Transource Intern., Inc. v. Trinity Industries, Inc.

• Decision Date: 21 February 1984
• Docket Number: No. 83-1009,83-1009
• Citation: 725 F.2d 274
• Parties: 1984-1 Trade Cases 65,865 TRANSOURCE INTERNATIONAL, INC., et al., Plaintiffs-Appellants, v. TRINITY INDUSTRIES, INC., a Texas corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 274

725 F.2d 274

1984-1 Trade Cases 65,865

TRANSOURCE INTERNATIONAL, INC., et al., Plaintiffs-Appellants, v. TRINITY INDUSTRIES, INC., a Texas corporation, Defendant-Appellee.

No. 83-1009.

United States Court of Appeals, Fifth Circuit.

Feb. 21, 1984.

Judge, Russ & Clark, Philip R. Russ, Amarillo, Tex., for plaintiffs-appellants.

Locke, Purnell, Boren, Laney & Neely, W. Andrew Barr, Michael H. Collins, Dallas, Tex., for defendant-appellee.

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

Before POLITZ, JOHNSON and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

This is an appeal from a summary judgment in an antitrust and breach of contract suit. Appellant, Transource International, Inc., a railcar manufacturer, sued Trinity Industries, Inc., a railcar marketer, claiming (1) that Trinity conspired with other railcar manufacturers and dealers to boycott Transource and eliminate it from competition in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2 (1970), section 3 of the Clayton Act, 15 U.S.C. Sec. 14 (1970), and section 15.01 of the Texas antitrust laws, TEX.BUS. & COM.CODE ANN. Sec. 15.01 (Vernon 1968); (2) that Trinity violated section 2 of the Sherman Act by monopolizing or attempting to monopolize the railcar market; and (3) that Trinity violated section 1 of the Sherman Act and section 3 of the Clayton Act by contractually eliminating competition by Transource through use of a non-competition clause. In addition, Transource claimed that Trinity breached its railcar manufacturing and marketing contract with Transource. The district court granted a summary judgment in favor of Trinity on all counts and Transource appeals.

We find that the district court's summary judgment on the antitrust claims should be affirmed. The summary judgment on the state law claim of breach of contract, however, we find to have been in error because that issue should have been submitted to the jury. We therefore vacate the district court judgment as to the breach of contract claim and remand the case to the district court for further proceedings.

FACTS

Plaintiff, Transource International, was formed in May 1979, by Rose, Cogliatti & Garrison, three former employees of ITEL Corporation, a company in the business of procuring and leasing railcars throughout the United States. ¹

Acting as agents for the newly formed corporation, the three principals contacted the defendant-appellee, Trinity, Inc., a manufacturer and marketer of a wide variety of steel products, including railcars. The Transource principals proposed that the two corporations combine Transource's marketing expertise and Trinity's manufacturing expertise to form a joint venture for the purpose of manufacturing and distributing railroad gondola cars.

On June 15, 1979, Trinity and Transource executed an agreement entitled "Railcar Manufacturing and Marketing Agreement" (June 15, 1979, Agreement). Under this contract, Transource agreed to assign valid and binding purchase orders for railcar components to Trinity at closing and agreed that upon this assignment Trinity would succeed to all rights and obligations under the purchase orders. Next, Transource agreed to secure an initial order for the purchase of 250 gondolas and to assign this order to Trinity prior to June 30, 1979. ² In addition, since Transource only had $1,000 in its corporate capital account at this time, Trinity agreed to loan $20,000 working capital to Transource each month for eight months and agreed to pay the June advance to Transource upon closing. Finally, Transource and its shareholders agreed to include a non-competition and conflict of interest clause in the contract which provided that Transource and its shareholders would not compete with Trinity in the marketing or manufacturing of railcars during the term of the agreement.

Among the railcar component purchase orders which Transource agreed to assign to Trinity under the agreement was an order for 585 sets of wheels and axles issued by Transource to the Valdunes Division of Creusot-Loire Steel Corporation. The enforceability of the Valdunes purchase order was contingent upon the posting of a $2,070,000 letter of credit in favor of Valdunes by June 15, 1979, which was the same day the Trinity-Transource Agreement was executed. ³

The responsibility for posting the Valdunes letter of credit is the major conflict in this case. Transource maintains that Trinity obligated itself to post the letter of credit as part of the Trinity-Transource Agreement. Trinity, however, contends that the June 15, 1979, Agreement constituted the entire contract between the parties and that the Agreement contained no provision obligating Trinity to post the Valdunes letter of credit. In any event, on the afternoon of June 15, 1979, after executing the Agreement with Transource, Trinity did contact its bank in an effort to have the Valdunes letter of credit posted. The bank, however, could not complete the letter of credit process that afternoon. When the letter of credit was not delivered as promised on June 15, 1979, Valdunes cancelled Transource's purchase order for wheels and axles. At this point, since Transource could not meet its obligations under the Agreement to provide the Valdunes purchase orders, Trinity refused to give Transource the $20,000 advance.

On July 2, 1979, Trinity notified Transource by letter that it considered the June 15, 1979, Agreement null and void. Subsequently, Trinity and Transource entered into a second contract in which Trinity agreed to sell 250 gondolas to Transource for $35,000 each. This agreement (July 6, 1979, Agreement) provided that all customer acceptance and financial arrangements were to be completed by September 28, 1979. Transource failed to complete financial arrangements by September 28, 1979, however, and at this point, negotiations between Trinity and Transource ended.

Thereafter, Transource filed a complaint in federal district court alleging several violations of antitrust laws. First, Transource asserted that the non-competition clause in Paragraph 8 of their June 15, 1979, Agreement with Trinity constituted an unlawful restraint of trade in violation of section 1 of the Sherman Act. Next, Transource claimed that Trinity conspired with its manufacturers and suppliers to keep Transource out of the business of manufacturing and leasing gondolas, and that this conspiracy monopolized trade in violation of sections 1 and 2 of the Sherman Act. Transource also alleged that Trinity violated section 3 of the Clayton Act because it had refused to allow Transource to sell its right to purchase gondolas to another railcar leasing company and that the non-competition clause in Paragraph 8 of the Agreement violated section 3 of the Clayton Act as well. In addition to its federal claims, Transource also complained that the June 15, 1979, Agreement violated Texas antitrust laws. Finally, Transource maintained that Trinity breached the Agreement itself by failing to post the Valdunes letter of credit and by failing to advance the $20,000 to Transource at closing. Both parties filed motions for summary judgment. The district court granted defendant Trinity's motion and ordered that Transource take nothing. This appeal followed.

I. Summary Judgment

Summary judgment is "drastic relief" and must be approached cautiously. Solomon v. Houston Corrugated Box Co., Inc., 526 F.2d 389, 393 (5th Cir.1976). This is especially true with respect to complex antitrust cases where summary judgment is not generally favored. Ibid. ⁴ Summary judgment should be entered only if when viewing the evidence in a light most favorable to the non-moving party, it appears from the pleadings, depositions, answers to interrogatories, admissions and affidavits 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." Fed.R.Civ.P. 56(c), see, e.g., Poller v. Columbia Broadcasting System, 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962).

Despite this strict standard, however, summary judgment is sometimes appropriate in antitrust actions. "It is now established that 'simply because a suit is brought under the antitrust laws does not foreclose a summary judgment.' " In re Municipal Bond Reporting Antitrust Litigation, 672 F.2d 436, 440 (5th Cir.1982), citing, Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1112 (5th Cir.1979). While the court must draw all inferences in favor of the party opposing summary judgment, the nonmoving litigant cannot establish a genuine issue of material fact merely by introducing conflicting testimony. On the contrary, "[t]his Court recognizes that once defendants have made ... sworn denials, summary judgment is appropriate unless plaintiff can produce significant evidence demonstrating the existence of a genuine fact issue." Parsons v. Ford Motor Co., 669 F.2d 308, 313 (5th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 73, 74 L.Ed.2d 72 (1982). (emphasis added). The trial court in this case rendered summary judgment in favor of defendant Trinity as it found that the plaintiff failed to introduce evidence which created a genuine factual dispute regarding any of its claims. In reviewing a summary judgment on appeal, we are bound by the same standard that controls the district court. Environmental Defense Fund v. Marsh, 651 F.2d 983, 991 (5th Cir.1981).

II. Restraint of Trade

Transource claims that Paragraph 8 of the June 15, 1979, Agreement constitutes an unlawful restraint of trade against Transource under section 1 of the Sherman Act. Under Paragraph 8, Transource agreed to refrain from competing with Trinity in the manufacture or marketing of railcars during the term of the Agreement or for five years after termination of the Agreement. Transource claims that Paragraph 8 prevented it from becoming either a competitor of Trinity, or a customer of Trinity's...