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Midatlantic International, Inc. v. Agc Flat Glass North America, Inc.

United States District Court, E.D. Virginia, Norfolk Division

February 7, 2014



ROBERT G. DOUMAR, Senior District Judge.

This matter comes before the Court on motions of Defendant AGC Flat Glass North America ("AGC") for Partial Summary Judgment, ECF No, 87, and to Stay and Compel Arbitration, ECF No. 118. This opinion sets forth in writing the reasons for the Court's rulings at the telephonic hearing on February 6, 2014. For the reasons set forth herein, the Court GRANTS the Motion for Partial Summary Judgment as to the question of what constituted the contract between the parties and DENIES the remainder of the motion. Additionally, the Court DENIES the Motion to Stay and Compel Arbitration.


As to the first motion for partial summary judgment, summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the moving party is thereby entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catreit, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "A material fact is one that might affect the outcome of the suit under the governing law.' A disputed fact presents a genuine issue if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Spriggs v. Diamond Auto Glass, 242 F.3d 179, 183 (4th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 255, 106 S.Ct. 2505 (1986).

As to the second motion requesting that the Court compel arbitration:

[u]nder the [Federal Arbitration Act], a party may lose its right to compel arbitration if it "is in default in proceeding with such arbitration." This principle of "default" is akin to waiver, but not identical. Unlike some waiver doctrines, "the circumstances giving rise to a statutory default are limited and, in light of the federal policy favoring arbitration, are not to be lightly inferred, " and the party opposing arbitration bears a heavy burden to prove default.

Rota-McLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 702 (4th Cir. 2012) (citations omitted).


This case is, ultimately, about what constituted the contract between AGC and Plaintiff MidAtlantic International, Inc. ("MidAtlantic") and whether or not the product that was provided conformed to the specifications of the contract. At this stage in the proceedings there are still many disputed facts which prevent the Court from fully granting the Motion for Partial Summary Judgment. However, there are enough undisputed facts for this Court to make a determination of what constituted the terms of the agreement between the parties, and those facts are as follows.

By 1997 MidAtlantic Minerals, Inc., an affiliate of MidAtlantic, had begun delivering Spanish dolomite to AFG Industries, Inc., who was AGC's predecessor, for use in its solar glass plant in Kingsport, Tennessee. Within a few years, the contractual relationship evolved into one between MidAtlantic and AGC. From the late 1990s until the end of 2011 AGC (and its predecessor AFG) was regularly supplied with dolomite by MidAtlantic (and its affiliate MidAtlantic Minerals). MidAtlantic obtained the dolomite from a mine in Spain. Before being shipped to the United States, the dolomite would be tested for certain chemical qualities. The resulting Certificate of Analysis would then be provided to AGC upon delivery. MidAtlantic shipped the dolomite from Spain to a warehouse in Norfolk, Virginia. After AGC placed an order, the dolomite would be delivered to Kingsport via rail.

At the end of every calendar year AGC would send MidAtlantic a seven page long purchase order that would provide a rough estimate of AGC's dolomite needs for the coming year. That annual purchase order would be supplemented by monthly purchase orders that provided a more exact request for dolomite. Each separate order would set forth the requirements and conditions for the delivery of the dolomite. The quantity of dolomite set forth in the monthly purchase orders would then occasionally be slightly altered via email and telephone conversations between the parties before the dolomite was actually shipped from the warehouse in Norfolk to the Kingsport plant.

Each and every purchase order contained, among other things, certain requirements concerning the technical specifications of the dolomite. The requirements specifically set forth the chemical composition and physical properties, including the maximum allowable levels of iron, silicon dioxide, and acid insoluble particles. In addition, this included a requirement that "no acid insoluble particle shall be coarser than 30 mesh, " which is equivalent to.6 millimeters ("30 mesh requirement"). That requirement was included on all purchase orders during the relevant time period. Also included with the purchase orders was a set of Terms and Conditions. Paragraph 13 of those Terms and Conditions stated that "[a]ny disagreement or litigation which may occur in relation with or further to this order... will definitely be settled by arbitration and to the exclusion of courts." The purchase orders also contained the price of the dolomite, the expected quantity, the maximum allowable levels of iron content (by MidAtlantic's own admission the most important chemical specification), how the "agreement" could be cancelled, detailed shipment requirements, and numerous other specifications that one would expect to find in order for both sides to understand how the transactions were to take place.

On January 14, 2008, MidAtlantic sent a letter to AGC requesting that a "take or pay" clause be added to their agreement ("2008 Letter"). This clause would require AGC to pay MidAtlantic for any dolomite remaining in the Norfolk warehouse should AGC decide to stop purchasing dolomite from MidAtlantic. The letter also stipulated that AGC would continue to purchase dolomite until at least December 31, 2010 at a set price.[1] AGC eventually signed the letter on October 10, 2008.

In the meantime, in May of 2008 MidAtlantic also requested that changes be made to the purchase orders. Included in those changes was a repeated request that AGC adopt a take or pay clause. MidAtlantic itself marked up a past purchase order and sent the edited purchase order reflecting the proposed changes to AGC. On December 19, 2008, MidAtlantic sent an email to AGC noting that the blanket order for 2009 had not yet incorporated the requested changes. In ...

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