NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 18-3521

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MOON EXPRESS, INC.,

Appellant

v.

INTUITIVE MACHINES, LLC

____________

On Appeal from the United States District Court 

for the District of Delaware

(D.C. No. 1-16-cv-00344)

District Judge: Honorable Leonard P. Stark

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Submitted Under Third Circuit L.A.R. 34.1(a)

September 9, 2019

Before: HARDIMAN, GREENAWAY, JR., and BIBAS, Circuit Judges.

(Filed: October 1, 2019)

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OPINION*

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* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does 

not constitute binding precedent.
2

HARDIMAN, Circuit Judge.

This case involves a dispute arising out of two contracts for the development of 

spacecraft to travel to and from the moon and the International Space Station. Moon 

Express, Inc. appeals the District Court’s order denying its motion for a new trial after a 

jury verdict in favor of Intuitive Machines, LLC. For the reasons that follow, we will 

affirm.

I

1

In 2016, Moon Express and Intuitive Machines sued each other for breach of 

contract relating to a flight software contract and a terrestrial return vehicle contract. 

Under the first contract, Intuitive Machines agreed to develop and deliver flight software 

for Moon Express to use as part of a lunar lander. The vehicle contract called for Intuitive 

Machines to provide intellectual property necessary to build a small shuttle that would 

transport materials back to earth from the Space Station.

Neither contract was fully performed and the two companies pointed the finger at 

each other. The dispute went to trial and Intuitive Machines was vindicated in all 

respects, receiving a jury verdict of $1.857 million and Moon Express stock worth $2.25 

million. In this appeal, Moon Express claims the evidence was insufficient to support the 

 

1 The District Court had diversity jurisdiction under 28 U.S.C. § 1332(a)(1). We 

have jurisdiction under 28 U.S.C. § 1291. We review the District Court’s denial of the 

motion for a new trial for abuse of discretion. See, e.g., Wagner by Wagner v. Fair Acres 

Geriatric Ctr., 49 F.3d 1002, 1017 (3d Cir. 1995).
3

jury’s verdict that it breached both the software and vehicle contracts. Moon Express also 

claims the District Court erred in admitting evidence of settlement discussions and in 

permitting Intuitive Machines to receive consequential damages the contract forbade. We 

address each argument in turn.

A

A party seeking to overturn a jury verdict faces an uphill climb. Giving due 

deference to our jury system, we will uphold the verdict if it is rational. See Leonard v. 

Stemtech Int’l Inc, 834 F.3d 376, 386 (3d Cir. 2016). Our review of the record in this case 

leads us to the conclusion that plenty of evidence supported the jury’s decisions that 

Moon Express breached both contracts, that it prevented Intuitive Machines from 

performing the software contract, and that any breach of the vehicle contract by Intuitive 

Machines was immaterial.

As for the software contract, Moon Express breached the contract and prevented

Intuitive Machines from delivering software that worked on its test vehicle. The parties 

negotiated the terms of the software contract in a series of emails. Without a written and 

signed contract, the jury was charged with deciding which terms governed the contract.

Moon Express contends that, under the software contract, it was not obligated to 

provide the test vehicle. But the jury determined that Moon Express prevented Intuitive 

Machines from fulfilling its obligation. Implicit in this jury verdict is a finding that 

Intuitive Machines was obligated to test the software successfully on the test vehicle. And 
4

Moon Express was obligated to deliver the test vehicle before Intuitive Machines could 

conduct that test.

But Moon Express never provided the vehicle necessary to conduct that test. Its 

founder, President, and CEO even testified that because they “didn’t have the test vehicle 

completed . . . there was no way that this software could have been delivered.” App. 

1394. And it gave notice it would not make its second payment under Phase A without 

successfully completing this test. This evidence supports the conclusion that Moon 

Express prevented Intuitive Machines from performing a condition precedent to its 

entitlement to payment. See Mobile Commc’ns Corp. of Am. v. MCI Commc’ns Corp, 

1985 WL 11574, at *4 (Del. Ch. Aug. 27, 1985). That is what the jury found here, so we 

will not disturb its verdict on this basis.2

As for the vehicle contract, Moon Express claims it was entitled to withhold 

payment because Intuitive Machines committed the first material breach. The jury agreed 

with Moon Express that Intuitive Machines breached the contract, but it deemed the 

breach immaterial. Moon Express cites three things Intuitive Machines failed to deliver

on time as material breaches: certain intellectual property, an authorization to visit the 

Space Station, and FAA approval for its first flight. The verdict does not indicate which 

 

2 Moon Express’s objections to the order and wording of the verdict form are 

unavailing because the District Court “adopted the identical language and order of the 

starting question . . . that [Moon Express] had at one point proposed.” Moon Express, Inc. 

v. Intuitive Machs., LLC, 2018 WL 4972220, at *4 (D. Del. Oct. 15, 2018).
5

of these three constituted a breach, so we assume all three did as we examine whether the 

evidence supported the jury’s finding of immateriality.

Regarding the delivery of intellectual property, numerous facts support a finding 

of immateriality. First, the vehicle contract required only the “conveyance of title,” which

occurred. App. 906. Second, a schedule to the contract stated “all [milestone] dates . . .

are approximate and for planning purposes only.” App. 922. Third, Moon Express 

stopped making monthly installment payments while the vehicle was still in 

development. Fourth, Moon Express did not request the intellectual property or assert that 

Intuitive Machines had failed to provide it until months after signing and the deadline for 

conveyance of title had passed. Finally, once Moon Express made the request, Intuitive 

Machines delivered a large number of “design documentation” files within days. App. 

1369.

As for the transfer of Intuitive Machines’s authorization to visit the Space Station, 

the following evidence supported the jury’s finding of immateriality: transferring the 

agreement was not required by the vehicle contract (only requesting that the Station’s 

governing body, the Center for Advancement of Science in Space (CASIS), transfer the 

agreement was); two of Moon Express’s most senior officers knew that CASIS might not 

transfer the agreement even if requested, so they were preparing to get their own 

agreement if needed; and testimony by Intuitive Machines’s President and CEO 

suggested he made reasonable efforts to obtain the transfer (albeit not within the ten days 

as required by the contract).
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Finally, there was plenty of evidence that the breach was immaterial as to the 

Federal Aviation Administration license. The vehicle contract’s target date for the firstflight license—which was “approximate and for planning purposes only,” App. 922—

was August 1, 2016 (months after Moon Express stopped paying Intuitive Machines).

Intuitive Machines had completed two key steps toward obtaining the license, and Moon 

Express’s President and CEO agreed that missing the deadline was “not a basis to call a 

[sic] breach of a contract.” App. 1396.

In sum, we cannot know whether the jury found that Intuitive Machines breached 

the vehicle contract in each of the three respects alleged by Moon Express. But assuming 

breaches in all three respects, we agree with the District Court that none was “so 

fundamental . . . that the failure to perform that obligation defeat[ed] the essential 

purpose of the contract or [made] it impossible for [Moon Express] to perform under the 

contract.” Preferred Inv. Servs., Inc. v. T & H Bail Bonds, Inc., 2013 WL 3934992, at *11 

(Del. Ch. July 24, 2013), aff’d, 108 A.3d 1225 (Del. 2015).

B

Moon Express also urges us to overturn the jury’s verdict on the software contract 

because the District Court allowed prejudicial emails and text messages referring to a 

“software settlement” into evidence. Intuitive Machines responds that those 

communications were admissible because they went to the parties’ negotiations and 

course of dealing, not to an impermissible purpose. See FED. R. EVID. 408 (Evidence of 

compromise offers and negotiations “is not admissible . . . either to prove or disprove the 
7

validity or amount of disputed claim or to impeach by a prior inconsistent statement or a 

contradiction . . . . The court may admit this evidence for another purpose . . . .”). We 

agree with Intuitive Machines.

The challenged communications involved renegotiation of both the software and 

vehicle contracts following Moon Express’s failure to pay two of its monthly installments 

under the software contract. The parties discussed Moon Express’s next installment 

payment and amending the vehicle contract to “connect[]” them. App. 4278. And 

Intuitive Machines eventually accepted Moon Express’s offer to “settle the flight 

software deal” for $500,000. App. 1365.

The District Court found that the challenged evidence would “be relevant to the 

jury understanding the nature of the dispute between the parties regarding contracts in 

this case and the parties’ course of dealing.” App. 1205.It reasonably concluded that the 

evidence would not be used improperly to prove the validity or amount in dispute of 

Intuitive Machine’s claims or to impeach a prior inconsistent statement.

Even if the evidence was used for an improper purpose, Moon Express did not 

object to other evidence that referred to the same potential “settlement” from the same 

time as the challenged communications. Id. So the District Court properly ruled that 

Moon Express would not suffer prejudice from admitting the additional evidence 

referencing the same potential settlement. The District Court did not abuse its discretion 

in this regard.
8

C

Lastly, Moon Express argues the District Court erred in denying its motion for 

reconsideration because it was error to award Intuitive Machines $212,000 in “wind 

down” damages. It claims that, as a matter of law, those costs were consequential 

damages barred by the vehicle contract. See App. 919 (excluding “indirect, 

consequential, or other incidental damages,” which “includes, but is not limited to, any 

damages arising from, or calculated by, the loss of business opportunity, loss of profit, 

loss of production, loss of data, loss of use of hardware, economic loss of use of software, 

indirect, special, or incidental damage”). We disagree.

We first note that the contract is silent as to whether the wind down costs were 

direct or consequential. Absent guidance from the contract, delineating consequential 

damages from direct damages becomes “context-specific” and sometimes difficult given 

“the amorphous state of the law and its confusing efforts to clearly [differentiate] general 

damages, on the one hand, and consequential or special damages on the other.” Pharm. 

Prod. Dev., Inc. v. TVM Life Sci. Ventures, L.P., 2011 WL 549163, at *7 (Del. Ch. 

Feb. 14, 2011). Thus, the costs of “winding up” a business may or may not be direct 

depending on the circumstances, including whether closing down “was the only logical 

step available to [the aggrieved party].” Id. And the commercial context in which a 

contract is made is critical to determine whether particular damages flowing from its 

breach are direct or consequential. Concord Plaza Assocs., Inc. v. Honeywell, Inc., 1987 

WL 8884, at *2 (Del. Super. Ct. Mar. 20, 1987). For these reasons, it made perfect sense 
9

for the District Court to let the jury decide such a fact-intensive question. Accord 

McNally Wellman Co., a Div. of Boliden Allis, Inc. v. N.Y. State Elec. & Gas Corp., 63 

F.3d 1188, 1195 (2d Cir. 1995) (“[O]rdinarily the precise demarcation between direct and 

incidental or consequential damages is an issue of fact . . . .”); see Mem. Order, App. 

443–44 (explaining disputes better suited for the jury). The jury’s $732,000 award—

which included $212,000 for wind down costs—did not compensate Intuitive Machines 

twice for the lost benefit of its bargain. And the evidence the jury received was sufficient 

for the jury to award those costs.

* * *

In our system, jury verdicts are entitled to substantial deference. A careful review 

of the record shows that the District Court afforded the parties a fair trial free of 

evidentiary or legal error. And the evidence presented, viewed in the light most favorable 

to the verdict winner, substantiated each aspect of the verdict. We will therefore affirm.