NOT PRECEDENTIA L UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 10

- 4343

_____________ ECEM EUROPEAN CHEMICAL MARKETING B.V., Appellant

v.
THE PUROLITE COMPANY

_______________ On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 05

- cv - 0 3078) District Judge: Hon. Joel H. Slomsky

_______________ Submitted Under Third Circuit LAR 34.1(a)

November 9 , 2011 Before: SCIRICA, SMITH , and JORDAN, Circuit Judges

.

(Filed : November 14, 2011 )

_______________ OPINION OF THE COURT

_______________2

JORDAN, Circuit Judge

. This case arises out of a contractual dispute between ECEM European Chemical Marketing, B.V. (“ECEM”) and The Purolite Company (“Purolite”) for the sale of an organic compound called styrene monomer (“styrene”)

. ECEM appeals orders of the United States District Court for the Eastern District of Pennsylvania : (1) granting Purolite‟s motion in limine to exclude statements ma de by the parties during co mpromise negotiations; (2) denying ECEM‟s motion for a new trial; (3) granting Purolite‟s request
to receive prejudgment i nterest at a rate of 6% per annum ; and (4 ) reducing ECEM‟s award to include only the amount due in compensatory damages as a result of Purolite‟s
breach

. For the following reasons, we will a ffirm

. I. Background ECEM is a company that distributes raw materials and is located in the Netherlands. Pur olite is a Delaware corporation with its principal place of business in Pennsylvania. O n December 16, 2003, Purolite entered a contract with ECEM (the “2003 Contract”) under which ECEM would deliver a specified amount of styrene monthly to Purolite‟s factory i n Victoria, Romania

. The monthly amount was to be delivered by rail in two shipmen ts

. T he 2003 Contract also provided that ECEM would bear all of the
costs a nd risks of delivery to the Victoria factory

. Thereafter, i n March 2004 , the parties agreed to increase the delivery amount to three shipments per month via rail through the Sprin g of 2005 (the “2004 Contract”)

. In November 2004, Purolite received only one shipment of styrene because ECEM mistaken ly sent two of the three railcars meant for Purolite‟s Victoria factory to Ploesti,3

Romania

. On December 10, 2004, Pu rolite‟s Materia ls Manager, Brian Wareham, sent an email to ECEM containing the following message: [T]his is unacceptable. We know that these [railcars] have been in Ploesti since December 2 nd . To put it po litely, Schenker [ECEM‟s agent] needs to pull their finger out a nd make things happen. We have a maximum of one

week styrene left. If, in the circumstances, we run out of material, a considerable compensation claim will be lodged with whoever is responsible for the delay. Purolite exhausted its supply of styrene on December 14, 2004 , and shut down its production lines for a one

- week period. It alleged ly sustained approximately $498,000 .00 in damages as a result of that shutdown

. T he two misrouted railcars eventually made it to Victoria on December 21, 2004. Fol lowing the misshipment, the parties‟ r elationship deteriorated . Purolite‟s
G eneral Manager directed his emplo yees to withhold payment for the two late shipments in the amount necessary to offset the losses Purolite sustained between December 14 and Decemb er 21 , 2004

. A dispute arose bet ween the parties concerning whether Purolite was obligat ed to pay each invoice within ninety days of delivery or ninety days of the date of the initial invoice. Finally , ECEM declined to do business with Purolite , based
up on its belief that “[Purolite] stopped payi ng t heir invoices that were due. ” (SA at 50 .) Between January and June 2005 , the parties began an email correspondence aimed
at resolving their differences. During those discussions, ECEM consistently asserted that Purolite was contractually obligated to pay for each of the outstanding invoices due unde r the terms of the 2003 C ontract. ECEM claims that, during those conversations , Purolite4

never stated that it suffered losses as a result of the delayed shipment of styrene in November 2004. On June 28, 2005, ECEM filed the present suit , alleg ing that Purolite breached its contractual obligation by failing to pay for five shipments of styrene between October 13, 2004 and December 9, 2004. ECEM sought compensat ory damages in th e amount of $449,027.60 1 . It also sought statutory in terest at a rate of 8% , plus interest at a “penalty”

rate of 3.75% pursuant to a docum ent entitled “General Terms and Conditions of Sale ” (“GTCS”) , and attorneys‟ fees, costs, and expen ses. 2 Purolite asserted a counterclaim for breach of contract, seeking damages caused by the two missed shipments in November
2004

. Purolite also filed a motion in limine seeking to exclude statements made by the parties during their compromise negotiati ons between January and June 2005. The District Court granted the in limine motion and the case went to trial. At the conclusion of the trial, and in accordance with the jury‟s verdict, the Court entered judgment in favor of Purolite and against ECEM fo r $245,213.00, and in favor of ECEM

1 That figure represents a conversion from Euros

.
2 The GTCS provides, in relevant part, that: If the term of payment is exceeded all costs of collection, both in and out of court, shall be for the account of the Buyer

... If the Buyer has not made payment within 8 days from the invoice date and also in the event the parties agree upon a term of payment of more than 8 days the Buyer shall pay the seller interest at the rate of 4% above the statutory interest.5

and against Purolite for $785,725.00. 3 Significantly, in answering interrogatories on the verdict sheet, t he jury determined that the GTCS did not form a part of the 2004
Contract. 4 After the District Court entered ju dg ment, the parties filed several po s t

- trial
motions

. ECEM moved to vacate the District Court‟s order granting Purolite‟s motion in limine

. The Court denied ECEM‟s motion because , it reiterated, under Federal Rule of Evidence 408, “an actual dispute exis ted [between the parties] in late 2004 and early 2005 beyond mere business discussions over the payment timetable.” (J

. A

. at 21.) In particular , t he District Court pointed to the follow ing disputes : (1) “[Purolite‟s] failure to pay several invoices”; (2 ) “ [Purolite‟s] contention regarding improper invoicing by [ECEM] ” ; (3 ) “ [ECEM‟s] failure to provide [Purolite] with three (3) rail tank c ars of styrene in November 2004 ” ; (4 ) “ [ECEM‟s] rejection of [Purolite‟s] co ntract proposal in December [2004] ” ; and ( 5 ) ECEM‟s decision to prematurely terminate the 2003 Contract

. ( Id

. ) ECEM also moved for a new trial on Purolite‟s counterclaim for damages. The Court denied that mo tion because it determined that “ECEM ... failed to show that it

3 While ECEM‟s award consisted of $405,183.00 in principal, the source of the remaining $380, 542.00 is unclear.

4 The jury responded in the negative to the following interrogatory: “ [d] o you find that Plaintiff ECEM has proven by a preponderance of the evidence that the [GTCS] referred to on the invoices formed a part of the contract with Defe ndant Purolite Company?” (JA at 81).6

suffered substantial inju stice or was prejudiced by the [District] Court‟s ruling [s] ” or that

“ the [District] Court erred in ruling on the pre

- trial motions or at trial.” 5 (J.A. at 38.) Purolite also moved to amend the judgment, requesting an award of prejudgment interest in the amount of $80,037.52. The Court granted that motion based on its
conclusion that “Purolite succeeded on its counterclaim,” and that “[j]ustice requires that Purolite receive prejudgment interest on its award under Pennsylvania law.” (JA at 52.)
Purolit e also moved to amend the judgment entered in favor of ECEM by reducing ECEM‟s award from $785,725.00 to the principal amount, $405,183.00. The Court granted that motion because it found that “the jury committed a clear error of fact and law” by “returnin g a verdict in the amount of $785,725.00 ” even though the jury found “that the GTCS did not form part of the cont ract ” (J

. A

. 47), and that ECEM was entitled to interest at the statutory rate of 6% under Pennsylvania law

. I I . Discussion 6
A. Exclusions of the Parties’ Compromise Negotiations ECEM argues that the District C ourt abused its discretion by excluding statements the parties made during their email com munications between January and June 2005. Specifically, ECEM contends that because there was no “dispute” between ECEM and Purolite as to the validity or amount of payment due under the 2004 Contr act, the District

5 ECEM also moved to vacate the judgment entered on June 10, 2010, in favor of Purolite in the amount of $245,213.00. However, the District Court denied that motion, and ECEM does not appeal that judgment.

6 We h ave jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. The District Court had jurisdiction pursuant to 28 U.S.C. § 1332.7

Court erred by excluding the parties‟ email s . Purolite responds that the Court did not abuse its discretion because, during the early 20 05 time frame in question , Purolite put ECEM on notice of a potential “compensation claim” based on ECEM‟s failure to deliver two styrene shipments in November 2004 , and because the parties were negotiating to avoid a breakdown in their business relationsh ip. We review for abuse of discretion a district court‟s decision to admit or exclude
evidence. Coleman v. Home Depot, Inc. , 306 F.3d 1333, 1341 (3d Cir. 2002). “An abuse of discretion is a „clear error of judgment,‟ and not simply a different result w hich can arguably be obtained when applying the law to the facts of the case.” SEC v. Infinity Grp. Co. , 212 F.3d 180, 195 (3d Cir. 2000) (quoting In re Tutu Wells Contamination Litig. , 120 F.3d 368, 387 (3d Cir. 1997) , overruled on other grounds by Cunni ngham v. Hamilton Cnty., Ohio , 527 U.S. 198 (1999) ). However, to the extent the district court‟s decision depends upon its interpretation of Federal Rule of Evidence 408, our review is plenary. In re Paoli R.R. Yard PCB Litig. , 35 F.3d 717, 749 (3d Cir. 1994). Federal Rule of Evidence 408 provides , in relevant part : (a) Prohibited u ses. Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to vali dity or amount, or to impeach through a prior inconsistent statement or contradiction: (1) f urnishing or offering or promising to furnish

– or accepting or offering or promising to accept

– a valuable consideration in compromising or attempting to comprom ise the claim; and (2) conduct or statements made in compromise negotiations regarding the claim

... .8

Fed. R. Evid. 408. Rule 408 applies where there is a “dispute” between parties, or “at least an apparent difference of view

... concerning the validity or amount of a claim.” Aff i liated Mf rs. , Inc. v. Aluminum Co. of Am. , 56 F.3d 521, 525 (3d Cir. 1995)

. A dispute need not “crystallize to the point of threatened litigation”; a mere difference of opinion
will suffice to warrant the exclusion

. Id. at 527. In determining whether a di spute exists, the facts of each case are critical to a district court‟s exercise of discretion. Id. at 528. Ultimately, w hen in doubt, the district court should err on the side of excluding compromise negotiations. Bradbury v. Phillips Petroleum Co. , 815 F.2d 1356, 1364 (10th Cir. 1987)

. T he District Court here did not abuse its discretion by excluding statements made by the parties during their compromise negotiations between January and June 2005. The record reveals that the threat of litigation loomed over the parties as early as December 10, 2004. On that date , Purolite put ECEM on notice by email that if Purolite exhausted its supply of s tyrene as a result of ECEM‟s untimely shipment, “ a considerable compensation claim [w ould] be lodged with whoever [was] responsible for the delay.” (SA at 82

- 83

. ) A t a minimum, Purolite‟s email demonstrates that ECEM was aware that Purolite con sidered filing a lawsuit to recoup losses it sustained as a result of the late shipment s , and t hat Purolite was serious enough to make its intentions known

. In addition , ECE M confirmed the existence of a d ispute between the parties when it terminated its deliveries to Purolite, thus showing the failure of negotiations . A s th e District Court noted , Matthew Rigby, ECEM‟s Purchasing Agent , sent the following email to Brian Wareham on January 7, 2005:9

I confirm that I have put a block on any further styrene deliveries to your plant until we are up to date with pay ments. We really mustn‟t let the payme nt issue spoil this deal. We are set up to supply your styrene requirements for this year as per our agreement but you have to have to [sic] keep your side of the bargain and pay on time. (J

. A

. at 178 (emphasis added). ) Finally , the record demonstrates that the General Manager of Purolite‟s V ictoria Plant directed his employees to withhold payment to
ECEM for outstanding invoices in the amount necessary to offset the losses Purolite sustained as a result of ECEM‟s late shipments

. Taken as a whole, the evidence demonstrates that a dispute existed between the parties concerning ECEM‟s cessation of deliveries and how Purolite would recover the losses it sustained as a result of ECEM‟s tardy shipments in November 2004

. Thus, the District Court did not abus e its discretion by granting Purolite‟s motion in limine.
B. Reduction of Attorneys’ Fees and Interest 7
ECEM contends that the District Court also abused its dis cretion by reducing its award by $376,042 .00. ECEM does not dispute that the total amount to w hich it was entitled for the damages it sustained as a result of Purolite‟s withholding of payments was $405,183 .00, but it asserts that “[t]he award of $781,725 to ECEM was within the exclusive purview of the fact

- finder and should not be dis turbed absent clear error.” (Appellant‟s Opening Brief at 33 ( citing Loughman v. Conso l

- Pennsylvania Coal Co. , 6 F.3d 88, 102 (3d Cir. 1993)

. ) Purolite responds that , because the jury found that the GTCS did not form a part of the agreement between th e parties, and b ecause no other

7 Decisions regarding remittitur are reviewed for abuse of discretion. Gumbs v. Pueblo Int’l, Inc. , 823 F.2d 768, 771 (3d Cir. 1987).10

evidence introduced at trial supports the portion of ECEM‟s award that exceeds $ 405, 183.00 , the District Court appropriately deducted $376,042.00 from ECEM‟s total
recovery. As did the District Court, we conclude that , b ecause th e evidenc e adduced at trial
does not provide a basis for the portion of ECEM‟s award that exceeded the $405,183.00 acknowledged to be due, the District Court correctly amended the judgment by reducing ECEM‟s total recovery by the $376,042.00 over that past due amou nt

. ECEM complains that the overage may represent interest calculated according to the GTCS. However, the jury expressly found that the GTCS was not a part of the contract between ECEM and Purolite, and that conclusion was hardly surprising, since the ev idence established that Purolite never saw the GTCS until this suit was filed. N o ne of the evidence introduced at trial , aside from the GTCS, supports an award of attorneys‟ fees or interest at a statutory rate of 8% or a penalty rate of 4%. Therefore, b ecause the jury awarded ECEM $376,042.00 in excess of its recoverable compensatory damages, and because ECEM failed to introduce evidence at trial supporting that award, the District Court did not err in amending the judgment by reduc ing ECEM‟s total award by $376, 042.00. Accordingly, we affirm the District Court‟s remittitur order, reducing the judgment for ECEM by $376,042.00.
C

. Purolite’s Recovery of Prejudgment Interest ECEM argues that the District Court abused its discretion by awarding Purolite prejudgment interest beca use (1) Article 78 of the United Nations Convention on Contracts for the International Sale of Goods (“CISG”) does not provide Purolite a right11

to recover prejudgment interest on its claim for loss profits; (2) Purolite is not enti tled to prejudgment interest under P ennsylvania law because it‟s breach of contract claim did not seek a definite sum of compensation; and (3) Pennsylvania law does not provide for an award of prejudgment interest upon a claim for damages not derived from a contract of sale. Purolite answers that it is entitled to prejudgment interest because, under Pennsylvania law , a prevailing party is entitled to an award of prejudgment interest a s a matter of right, and the CISG does not expressly preclude Purolite fr om receiving an award of prejudgment interest. We review for abuse of discretion a district court‟s decision to require a losing party to pay prejudgment interest , and a district court‟s findings regarding the appropriate amount of prejudgment interest

. Thabault v. Chait , 541 F.3d 512, 533 (3d Cir. 2008) (reviewing for abuse of discretion district court‟s decision to award prejudgment interest and district court‟s calculation of interest) ; Gelof v. Papineau , 829 F.2d 452, 456

- 57 (3d Cir. 1987) (reviewing for abuse of discretion district court‟s decision regarding the rate of prejudgment interest ) . “The district court may exercise this discretion upon „considerations of fairness‟ and prejudgment interest may be denied „when its exaction would be inequitabl e.‟” Thabault , 541 F.3d at 533 (quoting Bd. of Comm’rs of Jackson Cnty. v. United States , 308 U.S. 343, 352 (1939)).
T he parties seem to disagree about whether the appropriate law to apply in determining the award of preju dgment interest is the CIS G or Pe nnsylvania law. However, regardless of whether we apply the CISG or Pennsylvania law, the result is the

same. Under Pennsylvania law, the award of prejudgment interest in a contract action is12

not discretionary; it is a legal right to which a prevailing p arty is entitled. Fernandez v.
Levin , 548 A.2d 1191, 1193 (Pa. 1988). Pennsylvania has adopted the Second Restatement of Contracts § 354 (1981), which provides: (1) If the breach consists of a failure to pay a definite sum in money or to render a perform ance with fixed or ascertainable monetary value, interest is recoverable from the time for performance on the amount due less all deductions to which the party in breach is entitled. (2) In any other case, such interest may be allowed as justice requires on the amount that would have been just compensation had it been paid when performance was due

. Restatement (Second) of Contracts § 354 (1981) (e mphasis added) ; see Fernandez , 548 A.2d at 1193

. W here “damages are known or ... ascertainable through mathemat ical calculations,” prejudgment interest is limited to the statutory rate of 6% per annum. Spang & Co. v. USX Corp. , 599 A.2d 978, 9 84 (Pa. Super. Ct. 1991) ; see 41 P A
. C ONS
. S TAT
. § 202. On the other hand, if, as ECEM argues, the CISG (an internationa l treaty) governs the dispute, then we may treat the dispute as a federal question. 28 U.S.C. § 1331. And, assuming that this case presents a federal question, under our well

- established precedent, the District Court had broad discretion in determining w hether to award prejudgment interest. See Ambromovage v. United Mine Workers of Am. , 726 F.2d 972, 981

- 82 (3d Cir. 1984) (“In the absence of an explicit congressional directive, the award of prejudgment interest under federal law is committed to the trial court‟s discretion, and „given in response to considerations of fairness[,] ... [and] denied when its exaction would be inequitable.‟”) (quoting Bd. of Commr’s of Jackson Cnty

. , 308 U.S. at 352 ).13

Here, the jury determined that ECEM breached its contract by f ailing to deliver shipments of s tyrene in a timely manne r, and it awarded Purolite $245,213 .00 in compensatory damages. Purolite is thus a prevailing party in this litigation. T he District
Court was therefore within its discretion in awarding Purolite prejudgment interest

. W here, as here, both the plaintiff and the de fendant recover damages due to the breakdown of a contractual agreement, we find no inequity in awarding both parties prejudgment interest at the same statutory rate . Accordingly, we will affirm the District Court‟s decision to award Purolite prejudgment interest at a rate of 6% per annum.
D. Motion for a New Trial 8 ECEM challenges the District Court‟s order “denying ECEM‟s post

- trial motion seeking a new trial on the issue of [Purolite ‟s] counterclaim due to the [District] Court‟s failure to admit evidence of business communications between the parties.” (J.A. at 1.) However, because of our holding that the District Court did not err in granting Purolite‟s
motion in limine to exclude evidence of compromise negotiations, we also conclude that the District Court did not err in denying ECEM‟s motion for a new trial.
III. Conclusion For the foregoi ng reasons, we affirm t he District Court

.

8 “The standard of review on a motion for a new trial is abuse of discretion, except where a district court bases its denial of the motion on an application of law, in which case the appellate court‟s review is plenary.” McKenna v. City of Ph ila. , 582 F.3d 447, 460 (3d Cir. 2009).