Opinion ID: 1272032
Heading Depth: 1
Heading Rank: 2

Heading: the contractual relationships of the parties

Text: United is a major New Mexico uranium producer. Much of the uranium it produces is used in the nuclear reactors of public utilities. In the 1960's, United entered into the fuel fabrication market. Fuel fabrication is the process by which enriched uranium is manufactured into fuel clusters to power nuclear reactors. In 1966, United entered into a contract to sell nuclear fuel to Commonwealth Edison, a commercial utility. It later contracted to sell fuel to I&M, and signed letters of intent to deliver fuel to Detroit Edison, Duke Power, Yankee Atomic and Consolidated Edison, all of which are also commercial utility companies. United also signed a letter of intent with Commonwealth Edison to supply it with additional fuel. [5] By 1970, United's commercial nuclear fuels business required more capital than United had or could obtain on its own. In that year, United entered into negotiations with Gulf, through Gulf Energy, to form a joint commercial light water reactor fuel fabrication business. For its part, Gulf was interested in such a business as an outlet for its uranium supply and as an opportunity to enter the fuel market for such reactors, which might provide a hedge for its high temperature reactor business. The negotiations between Gulf and United culminated in July 1971, with the formation of a jointly owned corporation called Gulf United Nuclear Fuels Corporation (Gulf-United). The purpose of Gulf-United was to manufacture and sell nuclear fuel for commercial power reactors. United contributed its expertise in the business and some of its facilities and employees. Gulf was to contribute capital. United assigned its rights under the utility contracts to Gulf-United, thereby obligating the new corporation to supply the utilities with uranium. United in turn agreed to supply the new corporation with the uranium needed to fulfill the utility contracts. This latter agreement will be referred to as the 1971 Supply Agreement. Gulf was to supply Gulf-United with one-half of the uranium required for each existing order and letter of intent, but, upon the advice of United's counsel, this obligation was made an option. Gulf owned fifty-seven percent of the capital stock of Gulf-United, and United owned the remainder. From 1971 to 1973, Gulf-United was jointly operated by Gulf and United. During this period Gulf-United formalized two of the letters of intent. For reasons that are disputed, Gulf-United's business did not prosper. In the summer of 1973, United agreed to sell its interest in Gulf-United to Gulf (the Buyout Agreement). United and Gulf then entered into a new contract, the 1973 Supply Agreement. Pursuant to this contract, which cancelled and rescinded the 1971 Supply Agreement, United agreed to sell Gulf-United the uranium needed to supply the utilities. Gulf-United continued to be obligated to supply the utilities with uranium. Thus, the 1973 Supply Agreement basically replaced the 1971 Agreement, with an upward adjustment in the price. In November 1973, Gulf-United was merged into Gulf. Gulf then entered into a partnership with Scallop. That partnership, known as General Atomic Company (GAC), is the defendant here. Gulf transferred Gulf Energy, including Gulf General Atomic to the new partnership. In the spring of 1974, Gulf transferred the Gulf-United business operation, including the utility contracts and the 1973 Supply Agreement, to GAC. GAC thus became obligated to perform the utility contracts and acquired the right to receive uranium from United. In essence, GAC simply took over the operations of Gulf Energy and Gulf-United. Later in 1974, the new partnership, GAC, entered into another contract with United, the 1974 Supply Agreement, whereby United became obligated to supply GAC with an additional three million pounds of uranium. United contends that Gulf entered into the formation of Gulf-United and the 1971 Supply Agreement as part of an attempt to monopolize the uranium market, and with the specific intent of eliminating United as a competitor in the fuel fabrication and uranium mining industries. United contends that Gulf fraudulently promised to supply Gulf-United with capital and one-half of the uranium needed for the utility contracts. United alleges that as part of this monopolistic scheme, Gulf refused to honor its obligations, refused to permit Gulf-United to buy uranium on the open market, and forced United to supply all of the uranium necessary to meet Gulf-United's needs. United argues that by deliberately mismanaging Gulf-United and withholding capital and uranium, Gulf successfully forced United to sell its interest in Gulf-United to Gulf at terms Gulf dictated and to execute the 1973 Supply Agreement. United also alleges that Gulf, acting through GAC, planned and attempted to negotiate out of its obligations to the utilities, and to then resell the uranium which United was obligated to supply at prices that Gulf had fixed. Knowing that United was in desperate financial straits, Gulf and GAC are alleged to have sought to secure a security interest on United's Churchrock, New Mexico mine-the largest underground uranium mine in the United States-and the right to control production from that mine. GAC allegedly refused to give United any price relief. This impasse led to the filing of this case. All of the foregoing alleged actions are asserted to have been part of a larger conspiracy to control uranium reserves in the United States. United contends that Gulf sought to accomplish this feat by tying up vast quantities of uranium through the contracts it entered into between 1972 and 1974 with other American uranium producers, in addition to the 1973 and 1974 Supply Agreements with United, and by acquiring, and then delaying the production of, uranium from Gulf's enormous Mt. Taylor reserves. C.