Opinion ID: 690481
Heading Depth: 3
Heading Rank: 6

Heading: Mylan's Count I

Text: 29 Mylan next contends that the district court erred in granting summary judgment on its Count I, which alleged that Cyanamid undercompensated Mylan for its purchases of Maxzide. The Maxzide agreement required Cyanamid to pay Mylan a certain amount for each package of Maxzide that Cyanamid sold. The Saydah Agreement provided a formula for this amount based on Cyanamid's net sales or average selling price. Average selling price was computed by dividing Cyanamid's total revenue by the number of units actually sold. The parties disagree as to whether, when Cyanamid offered a buy ten, get two free discount, the two free units should have been counted as units actually sold. 30 In its motion for summary judgment on this count, Cyanamid attached an affidavit from an expert witness that under normal trade usage the two free units would be considered actually sold. Mylan produced no evidence of trade usage, but rather relied on deposition testimony from Mylan and Cyanamid officials regarding their intent. Milan Puskar (Mylan's president) and Rod Jackson (Mylan's vice president) both testified that at the time the Saydah amendment was signed they believed that free units should not be considered actually sold. Robert Saydah (Lederle's president at the time the Saydah agreement was signed) also testified about the meaning of net sales. While his testimony is inconsistent, part of his testimony and a sample calculation that he performed indicate he agreed with Mylan that the free goods should not be counted as actually sold. The West Virginia U.C.C. provides that 31 Terms ... set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented 32 (a) by course of dealing or usage of trade ... or by course of performance.... W. Va.Code Sec. 46-2-202. Under this provision, evidence of trade usage may explain or supplement even a contract that is clear on its face. See W. Va.Code Sec. 46-1-205 cmt. 1 (The measure and background for interpretation are set by the commercial context, which may explain and supplement even the language of a formal or final writing.); W. Va.Code Sec. 46-2-202 cmt. 1(c) (This section definitely rejects ... [t]he requirement that a condition precedent to the admissibility of [trade usage, course of dealing, or course of performance] is an original determination by the court that the language used is ambiguous.). However, the Code and Commentary leave unclear the extent to which other types of extrinsic evidence of intent may be admissible where a contract term is ambiguous. 33 The district court, citing Sec. 46-2-202, granted summary judgment in favor of Cyanamid because of Mylan's failure to introduce evidence of trade usage. It did not consider Mylan's evidence of the parties' subjective intent. While the district court did not make clear the basis for its decision, it apparently concluded that under Sec. 46-2-202 only evidence of trade usage, course of dealing, or course of performance is admissible to explain a contract's meaning. Thus, this issue turns on the extent to which Mylan may introduce extrinsic evidence of the parties' subjective intent to show the meaning of a contract under the U.C.C. 34 The U.C.C. modified the common law parol evidence rule by giving special weight to evidence of trade usage and commercial practices. In effect, trade usage becomes part of the contract: 35 [Contracts] are to be read on the assumption that the course of prior dealings between the parties and the usages of trade were taken for granted when the document was phrased. Unless carefully negated they have become an element of the meaning of the words used. 36 W. Va.Code Sec. 46-2-202 cmt. 2. See also W. Va.Code Sec. 46-1-205(3) ([A]ny usage of trade in the vocation or trade in which [the parties] are engaged or of which they are or should be aware give[s] particular meaning to ... terms of an agreement.) Other types of extrinsic evidence may be admissible to explain an ambiguous contractual term. However, because trade usage is deemed incorporated into the con tract unless specifically negated, it must be considered when determining whether a term is ambiguous. Parol or extrinsic evidence like that offered by Mylan is inadmissible to explain a term which is unambiguous when read in light of trade usage. 37 Furthermore, Mylan's proffered evidence shows at most the parties' unexpressed, subjective interpretations of a contract term. Both the U.C.C. and West Virginia common law express a preference for objective, rather than subjective, manifestations of intent. See W. Va.Code Sec. 46-1-205 cmt. 1 ([T]he meaning of the agreement of the parties is to be determined by the language used by them and their action, read and interpreted in the light of commercial practices and other surrounding circumstances (emphasis added)); Watson v. Buckhannon River Co., 45 W. Va. 164, 175 (1923) ([W]hen there is doubt as to [a contract's] proper meaning, the construction which the parties have put upon it by their acts is entitled to great consideration. (emphasis added)); Restatement (Second) of Contracts Sec. 212 cmt. a (1981) ([T]he relevant intention of a party is that manifested by him rather than any different undisclosed intention.). 38 Because the term net sales was unambiguous in light of Cyanamid's uncontested evidence of trade usage, the district court properly disregarded Mylan's proffered evidence of subjective intent. We therefore affirm the district court's grant of summary judgment on this claim.