                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-20-2008

PMC Film Canada Inc v. Shintech Inc
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-5011




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                                                               NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT


                                       No. 06-5011


                              PMC FILM CANADA, INC.,
                                            Appellant

                                           v.

                                     SHINTECH, INC.


             APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF NEW JERSEY
                            (D.C. Civil No. 04-cv-05150)
                 District Judge: The Honorable Freda L. Wolfson


                               Argued: January 17, 2008


          Before: SCIRICA, Chief Judge, BARRY and ROTH, Circuit Judges

                          (Opinion Filed: February 20, 2008)




Francis J. Sullivan, Esq. (Argued)
Jeffrey G. DiAmico, Esq.
Hill Wallack, Esq.
777 Township Line Road
Suite 250
Yardley, PA 19067

Counsel for Appellant
T. Michael Wall, Esq. (Argued)
Gardere Wynne Sewell
1000 Louisiana, Suite 3400
Houston, TX 77002
        -AND-
Christopher M. DiMuro, Esq.
Patton Boggs
One Riverfront Plaza
6 th Floor
Newark, NJ 07102

Counsel for Appellee




                                        OPINION




BARRY, Circuit Judge

       This is a breach-of-contract action in which PMC Film Canada Inc. (“PMC”) seeks

reversal of an order of the District Court granting the motion for summary judgment of

Shintech Inc. (“Shintech”) and denying PMC’s cross-motion for summary judgment.1

       The parties entered into a contract in September 2003 (the “Agreement”) for a

period beginning (retroactively) on July 1, 2003 and ending on December 31, 2005.

Under the Agreement, Shintech promised to sell to PMC certain amounts of polyvinyl

chloride resin (“PVC resin”), a raw material used by PMC to create PVC film, a type of



   1
     The amended complaint contained two counts alleging Shintech’s breach of the
parties’ contract for two different time periods. Count I was settled and then dismissed
with prejudice in an order dated October 10, 2006. Count II is thus the only remaining
claim.

                                            2
film used to package retail products. Section 4 of the Agreement—the “Price”

provision—tied the monthly cost of the resin to an industry index, the Chemical Data

Index (“CDI”), that prices PVC resin in a monthly publication created by Chemical Data,

Inc. The pertinent language of that provision, the critical provision before us, states:

              The price for hopper truck shipments will be equal to CDI minus
       US$0.1675 (16.75 cents) per pound for the month. For purposes hereof,
       “CDI” means the final monthly contract price for general purpose grade
       suspension PVC resin listed as “Large Buyer Contract Price” in the table for
       PVC of Monthly Petrochemical and Plastics Analysis published by
       Chemical Data, Inc., regardless of what may be written in the text of the
       publication. . . . If such publication ceases, or if Chemical Data Inc. makes
       adjustments to its published contract price for reasons not specific to
       changes in the market price of PVC resin for the month, or otherwise alters
       its methodology in any material manner, the parties will negotiate an
       appropriate adjustment to the pricing mechanism or a suitable replacement
       pricing mechanism, which, in either case, is consistent with CDI as of the
       date hereof. Without limiting the foregoing, the non-market change of
       $0.08 (8 cents) per pound adjustment to CDI in January 2004 due to a
       change in methodology by Chemical Data Inc. as announced in June 2003,
       will not affect the Price. . . .

(J.A. 1336.) 2 The parties agree that the last sentence of this excerpt was included because

the CDI had publicly stated that it might make an 8-cent, non-market adjustment (i.e., a

discretionary adjustment not caused by market conditions) in January 2004.

       Between September and December 2003, Shintech charged PMC at the published



   2
      The Agreement also contained a merger clause, which stated that the Agreement,
along with its Terms and Conditions (an attachment incorporated into the Agreement by
reference), constituted the parties’ entire agreement, and superseded any prior
agreements, whether written or oral, with respect to the same subject matter. It further
states that the Agreement may only be modified if the parties specifically agree to do so in
writing. (J.A. 1338.)

                                              3
CDI rate minus 16.75 cents for each pound of PVC resin. In January 2004, the

anticipated 8-cent, non-market based adjustment was made to the CDI, and Shintech

began charging PMC the CDI rate minus 8.75 cents. PMC paid these invoices between

January 2004 and August 2004 without dispute.

       On August 11, 2004, PMC wrote to Shintech, claiming it just discovered that it

had been paying the CDI rate minus 8.75 cents per month, and that it had done so in error

because section 4 clearly stated that the January 2004 non-market adjustment was not to

affect the price of the resin. Shintech disagreed. On October 21, 2004, PMC brought this

action and, following discovery, the parties filed cross-motions for summary judgment.

       Shintech argued in its motion for summary judgment that section 4 unambiguously

reflected the parties’ intention that the January 2004 adjustment would have a neutral

effect on the price of the resin; in other words, “if PVC was sold at $0.42 before the non-

market adjustment, the price is still $0.42 after the CDI adjustment (i.e., the parties would

adjust the pricing mechanism so that the contract price would not change).” (J.A. 153-

62.) PMC argued in its cross-motion that section 4 was indeed unambiguous, but that the

lack of ambiguity led to only one reasonable interpretation—that regardless of what

happened in January 2004, PMC would always pay 16.75 cents less per pound than

whatever the CDI rate was in any given month. The District Court agreed with

Shintech’s proposed interpretation of section 4 and, by order dated November 30, 2006,

granted its motion for summary judgment and denied PMC’s cross-motion. PMC timely



                                              4
appealed.

       We have jurisdiction under 28 U.S.C. § 1291, and review the District Court’s grant

of summary judgment de novo, applying the same standards the District Court should

have applied. Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). After

reviewing the record and hearing the arguments of the parties, we will vacate the order of

the District Court and remand with directions to enter judgment on behalf of PMC.

       In a diversity action, we must apply the substantive law of the state in which the

forum is located, including that state’s choice-of-law rules. Klaxon Co. v. Stentor

Electric Mfg. Co., 313 U.S. 487, 496 (1941). With certain exceptions not relevant here,

New Jersey courts will enforce a contract’s governing-law clause if it does not violate

New Jersey’s public policy. N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 730 A.2d

843, 847-48 (N.J. 1999). Section 12 of the Agreement’s “General Terms and Conditions”

states that the Agreement “shall be governed by the laws of the state of Texas, including

without limitation the Texas Business and Commerce Code (Uniform Commercial

Code).” (J.A. 1338.) The District Court correctly determined that enforcement of the

Agreement’s governing-law clause does not violate New Jersey’s public policy.

Consequently, Texas law will be applied.

       Under Texas law, “the primary concern of the court is to ascertain the true

intentions of the parties as expressed in the instrument.” Coker v. Coker, 650 S.W.2d

391, 393 (Tex. 1983). In its attempt to reach this objective, the court should take into



                                             5
account the entire writing such that all of its provisions are given effect, and none are

rendered meaningless. Id. “If a written instrument is so worded that it can be given a

certain or definite legal meaning or interpretation, then it is not ambiguous and it can be

construed as a matter of law.” Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d

565, 574 (Tex. 1996).

       We need not set forth more than these basic legal principles because we find that

section 4 unambiguously evinces only one reasonable meaning, namely, PMC’s. The

Agreement’s first sentence unambiguously states the price: PMC will pay for the resin at

a monthly rate per pound of CDI minus 16.75 cents. The subsequent sentences call for

the parties to essentially renegotiate an adjustment to the “pricing mechanism” or a

replacement “pricing mechanism” if CDI adjusts its published price “for reasons not

specific to changes in the market price of PVC resin,” i.e., a non-market adjustment.

Whether the “pricing mechanism” is adjusted or replaced, the resulting mechanism shall

be “consistent with CDI as of the date hereof.” Had the parties stopped there, it would

seem that CDI’s decision to make a non-market adjustment in January 2004 would have

triggered the parties’ obligation to renegotiate an adjustment to, or a replacement of, the

pricing mechanism.

       The parties, of course, did not stop there and instead explicitly addressed in the

final relevant sentence of section 4 the effect of the then-anticipated January 2004

adjustment. They agreed that, “[w]ithout limiting the foregoing, the non-market change



                                              6
of $0.08 (8 cents) per pound adjustment to CDI in January 2004 due to a change in

methodology by Chemical Data Inc. as announced in June 2003, will not affect the Price.”

The price, unambiguously stated in the first sentence, is CDI minus 16.75 cents per month

regardless of what the CDI figure is in any given month.3 PMC’s reading of section 4 is

the only plausible reading.

       We will vacate the November 30, 2006 order of the District Court and remand this

matter to the District Court with instructions to enter judgment in favor of PMC.




   3
     Under Shintech’s interpretation, the discount would drop to 8.75 cents from 16.75
cents to compensate for the 8-cent adjustment. Not only is the 8.75 figure not mentioned
in section 4, but if, as the District Court stated, the 8-cent adjustment was to have a
neutral effect on the price, the price as defined in the first sentence of section 4 would
remain CDI minus 16.75 cents.

                                            7
