Bayer CropScience LP v. Albemarle Corporation
696 F. App'x 617
| 4th Cir. | 2017Background
- Bayer and Albemarle were parties to a long-term Methyl Bromide Sales Agreement (Virginia law) requiring Bayer to buy 80% of its methyl bromide from Albemarle, with an open-price clause allowing Albemarle to unilaterally raise prices on quarterly notice and a limited "meet or release" right for Bayer on 20% of volume after a 2009 amendment.
- In February 2014 Bayer gave notice terminating the agreement effective December 31, 2015, but the parties continued performance while disputes arose over price increases announced by Albemarle in March 2014 ($1.85 to $4.09), June 2014 ($4.09 to $8.49), and March 2015 ($8.49 to $11.04).
- Bayer purchased 20% of its 2014 supply from Chemtura in April 2014 at $2.30 without offering Albemarle the opportunity to match, which the district court found to be a material breach of the "meet or release" provision.
- Bayer sued alleging (1) declaratory relief under the UCC/Virginia law that Albemarle’s price increases (particularly the three increases) were made in bad faith; (2) breach of contract for commercially unreasonable/bad-faith pricing; and (3) a North Carolina UDTPA claim based on an alleged misrepresentation that the first increase was a pure pass-through of a tolling fee.
- The district court granted summary judgment to Albemarle on Bayer’s claims relating to the first price increase and the UDTPA claim, and dismissed Bayer’s claims relating to the second and third increases under Virginia’s first-material-breach doctrine. Bayer appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Albemarle acted in bad faith/commercially unreasonable in setting the first price ($1.85→$4.09) under the UCC open-price provision | Bayer: the increase was opportunistic, not a good-faith price fixation; violated UCC good-faith standard | Albemarle: price reflected value-based analysis and cost increases (Chemtura tolling fee); exercise of contractual rights | Affirmed — no genuine dispute that $4.09 was commercially reasonable/good faith; summary judgment for Albemarle |
| Whether Bayer stated a viable UDTPA claim based on Albemarle’s statement that the first increase was a 100% cost pass-through | Bayer: Ware’s statement was a misrepresentation and Bayer relied on it, causing injury | Albemarle: no aggravating circumstances beyond a contract dispute; Bayer did not show reliance | Affirmed — UDTPA claim dismissed for lack of aggravating circumstances and lack of reliance |
| Whether Bayer’s April 2014 purchase from Chemtura constituted a first material breach that bars Bayer from suing over Albemarle’s later price increases | Bayer: even if it breached, the first-material-breach rule should not bar claims where both parties continued performance; the rule excuses performance but should not foreclose suit for later breaches | Albemarle: Bayer’s April 2014 conduct was the first material breach, which precludes enforcement of contract claims for subsequent breaches | Reversed in part — court holds Virginia’s first-material-breach doctrine does not bar Bayer from suing for the second and third price increases where both parties continued performance; remanded for further proceedings |
Key Cases Cited
- Wilkins v. Montgomery, 751 F.3d 214 (4th Cir. 2014) (standard of review for summary judgment)
- Libertarian Party of Virginia v. Judd, 718 F.3d 308 (4th Cir. 2013) (definition of genuine dispute and material fact on summary judgment)
- Horton v. Horton, 487 S.E.2d 200 (Va. 1997) (Virginia first-material-breach rule excuses nonperforming party)
- Countryside Orthopaedics, P.C. v. Peyton, 541 S.E.2d 279 (Va. 2001) (applies first-material-breach principle across related agreements)
- Am. Trading & Prod. Corp. v. Fairfax Cty. Bd. of Sup’rs, 200 S.E.2d 529 (Va. 1973) (seller fixing price must act non-arbitrarily and treat similarly situated buyers alike)
- Dalton v. Camp, 548 S.E.2d 704 (N.C. 2001) (elements of a UDTPA claim)
- Bumpers v. Comm. Bank of N. Va., 747 S.E.2d 220 (N.C. 2013) (reliance required for UDTPA misrepresentation claims)
- Griffith v. Glen Wood Co., Inc., 646 S.E.2d 550 (N.C. Ct. App. 2007) (contract breach supports UDTPA only with substantial aggravating circumstances)