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Field Aerospace, Inc. v. The Boeing Co.

United States District Court, S.D. Ohio, Western Division

June 22, 2017

FIELD AEROSPACE, INC., et al., Plaintiffs,


          Timothy S. Black United States District Judge

         This civil action is before the Court on Defendant The Boeing Company's motion to dismiss for lack of personal jurisdiction (Doc. 5) and the parties' responsive memoranda (Docs. 16 and 23).[1]


         For purposes of this motion to dismiss, the Court must: (1) view the complaint in the light most favorable to Plaintiffs; and (2) take all well-pleaded factual allegations as true. Tackett v. M&G Polymers, 561 F.3d 478, 488 (6th Cir. 2009).

         A. The Field Entities

         In April 2012, an Ohio corporation named AVAMCO was formed to acquire two companies: Field Aviation, Inc. (“FAI, ” an Ohio Corporation) and Field Aviation Company, Inc., (“FACI, ” a Canadian entity).[2] (Doc. 16, Ex. 1 at ¶ 3). AVAMCO later changed its name to Field Aerospace, Inc. (Id. at ¶ 4). The Field family of companies specializes in aircraft modification. (Id. at ¶ 6). Dan Magarian has at all times served as Chairman of Field Aerospace and its predecessor AVAMCO, based out of Cincinnati, Ohio. (Id. at ¶ 2).

         B. The relationship between Boeing and the Field Entities

         In late spring 2012, Boeing “cold called” FAI's Ohio office, seeking a strategic partner for its mid-market intelligence, surveillance, and reconnaissance/maritime surveillance aircraft program (“MSA program”). (Doc. 16-1 at ¶ 7). Shortly after that call, Boeing presented a program pitch to Field's Ohio-based Chairman (Magarian) as well as to other Field executives. (Doc. 16-1 at ¶ 8). Field and Boeing discussed Field providing proprietary engineering and modification services for the MSA program, beginning with one prototype aircraft: the MSA Demonstrator. (Doc. 16-1 at ¶ 12; Doc. 1-1 at ¶ 8).

         During Boeing's initial presentation, Field informed Boeing of Field's plans to build an Aviation Center of Excellence in Ohio. In internal emails immediately after that pitch, Boeing executives described the possibility of a Field facility in Ohio as “[t]oo good to be true, ” and “in the right location.” (Doc. 16-2, Ex. A).

         Magarian sent Boeing a follow-up letter on June 29, 2012 on FAI letterhead, listing a Cincinnati, Ohio, address, to express Field's interest in partnering with Boeing. (Doc. 16-1 at ¶ 10; Ex. A). A week later, Field's Contract Manager, David MacNeil, sent a Budgetary Letter to Boeing, providing a rough pricing estimate for the MSA Demonstrator project. MacNeil's letter, and an attached summary and support letter from Magarian, were sent on FAI letterhead that listed a Cincinnati, Ohio, address. (Id. at ¶ 11; Exs. B, C). Over the following several months, Magarian, MacNeil, and Brian Love were the principal negotiators and decision-makers for Field in connection with the MSA program. (Id. at ¶ 13).

         As a result of the negotiations, Boeing knew that Field was seeking to build or lease a production facility in Ohio in order to perform modification work once the MSA program entered the production phase.[3] In August 2012, Magarian met with Steve Teske, a Field Marketing Director in Boeing's Dayton-area office, at a trade event in the Dayton area. (Doc. 16-1 at ¶ 21). Magarian reported that meeting to Boeing's Project Manager for the MSA project, Doug Ilgenfritz. (Id. at ¶ 22). Ilgenfritz then briefed Teske on Field's role in the MSA program and efforts to locate a facility in Ohio so that Teske would “have more detail and awareness” regarding the project. (Id.; Ex. E). Boeing offered to make Teske available to assist Field in its efforts to secure an Ohio production facility. (Id. at ¶ 23).

         Throughout the project negotiations, Field sought to secure a long-term role as a supplier for Boeing and to gain some certainty on the scope of its work. (Doc. 16-1 at ¶ 14). On September 21, 2012, John Mackiewicz, the Boeing supplier manager who supported the MSA program, initiated a phone call with Magarian to discuss a commitment from Boeing to make Field its exclusive supplier for up to 30 MSA aircraft, as well as a process for how the parties would address changes to the scope of work on (and therefore the cost of) the MSA Demonstrator. (Id. at ¶ 25; Ex. F). Mackiewicz sent a summary of that conversation, including the parties' respective positions on those terms, to Magarian (who was based in Ohio). (Id.) Magarian sent a response providing a detailed summary of Field's negotiating position. (Id.) Among other things, Magarian recommended that the parties press forward with a term sheet for a future production contract while they negotiated and executed the MSA Demonstrator Purchase Contract (“Purchase Contract”). (Id.)

         The production contract contemplated that Field would be Boeing's exclusive supplier for the first ten MSA aircraft and-provided that Field met certain quality and production capacity requirements-the next 20 as well. (Doc. 1-1 at ¶¶ 18-20). Although the production contract was never signed, Field undertook extensive efforts to locate a site for a production facility in Ohio. (Doc. 16-1 at ¶ 16). Those efforts included working with Governor Kasich, Senator Portman, and several local government officials; securing incentives from Jobs Ohio (a non-profit corporation designed to stimulate job creation in Ohio); and securing substantial incentives from Butler County and the City of Fairfield to expand the Butler County Airport. (Id. at ¶¶ 17-18). Magarian discussed many of these efforts at length with Ilgenfritz. (Id. at ¶ 19-20; Ex. D). Magarian advised Ilgenfritz that Jobs Ohio incentives would be available to fund the Ohio production facility. (Id. at ¶ 20). Ilgenfritz said that a facility in Ohio would be interesting and advantageous. (Id. at ¶ 19, Ex. D). Boeing encouraged and promised to support Field's efforts, and, among other things, offered to make Teske-an Ohio based employee- available to help. (Id. at ¶¶ 19-23).

         On October 2, 2012, Magarian sent an email to Mackiewicz on Field Aviation letterhead, showing Field's Ohio address, asking about Boeing's progress on putting a contract together. Mackiewicz responded that Boeing was updating the statement of work for the MSA Demonstrator project, and planned to issue a final Request for Proposal later that week. (Doc. 16-1 at ¶ 26; Ex. G). He added that Magarian “should not see any surprises based on the level of coordination we have been going through between the teams.” (Id.) Mackiewicz concluded by promising to keep Magarian posted. (Id.)

         About three weeks later, Magarian sent Ilgenfritz an email from Ohio with an agenda for their meeting in Seattle later that week. (Doc. 16-1 at ¶ 27; Ex. H). Among other things, Magarian wanted to discuss “finaliz[ing] open items on the . . . Demonstrator, ” “[m]ov[ing] forward with executing” the parties' contract, the scope of work on the Demonstrator, the term sheet for a future production contract, press releases for the Demonstrator project, and Field's role in marketing the MSA project. (Doc. 16-1 at ¶ 27; Ex. H). Ilgenfritz confirmed that those were all planned topics of discussion. (Id.) In November 2012, Boeing invited Magarian and others to come to Seattle to sign the MSA Demonstrator Purchase Contract. (Id. at ¶ 28; Ex. I).

         C. The Purchase Contract between Boeing and FACI

         On December 4, 2012, Boeing and FACI executed the Purchase Contract. (Doc. 1-1 at ¶ 9; Doc. 9). The Purchase Contract incorporates a “term sheet” for a future production contract. (Doc. 9 at 68). The term sheet states, in relevant part:

Given the uncertainties associated with the Demonstrator Aircraft effort and the parties' shared desire to expedite negotiations associated with the follow-on production contract, the parties have agreed to proceed with collaboration on the Demonstrator Aircraft prior to completing negotiations on a long-term production contract (“Production Contract”) pursuant to which Boeing intends to purchase from Field Aviation modifications to new or used Challenger 604/605 aircraft for maritime surveillance missions (as modified for such missions, the aircraft are referred to as “MSA”). As soon as practical, the parties agree to negotiate in good faith on the terms of a Production Contract, which will include the key terms set forth below. The parties intend to sign the Production Contract at the conclusion of the Demonstrator Aircraft effort (or such earlier time as mutually agreed by the parties).


         In July 2013, Magarian and three others from Field participated in an MSA program review with Boeing. (Doc. 1-1 at ¶ 29). During that review, Magarian discussed Field's efforts to open a facility in Ohio for the production phase of the MSA program. (Id.) Boeing was pleased with that development. (Id.) However, the parties ultimately never entered into a production contract.

         D. Boeing's termination of the Purchase Contract

         In mid-2016, Boeing stopped soliciting orders for MSA aircraft. (Doc.1-1 at ¶ 28). In or around September 2016, Boeing indicated to Field that Boeing was no longer actively marketing the MSA program, and that Boeing would decline any opportunity to sell an MSA. (Id. at ¶ 30). On or about October 11, 2016, Boeing indicated that it terminated the MSA program and transferred the MSA Demonstrator to another division of Boeing for an alternate use, allegedly in breach of the Purchase Contract. (Id. at ¶ 31). On November 1, 2016, Boeing confirmed that it terminated the Purchase Contract effective October 25, 2016, and informed Field that Boeing would not sell an MSA to customers in the future. (Id. at ¶¶ 32-33). Boeing also informed Field that Boeing had transferred the MSA Demonstrator to “Phantom Works, ” a different division of Boeing, in order to allow Boeing to use the MSA Demonstrator for other projects. (Id. at ¶ 34).

         On November 7, 2016, Field submitted a proposed termination settlement of $7, 126, 280, representing the value of the MSA Demonstrator ($6, 478, 600), plus the value of all Boeing-approved changes ($647, 680). (Doc. 1-1 at ¶ 36). Boeing did not pay the proposed settlement amount. (Id. at ¶¶ 37-38). Field claims Boeing is using the MSA Demonstrator to explore non-MSA projects. (Id. at ¶ 40). To date, Boeing has not paid Field for its ...

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