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Lindau Chemicals, Inc. v. Matheson Tri-Gas, Inc.

United States District Court, D. South Carolina, Columbia Division

December 11, 2018

Lindau Chemicals, Inc., Plaintiff,
v.
Matheson Tri-Gas, Inc., Defendant.

          AMENDED ORDER AND OPINION

         This matter is before the court pursuant to Plaintiff Lindau Chemicals, Inc.'s Motion for Summary Judgment against Defendant Matheson Tri-Gas, Inc. (ECF No. 30.) The court DENIES Plaintiff's Motion for Summary Judgment (ECF No. 30).

         I. JURISDICTION

         The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1) because there is complete diversity of citizenship[1] between the parties and the amount in controversy herein exceeds the sum of Seventy-Five Thousand ($75, 000.00) Dollars, exclusive of interest and costs. (See ECF No. 1 at 3-4, ¶¶ 10-12.)

         II. FACTUAL AND PROCEDURAL BACKGROUND

         Air Liquide U.S., L.P., (“Air Liquide”) (later acquired by Defendant) entered into the Bulk Product Agreement (the “Agreement”) with Plaintiff for the supply of liquid nitrogen from Air Liquide to Plaintiff. (ECF Nos. 30 at 1; 30-1; 31 at 1.) The parties executed the Agreement in January of 2011 with a retroactive effective date of October 25, 2010. (ECF Nos. 30 at 2; 30-1; 31 at 2.) The Agreement is a requirements contract for Defendant to supply Plaintiff with bulk liquid nitrogen which is housed in Defendant's tank on Plaintiff's facility. (ECF Nos. 8 at 1-2; 19 at 1-2.) The Agreement required that it would last for an initial term of 84 months which was set to expire as of October 25, 2017. (ECF Nos. 8 at 1; 30-1; 31 at 2.) The contract would automatically renew for an additional 84-month term, unless cancelled by either party by providing 12 months' notice before the expiration of the initial or renewal term. (ECF Nos. 8 at 1-2; 30-1; 31 at 2.)

         Paragraph 5(d) of the Agreement states:

if Customer requests relocation or modification of the Systems, Supplier may, at its option, carry out the relocation or modification. In that case, the term of this Agreement will be extended to a new Initial Term of the same length as the original Initial Term. The new term shall begin on the first day of the month following the completion of the relocation or modification. (ECF No. 30-1.)

         Paragraph 5(b)(v) of the Agreement states that “Customer shall at its expense . . . reimburse Supplier for costs associated with the installation of any System installed by the Supplier.” (Id.)

         In August 2015, Plaintiff requested that Air Liquide install a new regulator manifold system. (ECF Nos. 30 at 3; 31 at 2.)[2] Plaintiff's Maintenance Manager John Hinkle, who has a bachelor of science degree in chemical engineering and over 18 years of experience in the chemical manufacturing industry, determined Plaintiff needed a new manifold and coordinated this installation. (ECF Nos. 30-2 at 1; 30-13 at 21.)

         Air Liquide completed the work on August 21, 2015. (ECF Nos. 30 at 3; 31 at 2.) Plaintiff did not pay Defendant for this work. (ECF No. 30 at 4.) Plaintiff alleges the manifold would have cost roughly $2, 000.00 to $5, 000.00 to acquire on the open market in 2015 and that the installation took several hours to complete. (ECF No. 30 at 3-4.) Defendant alleges the manifold would have cost roughly $8, 000.00. (ECF No. 31-3.)

         Robert Watkins, who joined Defendant as Regional Sales Manager in January 2017, previously worked as Air Liquide's Sales Manager for 28 years and had sales management responsibility for the Agreement. (ECF No. 31-3 at 1.) Watkins signed a letter dated August 28, 2015, which is addressed to Hinkle; the letter stated that the installation was completed on August 21, 2015 and “in accordance with Section 5 (d) of the Bulk Product Agreement between our firms, the Term of the Agreement is extended for a new Initial Term. The new Initial Term will commence on September 1, 2015 and shall remain in effect for a period of 84 consecutive months.” (ECF No. 30-12.) Plaintiff alleges it has no record of receiving this letter prior to October 12, 2017, when it was attached to an email from Defendant in which Defendant alleged that the new initial term had been triggered in August 2015. (ECF Nos. 30-11; 30-13 at 54-55; 30-14 at 35.)

         In September of 2016, Defendant acquired the rights to the Agreement with Plaintiff from Air Liquide and began providing liquid nitrogen to Plaintiff at its facilities. (ECF Nos. 30 at 4; 30-3; 31 at 3.) On October 20, 2016, Plaintiff sent a letter notifying Defendant of its intention to terminate the Agreement. (ECF Nos. 30 at 4; 30-4; 31 at 3.) Defendant alleges that it was not aware of the purported new initial term at that time. (ECF No. 31 at 3.) In the Spring of 2017 Defendant engaged in negotiations with Plaintiff in an effort to continue the relationship, but the negotiations failed. (ECF Nos. 30 at 4-5; 31 at 3.) On June 29, 2017, Defendant sent Plaintiff a letter stating that, effective July 11, 2017, Defendant would increase its monthly prices. (ECF Nos. 30 at 5; 30-10; 31 at 11.) Plaintiff purports the increase was 15% for liquid nitrogen and 10% for the addition of various other fees. (ECF No. 30 at 5.) In its Second Motion for Summary Judgment, Plaintiff argues that because the price increase was above 5%, Defendant's actions potentially triggered the “Revision of Prices” clause in ¶ 6. (Id. at 6.) This clause states that if Defendant increases prices by an amount greater than 5%, Plaintiff can present Defendant with a price quote from another supplier. (ECF No. 30-1.) Defendant can then either 1) return to the original, prior fee schedule, or 2) meet or beat the quote price from the alternative supplier. (Id.)

On October 27, 2017, Defendant sent Plaintiff a memo stating that it had recently discovered the August 28, 2015 letter and informing Plaintiff that the Agreement had been renewed following the August 2015 work. (ECF Nos. 30 at 6; 30-11; 31 at 3.) In that letter, Defendant informed Plaintiff that the new initial term remained in effect until 2022 and attached the August 28, 2015 letter. (ECF Nos. 30-11; 31 at 3.) Plaintiff then filed the Complaint on February 23, 2018, seeking a declaratory judgment that the Agreement between Plaintiff and Defendant was properly terminated by Plaintiff and is of no present substantive effect. (ECF No. 1-1.) Plaintiff demanded a jury trial. (Id.) Defendant removed the matter to this court on March 15, 2018. (Id.) Plaintiff filed an Amended Complaint on March 27, 2018.[3] (ECF No. 8.) Defendant answered by denying Plaintiff's allegation and counterclaiming for damages stemming from Plaintiff's alleged breach of contract pertaining to the exclusivity provision. (ECF No. 19.) After the parties engaged in discovery, Plaintiff filed a second summary judgment motion.[4] (ECF No. 30.) Defendant responded in opposition. (ECF No. 31.) On October 25, 2018, the court heard arguments regarding Plaintiff's Second Motion for Summary Judgment.[5] (ECF No. 34.)

         III. ...


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