United States District Court, D. Arizona
A. TEILBORG, SENIOR UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiff MD Helicopters Inc.'s
(“MDHI”) Motion to Dismiss Defendant The Boeing
Company's (“Boeing”) Counterclaims 1-4 and
6-9, (Doc. 21). Boeing filed a Response in Opposition to the
Motion to Dismiss, (Doc. 25), and MDHI filed a Reply in
Support of Plaintiff's Motion to Dismiss, (Doc. 26).
manufactures helicopters for commercial, military, and law
enforcement markets. (Doc. 9 at 2). Boeing is an aerospace
business that, among other product offerings, designs,
develops, produces, sells, and offers support for military
helicopters. (Doc. 9 at 3); (Doc. 16 at 2). In February of
2005, MDHI and Boeing entered into an Asset Acquisition
Agreement (“AAA”), (Doc. 16-1 at 2-39), and a
Cross License, (Doc. 16-2 at 1-21), so that Boeing could
purchase some of MDHI's intellectual property and, in
turn, license the purchased assets back to MDHI on a
non-exclusive basis, (Doc. 16 at 8); (Doc. 29 at 1-2). In
July of 2010, Boeing and MDHI entered into a Memorandum of
Agreement (“2010 MOA”), (Doc. 16-2 at 22-46),
providing that “MDHI and Boeing will cooperatively
produce and support the AH-6i Aircraft in the worldwide
market, ” (Doc. 16 at 12); (Doc. 9 at 3). On October 6,
2011, MDHI and Boeing signed a Long Term Requirements
Contract (“LTRC”) whereby MDHI agreed to sell and
Boeing agreed to buy airframes and related components for the
AH-6i helicopter. (Doc. 9 at 3); (Doc. 16 at 12). The LTRC
incorporated the Boeing Company General Provisions 1, (Doc.
16-3 at 36-45), dated April 1, 2009 (“GP1”),
(Doc. 9 at 4); (Doc 16 at 13). In November 2011, the parties
agreed to the Master Purchase Contract No. 524842
(“Master PC”), which incorporates the terms of
the LTRC. (Doc. 16 at 14); (Doc. 9 at 4).
claims, and MDHI denies, that, from late 2011 to the middle
of 2012, MDHI complained to Boeing that there had not been
any orders for parts under the LTRC. (Doc. 16 at 15); (Doc.
29 at 4). Boeing likewise claims, and MDHI denies, that in
April of 2012, MDHI announced that it would compete against
Boeing for an Army contract by bidding its own helicopter,
the MD 540F, against Boeing's AH-6i. Id.
26, 2012, Boeing issued Purchase Contract No. 648538 to MDHI
for the purchase of airframes and related components for the
AH-6i. Id. Boeing claims, and MDHI denies, that MDHI
initially refused to sign this Purchase Contract in an
alleged violation of the LTRC. Id. Eventually, in
September of 2012, MDHI signed Purchase Contract No. 648538.
these events, Boeing claims, and MDHI denies, that MDHI
attempted to frustrate Boeing's AH-6i program, by
engaging in delivery delays and poor production. Id.
MDHI claims, and Boeing denies, that during the course of
performance under the purchase contract for airframes for the
AH-6i, MDHI raised various issues regarding the pricing,
delivery schedule, and additional work required. (Doc. 9 at
4); (Doc. 16 at 3). In May of 2015, MDHI prepared and
submitted to Boeing a formal Request for Equitable Adjustment
(“REA”). Id. Additionally, in response
to the various issues surrounding the production and delivery
of the AH-6i parts, in August of 2015, the parties entered
into a Memorandum of Agreement (“2015 MOA”).
(Doc. 9 at 5); (Doc. 16 at 3). Boeing claims that after the
parties entered into the 2015 MOA, MDHI timely delivered five
AH-6i airframes. (Doc. 16 at 16). However, after that, on
March 7, 2016, Boeing and MDHI entered into the Purchase
Contract Change No. 32 (“PCC-32”), which Boeing
alleges established a new schedule setting deadlines for
delivery of the remaining airframes. (Doc. 16 at 16); (Doc.
29 at 5). Boeing further alleges that, despite that
agreed-upon schedule under the PCC-32, MDHI failed to timely
deliver the remaining seventeen airframes as required. (Doc.
16 at 16). MDHI claims that AH-6i production delays were
caused, in part, by labor unrest issues in Monterrey, Mexico.
(Doc. 29 at 5). Boeing conducted an investigation into the
delays and does not accept MDHI's explanation, but rather
believes that MDHI's reasons for the post-2015 MOA delays
were pretextual and that MDHI's true objective was to
undermine Boeing's efforts so MDHI could promote its own
MD 540F helicopter. (Doc. 16 at 16-18).
the performance period of the LTRC, Boeing sought out other
suppliers to supply parts for the AH-6i. Boeing claims, and
MDHI denies, that MDHI instructed other suppliers not to work
with Boeing. (Doc. 16 at 20-21); (Doc. 29 at 6). Boeing
likewise claims, and MDHI denies, that MDHI did not provide
written notice to MDHI's suppliers that they could work
with Boeing as allegedly required by the AAA and the Cross
License. (Doc. 16 at 20); (Doc. 29 at 6).
claims Boeing has failed to pay MDHI for the AH-6i airframes
delivered to Boeing. (Doc. 9 at 6). Boeing admits that it is
in possession of the AH-6i airframes MDHI delivered, but
states that MDHI's delivery of the final airframe was
incomplete and nonconforming, thus MDHI was not entitled to
payment. (Doc. 16 at 4).
also claims that MDHI is in possession of parts that
rightfully belong to Boeing and its customers. (Doc. 16 at
22-23). Boeing believes that MDHI is holding these parts as a
method to extract payment on MDHI's contract claims.
(Doc. 16 at 24).
has presented two claims: 1) Breach of the 2015 MOA and 2)
Breach of Implied Covenant of Good Faith and Fair Dealing.
Boeing has presented nine counterclaims: 1) Breach of the
AAA; 2) Breach of the Cross License; 3) Breach of LTRC; 4)
Breach of the GP1; 5) Breach of the 2015 MOA and PCC-32; 6)
Breach of the Implied Covenant of Good Faith and Fair
Dealing; 7) Conversion; 8) Tortious Interference with
Contract and Business Expectancy; and 9) Declaratory
Judgment. MDHI has moved to dismiss all of Boeing's
counterclaims except its fifth counterclaim.
has moved to dismiss the Boeing's Counterclaims 1-4 and
6-9 for failure to state a claim upon which relief can be
granted pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure. Under Rule 12(b)(6), a motion to dismiss
should not be granted “unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of
his claims which would entitle him to relief.”
Barnett v. Centoni, 31 F.3d 813, 816 (9th Cir. 1994)
(citations and internal quotation marks omitted).
survive a Rule 12(b)(6) motion to dismiss, a complaint must
meet the requirements of Rule 8. Rule 8(a)(2) requires a
“short and plain statement of the claim showing that
the pleader is entitled to relief, ” so that the
defendant has “fair notice of what the . . . claim is
and the grounds upon which it rests.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). Although
a complaint attacked for failure to state a claim does not
need detailed factual allegations, the pleader's
obligation to provide the grounds for relief requires
“more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Id. (citing Papasan v. Allain,
478 U.S. 265, 286 (1986)). The factual allegations of the
complaint must be sufficient to raise a right to relief above
a speculative level. Id.
8's pleading standard demands more than “an
unadorned, the-defendant unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Twombly, 550 U.S. at 555). A
complaint that offers nothing more than blanket assertions
will not suffice. A complaint must contain sufficient factual
matter, which, if accepted as true, states a claim to relief
that is “plausible on its face.” Iqbal,
556 U.S. at 678. Facial plausibility exists if the pleader
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged. Id. Plausibility does not equal
“probability, ” but it requires more than a sheer
possibility that a defendant has acted unlawfully.
Id. “Where a complaint pleads facts that are
‘merely consistent' with a defendant's
liability, it ‘stops short of the line between
possibility and plausibility of entitlement to
relief.'” Id. (quoting Twombly,
550 U.S. at 557).
analyzing a complaint for failure to state a claim, all
factual allegations are taken as true and construed in the
light most favorable to the nonmoving party. Iolab Corp.
v. Seaboard Sur. Co., 15 F.3d 1500, 1504 (9th Cir.
1994). All reasonable inferences are to be drawn in favor of
the nonmoving party. Jacobsen v. Hughes Aircraft
Co., 105 F.3d 1288, 1296 (9th Cir. 1997), rev'd
on other grounds, 525 U.S. 432 (1999). Moreover,
“[i]f a complaint is accompanied by attached documents,
the court is not limited by the allegations contained in the
complaint. These documents are part of the complaint and may
be considered in determining whether the plaintiff can prove
any set of facts in support of the claim.” Durning
v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.
absent specific exceptions, the Court will not consider
evidence or documents beyond the complaint in the context of
a Rule 12(b)(6) motion to dismiss. See Hal Roach Studios,
Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542,
1550 (9th Cir. 1990) (amended decision). There are two
exceptions to the general rule. First, “[i]f the
documents are not physically attached to the complaint, they
may be considered if the documents' authenticity . . . is
not contested and the plaintiff's complaint necessarily
relies on them.” Lee v. City of Los Angeles,
250 F.3d 668, 688 (9th Cir. 2001) (internal quotations and
citations omitted). “Second, under Fed.R.Evid. 201, a
court may take judicial notice of matters of public
record.” Id. at 688-89 (internal quotations
and citations omitted).
this Court has diversity jurisdiction under Section 1332.
See 28 U.S.C. § 1332. A court sitting in
diversity applies federal procedural law and state
substantive law. See Erie R. Co. v. Tompkins, 304
U.S. 64, 78 (1938). Accordingly, this Court will apply the
substantive law of Arizona. Med. Lab. Mgmt. Consultants
v. Am. Broad. Cos., Inc., 306 F.3d 806, 812 (9th Cir.
First Counterclaim: Breach of Contract-AAA
order to state a claim for breach of contract, the
counterclaimant must allege the existence of a contract
between the parties, a breach of the contract, and damages.
Chartone, Inc. v. Bernini, 83 P.3d 1103, 1111