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Howard Industries, Inc. v. Allegheny Ludlum Corp.

July 26, 2010

HOWARD INDUSTRIES, INC., PLAINTIFF,
v.
ALLEGHENY LUDLUM CORPORATION DOING BUSINESS AS ATI ALLEGHENY LUDLUM, DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

MEMORANDUM OPINION

This declaratory judgment action arises from a contract dispute for the sale of goods between plaintiff, Howard Industries, Inc., and defendant, Allegheny Ludlum Corporation doing business as ATI Allegheny Ludlum. This matter is governed by the Uniform Commercial Code, and this Court has jurisdiction pursuant to 28 U.S.C. ¶ 1332.

Plaintiff filed this lawsuit essentially seeking a declaration that it was entitled to, and properly did, cancel its contract with defendant effective July 29, 2010, including any obligations thereunder.

The parties filed cross-Motions for Summary Judgment (doc. nos. 34 and 41) and they subsequently filed responses to one another's motions. Each party argued that as a matter of law the contract at issue either did or did not support the plaintiff's legal position that it was entitled to the declarations concerning contract cancellation. Thus, the matter is now ripe for adjudication.

I. BACKGROUND

The following relevant and material facts are uncontested.

Plaintiff produces electrical transmission and distribution equipment, including transformers which are used by utility companies in North America. Defendant produces specialty metals including grain oriented electrical steel ("GOES"). Plaintiff uses GOES in the core of its transformers. Plaintiff and defendant enjoyed a longstanding business relationship which extended for the past several decades where plaintiff would buy GOES from defendant. See doc. no. 54, ¶¶ 1-5.

Morris Caver, Jr. worked for the plaintiff as its Vice President of Purchasing for the Transformer Division, and starting in year 2005, he negotiated contracts with Raymond Polinski, defendant's General Manager of GOES. In late 2005, plaintiff and defendant negotiated and entered into an agreement for the supply of GOES beginning January 1, 2006 through December 31, 2007 (the "2006 Supply Agreement"). The 2006 Supply Agreement contained a "take-orpay" provision, which was a deviation from the parties' prior agreements. In addition to the take-or-pay provision, the 2006 Sales Agreement also indicated that all sales would continue to be subject to the defendant's standard terms and conditions ("Terms and Conditions"). Id. at ¶¶ 8, 10, 13-15, 17-19.

Paragraph 7 of the 2006 Supply Agreement states in pertinent part:

7. Terms and Conditions -- ALC [Defendant] sales will continue to be subject to the Standard Terms and Conditions set forth on the reverse side of our Sales Order Acknowledgements, except that ALC and HI [plaintiff] specifically agree that:

No changes of any kind or type may be made to this Agreement except in writing and signed by ALC and HI.

Id. at ¶27. See also doc. no. 47-5, Exhibit F (filed under seal).

While the parties were buying and selling GOES pursuant to the 2006 Supply Agreement, in July of 2006, they entered into the "2008 Supply Agreement" which covered the time period from January 1, 2008 to December 31, 2009. The 2008 Supply Agreement contained the identical reference to Terms and Conditions found in the 2006 Supply Agreement (as set forth immediately above), albeit at a different paragraph number. Doc. no. 54, ¶¶ 28-29. See also doc. no. 47-7, Exhibit H (filed under seal).

In late 2007 and early 2008, plaintiff and defendant renegotiated the 2008 Supply Agreement to increase the supply of GOES for 2009 and to extend the term of the 2008 Supply Agreement. In March of 2008, the parties executed this document creating a new supply agreement (hereinafter "2009 Supply Agreement"), which was effective beginning January 1, 2009 through December 31, 2012. Like its predecessors, it too contained the identical reference to the Terms and Conditions (as set forth immediately ...


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