Textron Aviation Defense LLC v. United States

Court of Appeals for the Federal Circuit·Decided April 3, 2025·No. 23-1042·Unpublished

Opinion

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit

TEXTRON AVIATION DEFENSE LLC, Plaintiff-Appellant

v.

UNITED STATES, Defendant-Appellee

2023-1042

Appeal from the United States Court of Federal Claims in No. 1:20-cv-01903-MHS, Judge Matthew H. Solomson.

Decided: April 3, 2025

WILLIAM R. PETERSON, Morgan, Lewis & Bockius LLP, Houston, TX, argued for plaintiff-appellant. Also represented by WILLIAM BARRON ARBUTHNOT AVERY, DOUGLAS W. BARUCH, JENNIFER M. WOLLENBERG, Washington, DC; JULIE S. GOLDEMBERG, Philadelphia, PA.

DANIEL B. VOLK, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington , DC, argued for defendant-appellee. Also represented by BRIAN M. BOYNTON, ELIZABETH MARIE HOSFORD, PATRICIA M. MCCARTHY, ANTONIA RAMOS SOARES.

2 TEXTRON AVIATION DEFENSE LLC v. US

Before PROST, CLEVENGER, and CUNNINGHAM, Circuit Judges.

CUNNINGHAM, Circuit Judge.

Textron Aviation Defense LLC (“Textron”) appeals from a decision of the United States Court of Federal Claims granting the government’s motion to dismiss Textron ’s complaint for failure to state a claim upon which relief may be granted and, in the alternative, for summary judgment. Textron Aviation Def. LLC v. United States, 161 Fed. Cl. 256 (2022) (“Decision”). The Court of Federal Claims found Textron’s complaint was time-barred by the Contract Dispute Act’s six-year statute of limitations. Id. at 275. For the reasons explained below, we affirm the grant of summary judgment by the Court of Federal Claims.

I. BACKGROUND

This case relates to pension contracts between the federal government and Textron’s predecessor-in-interest, Hawker Beechcraft Defense Company, LLC (“HBDC”). Decision at 261–62. Textron seeks approximately $19.4 million in pension cost adjustments from the United States pursuant to the Contract Disputes Act (“CDA”), codified as amended at 41 U.S.C. §§ 7101–7109. Id. at 262–63; J.A. 53.

The contracts at issue are subject to certain Cost Accounting Standards (“CAS”). The CAS provisions “provide uniformity in how contractors measure, assign, and allocate costs to Government contracts.” Gates v. Raytheon Co., 584 F.3d 1062, 1064 (Fed. Cir. 2009). The CAS provisions include standards for the composition, measurement, adjustment, and allocation of pension costs and pension

TEXTRON AVIATION DEFENSE LLC v. US 3

cost adjustments. See CAS 401–420. 1 The contracts are covered by the CAS, meaning they incorporate Federal Acquisition Regulation (“FAR”) 52.230-2, 2 which requires contractors to comply with all CAS in effect and any later modifications or amendments. FAR 52.230-2; Decision at 260; J.A. 33, 39, 47.

At issue in this case is CAS 413, entitled “Adjustment and Allocation of Pension Cost.” When a business segment closes, CAS 413 provides that the contractor must “determine the difference between the actuarial accrued liability for the segment and the market value of the assets allocated to the segment.” CAS 413-50(c)(12); Raytheon Co. v. United States, 747 F.3d 1341, 1346 (Fed. Cir. 2014). “The difference between the plan’s assets and liabilities indicates the amount by which the plan is over- or underfunded .” Gates, 584 F.3d at 1065. CAS 413–50(c)(12)(vi) identifies a method for calculating the government’s “share” of this difference. Id. “If the adjustment results in a surplus, the [g]overnment may be entitled to recover its share from the contractor.” Raytheon, 747 F.3d at 1346–47 (citing CAS 413–50(c)(12)(vi)). “If the adjustment results in a deficit, the contractor may be entitled to recover its share from the [g]overnment.” Id. at 1347.

The contractual rights and obligations at issue in this appeal arise from the termination and curtailment of CAScovered pension contracts between the federal government

1 The CAS provisions are codified in Title 48 of the Code of Federal Regulations. For brevity, we refer to the CAS without corresponding C.F.R. citations. For example, “CAS 412” corresponds to 48 C.F.R. § 9904.412.

2 The FAR is codified in Title 48 of the Code of Federal Regulations. For brevity, we refer to the FAR without corresponding C.F.R. citations. For example, FAR 52.230- 2 corresponds to 48 C.F.R. § 52.230-2.

4 TEXTRON AVIATION DEFENSE LLC v. US

and Textron’s predecessor-in-interest, HBDC. Decision at 261–62; J.A. 36, 39, 48. In May 2012, HBDC’s parent company and its related entities (collectively, “Beechcraft”) began formal bankruptcy proceedings. Decision at 262; J.A. 37, 124. HBDC’s parent company, the Hawker Beechcraft Corporation (“HBC”), contributed to three employee pension plans, Decision at 262, that were available to certain employees who performed under the contracts. J.A. 37. On December 31, 2012, as part of the bankruptcy proceedings, Beechcraft terminated two of the pension plans and curtailed the third. Decision at 262; J.A. 37–38. Beechcraft’s bankruptcy proceedings concluded on February 15, 2013. Decision at 262; J.A. 41.

On March 14, 2014, Textron’s indirect parent, Textron Inc. (“TI”), acquired Beech Holdings, LLC; 3 this acquisition included the contracts at issue. Decision at 262 & n.10; J.A. 41. “Through a series of corporate acquisitions, mergers, and new entity formations, Textron [ ] acquired the contractual rights and obligations” arising from the termination or curtailment of the three pension plans. Decision at 262; J.A. 34, 42.

On April 4, 2018, TI sent a letter to the government requesting pension adjustment costs pursuant to CAS 413; Textron refers to this letter as the “CAS 413 Submission.” Decision at 262; J.A. 42, 99. TI requested $18.9 million under CAS 413-50(c)(12) because of Beechcraft’s pension plan terminations and curtailment. Decision at 262; J.A. 43–45, 99, 111. “In February 2020, the Defense Contract Audit Agency audited [TI’s April 2018 request] and determined

3 “On May 13, 2014, [TI] formed Textron Aviation Inc. (“TAI”) as the corporate parent of Beech Holdings . . . . On January 1, 2017, [TI] merged Beech Holdings into TAI; as a result, Beechcraft Defense Company (formerly HBDC) became a wholly-owned subsidiary of TAI.” Decision at 262 n.10.

TEXTRON AVIATION DEFENSE LLC v. US 5

that the government’s share of the terminated plans should be approximately $19.4 million.” Decision at 262; J.A. 46; see also J.A. 218–23.

As of April 6, 2020, the government had not paid, and refused to pay, any Textron entity any of the money TI demanded . Decision at 262; J.A. 46. On July 22, 2020, Textron submitted to the government a certified CDA claim for approximately $19.4 million, alleging breach of contract based on the government’s failure to pay the requested pension cost adjustments. Decision at 262–63; J.A. 34–35; see also J.A. 75–94 (claim letter). On September 8, 2020, the contracting officer denied Textron’s claim, finding the claim time-barred by the statute of limitations at 41 U.S.C. § 7103. Decision at 263; J.A. 172–73.

On December 18, 2020, Textron filed a complaint in the Court of Federal Claims, alleging three counts of breach of contract and seeking total damages of approximately $19.4 million in addition to CDA interest. Decision at 263; J.A. 32–53 (complaint). Textron asserted that the government failed to comply with its contractual obligations pursuant to CAS 413. J.A. 32; see also Decision at 262–63. On February 16, 2021, the government moved to dismiss or, alternatively , for summary judgment, arguing that Textron’s claim is barred by the CDA statute of limitations codified at 41 U.S.C. § 7103(a)(4)(A). Decision at 263; J.A. 64, 68. Textron cross-moved for partial summary judgment that its claim was timely. Decision at 263; J.A. 175, 193.

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