, for this s/n 212 sale, it was entitled to a
2.5% commission under the FFA. (P1. Resp.
¶
40.) The sale price, it says, was
approximately $49.5 million, and its 2.5% commission should have amounted
to approximately $1,203,650. (AC
¶
45.) China Falcon’s reasoning is somewhat
complex. It characterizes the sale of s/n 212 as not a simple sale, but a “swap”
(i.e., a substitute purchase of some kind) involving s/n 163, s/n 210, and then
s/n 212.
The s/n 212 sale, says China Falcon, should receive the benefit of the
terms that would have governed the s/n 163 sale if it had closed. The original
(abortive) purchase of s/n 163, says China Falcon, fell within the window of the
Second Amendment to the FFA, because the purchase agreement for s/n 163
was executed on September 13, 2011, before the expiration of the Second
Amendment on December 31, 2011. (P1. St.
fl
49, 53; Klein Deci., ex. 32, at 9;
see also P1. St. ¶ 55 (claiming that Dassault Jet admitted to the transaction
being a “swap”).) Dassault Jet points to evidence that the terms for the sale of
s/n 163 were materially different than those for s/n 212, so that the two
cannot be regarded as part of a single, continuous “swap” transaction. (Def.
Resp.
¶
49.)
Alternatively, China Falcon claims that the parties’ agreement or course
of dealing, “as borne out by contemporaneous communications,” was that the
2.5% rate would apply to all planes sold to Minsheng, during and even after the
expiration of the Second Amendment. (P1. St.
6
¶
54.)
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Finally, China Falcon characterizes this “swap” as part of a bad faith
strategy to prevent it from receiving a commission on the sale of s/n 163. (P1.
69.) Here, China Falcon points to an agreement between Minsheng and
St.
Dassault Falcon, entitled the “Business Assistance Agreements” (“BAAs”). It
claims that, under the BAAs, funds that should have been disbursed to China
Falcon as commissions were instead given to Minsheng to promote, distribute,
and market Falcon aircraft in China. (P1. Resp.
¶
96.) That arrangement
allegedly gave Minsheng an incentive to terminate its purchase agreement, with
the knowledge that it could receive “a bigger back end” if it did not take delivery
of the aircraft. (P1. St.
¶
77.) Dassault Jet admits only that it had “business
assistance agreements” with Minsheng for the promotion of its aircraft.
Dassault Jet claims that it handed copies of these agreements to China Falcon
during the negotiations, which Ms. Cheung denies. (Def. St.
¶
¶f
96—98; P1. Resp.
96—98.)
As with the sale of s/n 721, Dassault Jet argues that, though the parties
initially disputed the finder’s fee owed on the aircraft, they nevertheless
executed a transaction-specific contract governing China Falcon’s finder’s fee
for s/n 212 and that they paid China Falcon according to that agreement. (Def.
Br. at 2.)
c. s/n 244
On September 15, 2011, Minsheng Bolong (Tianjin) Aviation Leasing Co.
Ltd. [“Minsheng Bolong”] signed a purchase agreement to purchase s/n 157 for
$52.1 million. (Def. St.
¶
47; P1. Resp.
¶
47.) Though the purchase agreement
contemplated an April 30, 2012 delivery date for the aircraft (Def. St.
Resp.
¶
¶
48; P1.
48), Minsheng Bolong refused to take delivery of the aircraft on that
day, saying that it had been unable to arrange a resale or lease of the aircraft.
(Def. St.
¶
49; P1. Resp.
¶
49.) In response, Dassault Jet adjusted its production
schedule to give Minsheng greater flexibility to market the aircraft to its
prospective client base. (Def. St.
¶
50; P1. Resp.
¶
50.) As of October 13, 2013,
Minsheng Bolong was still refusing to accept delivery. (Def. St.
7
¶
51; P1. Resp.
¶
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51.) These delays caused Dassault Jet to incur expenses for maintenance,
storage, and labor. (Def. St.
¶
52; P1. Resp.
157 to another buyer. (Def. St.
¶
¶
52.) Dassault Jet finally sold s/n
53; P1. Resp.
¶
53.)
On December 24, 2013, another Minsheng entity, Minsheng Fenglong
Aviation Leasing Co. Ltd. [“Minsheng Fenglong”], which had been assigned the
purchase rights previously held by Minsheng Bolong, entered into a purchase
agreement with Dassault Jet to purchase not s/n 157 but another jet, s/n 244.
(Def. St.
¶J
54—55; P1. Resp.
¶J
54—55.) That purchase agreement specified a
price of $47.95 million for the aircraft. (Def. St.
¶
58; P1. Resp.
Minsheng Fenglong refused to accept delivery. (Def. St.
¶
58.) However,
59; P1. Resp.
¶
¶
59.)
Dassault Jet, wary of repeating the situation with s/n 157, offered Minsheng
Fenglong financing on the sale and a discount of $500,000 if delivery occurred
within 45 days. Minsheng Fenglong accepted that offer. (Def. St.
¶
¶
60; P1. Resp.
60.) On November 26, 2014, Dassault Jet and Minsheng Fenglong entered
into an agreement including 0.75% per annum financing, a delivery date of
December 14, 2015, and an additional purchase “incentive” (i.e., discount) of
$500,000 for prompt delivery. (Def. St.
¶
62—64; P1. Resp.
¶
62—64.) The price of
the aircraft was $47.95 million without the $500,000 purchase incentive. (Def.
St.
¶
65; P1, Resp.
¶
65.) Dassault Jet states that China Falcon had “no
personal knowledge” of the events and negotiations between Dassault Jet and
Minsheng Fenglong that resulted in this sale. (Def. St.
¶
66) China Falcon
states that Ms. Cheung was involved in “many meetings” regarding both sales
(s/n 157 and s/n 244). (P1. Resp.
¶
66.)
China Falcon believes it was entitled to a 2.5% commission, amounting
to at least a $1,186,250, for the sale of s/n 244. (AC
¶
54; P1. St.
¶
112.) It
characterizes the sale of s/n 157 to a different buyer and the sale of s/n 244 to
Minsheng Fenglong as a swap” and claims that Ms. Cheung was involved in
many meetings regarding the sale of both aircraft, (P1. St.
Dassault Jet counters that this was no continuous
¶
100, 107, 113.)
“swap”
After years of
negotiation and a failed delivery, it simply sold s/n 157 to another, separate
entity and, in a separate transaction, sold s/n 244 to a different Minsheng
8
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subsidiary. (Del Resp.
¶
107.) It states that at the time of the sale of s/n 244
there existed no contract under which China Falcon could earn a finder’s fee.
d. s/n 141
In October 2012, Ms. Cheung informed Dassault Jet that she had
identified a potential purchaser of s/n 141, Mr. Li Guangyu, who offered a
“very low” price of $46 million. (DeL St. ¶j 69—70; P1. Resp.
¶
69—70.) She
communicated to Mr. Li Dassault Jet’s counteroffer of $52 million, with an
eight-week delivery schedule and $1 million commission to China Falcon. (Def.
St.
¶
7 1—72; P1. Resp.
¶
7 1—72.) Dassault Jet warned Ms. Cheung, though, that
“if further negotiations are needed, it will be deducted from your success fees.”
(Def. St. ¶ 73; P1. Resp. ¶ 73.) Mr. Li rejected the counteroffer. (Def. St. ¶ 74; P1.
Resp.
¶
74.) On December 18, 2012, Dassault Jet revised its offer to $49.5
million with a $1 million credit toward the Falcon Care aircraft maintenance
program, but with no commission to China Falcon. (Def. St. ¶ 75—76; P1. Resp.
¶j 75—76.) Upon reviewing this offer, Ms. Cheung requested that China Falcon
receive a $500,000 commission in the event of a sale, a proposal which
Dassault Jet rejected. (Def. St.
¶f
77—78; P1. Resp.
¶}
77—78.) In an email, Ms.
Cheung noted that in the past she had “compromise[dj” her commission in
order to close a sale, and she informed Dassault Jet that “[i]f we can fulifU the
price the customer wants of 47 million, then I don’t need commission.” “If we
do so,” she wrote, “at least the customer will be very happy, and he will
introduce other customers to me.” (Def. St.
¶J
79—80; P1. Resp.
¶11
79—80.) The
sale, however, did not go through on those terms.
On December 20, 2012, Dassault Jet offered Mr. Li not s/n 141 for $47
million, but a different model jet for $48.2 million, with a commission to China
Falcon of $200,000. (Def. St.
¶f
81—82; Def. Resp.
¶
81—82.) Dassault Jet
states that Ms. Cheung informed them that this commission was acceptable to
her (DeL St. ¶ 83), at least if the plane sold for that specific price. (Def. St. ¶
84; P1. Resp.
¶
84.) However, Mr. Li rejected this offer because the delivery date
was unacceptable. (Def. St.
¶
85; P1. Resp.
9
¶
85.)
Case 2:15-cv-06210-KM-MAH Document 124 Filed 05/09/18 Page 10 of 30 PageID: 4654
On December 31, 2012, the negotiations returned to the subject of s/n
141. Mr. Li offered a price of $48 million for s/n 141. (Def. St.
¶
89; P1. Resp.
¶
89.) Dassault Jet informed Ms. Cheung of the offer and told her that she would
not receive a commission if the sale occurred at that price. (Def. St. ¶ 90; P1.
Resp.
¶
90.) The sale for s/n 141 eventually went through with a purchase
price of $49.5 million which included $1 million worth of Falcon Care
maintenance. (Def. St. ¶ 92—93; P1. Resp. ¶ 92—93.) Mr. Li’s company paid for
the aircraft and accepted delivery on May 16, 2013. (Def. St.
¶
94; P1. Resp.
¶
94.)
On April 11, 2013, Dassault Jet responded to an email that Ms. Cheung
had sent during negotiations for the purchase of s/n 141 by Mr. Li. A Dassault
Jet representative wrote that “I confirm that [Dassault Jetj will stay in phase
with your agreement of not receiving any finder[’s] fee” and that “[China Falcon]
agreed [to the sale of s/n 141] at a very low price and accepted not [to] take any
finder[’sJ fee.” (P1 St.
¶
35; Def. Resp.
¶
35.) China Falcon says that it never
agreed to forgo a commission on a sale at a price of $49 million. (P1 St. ¶ 36.) It
also claims that Dassault Jet repeatedly tried to cut it out of the negotiation
process to force it into a reduced commission or no commission at all. (P1. St.
¶
41.)
The parties agree that the then-operative Fourth Amendment to the SRA,
executed on January 24, 2013, shortly before the execution of the purchase
agreement for s/n 141, did not contain a specific reference to the commission
for s/n 141. (P1. St. ¶‘ 44—45; Def. Resp. ¶IJ 44—45.) China Falcon claims that it
was practice between the parties not to identify not to identify each and every
plane, but only those that deviated from the “standard” commission rate that
would govern that sale. (P1. St.
¶
46.) In support it cites the Third Amendment
to the SRA which made such a provision for a particular plane. (Id.)
10
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China Falcon states that, under the Fourth Amendment of the SRA, it
was entitled to a 2% commission on the $49 million sale price of s/n 141,
17; P1. St. ¶ 47)4
amounting to at least $1,393,910. (AC 60; P1. St.
¶
¶
e. English Capability of Ms. Cheung
There is also a dispute in the record as to Ms. Cheung’s ability to speak,
read, and write the English language. Dassault Jet claims that Ms. Cheung
“understood” English during the negotiations, though she used a number of
assistants, including her then-boyfriend, to help communicate with Dassault
Jet and to translate documents. (Def. St.
¶
95.) Ms. Cheung, however) denies
that she understood English at the time, claiming that her English skills were
“limited.” (P1. Resp.
¶
95.)
Legal Argument
II.
a. Standard of Review
Federal Rule of Civil Procedure 56(a) provides that summazv judgment
should be granted “if the movant shows 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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986); Kreschollek v. S Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In
deciding a motion for summary judgment, a court must construe all facts and
inferences in the light most favorable to the nonmoving party. See Boyle v. Cty.
of Allegheny, Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears the
burden of establishing that genuine issue of material fact remains. See Celotex
Corp.
iS’.
Catrett, 477 U.S. 317, 322—23 (1986). “[W]ith respect to an issue on
which the nonmoving party bears the burden of proof.
.
.
the burden on the
moving party may be discharged by ‘showing’—that is, pointing out to the
Dassault Jet also argues that contemporaneous emails between its employees
and China Falcon during the sale show that China Falcon agreed to take no
commission on the sale of s/n 141. (Def. Br. at 3 n.4.) However, Ms. Cheung denied
that this happened at her deposition. (Id.) Dassault Jet, stating that this argument
may implicate a question of fact, decided not to move for summary judgment on these
grounds but reserved this argument. (Id.)
4
11
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district court—that there is an absence of evidence to support the nonmoving
party’s case.” Celotex, 477 U.S. at 325.
Once the moving party has met that threshold burden, the non-moving
party “must do more than simply show that there is some metaphysical doubt
as to material facts.” Matsuhita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.s. 574, 586 (1986). The opposing party must present actual evidence that
creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at
248; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which a
nonmoving party must rely to support its assertion that genuine issues of
material fact exist). “[U]nsupported allegations
.
.
.
and pleadings are
insufficient to repel summary judgment.” Schoch u. First Fid. Bancorp., 912
F.2d 654, 657 (3d Cir. 1990); see also Gleason u. Norwest Mortg., Inc., 243 F.3d
130, 138 (3d Cir. 2001) (“A nonmoving party has created a genuine issue of
material fact if it has provided sufficient evidence to allow a jury to find in its
favor at trial.”). If the nonmoving party has failed “to make a showing sufficient
to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial,
.
.
.
there can be no
‘genuine issue of material fact,’ since a complete failure of proof concerning an
essential element of the nonmoving party’s case necessarily renders all other
facts immaterial.” Katz v. Aetna Cas. & Stir. Co., 972 F.2d 53, 55 (3d Cir. 1992)
(quoting Celotex, 477 U.S. at 322—23).
In deciding a motion for summary judgment, the court’s role is not to
evaluate the evidence and decide the truth of the matter, but to determine
whether there is a genuine issue for trial. Anderson, 477 U.S. at 249.
Credibility determinations are the province of the fact finder. Big Apple BMW,
Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). The summary
judgment standard, however, does not operate in a vacuum. “[I]n ruling on a
motion for summary judgment, the judge must view the evidence presented
through the prism of the substantive evidentiary burden.” Anderson, 477 U.S.
at 242.
12
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b. Breach of Contract
Under New Jersey law, a plaintiff must establish the following elements
to state a claim for breach of contract: “(1) the existence of a valid contract
between the parties; (2) failure of the defendant to perform its obligations under
the contract; and (3) a causal relationship between the breach and the
plaintiff’s alleged damages.” Sheet Metal Workers Int’l Ass’n Local Union No. 27,
AFL-CIO a E.P. Donnelly,
ma,
737 F.3d 879, 900 (3d Cir. 2013). The Supreme
Court of New Jersey has instructed that “[wihere the terms of a contract are
clear and unambiguous there is no room for interpretation or construction”
and it must be enforced “as written.” Id. (quoting Kutzin
ii.
Pimie, 124 N.J. 500,
507 (1991)).
1. s/n 721
Dassault Jet argues that the SRA does not apply to the sale of s/n 721, a
Falcon F2000s model aircraft. The SRA explicitly covers the Dassault 2000
series. None of the amendments to the SRA, however, expanded the SPA’s
scope to the 2000s series. Rather, says Dassault Jet, a separate agreement
entered into on December 3, 2013 (“s/n 721 Finder’s Fee Agreement”) governs
the sale of s/n 721. (Def. St.
¶11
26—29; Tor. Decl., ex. 9.) That separate
agreement sets out a flat fee of $200,000 for the s/n 721 sale. Dassault Jet
also argues that this separate agreement operates as an “accord and
satisfaction,” whereby a superseding “agreement.
.
.
upon its execution,
completely terminates a party’s existing rights and constitutes a defense to any
action to enforce pre-existing claims.” (Id. at 15 (quoting Nevets CM Inc. a
Nissho Iwai American Corp., 726 F. Supp. 525 (D.N.J. 1989)).) Even assuming
that China Falcon had a preexisting right to a percentage commission, then,
the separate, specific s/n 721 Finder’s Fee Agreement extinguished and
superseded that right.
China Falcon, on the other hand, argues that the parties had a “course
of dealing” under which s/n 721 would fall into the “ambit” of the SPA. (P1.
Opp. at 34.) China Falcon acknowledges that the F2000s series did not exist
13
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when the SFA was executed, but states that the 2000s series is simply a
continuation or update of the 2000 series, and should be deemed to be covered
by the SPA. (Id. at 33—34.) China Falcon also attacks the separate s/n 721
Finder’s Fee Agreement, stating it was not supported by consideration or was
the product of duress. (Id. at 34.)
There is no question that the parties executed the SPA which, by its
explicit terms, does not apply to a F2000s series jet like s/n 721. (Def. St.
P1. Resp.
¶
¶
18;
18; Tor. DecI., ex. 9 at 2.) There is also no question that the s/n 721
Finder’s Fee Agreement was duly executed. Ms. Cheung initialed each page and
physically signed that agreement, which expressly stated that the finder’s fee
for the sale of s/n 721 would be $200,000 if Dassault Jet sold it to De Hong
Capital. (Def. St.
¶
33—34; P1. Resp.
¶1!
33—34; Tor. Decl., ex. 9 at 1—2.) The
only evidence China Falcon cites to show that the parties had an
understanding different from that established in the SPA and the separate
agreement are copies of the SPA and its amendments and statements made by
Ms. Cheung at her deposition. (See P1. Opp. at 34.) However, the plain language
of the SPA and its amendments do not contemplate a commission for the sale
of a model F2000s nor do their terms speak to what should happen to the sale
of a later model. (Tor. Decl., ex. 9 at 2.) Likewise, Ms. Cheung’s statement that
“At that time I say that I had been with this client for three years, I have been
following up on this client for three years. It’s quite a difficult job for me to be
able to bring this client along and the investment
.
.
.
I put in more than
$200,000” does not reasonably support the conclusion that there was a mutual
understanding between China Falcon and Dassault Jet that the agreement
would cover that sale. (Klein Deci., ex. 19, tr. 280:7—13.) If anything, the very
existence of the separate s/n 721 Purchase Agreement is strong evidence that
everyone understood that the sale fell outside the bounds of the SPA. And the
parties’ regular practice of explicitly amending their agreements further argues
against finding an amendment-by-implication.
In short, China Falcon does not put forward evidence sufficient to raise a
genuine dispute of material fact as to its contention that the SPA was
14
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ambiguous or that the parties intended for newer models to be covered by the
SPA.
I must also reject the argument that the s/n 721 Finder’s Fee Agreement
was not supported by consideration.
Consideration is, in effect, the price bargained for and paid for a
promise. A very slight advantage to one party, or a trifling
inconvenience to the other, is a sufficient consideration to support
a contract when made by a person of good capacity, who is not at
the time under the influence of any fraud, imposition, or mistake.
Whatever consideration a promisor assents to as the price of its
promise is legally sufficient consideration. Coast Nat’l Bank v.
Bloom, 113 N.J.L. 597 (E. &A. 1943).
Oscar a Simeonidis, 325 N.J. Super. 476, 485 (App. Div. 2002). As established
above, China Falcon had no rights under the SPA to receive a commission for
the sale of an F2000s model aircraft. The best that can be said is that, at the
time, its rights were disputed or indeterminate. It entered into a separate
written Finder’s Fee Agreement to contribute its “efforts” to help Dassault Jet
“successfully negotiate” the sale (Id. at 1), in return for a negotiated
commission of $200,000. Whether this is viewed as a compromise of a dispute
over the old SPA agreement, or as a wholly new agreement, there was
consideration.
Likewise, China Falcon has failed to demonstrate that it should be
excused from the separate 721 Purchase Agreement because it signed that
agreement under economic duress. Under New Jersey law, “the party alleging
economic duress must show that [it] has been the victim of a wrongful or
unlawful act or threat, and [s]uch act or threat must be one which deprives the
victim of [itsj unfettered will.” Cont’l Bank of Pa. v. Barclay Riding Acad., Inc.,
93 N.J. 153, 176 (1983) (noting that there has been disagreement among the
China Falcon fails back on an argument that it should have been notified that
newer models would not be covered. (P1. Opp. at 33—34.) That alleged duty to notify,
however, is not contained in any of the agreements between China Falcon and
Dassault Jet; nor is there such an implied duty at law. As to the terms of a written
agreement, the agreement itself is the only “notification” required.
15
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courts about the degree of coercion necessary for a finding of economic duress).
The “decisive facto?’ in the economic duress analysis is the wrongfulness of the
pressure exerted. Id. at 177. China Falcon, despite its statement that “[t]his is
a clear case of economic duress” (P1. Opp. at 35), has not put forward sufficient
evidence (or any evidence, really) to show that Dassault Jet behaved in a way
that deprived China Falcon of its “unfettered will.” It has made no allegations of
threats or other wrongful conduct that would constitute duress; it alleges only
that Dassault Jet threatened it would not pay them the commission to which
China Falcon believed itself entitled under the SRA. That claim of entitlement
was dubious at the time and, as I have ruled, actually invalid. These are not
grounds for invalidating an otherwise valid separate agreement under the
doctrine of economic duress.
The commission owed was $200,000, and that commission was paid.
Because the SRA and its amendments do not govern the sale of s/n 721,
because a valid, separate s/n 721 Purchase Agreement, supported by
consideration and not the product of duress, does govern that sale, I will grant
summary judgment in favor of Dassault Jet on China Falcon’s breach of
contract claim in connection with the sale of s/n 721.
ii. s/n 212
The parties disagree as to what agreement governs the sale of s/n 212.
As in the case of s/n 721, Dassault Jet argues that China Falcon signed a
separate agreement (“s/n 212 Finder’s Fee Agreement”) governing this sale,
whereby Dassault Jet would pay China Falcon a flat fee of $150,000. (Def. Br.
at 18; Tor. Decl., ex. 12.) China Falcon claims that the FFA governs the s/n
212 sale and entitles it to a 2.5% commission. Ms. Cheung, it says, was
“pressured” into signing the s/n 212 Finder’s Fee Agreement, which therefore
is not valid. (P1. Opp. at 26, 30.) It also characterizes the sale of s/n 212 as a
“swap” for the abortive s/n 163 transaction. (Id. at 26.) Under this theory,
China Falcon earned its commission for the s/n 212 sale when the customer
signed the purchase agreement for s/n 163 in September 2011, before the FFA
16
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expired. (Id.) Alternatively, it earned its commission in September 2013, when
the purchase agreement for s/n 212 was signed, because, despite the
expiration of the Second Amendment to the FFA, the parties continued to “act”
with the understanding that China Falcon would be entitled to a 2.5%
commission on all sales to Minsheng “for years beyond [the FFA’s] technical
expiration date.” (Id. at 27.)
The “swap” theory—that, under the FFA, China Falcon was entitled to a
2.5% commission for the sale of s/n 163, and that this entitlement carried over
to the later sale of s/n 212—fails in its premise. Even under the explicit
language of the FFA, China Falcon would not have been entitled to a 2.5%
commission on the sale of s/n 163. The FFA conditioned the eligibility of China
Falcon to receive a commission on
two
sets
of events:
(a) the buyer had to “enter into and sign a binding and enforceable
contract of sale with [Dassault Jet] for the purchase of one or more new
Falcon aircraft on or before December 31, 2009”; and
(b) “the buyer who enters into the contract of sale must [1]
complete the acquisition, [21 fully pay for and [3] take title to the aircraft
in accordance with the terms of the contract.”
(Def. St.
¶
4; P1, Resp.
¶
4 ([bracketed] numbers added.)
China Falcon contends that only (a), the signing of a purchase
agreement, was necessary. The contract is clear, however, that (b), comprising
acquisition, payment, and conveyance of title, must also occur in order for a
sale to be “complete.” That conclusion flows from the plain language of the
contract.6 See generally Schor v. FMS Financial Corp., 357 N.J. Super. 185, 191
China Falcon fries to argue that the (b) requirements should not apply because
it could not control the actions of the purchaser vis-a-vis acceptance of delivery,
payment, and taking title. That was, however, the condition for which it bargained.
Conditions precedent need not be within a party’s control to be enforceable. If the
condition is stated clearly, I may contract, for example, to drive you to the beach if it
does not rain. See Torre u. Geary, No. C-233-14, 2017 WL 1101488, at *6 (N.J. Super.
Ct. App. Div. Mar. 24, 2017) (noting that, while conditions precedent are generally
disfavored, they are permitted when they are expressed in clear language). China
Falcon also contends, however, that Dassault Jet actively strove in bad faith to prevent
6
17
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(App. Div. 2002) (“To determine the meaning of the terms of an agreement by
the objective manifestations of the parties’ intent, the terms of the contract
must be given their plain and ordinary meaning. The court should examine the
document as a whole and the court should not torture the language of a
contract to create ambiguity.
.
.
.
A party that uses unambiguous terms in a
contract cannot be relieved from the language simply because it had a secret,
unexpressed intent that the language should have an interpretation contrary to
the words’ plain meaning.” (citations and quotation marks omitted).).
It is undisputed that Minsheng never accepted the delivery of s/n 163.
(Def. St.
¶
36; P1. St.
¶
38.) Under the explicit terms of the FFA, then, China
Falcon was not entitled to a commission for that earlier sale. It is therefore not
necessary to consider the remainder of the “swap” theory, i.e., that the
commission on s/n 163 should carry forward to the s/n 212 transaction.
Under the explicit terms of the contract, however, that argument is dubious.
China Falcon’s second theory—that the FFA remained in effect at the
time of the sale of s/n 212 and entitled it to a commission—also runs afoul of
the plain language of the agreement. The FFA, by its terms, expired at the
latest on December 31, 2011, well before the sale of s/n 212 took place in
2013. (Tor. Deci., ex. 3,
§
1.1; see also P1. Opp. at 5 (“[T]he FFA technically
expired on December 31, 2011.”).)
China Falcon calls this a “technical expiration” (P1. Opp. at 1), but adding
the word “technical” does not make the contractual language disappear. The
expiration date is an explicit, unambiguous, and enforceable term of the FFA.
China Falcon argues in the alternative that the parties had a “course of
dealing” that in effect extended the term of the FFA past the expiration date for
purposes of the s/n 212 sale. This contention fails for lack of evidence. China
Falcon’s most salient proof consists of an internal email obtained from
the fulfillment of these conditions precedent by offering Minsheng financial incentives.
That distinct argument is best considered within the framework of breach of the
implied covenant of good faith and fair dealing. See infra.
18
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Dassault Jet. (Klein Deci., ex. 4.) That email, dated February 28, 2013, related
to another, earlier sale of a different jet (s/n 159) to a different company. (Id.)
The email concerns the approval of a payment to China Falcon and it merely
states that “2.5% is the normal commission for sales to both Minsheng Leasing
and the Hainan Group.” (Id.) No fact-finder would find that this exchange
raises an ambiguity as to whether the FFA was supposed to operate past its
expiration date as to s/n 212.
As in the case of s/n 721, see Section IV.i, supra, China Falcon has
failed to establish that the s/n 212 Finder’s Fee Agreement was the product of
economic duress. It has not asserted threats or wrongful conduct regarding
this sale that would rise to the required level. Nor has it shown that Dassault
Jet’s actions prevented China Falcon from asserting its “unfettered will” during
the negotiations for the commission of the sale of s/n 212. As in the case of
s/n 721, see supra, the parties do not dispute that the s/n 212 Finder’s Fee
Agreement was duly executed. (Def. St.
¶
3g; P1. Resp.
¶
38.) It therefore
governs the finder’s fee for the s/n 212 sale.
Under the s/n 212 Finder’s Fee Agreement, China Falcon was entitled to
a flat fee of $150,000, which was paid. Because China Falcon has failed to put
forward sufficient evidence that Dassault Jet breached the terms of the expired
FFA or that the separate s/n 212 Finder’s Fee Agreement was signed under
economic duress, I will grant summary judgement in favor of Dassault Jet for
the breach of contract claim concerning the sale of s/n 212.
iii. s/n 244
As to s/n 244, China Falcon relies on similar arguments to the ones
made for s/n 212. The s/n 244 sale, it says, was a “swap” for the earlier s/n
157 sale. (P1. Opp. at 32.) And although the FFA had expired by the time of the
sale of s/n 244, China Falcon argues that the parties continued to act with the
understanding that it was entitled to a 2.5% on all sales to Minsheng. (Id. at
32—33.)
19
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By its terms, the FFA agreement had expired by the time of the s/n 244
sale. Citing the same email evidence it cited in relation to s/n 212, China
Falcon again fails to raise a genuine dispute as to the whether the parties had
an understanding that the FFA agreement would continue to apply to sales
made after its expiration. (Compare P1. Opp. at 28—29, with Id. at 32—33.) Thus,
I will grant summary judgment in favor of Dassault Jet as to the claim of
breach of contract regarding the sale of s/n 244.
iv. s/n 141
As to s/n 141 only, Dassault Jet asserts the distinct defense of equitable
estoppel. It points to evidence that it told China Falcon it had made a final offer
to Mr. Li for $48 million, and that if the sale closed China Falcon would not
receive a commission. China Falcon allegedly remained silent about the
commission and told Mr. Li to proceed with the transaction. (Def. Br. at 24.)
That silence and conduct, says Dassault Jet, equitably estops China Falcon
from collecting a commission on that sale. (Id. at 22.)
“Equitable estoppel ‘is invoked in the interests of justice, morality and
common fairness.” Newark Cab Ass’n v. City of Newark, 235 F. Supp.3d 638,
648 (D.N.J. 2017) (quoting Knorrv. Smeal, 178 N.J. 169, 178 (2003)). “To
establish equitable estoppel, plaintiffs must show that defendant engaged in
conduct, either intentionally or under circumstances that induced reliance,
and that plaintiffs acted or changed their position to their detriment.” Id.
(quoting Knorr, 178 N.J. at 178).
Dassault Jet’s reliance on Ms. Cheung’s purported silence during the
negotiations is misplaced. They characterize China Falcon as having a “duty”
during the negotiations to intervene and clarify whether it would take a
commission. (See Def. Reply at 7 (citing Daub-i, LLC v. Daham, 329 N.J. Super.
54, 68—69 (App. Div. 2000) (“Equitable estoppel may arise by silence or
omission where one is under a duty to speak or act.”)).) Dassault Jet has not
provided evidence that Ms. Cheung was under any such duty. The cases cited
by Dassault Jet are inapt, as they dealt with situations where the reliance had
20
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much more substantial and unexpected consequences and went against the
basic expectations of the parties. Davin, 329 N.J. Super. at 68—69 (finding
equitable estoppel could apply to an eviction where the landlord knew
defendants were incurring substantial expenditures to open their bagel shop
but also knew about knew of an active foreclosure attempt on the property,
thus creating a duty to advise defendants of their “perilous position”); lacono a
Toll Bros., 225 N.J. Super. 87, 92 (App. Div. 1988) (finding silence by one of the
parties in a specific performance action as grounds for equitable estoppel
where that party’s conduct and silence were consistent with the terms in the
binding contract, which induced plaintiffs’ reliance in staying out of a sharply
rising real estate market).
Here, China Falcon and Dassault Jet had a binding contract (i.e., the
SRA) which governed the relationship of the parties. China Falcon had
“spoken” in the context of arriving at the terms of the contract. The two
companies had been in a longstanding contractual relationship under which
China Jet received commissions. Dassault Jet was thus not unfairly surprised
by China Jet’s failure to speak up and demand a commission to which it
already believed itself entitled under the SRA. And Dassault Jet could have
clarified the situation; as it had done in other transactions, it could have
proposed a deal-specific agreement that would override the SPA and govern the
sale of s/n 141. In short, Dassault Jet has not shown that it had a reasonable
basis to enter into the transaction with no expectation of owing a commission
merely because China Jet was silent.7
Dassault Jet does not rely solely on silence, however. It also asserts that
China Jet was equitably estopped by oral statements of Ms. Cheung in which
she expressed willingness to receive no commission if the sale price for s/n 141
Dassault Jet here complains that China Falcon “silently watched [it] sell s/n
141 to Mr. Li for net $48 million, demanding a commission only after tide had passed
and the aircraft delivered.” Elsewhere, of course, Dassault Jet insists that China
Falcon could not claim its commission until after those two conditions were met.
(Compare Def. Reply at 7, with, e.g., Def. Br. 17—18.)
7
21
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was below a certain dollar threshold. Dassault Jet admits, however, that the
dispute over whether Ms. Cheung orally agreed to accept no commission
“potentially creat[es] an issue of fact for trial.” (Def. Br. at 22.)
I will assume arguendo that there could be an oral modification, if there
was mutual assent, as opposed to unilateral statements in derogation of the
existing agreement. See McGrath v. Poppleton, 550 F. Supp. 2d 564, 571 (D.N.J.
2008) (“But whether or not the parties intended that all modifications be in
writing, at common law, a ‘no oral modification’ clause may be waived by the
parties by entering into an otherwise enforceable oral agreement.” (citation
omitted)). Nevertheless, there is a dispute between the parties as to whether
such an oral modification occurred, whether China Falcon assented to it, and
whether that oral modification, even with assent, is enforceable. See Id.; Cty. of
Moths v. Fauver, 153 N.J. 80, 100 (1998)).
Because Dassault Jet has not been able to show equitable estoppel
applies to the SRA for the sale of s/n 141 and has not been able to show that
the parties modified the SRA with respect to that specific sale, I will deny
Dassault Jet’s motion for summary judgment on the breach of contract claim
for the sale of s/n 141.
c. Breach of Implied Covenant of Good Faith and Fair Dealing
“Every contract in New Jersey contains an implied covenant of good faith
and fair dealing.” Gotthelf v. Toyota Motor Sales, U.S.A., Inc., 525 Fed. Appx 94,
106 (3d Cir. 2013) (citing Kalogeras v. 239 Broad Ave., LLC, 202 N.J. 349, 366
(2010)). A breach of this implied covenant occurs if one of the parties to the
contract “acts in bad faith or engages in some other form of inequitable
conduct in the performances of a contractual obligation.” Black Horse Lane
Dassault Jet cites to Ms. Cheung’s statement at her deposition that “[i]f a sales
price is lower and then you get a lower commission. That’s known to the whole world.
And everyone knows that and that my practice.” (Def. St. ¶ 68.) That statement,
however, may stand for nothing more than the mathematical certainty that the
absolute dollar amount of a percentage-based commission goes down when the sale
price goes down. ft is not proof or an admission that China Falcon would lower its
percentage (let alone lower it to zero) as the price for s/n 141 dropped.
8
22
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Assoc., LI’. u. Dow Chem. Corp., 228 F.3d 275, 288 (3d Cir. 2000) (citing Sons
of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 423—24 (1997)). Described
differently, “good faith” entails adherence to “community standards of decency,
faimess[,] or reasonableness” and requires a party to refrain from “destroying
or injuring the right of the other party to receive its contractual benefits.”
fliadis u. Wal-Mart Stores, Inc., 191 N.J. 88, 109—10 (2007) (citations omitted).
“[A] plaintiff must also prove the defendant’s bad motive or intention.” Id. On
the other hand, a party does not breach this implied covenant merely by
making decisions that disadvantage the other party, nor are the parties
required to behave altruistically to each other. Fabbro v. Drx Urgent Care, LLC,
616 Fed. App’x 485, 488 (3d Cir. 2015) (quoting Elliott & Frantz, Inc. v.
Ingersoll-Rand Co., 457 F.3d 312, 329 (3d Cir. 2006)).
The party alleging a breach of the implied covenant of good faith and fair
dealing must provide sufficient evidence to support a conclusion that the party
alleged to have acted in bad faith has engaged in some conduct that denied the
benefit of the bargain originally intended by the parties. Qotthelf, 525 Fed.
App5c at 106. This includes actions which have the effect of destroying or
injuring the right of the other party to receive the fruits of the contract.
Kalogeras, 202 N.J. at 366. “It is not enough for [the plaintiff] to merely present
evidence that [d]efendants acted in bad faith; those alleged bad-faith actions
must also have denied [p]laintiff ‘the benefit of the bargain originally intended
9
The Supreme Court of New Jersey has further elucidated the doctrine thus:
If courts construe the covenant too broadly, it ‘could become an allembracing statement of the parties’ obligations under contract law,
imposing unintended obligations upon parties and destroying mutual
benefits created by legally binding agreements. We have warned that ‘an
allegation of bad faith or unfair dealing should not be permitted to be
advanced in the abstract and absent an improper motive.’ ‘Contract law
does not require parties to behave altruistically toward each other; it
does not proceed on the philosophy that I am my brother’s keeper. We
stress that while a commercial party does not have to act with
benevolence towards an opposing party, it cannot behave inequitably.
Brunswick Hills Racquet Club, Inc. a Route 18 Shopping Ctr. Assocs., 182 N.J. 210,
231 (2005) (citations omitted).
23
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by the parties.” Irwin Katz & Assoc., Inc. u. Concepts in Health, Inc., No. 131217, 2017 WL 593502, at* 23(D.N.J. Feb. 14, 2017) (quoting Gotthelf, 525 F.
App’x at 106).
Here are the essentials of China Falcon’s argument that Dassault Jet
breached the implied covenant of good faith and fair dealing: (1) Dassault Jet
entered into a separate agreement with Minsheng; (2) Dassault Jet officers and
employees engaged in a scheme to avoid paying full commission or any
commissions to China Falcon; (3) Dassault Jet presented documents to Ms.
Cheung in English, knowing full well that she could not read or write in
English fluently; (4) Dassault Jet switched s/n 163 for s/n 212 in order to
avoid paying a full commission to China Falcon; and (5) Dassault Jet switched
s/n 157 for s/n 244 and switched subsidiaries of Minsheng as purchaser in
order to avoid paying China Falcon a full commission. (AC
¶
66—69.) China
Falcon claims that these actions evince bad faith performance on the part of
Dassault Jet and argue that summary judgment is thus inappropriate. (P1.
Opp. at 38.)
The question of bad faith is a question of fact, Cedar Holdings, LLC u.
Menashe, No. 16-7152, 2017 WL 13149321, at*4 (D.N.J. Apr. 7,2017), and
here there is a dispute over that question of fact. As China Falcon interprets
the facts, Dassault Jet actively worked with Minsheng to prevent China Falcon
from receiving full commissions on the sale of aircraft. China Falcon disputes
that it had knowledge of the agreements between Minsheng and Dassault Jet
and points to some evidence that it was kept in the dark. (See P1. Resp.
¶
97
(citing Klein Dccl., ex. 16 at Tr. 92:3—11; ex. 6 at Tr. 53:13—18).) These
agreements with Minsheng created an incentive for Minsheng to decline
delivery of aircraft it would have otherwise purchased (and which would have
generated a commission for China Falcon). Dassault Jet, on this view, colluded
with Minsheng to circumvent China Falcon and deny it the commissions it was
entitled to expect from the contract with Dassault Jet.
24
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Dassault Jet, to be sure, offers an alternative interpretation of the facts:
As for s/n 212 and s/n 157, it was Minsheng on its own which failed to take
delivery of the aircraft and caused the sale to fall through. At that point,
Dassault Jet had no choice but to find another buyer for these aircraft. (Def.
Br. at 25—26.) Regarding s/n 141, Dassault Jet says that it proposed prices to
the buyer that would have netted China Falcon a commission, but the buyer
rejected them. (Id. at 26—27.) Regarding s/n 244, Dassault Jet again blames
China Falcon’s “own client” for refusing to accept delivery of the aircraft and
causing the delays. (Id. at 27.)
As to s/n 212 and s/n 244, there is an issue of fact as to whether
Dassault Jet entered into a collusive agreement with Minsheng by which the
two engineered the failure of the condition precedent (Minsheng’s acceptance of
delivery) to China Falcon’s entitlement to a commission on the earlier
transaction, and then entered into their own, similar “swap” transaction,
having circumvented China Falcon. Viewing the facts in the light most
favorable to China Falcon, I must deny Dassault Jet’s motion for summary
judgment on the claim of breach of the implied covenant of good faith and fair
dealing as to these two transactions.’°
Dassault Jet also takes issue with China Falcon’s assertion of both a breach of
contract claim and a good faith and fair dealing claim based on the same facts. (Def.
Reply at 9.) Duplicative claims, it says, are not permitted by New Jersey law. (Id.
(citing Hahn v. OnBoard LLC, No. 09-3639, 2009 WL 4508580, at *6 (D.N.J. Nov. 19,
2006) (“In both New York and New Jersey, a plaintiff cannot maintain a claim for
breach of the implied covenant of good faith and fair dealing when the conduct at
issue is governed by the terms of an express contract or the cause of action arises out
of the same conduct underlying the alleged breach of contract.”)).) It is true that the
implied covenant of good faith and fair dealing cannot override an express term in a
contact. Wade v. Kessler, 172 N.J. 327, 342 (2002) (noting also that a party’s
performance under a contract may breach the implied covenant even though that
performance does not violate a pertinent express term). The implied covenant claim,
however, is not just another name for the breach of contract claim. It does involve a
distinct set of facts and considerations, even though it arises from the same general
narrative as the breach of contract claim. See Cedar Holdings, LLC u. Menashe, No. 167152, 2017 WL 13149321, at *3 (D.N.J. Apr. 7, 2017) (“A claim for breach of the
implied covenant is duplicative of a breach of contract claim when allegations of bad
faith all relate to actions that form the basis of the breach of contract claim.”
(emphasis added)). China Falcon alleges that Dassault Jet engaged in a set of actions
10
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d. Quantum Meruit
“Quantum meruit,’ which literally means ‘as much as is deserved,’ is
applied when, absent a manifest intention to be bound, ‘one party has
conferred a benefit on another and the circumstances are such that to deny
recovery would be unjust.” Kas Oriental Rugs, Inc. v. Ellman, 394 N.J. Super
278, 286 (App. Div. 2007) (citations omitted). “Stated another way, the basis for
the application of quantum memit is ‘wholly unlike an express or implied-infact contract in that it is ‘imposed by the law for the purpose of bringing about
justice without reference to the intention of the parties.’” Id. (quoting St.
Barnabas Med. Ctr. u.
Cty.
of Essex, 11 N.J. 67, 79 (1988)). To recover under a
theory of quantum meruit, a plaintiff must establish (1) the performance of
services in good faith; (2) the acceptance of the services by the entity to which
they were rendered; (3) an expectation of compensation therefor; and (4) the
reasonable value of the services. Coldwell Banker Commercial/Feist & Feist
Realty Corp. v. Blancke F.W. L.L.C., 368 N.J. Super. 382, 401 (App. Div. 2004)
(quoting Longo v. Shore & Reich, Ltd., 25 F.3d 94, 98 (2d Cir. 1994)). However,
“[i]t has long been recognized that the existence of an express contract excludes
the awarding of the relief regarding the same subject matter based on quantum
meruit.” Kas Oriental, 394 N.J. Super at 286.
China Falcon says that it provided valuable services to Dassault Jet in
good faith with a reasonable expectation that it would be compensated for
those services. (AC
¶
71.) It alleges that, as described above, it identified
whereby it “repeatedly tried to cut [Ms. Cheung] out and force her into getting less or
no commission at all” and that it tried to divert funds destined to China Falcon to
Minsheng instead. (P1. Opp. at 37.) These facts are separate from China Falcon’s
claims that it was not paid the amount it was owed under the express terms of the
SRA and FFA. Additionally, federal practice and substantive New Jersey law allow for
the pleading and pursuit of alternative and even inconsistent theories in pursuit of
breach of contract and quasi-contractual theories. See Fed. 1?. Civ. P. 8(d); Kas
Oriental Rugs, Inc. v. Ellman, 394 N.J. Super. 278, 288 (App. Div. 2007). Plaintiffs
merely are not permitted to recover on the inconsistent theories. See, e.g., id.
(reversing the trial court’s award of damages on both a breach of contract theory and a
quantum memit theory).
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potential customers, introduced those customers to Dassault Jet, arranged
meetings, and engaged in negotiations that led to those customers’ purchasing
Dassault aircraft. (P1. Opp. at 39.) It further describes these actions as “the
typical services of a broker” and argues that the particular expenses incurred
by China Falcon are irrelevant to whether China Falcon could reasonably
expect compensation in the form of a commission for the provision of these
services. (Id.)
New Jersey courts have allowed brokers and sales representatives to
recover on a theory of quantum meruit when the principal accepts the services
of the broker or sales representative but the contract between the two proves
unenforceable for lack of agreement on an essential term (e.g., the commission
for a sale). See, e.g., Weichert Co. Realtors v. Ryan, 128 N.J. 427, 438 (1992). If
an express contract exists, however, quantum meruit relief is not available.
In Kas Oriental, an importer/seller of rugs engaged an independent sales
representative, and the two agreed orally on “[t]erritory, commission
percentage, nature, and type of material to be sold.” The obligation to pay the
commission did not arise until orders were received, shipped, and paid for. Kas
Oriental, 394 N.J. Super at 280—8 1. Unlike the relationship between China
Falcon and Dassault Jet, the oral contract did not contain an explicit
termination date, but the trial judge concluded that it was terminable at will,
as was the custom in the industry. Id. Noting that “[i]t is a well-settled rule that
an express contact excludes an implied one” and “[a]n implied contract cannot
exist when there is an existing express contact about the identical subject,” the
appellate court held that the award of post-termination commissions was
inconsistent with the terms of the express contract. Id. at 286—88. Similarly,
while there has not been evidence presented of the custom of the industry of
aircraft sales, we do have two express contracts (the FFA, SRA, and their
amendments), which governed the relationship between the parties. Both of
them had expiration dates. Both provided that China Falcon could collect
commissions, but limited that entitlement to specific Dassault aircraft sold to
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specific companies in a particular territory. As to certain of the transactions
that fell outside of the scope of the FFA or SRA, the parties entered into
transaction-specific agreements. Because of the explicitness of these contracts,
China Falcon is not able to make a claim for commissions on sales that fell
outside of the scope of the contracts.
I will therefore grant summary judgment for the claim of quantum
meruit.
e. Unjust Enrichment
Under New Jersey law, to prove a claim for unjust enrichment, “a party
must demonstrate that the opposing party ‘received a benefit and that
retention of that benefit without payment would be unjust.” Thieme v. Aucoin
Thieme, 227 N.J. 545, 557 (2016) (quoting fliadis a Wal-Mart Stores, Inc., 191
N.J. 88, 110 (2007). This doctrine of quasi-contract also requires that plaintiff
show that it expected remuneration from the defendant at the time it performed
or conferred a benefit on defendant and that the failure of remuneration
enriched defendant beyond its contractual rights. Id. (quoting fliadis, 191 N.J.
at 110); see also Ebner u. Statebridge Co., LLC, No. 16-8855, 2017 WL
2495408, at *9 (D.N.J. June 9, 2017) (noting that restitution for unjust
enrichment is an equitable remedy and only available when there is no express
contract providing for remuneration).
As with its quantum memit claim, China Falcon claims that it provided
benefits to Dassault Jet in the form of “the typical services of a broker,” which
allowed Dassault Jet to sell the four aircraft at issue for over $170 million all
together. (P1. Opp. at 39—40). China Falcon claims it was expected to receive
remuneration in the form of commissions from these sales. (Id. at 40.) Dassault
Jet argues that China Falcon has made no attempt to show the fair and
reasonable value of its purported services to Dassault Jet and points to the
explicit agreements, in the form of the FFA, the SRA, and their amendments, as
evidence of agreements governing their relationship and thus barring relief.
(Def. Br. at 28.)
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China Falcon has failed to show how the retention of the services it
provided to Dassault Jet would be unjust. China Falcon was not just the sales
representative for the four aircraft in dispute. See supra Section I (detailing the
contractual sales relationship between China Falcon and Dassault Jet that
extended to sales of aircraft besides the four at issue). The marketing and sales
efforts, directed at repeat players (particularly Minsheng and its subsidiaries),
are not necessarily attributable to a particular transaction. The contracts, by
their nature, contemplated that not all of China Falcon’s efforts would bear
fruit in the form of commissions. China Falcon in its briefing did not show
which of its particular “services” were rendered exclusively for those four sales.
It asserts, often in vague terms, that it aided Dassault Jet in some capacity and
that actual sales followed. That these efforts may have had some connection to
the sale of (other) aircraft past the expiration dates of the two agreements is not
sufficient to sustain a claim that Dassault Jet unjustly enriched itself at China
Falcon’s expense.
I will therefore grant Dassault Jet’s motion for summary judgment as to
the claim of unjust enrichment.
III.
Conclusion
For the reasons set forth above, the defendant’s motion for summary
judgment is GRANTED IN PART and DENTED IN PART. It is GRANTED as to
the breach of contract claim for the sales of s/n 721, s/n 212, and s/n 244, to
the claim for quantum meruit, and to the claim of unjust enrichment. It is
DENIED as to the breach of contact claim for the sale of s/n 141. It is DENIED
as to the claim for the breach of the implied covenant of good faith and fair
dealing regarding s/n 212 and s/n 244.
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The claims that remain, then, are the following:
s/n 141 breach of contract.
s/n 212 and s/n 244 good faith and fair dealing.
An appropriate order accompanies this opinion.
Dated: May 8, 2017
Kevin McNulty
United States District Judge
30
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