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Gerard Tank & Steel, Inc. v. Airgas USA, LLC

United States District Court, D. Kansas

July 2, 2018

GERARD TANK & STEEL, INC., Plaintiffs,
v.
AIRGAS USA, LLC, Defendant.

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON UNITED STATES DISTRICT JUDGE

         Plaintiff filed this declaratory action, alleging an agreement it executed with Defendant is: 1) void for lack of mutuality of obligation because the Price Changes provision gave Defendant the unilateral right to escape performance under the Agreement at any time (Count I); and 2) terminable at will because Plaintiff had no knowledge of the page containing the termination provision (Count II). This Court previously dismissed Count I, but allowed Count II to proceed, finding whether Plaintiff was ever presented with the page containing the termination provision and whether Plaintiff had sufficient notice of that page required further factual development.[1] Before the Court is Defendant's Motion for Summary Judgment (Doc. 37). The motion is fully briefed and the Court is prepared to rule. For the reasons stated below, the Court denies the motion.

         I. SUMMARY JUDGMENT STANDARD

         Summary judgment is appropriate if the moving party demonstrates “that there is no genuine dispute as to any material fact” and that it is “entitled to judgment as a matter of law.”[2]In applying this standard, courts view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.[3] “There is no genuine [dispute] of material fact unless the evidence, construed in the light most favorable to the non-moving party, is such that a reasonable jury could return a verdict for the non-moving party.”[4] A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.”[5] A dispute of fact is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.”[6]

         The moving party initially must show the absence of a genuine dispute of material fact and entitlement to judgment as a matter of law.[7] In attempting to meet this standard, a movant who does not bear the ultimate burden of persuasion at trial need not negate the nonmovant's claim; rather, the movant need simply point out to the court a lack of evidence for the nonmovant on an essential element of the nonmovant's claim.[8]

         Once the movant has met the initial burden of showing the absence of a genuine dispute of material fact, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”[9] The nonmoving party may not simply rest upon its pleadings to satisfy its burden.[10] Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.”[11] In setting forward these specific facts, the nonmovant must identify the facts “by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.”[12] To successfully oppose summary judgment, the nonmovant must bring forward more than a mere scintilla of evidence in support of his position.[13] A nonmovant may not create a genuine issue of material fact with unsupported, conclusory allegations.”[14]

         Finally, summary judgment is not a “disfavored procedural shortcut”; on the contrary, it is an important procedure “designed to secure the just, speedy, and inexpensive determination of every action.”[15]

         II. UNCONTROVERTED FACTS

         The following material facts are either uncontroverted or, if controverted, are construed in the light most favorable to the nonmovant. As an initial matter, for convenience and clarity, the Court begins by identifying and denominating documents central to this case. Plaintiff claims the parties' agreement was a single-page agreement, while Defendant maintains the parties' agreement was a double-sided document, making it a two-page agreement. According to Defendant, one side was entitled “Product Sale Agreement” and contained enumerated paragraphs 1-10 (“Page One”), and the other side contained enumerated paragraphs 11-21 and the signature block (“Page Two”). Plaintiff maintains the parties' agreement was Page Two only.

         Defendant supplies and sells industrial, medical, and specialty gases in both bulk and cylinders. Plaintiff manufactures large storage tanks and works in heavy steel fabrication. When the parties' executed their agreement, Larry Joe Gerard was Plaintiff's president, and Mike Tremblay was Defendant's sales representative assigned to Plaintiff's account.[16]

         On September 9, 2003, Tremblay presented Gerard with two sheets of paper on a clipboard: on top was Page Two, and on bottom was the “Bulk Gases Rider.”[17] Tremblay told Gerard that the agreement was for seven years and for bulk only.[18] Trembly knew that Gerard would not sign a contract involving cylinder gases. Tremblay did not tell Gerard that the agreement would renew for successive seven-year terms, a provision included on Page One.[19]

         Gerard signed Page Two and dated it September 9, 2003, without turning it over.[20]Tremblay also signed Page Two on September 9, 2003, and forwarded it for acceptance by Mike Duvall, who signed and dated it September 19, 2003. Defendant kept the agreement with the original signatures.[21]

         From September 2003 through today, Plaintiff bought bulk gases exclusively from Defendant. From September 2003 through November 2016, Plaintiff purchased its requirement for cylinder gases exclusively from Defendant. For a short period of time from November to December 2016, Plaintiff purchased certain cylinder gases from Matheson Tri-Gas (“Matheson”).

         On or about December 8, 2016, Defendant wrote Matheson a letter, advising: 1) Plaintiff had an agreement with it to purchase all of its present and future requirements for gases, 2) the agreement had a seven year initial term and an automatic renewal provision for successive seven-year terms, 3) Plaintiff had not provided Airgas with a notice of termination, therefore their agreement remained in effect until at least September 18, 2024, and 4) it reserved all of its rights and remedies under the agreement.[22] The letter asked Matheson to take no further action inconsistent with said agreement. Defendant attached to the letter, a copy of Page One, Page Two, and the Bulk Gases Rider with the prices redacted.

         Plaintiff received a copy of the Matheson letter, along with the attachments. This was the first time Plaintiff became aware of the existence of Page One and its terms.

         III. DISCUSSION

         Count II alleges that the parties' agreement is terminable at will because Plaintiff never saw or had any knowledge of Page One, which contained the termination provision. Plaintiff contends that because the parties' agreement did not specify the term or duration of the agreement, it is terminable at will pursuant to K.S.A. 84-2-309. Plaintiff claims that it was never presented with Page One in the first place.

         Defendant argues that the undisputed evidence establishes that Tremblay gave Gerard a double-sided product sale agreement on September 9, 2003. In other words, Tremblay gave Gerard both Pages One and Two. Defendant points to ...


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