Court Opinion

ID: 1007048
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:20:00.942179+00
Date Added: 2024-06-11T09:13:56.351700
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT

THE CENTECH GROUP, INCORPORATED,      
               Plaintiff-Appellant,
                v.                              No. 01-1898
GETRONICSWANG COMPANY, LLC,
              Defendant-Appellee.
                                      
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
               Leonie M. Brinkema, District Judge.
                         (CA-00-1555-A)

                     Argued: February 26, 2002

                     Decided: March 29, 2002

      Before WIDENER and LUTTIG, Circuit Judges, and
    Henry M. HERLONG, United States District Judge for the
        District of South Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.

                            COUNSEL

ARGUED: Grant G. Moy, Jr., Bethesda, Maryland, for Appellant. C.
Allen Foster, GREENBERG TRAURIG, L.L.P., Washington, D.C.,
for Appellee. ON BRIEF: Kenneth A. Martin, Jennifer C. Adams,
MARTIN & ADAMS, P.L.L.C., Washington, D.C.; Daniel M. Press,
Angela L. Hart, CHUNG & PRESS, McLean, Virginia, for Appellant.
Kevin E. Stern, Geoffrey J. Greeves, GREENBERG TRAURIG,
L.L.P., Washington, D.C., for Appellee.
2               THE CENTECH GROUP v. GETRONICSWANG CO.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                                OPINION

PER CURIAM:

   Appellant Centech entered into a contract with the Navy that
required Centech to convert 55 million microfiche personnel records
into digital form by June 30, 1997. Centech then awarded I-NET1 a
subcontract to design and develop a data conversion system.

   Centech became delinquent in its performance of the prime con-
tract with the Navy. On February 29, 1996, Centech and I-NET
agreed to a memorandum of understanding ("Original MOU"), which
stated, in part:

        I-NET agrees to assume liability for performance of the
        prime contract from CENTECH . . . by either of the follow-
        ing methods:

            a. Novation of the Contract from CENTECH to
            I-NET. . . .

            b. Substantial Restructuring of the Subcontract
            Agreement to Allow I-NET to Perform the Major-
            ity of the Remaining Work in Compliance with
            Applicable Government Regulations. . . .

            c. If a. or b. above are not possible, the parties
            agree to work in good faith to restructure the cur-
            rent prime/subcontract arrangement to achieve
            essentially the same objectives with the Govern-
            ment’s approval.

    1
     Appellee Getronicswang is the successor in interest to I-NET.
             THE CENTECH GROUP v. GETRONICSWANG CO.                 3
J.A. 38 (emphasis added). I-NET also agreed, in the original MOU,
to award $9.25 million in subcontracts to Centech over a three-year
period, and to provide Centech with $20 million in bid/teaming
opportunities over a two-year period. J.A. 38-39.

   The parties were unable to agree to a novation or a substantial
restructuring. On May 31, 1996, they entered into a new "memoran-
dum of understanding" ("Revised MOU"), which expressly stated that
it "supercedes all other previous agreements between [Centech] and
[I-NET] made pursuant to the [Navy] contract." J.A. 182 (emphasis
added). It also provided that I-NET

    agrees to assume full liability for the timely, and satisfac-
    tory performance and delivery of the services described in
    the prime contract and to indemnify Centech Group against
    all contractual claims and losses arising from any failure to
    perform such services in a timely or satisfactory manner.

J.A. 182 (emphasis added). The Revised MOU further stated that the
parties have agreed with the Navy that the Navy/Centech prime con-
tract would be terminated and I-NET would enter into a new contract
with the Navy. J.A. 182. Under the Revised MOU, I-NET agreed to
"use commercially reasonable efforts to identify and pursue
bid/teaming opportunities offering projected total contract revenue of
$10 million to Centech Group." J.A. 183.

   Centech now sues I-NET, claiming that I-NET breached the Origi-
nal MOU and the Revised MOU by failing to provide Centech with
the required teaming and bidding opportunities. The district court
granted summary judgment for I-NET on Centech’s claim under the
Original MOU, because the Original MOU had been abrogated by the
Revised MOU, which stated that "[t]his agreement . . . supercedes any
and all other agreements between [Centech] and [I-NET]."). The dis-
trict court rejected Centech’s claim that Revised MOU was not a valid
contract. Centech appeals.

                                  I.

   Centech argues that the Revised MOU was not supported by con-
sideration, claiming that each promise made to Centech by I-NET in
4             THE CENTECH GROUP v. GETRONICSWANG CO.
the Revised MOU had already been made in the Original MOU. How-
ever, we agree with the district court that the Revised MOU was sup-
ported by consideration. In the Revised MOU, I-NET agreed to
assume the prime contract by entering into a new contract with the
Navy, unlike the Original MOU, which said the parties would merely
"work in good faith" to restructure their contracts if they were unable
to agree on a novation or substantial restructuring of their subcontract.
Under the Revised MOU, I-NET definitely assumed Centech’s
responsibilities under the prime contract. The Original MOU, on the
other hand, was conditional — I-NET would only assume Centech’s
responsibilities if the parties could agree to a novation, a substantial
restructuring of their subcontract, or successfully work in good faith
to restructure the contractual arrangements. J.A. 221-25.

   Centech nevertheless argues that the Original MOU was not condi-
tional, because it "states flatly that ‘I-NET agrees to assume liability
for performance of the prime contract,’ and then goes on to describe
how that will be accomplished." Reply Br. at 7 (emphasis in original).
That is not a fair reading of the Original MOU, under which I-NET
agreed to assume liability for the prime contract "by either of the fol-
lowing methods." J.A. 38 (emphasis added). The Original MOU was
not a definite promise by I-NET to assume the prime contract, with
sections a., b., and c. merely "describing" how that will be done.
Rather, I-NET only agreed to assume Centech’s responsibilities under
the prime contract by one of the methods listed in a., b., or c. The dis-
trict court was correct to find consideration in the Revised MOU, in
which I-NET flatly assumed Centech’s responsibilities under the
prime contract with no strings attached.2

                                   II.

   Centech further asserts that the Revised MOU is invalid because it
was procured by duress. Centech claims that I-NET "threatened" to
discontinue its performance under its subcontract with Centech,
    2
   We find no ambiguity on the face of either the Original MOU or the
Revised MOU. It is obvious on the face of the Original MOU that I-NET
would only assume Centech’s responsibilities under the prime contract
if certain conditions were met. Accordingly, we do not consider
Centech’s parol evidence.
             THE CENTECH GROUP v. GETRONICSWANG CO.                    5
which induced Centech to sign the Revised MOU. I-NET’s alleged
"threat" hardly constitutes the coercive circumstances necessary for a
claim of economic duress. For duress to exist under Virginia law, "not
only must a threat be improper, but it must leave the aggrieved party
without any reasonable alternative other than to assent to the con-
tract." King v. Donnkenny, Inc., 84 F. Supp. 2d 736, 739 (W.D. Va.
2000) (emphasis added). Centech had many "reasonable alternatives"
other than to sign the Revised MOU in response to I-NET’s alleged
threat. It could have filed a declaratory judgment or an anticipatory
lawsuit against I-NET, or it could have sought to renegotiate its prime
contract with the Navy, to name just a few.

   The record shows that the Revised MOU was the result of arms-
length discussions between sophisticated corporate parties, and
Centech even consulted with its in-house counsel, Grant Moy, before
signing the Revised MOU. We find Centech’s claim of duress to be
without merit.

                           CONCLUSION

  For these reasons, the judgment of the district court is affirmed.

                                                          AFFIRMED