Carbon Processing & Reclamation, LLC v. Valero Marketing & Supply Co.
823 F. Supp. 2d 786
W.D. Tenn.2011Background
- CPR Processing and Reclamation and CPR Marine sue Valero Marketing and Supply Co. and Valero Refining Co.-Tennessee for contracts related to Memphis slurry; two separate contract writings (953 FOB and 954 Delivered) were exchanged but never signed as a single instrument.
- Negotiations began in Aug 2007; CPR sought long-term term deals, Valero pushed for one-year term with evergreen options debated between the parties.
- Draft writings dated Feb 2008 included a pricing band linked to WTI oil prices and an automatic renewal provision; CPR proposed Rider B with two 1-year auto-renewals, Valero added terms in later drafts.
- From Feb 2008 through mid-2009 CPR purchased >1.35 million barrels of Memphis slurry from Valero under 953/954 terms, though Valero characterized many as spot deals.
- CPR contends the parties had a binding two-year term contract by December 2007 or Feb 2008 and that Valero breached those terms; Valero argues the writings did not contain all essential terms and there was no contract, aside from conduct under UCC 2-207(3).
- Valero terminated the contracts in 2009, claiming the term had ended or was not renewed timely under the evergreen provision, while CPR claims ongoing performance showed a contract existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a contract existed by conduct under UCC 2-207(3). | CPR contends conduct evidenced a term contract; writings reflected term, price, quantity, and duration. | Valero argues no contract arose due to missing terms in writings and a true battle of the forms showing no agreement on essential terms. | CPR's contract-by-conduct claim under UCC 2-207(3) is supported; contract exists by conduct. |
| What are the contract terms under the 953 FOB and 954 Delivered writings. | Writings/mark-ups, plus course of performance, reflect two-year term and evergreen renewal. | Writings lacked mutual agreement on key terms; evergreen clause and initial term are contested. | FOB initial term Feb 28, 2008–June 1, 2009 with automatic two-year renewals; Delivered initial term Feb 28, 2008–Mar 1, 2009 with renewals; CPR entitled to partial summary judgment on term breach for these periods. |
| Did Valero breach the term provisions of the FOB and Delivered contracts? | Valero breached by not adhering to two-year term and renewal notices; CPR performed under claimed terms. | Valero gave timely notices or nullified term; performance under spot terms did not create enforceable term contract. | FOB—Valero did not breach; timely non-renewal notices; Delivered—Valero breached initial term extending to 2010 due to improper timing of notices. |
| Are CPR’s promissory fraud/promissory estoppel claims cognizable, and under what law? | Valero promised a two-year term and to memorialize the agreement; CPR relied to its detriment. | Promissory fraud/estoppel lack present intent to perform; statute of frauds may bar; estoppel uncertain under Tennessee law. | Promissory fraud and promissory estoppel claims are dismissed pending Tennessee Supreme Court resolution of certified questions; equitable estoppel similarly failed. |
| TCPA viability and accrual for CPR’s claims against Valero;** time-bar. | CPR suffered ascertainable loss; facts show unfair/deceptive acts; discovery rule applies. | Cardinal challenge on timeliness; accrual date contested. | TCPA claim remains for trial; issues of unfair/deceptive acts and accrual unresolved. |
Key Cases Cited
- Dorton v. Collins & Aikman Corp., 453 F.2d 1161 (6th Cir. 1972) (UCC 2-207(3) formation; battle of the forms analysis concept)
- Mead Corp. v. McNally-Pittsburg Mfg. Corp., 654 F.2d 1197 (6th Cir. 1981) (Formation under 2-207(3) governs contract terms by conduct)
- Alden v. Presley, 637 S.W.2d 862 (Tenn. 1982) (Promissory estoppel standards and Restatement guidance)
- Southern Indus. Banking Corp. v. Delta Props., Inc., 542 S.W.2d 815 (Tenn. 1976) (Promissory estoppel/exceptions to statute of frauds discussed)
- EnGenius Entm't, Inc. v. Herenton, 971 S.W.2d 12 (Tenn. Ct. App. 1997) (Promissory estoppel viability in Tennessee independent of statute of frauds)
- Chavez v. Broadway Elec. Serv. Corp., 245 S.W.3d 398 (Tenn. Ct. App. 2007) (Promissory estoppel and statute of frauds interplay)
- Launius v. Wells Fargo Bank, N.A., 2010 WL 3429666 (E.D. Tenn. 2010) (Promissory estoppel as independent action in some courts)