In both 2015 and in 2018 we reported on litigation between BRC Rubber & Plastics, Inc. ("BRC") and Continental Carbon Company ("Continental"). On November 25, 2020, the Seventh Circuit Court of Appeals issued its third opinion in this litigation. Judge Hamilton, the author of the opinion, expressed the hope that this opinion would be the final opinion. Certainly, the case has taken some head-snapping twists and turns.
In our December 7, 2015 update, we reported that BRC had claimed that Continental breached a written supply agreement that BRC alleged was a requirements agreement. In this first Seventh Circuit opinion, Judge Williams disagreed, concluding the written agreement was not a requirements contract. The result was that a nearly $1 million judgment in BRC's favor was reversed. Our December 7, 2015 update can be found at (link).
On remand back to the trial court, BRC changed its position. It argued that Continental had breached the supply agreement and the supply agreement was for a fixed quantity. At the trial level, BRC lost on summary judgment. BRC appealed. It got a better result in an August 16, 2018 opinion written by Judge Ripple, as we reported in an October 2, 2018 update found at (link). In that opinion, Judge Ripple concluded that the supply agreement could be interpreted as a supply agreement for a fixed quantity and that BRC's complaint could "plausibly allege that Continental repudiated the Agreement by failing to provide adequate assurances of performance." We speculated that the damages may not justify the additional effort but that "BRC's persistence may yet pay off."
Indeed, BRC's persistence did pay off, resulting in the affirmation of a damages award in its favor of $843,000 and prejudgment interest of $400,000. (BRC Rubber & Plastics, Incorporated v. Continental Carbon Company, 7th Circuit Court of Appeals, No. 20-1011, November 25, 2020)
Judge Hamilton, author of the 2020 opinion, gave more information about the case than either of the previous two opinions. This information put Continental in an unfavorable light.
A summary of some of the key facts and background as follows:
"Applying the standard of commercial reasonableness to all of the circumstances of the case, the district court reasonably found that Continental's assurance was inadequate. Continental did not follow its lawyer's assurance with consistent expressions of its readiness to perform under the contract. It did the opposite."
"Continental's failure to provide adequate assurance meant that BRC was entitled to treat Continental as having repudiated the contract... That's what BRC did on June 2, 2011 notifying Continental that it was terminating the parties' contract and had filed this lawsuit. BRC then proceeded to "cover" by starting to buy carbon black from another supplier at higher prices, which it did for the rest of the contract term."
It was a long and winding road, but BRC's persistence has paid off for it (and possibly its legal counsel). It's a lesson in not giving up, as well as being creative and flexible in pursuing litigation.
©2021 Masuda, Funai, Eifert & Mitchell, Ltd. All rights reserved. This publication should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended solely for informational purposes and you should not act or rely upon information contained herein without consulting a lawyer for advice. This publication may constitute Advertising Material.