2006 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-21-2006 

# B a ye r C he m C orp v

. Alb e rm arle C orp P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 04-4321

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2006

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2006 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion
" B a ye r C he m C orp v

. Albe rm arle C orp " (2006). 2006 D e cisio n s . P ape r 1408. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2006/1408T h e H o n o rab le Jo sep h H . R o d ri g u ez , S en ior D istri ct Ju d g e, U n it ed S tat es D istri ct C o u rt * fort he D i s t r i ctof N ew J er s ey , s i t t i ng bydes i gnat i on. NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT
N o. 04- 4321
BA YE R C HE M I CA L S CO RP OR AT I ON

v. AL BE RMARL E CO RP OR AT I ON,

A ppel l ant O n A p p e a l f

ro m th e U n ited S tate s D istric t C o u rt fort he W es t ern D i s t r i ctof Penns y l vani a,

( N o. 04- cv- 00585) T he H onor abl e D onet t a W . A m br os e, D i s t r i ctJ udge

A r gued M ar ch 9, 2006 B efor e: R O T H and A L D I SE R T , C i r cui tJ udges , and R O D R I G U E Z , D i s t r i ctJ udge * (F il ed M arc h 2 1 , 2 0 0 6 ) 

### A. Marvi n Quatt l ebaum , Jr . , Es q. ( Argue d) Ri ve r s S. St i lwe l l , Es q. Ne l s on Mul l i ns Ri l e y

& Sc ar bor ough, L. L. P. 104 South Ma i n Str e e t , Sui t e 900 P. O. Box 10084 Gr e e nvi l l e , South Car ol i na29601 E ric N . An d erso n , E sq . CarlA. Ec k, Es q.2



### Me ye r , Darr a gh, Buc kl e r , Bebe ne c k & Ec k, P. L. L. C. U. S. St e e lTowe r , Sui t e 4850 60 0 G rant Stre et Pi tt s burgh, PA 15219 Couns e lfor

Appe l l ant Mi c ha e lD. W ar de n, Es q. ( Argue d) J os eph R. Pa l m or e , Es q. Si dl e y Au s t i n B r own &W oo d L LP 15 01 K S t . , NW W a s hi ngt on, DC 20005 Dr . J ohn E. Murr ay , Jr . , Es q. J on Hogue , Es q. Ti m othy Murr ay , Es q. M urray , H o g u e & L ann is 34 00 Gu lf To wer Pi tt s burgh, PA 15219 Todd A. Portz l ine , Es q. LANXESS Cor

por at i on 11 1 R IDC P ar

k Wes t Dr. Pi tt s burgh, PA 15275 Co un se l for Ap pell ee

OP I NI ON A L D I SE R T , C i r cui tJ udge. A l berm ar l e C orpor at i on appea l s fr om an adve r s e rul i ng of the U ni t ed St at es D istric t C o u rt f

o r th e W e ste rn D istric t o f P e n n sy lv a n ia g ra n tin g B a y e r C h e m ica ls C orpor at i on’ s m ot i on forj udgm enton t he pl eadi ngs pur s uantt o R ul e 12( c) of the Feder alI n t he Sum m erof 2000, C yt ec s ol d i t s paperchemi cal s oper at i ons t o B ay er . B eca us e of 1 t hi s acqui s i t i on A l berm ar l e agr eed t o an as s i gnm entof C yt ec’ s obl i gat i ons underthe Sal es A gr eementt o B ay er . T he part i es al s o agr eed upon a thr ee- y earext ens i on of the Sal es A gr eement , unt i l Sept ember30, 2005. 3 R ul es of C i vi l Pr ocedur e. T he C our tal s o deni ed A l berm ar l e’ s m ot i on forj udgm enton th e p le a d in g s . W e h a v e ju ri s d ic tio n to h e a r t h e p re s e n t a p p e a l p u rs u a n t to 2 8 U .S .C . § 1 2 9 1 . W e wi l l a f

f i r m. I. B ec au se th e p arti es a re f am il iar w ith the f

ac ts an d p roc ee d ing s in the D istri ct C o u rt
w e w ill o n ly b ri e f

ly re v is it th e m h e re . A. O n O ct ober1, 1997, B ay er( the s ucce s s or - i n- i nt er es tt o C yt ec I ndus t r i es , the
or i gi nal pur chas erundert he Sal es A gr eement ) , and A l berm ar l e ent er ed i nt o a Sal es 1 A gr eementunderw hi ch A l berm ar l e agr eed t o s uppl yand B ay eragr eed t o pur chas e 100%
o f B ay er’s req u ir em en ts of a C 1 6 -C 1 8 co m p o u n d , alke n y l suc cinic a n h y d ri d e (“ A S A ”),
w hi ch i s us ed i n t he pape rs i zi ng i ndus t r y . T he part i es det erm i ned thatthe A SA chemi cal compound cover ed byt he Sal es A gr eementw oul d be know n as “PR O D U C T ” ( her ei naft er

“ P ro d u c t”) . T h e o n lyd e f in iti o n o f P ro d u c t co n tain e d in th e S a les A g re e m e n t, w h ich is f o u n d i n o n e o f

t h e o p e n i n g c l a u s e s , s i m p l y q u a l i f i e s th e s u b s t a n c e a s “ C 1 6
- C 1 8 a l k e n yl
s ucci ni c anhy dr i de ( her ei naft err efe r r ed t o as ‘ PR O D U C T ’ ) . ” The agr eementhad a f i vey eart erm , coul d onl ybe t erm i nat ed ther eaf t erw i t h t he pr ovi s i on of tw o y ear s not i ce, andIn i t s ent i rety , S ect i on 1. 7 st at es: 2 I f [Bay er ] s houl d dur i ng t he t erm of thi s A gr eementdes i r e t o r efo r m ul at e or s ubs t i tut e anotherm at er i al or compound for PR O D U C T i n [B ay er ’ s ] al kal i ne papers i zi ng bus i nes s w hich w oul d r educe the vol um e of PR O D U C T t o be pur chas ed fr om A l berm ar l e, t hen [B ay er ] w i l l s o not i fyA l berm ar l e i n w r i t i ng o f su c h re f o rm u latio n o r su b stitu tio n a n d g iv e A lb e rm a rle th e f irst o p p o rtu n ity (as againstanyt hir d p a rt yand / or sel f-pr od ucti on ) t o sup ply[B ay er’ s] r equi r ement s fort he r eform ul at ed ors ubsti tut ed mat er i al orcompound
. If aft ergood fai t h negot i at i ons on t he suppl y of t he re form ul at ed or s ubs t i tut ed m at er i al orcompound, [B ay er ] deci des t o pr ocu re the r eform ul at ed or s ubs t i tut ed mat er i al orcompound from ano ther par t yorpr oduce s uch re f o rm u late d o r su b stitu te d m a ter ial o r c o m p o u n d itse lf , the n p rio r to comm enci ng t he pr ocurem en tors el f- pr oduct i on of the r eform ul at ed or s ubs t i tut ed mat er i al orcompound, A l berm ar l e w i l l have f i r s t r i ghtof r efus al to m e e t th e c o m p e tit iv e th ird p a rty o r se lf -p ro d u c tio n e c o n o m ics to su p p lyto [B ay er ’ s ] r equi r ement s forthe r eform ul at ed or s ubs t i tut ed mat er i al or compound for us e i n al kali ne pape rs i zi ng. . . undert he s ame t erm s and c o n d i t i o n s o f

f e r e d b y t h e t h i r d p a r t y. . . . A l b e r m a r l e w i l l h a v e th i r t y ( 3 0 ) d a ys fr om r ece i ptof w r i t t en not i ce f r om [B ay er] not i fy i ng A l berm ar l e of i t s r i ght of fi r s tr efus al t o m at ch s uch thi r d par ty o ff er t o m at ch s uch t erm s and c o n d iti o n s o f

f e re d b yth e th ird p a rty , an d in th e e v e n t A lb e rm a rl e a g r e e s to m at ch the thir d p artyoffe rand s uppl ythe quant i t i es of r eform ul at ed or s ubs t i tut ed m at er i al or compound s o des i r ed, A l berm ar l e w i l l have 18 m onths w i t hi n w hi ch t o begi n s uppl y of s uch r eform ul at ed ors ubs t i tut ed mat er i al or compound. 4 it ex p re ss lysta ted th a t itc a n o n lyb e m o d if ied b ya w ritten d o c u m e n t sig n e d b yth e p a rty
c la im e d to b e b o u n d . T he Sal es A gr eementcont ai ns pr ovi s i ons thatal l ow form odi fi cat i on or su p p lem e n tatio n o f

th e P ro d u c t sp e c if

ica tio n s, a n d e sc a p e f

ro m th e o v e ra ll co m m itm e n t if
cert ai n condi t i ons ar e met . T he mai n s uch pr ovi s i on, Sect i on 1. 7, i s centr al t o t he pr es ent di s put e. E s s ent i al l y , i ts t at es t hati f B ay erdeci des t o “r eform ul at e ors ubs t i tut e another

25

m at er i al orcompound for Pr oduct , ” then the part i es s hal l ent eri nt o negot i at i ons t o agr ee u p o n th e su p p lyo f

th e n e w c h e m ica l. If a n a g re e m e n t is n o t re a c h e d f o llo w in g g o o d f

a ith
n eg o ti ati o n s, then B ay er h as th e righ t t o see k the s u p p lyo f th e c h em ical fro m a third p a rty . T h e se c tio n p ro v id e s, h o w e v e r, th a t A lb e rm a rle sh a ll h a v e th e f irst rig h t o f

re f u sa l, t o be exe r ci s ed w i t hi n 30 day s of r ece i ptof not i ce of the r eques t ed cha nge, t o m at ch any th ird -p a rtyo f

f e r f o r th e re f o rm u late d o r su b stitu ted c h e m ica l. T he others uch pr ovi s i on des i gned t o pr ovi de fl exi bi l i t yi n t he Sal es A gr eementfor t he part i es ’ changi ng needs i s Sect i on 2. 2, w hi ch es s ent i al l ycover s the s uppl yi n E ur ope, s houl d i teverbe r equi r ed byB ay er , of s m al l quant i t i es of notm or e than 3. 5 m i l l i on pounds of al t ernat i ve s peci fi cat i on A SA , “w hetherC 16- 18 orot herw i s e. ” Shoul d s uch
a ltern a tiv e sp e c if

ica tio n A S A b e n e e d e d , the a g re e m e n t re q u ire s th a t th e p a rties n e g o tiate t he pr oduct i on, t i m e fr ames a nd pr i ce of s uch a c om pound. I f af t ers i x m ont hs of good fai t h negot i at i ons no new agr eementi s r eac hed on thi s al t ernat i ve s peci fi cat i on A SA , t hen B a y e r w o u ld b e f

re e to lo o k to o th e r v e n d o rs f o r its n e e d s. A lb e rm a rle , h o w e v e r, w o u ld h a v e a ri g h t o f

f ir s t r e f u s a l, m u c h lik e in S e c tio n 1 .7 , to m a tc h a n yth ir d -p a rt yo f f e rs . B. Fr om t he dat e of i m pl ement at i on of the Sal es A gr eementunt i l 2003, the part i es oper at ed undert he agr eement ’ s t erm s . A l t hough the Sal es A gr eementdi d nots peci fyt heT h e c lo se st th in g to a sp e c if ica tio n in th e S a les A g re e m e n t f o r th e f o rm u la o f

P ro d u c t is 3 s t at ed atSect i on 2. 1: “PR O D U C T t o be s uppl i ed underthi s A gr eements hal l conform at t he t i m e of s hi pm entt o t he s peci fi cat i ons i n E xhi bi tA ( att ache d) . ” The r efe r ence d E x h ib it A , h o w e v e r, d o e s n o t s ta te th e A S A f o rm u la o r p ro p o rt io n s o f C 1 6 a n d C 1 8 . 6 fo r mul a of

Pr od uc tt o b e s up pl i e d, i ti s un di s pu t e d tha tun t i l 20 03 the fo r mul a of A SA 3
su p p lied b yA lb e rm a rle h a d c o n sis ted o f 6 5 % C 1 6 a n d 3 5 % C 1 8 in a b ra n c h e d iso m e tric f o rm (t h e “ 6 5 /3 5 % m ix tu re ” ). O n Sept ember22, 2003, B ay ers enta l ett ert o A l berm ar l e s t at i ng thati tw as exer ci s i ng i t s r i ght s underSect i on 1. 7. T he l ett ers t at ed thatB ay er“des i r es t o pr ocur e a r eform ul at ed Pr oductforus e i n B ay er ’ s al kal i ne pape rs i zi ng bus i nes s . ” The
r eform ul at i on r eques t ed byB ay erw as an A SA compound com pos ed of 25% C 16 and 7 5 % C 1 8 c o n s is tin g o f

m o re th a n 9 5 % in a lin e a r i s o m e tr ic f o rm (t h e “ 2 5 /7 5 % m ix tu re ” ). T he l et t ert hen s t at ed B ay er ’ s des i r e t o ent eri nt o negot i at i ons w i t h A l berm ar l e forthe
s uppl yof thi s r eform ul at i on. T hus , the 65/ 35% m i xtur e w oul d be cha nged t o 25/ 75%
m i xtur e, ret ai ning t he sam e i ng redi ents , bu tw i t h a m aj or chan ge in propo rt i on s. O n D ece m ber1, 2003, B ay ers enta s econd l ett ert o A l berm ar l e. T hi s l ett er not i fi ed A l berm ar l e thatB ay erhad r ece i ved an of ferforthe r eform ul at ed A SA fr om anothervendor , and that , i n compl i ance w i t h Sect i on 1. 7, thi s l ett erw as t o s erve as not i ce t o A l b e r m a r l e o f

t h i s o f f e r . A c c o r d i n g l y, th e l e t t e rs t a t e d th a tA l b e r m a r l e h a d th i r t y d a ys fro m that d ate to e x erc ise i ts r igh t of firstref u sal w ith reg ard to the thir d -pa rtyo ff er. O n D ece m ber10, 2003, A l berm ar l e w r ot e t o B ay erobj ect i ng t o t he l att er ’ s us e andI n i t s m emora ndum s uppor t i ng i t s R ul e 12( c) m ot i on, A l berm ar l e cont ended thati tw as 4 “ re a d y , w ill in g , an d a b le” to su p p lyth is re f o rm u late d b len d o f

P ro d u c t, bu t th a t it s o n ly obj ect i on w as t o t he l ow erpr i ce s oughtbyB ay er . I tthen ar gued thatSect i on 1. 7 w as not t he pr operm eans t o di s put e the pr i ci ng of A SA , as the part i es had al r eadyagr eed t o the p ric in g o f

P ro d u c t u n d e r th e a g re e m e n t. 7 i nt erpr et at i on of Sect i on 1. 7. A l berm ar l e s t at ed thatSect i on 1. 7 w as an i m pr oper m echa ni s m forat t empt i ng t o r equi r e i tt o m eetanycompet i t i ve off erforanyC 16- C 18 A S A , re g a rd le s s o f

th e s p e c if

ic p e rc e n ta g e s o f

C 1 6 o r C 1 8 re q u e s te d in a re f o rm u la tio n . A l berm arl e t hen argued t hat ( 1) the term “P roduct” encom passes any gr ade of C 16- C 18 A SA , i r r es pect i ve of pe r cent ages orl i near i t y , and ( 2) B ay eri s ther efor e obl i gat ed under Sect i on 1. 1. 1 t o pur chas e 100% of i t s r equi r ement s of A SA fr om A l berm ar l e. I tthen 4 i ndi cat ed thatSect i on 2. 2 al r eadypr ovi ded forthe s uppl ement al pr ovi s i on of al t ernat i ve s p e c if ic a tio n A S A . It s ta te d th a t th e a p p lic a tio n o f B a y e r’ s in te rp re ta tio n o f S e c tio n 1 .7 t o al l ow i tt o pur chas e al t ernat i ve s peci fi cat i on A SA fr om a thi r d par t yw oul d t hen r ender t he al t ernat i ve s peci fi cat i on pur chas e al l ow ance underSect i on 2. 2 i r r el evantand
m eaningl ess. B ased on i t s i nterpret at i on of S ect i on 1. 7, B ay er treat ed A l berm arl e’s res po nse as a fai l ur e t o exer ci s e the r i ghtof fi r s tr efus al and B ay eracc or di ngl ybegan pur chas i ng the
r eform ul at ed A SA fr om a thi r d- par t yvendorand r educe d t he vol um e of i t s or derfr om A l berm ar l e. A l berm ar l e cont ends t hatB ay ercont i nues t o pur chas e the al t ernat i ve s p e c if ic a tio n A S A f

ro m o th e r v e n d o rs .B a y e r’s c o m p lain t so u g h t a d e c lar a tio n th a t: 5 Sect i on 1. 7 of the Sal es A gr eementfurni s hed B ay er t he ri ght t o: 1) pr ocur e a r eform ul at ed PR O D U C T ; and 2) pr ocur e t he r eform ul at ed PR O D U C T fr om th ird p a rties th e re b yre d u c in g th e v o lu m e s o f P R O D U C T th a t B a y e r is r equi r ed t o pr ocur e fr om A l berm ar l e un d er the Sal es A gr eement , i n l i ghtof A l berm ar l e’ s fai l ur e t o exer ci s e i t s r i ghtof fi r s tr efus al t o s uppl ythe r e f o r mul a t e d PROD UC T. (C o m p la in t ¶ 2 3 , A p p . a t 2 4 .) A lb e rm a rle a sk e d th e C o u rt to d e c lar e th a t: 6 B ay erhas br eac hed the t erm s of the A gr eement[and] t hatB ay erhas no 8 C. Seeki ng r es ol ut i on of thi s di s put e, on A pr i l 16, 2004, B ay erfi l ed a c om pl ai nt agai ns tA l berm ar l e i n t he U ni t ed St at es D i s t r i ctC our tforthe W es t ern D i s t r i ctof Penns y l vani a s eeki ng i nj unct i ve r el i ef a nd a dec l ar at oryj udgm ents t at i ng thati tw as not
v i o l a t i n g t h e t e r ms o f

t h e S a l e s Ag r e e me n tb yp u r c h a s i n g r e f o r mu l a t e d P r o d u c tf

r o m a t hi r d par t y . M or e s peci fi cal l y , i ts oughta dec l ar at i on thatB ay eroffe r ed A l berm ar l e the oppor tuni t yt o s uppl yt he r eform ul at ed Pr oduct , i n compl i ance w i t h Sect i on 1. 7, and Al b e r ma r l e d e c l i n e d , t h u s f r e e i n g Ba y e rt o p u r c h a s e th e r e f o r mu l a t e d P r o d u c tf

r o m a t hi r d par t y . A l berm ar l e then ans w er ed and f i l ed count er cl ai m s . I n i t s ow n r eques tfor 5 decl ar at or yr el i ef, A l berm ar l e as ked the C our tt o decl ar e thatB ay erw as i n vi ol at i on of t he Sal es A gr eementbeca us e the r eques t ed r eform ul at ed ver s i on of Pr oductw as i n fac t encompas s ed byt he t erm “Pr oduct ” as us ed i n t he Sal es A gr eementand thatB ay er there fo re h ad n o ri g h t un d er S ec ti o n 1 . 7 to p u rch ase the c o m p o u n d fro m an o ther v en d o r. 6co n tr ac tual ri g h t to pro cu re A S A P rod u ct fro m thir d p arti es [ b ec au se] [ t] h ere

i s no l i m i t at i on of the per cen ta ges of C
- 16 orC
- 18 i n the def i ni t i on of “Pr oduct ” i n t he A gr eementori n t he spec i fi cat i ons of t he “Pr oduct ” att ache d a s a n e x h ib it t o th e A g re e m e n t. (A n s w e r a n d C o u n te rc la im ¶ ¶ 3 8 , 4 3 , A p p . a t 6 3 .) A lth o u g h n o t st ated b ythe C o u rt , this i n terpretati o n im p li cit lyrejected A lberm arle’s 7 b ro a d e r d e f

in itio n o f “ P ro d u c t.” 9 C ont endi ng t hatt hi s cas e w as pur el ya mat t erof contr acti nt erpr et at i on, on J une 3 0 , 2 0 0 4 , B a y e r f

iled a R u le 1 2 (c ) m o tio n f o r ju d g m e n t o n th e p lea d in g s. O n e m o n th l at er , on J ul y30, 2004, s i m i l ar l ycont endi ng thatthi s cas e onl yconce r ns a l egal ques t i on

– th e in terp re tatio n o f

th e S a les A g re e m e n t – A lb e rm a rle re sp o n d e d w ith its o w n R u le 12( c) m ot i on. O n O ct ober12, 2004, t he D i s t r i ctC our tgr ant ed B ay er ’ s m ot i on and r ej ect ed A l berm ar l e’ s . T he C our tfi r s tconcl uded thatthe “r el evantcontr actl anguage [i s ] cl ear a n d u n a m b ig u o u s a n d c a n b e c o n stru e d w ith o u t re so rt to e x trin sic e v id e n c e ” a n d th a t a “cl ear r eading o f t he co ntr actcom po rt s w i t h [B ay er’ s] proffered int erpr et at i on . ” In so ruli n g fo r B ay er, th e C o u rtm ad e the fo ll o w ing d eterm ination s: ( 1 ) alth o u g h the term “Pr oduct ” i n t he Sal es A gr eementw as vague a nd onl yr efe r r ed t o t he A SA composi t i on as “C 16- C 18 al keny l s ucci ni c anhy dr i de, ” the part i es ’ cour s e of pe r form ance of r epea t ed
s uppl yand pur chas e of the 65/ 35% m i xtur e of A SA cl ear l yi dent i fi ed the meani ng fort he t erm “Pr oduct ”; ( 2) Sect i on 1. 7 s houl d be i nt erpr et ed t o s t at e that“[Bay er ] has the opt i on 7 of r eform ul at i ng t he Pr oduct , i . e. , changi ng pr opor t i ons of the i ngr edi ent s of the C 16-T h e C o u rt h a d p re v io u slyd e ter m in e d th a t th e ter m “ re f o rm u late ” d o e s n o t tak e a s its 8 obj ectt he w or ds “anotherm at er i al orcompound for PR O D U C T . ” R ather , i ts t at ed that t he obj ectof the t erm “r eform ul at e” w as onl ythe t erm “PR O D U C T . ” 10 C 18, ors ubs t i tut i ng anotherm at er i al forthe pr oduct , i . e. , us i ng ot herel ement s ”; ( 3) B a y e r r e q u e s te d a re f

o rm u la tio n ; ( 4 ) A lb e rm a rl e ’s s u g g e s te d in te rp re ta tio n o f S e c tio n 1 .7 is “ n o n se n sic a l” b e c a u se its su g g e stio n th a t th e w o rd s “ re f o rm u late ” a n d “ su b stitu te” b o th tak e a s th e ir o b

jec t th e w o rd s “ a n o th e r m a ter ial o r c o m p o u n d f o r P R O D U C T ” w o u ld
r endert he t erm “r eform ul at e” meani ngl es s beca us e i tw oul d s erve no purpos e notal r eady th e n a c c o m p lis h e d b yth e te rm “ s u b s titu te ” ; (5 ) A lb e rm a rl e ’s re lia n c e u p o n S e c tio n 2 .2 8 to d istin g u ish th e m e a n in g o f S e c tio n 1 .7 is o f

n o a v a il b e c a u se S e c tio n 1 .7 “ d e a ls w ith th e s c e n a ri o p re s e n t h e re , w h e re B a y e r d e s ir e s to o b ta in s o m e th in g in lie u o f th e P ro d u c t,”
w her eas Sect i on 2. 2 “dea l s w i t h addi t i onal pur chas es ”; ( 6) and fi nal l y , beca us e B ay er r eques t ed a r eform ul at i on of the Pr oduct , w hi ch A l berm ar l e r efus ed t o s uppl yaft erbei ng offe r ed i t s r i ghtof fi r s tr efus al , B ay erw as “thus ent i t l ed t o pr ocur e r eform ul at ed Pr oduct fr om t he thi r d- par t ys uppl i er s . ” Thi s appea l then fol l ow ed. II. W e exe r ci s e pl enaryr evi ew overa R ul e 12( c) m ot i on forj udgm enton t he p le a d in g s . J a b lo n s k i v . P a n A m . W o rl d A ir w a y s , In c ., 8 6 3 F .2 d 2 8 9 , 2 9 0 (3 d C ir . 1 9 8 8 ). “U nderR ul e 12( c) , j udgm entw i l l notbe gr ant ed unl es s the movantcl ear l yes t abl i s hes t hatno m at er i al i s s ue of f actr emai ns t o be r es ol ved and thathe i s ent i t l ed t o j udgm entas a m a tter o f

law .” Id . (cita tio n s a n d q u o tatio n s o m itt e d ). “I n re v iew in g th e g ra n t o f a R u leA lb e rm a rle a rg u e s th a t th e D istric t C o u rt c o m m itt e d e rro r b yf a ili n g to v iew th e f

a c ts 9 p led in th e lig h t m o st f

a v o ra b le to th e n o n -m o v in g p a rty , A lb e rm a rle . T o su p p o rt its a rg u m e n t, A lb e rm a rle f in d s it sig n if

ica n t th a t, i n sta tin g its sta n d a rd o f re v iew f o r R u le 1 2 (c) m o ti o n s, the C o u rtref erred to the term “C o m p lai n t” an d n o t th e term “A lberm arle’s count er cl ai m . ” ( See O pi ni on of the D i s t r i ctC our t , app. at4 ( “I ‘ m aydi s m i s s the c o m p l a i n to n l y i f

i t s c l e a rt h a tn o r e l i e f

c o u l d b e g r a n t e d . . . . ’ ” ) . ) T h i s i s m e r e l y a t ypogr aphi cal err orpr oduced byt he C our t ’ s us e of di r ectquot at i ons i n s t at i ng the s ta n d a rd o f

re v ie w . W e c a n f

in d n o s u b s e q u e n t e rr o r p ro d u c e d b yth is m is p ri n t. A lberm arle also co n tend s tha t th e C o u rterred b ec au se itfa il ed to tr ea t eac h p arty ’s m o ti o n fo r j u d g m en t on the p lead ing s sep ara tel y . Itfo u n d itsign ifi ca n t th at th e C o u rt init ial lyo b serv ed that ea ch p artyco n tend ed that the S ales A g ree m en t i s u n am b igu o u s. It th e n c o n ten d s th a t b e c a u se th e C o u rt re p e a ted lyn o ted a rg u m e n ts m a d e b yb o th p a rties in their R u le 12 (c) m o ti o n s itco n seq u en tl yfa il ed to co n stru e the fa cts i n A lberm arle’s fa v o r, as t he non- m ovi ng par t y . W e di s agr ee. T he C our ti t s el f r ecogni zed thatthi s cas e turned en ti relyu p o n a q u esti o n o f law , the in terpretati o n o f th e S ales A g ree m en t. M o reo v er, al t hough i tobs erved thatbot h par t i es ar gued thatthe contr acti s unambi guous , and not ed t hei rdi s agr eementovert he t erm Pr oduct , i tther eaf t erpr oper l yconduct ed a de novo i nt erpr et at i on of the contr act . See W i nn v. A l eda Const . C o. , I nc. , 315 S. E . 2d 193, 194 ( V a. 1984) ( “W hen a c ont r acti s cl earand unambi guous , i ti s the dutyof the court , and no tt he jury , t o d eci de it s m eaning. ”). A ccordi ng l y , otherthan the ev i den ce of the p art i es’ co u rse o f p erf

o rm an ce , w h ich is n o t i n d ispu te, the f ac ts al lege d in A lberm arle’s c o u n ter c laim a re irre lev a n t. W e th e re f o re f in d n o e rro r in th e C o u rt’s b rie f re f e re n c e to bot h par t i es ’ m ot i ons . I ndeed, aft erobs ervi ng thatthe part i es di s agr eed on the meani ng of the t erm Pr oduct , i ts ubs equent l ys t at ed thats uch di s agr eementhad no bea r i ng on w h e th e r a ter m in a c o n tra c t is a m b ig u o u s. S e e G a llo w a yC o rp . v . S .B . B a llard C o n st. C o ., 4 6 4 S .E .2 d 3 4 9 , 3 5 4 (V a . 1 9 9 5 ). F in a lly , w e m u st n o te th a t in so f a r a s A lb e rm a rle is ar gui ng t hatt he C our tfai l ed t o acc eptas true A l berm ar l e’ s pr offe r ed i nt erpr et at i on of the S a les A g re e m e n t, th e C o u rt w a s c o rre c t to so d isre g a rd A lb e rm a rle ’s a rg u m e n ts o n th is issue . B o th the interpre tat ion o f a co n tr ac t and w h ethe r a c o n tr ac t i s am b igu o u s are 11 12( c) m ot i on, w e mustvi ew t he fa ct s pr es ent ed i n t he pl eadi ngs and the i nfer ence s t o be dr aw n t her efr om i n t he l i ghtm os tfavor abl e t o t he nonmovi ng par t y . ” I d. at290- 291 ( ci t at i ons and quot at i ons om i t t ed) . W e, how ever , “nee d notacc eptas true l egal
c o n c lu sio n s o r u n w a rra n ted f a c tu a l in f

e re n c e s.” M ix o n v . O h io , 1 9 3 F .3 d 3 8 9 , 4 0 0 (6 th C ir . 1 9 9 9 ). 9q u e stio n s o f law , an d in c o n stru in g a R u le 1 2 (c ) m o tio n , a c o u rt is n o t re q u ire d to d e f e r to a part i es ’ l egal concl us i ons , w hi ch w oul d i ncl ude s ugges t ed i nt erpr et at i ons of a c ont r act p rov isi o n . S ee M o rse v . L o w er M erion S ch o o l D ist . , 1 3 2 F . 3 d 9 0 2 , 9 0 6 (3d C ir . 1 9 9 7 ). J us t i ce Rober tH . J acks on once c om m ent ed: 10 L egal cont ent i ons , l i ke t he cur r ency , depr eci at e thr ough over
- i s s ue. T he mi nd o f an ap p ell ate jud g e is h ab itu all yrec ep ti v e to th e su g g esti o n that a low er c o u rt co m m itt ed an e r r or . B utr ece pt i venes s decl i nes as t he numberof as s i gned err or s i ncr eas es . M ul t i pl i ci t yhi nt s atl ack of confi dence i n anyone. O f cour s e, I have notfor got t en the r el uct ance w i t h w hi ch a l aw y erabandons even the w eake s tpoi ntl es ti tpr ove al l ur i ng t o the same ki nd of j udge. B utexper i ence o n th e b e n c h c o n v in c e s m e th a t m u lti p ly in g a ss ig n m e n ts o f e rro r w ill d ilu te and w eake n a good ca s e and w i l l nots ave a bad one. J acks on, A dvocac yB efor e the U ni t ed St at es Supr eme C our t , 25 T empl e L. Q . 115, 119 12 F urtherm ore, al t ho ug h w e app l ythe F ederal R ules of C i vil P rocedu re t o thi s case beca us e i ti s a di ver s i t yact i on i n fede r al cour t , V i r gi ni a’ s s ubs t ant i ve l aw appl i es t o t he pr es entact i on pur s uantt o t he choi ce- of- l aw pr ovi s i on i n t he Sal es A gr eement . See K l axon C o. v. St ent orE l ec. M fg. C o. , 313 U . S. 487, 496 ( 1941) ( hol di ng thatfede r al
co u rt s sitti n g in d iversitysh o u ld ap p lythe c o n fli ct of law rules o f th e f

o rum stat e); C hur chi l l C orp. v. T hi r d C entur y , I nc. , 578 A . 2d 532, 537 ( Pa. Super . C t . 1990) ( “Penns y l vani a court s w i l l uphol d choi ce- of- l aw pr ovi s i ons i n contr act s t o t he ext entt hat t he tr ans act i on bear s a r eas onabl e r el at i on t o t he chos en forum . ”) . Fi nal l y , beca us e the S ales A g ree m en t dea ls i n the s ale o f g o o d s, this co n tr ac t i s g o v ern ed b yV ir g inia’s
e n a c tm e n t o f

th e U n if o rm C o m m e rc ia l C o d e . S e e V a . C o d e A n n . § 8 .2 -1 0 2 (2 0 0 5 ).

III . A l berm ar l e as s er t s ni ne s epar at e gr ounds forw hythe D i s t r i ctC our terr ed by 10( 1951) ; s ee a l s o B uehl v. V aughn, 166 F. 3d 163, 174 ( 3d C i r . 1999) ( comm ent i ng that

“ [ o ]n e e lem e n t o f

e f f e c tiv e a p p e llate stra teg yis th e e x e rc ise o f re a so n a b le s e lec tiv ityin d e c id in g w h ic h a rg u m e n ts to ra is e ” ). 13 gr ant i ng B ay er ’ s R ul e 12( c) m ot i on. O urr evi ew of i t s ni ne cont ent i ons , how ever , can be
r educe d t o t w o m ai n ques t i ons : ( 1) w as the C ourtcorr ecti n concl udi ng thatthe Sal es A gr eementw as unambi guous and abl e t o be i nt erpr et ed byr es or t i ng s ol el yt o evi dence of the p arti es’ c o u rse o f p erf o rm an ce ; and , if so , (2) d id the C o u rtp rop erlyg ran t B ay er’s Rul e 1 2 ( c ) mot i o n ? B eca us e the i s s ue now befor e us turns s ol el yturns upon t he i nt erpr et at i on of the Sal es A gr eement , w e def ert o t he V i r gi ni a Supr eme C ourt ’ s gui dance fori nt erpr et i ng con t ract s: [W ] e have oft en sai d t hati ti s t he dutyof the courtt o cons t rue a c ont r actas w r i t t en: “I ti s t he func t i on of the co u rtt o cons t rue the contr actm ade byt he p a rties , n o t to m a k e a c o n tra c t f o r th e m . T h e q u e stio n f o r th e c o u rt is w h a t d id t he part i es agr ee t o as evi dence d byt hei rcontr act . T he g u iding l i ghti n the cons t ruct i on of a contr act i s the i nt ent i on of t he par t i es as expr es s ed bythem i n t he w or ds t heyhave us ed, and court s ar e bound t o s ay that t he part i es i nt ended w hatt he w r i t t en i ns t rum entpl ai nl ydecl ar es . ” M eade v. W al l en, 226 V a. 46 5, -- -, 31 1 S . E . 2d 10 3, 10 4 (198 4); M agan n C orp. v. E l ect ri cal W orks, 203 V a. 259, 264, 123 S. E . 2d 377, 381 ( 1962) . A cor ol l ary t o t he l as ts t at ed p rin c ip le is th a t co u rts c a n n o t re a d in to c o n tra c ts la n g u a g e w h ich w ill a d d to ort ake a w ayfr om t he meani ng of the w or ds al r ea d y co n tai ned ther ei n. See V i r g i n i a n R y. C o . v . A v i s , 1 2 4 V a . 7 1 1 , 7 1 9 , 9 8 S . E . 6 3 8 , 6 4 0 ( 1 9 1 9 ) . F i n a l l y, on r evi ew , w e ar e notbound b y the tr ial court ’ s cons t ruct i on of the contr act pr ovi s i on her e i n i s s ue. See H ut chi s on v. K i ng, 206 V a. 619, 625, 145 S. E . 2d 2 1 6 , 2 2 1 (1 9 6 5 ). W e h a v e a n e q u a l o p p o rtu n ity to c o n sid e r th e w o rd s w ith in t he fourcorner s of the di s put ed pr ovi s i on. W i l s on v. H ol y fi el d, 313 S. E . 2d 396, 398 ( V a. 1984) , ci t ed w i t h appr oval i n PM A C api t alS e c tio n 8 .2 -2 0 2 (a ) o f th e V irg in ia C o d e sta tes th a t: 11 T erm s w i t h r es pectt o w hi ch the confi r m at ory m emora nda of the part i es agr ee orw hi ch ar e otherw i s e s etfor t h i n a w r i t i ng i nt ended by t he par t i es as a fi nal expr es s i on of thei ragr eementw i t h r es pect t o s uch t erm s as ar e i ncl uded t here in m aynotbe contr adi ct ed byevi dence of anypr i oragr eementorof a cont empora neous or al agr eementbutm aybe expl ai ned ors uppl ement ed ( a) bycour s e of per form ance , cour s e of de al i ng orus age of t r ade ( § 8. 1A
- 303)

. . . 14 Ins. C o . v . U S A irw ay s, Inc . , 6 2 6 S . E . 2 d 3 6 9 , 3 7 2 (V a. 20 0 6 ). R el y i ng on t he for egoi ng pr ece pt s , and af t era thor ough exami nat i on of the Sal es Ag r e e me n t , t h e Di s t r i c tCo u r tOp i n i o n a n d b o t h p a r t i e s ’ p r o f f e r e d i n t e rp r e t a t i o n s , we concl ude as a mat t erof l aw t hatt he C our tw as corr ecti n det erm i ni ng thatthe Sal es A gr eementi s unambi guous . W e agr ee w i t h t he C our tthatal t hough the Sal es A gr eement
o n lyre f e rs g e n e ric a llyto th e c o m p o sitio n o f P ro d u c t as “ C 1 6 -1 8 a lk e n y l su c c in ic anhy dr i de, ” thatt erm w as r efi ned and e xpl ai ned bythe part i es ’ cour s e of pe r form ance , w hi ch w as t he cons i s t entand s ol e s uppl yoverthe cour s e of s ever al y ear s of a mi xtur e of 65% C 16 and 35% C 18 i n a br anche d i s om etr i c form . See V a. C ode A nn. § 8. 2- 202( a) (2 0 0 5 ). W e a lso c o n c lu d e th a t th is in terp re tatio n o f P ro d u c t is th e b e st w a yto g iv e f u ll 11
e f f e c t to th e te rm s o f

S e c tio n 1 .7 . A. A lberm arle co n tend s tha t th is i n terpretati o n o f th e S ales A g ree m en t i s inc o rrect. It firstasse rt s, li k e B ay er, th at th e c o n tr ac t i s u n am b igu o u s, b u t th en co n tend s tha t th e termS ect i on 8. 1A -303(e)( 1) provi des: 12 E xcept as ot herw i s e pr ovi ded i n s ubs ect i on ( f) , t he expr es s t erm s o f an agr eementand anyappl i cabl e cou rse of per form ance , cour s e of de al i ng, or us age of t r ade mustbe construed w heneve rr eas onabl e as cons i s t entw i t h eac h ot her . I f s uch a c ons t ruct i on i s unr eas onabl e: ( 1) expr es s t erm s pr evai l overcour s e of per form ance , cour s e of de al i ng, and u s a g e o f tr a d e . . . 15 “Pr oduct ” br oadl yencompas s es anycombi nat i on of C 16- C 18, notj us tthe 65/ 35%
m i xtur e pr oduced ove rt he part i es ’ cour s e of pe r form ance . I tar gues thatthe cour s e of p e rf o rm a n c e e v id e n c e , as e x trin sic e v id e n c e o u tsid e o f th e f o u r c o rn e rs o f

th e c o n tra c t, i s being i m properl yused to con t radi ctthe p l ai n term s of t he ag reem ent. Ital so argues, ci t i ng t o § 8. 1A
- 303( e) of the V i r gi ni a C ode, thateven i f cour s e of pe r form ance 12
e v id e n c e w e re a d m iss ib le a t th e R u le 1 2 (c ) sta g e , su c h e v id e n c e m u st b e c o n stru e d in conform i t yw i t h t he t erm s of the agr eement , and bec aus e the admi s s i on of thi s evi dence
cr eat ed an unr eas onabl e contr adi ct i on i n t he agr eement ’ s m eani ng, the expr es s t erm s of t he Sal es A gr eements houl d have pr evai l ed. Fi nal l y , i tar gues thatthi s us age of cour s e of per form ance di r ect l ycontr avene s t he Sal es A gr eement ’ s m er gercl aus e found a tSect i on 1 9 . W e r ej ectt hes e ar gum ent s . Fi r s t , al t hough the Sal es A gr eementm ayonl ypr ovi de a gen eri c def

i nit i on of the t erm “P roduct, ” t hat defi nit i on w as r efi ned bythe p art i es’
cour s e of pe r form ance . See V a. C ode A nn. § 8. 2- 202( a) ( 2005) . Second, the cour s e of p e rf o rm a n c e e v id e n c e is n o t b e in g u se d to c o n tra d ict th e ter m s o f th e c o n tra c t, bu t toA lb e rm a rle a lso a rg u e s th a t co u rse o f p e rf o rm a n c e e v id e n c e w a s n o t ev e n c re a ted v ia 13 the p arti es’ so le pro v isi o n o f th e 6 5 /35 % m ixture o v er the co u rse o f se v era l y ea rs. It ar gues t hatpur s uantt o § 8. 1A
- 303( a) of the V i r gi ni a C ode, cour s e of pe r form ance evi dence i s onl ycr eat ed w her e the one pa r t yact s and the otherpart y , w i t h know l edge of and the abi l i t yt o obj ectt o t he per form ance , acqui es ces i n i tw i t houtobj ect i on. See V a. C ode A nn. § 8. 1A
- 303 ( 2005) . B eca us e A l berm ar l e bel i eved thatthe t erm Pr oduct encompas s ed any m i xtur e of C16-C18, i tcont ends thati thad no r eas on t o obj ectt o t he 65/ 35% m i xtur e. Phr as ed rhet or i cal l y , w hyw oul d A l berm ar l e be e xpect ed t o obj ector acqui es ce – w hi ch i tar gues denot es acc ept ance of a non- conform i t y– t o a per form ance th a t itb e liev e d to c o n f

o rm to th e ter m s o f

th e S a les A g re e m e n t? W e re jec t th is in terp re tatio n o f

th e m e a n s o f

c re a tin g c o u rse o f

p e rf o rm a n c e e v id e n c e . F irst, A lb e rm a rle ci t es t o no cas es fort hi s pr opos i t i on. Second, the V i r gi ni a U . C . C . does noti ndi cat e that c o u r s e o f p e r f o r ma n c e e v i d e n c e c a n o n l yb e f o r me d b yn o n - c o mpl y i n g p e r f o r ma n c e . To th e c o n tra ry , the V irg in ia U .C .C . sta tes th a t co u rse o f p e rf o rm a n c e e v id e n c e (1 ) is “r el evanti n as cert ai ni ng t he meani ng of the part i es ’ agr eement , ” ( 2) can qua l i fyorgi ve par t i cul arm eani ng t o a t erm , and thatw hen us ed i n s uch a r ol e, ( 3) s uch evi dence b e c o m e s p a rt o f

th e c o n tr a c t. S e e V a . C o d e A n n . § 8 .1 A -3 0 3 (d ) ( 2 0 0 5 ); V a . C o d e A n n . § 8 .2 -2 0 2 (2 0 0 5 ), co m m e n t 2 (“ [ T ]h e c o u rse o f a c tu a l p e rf

o rm a n c e o f

th e p a rties is cons i der ed the bes ti ndi cat i on of w hattheyi nt ended the w r i t i ng t o m ean. ”) ; V a. C ode A nn. § 8. 1A
- 201( 3) ( 2005) ( “‘ A gr eement , ’ as di s t i ngui s hed fr om ‘ contr act , ’ m eans the bar gai n of the part i es i n fac t , as found i n t hei rl anguage ori nferr ed fr om ot her ci rcum st ances, i ncludi ng cou rs e of p erform ance . . . . ”). A ccordi ng l y , adm i ssi ble course of per form ance evi dence w as cr eat ed thr ough t he r epea t ed s uppl yof the 65/ 35% m i xtur e, even i f i tw as “compl y i ng” per form ance . 16 c la ri f yth e m , w h ic h is a p ro p e r u s a g e u n d e r t h e V ir g in ia U .C .C . S e e V a . C o d e A n n . § 8. 1A
- 303( d) ( s t at i ng t hatcour s e of pe r form ance evi dence “maygi ve part i cul arm eani ng t o s peci fi c t erm s of the agr eement , and mays uppl ementorqual i fythe t erm s of the agr eement ”) . M or eover , t he evi dence of the part i es ’ cour s e of pe r form ance does not
c o n tra d ict th e ter m s o f

th e S a les A g re e m e n t in v io latio n o f § 8 .1 A -3 0 3 (e ) o f

th e V irg in ia C o d e . T h e S a les A g re e m e n t ca lled f o r th e p ro v isio n o f

“ C 1 6 -1 8 a lk e n y l su c c in ic
a n h y d ri d e ” a n d th a t w a s w h a t w a s s o ld th ro u g h o u t th e p a rt ie s ’ c o u rs e o f p e rf o rm a n c e . 1317

F i nall y , t he u se of co urse of perform ance e vidence d oes no tcon t ravene the m ergercl ause of Sect i on 19. Sect i on 8. 2- 202 of the V i r gi ni a C ode expl i ci t l ys t at es that“a w r i t i ng i nt ended byt he part i es as a f i nalexpr es s i on of thei ragr eement. . . m aybe expl ai ned or
s uppl ement ed . . . bycour s e of pe r form ance . . . . ” V a. C ode A nn. § 8. 2- 202 ( 2005) ( emphasi s added) . T he mer gercl aus e does notpr eventthe us e of c our s e of pe r form ance e v id e n c e to h e lp e x p la in th e S a le s A g re e m e n t. B. I n t he al t ernat i ve, A l berm ar l e ar gues thatthe Sal es A gr eementi s ambi guous and t hatbeca us e of thi s ambi gui t y , t he C our tw as r equi r ed t o cons i derot herextr i ns i c evi dence bey ond j us tcour s e of pe r form ance t o as cert ai n t he Sal es A gr eement ’ s m eani ng. See V ideo Z o n e, Inc . v . K F & F P rop s. , 5 9 4 S . E . 2 d 9 2 1 , 9 2 3 (V a. 20 0 4 ) (st ati n g that a C o u rt
w ill a llo w th e in tr o d u c tio n o f e x tr in s ic e v id e n c e w h e n a c o n tr a c t is a m b ig u o u s ). A gai n, w e di s agr ee. T he t erm Pr oduct , as us ed i n t he Sal es A gr eement , i s not
am biguou s. S ee W i l son, 31 3 S . E . 2d at39 8 (st at i ng that am bigui t yi n a co ntr acti s a ques t i on of l aw ) . Foran ambi gui t yt o exi s t , i tm us tbe appa r enton t he fa ce of the agr eementbyappar ent l yr efe r enci ng “tw o orm or e thi ngs atthe s ame t i m e. ” V i deo Zone, 59 4 S . E . 2d at92 3-924 . H ere, t he S al es A greem ent unam biguou sl ydefines Produ ctas a m i xtur e of “ C 16- 18 al keny l s ucci ni c anhy dr i de. ” A doubt ful nes s of m eani ng onl yar i s es th ro u g h th e p a rties ’ c u rre n t d isp u te o v e r th e p e rc e n tag e m ix tu re o f C 1 6 -C 1 8 . T h is d i s p u t e , h o w e v e r , i s i m m a t e r i a l a s t o a m b i g u i t y vel non , beca us e a c ont r acti s “not18

r ender ed ambi guous m er el ybeca us e the part i es di s agr ee a s t o t he meani ng of the la n g u a g e e m p lo y e d b yth e m in e x p re s s in g th e ira g re e m e n t.” W ils o n , 3 1 3 S .E .2 d a t 3 9 8 . F in a lly , n o tw ith sta n d in g th e g e n e ra l ru les th a t ex trin sic e v id e n c e c a n n o t b e u se d to expl ai n i nt egr at ed agr eement s and thati tm ayot herw i s e onl ybe exa m i ned w her e a c o n tra c t is a m b ig u o u s, th e D istric t C o u rt d id n o t er r h e re b ye x a m in in g th e e x trin sic evi dence of the part i es ’ cour s e of pe r form ance . Fi r s t , pur s uantt o § 8. 2- 202 of the V irg in ia C o d e , the p a rties ’ c o u rse o f p e rf o rm a n c e m a ya lw a y s b e e x a m in e d to h e lp exp l ai n a co ntr actual t erm . S econ d, a fi nd i ng of am bigui t yi s not r equ i red befo re course of per form ance evi dence m aybe i ntr oduced. See C ol um bi a N i t r ogen C orp. v. R oy s t er C o. , 451 F. 2d 3, 9 ( 4t h C i r . 1971) ( exami ni ng and appl y i ng § 8. 2- 202) . A ccor di ngl y , t he C ou rtdid not err bysol el yexam i ning on e form of ex t ri nsi c evidence, the p art i es’ cou rs e of per form ance , beca us e the Sal es A gr eementi s unambi guous and § 8. 2- 202 fr ees s uch evi dence of m anyof the r es t r ai nt s on t he us e of e xtr i ns i c evi dence . C. W e nexttur n t o A l berm ar l e’ s ar gum ent s on t he appl i cat i on of Sect i on 1. 7. T he D istri ct C o u rtco n clud ed that, in co m p li an ce w ith the term s o f S ec ti o n 1 . 7 , B ay er’s
re q u e st f o r a 2 5 /7 5 % m ix tu re c o n stitu ted a re q u e st f o r a re f o rm u latio n , w h ich A lb e rm a rle
r ej ect ed. A l berm ar l e as s ai l s t hi s i nt erpr et at i on of Sect i on 1. 7 w i t h a hos tof ar gum ent s as t o w hyt he C our t ’ s i nt erpr et at i on w as i ncorr ect . C hi efl y , A l berm ar l e ar gues thatSect i on 1. 7’ s r i ghtof fi r s tr efus al i s onl yt r i gger ed w hen B ay err eques t s the s uppl yof a c om pound19

co m p o sed o f so m ethin g o ther tha n a C 1 6 -C 1 8 b lend , w h ich B ay er’s req u est w as n o t. It
s uppor t s t hi s cont ent i on byar gui ng thatthe t erm s “r eform ul at e” a nd “s ubs t i tut e” of Sect i on 1. 7 m us tbot h t ake a s t hei robj ect s the phr as e “a not herm at er i al orcompound for pr oduct . ” W e again rej ectA l berm arl e’s readi ng of the S al es A greem ent. “[T ]her e i s a presum pti on t hat the p art i es have no tused w ords ai m l essl y ” and w e w i l l no ttreata ph ras e ort erm as bei ng “meani ngl es s i f a r eas onabl e meani ng can be gi ven t o i t . ” See W i nn, 315 S. E . 2d at195. W e have al r eadydet erm i ned thatthe t erm Pr oductonl yencompas s es t he 6 5 /3 5 % m ix tu re su p p lied th ro u g h o u t th e p rio r o p e ra tio n o f th e S a les A g re e m e n t. T h is
co n seq u en tl yg u ides o u r i n terpretati o n o f S ec ti o n 1 . 7 . A cc o rdin g ly , A lberm arle’s p r o f f e r e d i n t e rp r e t a t i o n o f

S e c t i o n 1 . 7 i s u n wo r k a b l e b e c a u s e t o h a v e b o t h th e t e r ms “r eform ul at e” a nd “s ubs t i tut e, ” r atherthan j us t“s ubs t i tut e, ” t ake a s thei robj ect s the phr as e “a not herm at er i al orcompound, ” w oul d r enderthe t erm “r eform ul at e”
s uper fl uous . “R eform ul at i on” w oul d t hen as s um e no meani ng thati s notal r eady
e n c a p s u la te d b yth e te rm “ s u b s titu te .” W e m u s t th e re f o re re je c t th a t in te rp re ta tio n . Co n v e r s e l y , t h e Di s t r i c tCo u r t ’ s i n t e rp r e t a t i o n o f “ r e f o r mu l a t i o n ” g i v e s e a c h t e r m a di s t i nctm eani ng, i . e. , “t o r eform ul at e” means t o change the pr opor t i on of i ngr edi ent s and “t o sub st i tute” m eans t o incorporat e otherel em ents . Indeed , the C ou rtcull ed theseA l berm ar l e al s o ar gues t hatt he D i s t r i ctC our terr ed byus i ng the w ebs i t e, 14 D i c t i o n a r y . c o m , a tt h e R u l e 1 2 ( c ) s t a g e t o a i d i n i t s i n t e rp r e t a t i o n o f S e c t i o n 1 . 7 . We c o n c lu d e , h o w e v e r, th a t th is w a s n o t an im p e rm iss ib le r e so rt to e x trin sic e v id e n c e to a id in th e in terp re tatio n o f

a n u n a m b ig u o u s c o n tra c t. V irg in ia c o u rts c o m m o n lyre so rt to dict i on ari es t o h el p ex plai n the m eaning o f an u nam biguou s contr actt erm , and becau se c o n tra c t in terp re tatio n is a q u e stio n o f law it w a s n o t er ro r to e x a m in e th e d ictio n a ryin t hi s i ns t ance . See G or dons vi l l e Ener gy , L . P. v. V i r gi ni a El ec. & Pow erC o. , 512 S. E . 2d 8 1 1 , 8 1 7 (V a. 19 9 9 ) (using a d ict ion aryto ex p lai n an u n am b igu o u s co n tr ac t t erm ); C h arles E . R u ssell C o . v . C arro ll , 7 4 S . E . 2 d 6 8 5 , 6 8 7 (V a. 19 5 3 ) (sam e); see a lso In re E n v ir o d yn e In d u s ., In c ., 2 9 F .3 d 3 0 1 , 3 0 5 (7 th C ir . 1 9 9 4 ) ( P o s n e r, J .) ( “ [ D ]i c tio n a ri e s . . . and otherpubl i s hed mat er i al s cr eat ed bys t r anger s t o t he di s put e, l i ke evi dence of tr ade us age, w hi ch i s al s o admi s s i bl e bec aus e i ti s al s o evi dence cr eat ed bys t r anger s r athert han bya part yt r y i ng t o s l i p outof a c ont r actual bi nd, do notpr es enta s i m i l ardangerof m anufa ctur ed doubt s and ar e ther efor e ent i r el yappr opr i at e forus e i n contr actcas es as i nt erpr et i ve ai ds . A ppr opr i at e, and s om et i m es i ndi s pens abl e. ”) . M or eover , the d e f in iti o n s c ited b yth e D istric t C o u rt f ro m D ictio n a ry .co m re f lec t, or a re n o t m a ter ially d iffe ren t from , tho se f

o u n d in W eb ster’s T h ir d N ew Intern ati o n al D ict ion ary(19 6 8 ).

20 d e f i n i t i o n s f r o m t h e d i c t i o n a r y, w h i c h i s m o s th e l p f u l h e r e . T u r n i n g t o th e d i c t i o n a ry,

14
w e begi n w i t h t he r ootw or d “form ul a, ” w hi ch i s defi ned as : “a r eci pe orpr es cr i pt i on g iv in g m e th o d a n d p ro p o rt io n s to in g re d ie n ts f o r t h e p re p a ra tio n o f

s o m e m a te ri a l.” W ebs t er ’ s T hi r d N ew I nt ernat i onal D i ct i onary894 ( 1968) . “To for m ul at e” i s defi ned as “t o r educe orexpr es s i n oras i f i n a form ul a. ” I d. A nd fi nal l y , “t o r eform ul at e” means

“ to f o rm u late a g a in ; esp : t o fo rm ulat e i n a d i fferentw ay . ” Id. at19 09 . B ased on these d e f in iti o n s, th e C o u rt’s in terp re tatio n o f S e c tio n 1 .7 w a s c o rre c t. T hi s i nt erpr et at i on of Sect i on 1. 7 i s bol s t er ed both byourpr emi s e thatthe Sal es A g re e m e n t is u n a m b ig u o u s a n d b yo u r r e s tr ic tiv e 6 5 /3 5 % m ix tu re d e f in itio n o f P ro d u c t. O nce the 65/ 35% m i xtur e bec ame t he d e fa c to Pr oductdue t o t he part i es ’ cour s e of per form ance , t hatw as t he form ul a, and a de vi at i on fr om thatm i xtur e w oul d be aT he exi s t ence of Sect i on 2. 2 does notal t erouri nt erpr et at i on of Sect i on 1. 7, and our 15 i n t e rp r e t a t i o n o f

S e c t i o n 1 . 7 d o e s n o tn e g a t e th e a p p l i c a b i l i t yo f S e c t i o n 2 . 2 . T h e two pr ovi s i ons s erve ent i r el ydi ffe r entpurpos es . Sect i on 2. 2 deal s w i t h t he nee d, unant i ci pat ed orot herw i s e, of up t o 3. 5 m i l l i on pounds i n E ur ope of “ A l t ernat eSpeci fi cat i on A SA , ” w hetherC 16- C 18 orot herw i s e, thati s m at er i al l ydi ffe r entfr om th o se sp e c if

ica tio n s liste d a t ex h ib it A o f th e a g re e m e n t. C o n v e rse ly , S e c tio n 1 .7 d e a ls w ith th e re f

o rm u la tio n o r s u b s titu tio n o f a n o th e r m a te ri a l o r c o m p o u n d f o r P ro d u c t. A l berm ar l e ar gues t hat“Sect i on 2. 2 pr oves thatthe part i es w ho dr aft ed the A gr eement k n e w h o w to m a k e th e ir in ten t cle a r th a t a s e c tio n o f th e A g re e m e n t co u ld a p p lyto change s i n s peci fi cat i ons t he r es ul tof w hi ch w as a compound t hatw as s t i l l C 16- C 18 A SA ” and that“[i ] f Sect i on 1. 7 w as i nt ended t o appl yt o s peci fi cat i on change s that re su lted in a c o m p o u n d th a t w a s s til l C 1 6 -C 1 8 A S A , the p a rties c o u ld a n d p re su m a b ly w o u ld h a v e u se d id e n tica l o r sim ilar la n g u a g e .” It th e n a rg u e s th a t th e p a rties ’ “ f a ilu re to do s o pr oves t hatSect i on 1. 7 w as noti nt ended t o appl yt o r eform ul at i ons ors ubs t i tut i ons th a t r e s u lte d in A S A th a t w a s s till c o m p o s e d o f C 1 6 a n d C 1 8 ,” a s w a s re q u e s te d h e re . A lth o u g h w e a g re e th a t th e d if f e re n c e in lan g u a g e b e tw e e n S e c tio n 1 .7 a n d S e c tio n 2 .2 is s om e evi dence of the part i es ’ abi l i t yt o be s peci fi c orgener al i n t hei rdr aft i ng, i ti s not s uffi ci entt o per s uade us t hatt he t erm “Pr oduct ” i s notw hol l yr efi ned and e xpl ai ned by t he part i es ’ cour s e of pe r form ance evi dence . 21 re f o rm u la tio n . A c c o rd in g ly, w e a g re e w ith th e D is tr ic t C o u rt a n d B a y e r t h a t S e c tio n 1 .7
c o n tem p late s th a t o n c e th e p a rties a g re e d u p o n a f o rm u latio n o f

P ro d u c t, w h ich th e yd id
as evi dence d byt he s uppl yof the 65/ 35% m i xtur e, a l at erdes i r e t o r eform ul at e the pr oduct , as evi dence d byB ay er ’ s des i r e t o s w i t ch t o t he 25/ 75% m i xtur e, w oul d t r i gger Sect i on 1. 7. 15 I V. W e fi nd no m er i tt o A l berm ar l e’ s fi nal ar gum entthati tdi d notdecl i ne t o pr oduce t he 25/ 75% m i xtur e, butr atheronl ydecl i ned t o pr oduce the 25/ 75% m i xtur e atthe pr i ce r eques t ed byB ay er . Fol l ow i ng uns ucce s s ful negot i at i ons on t he s uppl yof r eform ul at ed pr oduct , Sect i on 1. 7 al l ow s A l berm ar l e t o m at ch the off erof a thi r d par t yw ho has offe r edA l berm ar l e ar gues t hati ti s a ques t i on of fa ctas t o w hetheri tdecl i ned t o s uppl ythe 16 re f o rm u late d P ro d u c t, an d th a t th e C o u rt e rre d b yc o n stru in g th e f a c ts a g a in st A lb e rm a rle as t he non- m ovi ng par t y . T he C our tcomm i t t ed no s uch err or . I ti s pl ai n fr om A l berm ar l e’ s count er cl ai m t hati tdi s agr eed w i t h B ay er ’ s us e of Sec t i on 1. 7, and neve r exer ci s ed i t s r i ghtof fi r s tr efus al t o m at ch the thi r d- par t yoffe rt o s uppl yr eform ul at ed P ro d u c t. A lb e rm a rle ’s r e p e a ted in c o rre c t in terp re tatio n o f S e c tio n 1 .7 d o e s n o t ex c u se its f a ilu re to e x e rc ise its rig h ts u n d e r th a t p ro v isio n . T h e C o u rt w a s th e re f o re c o rre c t in c o n c lu d in g th a t th e ri g h t o f f ir s t r e f u s a l w a s n o t e x e rc is e d . 22 t o s uppl yB ay erw i t h t he des i r ed r eform ul at ed Pr oduct . Sect i on 1. 7 does notal l ow A l berm ar l e t o haggl e overpr i ce i n exer ci s i ng i t s r i ghtof fi r s tr efus al , i tonl yal l ow s for A l berm ar l e t o m at ch the off er . A ccor di ngl y , a r efus al t o m at ch the thi r d- par t yoffe r 16 based u po n p ri ce con cerns i s st i l l a rej ect i on and a fai l ure t o ex erci se the ri gh tof f i rs t
re f u sa l. W e c o n c lu d e th a t, i n c o m p lian c e w ith se c tio n 1 .7 , B a y e r: (1 ) so u g h t a
r eform ul at i on, ( 2) al l ow ed A l berm ar l e thei rr i ghtof fi r s tr efus al , w hi ch w as notexer ci s ed, and ( 3) w as t her efor e fr eed f r om i t s obl i gat i ons underthe Sal es A gr eement . T he D i s tr i ct C o u rt c o rr e c tly g ra n te d B a y e r’ s R u le 1 2 (c ) m o tio n f o r j u d g m e n t o n th e p le a d in g s . * * * W e have cons i der ed al l cont ent i ons r ai s ed bythe part i es and conc l ude thatno fur t herdi s cus s i on i s nece s s ary . T he j udgm entof the D i s t r i ctC our tw i l l be af fi r m ed.

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