IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA Greensboro Division

__________________________________________ KDH Defense Systems, Inc. 750A Fieldcrest Road Eden, North Carolina 27288, Plaintiff, v. Eagle Industries Unlimited, Inc. 1000 Biltmore Drive Fenton, Missouri 63026, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) COMPLAINT Plaintiff KDH Defense Systems, Inc. (“KDH”), by way of this Complaint against the Defendant, Eagle Industries Unlimited, Inc. (“Eagle”), hereby alleges as follows: NATURE OF THE ACTION 1. This is an action for breach of contract arising from Eagle’s violation of

Civil Action No. 1:11-cv-843 Jury Trial Demanded

contractual obligations owed to KDH. Facing significant time pressures and penalty provisions under a contract with the United States Marine Corps Systems Command (“Marine Corps”) in January 2011, Eagle turned to KDH to manufacture, among other items, protective panels (front and back) to be inserted into 3,884 large ballistic panel vests (“Large Vest Panels”) for Eagle to supply to the Marine Corps. Eagle’s previous manufacturer’s vest products failed during testing. Responding to Eagle’s urgent time sensitivity, KDH quickly submitted two proposals to respond to two order scenarios set forth in Eagle’s January 13, 2011 Request for Quote (“RFQ”).

Despite: (a) KDH immediately responding to aid Eagle in a time of commercial need; (b) Eagle orally directing KDH to proceed with production and delivery of a large order of vest panels, including enough Large Vest Panels to fill 3,884 vests; and (c) KDH performing in reliance on Eagle’s direction and agreement to pay for the number of units ordered, Eagle failed to purchase front and back panels for use in 1,192 of the large vests at more than $206 per unit—more than 30% of the total order for Large Vest Panels. Eagle admitted its mistake and promised to buy the number ordered but has failed to date to do so. Accordingly, Eagle breached its contract and caused KDH to incur damages including without limitation, material, labor, storage, and administration costs, lost profits, attorneys’ fees, and interest. PARTIES 2. Plaintiff, KDH, is a corporation organized and existing under the laws of the

Commonwealth of Pennsylvania, with its principal place of business located at 750A Fieldcrest Road, Eden, North Carolina. KDH is a leading manufacturer of American-made custom solutions for body armor. The company designs, manufactures and distributes high-performance body armor for military, federal government and law enforcement agencies. 3. Defendant, Eagle, is a corporation organized and existing under the laws of the

State of Missouri, with its principal place of business located at 1000 Biltmore Drive, Fenton, Missouri. JURISDICTION AND VENUE 4. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1),

in that KDH and Eagle are citizens of different states and the amount in controversy exceeds $75,000.00, exclusive of interest and costs.

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5.

Venue is proper in the United States District Court for the Middle District of

North Carolina, Greensboro Division, pursuant to 28 U.S.C. § 1391(a) and (c), because: (1) KDH has its principal place of business in Rockingham County, North Carolina; and (2) the Defendants are subject to personal jurisdiction in North Carolina by virtue of their having transacted business in North Carolina pursuant to N.C. Code § 1-75.4 and by virtue of having a registered agent for service of process in North Carolina. FACTUAL ALLEGATIONS 6. Eagle served as the general contractor in a contract involving the supply of Kevlar

soft armored vests to the U.S. Marine Corps (“Eagle/Marine Corps Contract”). 7. In connection with that contract, Eagle reached out to KDH in North Carolina to

emergently assist Eagle in fulfilling its time sensitive obligations to produce protective panels for use in over 12,000 body armor vests. 8. Specifically, under extremely significant and disclosed time pressures, Eagle sent

to KDH a Request for Quote (“RFQ”) on January 13, 2011, for soft armor vest panels, which RFQ sought two separate quotes for two purchase/production scenarios. A true and correct copy of Eagle’s RFQ is attached hereto as Exhibit “A.” 9. The emergent need arose because vest panels from a previous manufacturer that

Eagle had engaged failed product testing, placing Eagle in serious jeopardy of failing to meet stringent production deadlines, and exposing Eagle to substantial late delivery penalties under the Eagle/Marine Corps Contract. 10. Eagle, needing a quick turn-around, requested that KDH promptly respond to the

Eagle-authored RFQ.

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11.

KDH provided quick and timely responses to both of the RFQ’s

purchase/production scenarios within two days (by January 15, 2011). 12. Shortly thereafter, Eagle orally told KDH that it accepted KDH’s proposal, and

Eagle ultimately directed KDH to proceed to manufacture and deliver front and back body armor panels for the second scenario under Eagle’s RFQ (Ex. A), requesting front and back panels to fill more than 12,000 vests at the designated unit price (which varied with the size of the vest panel). 13. KDH ordered materials and devoted the labor force and manufacturing space

necessary to cut the material to fit the contract’s precise specifications and complete the order as quickly as possible. 14. Included in the order Eagle directed KDH to fill were front and back body armor

panels for 3,884 large vests at $206.83 per vest. 15. After the oral direction to proceed, and after KDH performed, Eagle followed up

and sent a unit/price purchase order to KDH for all vests. For the large vest panels, the numbers in the purchase orders equated to panels to fill a total of 2,692 large vests, which was 1,192 fewer large vests than the 3,884 large vests requested in Eagle’s RFQ (Ex. A, scenario 2), and 1,192 fewer vests than the number for which Eagle directed KDH to manufacture panels. 16. As a result, on February 18, 2011, KDH informed Eagle that the Purchase Order

total of front and back panels to fill 2,692 large vests was less than the Eagle-ordered number of panels to fill 3,884 large vests. 17. Eagle’s representative, Mr. Canas, responded, stating that he would look into the

issue and get back to KDH.

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18.

That same day, Eagle admitted that the Request for Quote that Eagle authored,

sent to KDH, and asked KDH to quote on was incorrect, and that Eagle would look for ways to buy the remaining large vests from KDH. 19. Specifically, Mr. Canas, on Eagle’s behalf, stated that “[t]here was a discrepancy

in the number of large pieces required that had not been realized at the time of the RFQ. We unfortunately do not need the extra larges. That being said, we are very grateful for this opportunity and are looking into a couple ways we could buy that extra armor from KDH.” 20. In a subsequent meeting in March 2011, Eagle again promised that it would

purchase the panels for the 1,192 remaining large vests. 21. However, despite several representations to the contrary, Eagle has not purchased

or followed through on its intention to purchase any of the remaining Large Vest Panels that were part of Eagle’s acceptance and order. 22. The overall order for vest panels to fill more than 12,000 different sized vests

(and other than the panels to fill the 1,192 large vests at issue), proceeded as Eagle directed and ordered. Eagle took delivery of all such other vests, and delivered them to the Marine Corps. 23. The Marine Corps accepted the vests and paid Eagle for them. Eagle, in turn,

paid KDH for the vest panels that Eagle accepted. No vest panel was ever rejected (nor was payment for any ever withheld) for any reasons related to quality, performance, or compliance with specifications. In fact, none were rejected for any reason whatsoever, other than the 1,192 Large Vest Panels at issue in this matter, which Eagle has apparently refused to accept after admitting that it made an error in the number ordered. 24. Eagle has never criticized or questioned the quality of any vest panel ordered,

including the panels to fill 1,192 large vests at issue.

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COUNT I Claim for Breach of Contract Against Eagle 25. KDH incorporates by reference the averments contained in the paragraphs above

as fully as if set forth herein. 26. KDH and Eagle entered into a duly executed and enforceable contract; Eagle

accepted KDH’s proposal, and Eagle ordered and directed KDH to proceed to manufacture and deliver front and back body armor panels to fill over 12,000 body armor vests for the Eagle/Marine Corps Contract, including without limitation panels to fill 3,884 large vests. 27. 28. KDH performed its obligations under the contract. Eagle failed to perform its obligations under the contract, in part, because it failed

to purchase panels for 1,192 large vests as it was required to do pursuant to the clear and unambiguous terms of its oral direction. 29. 30. Eagle’s breach has caused damages to KDH. Specifically, KDH has incurred and suffered damages caused by Eagle’s breach

of contract in the form of costs and expenses for: (a) purchasing the materials; (b) manufacturing the vests; and (c) the additional administrative and storage costs (among other costs) incurred in holding the Large Vests (uniquely manufactured pursuant to precise specifications for a Marine Corps/Eagle Contract) and for lost profits and attorneys’ fees. 31. Eagle’s breaches of contract are the actual cause of the damages sustained by

KDH, which damages are recoverable under North Carolina law. Those damages exceed $75,000.00. WHEREFORE, Plaintiff KDH Defense Systems demands judgment against Defendant Eagle Industries Unlimited, Inc., and seeks recovery of the damages outlined above, plus costs, interest, and such other relief the Court deems just and equitable.

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COUNT II Claim for Breach of Duty of Good Faith and Fair Dealing Against Eagle 32. KDH incorporates by reference the averments contained in the paragraphs above

as fully as if set forth herein. 33. By entering into a contract with KDH, Eagle is subject to the implied covenant of

good faith and fair dealing applicable to all contracts in the State of North Carolina. 34. The implied covenant of good faith and fair dealing required that Eagle not do

anything that would have the effect of destroying or injuring KDH’s right to receive the fruits of its agreement with Eagle. 35. Eagle intentionally refused to comply with the express terms of the contract when

it failed to purchase and take delivery of the panels to fill the remaining 1,192 large vests that it had ordered. 36. 37. In doing so, Eagle destroyed KDH’s right to receive the fruits of the contract. As a result, KDH has suffered actual damages in excess of $75,000.00.

WHEREFORE, Plaintiff KDH Defense Systems demands judgment against Defendant Eagle Industries Unlimited, Inc., and seeks recovery of the damages outlined above, plus costs, interest, and such other relief the Court deems just and equitable. COUNT III Claim for Quantum Meruit/Unjust Enrichment Against Eagle 38. KDH incorporates by reference the averments contained in the paragraphs above

as fully as if set forth herein. 39. 40. Alternatively, KDH pleads the theories of quantum meruit and unjust enrichment. Specifically, relying on Eagle directing the production of front and back body

armor panels to fill over 12,000 vests (including without limitation 3,884 large vests) on the

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promise of payment, KDH undertook the material purchases and labor efforts necessary to manufacture the total number of vests ordered. 41. As a result of undertaking these actions, KDH conferred a benefit on Eagle for

which Eagle has failed to fairly and properly compensate KDH. 42. 43. In this respect, Eagle has been unjustly enriched. In addition, KDH is entitled to the reasonable value of the Large Vests that Eagle

refused to take delivery of or pay for. 44. As a result, KDH seeks recovery of the value of the benefit KDH’s performance

conferred on Eagle, and/or the value of the Large Vest Panels that Eagle ordered but failed to take delivery of and pay for. The value of the Large Vest Panels at issue exceeds $75,000.00. WHEREFORE, Plaintiff KDH Defense Systems demands judgment against Defendant Eagle Industries Unlimited, Inc., and seeks recovery of the damages outlined above, plus costs, interest, and such other relief the Court deems just and equitable. COUNT IV Claim for Promissory Estoppel Against Eagle 45. KDH incorporates by reference the averments contained in the paragraphs above

as fully as if set forth herein. 46. KDH relied on the oral and written conduct, representations and promises of

Eagle, designed to create the expectation that Eagle would take delivery of and pay for the quantity of vests (including panels to fill the 1,192 large vests at issue) listed in the RFQ— scenario 2, and that KDH would be paid in accordance with its proposal that Eagle accepted. 47. Eagle’s promises induced KDH to proceed immediately (and over several weeks)

to manufacture the total number of vests ordered.

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48.

Eagle failed to honor its representations and promises concerning the acceptance

of and payment of panels to fill 1,192 large vests. 49. Injustice can be avoided only by enforcing the representations and promises of

Eagle which induced KDH to act, and created the expectation of acceptance of and payment for all panels ordered, including panels to fill the 1,192 large vests at issue. 50. As a result, Eagle is estopped from asserting any right to refuse delivery of and/or

payment for those panels. WHEREFORE, Plaintiff KDH Defense Systems demands judgment against Defendant Eagle Industries Unlimited, Inc., and seeks recovery of the damages outlined above, plus costs, interest, and such other relief the Court deems just and equitable. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays that this honorable Court will take jurisdiction of this proceeding; that it be awarded damages against the Defendant; and for such other and further relief as the Court may find warranted.

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JURY TRIAL DEMAND The Plaintiff hereby demands a trial by jury on all issues triable by jury.

DATED: October 7, 2011

Respectfully submitted, /s/ Pamela S. Duffy Pamela S. Duffy, Esquire (N.C. State Bar #18329) Molly A. Whitlatch, Esquire (N.C. State Bar #34137) WISHART NORRIS HENNINGER & PITTMAN, P.A. 3120 South Church Street P.O. Box 1998 Burlington, NC 27216-1998 Tel: (336) 584-3388 Fax: (336) 584-3994 Pam.Duffy@wnhplaw.com Molly.Whitlatch@wnhplaw.com David A. Dorey, Esquire Michael A. Iannucci, Esquire BLANK ROME LLP One Logan Square Philadelphia, PA 19103-6998 Tel: (215) 569-5500 Fax: (215) 569-5555 Dorey@BlankRome.com Iannucci@BlankRome.com Counsel for Plaintiff KDH Defense Systems, Inc.

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