Hanwha Azdel, Inc. v. C & D Zodiac, Inc.

617 F. App'x 227
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 9, 2015
DocketNo. 14-1654
StatusPublished
Cited by5 cases

This text of 617 F. App'x 227 (Hanwha Azdel, Inc. v. C & D Zodiac, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanwha Azdel, Inc. v. C & D Zodiac, Inc., 617 F. App'x 227 (4th Cir. 2015).

Opinion

Affirmed in part, vacated in part, reversed in part, and remanded by unpublished opinion. Judge WYNN wrote the opinion, in which Judge GREGORY and Judge KEENAN joined.

Unpublished opinions are not binding precedent in this circuit.

WYNN, Circuit Judge:

Hanwha Azdel, Inc. (“Azdel”), the manufacturer of a thermoplastic composite sheet product called “Aero-Lite,” entered into an agreement with aircraft sidewall manufacturer C & D Zodiac, Inc. (“C & D”) to use Aero-Lite to manufacture aircraft sidewalls for American Airlines (“American”). The relationship deteriorated when the Aero-Lite sidewalls did not live up to American’s expectations. C & D never paid Azdel for the sheets of Aero-[230]*230Lite that it ordered or that Azdel delivered while the parties were working together. C & D later found a partner in Crane & Co. (“Crane”), whose product proved successful for use in sidewall manufacturing and met American’s expectations.

Azdel filed this lawsuit to recover inter alia 1) the contract price of 144 sheets of 2000 . grams-per-square-meter (“gsm”) Aero-Lite it delivered to C & D and which C & D forwarded to its forming facility to be molded into sidewalls; 2) the contract price of the remaining sheets of Aero-Lite reflected in C & D’s original purchase order; 3) the contract price of eight sheets of a lighter 1320 gsm Aero-Lite product it delivered tó C & D; and 4) damages for C & D’s disclosure of Azdel’s confidential information to Crane. The parties filed cross-motions for summary judgment. The district court denied Azdel’s motion and granted C & D’s motion in tato. On appeal, Azdel challenges the district court’s summary judgment rulings and its denial of Azdel’s motion to compel discovery of certain documents from Crane.

We affirm the district court’s grant of summary judgment to C & D on Azdel’s confidentiality claims, and further rule that the district court did not err in denying Azdel’s motion to compel. However, we reverse the district court’s grant of summary judgment to C & D because we hold that C & D accepted the 144 sheets of 2000 gsm Aero-Lite by taking actions inconsistent with Azdel’s ownership of those sheets; accordingly, we grant summary judgment to Azdel as to this claim. We likewise reverse the district court’s grant of summary judgment to C & D regarding Azdel’s delivery of the eight sheets of 1320 gsm Aero-Lite and grant summary judgment to Azdel on this claim because C & D accepted these sheets. Finally, we hold that the district court acted prematurely in granting summary judgment to C - & D regarding C & D’s liability under the original purchase order. Whether C & D terminated is a question that must be resolved by a jury. We therefore affirm in part, reverse in part, and vacate in part the district court’s rulings and remand for trial on the termination issue.

I.

A.

In March 2008, Azdel and C & D executed a Memorandum of Understanding (“MOU”) memorializing the parties’ agreement to work together to provide aircraft sidewalls for American Airlines. The MOU was a preliminary agreement that would govern the parties’ relationship while they worked to establish a more permanent contract. Azdel was to manufacture sheets made of 2000 gsm Aero-Lite to be molded by C & D into aircraft sidewalls for American. The MOU also provided that the parties would work together to develop a “next-generation Aero-Lite material” and set out a development schedule for that product. J.A. 2186. The parties “anticipate[d] a 20-year commitment ... during which AZDEL [would] offer C & D exclusivity of supply for” various programs. J.A. 2185 ¶¶ 2-3. Az-del also agreed to provide C & D with “Most' Favored Pricing.” J.A. 2186 ¶ 5.

The parties agreed that Azdel would manufacture 2000 gsm Aero-Lite according to a “Specification” prepared by C & D and modified as a result of feedback from Azdel. The Specification was “fairly generic” and labeled as proprietary to C &' D. J.A. 2033-35. Azdel warranted only that its product would comply with the Specification and expressly disclaimed any warranty of fitness for a particular purpose. Indeed, Paragraph 9 of the agreement stated in no uncertain terms:

[231]*231The Parties agree that suitability of the Product for the American Airlines 757 program has been extensively tested and investigated. AZDEL warrants only that Products sold to C & D will conform to C & D’s specifications in effect at the time of manufacture and agreed in writing between AZDEL and C & D. AZDEL expressly disclaims any warranty of fitness for a particular purpose.

J.A. 2189-90 ¶ 9 (emphasis added).

The MOU required C & D to provide six-month forecasts of its Aero-Lite requirements because, according to the agreement, “[t]he Parties acknowledge that AZDEL’s supply chain requirements for [2000 gsm Aero-Lite] result in long lead times.” J.A. 2189. As a result, such forecasts were “binding in that C & D will be committed to later issue a purchase order for not less than the material requirements forecasted.” J.A. 2189 H7.B. Purchase orders were to be issued at least twelve weeks before the anticipated ship date. C & D could make reasonable changes in quantities or delivery dates by issuing notice to Azdel thirty days prior to the expected delivery date. Any other changes to purchase orders that came with less than thirty days’ notice were subject to acceptance by Azdel.

Azdel retained “[t]itle to any shipment of the Products” until C & D paid “all sums due to Azdel for that shipment, or until the Product is no longer in sheet form.” J.A. 2189 ¶ 8.B.

While the MOU severely limited the extent of Azdel’s warranties, C & D was protected by broad termination rights, as laid out in Paragraph 11 of the agreement:

C. C & D shall have the right to terminate this MOU as well as any open orders in connection thereto if: (i) the material does not perform as predicted and is deemed not suitable for C & D’s intended use, conversion, or processing; and C & D has given the required 60 days’ notice and/or (ii) the customer requests C & D to switch back to conventional material/manufaeturing methods.

J.A. 2190 ¶ 11.

In addition to establishing the parties’ rights and obligations regarding the purchase and delivery of 2000 gsm Aero-Lite, the MOU required the parties to maintain confidentiality regarding certain information. Paragraph 12 of the MOU provided that the MOU itself would remain confidential, and referenced a “separate” “Confidentiality and Non-Disclosure Agreement” (“NDA”) that would govern certain other confidentiality obligations. J.A. 2191 ¶ 12. The NDA prohibited the parties from disclosing confidential information “conspicuously labeled” as such by the party seeking to prohibit disclosure. J.A. 2194. The extensive list of materials that was subject to non-disclosure included “costs and pricing” and “prototypes.” J.A. 2194. Information “in the public domain,” however, was not protected. J.A. 2195.

B.

On April 8, 2008, C & D issued a purchase order for 2900 sheets of 2000 gsm Aero-Lite, with deliveries staggered over eight months (the “Original Purchase Order”).

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617 F. App'x 227, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanwha-azdel-inc-v-c-d-zodiac-inc-ca4-2015.