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China Falcon Flying Limited v. Dassault Falcon Jet Corp.

United States District Court, D. New Jersey

May 8, 2018




         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%-2.5% 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.

         I. Summary of Facts[1]

         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; Pl. Resp. ¶ 1.) Under this agreement, China Falcon would earn a 2.5% commission[2] on the sale of certain Falcon aircraft to two companies, Minsheng Bank and Deer Jet. (Def. St. ¶ 2; Pl Resp. ¶ 2.) The agreement contained language stating that this commission percentage could "be reduced proportionally, if the sale occurred] at a price less than [Dassault Jet]'s current list price." (Def. St. ¶ 3; Pl 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
(b) "the buyer who enters into the contract of sale must [1] complete the acquisition, [2] fully pay for and [3] take title to the aircraft in accordance with the terms of the contract." (Def. St. ¶ 4; Pl. 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. (Pl. Resp. ¶¶ 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. (Pl. St. ¶¶ 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 Deer Jet purchased five Falcon aircraft before June 30, 2010. (Def. St. ¶¶ 5, 7; Pl. Resp. ¶¶ 5, 7.) If not, the FFA would expire on December 31, 2010. (Def. St. ¶ 7; Pl. Resp. ¶ 7.) China Falcon claims it was not aware of the condition governing termination at the time of the amendment's signing. (PI, St. ¶ 1.)

         The parties amended the FFA a second time on January 26, 2011. (Def. St. ¶ 9; Pl. Resp. ¶ 9.) This Second Amendment to the FFA dropped Deer Jet as one of the two specified purchasers, leaving only Minsheng Bank. (Def. St. ¶ 10; Pl. 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/n[3] 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 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. ¶ 13; Pl. Resp. ¶ 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. (Pl. 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 "(according 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." (Pl. Resp. ¶ 11; see also Pl 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 Deer Jet, which were covered by the FFA). (Def. St. ¶¶ 18-20; Pl Resp. ¶¶ 18-20.) To qualify for this commission, the sale had to result "predominantly and primarily" from China Falcon's services. (Def. St. ¶ 21; Pl Resp. ¶ 21.) The parties subsequently amended the SRA four separate times, with the fourth amendment extending the SRA until December 31, 2013. (Def. St. ¶ 23; Pl 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. (Pl St. ¶ 8.) China Falcon claims moreover that this "understanding" between the parties survived the expiration of the relevant written agreements and is documented by email communications between them. (See Pl St. ¶¶ 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; Pl Resp. ¶ 24.) S/n 721 is a model 7200s airplane manufactured by Dassault Jet. (Def. St. ¶ 25; Pl Resp. ¶ 25.) This model was not listed in the SRA. (See Tor. 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 die 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. (Pl Resp. ¶ 26.) China Falcon calculates that 2% commission to be at least a $540, 260. (AC ¶ 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, (Pl 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"], a subsidiary of Minsheng, signed a purchase agreement for s/n 163. (Def. St. ¶ 35; Pl Resp. ¶ 35; Pl St. ¶ 48; Def. Resp. ¶ 48.) However, Minsheng Tianjin failed to take delivery of s/n 163. (Def. St. ¶ 36; Pl Resp. ¶ 36.)

         On September 3, 2013, Minsheng Jiayi Leasing (Fenglong) ["Minsheng Jiayi"], another Minsheng subsidiary, signed an agreement with Dassault Jet to purchase a second aircraft, s/n 212, for $49.65 million. (Def. St. ¶ 38; Pl. Resp. ¶ 38; Pl. St. ¶ 50; Def. 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; Pl. 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; Pl. 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. (Pl. St. ¶ 93.)

         China Falcon contends that, for this s/n 212 sale, it was entitled to a 2.5% commission under the FFA. (Pl. 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/n210, 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. (Pl. St. ¶¶ 49, 53; Klein Decl., ex. 32, at 9; see also Pl. 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. (Pl. St. ¶ 54.)

         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. (Pl. St. ¶ 69.) Here, China Falcon points to an agreement between Minsheng and 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. (Pl. 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. (Pl. 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. ¶¶ 96-98; Pl. 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; Pl. Resp. ¶ 47.) Though the purchase agreement contemplated an April 30, 2012 delivery date for the aircraft (Def. St. ¶ 48; Pl. Resp. ¶ 48), Minsheng Bolong refused to take delivery of die aircraft on that day, saying that it had been unable to arrange a resale or lease of the aircraft. (Def. St. ¶ 49; Pl. 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; Pl. Resp. ¶ 50.) As of October 13, 2013, Minsheng Bolong was still refusing to accept delivery. (Def. St. ¶ 51; Pl Resp. ¶ 51.) These delays caused Dassault Jet to incur expenses for maintenance, storage, and labor. (Def. St. ¶ 52; Pl. Resp. ¶ 52.) Dassault Jet finally sold s/n 157 to another buyer. (Def. St. ¶ 53; Pl. Resp. ¶ 53.)

         On December 24, 2013, another Minsheng entity, Minsheng Fenglong Aviation Leasing Co. Ltd. ["Minsheng Fenglong"], which had been assigned die 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. ¶¶ 54-55; Pl. Resp. ¶¶ 54-55.) That purchase agreement specified a price of $47.95 million for the aircraft. (Def. St. ¶ 58; Pl Resp. ¶ 58.) However, Minsheng Fenglong refused to accept delivery. (Def. St. ¶ 59; Pl 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; Pl 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; Pl Resp. ¶ 62-64.) The price of the aircraft was $47.95 million without the $500, 000 purchase incentive. (Def. St. ¶ 65; Pl Resp. ¶ 65.) Dassault Jet states that China Falcon had "no personal knowledge" of die 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). (Pl 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; Pl 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 die sale of both aircraft. (Pl St. ¶¶ 100, 107, 113.)

         Dassault Jet counters that this was no continuous "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 subsidiary. (Def. 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. (Def. St. ¶¶ 69-70; Pl. 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. ¶ 71-72; Pl. Resp. ¶ 71-72.) Dassault Jet warned Ms. Cheung, though, that "if further negotiations are needed, it will be deducted from your success fees." (Def. St. ¶ 73; Pl. Resp. ¶ 73.) Mr. Li rejected the counteroffer. (Def. St. ¶ 74; Pl 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; Pl Resp. ¶¶ 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. ¶¶ 77-78; Pl Resp. ¶¶ 77-78.) In an email, Ms. Cheung noted that in the past she had "compromise[d]" her commission in order to close a sale, and she informed Dassault Jet that "[i]f we can fulfill die 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. ¶¶ 79-80; Pl Resp. ¶¶ 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. ¶¶ 81-82; Def. Resp. ¶¶ 81-82.) Dassault Jet states that Ms. Cheung informed them that this commission was acceptable to her (Def. St. ¶ 83), at least if the plane sold for that specific price. (Def. St. ¶ 84; Pl Resp. ¶ 84.) However, Mr. Li rejected this offer because the delivery date was unacceptable. (Def. St. ¶ 85; Pl Resp. ¶ 85.)

         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; Pl. 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; Pl. 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; Pl. Resp. ¶¶ 92-93.) Mr. Li's company paid for the aircraft and accepted delivery on May 16, 2013. (Def. St. ¶ 94; Pl. 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 Jet] 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[s] fee." (PI 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. (PI 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. (Pl. 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. (Pl. St. ¶¶ 44-45; Def. Resp. ¶¶ 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. (Pl. St. ¶ 46.) In support it cites the Third Amendment to the SRA which made such a provision for a particular plane. (Id.)

         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, amounting to at least $1, 393, 910. (AC ¶ 60; Pl. St. ¶ 17; Pl St. ¶ 47)[4]

         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 ...

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