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Aluminum Co. of America v. Essex Group, Inc.

United States District Court for the Western District of Pennsylvania

April 7, 1980

Civ. A. No. 78-598

Opinion

 [*55]  MEMORANDUM OPINION AND ORDER

Plaintiff, Aluminum Company of America (ALCOA), brought the instant action against defendant, Essex Group, Inc. (Essex), in three counts. The first count requests the Court to reform or equitably adjust an agreement entitled the Molten Metal Agreement entered into between ALCOA and Essex. The second count alleges that the Molten Metal Agreement was modified by oral amendment and that Essex has breached the amended agreement. The second count seeks a declaratory judgment that the alleged breach by Essex excuses ALCOA's further performance and seeks as well an award of damages caused by the alleged breach of Essex. The third count asks for a declaratory judgment that ALCOA's prior notice of termination of the Molten Metal Agreement was proper or, in the alternative, that ALCOA may terminate the Molten Metal Agreement if it be determined by this Court to be a contract for the sale of goods. Essex denies all of [**2]  ALCOA's material allegations. Essex further counterclaims that ALCOA is liable to it for damages based on ALCOA's failure to deliver to Essex the amounts of molten metal ALCOA is contractually obligated to deliver under the Molten Metal Agreement and seeks entry of an order specifically enforcing its right to receive molten aluminum from ALCOA in the amounts requested.

Jurisdiction is based upon diversity of citizenship and amount in controversy and is one of the few issues in the case sub judice not in dispute.

In 1966 Essex made a policy decision to expand its participation in the manufacture  [*56]  of aluminum wire products. Thus, beginning in the spring of 1967, ALCOA and Essex negotiated with each other for the purpose of reaching an agreement whereby ALCOA would supply Essex with its long-term needs for aluminum that Essex could use in its manufacturing operations.

By December 26, 1967 the parties had entered into what they designated as a toll conversion service contract known as the Molten Metal Agreement under which Essex would supply ALCOA with alumina which ALCOA would convert by a smelting process into molten aluminum. Under the terms of the Molten Metal Agreement,  [**3]  Essex delivers alumina to ALCOA which ALCOA smelts (or toll converts) into molten aluminum at its Warrick, Indiana, smelting facility. Essex then picks up the molten aluminum for further processing.

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499 F. Supp. 53 *; 1980 U.S. Dist. LEXIS 9402 **

ALUMINUM COMPANY OF AMERICA, a Pennsylvania Corporation, Plaintiff, v. ESSEX GROUP, INC., a Michigan Corporation, Defendant

CORE TERMS

parties, Molten, Contracts, Metal, cases, aluminum, courts, impracticability, frustration, alumina, costs, circumstances, prediction, minus, negotiations, deliveries, formula, risks, terms, mutual mistake, non-labor, declares, smelting, pricing, plant, long term, conversion, inflation, estoppel, losses

Business & Corporate Compliance, Contract Formation, Mistake, Mutual Mistake, Contracts Law, Defenses, Ambiguities & Mistakes, General Overview, Remedies, Reformation, Unilateral Mistake, Types of Contracts, Unilateral Contracts, Standards of Performance, Impossibility of Performance, Frustration of Purpose, Contracts Law, Impracticability, Commercial Law (UCC), Sales (Article 2), Equitable Relief, Consideration, Detrimental Reliance, Real Property Law, Ownership & Transfer, Transfer Not By Deed, Acquisition by After Acquired Title, Deeds, After Acquired Property