IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

TRIUMPH AEROSTRUCTURES-
TULSA, LLC

Plaintiff

)

)

)

)

)

v. )
)
SPIRIT AEROSYSTEMS, INC. )
)

Defendant )

)
--------------------------- C.A. No. N17C-11-262 MMJ CCLD
SPIRIT AEROSYSTEMS, INC.

COunterclaim-Plaintiff

V.

TRIUMPH AEROSTRUCTURES -
TULSA, LLC & TRIUMPH GROUP,)
INC. )

)

Counterclaim Defendants)
Submitted: July 19, 2018
Decided: August 8, 2018
On Plaintiff’ s Motion for Judgment on the Pleadings
on the Issue of Liability
GRANTED IN PART

MEMORANDUM OPINION

David J. Margules, Esquire, Evan W. Krick, Esquire, David H. Pittinsky, Esquire
(Argued), Burt M. Rublin, Esquire, Ballard Spahr LLP, Attorneys for Plaintiff

Robert W. Whetzel, Esquire, Travis S. Hunter, Esquire, Richards, Layton &
Finger, P.A., Eric Fishman, Esquire (Argued), Anne Catharine Lefever, Esquire
(Argued), Pillsbury Winthrop Shaw Pittman LLP, Attorneys for Defendant

JOHNSTON, J.

PROCEDURAL AND FACTUAL CONTEXT

Plaintiff Triumph Aerostructures-Tulsa, LLC is a supplier of aerospace
components and systems. Defendant Spirit Aerosystems, lnc. designs and
manufactures large aircraft structures, including wings.

This case arises out of an asset purchase agreement (“APA”). Triumph
acquired two Gulfstream Aerospace Corporation Wing supply programs from Spirit.
The APA, dated December 8, 2014, allocated the parties’ assumption of liabilities
and obligations. Triumph filed this action on December l, 2017.

As the seller, Spirit retained responsibility for EXcluded Liabilities. The
parties now dispute the interpretation of Excluded Liabilities. Triumph alleges that
EXcluded Liabilities includes all “matter[s] set forth on Schedule 3.l9(b).” Spirit
filed a counterclaim, demanding attorneys’ fees and costs incurred in connection

With Triumph’s refusal to assume “all Warranty Liabilities.”

This action was stayed while the parties engaged in mediation. The mediation
was unsuccessful Triumph filed the instant Motion for Partial Judgment on the
Pleadings. Triumph seeks a judicial declaration that Spirit is liable for all Schedule
3.19(b) liabilities.

STANDARD OF REVIEW

The Court reviews a motion for judgment on the pleadings in the light most
favorable to the non-moving party. If the pleadings raise any material issues of fact,
the motion cannot be granted.l Where a motion is supported by affidavits, and
matters outside the pleadings are inj ected, the motion is treated as one for summary
judgment2 When the motion involves contract interpretation, and the provision at
issue is susceptible to more than one reasonable construction, the motion must be
denied.3

ANALYSIS

Triumph’s request for relief in the pending motion is narrow.

Triumph respectfully requests that this Court declare that the

“(including any matter set forth on Schedule 3.l9(b))” Excluded

Liability in APA Section l.2(c)(xi) requires Spirit to “pay, perform,
discharge or otherwise satisfy” all of the Liabilities which arise out of

 

lFagnam' v. Integrz`ty Fin. Corp., 167 A.2d 67, 75 (Del. 1960).

2Brown v. Colonial Chevrolet C0., 249 A.Zd 439, 44l (Del. Super. 1968).

3BAE Sys. N. Arn. Inc. v. Lockheed Marlin Corp., 2004 WL 1739522, at *4 (Del. Ch.).
3

all of the matters set forth on Attachment 3.l9(b), which was
incorporated by reference in Schedule 3. l9(b).4

Spirit counters that the APA expressly states that Triumph assumes “all
Warranty Liabilities.” Thus, all Warranty Liabilities on Schedule 3.19(b) are not
Spirit’s responsibility.

Relevant APA Provisions
Section 1.2 Assumption of Liabilities of the APA provides:

(a) [Triumph] shall assume from [Spirit] . . . all of the Assumed Liabilities (as
defined below).

>l< >l< >l<

(b)(ii) [and (iii)] all Warranty Liabilities arising nom the defective
manufacture [or design] of products . . ., whether manufactured [or designed] before,
on or after the Closing date and whether delivered to customers before, on or after
the Closing Date, but excluding (A) any Liabilities arising from Known Claims . . .

>l< >l< >l<

(c) [Triumph] shall not assume, and [Spirit] shall retain . . . all Liabilities other
than the Assumed Liabilities (collectively, the “Excluded Liabi lities”), including the
following liabilities:

(vii) Liabilities arising from either (A) Known Claims . . .

>l< >l< >l<

(Xi) . . . Liabilities arising out of any lawsuit, proceeding, claim, arbitration,
mediation, governmental inquiry, or investigation pending as of the Closing

 

4Plaintiff’ s Opening Brief at l4.

(including any matter set forth on Schedule 3.19(b)), except for Liabilities to the
extent such Liabilities relate to any act or omission of [Triumph] after the Closing

Date . ..
>l< >l< >l<

12.1 Definitions . . .

“Known Claims” means claims for refund, reimbursement, return,
replacement, repair or correction arising from non-conforming products submitted
to [Spirit] in writing prior to the Closing Date in accordance with the provisions of
the applicable customer agreement.

“Liabilities” means all indebtedness, obligation and other liabilities (or
contingencies that have not yet become liabilities), whether absolute, accrued,
matured, contingent (or based upon any contingency) known or unknown, fixed or
otherwise, or whether due or to become due, including without limitation, any fines,
penalties, judgments, awards or settlements respecting any judicial, administrative
or arbitration proceedings or any damages, losses, claims or demands with respect
to any Law.

Contract Interpretation
A contract is ambiguous when the questioned provision is reasonably
susceptible of two or more interpretations “Courts will not torture contractual terms

to impart ambiguity when ordinary meaning leaves no room for uncertainty.”5 When

a contract is unambiguous, “extrinsic evidence may not be used to interpret the intent

 

5Rhone-Poulenc Basic Chemz'cals Co. v. American Motorists Ins. C0., 616 A.Zd 1192, 1196 (Del.
1992).

of the parties, to vary the terms of the contract, or to create an ambiguity.”6 A party
will be bound to plain, clear and unequivocal contract language. “[C]reating an
ambiguity where none exists could, in effect, create a new contract with rights,
liabilities and duties to which the parties had not assented.”7 Judgment on the
pleadings may be granted as a matter of law to enforce unambiguous contracts
because there is no need to resolve material disputed facts.8
APA Interpretation

Triumph contends that Excluded Liabilities (for which Spirit remains
responsible) include “any matter set forth on Schedule 3.19(b).”9 The APA
definition of Liabilities is broad and comprehensive10 Triumph argues that the
phrase “including any matter set forth on Schedule 3.19(b)” is a term of enlargement,
not limitation.'l Triumph states that Schedule 3.19(b) is a list of Known Claims, of

which Spirit was aware as of the Closing.

 

6Eagle lna'ustries, lnc. v. De Villbiss Health Care, lnc., 702 A.2d 1228, 1232 (Del. 1997).
7Rhone-Poulenc, 616 A.2d at 1195-96; see E.I. duPont de Nemours & C0. v. Medtronic
Vascular, Inc., 2013 WL 261415, at *26 (Del. Super.).

8Alcoa Worla’Alumina LLC v. Glencore Ltd., 2016 WL 521193, at *6 (Del. Super.).

9APA §1.2(c)(xi). Schedule 3.19(b) incorporates Attachment 3.19(b). The list of matters is
actually set forth in Attachment 3.19(b).

l°APA §12.1.

llSee American Surety Co. v. Marotta, 287 U.S. 513, 517 (1933) (“In definitive provisions of
statutes and other writings, ‘include’ is frequently, if not generally, used as a word of extension

or enlargement rather than as one of limitation or enumeration.”).

6

Spirit asserts that the APA requires Triumph to assume “all Warranty
Liabilities . . . whether manufactured before, on or after the Closing Date . . . .”‘2
Spirit posits that Schedule 3.19(b) contains items that did not “aris[e] out of any
lawsuit, proceeding, claim arbitration, mediation, governmental inquiry, or
investigation pending as of the Closing . . . .”‘3 Thus, Spirit claims it is only liable
for Schedule 3.19(b) matters that constituted pending disputes, proceedings, or
investigations as of the Closing.

At this stage of the proceedings, what exactly is included in Schedule 3.19(b)
remains a question of fact. An additional issue of fact is the existence and import of
$15 million Spirit claims it paid Triumph to assume all Warranty Liabilities.
However, neither of these factual questions are relevant upon a finding that the
contractual language at issue is clear and unambiguous The content of Schedule
3.19(b) might come into play to determine the amount of Spirit’s retained liability.
The $15 million payment likely never will be relevant. Spirit has failed to
demonstrate even a prima facie issue of fact that the executed version of the APA

delineated any portion of the sale proceeds as consideration for any specific

assumption of liability.

 

12APA §1.2(b)(ii) and (iii).
'3APA §1.2(¢)(xi).

The Court finds APA §1.2(c)(xi) to be clear and unambiguous This Section
must be interpreted standing alone, as well as construed in the context of the contract
as a whole.14 The plain language can only be read in a way that “including any matter
set forth on Schedule 3.19(b)” modifies and clarifies “Liabilities arising out of any
lawsuit, proceeding, claim, arbitration, mediation, governmental inquiry, or
investigation pending as of Closing . . .” Whether or not Schedule 3.19(b) lists
matters in addition to defined Liabilities is a matter for another day.

Triumph agreed to assume “all Warranty Liabilities.”'5 That assumption
explicitly excludes Known Claims.'6 Spirit agreed to retain Excluded Liabilities17
Excluded Liabilities include Liabilities arising from Known Claims.18 Excluded
Liabilities include any matter set forth on Schedule 3.19(b), which is a Liability
arising out of any lawsuit, proceeding, claim, arbitration, mediation, governmental

inquiry, or investigation pending as of the Closing.19

 

14Kuhn Constr. lnc. v. Diamona' State Port Corp., 990 A.2d 393, 396-97 (Del. 2010) (basic tenet
of contract law requires specific clauses to be construed Within the context of the entire contract,
not in isolation).

15APA §1.2(b)(2).

16 Id

17APA §1.2(0).

18APA §1.2(0)(vii).

19APA §1.2(c)(xi).

CONCLUSION
The Court finds APA §l.2(c)(xi) to be clear and unambiguous Spirit is

required to “pay, perform, discharge or otherwise satisfy”20 all Liabilities arising
from Known Claims. Liabilities include matters set forth on Schedule 3.19(b),
which incorporates Attachment 3.19(b), The Court cannot determine at this juncture
whether every single matter on Attachment 3.19(b) is a “Liability arising out of any
lawsuit, proceeding, claim, arbitration, mediation, governmental inquiry, or
investigation pending as of Closing . . .”

THEREFORE, Plaintiff’ s Motion for Judgment on the Pleadings is hereby
GRANTED IN PART.

IT IS SO ORDERED.

 

The Ho!/'£rable¢Q/ary M. Johnston

 

20APA §1.2(¢).

