MATHESON TRI-GAS, INC. v. Atmel Corp.
347 S.W.3d 339
Tex. App.2011Background
- Matheson Tri-Gas provides nitrogen to Atmel under a Supply Agreement for 10 years (later 12) with minimum monthly purchases.
- Atmel shut down production in July 2002 but continued to pay minimum as a take-or-pay obligation and used small amounts of nitrogen for maintenance.
- In late 2006, Atmel negotiated sale of its Irving facility to Maxim; Matheson, Atmel, and Maxim executed a MTG/Maxim Agreement in February 2007 and a Termination Agreement releasing Atmel from the Supply Agreement upon four conditions.
- On May 7, 2007, Atmel closed the sale to Maxim; Matheson invoiced the minimum purchase amount after May 2007 and Atmel ceased paying.
- Both sides moved for summary judgment; Atmel argued the Supply Agreement terminated on May 7, 2007, while Matheson argued condition four had not been satisfied because Maxim’s use was de minimis.
- The appellate court held that “consuming product under” the MTG/Maxim Agreement includes any consumption, and that Atmel was entitled to summary judgment because Maxim began consuming nitrogen on closing and condition four was satisfied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether condition four occurred, releasing Atmel from the Supply Agreement | Matheson: condition four not satisfied; Maxim’s maintenance use was de minimis and not ‘consuming product under’ | Atmel: Maxim began consuming nitrogen on closing, satisfying condition four | Condition four satisfied; Atmel liable for termination |
Key Cases Cited
- MCI Telecomm. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647 (Tex. 1999) (contract interpretation; determine true intent from entire agreement)
- Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783 (Tex.App.-Dallas 2005) (interpretation of contract terms; not consider subjective intent)
- Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118 (Tex. 1996) (undefined words given plain meaning unless technical sense shown)
- Tex. Auto Supply Co. v. Gulf Refining Co., 204 S.W.2d 457 (Tex.Civ.App.-Fort Worth 1918) (interpretation of quantity-based contract language)
- Garcia v. King, 139 Tex. 578, 164 S.W.2d 509 (Tex. 1942) (interpretation of terms like 'produce' in leases)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract interpretation; give effect to all provisions)