NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

__________

No. 2 2

- 2 7 2 4

__________

S O L I D S T A T E C H E M I C A L S L T D

, a n d ;

S O L I D S T A T E C H E M I C A L S I N C

. Appellants

v.

A S H L A N D I N C

.

__________

On Appea l from the United Sta t es District Court

for the W e s t e rn District of P e n n s y l v a n i a

( W

. D

. P a . No. 2

- 1 9

- cv

- 10 4 4 )

District Judge: Honorable M a r i l y n J

. H o r a n

__________

S ub m i t t ed U n d e r T h i r d C i r c u i t L

. A

. R

. 3 4

. 1 ( a ) on J u l y 1 1 , 2023

Before: S H W A R T Z

, R E S T R E P O

, and C H U N G

, Circuit Jud ges

( Opinion f iled : October 25, 2023 )

__________

OPINION *

__________

RESTREPO

, Circuit Judge

* This disposition is n ot an opinion of the full Court and pursuant to I. O.P. 5.7 does not

constitute binding prec edent.2 A p p e l l a n t s

, S o l i d S t a t e C h e m i c a l s L t d

. a n d S o l i d S t a t e C h e m i c a l s I n c

.

( c o l l e c t i v e l y

, “ S o l i d S t a t e ” )

, ap p e a l t h e D i s t r i c t C o u r t ’ s decision which de nied in part,

and granted in part, e a ch of the t w o respective c r o s s

- m o t i o n s f o r s u m m a ry j u d g m e n t

.

S p e c i f i c a l l y , Solid State appeals the d e n i al of S o l i d S t a t e ’ s b r e a c h o f c o n t r a c t c l a i m s

, a n d

the g r a n t of t w o o f the b r e a c h o f c o n t r a c t c o u n t e r c l a i m s o f A p p e l l e e

, A s h l a n d

, I n c

.

( “ A s h l a n d ” )

. Because t h e C o u r t p r o p e r l y f o u n d i n f a v o r o f A s h l a n d a n d a g a i n s t S o l i d

S t a t e o n t h e i r a f o r e m e n t i o n e d r e s p e c t i v e b r e a c h o f c o n t r a c t c l a i m s

, w e a f f

i r m

.

I. FACTUAL BACKGROUND

The process of manufacturi ng solid ma leic anh ydride ( “ s o l i d m a l e i c ” ) involve s

c onverting molten ( l i q u i d ) maleic a nhydride ( “ m o l t e n m a l e i c ” ) into sol i d m a l e i c by

p u m p ing t h e m o l t e n m a l e i c onto a m a c h i n e c a l l e d a p a s t i l l a t o r w h i c h i n c l u d e s a metal

roll er o r c o n v e y e r b e l t t h a t c o o l s a n d s o l i d i f i e s t h e m o l t e n m a l e i c

. T h e p a s t i l l a t o r t h e n

b r e a k s u p t h e s o l i d m a l e i c i n t o d r o p l e t s

, w h i c h a r e kn o w n a s p a s t i l l e s

, a fter w h ich the

pastilles a re conveyed to a bagger where they a re packaged for shipment

. 1 From

app roximately 201 4 to 2 017 , A s hland supplie d mo lten maleic to Solid State for the

manufacture of solid maleic pastilles in Alab am a

.

1 M a l e i c a n h y d r i d e is a c h e m i c a l i n t e r m e d i a r y p rimar ily used to produce polyester resins

which can be com b ined with fibergl ass , for exam ple, a nd used fo r such things as auto

parts, boat hulls

, and home constr uction i tems such as shower stalls

. I t c an be harmful to

the r espiratory system and becomes increasingly ha zardous upon repeated exposure

. T herefore

, i t i s s u b

j e c t t o stringent Occup ational Saf ety and Health Administration

( O S H A ) s t a n d a r d s

, a s w e l l a s o t h e r i n d u s t ry s t a n d a r d s

, s u c h a s t h e A m e r i c a n C o n f e r e n c e

o f G o v e rn m e n t a l I n d u s t r i a l H y g i e n i s t s ( A C G I H ) T h r e s h o l d L i m i t V a l u e ( T L V )

, t o

p r o t e c t w o r k e r s f r o m e x p o s u r e

.3 In early 2017, the parti es discussed moving Solid State ’ s pastillation process to

Ashlan d ’ s facility in Neville Island, P e n n s y l v a n i a

. T h a t s a m e y e a r

, Ashland and Solid

S tate nego tiated a nd executed a Manufacturing S erv ices A g r eement (MSA)

, which

became effective on November 1, 2017. 2

P u r s u a n t t o t h e M S A

, A s h l a n d a g r e e d t o manu factur e s ol id maleic exc lusively fo r

Solid State at Ashland ’ s Ne ville Island facility

. U n d e r M S A s e c t i o n 2

. 1 0 : “ I n t h e e v e n t

t h a t a d d i t i o n a l s i g n i f i c a n t c ap i t a l i n v e s t m e n t s o r e q u i p m e n t a r e r e q u i r e d t o m e e t

p r o d u c t i o n d e m a n d s

, t h e P a r t i e s w i l l a g r e e o n a n a p p r o p r i a t e c o s t a m o r t i z a t i o n o r

b a i l m e n t a g r e e m e n t t o b e e x e c u t e d b y t h e P a r t i e s a n d i n c o r p o r a t e d t o t h i s A g r e e m e n t b y

r e f e r e n c e

. ” A p p x

. 9 6

. T h e M S A f u r t h e r p r o v i d e s i n s e c t i o n 2

. 9 : “ In no event w i l l

[ A shland ] b e required to perform any of its obligations under this Agr eeme nt in [ : ] ( i) a n

un sa fe or imprudent manner; (ii) contraventi on of [ A s h l a n d ’ s ] en vir o nmental , health and

safety standards ; or (iii) violatio n of applicable law s. ” I d

.

P u r s u a n t t o t h e P a r t i e s ’ a g r e e m e n t

, Solid State ’ s pastillator an d o t h e r equipment

w ere installed at Ashland ’ s Neville I s land f acilit y in l a t e 2017

. Ashlan d started th e

pa stillator in 2018 and monitored indoor air quality for compliance with i t s i n t e rn a l

O c c u p a t i o n a l E x p o s u r e L i m i t ( O E L ) . Due to the fact tha t all personne l samp l es g r e a t l y

exce eded i t s i n t e rn a l e x p o s u r e l i m i t

, and all work areas were affected

, A shland put

p astillator opera tions on h old in July 2018

, a n d A s h l a n d i m m e d i a t e l y t o o k s t e p s t o p r o t e c t

w o r k e r s a n d r e d u c e e x p o s u r e s

. S o l i d S t a t e a c c e p t e d t h i s p l a n a s a p r u d e n t p a t h f o r w a r d

.

2 New York l aw governs con struc tion and enfo rcement of the MSA.4 Despite starting operati ons again with emp l o yees using pers on al protective

equi pment an d oth er efforts to improve the safety of the operation s , including authorizing

$544,0 47 to purchase an autob agger and relate d expenses

, indo or sampling in Oct ober

2 0 18 contin ued to significantly exceed the A C G I H TLV. Indeed, des pite efforts t o

improve sa fety, testing continued to show excee dances of the TLV, and on May 3, 2019,

Ashland shut the line d own bec aus e of iden tified safety concer n s which po se d a serious

health risk to employees. A s h l a n d t h e r e a f t e r a s k e d S o l i d S t a t e t o c o n t r i b u t e t o t h e c o s t o f

s e v e n i m p r o v e m e n t s t h a t w e r e i d e n t i f i e d a s n e c e s s a ry b e f o r e t h e p a s t i l l a t o r c o u l d b e

r e s t a r t e d

.

T he MSA called for Ashland to invoice Solid State monthly

, and p ayments were

due wit hin th i rty days following the date of inv oice

. Ashland routi nely invoiced Solid

State for the p astilles made

. Alt hough S olid State had previously pa id its invoice s, it

stopped paying invo i ces due after April 15, 2019.

I n M a y 2 0 1 9 , the r e w e r e d i s c u s s i o n s a b o u t the futu re of the pastillator line

, a n d

Solid Stat e “ initiated a discussio n wit h Ashland about ‘ ways to pay Sol id Sta t e as part of

an exi ting of the arrangement

. ’ ” Appx. 2326

. O n Ju ne 21, 2019, Solid State w r o t e

Ashland a l l e g i n g ma terial de fault under the MSA and m a d e a p r o p o s a l of s e t t l e m e n t w i t h

a d e m a n d t h a t

, a m o n g o t h e r t h i n g s

, Ash land pur chase all of the physical as sets of the

pastillation produc tion line a t Neville Island

. S o l i d S t a t e c o n t e n d s t h a t A s h l a n d b r e a c h e d

t h e M S A b e c a u s e i t u n i l a t e r a l l y s h u t d o w n p r o d u c t i o n

.5 On July 1, 2019, As hland then provided writt en notice to Sol id State that Solid

State mat erially de fault ed under the MSA and that, unless Solid State engaged with

Ashlan d to c o m e t o a n a g r e e m e n t a s t o e x p e n d i tu r e s t o w a r d a d d i t i o n a l s a f e t y m e a s u r e s

n e c e s s a r y t o s a f e l y r e s u m e production, Ashland would fo rmally terminate the agreement

under MSA Section 9.2. On July 15, 2019, Solid Stat e ’ s counse l responded, reaffirming

its position that Ashland was in breach b e c a u s e o f i t s “ u n i l a t e r a l d e c i s i o n t o c e a s e

p r o d u c t i o n

. ” A p p x

. 2 3 2 7

. O n July 31, 2019

, Ashland wrote to Solid State confirming

termination of the MSA

. A s t h e D i s t r i c t C o u r t p o i n t e d o u t

, as of July 31, 2019, each

party had decl ared m a t e r i a l b r e a c h of the MSA

, a n d n eit her party t h e r e a f t e r resp onded to

the demands of the ot her

.

Solid State ha s $237,500.95 in u npaid in voices

. Further, Solid State has never

remove d its equipment and materials fro m Nevi lle Island

, a s r e q u i r e d u n d e r M S A s e c t i o n

9

. 5

.

II. PROCEDURAL H I S T O RY

I n t h e D i s t r i c t C o u r t

, Sol id State ’ s operative Fir st Amend ed Compla int allege d

breach of c ontract d u e t o A s h l a n d ’ s f a i l u r e t o m a n u f a c tu r e s o l i d m a l e i c

. A shland brought

counter claim s for breach o f co ntract, breach of duty of good faith and fair d eal ing , and a

request for specific perf ormance of Solid Stat e ’ s du ty to remove its equipment and

materials

.

F ollowing discovery, t h e p a r t i e s f i l e d c r o s s

- m o t i o n s f o r s u m m a r y j u d g m e n t

, a n d

t h e Dis trict Court granted in part and denied in part ea ch m otion

. In so doing

, the Court6 found Solid Sta te breached the MSA in failing to pay the invoices due and failing to

remove the equipment. The Court also denied Solid State ’ s claim of b reach of contra ct

w h e n A s h l a n d c e a s e d p r o d u c t i o n o f s o l i d m a l e i c in light of t he saf ety concerns

, and t h e

C o u r t d e n i e d A s h l a n d ’ s c l a i m s t h a t S o l i d S t a t e v i o l a t e d s e c t i o n 2

. 1 0 o f t h e M S A

. 3 Solid

State requested reco n sid eration of the Court ’ s summ ary judgment o r d e r

, and the Court

reaffirmed its dec ision. 4

III. DIS CUSSIO N 5

The D istrict Cou rt proper ly found in favor of Ashland on its counter claim that

3 In the Dis t rict Court , A shla nd contended that Solid State bre ached MSA s ection 2.10 by

refu sing to “ participate in discussions with regard to expenditures needed for the

pastillator l ine to safely produce solid male ic an hydri de ” and that “ said breach and

conduct also constitute[d ] a breach of the implied covenant of good faith and fair

d ealing. ” Appx. 1 9

- 20

. However, as the Cou rt pointed out in concluding that neither

party may recov er under the p rovisions of MSA s ection 2 .10, s ection 2.10 was not leg ally

enforceable against eit her party under New York law as an “ a greement to agree. ” A ppx.

20 (citing Betty, Inc. v. Pepsico, Inc. , 848 F . Appx. 43, 45 (2d Cir. 2021)); see Joseph

Martin , Jr., Delicat e ssen, Inc. v. Sch umac her , 52 N

. Y .2d 105, 109 (198 1) (It is

“ rightfully well

- settle d ” u nder New York law “ that a mere ag reement to agree

, in w hich a

material term is left for future nego tiation, is unenforceable. ” ).

4 The Court re ser ved for tria l Ashland ’ s claim s for damages and specific performance

regardi ng equipment re mo val

, bu t t he p arties sub sequently entere d a joint stipulated

judgment , a ccepted by the Court, that Ashland ’ s damages for Solid State ’ s failure to

remove its e quipment amounted to $150

, 000, and that the total damages when added to

the $2 37,50 0.95 in unpa id in voic e s, were $387,500.95.

5 The Dist rict Court had jurisd ictio n pursuant to 2 8 U.S.C. § 1332, and we have appellate

jurisd iction under 28 U .S.C. § 1291. “We review the D istr ict Court’s grant of summary

judgment de novo,” apply ing “the same st andards and pres umptions as the District

Court.” Sapa Extrusions, Inc . v. Liberty Mut. Ins. C o. , 939 F.3d 243, 249 (3d Cir. 2019).7 Solid State breach ed the MS A by fail ing to pay in voices due. Under New York law, the

elements of a b reach of contract c laim are: (1) the existence of a co ntract; (2)

performan ce under the con tract by one side; (3) breach of the c on tract by the other sid e;

and (4) resulting damages. JP Mor gan Chase v. JH Elec

. o f NY, Inc. , 69 A. D

. 3d 802, 803

(N.Y. App. D iv. 2010).

Section 3.2 of the MSA provides for the payment of in voic es

. C oncluding that

So l id State breached its duty under se ction 3.2 of the MSA b y failing to pay invoices

, t he

District Court p roperly found that S olid State received n early a quarter million dollars of

pastilles, the pastilles met the M SA ’ s specifications, Solid State was p roperly invoiced,

and S olid State fai le d to pay the invoices due

, totaling $237,5 00.95

.

Solid State argues that its payment terms wer e o rally modified by a c onversation

with a contact at Ashlan d. However, as the Distri ct Cour t poin ted out, even besides the

fact that Ashland ’ s co ntact specif ically disagreed with Solid Stat e ’ s summary of this

conversation, the conten t of the conversation recounted by Sol id State contained no

language indic atin g t h e a l l e g e d a c tu a l modifica tion of the t erms of the MSA. Moreover,

even assuming arguendo the recor d established any qu es tion of material fact as to an y

mutual intention to ora l ly m odif y the MSA

, which the District Court p r o p e r l y found it d id

no t, the MSA specif ical l y preclu d es amendment o r modification exc ept as defined by

s ection 11.4

. MSA s ection 11 .4 provides in relevan t part: “ N o supplement, modificati on

or amen dment of the Agreement shall be bin ding unless in writing and execute d by [Solid

S tate] an d [Ashland]. ” Appx. 103. It is undispute d no such writing exists.8 S o l i d S t a t e f u r t h e r p o i n t s t o MSA s ection 3.2

, w h i c h p r o v i d e s : “ Unless otherwise

agreed between the P arties

, [Ashland] shall invoice [Solid S t ate ] o n a m o n t h l y b a s i s

. . .

P a y m e n t s s h a l l b e d u e w i t h i n t h i r t y ( 3 0 ) d a y s f o l l o w i n g t h e d a t e o f i n v o i c e

. ” 6 A p p x

. 9 6

-

9 7 ( e m p h

. a d d e d )

. A s e x p l a i n e d

, h o w e v e r

, M S A s e c t i o n 1 1

. 4 f u r t h e r p r o v i d e s t h a t a n y

m o d i f i c a t i o n m u s t b e “ i n w r i t i n g ” a n d e x e c u t e d b y t h e p a r t i e s

. A p p x

. 1 0 3

.

T h e District Court pointed out that Ne w York law permit s par ti es to “ knowingly,

voluntarily and intentionally ” abandon their contract rights by waiver, b y “ a f f

i r m a t i v e

c o n d u c t o r b y f a i l u r e t o a c t s o a s t o e v i n c e a n i n t e n t n o t t o c l a i m a p u r p o r t e d a d v a n t a g e

. ”

App x

. 18 (cit in g Fun d a m e n t a l Portfolio Advisors, Inc. v . Tocqueville Asset Mgmt., L.P.

,

7 N.Y.3d 96, 104 ( 2006) ( i n t e r n a l c i t a t i o n s a n d q u o t a t i o n s o m i t t e d ) )

. T h e C o u r t

e x p l a i n e d t h a t “ t h e p r e s e n c e o f a n o n

- w a i v e r c l a u s e d o e s n o t p r e c l u d e a c o n t r a c t f r o m

b e i n g e f f

e c t i v e l y m o d i f i e d b y a c t u a l p e r f o r m a n c e a n d t h e p a r t i e s ’ c o u r s e o f c o n d u c t

. ”

A p p x

. 1 8 ( q u o t i n g 1 3 0 1 P r o p

. O w n e r L P v

. A b e l s o n

, 3 7 N

. Y

. S

. 3 d 2 0 7 ( N

. Y

. S u p

. C t

.

2 0 1 6 ) ) ( i n t e rn a l c i t a t i o n s a n d q u o t a t i o n s o m i t t e d )

. H o w e v e r

, a s t h e D i s t r i c t Court also

found, h e r e “ the re cord d emonstrates no evi dence of a modific ation through actual

perform ance

. . . [ or ] through a course of conduct w i t h r e g a r d t o t h e r e g u l a r p a y m e n t o f

i n v o i c e s

. ” I d

.

6 We will assume arguen do that the “ unless otherw is e agreed ” clause in section 3.2

, which clearly relates to Ashland ’ s invoicing, also rel ates to the due dates for Solid S tate ’ s

invoice paymen t s , even though the sentence indicating the timing of Solid State ’ s

“ payment due date ” is a separate sentence fol low ing the one contain ing the “ unless

otherwise agreed ” clause and Ashland ’ s invoicing du ties

.9 The District Court also properly found in favor of Ashland on its c ounterclaim that

Solid State breached the MSA by failing to remove So lid State ’ s equipment. Under MSA

s ect ion 9.5, Solid State h ad a duty to rem ove a l l o f its equipment from Ashland ’ s Neville

Island facility within 180 days of termination of the MSA. A s explained, S o l i d S t a t e

b r e a c h e d the M SA in failing to pay th e invoices due pursuant to MSA s ect ion 3.2

.

M o r e o v e r

, as the Court f ound, b oth p arties gave notice of material default by the other

an d neither party moved to cure in respo nse to the other ’ s notice

. 7 Indeed, “ [ t]here is no

material question of fact that , follow ing Jul y 31, 2019, neither party acted i n any way to

challenge or question that the MSA was terminated. ” A p p x

. 2 5

. I t i s u n d i s p u t e d t h a t

S o l i d S t a t e h a d a c o n t r a c t u a l o b l i g a t i o n t o r e m o v e i t s e q u i p m e n t a f t e r t e r m i n a t i o n o f t h e

M S A

. T h e C o u r t p r o p e r l y f o u n d t h a t S o l i d S t a t e ’ s f a i l u r e t o d o s o w a s a b r e a c h o f t h e

c o n t r a c t

.

F i n a l l y

, h a v i n g t w i c e b r e a c h e d t h e M S A

, a s e x p l a i n e d a b o v e

, S o l i d S t a t e c a n n o t

m a i n t a i n a c l a i m f o r b r e a c h o f c o n t r a c t u n d e r N e w Y o r k l a w

. S e e G T F M a r k

e t i n g

, I n c

. v

.

7 Under the MSA, “ ‘ Materi al Default ’ means a b reach of this Agreement causing a

det riment of such severity for the aggrieved Pa rty a s to imped e the receipt of substantial

per forman ce promi sed under the A greement. ” Appx. 94. T he District Court poi nted out

that “ [s]aid breach [of Solid S tate ’ s failure to pay invoices due] was a ‘ material default

, ’

because it caused det rimen t to As hl and as to impede its receipt o f payment in e xchange

for servi ces performed as promised under t he MSA. ” App x . 25. Furt her, by the time of

its July 15, 2019 letter to Ashlan d, Solid St ate was clearly alleging that A sh land ’ s

“ decision to cease produ ction ” wa s a material default under th e MSA

, see Appx. 1831

( “ Ashland ’ s unilateral decision to cease production has caused sig nificant dam age to

Solid State a l ready and threatens t he very destruction of the business. ” ) , and , by that time

, Sol id State w as attemp ting to negoti at e a resolutio n a s a result of termination of the MS A

.10 C

o l o n i a l A l u m i n u m S a l e s

, I n c

. , 4 9 8 N

. Y

. S

. 2 d 7 8 6

, 7 8 8 ( 1 9 8 5 ) ( d i s m i s s i n g p l a i n t i f f

’ s

b r e a c h o f c o n t r a c t c l a i m b e c a u s e p l a i n t i f f w a s i t s e l f i n b r e a c h )

. M o r e o v e r

, A s h l a n d d i d

n o t v i o l a t e t h e M S A w h e n i t s t o p p e d a n d d i d n o t r e s u m e c o m m e r c i a l p r o d u c t i o n b e c a u s e

A s h l a n d “ h a d n o d u t y t o p e r f o r m u n d e r t h e M S A t o p r o d u c e s o l i d m a l e i c a n h y d r i d e w h e n

t o d o s o w a s i n c o n t r a v e n t i o n o f A s h l a n d ’ s I n d u s t r i a l H y g i e n e a n d O c c u p a t i o n a l H e a l t h

S t a n d a r d P o l i c y

, e n v i r o n m e n t a l h e a l t h a n d s a f e t y s t a n d a r d s

. ” A p p x

. 2 3

. H e r e

, t h e

D i s t r i c t C o u r t p r o p e r l y c o n c l u d e d t h e r e w a s “ n o q u e s t i o n o f m a t e r i a l f a c t t h a t t h e

p r o v i s i o n s o f M S A [ s ] e c t i o n 2

. 9 ap p l y t o r e l i e v e A s h l a n d f r o m p e r f o r m i n g i t s o b l i g a t i o n s

u n d e r t h e M S A

. ” 8 A p p x

. 2 2 ; s e e A p p x

. 9 6 ( “ I n n o e v e n t w i l l [ A s h l a n d ] b e r e q u i r e d t o

p e r f o r m a n y o f i t s o b l i g a t i o n s u n d e r t h i s A g r e e m e n t i n

. . . c o n t r a v e n t i o n o f [ A s h l a n d ’ s ]

e n v i r o n m e n t a l

, h e a l t h a n d s a f e t y s t a n d a r d s

. ” )

.

B e c a u s e t h e D i s t r i c t C o u r t c o rr e c t l y g r a n t e d s u m m a ry j u d g m e n t i n f a v o r o f

A s h l a n d o n i t s c o u n t e r c l a i m s f o r b r e a c h o f c o n t r a c t d u e t o S o l i d S t a t e ’ s f a i l u r e t o p a y

i n v o i c e s d u e a n d f a i l u r e t o r e m o v e S o l i d S t a t e ’ s e q u i p m e n t

, a n d t h e C o u r t c o rr e c t l y

d e n i e d S o l i d S t a t e ’ s c l a i m s f o r b r e a c h o f c o n t r a c t

, w e a f f

i r m

.

8 As Ashland point s out, since Solid State did not argue anticipatory re pud iation in the

Distric t Cou rt , that argument is waived. See DI RECT V, Inc . v. S eijas , 508 F.3d 123, 125

n.1 (3d C ir. 2007) ( “ It is we ll established that arguments not raised before the [d] istrict

[c] o urt are waived on appeal. ” ) ; Brenner v. Loca l 514 United Bhd. of Carpenters an d

Joiners of Am. , 927 F.2d 1283 , 1298 (3d Cir. 1991) ( “ It is well established th at failur e to

raise an issue in the district court constitutes a waiver of the argument

. ” ); see al so John

Wyeth & Bro. Ltd. v

. CIGNA Int ’ l Corp. , 119 F .3d 10 70, 1076 n.6 (3d Ci r. 1997)

( “ arguments raised in passing . . . but not sq ua rely argued, are considered waiv ed ” ).

Thus, Solid State i s precl uded from raising the argument on appeal.