Anderson Chemical Co. v. Portals Water Treatment, Inc.

• Decision Date: 28 June 1991
• Docket Number: Civ. A. No. 88-78-3-MAC (WDO).
• Citation: 768 F. Supp. 1568
• Parties: ANDERSON CHEMICAL CO., INC., et al., Plaintiffs, v. PORTALS WATER TREATMENT, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Georgia

768 F. Supp. 1568

ANDERSON CHEMICAL CO., INC., et al., Plaintiffs, v. PORTALS WATER TREATMENT, INC., et al., Defendants.

Civ. A. No. 88-78-3-MAC (WDO).

United States District Court, M.D. Georgia, Macon Division.

June 28, 1991.

W. Lyman Dillon, Mary A. Prebula, Hansell & Post, Atlanta, Ga., for plaintiffs.

Carl A. Neumann, Keck, Mahin & Cate, Oakbrook Terrace, Ill., for Anderson Equipment Co. and David M.A. Knowles.

John C. Filosa, Michael K. Murtaugh, Richard M. Franklin, Baker & McKenzie, Chicago, Ill., Benjamin M. Garland, Hall, Bloch, Garland & Meyer, Macon, Ga., for defendants.

ORDER

OWENS, Chief Judge.

Plaintiffs are Anderson Chemical Company, Inc., its subsidiary corporations and its stockholders ("Anderson Chemical"). Defendants are Portals Holdings PLC of the United Kingdom and its United States subsidiaries, Portals Water Treatment, Inc. and Wright Chemical Company ("Portals").

Anderson Chemical, its subsidiaries and stockholders, are citizens of different states from defendants who are subjects of a foreign state and citizens of other different states. The controversy exceeds the sum of $50,000, exclusive of interest and costs. The court, therefore, has jurisdiction under 28 U.S.C. § 1332.

By their complaint and motion for summary judgment plaintiffs contend that the defendants, on November 9, 1987, in writing, contracted to buy plaintiff corporation and its subsidiaries from plaintiff stockholders for some $13,400,000 and then defaulted, damaging plaintiffs in an amount of more than $4,000,000. Plaintiffs contend there is no genuine issue of material fact and that they are entitled to a judgment as a matter of law on each of their thirteen alleged causes of action.

Defendants assert by their responsive pleadings and cross motion for summary judgment that the November 9, 1987, writing is not an enforceable contract for defendants to purchase Anderson Chemical Company, Inc. and its subsidiaries from plaintiff stockholders; that there is no genuine issue of material fact; and that defendants, on each of plaintiffs thirteen asserted causes of action, are entitled to judgment as a matter of law.

Rule 56(c) of the Federal Rules of Civil Procedure allows for the granting of summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The moving party bears the initial burden of showing, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. Clark v. Coats & Clark, Inc., 929 F.2d 604, 607 (11th Cir., April 19, 1991). "Only when that burden has been met does the burden shift to the nonmoving party to demonstrate that there is indeed a material issue of fact that precludes summary judgment." Id.

The Material Undisputed Facts

Portals Holdings PLC is an international enterprise headquartered in the United Kingdom. It and its many world-wide subsidiaries at the time in question had annual gross sales of some $350,000,000, about 60% of which came from its water treatment division. Portals Water Treatment, Inc. and Wright Chemical Corporation, both of Schiller Park, Illinois, are two of Portals' United States subsidiaries. As a result of Wright Chemical Company's disappointing performance over several years, Portals Holdings PLC, in the fall of 1986, authorized Portals Water Treatment, Inc. and Wright Chemical Company, Inc. management to begin searching for a United States company to acquire for the purpose of possibly expanding Wright Chemical Company, Inc. and making it into a profitable enterprise. Devoto and Company of Atlanta, Georgia, a company representing United Kingdom businesses desiring to acquire United States businesses, was hired to find suitable prospects. Devoto contacted Richard K. "Jet" Anderson, chief executive officer and majority stockholder of Anderson Chemical, and interested him in talking with Portals' representatives about the possibility of Portals acquiring Anderson Chemical. With a written understanding of confidentiality, discussion began between Portals' United States representatives and Anderson Chemical on July 6, 1987. "Jet" Anderson, assisted by his attorney and his certified public accountant, was the main negotiator for Anderson Chemical. John S. Roberts and David Knowles, both employees of Portals' United States subsidiaries, were the main negotiators for Portals.

After many meetings, much conversation, extensive negotiations, disclosure of confidential operating and financial data, visits to each other's plants and offices, and exchange of proposed written agreements the parties signed the first and only writing that both plaintiffs and defendants agreed to on November 9, 1987, in Chicago, Illinois. Plaintiffs contend that the November 9, 1987, writing is a contract, while defendants contend it is a non-binding letter of intent. The writing reads as follows:

                                                  EXHIBIT D
                Portals Water Treatment
                Portals Water Treatment, Inc
                4328 N. United Parkway
                Schiller Park, Illinois 60176
                Telephone: XXX-XXX-XXXX                                 November 9, 1987
                Telex: 206682
                Mr. Richard K. Anderson            Anderson Chemical Company, Inc
                Anderson Chemical Company, Inc.    Waterville Road
                Waterville Road                    Macon, Georgia 31206
                Macon, Georgia 31206
                Mr. W. Ray Benton                  Anderson Chemical Company of
                Anderson Chemical Company of        Tennessee, Inc
                  of Tennessee, Inc.               Box 13244 Riverside Station
                P.O. Box 8151                      Memphis, Tennessee 38113
                Jackson, Mississippi 39204
                Mr. Thomas B. Parker               Anderson Chemical Company of
                Anderson Chemical Company, Inc.     Texas, Inc
                Waterville Road                    Box 47792 Brook Hollow Station
                Macon, Georgia 31206               Dallas, Texas 75247
                Estate of James W. Anderson        J.W. Anderson Holding Co
                1320 Briarcliff Road               Box 4507
                Macon, Georgia 31211               Macon, Georgia 31213
                Attention: Richard K
                  Anderson, Executor
                Gentlemen:
                  1. We wish to confirm our discussion with you or your representatives regarding the
                proposed purchase by Portals Water Treatment, Inc., a Delaware corporation ("Portals"),
                of Anderson Chemical Company, Inc., a Georgia corporation ("Anderson-Ga."), Anderson
                Chemical Company of Texas, a Texas corporation ("Anderson-Tex."), and Anderson
                Chemical Company of Tennessee, a Tennessee corporation ("Anderson-Tenn.") (individually
                a "Company" and collectively the "Companies"). The terms of the proposed acquisition
                are summarized as follows:
                    (a) The aggregate purchase price will be $13,400,000, subject to adjustment as
                    provided herein (the "Purchase Price"). The Purchase Price will be allocated among
                    the Companies in a manner consistent with the calculation of the purchase price in
                    accordance with allocation percentages (the "Allocation Percentages") to be agreed
                    upon by the parties.
                    (b) The price per share paid to stockholders for their shares in any Company will
                    equal the product of (i) the Allocation Percentage for such Company, (ii) times the
                    Purchase Price, (iii) times a fraction, the numerator of which is the number of shares
                    owned by such person in such Company and the denominator of which is the
                    aggregate number of issued and outstanding shares of such Company (the "Price
                    Formula").
                    (c) Portals will purchase from Mr. Richard K. Anderson and the Estate of James W.
                    Anderson (the "JWAH Sellers") all of the issued and outstanding capital stock of
                    J.W. Anderson Holding Co., a Georgia corporation ("JWAH"), which is the record and
                    beneficial owner of the capital stock of the Companies as follows:
                
                

                                                                    Approximate
                                              Shares of             Percentage of
                        Company             Common Stock            Outstanding Stock
                      Anderson-Ga.             15,736                     52.7%
                      Anderson-Tenn.            6,518                     53.3%
                      Anderson-Tex.             6,726                     40.3%
                    The JWAH Sellers will be paid a portion of the Purchase Price equal to the aggregate
                    amount to which JWAH would be entitled under the Price Formula for the capital
                    stock of the Companies owned by it and such amount will be allocated between the
                    JWAH Sellers according to their respective ownership interests in JWAH.
                    However, neither the immediately preceding sentence nor any other provision of this
                    Letter of Intent will be construed to mean that JWAH is selling any of the capital
                    stock of the Companies. Instead, Portals acknowledges that the express intent of the
                    parties is to structure this transaction so that Portals will be purchasing stock of
                    JWAH from the JWAH sellers, and will not be purchasing from JWAH stock of the
                    Companies owned by JWAH.
                    (d) Portals will then acquire the capital stock of the Companies, to the extent that
                    such stock is not owned by JWAH, from all other stockholders of the Companies
                    through a statutory merger of the Companies with and into JWAH (the "Merger")
                    which will be the surviving corporation ("New Anderson"). The price per share paid
                    to the remaining stockholders in the Companies pursuant to the Merger will be
                    calculated according to the Price Formula.
                    (e) The acquisition of the shares of capital stock of JWAH referred to in (c) above
                    (the "Stock Purchase") will be closed immediately prior to the closing of the Merger
                    and after the respective meetings of the stockholders of the Companies and JWAH
                    called for the purpose of approving the Merger. Messrs. Benton and Parker, JWAH
                    and the JWAH Sellers will commit to vote for the Merger at such meetings.
                    (f) The

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