United States District Court, W.D. Arkansas, Hot Springs Division
EVRAZ STRATCOR, INC. PLAINTIFF
KENNAMETAL, INC. DEFENDANT
O. Hickey United States District Judge
the Court is Plaintiff Evraz Stratcor, Inc.'s Motion for
Partial Summary Judgment. (ECF No. 68). Defendant Kennametal,
Inc. filed a response. (ECF No. 76). Plaintiff filed a reply.
(ECF No. 80). The Court finds the matter ripe for
a breach of contract case. Plaintiff is an Arkansas company
that sells vanadium products, including Vanadium Aluminum
(“VAl”), to customers in the titanium industry.
Defendant is a Pennsylvania company that, among other things,
provides the service of converting raw materials into
Plaintiff and Defendant are parties to an Amended and
Restated Conversion Agreement (the “Agreement”),
which was executed on July 29, 2013,  as well as a Representation
the Agreement, Defendant is required to convert up to four
million pounds of VAl per year for Plaintiff at a plant in
New Castle, Pennsylvania (the “Conversion
Facility”). Defendant is obligated to maintain and
operate the Conversion Facility so that it is capable of
converting raw materials into VAl. Defendant must also use
its best efforts to keep the Conversion Facility's lease
in full force and effect during the term of the Agreement.
is required to pay Defendant a contractually established fee
in exchange for Defendant's VAl conversion services.
Plaintiff is obligated to supply Defendant with the raw
materials needed for Plaintiff's VAl requirements, and to
maintain those raw materials at the Conversion
Facility. Plaintiff is also obligated to provide
Defendant with all of the vanadium oxide required for
Defendant's production of its own, unrelated
is prohibited from converting VAl on behalf of any entity
other than Plaintiff during the Agreement's duration and
for three years after the Agreement's termination.
Likewise, Plaintiff is prohibited from using any VAl
conversion service other than Defendant's during the
Agreement's duration. Plaintiff holds the exclusive right
to market and sell the VAl converted by Defendant.
August 2014, Defendant sent Plaintiff a letter contending
that Plaintiff was in material breach of the Agreement. In
January 2015, Defendant filed an arbitration
demand. In July 2016, Plaintiff filed an amended
complaint, seeking a declaratory judgment that it did not
breach the Agreement-and thus Defendant cannot terminate the
Agreement without first providing three years' notice to
Plaintiff-and asserting two breach-of-contract claims.
Defendant filed a counterclaim seeking a declaratory judgment
that Plaintiff breached the Agreement-thus allowing Defendant
to immediately terminate the Agreement with no prior notice
to Plaintiff-as well as asserting a separate
January 6, 2017, Plaintiff filed the instant motion, arguing
that it is entitled to summary judgment on its and
Defendants' claims seeking declaratory judgment as to
whether Plaintiff breached the Agreement. Plaintiff also
seeks partial summary judgment on Defendant's
breach-of-contract counterclaim, with the exception of
paragraph thirty-seven of Defendant's
standard for summary judgment is well established. When a
party moves for summary judgment, “[t]he court shall
grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact, and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a); Krenik v. County of LeSueur, 47 F.3d 953, 957
(8th Cir. 1995). This is a “threshold inquiry of . . .
whether there is a need for trial-whether, in other words,
there are genuine factual issues that properly can be
resolved only by a finder of fact because they reasonably may
be resolved in favor of either party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A fact is
material only when its resolution affects the outcome of the
case. Id. at 248. A dispute is genuine if the
evidence is such that it could cause a reasonable jury to
return a verdict for either party. Id. at 252.
deciding a motion for summary judgment, the Court must
consider all the evidence and all reasonable inferences that
arise from the evidence in a light most favorable to the
nonmoving party. Nitsche v. CEO of Osage Valley Elec.
Co-Op, 446 F.3d 841, 845 (8th Cir. 2006). The moving
party bears the burden of showing that there is no genuine
issue of material fact and that it is entitled to judgment as
a matter of law. See Enterprise Bank v. Magna Bank,
92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must
then demonstrate the existence of specific facts in the
record that create a genuine issue for trial.
Krenik, 47 F.3d at 957. However, a party opposing a
properly supported summary judgment motion “may not
rest upon mere allegations or denials . . . but must set
forth specific facts showing that there is a genuine issue
for trial.” Id. at 256.
argues that it is entitled to summary judgment on its and
Defendants' declaratory-judgment claims, as well as
partial summary judgment on Defendant's
breach-of-contract counterclaim. However, as a preliminary
matter, the Court must first address the law which governs
Choice of Law
Court agrees with the parties that the Agreement should be
governed by Pennsylvania law. Federal district courts sitting
in diversity, like the Court in this case, must apply the
forum state's substantive law, including its
conflict-of-law rules. Guardian Fiberglass, Inc. v. Whit
Davis Lumber Co., 509 F.3d 512, 515 (8th Cir. 2007).
Therefore, the Court will utilize Arkansas's
choice-of-law rule. “Arkansas courts will honor [a
contractual] choice of law provision, ‘provided that
the law selected is reasonably related to the transaction and
does not violate a fundamental public policy of the
state.'” Id. (quoting Ark. Civ. Prac.
& Proc. § 6:7).
Agreement states that it “shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.” (ECF No. 68-1). Defendant is a
Pennsylvania corporation that converts VAl in Pennsylvania
for Plaintiff. Thus, the Court finds that Pennsylvania law
bears a reasonable relationship to the parties'
contractual arrangement. See Nursing Home
Consultants, Inc. v. Quantum Health Servs., Inc., 926
F.Supp. 835, 841 (E.D. Ark. 1996), aff'd, 112
F.3d 513 (8th Cir. 1997) (applying Pennsylvania law to a
contract dispute between an Arkansas corporation and a
Pennsylvania corporation in light of the parties'
choice-of-law provision). Neither party argues that a public
policy of the State of Arkansas would override the
parties' choice of law. Accordingly, the Court will apply
Pennsylvania substantive law in interpreting the Agreement.
Plaintiff and the Agreement
amended complaint seeks, inter alia, a declaratory
judgment that it did not breach the Agreement.
Defendant's first counterclaim seeks a mirrored
declaratory judgment that Plaintiff did breach the Agreement.
Defendant also asserts a breach-of-contract counterclaim that
essentially tracks the allegations in Defendant's
declaratory-judgment counterclaim asserts that Plaintiff
breached or otherwise failed to carry out its duties under
the Agreement in good faith in, inter alia, the
a) [Plaintiff] is failing to use its best efforts to provide
orders for VAl to [Defendant], it is purposefully limiting
its sales of VAl, and it is providing [Defendant] with far
fewer orders for VAl than is necessary for [Defendant] to
operate the Conversion Facility;
b) [Plaintiff] has failed to provide sufficient raw materials
for [Defendant] to meet VAl customer requirements for orders