Petroleum Pipe Americas Corp. v. Jindal Saw, Ltd., No. 4:2007cv02210 - Document 80 (S.D. Tex. 2010)
Court Description: OPINION on Partial Summary Judgment.(Signed by Judge Lynn N. Hughes) Parties notified.(ghassan, )
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Petroleum Pipe Americas Corp. Plain tiff, versus Civil Action ~ : o ~ ~ c v ~ o 2 2 1 0 Jindal Saw, Ltd., Defendants. Opinion on Partial SummaryJudgment I. Background. Petroleum Pipe Americas sells pipe for the oil and gas ind~tstry. Jindal Saw manufactures pipe in India. Petroleum bought pipe from JindalI 10. grades N.80, L-80, and P, Petroleum then s ~ t p ~ l i the pipe to Grrnn Oil and Magnum Producing; their wells failed ed pipe. Gunn andMagnum agreed to settle with Petroleum if it could from defectiveJindal PIIO settle with Jindal, and they did. 2. Settlement. The settlement was: (a) Jindal paid $750,000; $55o,ooo cash and $roo,ooo credit on two current purchase orders, for all claims by Gunn andMagnum against Petroleum; (b) Jindal took back 497 metric tons of the defective pipe and credited $588,253 to Petroleum "against the future supply of material to the extent of 6,000 metric tons"; (c) Petroleum released rejection of other material from Jindal delivered before December 3 3 1 2 , 2005. Claim. Later, Petroleum rejectedJinda1 L.80 and N-80 pipe based on additional inspections by Petroleum. Jindal objected to these inspections because Petroleum agreed to have the pipe inspected by a third-party in India. Petroleum sued Jindal seeking million for breach of contract and breach of warranty for the defective L-80 and N.80 pipe, but no P-IIO pipe. Petroleum does not seek damages for L-So and N-80 pipe that was inspected before December 12, 2005. Jindal says that Petroleum breached two parts of the settlement because: (a) it did not buy 6,000 tons of pipe and(b) it rejected pipe delivered before December 12. Petroleum says it was not obliged to buy additional pipe and is allowed to reject pipe that it had not inspected before December 12. 4. Ambiguity. A contract term is ambiguous when it is susceptible to multiple, reasonable interpretations. When a contract is not ambig~~ous, court construes the contract as matter the of law. See Coker v. Coker, 650 S.W.zd 391, 393-94 v e x . 1983). The contract is not ambiguous. 5. First Part. T h e first disputed part is: Jindal agrees to adjust the sum of USD j 8 8 , 2 53 against f~tture supply ofmaterial to the extent of 6,000 metric tons to be made to Petroleum. Jindal says that this obligates Petroleum to buy an additional 6,000 tons of pipe. Petroleum says it allows Petroleum a credit towards discretionary f~lture purchases from Jindal. The ordinary meaning of this part is that Petroleum has a credit of $ j88,z53 for of of optional additional purchases of Jindal pipe. T h e val~te the credit equals the val~le the defective P-IIOpipe taken back by Jindal under the settlement agreement. Petroleum did not breach this clause because it was not obliged to buy additional pipe from Jindal. 6. Second Part. The second disputed part is: Petroleum will not raise any claim against the claimed rejection in their internal inspection carried out on any other material bought by Petroleum from Jindal. This clause relates only to materialreceivedup to 12 December 2005. Petroleum reserves the right to bring claims for claimed rejection in respect of material received after this date. Omitting needless words, it says: Petroleum may not reject other material from Jindal that was delivered before December 12, roog. T h e c l a ~ ~releases claims to all pipe delivered se before December 12. Petroleum could not reject the pipe, whether it had inspected it or not. Petroleum says material means only P-110 pipe; it is the subject of the parties' original dispute. Jindal says material means all grades of pipe delivered to Petroleum, including the N, 80 and L-80 pipe. T h e plain meaning of material encompasses all inventory supplies Jindal sold to Petroleum. Material means pipe. Further, if the parties had intended the release to apply e x c l ~ ~ s i vtolP.110 pipe they e ~ would have specified it, as they did elsewhere in the contract. In their agreement the parties used the words material, P-110 material and P-rro pipe to refer to steel pipe, specifring the grade sometimes and not others. T h e parties used the broader word material in giving Petroleum credit for rejected pipe and describing orders for all grades of pipe. Petroleum's argument, that material means only P-110 pipe, diminishes the meaning of the contract. Just as the credit provision does not limit Petroleum's use of it exclusively towards the purchase of P ~ I I O the release provision does not limit Petroleum's rejection pipe, solely to P-IIO pipe. T h e release applies to all pipe. 7. Conclusion. Because Petroleum breached the settlement by rejecting pipe delivered before December 12, 2005, it will take nothing from Jindal. Petroleum has a credit of $ j88,z53 towards the purchase of pipe fromJinda1 but is not obligated to b ~ l y anything. Signed on March 4- , 2010, at Houston, Texas. Lynn N. Hughes 1 United States District Judge
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