MD Helicopters Inc. v. Boeing Co.

          ORDER

          James A. Teilborg Senior United States District Judge.

         At issue is Plaintiff/Counter-Defendant MD Helicopters Inc.'s (“MDHI”) Motion for Summary Judgment (Doc. 146) and Defendant/Counter-Claimant the Boeing Company's (“Boeing”) Motion for Partial Summary Judgment on MDHI's Force Majeure Defense (Doc. 123). The Court now rules on these Motions.

         I. FACTUAL BACKGROUND

         MDHI manufactures helicopters for commercial, military, and law enforcement markets. (Doc. 9 at 2 ¶ 7).^[1] Boeing is an aerospace business that, among other product offerings, designs, develops, produces, sells, and offers support for military helicopters. (Docs. 9 at 3 ¶ 9; 16 at 2 ¶ 9). In July 2010, MDHI and Boeing entered into a Memorandum of Agreement (“2010 MOA”), (Doc. 138-3 at 41-67), providing that “MDHI and Boeing will cooperatively produce and support the AH-6i Aircraft in the worldwide market[, ]” (id at 43). On October 6, 2011, MDHI and Boeing signed a Long Term Requirements Contract (“LTRC”), (Doc. 127-1 at 8-53), whereby MDHI agreed to build and sell, and Boeing agreed to buy, airframes and related components for use in the manufacture of Boeing's AH-6i helicopters, (id. at 10). (See also Docs. 138 at 3-4 ¶ 1; 147 at 2 ¶ 1). The LTRC incorporated the Boeing Company General Provisions 1 (“GP1”), (Docs. 127-1 at 43-51), which sets forth various terms governing the parties' relationship over the course of the AH-6i program. (See Id. at 24-25 (stating that GP1 is “attached hereto and incorporated by reference” into the LTRC)).

         On July 26, 2012, Boeing placed a purchase order for 24 airframes and related components for the AH-6i from MDHI by issuing Purchase Contract No. 648538 (“Purchase Contract”) pursuant to the LTRC. (Doc. 127-1 at 55-82). MDHI signed this Purchase Contract in September 2012. (Docs. 16 at 15 ¶ 40; 29 at 5 ¶ 40; 57 at 7 ¶ 40). Under the Purchase Contract, the airframes and related components were to be delivered to Boeing on a rolling basis pursuant to a schedule set forth therein. (Docs. 127-1 at 56; 147 at 2 ¶¶ 2-3). The Purchase Contract and the LTRC provided that Boeing would make performance-based payments and delivery payments to MDHI after MDHI met certain production milestones. (Doc. 127-1 at 42, 81). Specifically, MDHI would receive a 15% payment after long-lead material orders were placed, 25% upon the loading of the airframe on the production line, 30% upon receipt of the airframe from MDHI's Monterrey, Mexico facility, and the final 30% upon delivery of the airframe to Boeing. (Id.). The Purchase Contract was also subject to the provisions set forth in the GP1, which the LTRC incorporated. (See Id. at 43-51).

         Although the Purchase Contract obligated MDHI to deliver all 24 airframes by December 11, 2014, (id. at 56), MDHI did not deliver the first airframe until June 25, 2015, (Docs. 127-10 at 68; 147 at 13). Thereafter, on August 14, 2015, MDHI and Boeing entered into a Memorandum of Agreement (“2015 MOA”), (Doc. 127-1 at 84-88), to resolve the parties' disputes regarding the scope of work, pricing, and delivery schedule for the AH-6i airframes that had arisen under the LTRC and the Purchase Contract. (Docs. 127-1 at 84; 138 at 4-5 ¶¶ 4-5; 147 at 3 ¶¶ 4-5). The 2015 MOA established a revised delivery schedule and new purchase price for each airframe, while retaining the performance-based milestones. (Doc. 127-1 at 84-85). The 2015 MOA also specified that the parties “agree that the Boeing Company General Provisions currently detailed on the Purchase Order will continue to apply according to the Purchase Order.” (Id. at 85).

         On March 7, 2016, the parties agreed to Purchase Contract Change 32 (“PCC-32”), which again modified the delivery schedule for Airframes 8 through 24. (Doc. 125-1 at 1- 34; see also Docs. 125 at 1; 136 at 1). PCC-32 incorporates GP1 by reference. (Docs. 125-1 at 29; 125 at 2; 136 at 2). MDHI did not deliver Airframes 8 through 24 by the deadlines established in PCC-32. (Docs. 125 at 4; 125-1 at 37; 136 at 2). The following table shows the delivery deadlines to which the parties agreed in PCC-32, the actual dates on which MDHI delivered the airframes, and the delivery delay for each airframe:

Airframe	Contract Date	Actual Delivery Date	Days Late
8	April 29, 2016	June 27, 2016	59
9	May 19, 2016	September 14, 2016	118
10	June 3, 2016	October 6, 2016	125
11	June 17, 2016	October 20, 2016	125
12	July 1, 2016	October 27, 2016	118
13	July 18, 2016	December 8, 2016	143
14	August 1, 2016	January 9, 2017	161
15	August 15, 2016	January 24, 2017	162
16	August 29, 2016	January 24, 2017	148
17	September 13, 2016	March 21, 2017	189
18	September 27, 2016	March 21, 2017	175
19	October 11, 2016	March 21, 2017	161
20	October 25, 2016	March 27, 2017	153
21	November 8, 2016	April 18, 2017	161
22	November 22, 2016	May 2, 2017	161
23	December 7, 2016	May 18, 2017	162
24	December 21, 2016	June 28, 2017 (short shipped)	189

(Id.).

         On June 28, 2017, MDHI delivered Airframe 24 to Boeing without certain components, (Docs. 125 at 5; 136 at 3), as authorized by an agreement regarding the short shipment dated that same day, (Doc. 125-1 at 76-77). This June 28, 2017 agreement further required MDHI to install those missing components at Boeing's facility when they became available, (id. at 77), but MDHI never did so, (Docs. 125 at 5; 136 at 3). MDHI claims that it was “relieved from any obligation to install the ‘short' parts on Airframe 24 when Boeing failed to pay the monies it owed under the terms of the contract.” (Doc. 136 at 3). As a result of MDHI's refusal to install the missing components on Airframe 24, Boeing contends it was “required to purchase and retrofit the requisite parts itself to complete Aircraft 24, requiring Boeing to extend the AH-6i program beyond its anticipated end date.” (Doc. 125 at 6).

         MDHI alleges that it has since produced and delivered all 24 airframes to Boeing, but Boeing has “failed and refused to make performance-based payments for line-loading airframes 14, 23, and 24; has failed and refused to make final delivery payments for airframes 14, 22, 23, and 24; and has failed and refused to pay MDHI's invoice for Pressure Switches that MDHI supplied at Boeing's request.” (Doc. 147 at 3-4 ¶ 7). In total, MDHI claims that Boeing owes $3, 808, 775.00 for these invoices, (id. at 4 ¶ 8), which are set forth below:

Date	Invoice #	Event	Amount Due
3/30/17	194375	Item 71 - PSR Switch	$18, 275.00
4/26/17	7926715	Delivery of Airframe 22	$541, 500.00
4/27/17	8019451	Line-loading Airframe 14	$541, 500.00
4/27/17	8019453	Line-loading Airframe 23	$541, 500.00
5/23/17	7953638	Delivery of Airframe 23	$541, 500.00
5/31/17	7988197	Delivery of Airframe 14	$541, 500.00
6/20/17	8066389	Line-loading Airframe 24	$541, 500.00
6/28/17	8070519	Delivery of Airframe 24	$541, 500.00
Total	Invoice Amount Due	$3, 808, 775.00

         While Boeing “admits that it is in possession of the AH-6i airframes MDHI delivered, ” Boeing states that these invoices are not due and payable because MDHI's delivery of Airframe 24 was incomplete and nonconforming. (Docs. 16 at 4 ¶ 29; 138 at 5 ¶ 7). Boeing claims that it only accepted delivery of Airframe 24 “upon MDHI's promise to complete the installation of those missing components at Boeing's facility when they became available, ” but MDHI never did so. (Doc. 138 at 5 ¶ 6). Boeing further contends that it has incurred costs resulting from MDHI's delayed and defective airframes which are substantially greater than the payments MDHI claims are owed and which are recoverable from MDHI as either an “equitable price reduction” or “credit against any amounts that may be owed.” (Id. at 5 ¶ 7).

         Using the 24 airframes and kits which MDHI had built, in addition to other kits and systems built by Boeing and other suppliers, Boeing ultimately assembled the 24 Ah-6i helicopters. (Docs. 138 at 6 ¶ 9; 147 at 5 ¶ 9). Boeing sold these 24 helicopters for $234, 700, 000.00 to the U.S. Government who, in turn, sold them to the Saudi Arabian National Guard (“SANG”). (Docs. 138 at 6 ¶¶ 9-10; 147 at 5 ¶¶ 9-10).^[2] The U.S. Government did not assess any monetary penalty on Boeing for the late delivery of these helicopters. (Doc. 128-5 at 375-76, Woody Dep. 19: 3-24, 22: 11-21).

         II. PROCEDURAL BACKGROUND

         On August 3, 2017, MDHI filed suit against Boeing, (Doc. 1), and thereafter filed an Amended Complaint on September 11, 2017, (Doc. 9). MDHI seeks damages for breach of contract in an amount not less than the amount of its outstanding invoices, alleging that Boeing's refusal and failure to pay the invoices MDHI issued constitutes a material breach of the parties' contract for the sale of AH-6i airframes and the terms of the 2015 MOA. (Doc. 9 at 6-7 ¶¶ 31-38).^[3] In the alternative, should any required provision of the parties' agreement be ambiguous or undefined, MDHI seeks damages for breach of the implied covenant of good faith and fair dealing. (Id. at 8 ¶ 45).

         On October 3, 2017, Boeing filed an Answer denying that MDHI is entitled to judgment in its favor or to any of the relief it has demanded. (Doc. 16 at 5 ¶ 50). That same day, Boeing also asserted nine counterclaims against MDHI, including: (1) Breach of the Asset Acquisition Agreement (“AAA”); (2) Breach of the Cross License; (3) Breach of the 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. (Id. at 29-36 ¶¶ 121-65). On October 24, 2017, MDHI moved to dismiss all of Boeing's counterclaims except its Fifth Counterclaim. (See Doc. 21). In its April 23, 2018 Order ruling on MDHI's Motion to Dismiss Boeing's Counterclaims 1-4 and 6-9 (Doc. 21), the Court dismissed without prejudice Boeing's First and Second Counterclaims, and dismissed with prejudice Boeing's Fourth Counterclaim. (Doc. 50 at 17). However, the Court did not dismiss Boeing's Third, Sixth, Seventh, Eighth, or Ninth Counterclaims, (id), and Boeing's Fifth Counterclaim also remains.^[4] MDHI filed an Answer and Defenses to Boeing's Counterclaims. (Docs. 29; 57).

         On February 28, 2019, Boeing filed a Motion for Partial Summary Judgment on MDHI's Force Majeure Defense (Doc. 123) and a supporting Statement of Facts (Doc. 125). Thereafter, MDHI filed its Response to Boeing's Motion (Doc. 135) and corresponding Controverting Statement of Facts and Statement of Additional Facts (Doc. 136) on April 1, 2019. On April 16, 2019, Boeing filed a Reply in Support of Its Motion for Partial Summary Judgment (Doc. 141).

         On February 28, 2019, MDHI filed redacted versions of a Motion for Summary Judgment (Doc. 126) and accompanying Separate Statement of Material Undisputed Facts in Support of its Motion for Summary Judgment (Doc. 127).^[5] In compliance with the Court's May 21, 2019 Order, Plaintiff filed updated versions of its Motion for Summary Judgment (Doc. 146) and supporting Statement of Facts (Doc. 147) on May 28, 2019. The Court deemed the later filed versions of MDHI's Motion (Doc. 146) and Statement of Facts (Doc. 147) timely, and struck the earlier versions filed at Doc. 126 and Doc. 127. (Doc. 145 at 7). Although the Court struck the redacted version of MDHI's Separate Statement of Material Undisputed Facts in Support of Its Motion for Summary Judgment (Doc. 127), the Court did not strike the exhibits filed therewith at Doc. 127-1-127-10. Further, for purposes of resolving the parties' Motions, the Court will consider the versions of MDHI's “Exhibits 35, 40, 41, 42, 45, 47, 50, 52, 53, 60, 64, 70, 71, and 74 filed at Docs. 144-1 and 144-2, and the versions of Exhibits 33 and 57 filed at Docs. 127-8, 127-9, and 128-2.” (Doc. 145 at 7).

         On April 1, 2019, Boeing filed a timely Response to MDHI's Motion for Summary Judgment (Doc. 137) and Controverting Statement of Facts in Support of its Response (Doc. 138).^[6] For purposes of resolving the parties' Motions, the Court will consider the versions of Exhibits C, T, Y and Z to Boeing's Controverting Statement of Facts filed at Doc. 144-3. (Doc. 145 at 7). On April 16, 2019, MDHI filed its Reply in Support of its Motion for Summary Judgment (Doc. 142). The Court heard oral argument on the parties' Motions on July 24, 2019. (Doc. 149).

         II. LEGAL STANDARD

         Summary judgment is appropriate when “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). “A party asserting that a fact cannot be or is genuinely disputed must support that assertion by . . . citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits, or declarations, stipulations . . . admissions, interrogatory answers, or other materials, ” or by “showing that materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Id. 56(c)(1)(A-B). Thus, summary judgment is mandated “against a party who fails 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         Initially, the movant bears the burden of demonstrating to the Court the basis for the motion and the elements of the cause of action upon which the non-movant will be unable to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the non-movant to establish the existence of material fact. Id. A material fact is any factual issue that may affect the outcome of the case under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant “must do more than simply show that there is some metaphysical doubt as to the material facts” by “com[ing] forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e)). A dispute about a fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Liberty Lobby, Inc., 477 U.S. at 248. The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247-48. However, in the summary judgment context, the Court construes all disputed facts in the light most favorable to the non-moving party. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004).

         At the summary judgment stage, the Court's role is to determine whether there is a genuine issue available for trial. There is no issue for trial unless there is sufficient evidence in favor of the non-moving party for a jury to return a verdict for the non-moving party. Liberty Lobby, Inc., 477 U.S. at 249-50. “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. (citations omitted).

         III. BOEING'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON MDHI'S FORCE MAJEURE DEFENSE

         A force majeure clause is “[a] contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event or effect that the parties could not have anticipated or controlled.” Force-Majeure Clause, Black's Law Dictionary (11th ed. 2019). Article 13 of GP1 is a force majeure clause, which states:

FORCE MAJEURE. Seller shall not be liable for excess reprocurement costs pursuant to the “Cancellation for Default” article of this contract, incurred by Buyer because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of Seller. Examples of these causes are (a) acts of God or of the public enemy, (b) acts of the Government in either its sovereign or contractual capacity, (c) fires, (d) floods, (e) epidemics, (f) quarantine restrictions, (g) strikes, (h) freight embargoes and (i) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of Seller. If the delay is caused by delay of a subcontractor of Seller and if such delay arises out of causes beyond the reasonable control of both, and if such delay is without the fault or negligence of either, Seller shall not be liable for excess costs unless the goods or services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit Seller to meet the required delivery schedules. Seller shall notify Buyer in writing within 10 days after the beginning of any such cause.

(Doc. 125-1 at 69 (emphasis added)).

         Boeing moves for partial summary judgment on MDHI's force majeure defense to Boeing's counterclaims, stating that “the Court can easily rule, based on the language of the contract and the undisputed facts, that MDHI has no force majeure excuse for its delayed performance.” (Doc. 123 at 1). Boeing claims that Article 13's force majeure clause does not apply because Boeing is not seeking excess reprocurement costs after a cancellation of default. (Id. at 8). Notably, MDHI does not dispute that the force majeure clause is inapplicable. (See Doc. 135 at 2 (“Boeing admittedly did not cancel the contract for default, and thus neither Article 15-nor Article 13-are at issue here. Boeing also concedes . . . that it is not seeking any excess reprocurement costs in this case. Article 13 is therefore irrelevant.”), 4 (“In sum, Boeing filed a meaningless motion asking the Court to enter a ruling on a provision of Boeing's GP1 (Article 13) that is not at issue in this case.”)).^[7]

         Despite the parties' agreement that the force majeure clause of GP1 does not apply, MDHI asks that the Court deny Boeing's Motion for Partial Summary Judgment because MDHI has “never invoked” the force majeure clause “in connection with its claims or defenses in this case.” (Id. at 1). Nevertheless, MDHI's denial that it ever invoked the force majeure clause proves disingenuous given that MDHI has explicitly asserted a force majeure defense on multiple occasions in this litigation, including: (1) in its position statement in the Joint Proposed Case Management Plan filed on November 3, 2017, (Doc. 24 at 3); (2) in its Answer and Defenses to Boeing's Counterclaims filed on November 27, 2017, (Doc. 29 at 15 (“The counterclaims are barred, in whole or in part, under the doctrine of force majeure.”)); (3) in its Responses to Boeing's First Set of Interrogatories dated April 18, 2018, (Doc. 141-1 at 38); (4) in its Second Supplemental Response to the Court-Ordered Mandatory Initial Discovery dated May 8, 2018, (id. at 16, 18, 21-22); and (5) in its Supplemental Responses to Boeing's First Set of Interrogatories dated July 10, 2018, (id. at 58). Although MDHI did not set forth the defense of force majeure in the Answer to Boeing's remaining Counterclaims which it filed on May 7, 2018 after the Court ruled on MDHI's Motion to Dismiss, (Doc. 57 at 17-18), MDHI continued to assert a force majeure defense on two occasions thereafter. (See Doc. 141-1 at 16, 18, 21-22, 58 (setting forth a force majeure defense in its Second Supplemental Response to the Court-Ordered Mandatory Initial Discovery dated May 8, 2018 and in its Supplemental Responses to Boeing's First Set of Interrogatories dated July 10, 2018)).

         Given that MDHI has repeatedly raised force majeure, the Court agrees with Boeing that “MDHI cannot credibly claim that Boeing is ‘wast[ing] the Court's and parties' time' by seeking summary judgment on that defense.” (Doc. 141 at 3 (quoting Doc. 135 at 1)). Indeed, it is MDHI who has unnecessarily and unreasonably wasted the Court's time by inaccurately representing its actions in this litigation, and by presenting arguments irrelevant to Boeing's Motion rather than forthrightly abandoning the defense in its Response after admitting that the force majeure clause of Article 13 is not at issue.^[8]However, at oral argument MDHI conceded that it is appropriate for the Court to grant Boeing's Motion for Partial Summary Judgment.^[9] Therefore, the Court will treat this concession, in conjunction with MDHI's failure to assert the affirmative defense of force majeure in its later-filed Answer to Boeing's remaining Counterclaims, (see Doc. 57), and its assertions in its Response to Boeing's Motion for Partial Summary Judgment that Article 13 is inapplicable, (see Doc. 135), as a withdrawal or waiver of that defense.^[10]Accordingly, Boeing's Motion for Partial Summary Judgment is granted to the extent that MDHI will not be permitted to assert Article 13's force majeure excuse in connection with its claims or defenses in this case.

         IV. MDHI'S MOTION FOR SUMMARY JUDGMENT

         MDHI asks that the Court grant summary judgment in favor of MDHI on all claims and remaining counterclaims, specifically MDHI's Breach of Contract claim (or, in the alternative, its Breach of the Implied Covenant of Good Faith and Fair Dealing claim), and Boeing's Third, Fifth, Sixth, Seventh, Eighth and Ninth Counterclaims. (Doc. 146 at 3). In opposition, Boeing asks that the Court deny MDHI's Motion for Summary Judgment in its entirety. (Doc. 137 at 2). The Court now considers each of the parties' claims, and all related arguments, in turn.

         A. Breach of Contract Claims

         “To establish a breach of contract, a [claimant] must prove by a preponderance of the evidence (i) ‘the existence of the contract,' (ii) ‘breach of an obligation imposed by that contract,' and (iii) ‘resultant damage to the [claimant].'” Air Prod. & Chems., Inc. v. Wiesemann, 237 F.Supp.3d 192, 213 (D. Del. 2017) (quoting VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)).^[11] “[I]n order to recover damages for any breach of contract, [the claimant] must demonstrate substantial compliance with all the provisions of his contract.” Emmett S. Hickman Co. v. Emilio Capaldi Developer, Inc., 251 A.2d 571, 573 (Del. Super. Ct. 1969) (citing Carroll v. Cohen, 91 A. 1001, 1003 (Del. Super. Ct. 1914)); see also Frunzi v. Paoli Servs., Inc., C.A. No. N11A-08-001 MMJ, 2012 WL 2691164, at *7 (Del. Super. Ct. July 6, 2012) (“It is established Delaware law that in order to recover damages for a breach of contract, the plaintiff must demonstrate substantial compliance with all of the provisions of the contract.”).

         “A breach of contract may be caused by nonperformance, repudiation, or both.” Preferred Inv. Servs., Inc. v. T & H Bail Bonds, Inc., C.A. No. 5886-VCP, 2013 WL 3934992, at *10 (Del. Ch. July 24, 2013) (citing Restatement (Second) of Contracts § 236 (1981)). “[A] slight breach by one party, while giving rise to an action for damages, will not necessarily terminate the obligations of the injured party to perform under the contract.” E. Elec. & Heating, Inc. v. Pike Creek Prof'l Ctr., No. 85C-MR-79, 1987 WL 9610, at *4 (Del. Super. Ct. Apr. 7, 1987), aff'd, 540 A.2d 1088 (Del. 1988) (citing 11 Williston on Contracts § 1292, at 8 (3d ed. 1968)). Stated differently, “[n]on-performance by the injured party under such circumstances will operate as a breach of contract” by the injured party. Id. A breach is of sufficient importance to justify non-performance by the non-breaching party where the breaching party fails “to do something that is so fundamental to a contract that the failure to perform that obligation defeats the essential purpose of the contract or makes it impossible for the other party to perform under the contract.” eCommerce Indus., Inc. v. MWA Intelligence, Inc., C.A. No. 7471-VCP, 2013 WL 5621678, at *13 (Del. Ch. Sept. 30, 2013) (citing E. Elec. & Heating, Inc., 1987 WL 9610, at *4). “In other words, for a breach of contract to be material, it must ‘go to the root' or ‘essence' of the agreement between the parties, or be ‘one which touches the fundamental purpose of the contract and defeats the object of the parties in entering into the contract.'” Id. (citation omitted); see also 23 Williston on Contracts § 63:3 (4th ed.). Whether a breach is material is ordinarily a question of fact. Norfolk S. Ry. Co. v. Basell USA Inc., 512 F.3d 86, 92 (3d Cir. 2008) (citations omitted).

         Before the Court can determine whether there is a genuine dispute of material fact as to whether either or both parties breached the contracts at issue, however, it must first interpret the provisions of the contracts to determine the parties' respective obligations. “If the terms of the contract ‘are clear on their face, . . . the court must apply the meaning that would be ascribed to the language by a reasonable third party.'” Comrie v. Enterasys Networks, Inc., 837 A.2d 1, 13 (Del. Ch. 2003) (quoting True N. Commc'ns Inc. v. Publicis S.A., 711 A.2d 34, 38 (Del. Ch. 1997)). “If, however, the court concludes that a contract's terms are ambiguous or ‘fairly susceptible of different interpretations,' the court may consider extrinsic evidence to uphold, to the extent possible, the reasonable shared expectations of the parties at the time of contracting.” Id. (citing Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997)). However, “[a] contract is not rendered ambiguous simply because the parties do not agree upon its proper construction. Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.” Rhone-Poulenc Basic Chemicals Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).

         The parties agree that the LTRC, the 2015 MOA, and PCC-32 incorporate GP1, which sets forth various terms governing the parties' relationship over the course of the AH-6i program. (Docs. 16 at 31 ¶ 137; 29 at 12 ¶ 137 (“MDHI admits the LTRC and the 2015 MOA incorporate GP1.”); 125 at 2 ¶¶ 2-3; 136 at 2 ¶ 2). Of note, Article 2(a) of GP1 provides that “Seller shall strictly adhere to the shipment or delivery schedules” and requires MDHI, as the Seller, to “promptly notify” Boeing in writing of any actual or anticipated delays, including delays attributed to labor disputes. (Doc. 127-1 at 44).

         Article 7(b) of GP1 states that if MDHI “delivers non-conforming Goods, ” Boeing “may at its option and at Seller's expense (i) return the Goods for credit or refund; (ii) require Seller to promptly correct or replace the Goods; (iii) correct the Goods; or (iv) obtain replacement Goods from another source.” (Id. at 45). Under Article 7(c), “[r]epair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as Buyer's Authorized Procurement Representative may reasonably direct.” (Id.). Moreover, Article 7(d) provides that “[a]ll costs and expenses and loss of value incurred as a result of or in connection with nonconformance and repair, replacement or other correction may be recovered from Seller by equitable price reduction or credit against any amounts that may be owed to Seller under this contract or otherwise.” (Id.).

         GP1's warranty clause in Article 8(a) states:

Seller warrants that all Goods furnished under this contract shall conform to all specifications and requirements of this contract and shall be free from defects in materials and workmanship. To the extent Goods are not manufactured pursuant to detailed designs and specifications furnished by Buyer, the Goods shall be free from design and specification defects. This warranty shall survive inspection, test and acceptance of, and payment for, the Goods. This warranty shall run to Buyer and its successors, assigns and customers. Such warranty shall begin after Buyer's final acceptance. Buyer may, at its option, either (i) return for credit or refund, or (ii) require prompt correction or replacement of the defective or non-conforming Goods. Return to Seller of defective or nonconforming Goods and redelivery to Buyer of corrected or replaced Goods shall be at Seller's expense. Goods required to be corrected or replaced shall be subject to this article and the “inspection” article of this contract in the same manner and to the same extent as Goods originally delivered under this contract, but only as to the corrected or replaced part or parts thereof. Even if the parties disagree about the existence of a breach of this warranty, Seller shall promptly comply with Buyer's direction to: (i) repair, rework or replace the Goods, or (ii) furnish any materials or parts and installation instructions required to successfully correct the defect or nonconformance. If the parties later determine that Seller did not breach this warranty, the parties shall equitably adjust the contract price.

(Id. (emphasis added)).

         The dispute provision of GP1, Article 12 provides that, “[p]ending final resolution of any dispute, Seller shall proceed with performance of this contract according to Buyer's instructions so long as Buyer continues to pay amounts not in dispute.” (Id. at 46). Article 15(a), GP1's provision regarding cancellation for default, states that Boeing “may, by written notice to [MDHI], cancel all or part of this contract” if MDHI “fails to deliver the Goods within the time specified by this contract or any written extension[.]” (Id. (emphasis added)). Further, Article 15(b) states that “Seller shall continue work not canceled[, ]” (id.), while Article 15(d) states that “Buyer shall pay the contract price for Goods accepted[, ]” (id. at 47).

         The rights and remedies provision of GP1, Article 26, specifies:

Any failures, delays or forbearances of either party in insisting upon or enforcing any provisions of this contract, or in exercising any rights or remedies under this contract, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. Except as otherwise limited in this contract, the rights and remedies set forth herein are cumulative and in addition to any other rights or remedies that the parties may have at law or in equity. If any provision of this contract is or becomes void or unenforceable by law, the remainder shall be valid and enforceable.

(Id. at 49).

         Finally, the LTRC incorporates various Boeing Standard Clauses, including Boeing's H900 Additional General Provisions Clause (“H900 Clause”). (See Doc. 127-1 at 22-23). Section 20 of the H900 Clause concerns delivery payment terms, and states:

Payment will be made in accordance with the Invoice and Payment article of this Contract. Notwithstanding the foregoing, in the event Seller's average monthly delivery rating under this purchase contract drops below 96% On-Time, as measured over the three most recent months in Buyer's BEST System, Buyer and Seller will first work together to resolve the delivery performance issues, which efforts will include the timely, progressive escalation of the delivery performance issues through the management of both Parties, as necessary. If after a reasonable time the Parties are unable to come to a mutually agreeable resolution that results in the improvement of Seller's average monthly delivery ratings, as measured in accordance with the foregoing, the Parties agree that Buyer shall then have the right to adjust the delivery payment terms of this Contract. Such adjustment to the delivery payment terms will be calculated by adding Seller's average days late, as recorded over the three most recent months in Buyer's BEST System, rounded up to a multiple of 30 days, to the standard net 30 days delivery payment term. Seller agrees the payment due date for Seller invoices may remain extended by Buyer by the average number of days late until Seller's average days late, as measured in accordance with the foregoing, is improved to no less than 96%.

(Doc. 16-3 at 53).

         With this background of the relevant terms and provisions, the Court now considers the ...