Taita Chemical Co. v. Westlake Styrene Corp.

                     IN THE UNITED STATES COURT OF APPEALS

                                  FOR THE FIFTH CIRCUIT

                                          No. 00-30020


TAITA CHEMICAL COMPANY, LTD.,

                                      Plaintiff-Counter Defendant-Appellant-Cross Appellee,

                                               versus

WESTLAKE STYRENE CORPORATION,

                                     Defendant-Counter Claimant-Appellee-Cross Appellant.



                         Appeal from the United States District Court
                            for the Western District of Louisiana

                                         March 23, 2001

Before HIGGINBOTHAM and DeMOSS, Circuit Judges, and KENT*, District Judge.

SAMUEL B. KENT, District Judge:

      Plaintiff-Counter Defendant-Appellant-Cross Appellee, Taita Chemical Co., Ltd.

(“Taita”), appeals the District Court’s grant of summary judgment in favor of Defendant-

Counter Claimant-Appellee-Cross Appellant, Westlake Styrene Corporation (“Westlake”).

Westlake cross-appeals, protesting the District Court’s grant of a partial summary judgment




      *
          District Judge of the Southern District of Texas, sitting by designation.

                                                  1
in favor of Taita and the dismissal of its counterclaim. For the following reasons we affirm

in part and reverse in part.

                  FACTUAL AND PROCEDURAL BACKGROUND

       In 1990, four companies, including Taita, entered into a joint venture to form

Westlake. The joint venture shareholders owned Westlake in the following percentages: (1)

Taita--40%; (2) BTR Nylex, Ltd. (“BTR”)--20%; (3) the Chao Group--20%; and (4) the

Sumitomo Corporation and Sumitomo Corporation of America--20%.1 Westlake produces

and sells styrene monomer.

       On January 15, 1991, Taita and Westlake entered into a contract known as the “Off-

Take Agreement.” This long-term agreement was a take-or-pay contract, under which Taita

agreed to purchase 40% of Westlake’s styrene monomer production capacity each month for

the duration of the contract. Price was to be determined on a monthly basis in accordance

with the contract’s pricing clause. This clause provided that each month Taita was to receive

the lowest of three alternative prices:

       4.     Price
              The Contract Price per pound of Product delivered or ordered for
       delivery, including Deemed Delivery, during each month shall be the U.S.
       Gulf Coast Styrene Monomer prices, net after all discounts, for contract
       transactions as last published in each month by DeWitt & Company,
       Incorporated in its Benzene & Derivatives Newsletter, or the price for such
       month charged by WSC [Westlake Styrene Corp.] to a consumer under a firm
       multi-year contract or the posted contract market price for comparable
       volumes of Product, whichever is lower. Should such publication cease to be


       1
        BTR held a 51% majority interest in Taita. Therefore, BTR and Taita collectively
owned 60% of Westlake.

                                              2
       published, Buyer and Seller shall mutually select other representative
       publications.

The meaning of this pricing clause and the parties’ conduct with respect to its terms lies at

the center of this dispute. In essence, Taita argues that Westlake overcharged it for styrene

because Westlake did not extend Taita a lower price provided by Westlake to another

customer as required under Taita’s interpretation of the second pricing mechanism. This

second provision states that Taita shall receive “the price for such month charged . . . to a

consumer under a firm multi-year contract.” The parties have referred to this provision as

the “most favored nations” clause, for the obvious reason that it ensures that Taita, as

Westlake’s largest investor and principal styrene purchaser, will receive the best available

price. Westlake disputes Taita’s interpretation of the pricing clause, but urges that, in any

event, the evidence demonstrates that Taita undeniably acquiesced in Westlake’s differing

reading of the contract.

       A rather substantial factual dissertation is needed in order to lay the groundwork for

the Court’s otherwise brief discussion. Many of these facts are not overtly disputed. Other

facts, however, as well as what inferences should be drawn from the undisputed facts, remain

in issue. As this case comes before us following a grant of Westlake’s motion for summary

judgment, our presentation of the facts is thus intentionally colored, to a degree, by our

obligation to view the evidence in the light most favorable to Taita.

       The harbinger of this dispute could be seen as early as June 1994. At that time Ken

O’Neill (“O’Neill”), then Westlake’s president, queried Taita regarding whether Taita would


                                             3
permit Westlake to enter into a long-term contract to sell styrene to another customer at a

lower price without Taita asserting its “most favored nations” rights. Taita president Graeme

Bulmer (“Bulmer”) responded that Taita would immediately demand the lower price in

accordance with the contract. Thus, later that year, when Westlake entered into a contract

to sell styrene production, the contract included a “meet or release” clause, which excused

performance if market prices for styrene fell below an agreed level. Taita and Westlake

apparently agreed that such a clause prevented the contract from becoming a “firm multi-year

contract” as is required to trigger Taita’s “most favored nations” rights. Therefore, despite

this foreshadowing, the pricing issue did not ripen until the end of 1994.

       Then in December 1994, Westlake’s outgoing president, O’Neill, recommended to

the Westlake board that it approve several multi-year contracts to sell styrene, including

deals with Novacor Chemicals, Inc. (“Novacor”) and Cook Composites & Polymers

Company (“Cook Composites”).2 The Novacor agreement involved the sale of roughly 25%

of the monthly volume that Taita was required to purchase from Westlake, while the Cook

Composites arrangement was for less than 10% of Taita’s purchase volume. Thus, although

Novacor and Cook Composites were both to be purchasing smaller volumes of styrene than

was Taita, they nonetheless were to receive lower prices than Taita was paying.

       Soon thereafter, Taita, through O’Neill, now its new president, pointed to the Off-


       2
         Of some interest, at least with respect to Westlake’s conspiratorial theory of this case,
O’Neill left Westlake to assume the presidency of Taita. At this December board meeting,
O’Neill did not explain to the board that these contracts could trigger Taita’s right to a lower
price. O’Neill has testified that he assumed each board member was aware of such ramifications.

                                                 4
Take Agreement’s “most favored nations” clause and demanded that Westlake honor its right

to receive the lower price provided to Novacor.3 Steve Bayless (“Bayless”), Westlake’s new

president, initially extended the Novacor discount to Taita. On March 29, 1995, however,

Bayless changed his stance, basing his reversal upon a legal opinion regarding the meaning

of the “most favored nations” clause. Westlake’s attorney opined that Taita was entitled to

a discount for a “firm multi-year contract” only if the sale was for a quantity “comparable”

to Taita’s volume. Because Novacor was only purchasing 25% of Taita’s amount, Bayless

informed Taita that the discount had been granted in error. According to Westlake, it only

granted Taita the Novacor price in the first place, because outgoing Westlake president

O’Neill informed Bayless that Taita was entitled to the lower price. After apprising Taita

of Westlake’s self-perceived error, Bayless demanded that Taita remit the amounts it had

underpaid for styrene delivered in January and February. At first, Taita did not comply.

Taita’s internal correspondence indicates that it was contemplating how to best advance its

position with regard to the sought-after pricing.4


       3
         The Novacor contract was allegedly closest to completion at this point and as such
Taita’s complaint in early 1995 was based upon the Novacor contract, rather than the Cook
Composites agreement that forms the basis for Taita’s lawsuit.
       4
         It seems that Taita expressed uncertainty regarding whether the Novacor contract had
been formally signed, even though shipments to Novacor were ongoing. Taita allegedly did not
want to press its pricing claim too vigorously until it knew that the Novacor sale was a “firm
multi-year contract” that would trigger the “most favored nations” clause. In this regard it is
helpful to note, as set forth above, that prior agreements by Westlake to sell styrene at lower
prices had included a “meet or release” clause, which excused performance if market prices for
styrene fell too low. Rightly or wrongly, the parties apparently had not viewed such arrangements
as “firm multi-year contracts.” Thus, Taita believed that only particular types of styrene sales
would trigger its “most favored nations” rights.

                                                5
       While Taita dithered and declined to show its hand, Bayless, on May 9, 1995, further

corresponded with Taita, arguing that Taita remained in breach of the Off-Take Agreement

and, further, threatened to cut off Taita’s styrene supply if Taita did not remit the amounts

past due. As of May 31, 1995, Taita had not yet paid Westlake, despite indicating that it

would do so, albeit under protest. This prompted another facsimile letter from Bayless to

Taita, and yet another on June 9, 1995, by which time Taita had fallen further behind on its

payments. At this juncture, Taita finally acceded to Bayless’ request, becoming current and

paying invoices in full as they came due. Taita’s payments did not, however, specifically

indicate that they were being made “under protest.” Taita nevertheless contends that its

compliance with Bayless’ request, and its continued payment of invoices as received, did not

indicate any agreement on its part with the position urged by Westlake. Instead, Taita alleges

that it could not risk losing its source of styrene supply at that time, and, moreover, it felt that

the pricing issue might have been about to become moot, at least prospectively, in light of

a contemplated arrangement between the several Westlake stockholders.5

       Purportedly, Taita had also chosen to bide its time on the pricing issue until a “firm

multi-year contract” was signed and executed, and Westlake in turn refused to supply Taita

at the lower price. By September 1995, such a situation had clearly presented itself.


       5
         The Westlake stockholders were considering whether to take all styrene produced by
Westlake under a new proportionate off-take agreement, with each paying the same price.
Although this course of action was never ultimately taken, the stockholders allegedly continued to
discuss the possibility from April to September 1995, during which time Taita did not wish to
rock the boat. In September, however, the bottom fell out of the styrene monomer market, which
made it uneconomical for Westlake, and correspondingly its other investors, to pursue this option.

                                                 6
Westlake and Cook Composites had signed their contract (mentioned above in the context

of the December 1994 board meeting) and pricing was made retroactive to the first of the

year.6 Graeme Bulmer, now Taita’s chairman, thus resurrected Taita’s protest.

       Bulmer wrote Westlake’s Bayless to confirm Taita’s understanding that the Cook

Composites contract provided a more favorable price than Taita was receiving. Bulmer’s

inquiry, in a September 18, 1995 letter regarding Westlake’s proposed 1996 budget,

questioned whether Westlake’s budget reflected Taita’s right to receive the lower price seen

in the now finalized, and thus “firm,” Cook Composites agreement. Bayless responded that

the Cook Composites price was not for a comparable volume, and that he believed that

Taita’s discount argument had already been considered and rejected earlier in 1995. In this

regard, Bayless pointed to Taita’s alleged acquiescence in Westlake’s position with respect

to the previously sought after Novacor contract-based discount.

       Several days later, on September 26, 1995, Bulmer responded to Bayless by

contending that Taita had only paid the disputed Novacor amounts because the Novacor

contract was not “firm,” as it had not been formally signed and approved by the Westlake

board. Bayless responded with surprise and reiterated Westlake’s view that Taita had waived

its right to complain by paying the invoices following the parties’ prior skirmish over Taita’s


       6
         The Westlake board approved this contract at its July 21, 1995 meeting, at which time
the Taita and BTR board members made no mention of any intention to claim a discount.
Westlake now counsels that this silence was momentous, because the lost profit required to give
Taita the later demanded discount would have exceeded the total revenue from the Cook
Composites deal, an arrangement that would of course accrue to the benefit of only Taita and
BTR, and not the other Westlake shareholders.

                                               7
claimed Novacor-based “most favored nations” rights. On October 9, 1995, Bulmer sent a

final letter to Bayless in which he noted Taita’s disagreement with Westlake’s position and

indicated that Taita would respond further under separate cover. Bulmer had in fact drafted

a harsh letter, on October 3, setting forth Taita’s position of objection in detail, but he never

sent this letter per the instructions of BTR’s managing director Phillip Aiken, who apparently

wished to deal with the dispute at an upcoming November 1995 Westlake board meeting.

Neither Taita nor BTR raised the pricing issue at this meeting, and Taita’s and BTR’s board

members voted to approve the proposed 1996 budget, which did not include discounts for

Taita.7

          This September and October 1995 round of correspondence was the last formal

exchange between the parties on this disputed pricing issue. They continued to negotiate,

however, on efforts to terminate the Off-Take Agreement, or for BTR and Taita to divest

themselves of their Westlake holdings. Taita alleges that it did not wish to actively press the

“most favored nations” pricing issue in late 1995, via litigation or otherwise, because of the

sensitivity of these ongoing efforts. Taita does, however, point to evidence purportedly

indicating that it had not agreed to Westlake’s interpretation of the pricing agreement, and

that Westlake, in fact, knew Taita continued to disagree.            First, Allen Grassedonio

(“Grassedonio”), a BTR employee who worked at Westlake, had created a spreadsheet at the

direction of Taita’s president, O’Neill, that set forth Westlake’s “Potential Favored Nations


          7
         Again Westlake cries foul, but Taita contends that approving a budget without reference
to Taita’s potential claim was acceptable accounting and thus not inconsistent with its protest.

                                               8
Liability” to Taita. Grassedonio testified in his deposition that he placed copies of these

spreadsheets in the in-box of Westlake’s president on at least two occasions during 1995 and

1996. Westlake’s two presidents during this time frame, Bayless and Dr. Ron Gilbert, deny

receiving these reports.     Grassedonio, however, has testified that he confirmed by

conversation, at least with Bayless, that this report was received. Additionally, Grassedonio

claims to have overheard Bayless having a conversation that he believed concerned the

spreadsheet’s content with another Westlake executive. Taita also points to the March 1996

report of the Westlake Evaluation Committee. This report sets forth valuation scenarios in

contemplation of the Chao Group’s purchase of Taita’s and BTR’s shares in Westlake.

Indisputably this report states that one valuation “assumes [C]ook pricing for Taita.”8

Finally, Taita notes the uncharacteristic lack of a release in the parties ultimate agreement

to part ways.

       However, despite Taita’s contention that it never agreed with Westlake’s

interpretation of the pricing clause, and in stark juxtaposition with its cited evidence of non-

acquiescence, Taita continued to pay Westlake’s invoices as they came due. It is thus

undisputed that for the next fourteen months, from November 1995 - December 1996, Taita

paid each undiscounted invoice it received.


       8
          The parties sharply disagree about the meaning of this report. The District Court
adopted Westlake’s view that this report actually contemplated a scenario in which Taita would
purchase the Chao Groups’ interest and then restructure the Off-Take Agreement in a manner
similar to the Cook Composites deal. Hence the “Cook” reference. This is certainly plausible,
but so too is Taita’s position which we are bound to give credence to at the summary judgment
stage.

                                               9
       In December 1996, BTR finally sold its, and Taita’s, combined 60% interest in

Westlake to the Chao Group. As a result of this sale, the Off-Take Agreement was

effectively canceled, with BTR agreeing to continue purchasing styrene from Westlake under

a different pricing formula. As mentioned, the termination agreement did not include any

type of release of claims as between the parties.

       Soon thereafter, BTR sold Taita, and in the summer of 1997, Taita’s new shareholders

became aware of the potential claim that Taita had against Westlake for styrene overcharges.

Taita then filed suit, on December 9, 1997, alleging $18 million dollars in damages. Taita

advanced claims for: (1) breach of contract, premised on Westlake’s failure to extend Taita

its “most favored nations” discount based upon the Cook Composites contract and (2)

payment of a thing not owed.9 In the District Court, below, Taita moved for partial summary

judgment regarding the meaning of the Off-Take Agreement’s pricing clause. On this issue,

the District Court agreed with Taita and granted a partial summary judgment. Westlake

cross-appeals this disposition. Taita’s victory, however, was merely pyrrhic, because the

District Court held that Westlake had established several affirmative defenses as a matter of

law. Westlake successfully argued that Taita lost its right to benefit from the “most favored


       9
          Taita’s amended complaint also set forth claims of bad faith, duress, fraud, unjust
enrichment, and an alternative breach of contract claim based upon the “DeWitt” pricing
mechanism. Taita’s opening brief does not address error with respect to these causes of action.
Accordingly, we find that Taita has waived these claims. See Carmon v. Lubrizol Corp., 17 F.3d
791, 794 (5th Cir. 1994) (“We liberally construe briefs in determining issues presented for review;
however, issues not raised at all are waived.”). Taita’s efforts by way or its reply brief to preserve
error on these claims is unavailing. See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256,
260 n.9 (5th Cir. 1995) (“[W]e do not consider issues raised for the first time in a reply brief.”)

                                                 10
nations” pricing clause through a modification, by waiver or by estoppel. Taita appeals the

grant of summary judgment on these affirmative defenses. Finally, Westlake had asserted

a cross claim for breach of fiduciary duty. The District Court dismissed this cross claim as

mooted by the summary judgment. Westlake cross-appeals this ruling.

                                        DISCUSSION

                                   I.   Standard of Review

       We review a district court’s grant of summary judgment de novo. See Geoscan, Inc.

of Texas v. Geotrace Techs., Inc., 226 F.3d 387, 390 (5th Cir. 2000). Summary judgment

is appropriate if no genuine issue of material fact exists, and the moving party is entitled to

judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.

317, 323, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986). When a motion for summary

judgment is made, the nonmoving party must set forth specific facts showing that there is a

genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct.

2505, 2510, 91 L. Ed. 2d 202 (1986). Issues of material fact are “genuine” only if they

require resolution by a trier of fact. See id. at 248, 106 S. Ct. at 2510. The mere existence

of some alleged factual dispute between the parties will not defeat an otherwise properly

supported motion for summary judgment. Only disputes over facts that might affect the

outcome of the lawsuit under governing law will preclude the entry of summary judgment.

See id. at 247-48, 106 S. Ct. at 2510. If the evidence is such that a reasonable fact-finder

could find in favor of the nonmoving party, summary judgment should not be granted. See

id.; see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106

                                              11
S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). Determining credibility, weighing evidence, and

drawing reasonable inferences are left to the trier of fact. See Anderson, 477 U.S. at 255,

106 S. Ct. at 2513.

          Procedurally, the party moving for summary judgment bears the initial burden of

“informing the district court of the basis for its motion, and identifying those portions of [the

record] which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp., 477 U.S. at 323, 106 S. Ct. at 2553; see also Fed. R. Civ. P. 56(c). The

burden then shifts to the nonmoving party to establish the existence of a genuine issue for

trial. See Matsushita, 475 U.S. at 585-87, 106 S. Ct. at 1355-56; Wise v. E.I. DuPont de

Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The Court must accept the evidence of

the nonmoving party and draw all justifiable inferences in favor of that party. See

Matsushita, 475 U.S. at 585-87, 106 S. Ct. at 1355-56. However, to meet its burden, the

nonmovant “must do more than simply show that there is some metaphysical doubt as to the

material facts,” but instead, must “come forward with ‘specific facts showing that there is

a genuine issue for trial.’” Id. at 586-87, 106 S. Ct. at 1355-56 (quoting Fed. R. Civ. P.

56(e)).

                                    II.   The Pricing Clause

          Westlake argues, by way of cross-appeal, that the District Court erred in determining

that the pricing clause in the Off-Take Agreement is unambiguous. The parties agree that

the pricing formula clearly provides for three distinct means of calculating the appropriate

price per pound of styrene monomer. Moreover, the agreement also indisputably sets forth

                                               12
that Taita was to pay only the lowest of these three plausible prices. What is at issue

between the parties is whether the phrase “for comparable volumes of product” was intended

to modify each of the three possible pricing mechanisms, or just the third means of price

calculation. Westlake argues that the “comparable volumes” language modifies not only the

third pricing mechanism which it follows, but also the second pricing calculation for “a firm

multi-year contract.” Taita argues that the District Court properly determined that the

language modifies only the third mechanism, which is not a basis for Taita’s overcharge

claim.

         The parties agree that Louisiana law governs our analysis in this diversity of

citizenship case. In Louisiana, the interpretation of an unambiguous contract is an issue of

law for the court. See Texas E. Transmission Corp. v. Amerada Hess Corp., 145 F.3d 737,

741 (5th Cir. 1998). A court interpreting a contract shall determine the “common intent” of

the parties. La. Civ. Code Ann. art. 2045. However, “[w]hen the words of a contract are

clear and explicit and lead to no absurd consequences, no further interpretation may be made

in search of the parties’ intent.” Id. at art. 2046. Therefore, when the contract is not

ambiguous, this Court lacks the authority to look beyond the four corners of the document.

See Texas E. Transmission Corp., 145 F.3d at 741. The District Court found the language

of the pricing clause “unequivocal.” We agree. The “comparable volumes” language clearly

and unambiguously modifies only the third pricing mechanism, which is not relevant to the




                                             13
present dispute.10 We therefore affirm the ruling of the District Court granting partial

summary judgment regarding the meaning of the pricing clause.

                            III.   Westlake’s Affirmative Defenses

       After granting the partial summary judgment in Taita’s favor regarding the meaning

of the pricing clause, the District Court turned to Westlake’s various asserted affirmative

defenses: modification, waiver and estoppel. The District Court determined that Westlake

had proven each of these three defenses as a matter of law, and thus granted summary

judgment.

A.     Modification

       The District Court held below, and Westlake now argues on appeal, that Taita’s

conduct served to modify the Off-Take Agreement. The Louisiana Civil Code provides that

a contract is an “agreement by two or more parties whereby obligations are created,

modified, or extinguished.” La. Civ. Code Ann. art. 1906. In order for a contract to be

formed, both parties must consent. See id. at art. 1927. This consent may be manifested by

a writing, or be made orally, or by “action or inaction that under the circumstances is clearly

indicative of consent.” Id. It follows that silence may also be a form of inaction indicating



       10
           Moreover, the DeWitt Newsletter price, which is the first pricing mechanism, apparently
did not publish volume information. The “comparable volumes” language, therefore, could not
have been applicable to all three mechanisms. Accordingly, it is apparent that reading the clause
in the manner urged by Westlake would be inconsistent with not only English grammar, but
reality. In a tortured recognition of the inherent rhetorical flaws in its argument, Westlake now
argues that the “comparable volumes” language modifies only the second and third pricing
mechanisms. We reject this argument.

                                               14
consent, provided that the silence “leads the offeror to reasonably believe that a contract has

been formed.” Id. at art. 1942. Westlake, as the party asserting modification, “must prove

the facts or acts giving rise to the nullity, modification, or extinction.” Id. at. art. 1831; see

also Allan v. Arnold, 673 F.2d 767, 669-70 (5th Cir. 1982); L & A Contracting Co., Inc. v.

Ram Indus. Coatings, Inc., 762 So. 2d 1223, 1232 (La. Ct. App. 2000); Big “D” Dirt Servs.,

Inc. v. Westwood, Inc., 653 So. 2d 604, 608 (La. Ct. App. 1995); Bank of Louisiana in New

Orleans v. Campbell, 329 So. 2d 235, 237 (La. Ct. App. 1976). Moreover, it is well

established that even if the written contract contains a provision requiring that all

modifications be in writing, as does the Off-Take Agreement, either oral agreement or

conduct can nonetheless prove modification. See Durham, Inc. v. Vanguard Bank & Trust

Co., 858 F. Supp. 617, 621 (E.D. La. 1994); Wisinger v. Casten, 550 So. 2d 685, 687 (La.

Ct. App. 1989); Campagna v. Smallwood, 428 So. 2d 1343, 1348 (La. Ct. App. 1983);

Pelican Elec. Contractors v. Neumeyer, 419 So. 2d 1, 5 (La. Ct. App. 1982); Pamper Corp.

v. Town of Marksville, 208 So. 2d 715, 717 (La. Ct. App. 1968). In all instances, however,

the party urging modification must establish that parties mutually consented to the agreement

as modified. See La. Civ. Code Ann. art 1927; Society of the Roman Catholic Church of the

Diocese of Lafayette, Inc. v. Interstate Fire & Cas. Co., 126 F.3d 727, 737 (5th Cir. 1997);

L & A Contracting, 762 So. 2d at 1232.

       The issue therefore becomes whether Taita consented either expressly or impliedly

to a modification of the pricing clause, because modification requires a meeting of the minds.

See La. Civ. Code Ann. art 1927; Interstate Fire & Cas. Co., 126 F.3d at 737; L & A

                                               15
Contracting, 762 So. 2d at 1232. Obviously, the record reflects a great amount of evidence

favorable to Westlake in this regard. Taita paid some fourteen invoices after making its last

clear complaint regarding the styrene’s price. Never, in submitting any of its payments for

these invoices, did Taita overtly and contemporaneously note that it was in any manner

paying “under protest.” Taita and BTR, through their votes on the Westlake board, also

voted to approve a budget that they knew did not reflect providing Taita with a price

discount. However, Taita does introduce evidence purporting to show that it had not

capitulated to Westlake’s will on this issue, and that Westlake moreover knew it had not so

agreed. In this regard Taita points principally to: its prior protestations regarding the

Novacor contract; its “last word” on the issue, Bulmer’s October 9, 1995 letter; the

Grassedonio spreadsheet; and the Evaluation Committee’s March 1996 pricing scenarios.

This evidence, taken as a whole, creates a genuine issue of material fact as to whether Taita

agreed to modify the “most favored nations” pricing clause.11 See Illinois Cent. Gulf R.R.

Co. v. International Harvester Co., 368 So. 2d 1009, 1013 (La. 1979) (holding that in some

instances the acceptance of payments without protest for extended periods of time will not


       11
           Westlake makes much of two Louisiana cases in which the repeated paying of increased
invoiced amounts was held to indicate a modification of the parties’ pricing agreement. See Ceco
Corp. v. Mid-Gulf Constr., Inc., 396 So. 2d 474, 476-78 (La. Ct. App. 1981); Stupp v. Con-Plex,
Div. of U.S. Indus., 344 So. 2d 394, 396 (La. Ct. App. 1977). These cases, however, are
distinguishable. In both of these cases, the buyer paid invoices without any protest until after all
needed goods had been delivered. Taita, by contrast, has set forth some evidence of timely
protest, from which a jury could conclude there had not been a modification. See Illinois Cent.
Gulf, 368 So. 2d at 1012-13 (noting that the question of modification is “essentially factual” and
affirming a trial court’s determination that a lease had not been modified by accepting sixteen
payments without complaint).

                                                16
always constitute modification). Moreover, as Taita contends, it seems that even if a

modification occurred, Taita may nonetheless have been overcharged for styrene up to the

time of such modification. The District Court did not address this issue below, and we

mention it now only to stimulate further consideration of this issue on remand.

B.     Waiver

       Waiver is defined as the “intentional relinquishment of a known right, power, or

privilege.” Steptore v. Masco Constr. Co., 643 So. 2d 1213, 1216 (La. 1994); see also Tate

v. Charles Aguillard Ins. & Real Estate, Inc., 508 So. 2d 1371, 1373 (La. 1987). In order for

waiver to occur there must first be an existing right and knowledge of that right’s existence.

See Steptore, 643 So. 2d at 1216. A party may then waive that right through either: (1) “an

actual intention to relinquish it,” or (2) “conduct so inconsistent with the intent to enforce

the right as to induce a reasonable belief that it has been relinquished.”12 Id. See also Gilbert

v. B.D.O.W.S., Inc., 764 So. 2d 313, 320 (La. Ct. App. 2000). The party asserting waiver,


       12
           Taita contends that Steptore and Tate have eased the traditional burden of proving
waiver, by providing that waiver may be established by the inducement of a reasonable belief even
absent actual intent to waive. According to Taita, these cases must be considered in the context
of insurance coverage law, a situation in which the parties have inherently unequal bargaining
power that the Louisiana Supreme Court obviously sought to ameliorate. We disagree. It may be
true that the court expanded its definition of waiver to alleviate inequities in the insurance context,
but it nonetheless set forth a general concept that this Court has previously found broadly
applicable. See Specialty Healthcare Mgmt., Inc. v. St. Mary Parish Hosp., 220 F.3d 650, 656,
658 (5th Cir. 2000). Moreover, the most recent waiver pronouncement by a Louisiana appellate
court undermines Taita’s argument. See Rogers v. Horseshoe Entm’t, 766 So. 2d 595, 601 (La.
Ct. App. 2000) (applying Steptore to the terms of an option contract). We see no reason to
depart from the Louisiana Supreme Court’s pronouncement of law that has been followed outside
of the insurance law context. Moreover, we are bound by the earlier panel decision of this Court.
See F.D.I.C. v. Abraham, 137 F.3d 264, 267-69 (5th Cir. 1998) (discussing the generally binding
effect of Erie “predictions” by an earlier panel).

                                                  17
here Westlake, must bear the burden of proof on the issue. See F.D.I.C. v. Duffy, 47 F.3d

146, 150 (5th Cir. 1995); Tate, 508 So. 2d at 1375.

       Westlake must therefore establish either that Taita: (1) intended to waive its rights

under the contract or (2) acted in a manner so inconsistent with this right as to induce a

reasonable belief in Westlake that Taita did intend to waive its right. Any effort by Westlake

to establish that Taita intended to waive its “most favored nations” rights fails at the

summary judgment stage for the same reasons that Westlake’s modification defense fails.

Taita has introduced enough evidence to create a fact issue on what it intended with respect

to the pricing clause. The second means of proving waiver, by conduct inducing a

reasonable belief, likewise fails at the summary judgment stage. This is so because Taita’s

objective evidence of its own intent is also probative of whether its conduct was so

inconsistent with its contractual rights as to induce a belief in Westlake of waiver; again

creating a fact issue. Moreover, Westlake fails to carry its summary judgment burden of

demonstrating the reasonableness of its beliefs. In this regard, we refer back to the untenable

pricing clause interpretation advanced by Westlake, which underlies this dispute. A

reasonable juror could conclude that Westlake could not have reasonably believed that Taita

had waived it right to millions of dollars in overcharges based upon Westlake’s audacious

legal opinion. We therefore reverse the District Court’s waiver ruling.

C.     Equitable Estoppel

       The Louisiana Supreme Court has defined equitable estoppel as “‘the effect of the

voluntary conduct of a party whereby he is precluded from asserting rights against another

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who has justifiably relied upon such conduct and changed his position so that he will suffer

injury if the former is allowed to repudiate the conduct.’” Morris v. Friedman, 663 So. 2d

19, 25 (La. 1995) (quoting John Bailey Contractor v. State Dep’t of Transp. & Dev., 439

So.2d 1055, 1059 (La. 1983)). The doctrine, in proper circumstances, will prevent a party

“from taking a position contrary to his prior acts, admissions, representations, or silence.”

John Bailey, 439 So. 2d at 1059-60; accord Wilkinson v. Wilkinson, 323 So. 2d 120, 126

(La. 1975). Equitable estoppel thus has three elements: “(1) A representation by conduct or

work; (2) Justifiable reliance thereon; and (3) A change of position to one’s detriment

because of the reliance.” John Bailey, 439 So. 2d at 1059-60. However, equitable estoppel

is disfavored and should only be applied as needed to avoid injustice. See Morris, 663 So.

2d at 25-26; John Bailey, 439 So. 2d at 1059. Accordingly, “a party having the means

readily and conveniently available to determine the true facts, but who fails to do so, cannot

claim estoppel.” John Bailey, 439 So. 2d at 1060.

       Westlake’s allegations in support of equitable estoppel are essentially as follows.

Taita’s conduct amounted to a representation that it had no right to “most favored nations”

pricing based upon the sale of a non-comparable volume of styrene monomer. Westlake

justifiably relied upon this representation to its detriment, in that it permitted Taita and BTR

to sell their interests in Westlake to the Chao Group. This sale terminated the Off-Take

Agreement, at a price that did not reflect a possible claim for overcharges by Taita. Thus,

Westlake’s present shareholders were left with full liability for a claim for which Taita and

BTR, as stockholders, would have born 60% of the financial burden.

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       Several items counsel against the District Court’s decision to grant Westlake’s Motion

for Summary Judgment on this issue. Taita has advanced evidence, as discussed above, that

Westlake knew that it had not dropped the overcharge issue. Additionally, under Louisiana

law, Westlake cannot invoke equitable estoppel against Taita if Westlake could have readily

ascertained the true facts with respect to Taita’s ongoing position regarding the “most

favored nations” clause. This duty to investigate is not a hollow pronouncement of horn-

book law in Louisiana. Rather, Louisiana courts regularly deny estoppel based, at least in

part, on failures in this regard. See Knippers v. Lambard, 620 So. 2d 1368, 1375 (La. Ct.

App. 1993) (holding that plaintiff seeking estoppel had failed to ensure that document had

been received); Robbins Tire & Rubber Co., Inc. v. Winnfield Retread, Inc., 577 So. 2d

1189, 1192 (La. Ct. App. 1991) (holding that a party seeking estoppel had an obligation to

determine the meaning of other party’s silence); Duthu v. Allements’ Roberson Mach.

Works, 393 So. 2d 184, 186-87 (La. Ct. App. 1980) (noting that defendant’s failure to

reasonably question plaintiff’s former husband or to check public records, prevented estoppel

based on plaintiff’s payment of a judgment not owed); Twillie v. H.B. Zachry Co., 380 So.

2d 747, 751 (La. Ct. App. 1980) (rejecting estoppel because plaintiff could have sent a letter

or made a phone call to determine a defendant’s place of business). Thus, to the extent that

Westlake argues that Taita was impermissibly silent regarding the overcharges, one must also

ask whether Westlake had a culpable role in the misunderstanding. Giving proper deference

to Taita on the inferences to be drawn from the evidence produced, it strikes us that perhaps

Westlake also was “laying behind the log.” For instance, it seems unusual that, in dissolving

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the Off-Take Agreement, Westlake did not obtain a release from Taita regarding potential

claims of whatever nature. Such releases are standard business practice even in situations

where no dispute was ever manifest. Moreover, Westlake’s failure to ever so much as ask

Taita if it had come to agree with Westlake’s view of the pricing clause further undermines

the justifiableness required of Westlake’s reliance. In sum, Taita has introduced enough

evidence, when viewed in a properly deferential manner, to create a material issue of fact

regarding equitable estoppel. Accordingly, we respectfully reverse the District Court’s

decision on this issue.

                              IV.   Payment of a Thing Not Owed

       Taita also asserted a code-based cause of action for “payment of a thing not owed.”

See La. Civ. Code Ann. art. 2299. The District Court determined that Westlake’s affirmative

defenses barred this claim for the same reasons that these defenses barred Taita’s breach of

contract claim. Because we reverse the District Court’s summary judgment based upon the

affirmative defenses, we are compelled to reverse the dismissal of Taita’s payment of a thing

not owed cause of action.13

       13
           The District Court ruling also discussed a difficult issue regarding a January 1, 1996
revision to the Louisiana Civil Code. See La. Civ. Code. Ann. arts. 2298-2305. Westlake argues
that prior to this revision, a party could only recover payments that were not knowingly made in
error. By contrast, post-revision, the code establishes that unknown error is not a prerequisite to
recovery. See id. We decline to reach the propriety of the District Court’s discussion of this
issue. It seems to us that in a case involving an express contract such as this, the viability of the
code-based claim is congruent with the primary claim for breach of contract. Thus, there seems
to be no reason to make an unneeded prediction of Louisiana law when Taita’s recovery under
Article 2299 cannot possibly exceed the amount it might recover on its breach of contract claim.
We note, however, that the District Court’s discussion ignores a critical accrual issue: Taita made
payments both before and after the code change. Thus, to the extent that Taita’s Article 2299

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                                      CONCLUSION

       The District Court properly granted partial summary judgment in favor Taita with

respect to the proper reading of the Off-Take Agreement’s pricing clause. We therefore

AFFIRM the District Court’s decision in this regard.

       With respect to the affirmative defenses advanced by Westlake, however, the District

Court, despite a protracted, meticulous and remarkably workmanlike effort, erred in granting

summary judgment. We simply cannot say with the requisite certitude that Westlake has

carried its summary judgment burden of establishing any one of its affirmative defenses as

a matter of law. The imprimatur of a jury is important in a complex case such as this, even

if said jury ultimately reaches the same conclusion as that seen in the District Court’s able

analysis. We therefore REVERSE the District Court’s grant of summary judgment that was

based upon Westlake’s asserted affirmative defenses. We likewise REVERSE the dismissal

of Westlake’s counterclaim, which is no longer moot following our disposition. This matter

is hereby REMANDED for proceedings consistent with this opinion.




claim has some importance that we have overlooked, the accrual issue would need to be
addressed on remand.

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