Cook Composites v Westlake Styrene

• Citation: 15 S.W.3d 124
• Parties: <!--15 S.W.3d 124 (Tex.App.-Houston 2000) COOK COMPOSITES, INC. N/K/A CURRAN COMPOSITES, INC., TOTAL COMPOSITES, INC., and COOK COMPOSITES AND POLYMERS CO., Appellants V. WESTLAKE STYRENE CORPORATION, Appellee NO. 14-98-01064-CV Court of Appeals of Texas, Houston (14th Dist.)
• Decision Date: 20 January 2000
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 124

15 S.W.3d 124 (Tex.App.-Houston [14th Dist.] 2000)

COOK COMPOSITES, INC. N/K/A CURRAN COMPOSITES, INC., TOTAL COMPOSITES, INC., and COOK COMPOSITES AND POLYMERS CO., Appellants

V.

WESTLAKE STYRENE CORPORATION, Appellee

NO. 14-98-01064-CV

Court of Appeals of Texas, Houston (14th Dist.).

Jan. 20, 2000.

On Appeal from the 190th District Court, Harris County, Texas, Trial Court Cause No. 96-64089

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[Copyrighted Material Omitted] Panel consists of Justices YATES, FOWLER and FROST.

O P I N I O N

KEM THOMPSON FROST, Justice.

This is a breach of contract case arising out of a written agreement between two companies for the purchase and sale of goods. At issue is the propriety of the trial court's granting of the seller's motion for summary judgment notwithstanding the buyer's assertion of various affirmative defenses, both under common law and arising under the Uniform Commercial Code.

INTRODUCTION

The appellee, Westlake Styrene Corporation sued the appellants, Cook Composites, Inc. n/k/a Curran Composites, Inc., Total Composites, Inc. and Cook Composites and Polymers Co. (collectively, "CCP") for breach of contract. Initially, CCP filed a general denial and asserted the affirmative defense of estoppel. Westlake filed a traditional motion for summary judgment on its contract claim and a "no evidence" motion for summary judgment on CCP's affirmative defense of estoppel. Before this combined motion was set for submission, CCP amended its answer to add ambiguity, modification of contract, abandonment, waiver and failure to mitigate damages as affirmative defenses to Westlake's claim. The trial court granted Westlake's motion and entered final judgment in favor of Westlake for $1,337,777.50, plus post-judgment interest and attorney's fees.

CCP presents seven issues for appellate review. In the first six issues, CCP contends that the trial court erred by granting summary judgment because: (1) the contract is ambiguous; (2) genuine issues of material fact exist with respect to Westlake's entitlement to damages; (3) CCP raised questions of fact on its affirmative defenses; (4) Westlake failed to prove all elements of its prima facie case for recovery of damages under the Uniform Commercial Code ("UCC"), as adopted in Texas; (5) Westlake's motion for summary judgment failed to address several of CCP's affirmative defenses; and (6) Westlake anticipatorily repudiated the contract when it failed to provide adequate assurance of due performance, thereby excusing CCP's obligation to perform. In its seventh issue, CCP claims the trial court erred in setting the rate of pre-judgment interest too high. We affirm the decision of the lower court.

FACTUAL BACKGROUND

In January of 1995, CCP and Westlake entered into a three-year contract for the purchase and sale of styrene monomer. Under the parties' contract, CCP agreed to buy a set quantity of product from Westlake through the end of 1997, at an agreed formula price. CCP was to purchase the product in equal monthly installments in the following volumes: (i) 12 million pounds in 1995; (ii) 14 million pounds in 1996; and (iii) 16 million pounds in 1997. Because the market price for styrene monomer fluctuates on a daily basis, the parties included in the contract a "meeting competition" clause in an effort to buffer the effects of market price movements. The clause reads in part:

If Buyer [CCP] furnishes Seller [Westlake] satisfactory written evidence of a legitimate price, which is lower than Seller's effective price to buy, offered by a recognized domestic manufacturer on standard products of like quantity and quality on substantially similar terms and conditions, Seller agrees to meet such lower price on the base volume as long as such competitive offer is valid over the term of this contract.

In early 1995, CCP (buyer) advised Westlake (seller) of a competitive situation and produced written evidence in the form of a contract with Amoco, one of CCP's competitors. The Amoco contract was for a term at least as long as the Westlake/CCP contract. Westlake met the competitive situation by adopting the competitor's pricing formula as part of the Westlake/CCP contract.

In July and August of 1996, CCP, in response to a fall in the market price for styrene monomer, asked Westlake for a reduction in the contract price. The Westlake/CCP contract contained a discretionary clause which provided that Westlake, as seller, "at any time may lower its price or institute or remove a temporary voluntary allowance or other similar competitive allowance off the list price without being obligated to provide [CCP] with any advance notice thereof." Although Westlake did not meet the price CCP had requested, it granted CCP a price reduction.¹ Westlake required no written evidence from CCP before lowering the price.

In October of 1996, CCP attempted to invoke the "meeting competition" clause by producing a competitor's invoice for one shipment of styrene monomer for the month of October 1996. This invoice did not contain the terms and conditions of the offer, did not verify quantity, and did not contain evidence that the offer was valid over the term of the Westlake/CCP contract, all of which was information required by the contract. When CCP refused to provide any written evidence of the terms and conditions, quantity or term over which the allegedly competitive offer was valid, Westlake refused to meet the price stated in the competitor's invoice.

Beginning in December of 1996, CCP refused to honor the Westlake/CCP contract formula price. Westlake filed suit against CCP for breach of contract. To mitigate its damages, Westlake sold the styrene monomer CCP had agreed to purchase on the spot market at prices well below the price specified in the Westlake/CCP contract. Westlake did not give CCP advance notice of the sale. At trial, the court found in favor of Westlake and awarded damages for the difference between the contract price and the spot market sales price, plus prejudgment and postjudgment interest and attorney's fees.

STANDARD OF REVIEW

The party moving for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. See Nixon v. Mr. Property Management Co., Inc., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether a disputed material fact issue precludes summary judgment, we take as true all evidence favoring the non-movant. See id. at 548-49. We review conclusions of law de novo and will uphold them if the judgment can be sustained on any legal theory supported by the evidence. See National Environmental Service Co., Inc. v. Homeplace Homes, Inc., 961 S.W.2d 632, 634-35 (Tex. App.-San Antonio 1998, no pet.) (citing Nelkin v. Panzer, 833 S.W.2d 267, 268 (Tex. App.-Houston [1st Dist.] 1992, writ dism'd w.o.j.)).

AMBIGUITY

In its first issue, CCP claims there are at least three ambiguities in the "meeting competition" clause which make the trial court's granting of Westlake's summary judgment motion improper. To support its argument, CCP offers various interpretations of the language in the clause.

At the outset, we note that conflicting interpretations of a contract and unclear and uncertain language do not necessarily mean a contract is ambiguous. See Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 465 (Tex. 1998); Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951); Preston Ridge Fin. Servs. Corp. v. Tyler, 796 S.W.2d 772, 777 (Tex. App.-Dallas 1990, writ denied). There are two steps to an ambiguity analysis. First, we apply the applicable rules of construction and decide if the contract is ambiguous. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). A contract is not ambiguous if it can be given a certain and definite meaning or interpretation. See id. We must interpret an unambiguous contract as a matter of law. See id. If, however, the contract can be given two or more reasonable interpretations, it is ambiguous. See Kelley-Coppedge, 980 S.W.2d at 465. If we find the contract ambiguous, the second part of the ambiguity analysis comes into play and the trier of fact may consider the parties' interpretation and other extraneous evidence. See National Union Fire Ins. Co. v. CBI, 907 S.W.2d 517, 520 (Tex. 1995); Quality Oilfield Products, Inc. v. Michigan Mut. Ins. Co., 971 S.W.2d 635, 639 (Tex. App.-Houston [14th Dist.] 1998, no pet.). In that event, we must find that summary judgment is improper. An ambiguous contract raises a question of fact which cannot be disposed of on summary judgment. See Calhoun v. Killian, 888 S.W.2d 51, 54 (Tex. App.-Tyler 1994, writ denied).

In the first step of the ambiguity analysis, our primary concern is to determine and give effect to the intentions of the parties as expressed in the instrument. See Coker, 650 S.W.2d at 393; Tyler, 796 S.W.2d at 775. In determining the intention of the parties, we look only within the four corners of the agreement to see what is actually stated, and not at what was allegedly meant. See Esquivel v. Murray Guard, Inc., 992 S.W.2d 536, 544 (Tex App.-Houston [14th Dist.] 1999, pet.denied). We must consider all of the provisions with reference to the entire contract; no single provision will be controlling. See Coker, 650 S.W.2d at 393; Esquivel, 992 S.W.2d at 543. In construing the contract, we consider how a reasonable person would have used and understood the language, by pondering the circumstances surrounding the contract's negotiation, and by considering the purposes which the parties intended to accomplish by entering into the contract. See Manzo v. Ford, 731 S.W.2d 673, 676 (Tex. App.-Houston [14th Dist.] 1987, no writ). We are free to examine prior negotiations and all other relevant incidents bearing on the intent of the parties; however, the parties may not contradict or vary the...