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Basf Corporation v. Man Diesel & Turbo North America, Inc.

United States District Court, M.D. Louisiana

May 15, 2015

BASF CORPORATION,
v.
MAN DIESEL & TURBO NORTH AMERICA, INC

RULING AND ORDER

JOHN W. deGRAVELLES, District Judge.

This matter comes before the Court on the Reurged Motion for Summary Judgment (Doc. 78) filed by Man Diesel & Turbo North America, Inc. ("MAN") and the Cross-Motion for Summary Judgment (Doc. 86) filed by BASF Corporation ("BASF"). Each motion is opposed. Oral argument was heard on the motions on April 20, 2015.

MAN argues in its motion that its November 7, 2011, quote (the "Quote") governs the parties' relationship and that, consequently, BASF cannot recover consequential damages. BASF argues that MAN's Quote is not an offer, that BASF's December 28, 2011, Purchase Order (the "Purchase Order" or "P.O.") controls the parties' relationship, and that, as a result, BASF can recover both its expenses and its lost profits. MAN responds that the Purchase Order was sent after performance began, and BASF claims that the Purchase Order was sent before performance commenced.

MAN's motion is easily denied. Reasonable jurors could easily conclude that MAN's Quote was not an offer, so summary judgment is inappropriate. Further, even if the Quote were an offer, reasonable minds could conclude that MAN's Quote was not expressly accepted or accepted by silence. These are additional reasons for denying MAN's motion.

BASF's motion is much closer. As with MAN's motion, the first critical question to BASF's motion is whether MAN's Quote is an offer. If the Quote is not an offer, then BASF's motion for summary judgment should be granted; the parties clearly had a contract (either under the Purchase Order or orally), so lost profits would be recoverable under the Purchase Order or under La. Civ. Code art. 1995. Because the Court finds that MAN has presented enough evidence - barely - to show that there is an issue of fact as to whether the Quote is an offer, and because BASF conceded at oral argument that there is a question of fact as to this issue, the Court finds that a reasonable juror could conclude that MAN's Quote was an offer.

Assuming that the Quote is an offer (which the Court must do when construing the evidence in a light most favorable to MAN), there are other issues of material fact that make summary judgment for BASF inappropriate. First, there is a question of fact as to when performance began. If performance began before the Purchase Order was sent, then the Purchase Order was a request for a modification of the existing contract. If the Purchase Order is a request for modification, then there is an issue of fact as to whether that request was accepted. Thus, because the Court must construe the evidence in a light most favorable to MAN, the Court finds that, for purposes of BASF's motion, a reasonable juror could conclude that the Quote was an offer, that performance began before the Purchase Order was sent, that the Purchase Order was consequently a request for a modification of a preexisting contract based on the Quote, that the request for modification was not accepted, and that the Quote's clause prohibiting the recovery of consequential damages governs. In short, BASF's motion for summary judgment should be denied.

Additionally, BASF's motion for summary judgment should be denied because the Fifth Circuit has held that summary judgment is inappropriate in cases such as this where there is undoubtedly a contract between the parties but there are questions of fact as to what terms govern that contract. This suit is squarely in line with those cases.

In short, there are simply too many issues of material fact to justify summary judgment in favor of either party. Accordingly, both motions are denied.

I. Relevant Factual Background

A. The C-300 Compressor Leak and the November 7, 2011, Quote

BASF owns and operates a chemical manufacturing facility in Geismar, Louisiana. (Petition for Damages, Doc. 1-4, p. 4). In October 2011, MAN overhauled the C-300 Compressor and another machine at the Ethylene Oxide Unit at BASF's Geismar facility. (Affidavit of Nicholas Granier, Doc. 78-8, p.1). At that time, the Original Equipment Manufacturer (i.e., Siemens) decided not to have the seals replaced on the C-300 Compressor, presumably to avoid shutting down the machine and losing productivity. ( Id., p. 2).

In response to a verbal request from BASF, MAN generated the Quote for the seal replacement on November 7, 2011. (Granier Affidavit, Doc. 78-8, p. 2). The November 7, 2011, Quote # 11-11382[1] states in the regarding line:

(Id. ). The Quote also provides as the first item under "Work Scope: Safety & Setup" - "Receive Permits and walk tag out with the client representatives and indoctrinate all employees." (Docs. 78-4 & 86-12, p. 1). The Quote then sets forth the remaining items of work that need to be performed and lists the cost of the work as $26, 750.00. (Id. ). The Quote also states that MAN is to provide, "Tooling required to perform scope finalized by client and MAN." (Id. ). On the second page, the Quote provides that the tentative start date for the job is November 9; however, the Quote then states, "We would need a purchase order before we can lock in a firm date." ( Id., p. 2).

The MAN Quote also includes certain "Terms and Conditions of Supply, " which "shall be applicable to all... services performed by MAN." ( Id., p. 3). Significantly, the Quote states that, if there is a breach of warranty, MAN "shall, in complete fulfillment of its liabilities under this warranty, correct by repair or replacement any nonconformity which shall appear." (Id. ). This remedy is given in lieu of all other warranties. (Id. ). Further, the Quote provides that, in no event shall MAN be liable for any special, incidental, indirect, consequential, or punitive damages, including loss profits or revenue. (Id. ).

According to a January 10, 2012, email sent from a BASF employee, the seals were not changed around the time of the November 7, 2011, Quote because they were only a year old and showed no signs of any issue with gas flow. (Doc. 78-11). However, the south seal "went squiffy" immediately after start up, reseated itself in about two weeks, and was "OK until a process upset on 12/21." (Id. ). Another BASF employee responded, "Squiffy? I take it that's high flow or in alarm." (Id. ).

On December 24, 2011, Kyle Frederick of BASF emailed others at BASF and said:

C300 seal flow has increased and is holding at 18-22scfm. We had a plant upset that tripped the compressor and after restart it rose to this flow. We are hoping the flow will stabilize but if not we are asking for availability of a rep for dec 28 to assist with the change. Please check and let me know if one is free.

(Doc. 90-6).[2]

B. Email Exchanges Between December 25-27, 2011

On December 25, 2011, at 2:11 p.m., Kyle Frederick of BASF emailed Nick Granier of MAN asking, "Would you have a crew available to assist changing the seal on C300 Wednesday 28th? Can you give me a quote?" (Doc. 86-3, p. 4). Granier replied on December 26 at 7:18 p.m., "Yes, Looks like we will have several people available. We will contact you first thing tomorrow morning to discuss.... Sorry for the delay getting back to you." (Id. ). Frederick responded minutes later at 7:35 p.m., "Thanks in advance for the help." (Id. ).

On December 27, 2011, at 8:35 a.m., Jerad Mitchell of MAN sent an email to Kyle Frederick of BASF stating:

I have attached a copy of the quote that we generated for Leonard in November to perform this job. This quote should be valid with the exception of the holiday that we have on Friday. If this job should go into Friday our time will be billed according to our rate sheets for holiday pay. Please work with Nick to get a P.O. for this opportunity.

( Id., p. 1).

C. December 28, 2011 - The Day of Repairs and the P.O.

1. Arrival of the Crew

On December 28, at 6:14 a.m., Jerad Mitchell sent Kyle Frederick another email stating in part:

We have a crew heading out to you [sic] facility this morning per your request to begin a seal change out on C300. It is possible that the P.O. is caught up due to the time frame we are working in to support this opportunity. Can you please email Nick and I a confirmation P.O. which supports the efforts we a [sic] putting forth. I forwarded the quote put together initially in November for this job as it should be the same pending holiday work on Friday.

( Id., p. 3).

Both sides agree that MAN arrived at BASF's premises sometime before 7:00 a.m. A document entitled "MAN GATE PUNCHES BASF GEISMER 122811-123011" (Docs. 86-5 & 78-10) demonstrates that James Spinks and Kenneth Thompson are MAN employees that arrived at the gates of the Geismar plant at 6:06 a.m.

2. BASF's Purchase Order

The parties agree that, at some time on December 28, BASF faxed something to MAN. But there is a dispute as to what was sent and when.

BASF contends that, at 8:50 a.m. Central Standard Time (or 15:50 Central European Time), BASF faxed to MAN a five-page Purchase Order containing certain terms and conditions for the job. BASF bases this on several pieces of evidence. First, BASF points to the testimony of Jamie Latuso, a BASF employee who buys maintenance and construction services for the Geismar site. (Deposition of Jamie Latuso, Doc. 86-6, p. 3). Latuso authenticated a screen shot of BASF's document system. (Id. ). The screen shot reflects the transmission of the purchase order and says when the Purchase Order was sent, to whom it was sent, and whether the transmission was successful. ( Id., p. 3-4). The time is in European time, according to Latuso. ( Id., p. 5). Latuso created the P.O. and then sent it. ( Id., p. 5).

BASF also submits the screenshot itself, which states that the document was sent at 15:50. (Doc. 86-8). Further, the document states, "Successfully processed" and "Created by LATUSOJ."

BASF also submits the Affidavit of Scotty Owens. (Doc. 86-21). Owens was one of two "buyers of services" at BASF's Geismar facility in December 2011. ( Id., p. 1). The other was Jamie Latuso. (Id. ). Owens attests that (1) 15:50 CET equates to 8:50 a.m. in Central Standard Time; (2) as the P.O. was created in BASF's system, the P.O. automatically included BASF's terms and conditions; (3) upon Latuso's saving of the P.O., the P.O. (including automatically all of BASF's terms and conditions) immediately dispatched from BASF and was faxed to MAN; and (4) the "successfully processed" notation means that "the purchase order - including the terms and conditions - was, in whole successfully transmitted to [MAN's] facsimile server." ( Id., p. 4). Owens further said that no one in the procurement department received an automated notice error indicating any issue with the transmission of the P.O. and that no one at BASF received a communication from MAN reporting an issue with transmitting the P.O. ( Id., p. 5).

MAN, on the other hand, submitted Nick Granier's affidavit of April 3, 2013, specifically stating that the fax was transmitted by BASF at 3:55 p.m. (Doc. 78-8, p. 3). But, in Granier's deposition, taken on June 17, 2014, Granier said that he did not know what time zone the "15:55" referred to and that he would have no reason to dispute the fact that the BASF purchase orders were issued according to European time. (Doc. 78-9, p. 17).[3]

Granier also attested to the fact that the P.O. was incomplete. Grannier states that, while the P.O. stated it was a five-page document, only two pages were transmitted, and those pages did not contain BASF's terms and conditions. (Doc. 78-8, p. 3).

Regardless of whether the entire P.O. was transmitted, both sides agree that, at the very least, the entire first page was transmitted. (Docs. 78-7, 86-9). This page of the Purchase Order provides:

THIS ORDER IS SUBJECT TO THE TERMS AND CONDITIONS INCLUDED HEREWITH, AND SELLER AGREES TO BE BOUND THEREBY, BY SHIPPING THE GOODS, OR BY ACKNOWLEDGING RECEIPT OF THIS ORDER SELLER AGREES TO SUCH TERMS AND CONDITIONS. ANY DIFFERENT OR ADDITIONAL TERMS IN SELLER'S ACCEPTANCE FORM, IF ANY, ARE HEREBY REJECTED.

(Docs. 78-7, 86-9). Notably, the Purchase Order rejects terms in the seller's "ACCEPTANCE FORM, " not terms predating the P.O. In any event, both copies of the P.O. contain the P.O./Release No. of XXXXXXXXXX.

The full five-page P.O., submitted into evidence by BASF, provides important elements of the offer in the allegedly unsent pages. The third page lists the price as $45, 000. (Doc. 86-19, p.3). This price differs from the $26, 750.00 listed in the Quote. Additionally, on the fourth page, the Purchase Order expressly states that, if it is sent in response to a quote, then the terms of the Purchase Order supersede the terms of the quote and shall be a rejection of same. ( Id., p. 4). Finally, the fifth page provides that any cost or damage incurred by BASF as a result of a breach of a warranty shall be borne by MAN. ( Id., p. 5).

On December 28 at 9:02 a.m., Terry Bourgeois of BASF sent Jerad Mitchell of MAN the following e-mail:

(R.Doc. 86-3, p. 2). At 9:29 a.m., Mitchell then forwarded the email to Michael Yu and Leigh Brashier, both of whom are MAN employees, with the message, "P.O. for the job the guys are on today."

Nick Granier of MAN testified that he understood that the purchase order is "basically a contract number, as far as them [BASF] being bound to have to pay something against that number." (Doc. 78-9, p. 14)

Q: So you understand the purchase order is the contract?
A: Yes.

(Id. ).

3. When Did ...


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