Opinion ID: 551885
Heading Depth: 3
Heading Rank: 2

Heading: The Evidence of Fraud

Text: 116 The district court's directed verdict may only be sustained if viewing the evidence most favorably to the party against whom the motion is made, and giv[ing] that party the benefit of all inferences, there is no evidence upon which the jury could properly find a verdict for that party. Hurd v. American Hoist & Derrick Co., 734 F.2d 495, 498-99 (10th Cir.1984) (quotations omitted). In making that determination, we must take into account the burden of proof for the underlying claim. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Under Kansas law, a claim of fraud must be proven by clear and convincing evidence. Nordstrom v. Miller, 227 Kan. 59, 65, 605 P.2d 545, 552 (1980); see Mackey v. Burke, 751 F.2d 322, 328 (10th Cir.1984). The district court's alternative ground for directing a verdict in favor of Allied was the Kansas two-year statute of limitations. Therefore, we must also take into account Allied's burden of proof for the affirmative defense of the statute of limitations. 117 [A] directed verdict for the party having the burden of proof may be granted only where he has established his case by evidence that the jury would not be at liberty to disbelieve. 118 Hurd, 734 F.2d at 499. 119 The evidence introduced at trial of the parties' original discussions concerning the shipment of experimental HMW resins to Traver's PeruPlast plant in Lima, Peru are set forth in the first subsection discussing General Poly's claim for breach of fiduciary duty. In addition, the following evidence relating to Allied's allegedly fraudulent misrepresentations of the PeruPlast test and the subsequent events which Allied contends should have reasonably caused General Poly to discover the alleged misrepresentations forming the basis of its fraud claim was introduced at trial. 120 On October 28, 1978, Pat Snell added a handwritten note to a memorandum addressed to Singleton from Jecha in which he indicated that he had spoken with Traver about supplying a developmental resin. See Plaintiff's Ex. 99 (Addendum to Appellee's Br., Doc. 3). Snell further explained: 121 (This of course would be the rebagged [Solvay] B5920F). The resin would be ideal. 122 I've told George Jecha of my conversations and he's aware of all developments. 123 This could be a great opportunity to test the BF920F, test an Allied version of the same, and make an entry into the HDPE film market in the U.S. Id; R. Vol. 20 at 1782. 6 124 Pat Snell testified that in late January 1979, he contacted Traver's Houston office concerning the shipment of HMW resin to Traver's PeruPlast plant in Lima, Peru. See R. Vol. 20 at 1729. On February 16, 1979, Snell sent Traver a telegram requesting information on scheduling for the resin trials of the new Allied resin. Plaintiff's Ex. S-114 (Addendum to Appellee's Br., Doc. 60). The shipping invoice which accompanied the five hundred and twenty-five pounds of resin shipped to Traver's PeruPlast plant indicated that the resin was Paxon High Density Polyethylene. Plaintiff's Ex. S-116 (Addendum to Appellee's Br., Doc. 61). Paxon is a registered Allied trademark. See R. Vol. 20 at 1733. 125 The resin shipped by Allied was tested at the PeruPlast facility on March 26-27, 1979. The actual resin which was tested at the PeruPlast facility was not an Allied manufactured resin, but was instead Solvay B5920F purchased by Allied in Europe. See Plaintiff's Ex. 167 (Addendum to Appellee's Br., Doc. 9); Appellant's Br. at 7. The resin packaging did not identify it as a Solvay-manufactured resin because Allied had repackaged it in plain wrappers and placed an Allied internal reference number on it. See R. Vol. 20 at 1735. On September 19, 1979, Snell sent Traver a letter with data from our testing on the film made from Allied chemical's developmental resin 6-100 (7-392) at your plant in Lima, Peru. Plaintiff's Ex. 142 (Addendum to Appellee's Br., Doc. 14). 126 Hans Traver testified that General Poly's executives were unaware that the resin tested at the PeruPlast plant was manufactured by Solvay until discovery in this litigation commenced. R. Vol. 25 at 2262. However, Allied maintains that General Poly should have known by September 1979, that Allied was at that time not yet capable of manufacturing a satisfactory Hoescht-quality HMW resin. 127 Hans Traver testified that in August 1979, he and Pat Snell began to make arrangements for a test of Allied's resin (along with resins from other manufacturers) at an extrusion plant operated in Natick, Massachusetts, by Alpine (a Swiss company). R. Vol. 25 at 2266. A test was conducted at the Alpine plant on August 23, 1979. Id. at 2267. Two representatives of General Poly attended the test. Id. at 2267-68. In a memorandum drafted four days after the test, the two General Poly representatives stated: 128 Began test on Allied Chemical HDPE # 6-412 97. Pat Snell of Allied Chemical was present and coordinated the test with Max Gmahle of Alpine. The HS65 extruder ran satisfactory but the test was a failure due to the melt instability of the test resin. Pat said that he would have to redesign the resin. 129 Plaintiff's Ex. 386 (Addendum to Appellant's Br., Doc. 12). Peter Barber, an extrusion supervisor for General Poly, testified that after the disappointing Alpine test, Pat Snell of Allied explained the adjustments that Allied needed to make in order to improve the resin. See R. Vol. 33 at 3365. Snell told Barber that he thought it was possible for Allied to make the necessary adjustments, although he did not say how much time would be required. Id. 130 In addition to the Alpine test, Allied points to the September 21, 1979 agreement's reference to a one-year development program as proof that General Poly was aware Allied did not yet have a commercially viable HMW resin developed. 131 In February 1980, several Allied experimental HMW resins were tested using General Poly's extrusion equipment. R. Vol. 33 at 3366-69. According to Peter Barber, the Allied resins performed better than the resin tested at the Alpine plant in Massachusetts, but none were equal in quality to the industry standard Hoescht resin. Id. at 3369. Barber testified that Allied's Pat Snell told him Allied was improving, getting closer and near to producing Hoescht-quality resin. Id. at 3369-70. Several other tests of Allied's resin samples were conducted at General Poly in 1980 and 1981, including a test on June 9, 1980 and one on September 18, 1980. See Appellee's Br. at 23, R. Vol. 33 at 3370, 3379. 132 General Poly placed its first orders for off-grade resin from Allied in June 1980. See Defendant's Ex. S-92 (Addendum to Appellant's Br., Doc. 83). A single rail car of resin mixed from several batches (the so-called rainbow car) was shipped to General Poly by Allied and received by General Poly in July. R. Vol. 12 at 778-79. On July 7, 1980, General Poly received an invoice from Allied for resin shipped June 16, 1980, which identified the resin shipped as Paxon Solvay Experimental PW resin. See id. Subsequent shipments of off-grade resin ordered by General Poly from Allied were of inconsistent quality and had to be blended with Hoescht resin in order to be used effectively. R. Vol. 33 at 3237-39.