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Tokyo Ohka Kogyo America, Inc. v. Huntsman Propylene Oxide LLC

United States District Court for the District of Oregon
2014 WL 3893031 (2014)


Facts

Tokyo Ohka Kogyo America, Inc. (TOK) (plaintiff) wanted to purchase propylene glycol from Huntsman Propylene Oxide LLC (Huntsman) (defendant). Huntsman made TOK fill out a credit application. The credit application included a provision limiting Huntsman’s liability to the purchase price and excluding consequential damages. TOK signed the credit application and spent two years testing Huntsman’s propylene. TOK concluded that Huntsman’s propylene, as currently manufactured, was satisfactory. Huntsman then signed TOK’s procurement specification, which required Huntsman to notify TOK about any changes to Huntsman’s manufacturing process. TOK began high-volume purchases of propylene. Huntsman changed the manufacturing process without notifying TOK, and the change caused a latent defect in the propylene. As a result, TOK suffered losses in the form of wasted chemicals and chemical-disposal expenses. TOK sued Huntsman for breach of contract. Both parties moved for summary judgment on the issue of damages. Huntsman argued that damages were limited to just the purchase price of the propylene, per the credit-application terms. TOK argued that Huntsman breached the procurement specification by failing to notify TOK of the manufacturing change.

Rule of Law

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Issue

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Holding and Reasoning (Simon, J.)

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