33 F.3d 355 (4th Cir. 1994), 93-2391, Brewster of Lynchburg, Inc. v. Dial Corp.

Docket Nº:93-2391.
Citation:33 F.3d 355
Party Name:BREWSTER OF LYNCHBURG, INCORPORATED, Plaintiff-Appellant, v. DIAL CORPORATION, Defendant-Appellee.
Case Date:August 29, 1994
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 355

33 F.3d 355 (4th Cir. 1994)



DIAL CORPORATION, Defendant-Appellee.

No. 93-2391.

United States Court of Appeals, Fourth Circuit

August 29, 1994

Argued May 10, 1994.

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[Copyrighted Material Omitted]

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ARGUED: David T. Petty, Jr., Petty, Livingston, Dawson & Devening, Lynchburg, VA, for appellant. Frank Kenneth Friedman, Michael Alan Cleary, Woods, Rogers & Hazlegrove, Roanoke, VA, for appellee. ON BRIEF: Robert C. Berkley, Petty, Livingston, Dawson & Devening, Lynchburg, VA, for appellant. Kevin S. Blair, Woods, Rogers & Hazlegrove, Roanoke, VA, for appellee.

Before WIDENER, WILKINS and HAMILTON, Circuit Judges.

Affirmed in part, vacated in part and remanded by published opinion. Judge HAMILTON wrote the opinion in which Judge WIDENER and Judge WILKINS joined.


HAMILTON, Circuit Judge:

In this case, we must decide whether Dial Corporation (Dial) breached its contract to purchase plastic bottles (the Contract) from Brewster of Lynchburg, Inc. (Brewster). In its complaint, Brewster alleged, inter alia, that Dial breached the Contract by: (1) canceling the Contract before its first anniversary; (2) providing inadequate molds to Brewster; (3) utilizing other suppliers for its plastic bottle requirements; and (4) supplying Brewster with inadequate amounts of resin. The district court granted summary judgment in favor of Dial on all theories.

For the reasons stated herein, we affirm the summary judgment with respect to Brewster's first theory. However, because the district court failed to provide any reasoning for granting summary judgment with respect to the latter three theories and our independent review of the record reveals no basis for summary judgment, we vacate that portion of the district court's decision. On remand, the district court should identify the rationale supporting summary judgment on these three theories.

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Brewster is a Virginia corporation headquartered in Lynchburg, Virginia. Prior to commencing this lawsuit, Brewster manufactured plastic bottles. Dial is a Delaware corporation headquartered in Phoenix, Arizona. Dial manufactures personal care and home cleaning products.

In 1987, Dial grouped several of its plants into a "Special Business Division" so that it could examine and correct profitability problems at these plants. The plants within this division produced various liquid products such as bleach and ammonia. At the time of its creation, the Special Business Division consisted of eight liquid product plants in: Toledo, Ohio; Dallas, Texas; Denver, Colorado; Salem, Virginia; Auburndale, Florida; Eagan, Minnesota; Tacoma, Washington; and Arlington, Texas. This Division also included three blow molding plants in: Baltimore, Maryland; Auburndale, Florida; and Toledo, Ohio. These plants manufactured the plastic bottles for the liquid products.

As part of its efforts to enhance the profitability of the Special Business Division, Dial considered various options for each plant. These options included eliminating product lines at particular facilities, expanding particular facilities, and closing or selling plants which could not be made profitable. Accordingly, Dial authorized a financial analyst to study the options for the Salem, Virginia facility. In February 1988, the analyst issued his report which concluded that "[t]he Salem plant at its current level of production is extremely unprofitable and should be closed." (J.A. 699). From 1987 to the present, Dial either closed or sold all of the plants within the Special Business Division except for the one in Auburndale, Florida.

In early 1988, pursuant to its restructuring of the Special Business Division, Dial decided to close its Baltimore, Maryland facility which manufactured plastic bottles for the liquid products produced at Dial's plant in Salem, Virginia. Because it was too costly to ship plastic bottles to Salem from one of the other manufacturing facilities, Dial sought to procure an outside supplier of plastic bottles for its Salem operations. In response to inquiries by Dial, Guy Arriola, the president of Brewster, sent Dial a price quote on March 1, 1988 offering to satisfy for five years the plastic bottle requirements generated by Dial's Salem, Virginia operations. Thereafter, representatives from Dial visited Brewster's facilities in Lynchburg to determine whether Brewster could provide the plastic bottles which Dial needed. After the visit, Dial informed Brewster that it needed to install particular machinery and procure a suitable supply of resin, a necessary ingredient for manufacturing plastic bottles, before Dial would agree to purchase its plastic bottle needs from Brewster.

On March 31, 1988, Brewster sent Dial a revised price quote proposal for supplying Dial's plastic bottle needs for the Salem, Virginia plant. The revised price quote expressly provided "[t]his proposal is based on a five year commitment of at least present minimal usage." (J.A. 137). Brewster's proposal also indicated that it would acquire three machines necessary to manufacture the plastic bottles required by Dial and that Brewster could begin production in late May or early June.

Upon receiving this proposal, on April 20, 1988, Dial and Brewster representatives again met in Lynchburg to discuss a potential contract for supplying the plastic bottle needs of Dial's Salem, Virginia facility. During that meeting, Dial indicated that it would commit to Brewster through annual purchase orders rather than with one written contract. On June 1, 1988, Dial sent Brewster a Purchase Order offering to purchase its plastic bottle requirements from Brewster from July 1, 1988 to June 30, 1989. This Purchase Order estimated the requirements for this period at 7,850,000 but added "[q]uantities are estimated only and do not bind Dial to purchase any minimum quantity." (J.A. 45). The Purchase Order also provided, in relevant part:

[Dial] agrees to purchase its Salem bottles requirements from Brewster through 6-30-93 provid[ed] the Salem plant is not either sold or closed, and providing Dial does not bring the blow-molding operation in-house. Dial will provide Brewster with 90 day written notice of cancellation should one of these events occur.

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(J.A. 46). The boiler-plate language in the Purchase Order provided, in relevant part:

This offer to purchase is made only on the express condition that seller accepts all conditions on reverse side hereof.

* * * * * *

This purchase order, together with any documents expressly incorporated herein by reference constitutes the entire agreement between the parties and supersedes all other agreements and understandings between the parties.... No oral agreement or other undertaking shall in any way modify or change this purchase order and neither party shall claim any modification, amendment or release from any of the terms or conditions set forth herein except by mutual written agreement to that effect signed by Seller and an authorized representative of the Dial Corp....

* * * * * *

This agreement shall be interpreted and governed according to the laws of the State of Arizona.

(J.A. 45, 48).

On June 23, 1988, Brewster's Chief Executive Officer, Jim Miller, sent a letter to Dial objecting to several provisions within the Purchase Order. The letter stated, in relevant part:

As the general terms and conditions state ... that the purchase order in and of itself constitutes the entire agreement between the parties including any addendums there to, and supersedes any other previous understandings or agreements between either of us, I thought it would be wise that I go over ... our feelings about the activities in general.

* * * * * *

I believe there are several areas where a meeting of the mind was reached here in Lynchburg, that has not transposed well to the purchase order.

(J.A. 147). The letter then outlined Brewster's objections to the Purchase Order. With respect to the quantity to be purchased, Brewster objected to the provision indicating that Dial was not obligated to purchase any minimum quantity from Brewster. However, Brewster did not suggest a particular minimum purchase obligation. With respect to the escape clause, Brewster indicated that it had to be "based on a year to year cycle and can occur only on the anniversary date of our agreement." (J.A. 150). The letter concluded "we need to properly resolve these issues in order to go forward with all positive feelings." Id.

On June 28 and 30, 1988, Scott Pearl, vice-president of Brewster, and Christine Mann, Dial's buyer and signatory to the Purchase Order, discussed the parties' disagreements over the terms in the Purchase Order. Brewster contends that, during the latter telephone conversation, Mann orally agreed to Brewster's demands with respect to the escape clause, i.e., that Dial could only cancel the Contract on its anniversary.

On July 5, 1988, Brewster and Dial mailed each other written documents confirming the oral agreements reached during these telephone conversations. Brewster's letter provided:

Confirming our conversation of 6-30-88 and the points of discussion that referenced our letter of 6-23-88 ..., the following clarifications have been agreed to and will subsequently be included as an addendum to your purchase order.

(J.A. 156). With respect to the escape clause, the letter provided "[a]s agreed, the escape clauses are based on a year to year cycle on the anniversary date of the purchase order." (J.A. 157). However, the letter contained no suggestion that the parties' oral agreement specified a minimum amount which Dial was obligated to purchase during the Contract. Finally, the letter stated that Brewster needed "the addendum to the purchase order on an item by item basis to reflect our agreement made on the phone on 6-30-88." Id.

Dial's written confirmation, entitled "Change...

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