Thermacor Process, L.P. v. Basf Corp.

• Decision Date: 07 May 2009
• Docket Number: No. 08-10227.,08-10227.
• Citation: 567 F.3d 736
• Parties: THERMACOR PROCESS, L.P., Plaintiff-Appellant, v. BASF CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

567 F.3d 736

THERMACOR PROCESS, L.P., Plaintiff-Appellant, v. BASF CORPORATION, Defendant-Appellee.

No. 08-10227.

United States Court of Appeals, Fifth Circuit.

May 7, 2009.

Stephen L. Tatum (argued), J. Frank Kinsel, Jr., John Steven Polzer, Cantey Hanger, LLP, Fort Worth, TX, for Plaintiff-Appellant.

George Parker Young, Karen S. Precella (argued), Thomas J. Williams, Haynes &

Boone, Fort Worth, TX, for Defendant-Appellee.

Appeals from United States District Court for the Northern District of Texas.

Before GARWOOD, GARZA and OWEN, Circuit Judges.

PER CURIAM:

Plaintiff-appellant, Thermacor Process, L.P. (Thermacor), sued defendant-appellee, BASF Corporation (BASF), alleging negligent misrepresentation, fraudulent inducement, and violations of the Texas Deceptive Trade Practices Act (DTPA), Tex. Bus. & Comm.Code Ann. § 17.46(b)(5) & (7). The district court granted summary judgment for BASF on all claims and entered judgment against Thermacor on February 7, 2008. On March 4, 2008, Thermacor filed a Motion for Relief from Judgment pursuant to Rule 60(b)(2). On March 6, 2008, Thermacor filed its notice of appeal from the February 7, 2008 judgment. On March 19, 2008, the district court denied Thermacor's Rule 60(b) motion, and on March 20, 2008, Thermacor filed its notice of appeal from that denial. Thermacor now challenges both the district court's grant of summary judgment and its denial of the Rule 60(b) motion. For the following reasons, we AFFIRM.

FACTS AND PROCEEDINGS BELOW

The summary judgment evidence reflects the following.

Thermacor manufactures pre-insulated piping systems for installation at commercial sites. One of Thermacor's products is steel piping that is installed for the distribution of high-temperature steam, condensate, and heated water. To insulate the pipe, Thermacor coats it with a foam insulation that is held in place and protected by a polyethylene outer jacket. There are two means by which Thermacor can insulate its piping systems: (1) an injection method, in which foam insulation is injected between the pipe and its polyethylene jacket, and (2) a more efficient "spray" method, in which foam insulation is sprayed on the pipe as it moves on a rotating conveyor and a polyethylene jacket is applied later. Thermacor initially used only the injection method, but in 2000, after purchasing a spray foam application system, Thermacor began using the spray method as well. The new system required a spray foam, and Thermacor was put in touch with BASF as a potential supplier. Thermacor began using BASF's low-temperature spray product after John Williams, a BASF sales representative, and Ron Patterson, a BASF process engineer, successfully tested the application of BASF's spray foam using Thermacor's spray equipment.

In 2004, the EPA banned (effective in January 2005) a blowing agent known as "HCFC 141b." Thermacor's high-temperature injecting foam contained HCFC 141b; thus, Thermacor was in urgent need of a new product to insulate its high-temperature steel piping. Thermacor hoped to replace the banned product with a high-temperature spray foam in order to increase efficiency; however, no such product existed at the time.

In mid-2004, Joe Keyes, Sr., Thermacor's CEO, asked BASF to pursue the development of a high-temperature spray formula that could withstand continuous temperatures as high as 366 degrees and spikes of up to 400 degrees.¹ BASF developed the Elastopor H17070R Resin product (17070 product), which it believed met Thermacor's needs, and on June 17, 2004 sent an email to Joe Keyes, Jr., President of Thermacor, stating:

"In my last conversation with [Keyes, Sr.], he indicated that BASF should pursue the Hi-Temp spray. It is done, please find tech data sheet attached. Please ask James Filer if one drum of Resin will be enough for the trial."

Attached to the email were data sheets pertaining to the 17070 product. The data sheets contained the results of two heat tests, a Dynamic Mechanical Analysis test and a Thermogravimetric Analysis test conducted by BASF's labs. These data sheets showed that the product softened at slightly over 390 degrees; they did not indicate the time-interval by which the temperature was increased during the test, and the data did not evidence end-use thermal stability. Each page of the data sheets pertained to the 17070 product, and stated that Thermacor "should thoroughly test any application, and independently determine satisfactory performance before commercialization." BASF also provided a PowerPoint presentation explaining that the graph showed the temperature at which the foam began to show "an onset of a softening transition" and that the values were dependent on the density of the foam.

Williams testified that he informed Thermacor representatives on several occasions that it was important to test the product, and Williams's call reports indicated he had made several attempts to schedule trial dates with Thermacor. Thermacor acknowledges that it has tested new high-temperature foam products in the past; however, Thermacor does not, as a general practice, test the products it purchases from other manufacturers. Keyes, Sr. also testified that Thermacor was told to test the product, and Thermacor did perform tests to determine how well the foam would perform under certain temperatures and whether the foam would apply properly to the pipe. Keyes, Sr. testified that Thermacor "could have been a little more critical" of the test results pertaining to temperature, which showed slight discoloration and charring at extreme temperatures.

Still, even with these results and the knowledge that the tests remained incomplete, Thermacor decided that the foam would be satisfactory for application in its insulated pipe system. Thermacor did not purchase the 17070 product, but instead, chose to go forward with a different product, the 17071 product, which was an unblended product that Thermacor had not yet tested.² The technical information and data sheets BASF provided to Thermacor about the 17071 product similarly warned Thermacor that it "should thoroughly test any application." Each of Thermacor's orders was accompanied by BASF's "Terms and Conditions," which provided:

"ANY TECHNICAL ADVICE FURNISHED ... IS BELIEVED TO BE RELIABLE BUT SELLER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, ... AS TO ITS ACCURACY OR COMPLETENESS OR OF THE RESULTS TO BE OBTAINED .... BUYER ASSUMES FULL RESPONSIBILITY FOR QUALITY CONTROL, TESTING AND DETERMINATION OF SUITABILITY OF PRODUCT FOR ITS INTENDED APPLICATION OR USE .... SELLER MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF MERCHANTABILITY."

At the time of the purchase at issue, BASF and Thermacor had enjoyed a long-lasting business relationship, and these same BASF Terms and Conditions had been included in many past transactions between them.

Thermacor manufactured several piping systems using the BASF high-temperature spray foam product and installed these systems in several locations. At one location a contractor noticed a soft spot on the pipe, and an investigation revealed that the BASF foam had deteriorated. Investigations at other sites revealed the BASF foam product was also failing within months. And during post-failure heat testing, Thermacor discovered that the spray foam failed at around 290 degrees.

Thermacor filed suit against BASF, alleging claims of negligent misrepresentation, fraudulent inducement, and violations of section 17.46(b)(5) & (7) of the DTPA. Summary judgment was granted for BASF as to all claims. Thermacor filed a Motion for Relief from Judgment pursuant to Rule 60(b)(2), which the district court denied. Thermacor now appeals both the summary judgment and the denial of the Rule 60(b) motion.

DISCUSSION

I. Summary Judgment

This court reviews a district court's grant of summary judgment de novo. United States v. Corpus, 491 F.3d 205, 209 (5th Cir.2007). Summary judgment is appropriate if the record, taken as a whole, "show[s] that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c); James v. Texas Collin County, 535 F.3d 365, 373 (5th Cir.2008). "A factual dispute is `genuine' if a reasonable trier of fact could return a verdict for the nonmoving party." James, 535 F.3d at 373. The nonmovant must designate specific facts that establish a genuine issue of material fact exists on all elements of its claims. Kunin v.Feofanov, 69 F.3d 59, 61 (5th Cir.1995). All facts and inferences must be viewed in the light most favorable to the nonmovant. Corpus, 491 F.3d at 209.

Thermacor argues that the district court improperly granted BASF's motion for summary judgment on each of Thermacor's claims for negligent misrepresentation, fraudulent inducement, and violations of section 17.46(b)(5) & (7) under the DTPA. All claims share a common element—each requires Thermacor to prove that BASF made a false representation.³ And all of Thermacor's claims turn on the same alleged misrepresentation, that BASF falsely represented it could and did develop a high-temperature spray foam capable of meeting Thermacor's thermal stability requirements. Thus, the central issue in this case is whether a rational trier of fact could find that BASF misrepresented its ability to develop such a product and/or falsely represented that it had developed such a product.

As evidence that BASF falsely represented its competence to produce a foam capable of meeting Thermacor's specifications, Thermacor points to BASF's internal policy not to refer to foam as "high-temperature," not to rate foam for temperature, and not to distribute test data to customers. These policies, however, do not evidence a misrepresentation of ability—if anything, they show a policy not to make representations regarding temperature at all. Nor do these policies show BASF was incapable of producing a foam that met Thermacor's...