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Hyperlogistics Group, Inc. v. Kraton Polymers U.S. LLC

December 4, 2006

HYPERLOGISTICS GROUP, INC., PLAINTIFF,
v.
KRATON POLYMERS U.S. LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Algenon L. Marbley

Magistrate Judge King

OPINION AND ORDER

I. INTRODUCTION

This matter is before the Court on Plaintiff Hyperlogistics Group, Inc.'s Motion to Reconsider, Alter or Amend Judgment. Pursuant to Rule 59(e), Plaintiff has asked this Court to amend the Court's Order granting partial summary judgment to Defendant Kraton Polymers U.S., LLC. For the following reasons, Plaintiff's Motion to Alter or Amend Judgment is DENIED.

II. BACKGROUND*fn1

On July 1, 1991, Shell Chemical Company ("Shell") entered into a Warehousing Agreement (the "Agreement") with Transdistribution/WV, Inc. ("Transdistribution") for receipt, storage, handling, and shipment of Shell's polymer products at Transdistribution's warehouse facility located on Rosemar Road in Vienna, West Virginia. Under Article 2 of the Agreement, Transdistribution agreed to provide "the necessary equipment, facilities, space, manpower, administration/office support and services...for receiving, transferring, and storing products consigned by Shell to the care of [Transdistribution] and for performing quality inspections and shipping the products from storage when and as specified by Shell."

The Agreement was effective for a term of ten years, beginning on the signing date, and beyond the initial ten-year term, it gave Shell the option of obtaining one-year extensions. In 2000, Shell assigned its interests under the Agreement to an entity that was later renamed Kraton ("Defendant"). Transdistribution later transferred its interests under the Agreement to Hyperlogistics ("Plaintiff").

Pursuant to Article 15 of the Agreement, West Virginia state law governs any disputes arising under the Agreement.

1. Cancellation Procedures

Under the Agreement Article 3(c) of the Agreement provides the procedure for terminating Plaintiff's handling obligations (the "handling services component"), as distinguished from Plaintiff's warehousing obligations (the "warehouse services component"), under the Agreement. It provides:

The Handling provision of this Agreement may be cancelled during the term of this contract by [Defendant] when service standards, as outlined in the attached Schedule B, are not being met. The cancellation procedures shall be:

(1) Written notice listing specific service standards not being met shall be delivered by [Defendant] to [Plaintiff] according to paragraph fourteen (14).

(2) On receipt of notice listing service standards not being met, [Plaintiff] has sixty (60) days to issue and implement a corrective action plan. If after sixty (60) days the service standards are not corrected, [Defendant] may give to [Plaintiff] a three (3) month, written notice of intent to terminate the Handling provisions of this Agreement. The termination shall take effect three (3) months after receipt of the notice. During this three (3) month period, [Plaintiff] will continue to provide normal services as outlined in this contract.

(3) This [Agreement] shall become a rental agreement between [Defendant] and [Plaintiff], when the Handling provision of this Agreement has been cancelled... [Defendant] shall pay [Plaintiff] an agreed to monthly rental fee not to exceed $60,000 per month.

(4) Other fees and terms shall be negotiated during the three months following the receipt by [Plaintiff] of the written notice of intent to terminate the Handling provision.

Additionally, Article 7(c) of the Agreement provides the following:

For the purposes of determining the monthly storage charge, [Plaintiff's] monthly storage guarantee will not apply during any period after written notice of intent to cancel this Agreement under Article 3 (Term of Agreement), Paragraph C, is received by either party, the charge will be determined by actual net product inventoried thereby eliminating the minimum monthly storage charge of $60,000 derived by applying the Schedule A storage rate to 30 million net pounds of product.

2. Responsibility for Loss, Damage, or Contamination of Defendant's Products Under the Agreement

The Agreement further provides that Plaintiff shall be held financially liable for certain damages to Defendant's products. In ...


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