USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 1 of 12

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 21-1244

BRISTOL METALS, LLC,

Plaintiff - Appellee,

v.

MESSER, LLC,

Defendant - Appellant.

No. 21-1245

BRISTOL METALS, LLC,

Plaintiff - Appellant,

v.

MESSER, LLC,

Defendant - Appellee.

Appeal from the United States District Court for the Eastern District of Virginia, at Richmond. David J. Novak, District Judge. (3:20−cv−00203−DJN)

Argued: September 14, 2022 Decided: November 23, 2022

Before WYNN and HARRIS, Circuit Judges, and KEENAN, Senior Circuit Judge. USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 2 of 12

Reversed in part, affirmed in part, and remanded by unpublished opinion. Senior Judge Keenan wrote the opinion, in which Judge Wynn and Judge Harris joined.

ARGUED: Joseph Michael Rainsbury, MILES & STOCKBRIDGE PC, Richmond, Virginia, for Appellant/Cross-Appellee. Harold Edward Johnson, WILLIAMS MULLEN, Richmond, Virginia, for Appellee/Cross-Appellant. ON BRIEF: Thomas M. Wolf, MILES & STOCKBRIDGE PC, Richmond, Virginia, for Appellant/Cross-Appellee. Joseph E. Blackburn, III, WILLIAMS MULLEN, Richmond, Virginia, for Appellee/Cross-Appellant.

Unpublished opinions are not binding precedent in this circuit.

2 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 3 of 12

BARBARA MILANO KEENAN, Senior Circuit Judge:

In 1998, a buyer and a seller entered into an agreement for the sale of certain

industrial gases. After many successors-in-interest, one addendum to the agreement, and

more than two decades of sales, a successor buyer sought to enforce the original price

escalation rate from the 1998 agreement. When the successor seller responded that this

escalation rate no longer applied, the buyer paid the increased prices under protest and later

filed this action seeking a declaratory judgment and damages for breach of contract.

After the parties filed cross-motions for summary judgment, the district court held

that the price escalation rate in the 1998 agreement remained in effect but that the buyer

had waived for several years its right to enforce that rate. The court further held that the

buyer was not entitled to any damages under the parties’ agreement. Both parties appealed

from the district court’s judgment.

Upon our review, we conclude that the parties’ relationship was not governed by

any contract after September 1, 2013. The addendum provided this fixed contract

expiration date, which supplanted the automatic renewal provision of the 1998 agreement.

We therefore reverse the district court’s conclusion that the automatic renewal provision

and the price escalation rate set forth in the 1998 agreement applied after September 1,

2013, and we affirm the district court’s conclusion that the buyer is not entitled to recover

any damages.

3 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 4 of 12

I.

In September 1998, Bristol Metals, LLC (Brismet) and Messer LLC (Messer)

entered into a product supply agreement (the 1998 agreement). 1 In the 1998 agreement,

Brismet agreed to buy, and Messer agreed to sell, helium, nitrogen, argon, and hydrogen

for use at Brismet’s manufacturing facility in Munhall, Pennsylvania. The 1998 agreement

established an initial term that ended ten years later. The 1998 agreement also included “a

renewal term equal to the initial [ten-year] term” and “successive [ten-year] renewal terms

thereafter” (the automatic renewal provision). Either party could terminate the 1998

agreement by providing twelve months’ written notice before the end of the initial term or

any renewal term. The 1998 agreement also fixed the price of the industrial gases for

eighteen months, and imposed afterward a maximum annual price escalation rate of 2%

(the 2% escalation rate).

In September 2008, Brismet and Messer executed “an addendum” to the 1998

agreement (the 2008 addendum, or the addendum). The 2008 addendum limited annual

price escalations to a rate of 9% in the second year and a rate of 8% in the third, fourth,

and fifth years of the 2008 addendum’s term. The 2008 addendum also “extend[ed] the

current product supply agreement . . . through September 1, 2013 (60 months from the

current expiration date).” The 2008 addendum did not contain a renewal provision, nor

did it outline any escalation rates after September 1, 2013.

1 Although Brismet’s and Messer’s predecessors entered into the 1998 agreement, we refer only to Brismet and Messer because each assumed their predecessors’ rights and obligations. 4 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 5 of 12

In 2017, nearly four years after the addendum had expired, Brismet sent Messer a

letter stating its intent to terminate the 1998 agreement executed by its predecessor-in-

interest. Brismet recently had purchased the Munhall facility and was unaware of the 2008

addendum. Therefore, Brismet thought the 1998 agreement had renewed automatically in

2008 for ten years and would expire in September 2018. Messer responded that under the

1998 agreement, “as amended,” a ten-year automatic renewal term had begun in 2013 and

would conclude in 2023. Despite this disagreement regarding the terms of their

obligations, Brismet and Messer did not take any further steps at that time to resolve their

differing interpretations of the amended 1998 agreement.

Between 2013 and 2020, Brismet continued to purchase industrial gases from

Messer even though Messer annually increased the price of each gas by a rate of more than

the 2% escalation rate contained in the original 1998 agreement. Each year during this

period, Messer annually increased the price of helium between 2.5% and 32%; the price of

nitrogen between 4.61% and 10%; the price of argon between 2.08% and 11.38%; and the

price of hydrogen between 3% and 8.7%. Until January 24, 2020, Brismet paid for the

industrial gases at these escalated rates without protest.

On January 24, 2020, Brismet sent a letter to Messer (the January 2020 letter),

stating that Brismet had learned of the 2008 addendum and objected to the price increases

that had exceeded, and that in 2020 also would exceed, the 2% escalation rate. On February

3, 2020, Messer responded that the 2% escalation rate from the 1998 agreement was not

reinstated after the 2008 addendum expired in September 2013. Brismet promptly filed

this suit in the district court (1) alleging breach of contract based on Messer’s imposition

5 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 6 of 12

of prices that exceeded the original 2% escalation rate, and (2) seeking a declaratory

judgment to limit future annual increases to a 2% escalation rate or to declare that Brismet

could terminate its contractual relationship with Messer immediately.

Both parties later moved for summary judgment. The district court granted in part

and denied in part each party’s motion. Applying Pennsylvania contract law, the court held

that both the 2% escalation rate and the automatic renewal provision from the 1998

agreement remained in effect after the 2008 addendum expired on September 1, 2013. The

court reasoned that the 2008 addendum did not supplant or extinguish these provisions in

the 1998 agreement because the 2008 addendum did not include language that “refer[red]

to or purport[ed] to override” them. The court also reasoned that the 2008 addendum,

which separately referred to both “the life of the addendum” and “the life of the

agreement,” contemplated the continued operation of the 1998 agreement. 2 Although the

court determined that Brismet had waived its right to enforce the 2% escalation rate before

sending the January 2020 letter, the court held that Brismet could enforce that rate

prospectively because it had retracted its waiver by sending the January 2020 letter.

Finally, the court declared that the 1998 agreement would remain in effect until at least

September 2023.

2 We note that in two other paragraphs, the 2008 addendum contained explicit references to the 1998 agreement, first referring to the 1998 agreement as “the Product Supply Agreement dated September 4, 1998,” and then as the “current product supply agreement.” In other paragraphs, the language of the 2008 addendum referred generally to the addendum as an agreement: “after year 2 of the agreement,” “throughout the life of this agreement,” and “for year 1 of the supply agreement.” 6 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 7 of 12

After receiving supplemental briefing on the issue of damages, the district court held

that Brismet could not recover any damages because Messer’s 2020 price increases had

already taken effect by the time that Brismet sent the January 2020 letter. Both parties

appealed from the district court’s judgment.

II.

On appeal, Messer challenges the district court’s holding that the 2% escalation rate

applied after the September 1, 2013 expiration date referenced in the 2008 addendum.

Brismet, in turn, challenges on cross-appeal the district court’s holding that it is not entitled

to damages for the prices Messer charged in 2020 in excess of the 2% escalation rate. We

now address the merits of these arguments.

We review both the district court’s interpretation of the parties’ contract and its grant

of summary judgment de novo. Foodbuy, LLC v. Gregory Packaging, Inc.,

(4th Cir. 2021); Greater Balt. Ctr. for Pregnancy Concerns, Inc. v. Mayor & City

Council of Balt.,

(4th Cir. 2018). Summary judgment is appropriate “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). Both parties agree, and

the district court correctly held, that Pennsylvania law applies to the parties’ dispute. 3

3 When a district court exercises diversity jurisdiction, we apply the choice-of-law rules of the state of the district court, here, Virginia. Kenney v. Indep. Ord. of Foresters,

(4th Cir. 2014). Virginia’s choice-of-law rules generally require us to apply the law of the state where the parties formed the contract in interpreting the contract or determining the contract’s nature and validity. Dreher v. Budget Rent-A-Car Sys., Inc., (Continued) 7 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 8 of 12

Messer contends that the 8% and 9% maximum escalation rates in the 2008

addendum, which applied for a five-year period, replaced the 2% escalation rate in the 1998

agreement. Messer submits that after the addendum expired on September 1, 2013, the

automatic renewal provision of the 1998 agreement extended the parties’ contract for ten

years until 2023, but that Messer was not bound by any maximum escalation rate during

this ten-year renewal period. Messer further argues that the parties’ post-addendum course

of performance, replete with years of payments made by Brismet without mention of a

maximum escalation rate, confirms this view.

In response, Brismet asks us to affirm the district court’s holding that the 2008

addendum did not permanently override the 2% escalation rate in the 1998 agreement.

According to Brismet, the express language in the 1998 agreement establishing the 2%

escalation rate was not modified by either (1) the 2008 addendum’s “silen[ce] regarding

the parties’ rights after [the addendum] expired,” or (2) the parties’ post-addendum course

of performance. Thus, Brismet submits that the 2% escalation rate took effect again after

the higher escalation rates in the 2008 addendum expired on September 1, 2013.

Alternatively, Brismet argues that the 2008 addendum altered and, thus, replaced

both the 2% escalation rate in the 1998 agreement and the agreement’s automatic renewal

provision. Therefore, Brismet alternatively contends that the parties’ agreement did not

(Va. 2006). However, if the contract will be performed in a different place, under Virginia law we apply the law of the state of the place of performance in interpreting the contract. Poole v. Perkins,

(Va. 1919); Erie Ins. Exch. v. Shapiro,

(1994). Here, the agreement was executed in Pennsylvania and established that state as the place of performance. Thus, we apply Pennsylvania contract law. 8 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 9 of 12

automatically renew when the 2008 addendum expired on September 1, 2013, and that the

parties’ relationship was not governed by a written contract after that date. In response,

Messer asserts that the terms of the 2008 addendum did not conflict with the automatic

renewal provision in the 1998 agreement and, thus, the addendum did not supplant that

provision. We agree with Brismet’s alternative argument, which is dispositive of this

appeal.

In interpreting contract language under Pennsylvania law, we first look to the

parties’ writing to discern their intent. Kripp v. Kripp,

(Pa. 2004);

see

(b) (principles of Pennsylvania law supplement provisions of

Pennsylvania’s version of the Uniform Commercial Code (UCC) unless displaced by the

UCC). Here, we review two writings, namely, the 1998 agreement and the 2008

addendum. See Elliott-Lewis Corp. v. York-Shipley, Inc.,

(Pa. 1953)

(explaining that parties may modify a written agreement by a later written agreement); see

also

(referencing contract modification).

In analyzing the terms of these two documents under Pennsylvania law, we treat the

2008 addendum as “a substitute for the original [1998 agreement] in so far as it alters,

modifies, or changes it.” Wagner v. Graziano Constr. Co.,

(Pa. 1957)

(applying this rule to an oral contract modification) (quoting Knight v. Gulf Refining Co.,

(Pa. 1933)); see also Melat v. Melat,

(Pa. Super. 1992).

In other words, under Pennsylvania law, a contract modification may supersede certain

provisions of the original agreement while leaving other provisions unaffected.

9 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 10 of 12

In the present case, if the automatic renewal provision had continued in effect

without the addendum, the automatic renewal provision would have extended the 1998

agreement for another ten-year period beginning in September 2008. However, instead of

leaving the subject of contract duration untouched, the 2008 addendum addressed contract

duration and specified that the parties agreed to extend the 1998 agreement for a fixed

period of five years: “[Messer] will also be extending the current product supply

agreement . . . through September 1, 2013 (60 months from the current expiration date).”

Although the 2008 addendum did not contain explicit language removing the 1998

agreement’s automatic renewal provision, the 2008 addendum necessarily supplanted that

provision by including a five-year extension that patently conflicted with the previously

agreed to ten-year extension. 4

This conclusion is reinforced when the fixed, five-year period “extending the

current product supply agreement” is read in conjunction with the addendum’s reference

to the “current expiration date” of the 1998 agreement. In employing such finite language

in the addendum, the parties plainly signaled their intent to limit the duration of their

contractual obligations. Thus, the plain language of the 2008 addendum extending the

4 The parties apparently recognized and addressed a similar conflict when they entered into the 1998 agreement. In the 1998 agreement, Paragraph 1 established the initial term, the automatic renewal provision, and the termination provision, while Paragraph 9 permitted Messer to modify that term and extend the contract if it matched a competitor’s offer. To account for the inconsistency between the extensions contemplated by these paragraphs, Paragraph 9 explicitly retained the termination provision in Paragraph 1 by stating that an extension under Paragraph 9 “shall not modify the requirements for notice of termination provided for in Paragraph 1” of the 1998 agreement. Unlike Paragraph 9 of the 1998 agreement, however, the addendum extended the agreement without explaining which, if any, of the sections of Paragraph 1 would remain in effect. 10 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 11 of 12

“current product supply agreement” until September 1, 2013, altered and replaced the

ten-year renewal term of the 1998 agreement.

We therefore conclude that the parties’ amended agreement, as reflected in the

unchanged terms of the 1998 agreement and the changes made in the 2008 addendum,

included a five-year extension of “the current product supply agreement” until September

1, 2013. No language in the parties’ amended agreement contemplated automatic renewal

upon the September 1, 2013 expiration date. And, although some remaining provisions of

the 1998 agreement contemplated the possibility of extending the agreement, the record

does not show any extension-triggering events that occurred before September 1, 2013.

We therefore hold that the district court erred in concluding that the automatic renewal

provision and the 2% escalation rate in the 1998 agreement remained in effect after

September 1, 2013.

Given the absence of any contractual relationship between the parties after

September 1, 2013, we do not consider Messer’s argument that the parties’ course of

performance after that date “confirms their intent to end the [2%] price escalation cap.” 5

This argument, like many of the others presented, presumes the existence of an agreement

for us to interpret. See

(d) (explaining that the parties’ course of

performance is relevant in interpreting, supplementing, or qualifying the terms “of the

agreement”).

5 We also note that the maximum escalation rates in the 2008 addendum altered and, thus, replaced, the 2% escalation rate in the 1998 agreement until the amended agreement expired in September 2013. 11 USCA4 Appeal: 21-1245 Doc: 31 Filed: 11/23/2022 Pg: 12 of 12

Our conclusion also is dispositive of Brismet’s argument on cross-appeal that the

district court erred by failing to award it damages after January 24, 2020. Because the

parties did not have a contract imposing a 2% maximum escalation rate after that date,

Brismet is not entitled to recover damages for the prices it paid after sending the January

2020 letter. See Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. L. Firm of Malone

Middleman, P.C.,

(Pa. 2016) (explaining that an element of a breach

of contract claim is the existence of a contract). We thus affirm the district court’s ruling

that Brismet is not entitled to damages for any payments made after sending the January

2020 letter.

III.

For these reasons, we reverse the district court’s conclusion that the automatic

renewal provision and the 2% escalation rate set forth in the 1998 agreement applied after

September 1, 2013. On Brismet’s cross-appeal, we affirm the district court’s conclusion

that Brismet is not entitled to contract damages. We remand the case for further

proceedings consistent with this opinion.

REVERSED IN PART, AFFIRMED IN PART, AND REMANDED

12