815 F.2d 702 (6th Cir. 1987), 86-5391, Delta Minerals Corp. v. First Mississippi Corp.

• Citation: 815 F.2d 702
• Date: 09 March 1987
• Docket Number: 86-5391.
• Parties: DELTA MINERALS CORPORATION, Plaintiff-Appellee, v. FIRST MISSISSIPPI CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 702

815 F.2d 702 (6th Cir. 1987)

DELTA MINERALS CORPORATION, Plaintiff-Appellee,

v.

FIRST MISSISSIPPI CORPORATION, Defendant-Appellant.

No. 86-5391.

United States Court of Appeals, Sixth Circuit

March 9, 1987

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA6 Rule 28 and FI CTA6 IOP 206 regarding use of unpublished opinions)

W.D.Tenn.

AFFIRMED.

On Appeal from the United States District Court for the Western District of Tennessee.

Before JONES and GUY, Circuit Judges, and EDWARDS, Senior Circuit Judge.

PER CURIAM.

This is a breach of contract action brought by Delta Minerals Corporation (Delta), a privately-held Tennessee corporation with its principal place of business in Memphis, Tennessee, against First Mississippi Corporation (FMC), a publicly held corporation with its principal place of business in Jackson, Mississippi. The case was filed in Shelby County, Tennessee, but was removed to federal court by FMC. Diversity jurisdiction pursuant to 28 U.S.C. § 1332 has been established. Delta contended that FMC had breached: (i) a written licensing agreement which obligated FMC to pay to Delta a non-refundable advance license fee of $700,000.00 (only $200,000.00 of which had been paid); and (ii) an oral agreement which obligated FMC to pay fifty percent of the total attorneys' fees and expenses incurred in litigation related to the patented process Delta was licensing to FMC. The court found in favor of Delta, awarding the corporation $500,000.00 plus pre-judgment interest on the breach of contract claim and $14,118.85 on the claim for attorneys' fees, from which FMC takes this appeal. Finding no error in the judgment below, we affirm.

I.

The president and principal stockholder of Delta, Mr. E.K. Wilson, Sr., is the inventor of the "Delta Process," a patented process for the manufacture of Portland and other hydraulic cements. Upon completion of development of the process, Wilson assigned the patent to Delta. Shortly thereafter, FMC entered into a joint venture with Delta for the purpose of commercializing and exploiting the Delta Process. Under this agreement, FMC was obligated to contribute $500,000.00 for additional pilot plant studies and to spend up to $9,500,000.00 to construct the first commercial plant utilizing the Delta Process. Approximately two years later, after conducting two pilot-plant feasibility programs, FMC concluded that a cement manufacturing plant could not be constructed for $9,500,000.00. Also during this period, Pennsylvania Engineering Corporation (PEC), at whose laboratory Delta had previously tested various aspects of the Delta Process, initiated litigation in which PEC disputed Delta's ownership of the process patents and also claimed misrepresentation by Delta and Wilson regarding the process. Delta retained counsel to defend this action and, in order to protect its interests in the Delta Process, FMC agreed to advance all attorneys' fees and expenses associated with this litigation. In return, Delta agreed to reimburse FMC for such fees out of the profits of the first plant constructed.

As a result of these developments, FMC insisted on renegotiating the original agreement. Although FMC believed that the prospects for successful commercialization of the Delta Process were good, they no longer wanted Delta as a partner in the venture. Negotiations ultimately resulted in the preparation and finalization of four separate but interrelated agreements: a Licensing Agreement; an Option to Purchase; a Stock Purchase Agreement; and a Consulting Agreement. Although certain provisions of the other agreements are relevant as interpretive aids, the focus of the parties' dispute is the language of the licensing agreement, which provides, in relevant part, as follows:

Section 3. Advance License Fees--FMC hereby agrees to pay DMC an advance license fee of Seven Hundred Thousand Dollars ($700,000) payable as follows: 1) The first advance license fee of Two Hundred Thousand Dollars ($200,000) payable upon execution of this Agreement, and 2) An additional advance license fee of Five Hundred Thousand Dollars payable upon the earlier of one year from the date of execution of this Agreement or the settlement and/or conclusion to FMC's satisfaction, the following actions: (a) that certain lawsuit entitled Pennsylvania Engineering Corporation, and Lectromelt Corporation vs. Delta Minerals Corporation and Eddie K. Wilson, Sr., Civil Action No....