Global Minerals Corporation v. Nucor Steel Tuscaloosa, Inc., et al

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 12-12186
Non-Argument Calendar
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D.C. Docket No. 7:10-cv-02095-LSC
GLOBAL MINERALS CORPORATION,
Plaintiff-Appellant,
versus
NUCOR STEEL TUSCALOOSA, INC.,
NUCOR CORPORATION,
Defendants-Appellees.
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Appeal from the United States District Court
for the Northern District of Alabama
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(September 20, 2012)
Before CARNES, WILSON and KRAVITCH, Circuit Judges.
PER CURIAM:
Global Minerals Corporation (Global) appeals from the district court’s grant
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of summary judgment in favor of defendants Nucor Steel Tuscaloosa, Inc. (NSTI)
and Nucor Corporation (NC) in this breach-of-contract action. Because we agree1
with the district court that there was no breach, we affirm.
I.
NC is the largest steel producer in the United States and owns NSTI, which
is engaged in the production of steel using raw minerals such as ferrosilicon. In
February 2008, NSTI purchasing supervisor James Yerkes requested from several
entities a price quote for ferrosilicon. Although Global’s quote was not the lowest,
NSTI agreed to a trial order from Global to qualify Global for future purchases. In
March 2008, NSTI and Global entered into a deal for 100 net tons of ferrosilicon
to be delivered from October through December of that year. The purchase order
(PO) explained: “NSTI makes no commitment or guarantee with regard to the
actual quantity of product released under this purchase order. However, shall not
exceed 100 net tons without agreement with Global Minerals.” There is no
dispute that both parties fulfilled their obligations under this contract.
During the spring of 2008, the price of ferrosilicon rose rapidly. To ensure
that it had sufficient supply, NSTI issued another PO on June 3, 2008 (the June
PO), before the trial delivery period even began but subject to satisfactory
We have diversity jurisdiction over this dispute. 28 U.S.C. § 1332.1
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performance of the trial order. In the June PO, NSTI ordered 600 net tons of
ferrosilicon to be delivered between September and December 2008 at the price of
$1.48 per pound. This quantity was changed to 600 metric tons at Global’s
request. The June PO contained the same “no commitment of guarantee with
regard to the actual quantity of product released under this purchase order”
language, as well as the “not to exceed” language.
Thereafter, the demand for, and price of, ferrosilicon dropped. Yerkes
approached Global to renegotiate the price, but Global declined to do so. From
September through December 2008, NSTI took delivery of only 29.79 tons from
the June PO. On December 29, 2008, Yerkes sent an email to Global’s vice
president of sales, Dan Ritter, informing Ritter that NSTI would not be taking any
more ferrosilicon under the June PO. Yerkes advised Ritter that NSTI needed
much less ferrosilicon than anticipated due to business conditions and the
recession.
By email, Ritter responded that the June PO was a contract for a set quantity
of ferrosilicon, and he requested that NSTI purchase the remaining tons under the
terms of the contract. In a follow-up email, Ritter wrote that NSTI was obligated
to purchase an amount “reasonably proportionate” to the quantity given in the
contract, which it had not done.
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Although Yerkes believed NSTI had fulfilled its obligations under the June
PO, on January 9, 2009, Yerkes contacted Ritter with the following offer: NSTI
would extend the contract through the first half of 2009 and would take all of its
purchase requirements from Global during that time. Yerkes explained that there2
was no volume guarantee, and it offered to pay low market price plus $.39 per
pound. Ritter responded with two offers, each proposing that NSTI purchase the3
remaining amount of the original 600 tons by the first half of 2009, with an
additional purchase at an agreed-upon price. By email, Yerkes informed Ritter
that the counter-offers were unacceptable and that NSTI’s offer was non-
negotiable. Ritter responded that he was not happy to take the loss but would
accept the offer in the hope that NSTI and Global could continue to work together.
After Ritter accepted NSTI’s terms, Yerkes issued a change order on
January 15, 2009 (the January PO). This document was identical to the June PO
and had the same order number, but the words “change order” were stamped
diagonally across each page, the description specified “ADDENDUM 1/15/2009,”
and the due date was marked as June 30, 2009. The January PO stated:
NSTI had contracted with another company for its ferrosilicon for the first half of 20092
but deferred the deal until the second half of the year to accommodate the deal with Global.
For purposes of this deal, the market price was set by Ryan’s Notes, an industry3
publication.
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This change order is issued to extend the end date of this blanket
order until June 30, 2009, based on a sincere request from Global
Minerals to do so. Given the economic situation and that Nucor will
help our supplier base, at time, this order is extended. NSTI
continues to make no commitment or guarantee with regard to the
actual quantity of product released under this purchase order.
However, NSTI will take all of its purchase requirements during this
period January through July 2009 from Global Minerals. The price
shall be changed to a formula basis, as Ryan’s Notes Low for the
month prior to the month of shipment plus $.39 per pound. . . . A
price cap of $1.48 per pound . . . shall also be in effect. This change
is confirmed with Dan Ritter on January 13, 2009 and per email
proposal from Jim Yerkes to Dan Ritter dated January 9, 2009. By
Jim Yerkes -January 15, 2009.
After seeing the January PO, Ritter emailed Yerkes, “it looks like what we
discussed on the phone and email so lets get it going.”
NSTI purchased only about 120 tons under the January PO. NSTI did not
purchase ferrosilicon from any other distributor, but it did take delivery of some of
its own stored inventory that had been purchased earlier from entities other than
Global.
In November 2009, Global’s president Michael Xu contacted Yerkes to
request that NSTI extend the January PO to 2010 to purchase the remaining 400
tons of ferrosilicon Global was warehousing. After NSTI declined, Global filed
the instant breach-of-contract action naming as defendants NSTI and its parent
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company, NC.4
Both parties moved for summary judgment. Global argued that each PO
was a separate contract and that the January PO could not be a modification to the
June PO because it was entered into after the time to perform under the June PO
had passed. Global also argued that NC was liable under agency theory. NSTI
argued that there was no breach because the January PO was an accord and
satisfaction and a substitute agreement. NSTI also noted that the January PO was
a requirements contract with no volume guarantee, and NSTI had adhered to the
terms by purchasing only from Global during the relevant time period. Finally,
NC argued that it was not liable because there was no agency relationship, it had
no role in the contracts, and there was no basis to pierce the corporate veil.
The district court granted NSTI’s summary judgment motion, finding no
breach of contract. Specifically, the court found that there was only one contract –
the June PO – and the January PO was a change order to that contract. In reaching
this conclusion, the court considered the emails between Yerkes and Ritter leading
up to the January PO, but the court explained that it would reach the same result
Global filed its original complaint in the Southern District of New York, alleging4
breach of contract, misrepresentation, breach of implied contract, and breach of the covenant of
good faith and fair dealing. The case was transferred to the Northern District of Alabama and the
district court granted NSTI’s motion to dismiss the claims of breach of implied-in-fact contract
and breach of the covenant of good faith and fair dealing. Global then filed an amended
complaint raising only a breach-of-contract claim and the claim against NC.
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even if confined to the “four corners” of the January PO. The court then found
that the January PO created a requirements contract, which contained neither an
estimate nor a specific quantity, but only a maximum purchase amount of 600
tons. The court concluded that NSTI had fulfilled its obligations under the5
contract by taking all of its purchase requirements from Global, and there was no
evidence NSTI acted in bad faith. This is Global’s appeal.
II.
We review de novo the district court’s grant of summary judgment.
Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1273 (11th Cir. 2010). A district
court shall grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “We draw all factual inferences in a light most
favorable to the non-moving party.” Shiver v. Chertoff, 549 F.3d 1342, 1343 (11th
Cir. 2008).
In a diversity action such as this, we apply the substantive law of the forum
state, here Alabama, along with federal procedural law. Horowitch v. Diamond
Aircraft Industrs., Inc., 645 F.3d 1254, 1257 (11th Cir. 2011). Alabama has
Because the court found that there was no breach, it did not consider the claims against5
NC. Global does not make any argument related to NC in its appellate brief and thus has waived
any claims. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004).
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codified the Uniform Commercial Code governing the sale of goods. See, e.g. La
Trace v. Webster, 17 So.3d 1210, 1216 (Ala. Civ. App. 2008); see also Ala. Code
§ 7-2-102.
Global argues that it entered into two separate and independent contracts,
one in June 2008 and another in January 2009, and that the district court erred by
concluding that the January PO was a substitution of the June PO. Global further
argues that the district court erred by considering the emails between Yerkes and
Ritter, and by finding that the 600 tons was a maximum amount rather than an
estimate. Global agrees that the January PO was a requirements contract, but
explains that NSTI breached it by taking a disproportionate reduction from its
estimated purchase or by acting in bad faith.
III.
A. The January PO
We begin by determining whether the January PO constituted an
independent contract or simply a substitution for the June PO. In answering this
question, we consider whether the district court was limited to the four corners of
the PO or if it was permitted to consider extrinsic, or parol, evidence.
To establish that the January PO is a substituted contract, we look at four
elements: “(1) a previous valid obligation; (2) an agreement of the parties thereto
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to a new contract or obligation; (3) an agreement that it is an extinguishment of the
old contract or obligation; and (4) the new contract or obligation must be a valid
one between the parties thereto.” Cook’s Pest Control, Inc. v. Rebar, 28 So.3d
716, 728 (Ala. 2009) (internal citations and quotation marks omitted) (discussing
the elements of a novation); see also Safeco Ins. Co of Amer. v. Graybar Elec. Co.,
Inc., 59 So.3d 649, 656 (Ala. 2010). (explaining that a novation and a substitute
contract are the same except a novation requires different parties). A “substituted
contract is one that is accepted in satisfaction of the original contract and thereby
discharges it.” Safeco Ins. Co of Amer., 59 So.3d at 656. “[W]hether there has
been a substituted contract depends upon the intention of the parties, which may
be determined by the facts and circumstances.” Id. at 657; see also Barnett v.
Quinn, 979 So.2d 816, 820 (Ala. Civ. App. 2007) (discussing requirements of a
valid accord and satisfaction).
Whether a court may consider parol evidence to interpret the meaning of a
document depends on whether the document is ambiguous; if it is, parol evidence
is admissible. Vulcan Painters, Inc. v. MCI Constructors, Inc., 41 F.3d 1457,
1461 (11th Cir. 1995). In contrast to the limitations on extrinsic evidence,
documents that are incorporated by reference in the contract are admissible. Ex
parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 36 (Ala. 1998); see also
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Cavalier Mfg., Inc. v. Clarke, 862 So.2d 634, 640 (Ala. 2003) (“[A] contract may
incorporate the terms of another document by reference.” (internal citation and
quotation marks omitted)).
Global contends that the district court erred by considering the emails
between Yerkes and Ritter. We disagree. The January PO specifically refers to
Global’s request to extend the June PO and to the emails between the two
companies. Thus, the emails are incorporated by reference and are not parol
evidence. Id. The district court was therefore permitted to consider these emails
when determining whether the January PO constituted an independent contract.
The emails detail the negotiations between Global and NSTI after Yerkes
notified Ritter that NSTI would take no further deliveries of ferrosilicon. Ritter
expressed concern over taking a loss, but agreed to Yerkes’s offer to extend the
purchases through the first half of 2009. The emails establish a series of offers,
counter-offers, and acceptance of the January PO to off-set Global’s losses. Thus,
the emails establish all the elements of a substitute contract. See Cook’s Pest
Control, 28 So.3d at 728.
The January PO itself confirms this conclusion. The PO has the words
“change order” stamped diagonally across the pages. It uses the same purchase
order number as the June PO, and the description indicates that it is an addendum.
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The text further states that it is an extension of the previous order, with the due
date changed to reflect the extension. And the above-market price is listed in the
text. Considering all of this evidence, there is no genuine issue of material fact
that the January PO was a substitution contract.
B. Breach
The next question before us is whether the district court properly concluded
that there was no breach of the substituted contract. The parties agree that the
January PO was a requirements contract.
In a requirements contract, if an estimate of quantity is given, the buyer may
deviate from the stated quantity but must not take an amount “unreasonably
disproportionate” to the estimate. Ala. Code § 7-2-306 & cmt.3. In the absence of
an estimate, a breach can occur if the buyer did not act in good faith. See Simcala,
Inc. v. Amer. Coal Trade, Inc., 821 So.2d 197, 201 (Ala. 2001). Good faith allows
a buyer to deviate based on lack of orders but not merely because the buyer wishes
to curtail losses. Ala. Code § 7-2-306, cmt.2.
Courts should construe contracts “so as to give meaning to all provisions
whenever possible.” Bd. of Water & Sewer Comm’rs of City of Mobile v. Bill
Harbert Constr. Co., 870 So.2d 699, 710 (Ala. 2003). “When interpreting a
contract, a court should give the terms of the agreement their clear and plain
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meaning and should presume that the parties intended what the terms of the
agreement clearly state.” Ex parte Dan Tucker Auto Sales, 718 So.2d at 36.
“Words used in a contract will be given their ordinary, plain, or natural meaning
where nothing appears to show they were used in a different sense or that they
have a technical meaning.” Id.
Here, the January PO did not include an amount as an estimate of NSTI’s
needs. The January PO specifically stated that there was no commitment or
guarantee as to the actual quantity except that it would not exceed 600 [metric]
tons. Giving terms their ordinary meaning, the language “not to exceed” would
ordinarily indicate an upper limit rather than an estimate. Cf. Simcala, 821 So.2d
at 198 (stating that the language “the above [i.e. 17,500 tons] is an approximate
quantity” was an estimate and concluding that the buyer’s purchase of 7,200 toms
was unreasonably disproportionate).
Because the January PO’s listed quantity was a maximum and not an
estimate, NSTI was not in breach for taking less than 600 tons so long as it acted
in good faith. Even construing the facts in the light most favorable to Global,
Global has not shown that NSTI acted in bad faith. NSTI did not purchase
ferrosilicon from any other company during the relevant time period. NSTI’s
decision to use some of its own stored inventory, which was consistent with the
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plain language of the contract, cannot amount to bad faith. Global has therefore
failed to establish a genuine issue of material fact about whether NSTI breached
the January PO.
For the foregoing reasons, we affirm the order granting summary judgment
in favor of NSTI and NC.
AFFIRMED.
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