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General Dynamics Loses Suit

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By Renae Merle
Washington Post Staff Writer
Wednesday, September 7, 2005

A federal jury in Greenbelt yesterday ordered General Dynamics Corp. to pay $129.9 million to its onetime partner, Final Analysis Communication Services Inc., a small satellite firm, according to officials for the two companies.

The verdict concluded a seven-week trial in U.S. District Court that included appearances by some of the defense industry's biggest players, including Nicholas D. Chabraja, General Dynamics' chief executive; and Gordon R. England, the former General Dynamics executive who is now acting deputy secretary of defense.

The case centered on whether General Dynamics violated agreements to help Lanham-based Final Analysis develop a $400 million project to launch low-flying satellites for data transmissions, including paging and text message services.

James J. McGuire, attorney for Final Analysis, said the jury ordered General Dynamics to pay a total of $137.9 million but also ordered Final Analysis to pay $8 million under a counterclaim, netting $129.9 million for the smaller company.

General Dynamics is awaiting a final decision by the court, said spokesman Kendall Pease. The judge has asked for briefs from both sides, he said. General Dynamics argued in court that a power struggle between the company's founders contributed to the problems, according to the transcripts.

In the midst of the telecommunications boom in 1998, Final Analysis forged what executives hoped would be a critical partnership with Falls Church-based General Dynamics. The large defense contractor, best known for building tanks and submarines, would buy a 30 percent interest in the smaller company and help with the engineering work. Final Analysis launched three test satellites and was once valued at $400 million to $600 million, according to court documents.

But by 2000, as the telecommunications boom turned into a bust, General Dynamics had backed out, Final Analysis argued in its breach of contract lawsuit. When General Dynamics stopped work on the project, the firm's parent company, Final Analysis Inc., fell into bankruptcy without ever having launched a working satellite or started its service, McGuire said.

Final Analysis is appealing the loss of its Federal Communications Commission license and hopes to use the money the jury awarded to rebuild its business, McGuire said.


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