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Obermeyer Hydro Accessories, Inc. v. CSI Calendering, Inc.

United States Court of Appeals, Tenth Circuit

March 30, 2017

OBERMEYER HYDRO ACCESSORIES, INC., d/b/a Obermeyer Hydro, Inc., Plaintiff Counterclaim Defendant -Appellant,
CSI CALENDERING, INC., d/b/a CSI Calendering Specialists, Inc., Defendant Counterclaimant-Appellee.

         Appeal from the United States District Court for the District of Colorado (D.C. No. 1:14-CV-00184-RM-KMT)

          Daniel M. Gross, Woods & Aitken, LLP, Denver, Colorado; (Mark D. Changaris, Berg Hill Greenleaf & Ruscitti, LLP, Boulder, Colorado, on the briefs), for Plaintiff Counterclaim Defendant-Appellant.

          Reid A. Page, Stinson Leonard Street, LLP, Greenwood Village, Colorado; (Ryan M. Sugden, Stinson Leonard Street, LLP, Greenwood Village, Colorado, on the brief), for Defendant Counterclaimant-Appellee.

          Before LUCERO, HARTZ, and McHUGH, Circuit Judges.

          HARTZ, Circuit Judge.

         This appeal concerns a contract dispute. The parties agree that they had a contract but differ on the price. At the core of the dispute is a price quote dated January 11, 2013 (the January quote) from CSI Calendering (CSI) to Obermeyer Hydro Accessories, Inc. (Obermeyer). The quote seems straightforward enough:

         (Image Omitted)

         Aplt. App. at 183. There is no dispute that the "Polyester Tire Cord Only" line refers to fabric sheets purchased by Obermeyer from CSI and that the "Calendering, Compound & Poly Only" line refers to a process called calendering by which rubber is compressed into the fabric sheets.

         But the parties read the document quite differently. CSI claims that the quote unambiguously states that the combined price is $5.97 for each pound of calendered fabric. Obermeyer, on the other hand, views the quote as reflecting prices that the parties had previously agreed to when CSI prepared separate quotes for the fabric sheets and for the calendering of those sheets: $3.74 per pound of untreated fabric and $2.23 per pound of calendered product. Although it may appear that there is no difference whatsoever, the price CSI seeks is almost a 50% increase above what Obermeyer had been paying.

         The increase is a consequence of the fact that calendering doubles the weight of the fabric. To obtain one pound of calendered fabric under the previous pricing, Obermeyer would purchase one-half pound of fabric sheet (for $1.87) and pay $2.23 for that half pound to be calendered into one pound of calendered fabric. That came to $4.10 per pound of calendered fabric. Under CSI's interpretation of the January quote, however, Obermeyer would pay $5.97 for the same product. The essence of the parties' dispute is whether the $3.74/lb price of the fabric sheets is based on the weight of the untreated sheets (the untreated pricing) or the weight of the calendered product (the treated pricing).

         The district court granted summary judgment to CSI. On appeal the parties raise a number of arguments about whose view of the price should prevail. They disagree about whether they already had agreed on the price before issuance of the January quote, whether the January quote modified any prior agreement, and whether Obermeyer is bound by CSI's view of the pricing because Obermeyer paid a number of invoices over several months that reflected that view. In our view, there are unresolved factual disputes that preclude judgment for either party at this time. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse and remand for further proceedings. We begin with a detailed discussion of the relationship between CSI and Obermeyer before and after the January quote because the parties' arguments rely so much on that relationship.

         I. BACKGROUND

         Obermeyer is a Colorado-based, family-owned business that designs and manufactures inflatable dams and other water-control structures. It purchased fabric sheets from CSI, a Texas-based company, and frequently paid CSI to compress, or calender, rubber into the sheets. At the time of the dispute Obermeyer was managed by three people. Its president, Henry Obermeyer, was responsible for product development and overall management. Vice President Rob Eckman was responsible for sales, marketing, engineering, and project management. And Katherine Obermeyer, Mr. Obermeyer's wife, handled administrative matters that included accounts payable and receivable, payroll, and rubber purchasing.

         CSI obtained its fabric from a Chinese supplier. Before the January quote it would send Obermeyer an invoice for the fabric 90 days after the fabric arrived in CSI's warehouse in Arlington, Texas, or when it was removed from the warehouse for calendering, whichever was sooner. CSI billed Obermeyer separately for the fabric at its untreated weight, and for the calendering at the increased weight of the finished fabric. Although Obermeyer was expected to pay CSI within 30 days after invoicing, its payments were typically late because of delayed payments from its customers-usually 20 to 50 days late, but occasionally as much as 60 to 91 days late. From 2010 to 2012, eight fabric and 13 calendering purchase orders were handled this way.

         In October 2012, CSI sent Obermeyer a quote for uncalendered fabric at $3.74/lb. The cover e-mail touted, "We are pleased to inform you that [the] below quotes are $0.14/lb lower than our last purchase." Aplt. App. at 359. The quote was valid until the year's end. As always in the past, the quote used untreated pricing (that is, used the weight of the fabric before calendering) rather than treated ...

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