E. I. Du Pont De Nemours & Co. v. Chemtura Corp.

308 A.3d 1080

223 Conn.App. 376

E. I. DU PONT DE NEMOURS AND COMPANY

v.CHEMTURA CORPORATION

(AC 45707)

Appellate Court of Connecticut.

Argued October 17, 2023

Officially Released January 23, 2024

Daniel J. Krisch, Hartford, with whom were Jennifer L. Morgan, and, on the brief, Julie A. Lavoie, Hartford, and Joy C. Fuhr, pro hoc vice, for the appellant (substitute plaintiff).

Brian J. Wheelin, Stamford, with whom, on the brief, was Joseph L. Clasen, for the appellee (defendant).

Bright, C. J., and Alvord and Cradle, Js.

CRADLE, J.

₃₇₈This breach of contract case, which was commenced by the plaintiff, E. I. du Pont de Nemours ₃₇₉and Company (DuPont),¹ in 2014, was first tried to the trial court in 2018, after which the court rendered judgment in favor of the defendant, Chemtura Corporation, on the ground that DuPont failed to strictly comply with the notice provisions of an asset purchase agreement (APA) between the parties. Our Supreme Court reversed the judgment of the trial court and remanded the case for further proceedings on the breach of contract claims. See E. I. du Pont de Nemours & Co. v. Chemtura Corp., 336 Conn. 194, 218, 244 A.3d 130 (2020). Following its review of the record from the first trial and further briefing from the parties, the court rendered judgment in favor of the defendant. On appeal, the plaintiff claims that (1) the court erred in rejecting its breach of contract claims as to certain fire protection systems in that it failed to determine the applicable law and apply that law to the evidence to determine whether those fire protection systems violated the Arkansas State Fire Code, and (2) the court misinterpreted the applicable federal regulations and improperly concluded that those regulations did not require the replacement of certain refrigeration units that leaked ozone depleting substances at rates exceeding the statutory threshold for several consecutive years.² We affirm the judgment of the trial court.

₃₈₀The following undisputed facts and procedural history, as set forth by our Supreme Court, are relevant to the plaintiff’s claims on appeal. "In 2007, the parties, DuPont and the defendant, negotiated the purchase of the defendant’s fluorine chemical business and related equipment located in El Dorado, Arkansas. On behalf of DuPont, Brian Engler negotiated the terms of the APA with Arthur Fullerton, the defendant’s associate general counsel, and Arthur Wienslaw, the defendant’s director of strategy and licensing. The parties ultimately entered into the APA on December 14, 2007. Because the parties were competitors in this field, DuPont’s pre-contractual ability to inspect the defendant’s plant and equipment and to conduct other due diligence was limited. Officials of DuPont conducted only one brief, after-hours tour of the plant prior to signing the APA. As a result, the defendant made certain representations and warranties in the APA, including that the transferred assets were in good repair and condition and were sufficient to conduct business as of the closing date, and that the business had been and was currently being operated in accordance with applicable laws.

"To further protect DuPont, given its limited ability to inspect the plant, the parties also entered into a side letter dated January 31, 2008, which confirmed ‘additional understandings’ of the parties. The side letter included the disclosure and discussion of all potential violations of codes and regulations that controlled the opera- tion of the plant and its products, including potential violations of the ozone depleting substances ₃₈₁regulations.³ The side letter primarily addressed any past deficiencies or violations that continued to impact the operation of the plant at the time of closing that DuPont would not have been able to discover given its limited inspection of the plant. The parties closed the sale on January 31, 2008.

"The APA contains two provisions, §§ 3.16 and 3.17, that set forth a number of representations and warranties by the defendant related to the facility’s prior and ongoing compliance with various laws in connection with the operation of the plant. Under article 8 of the APA, the defendant agreed to indemnify DuPont from any losses arising from any breach of those representations or warranties.⁴ Section 8.4 (a) of the APA provides a four year time period for indemnification as a result of a breach of the representations or warranties contained in §§ 3.16 and 3.17 and requires that DuPont notify the defendant in writing within four years of the closing date, ‘specifying the amount and factual basis of that claim in reasonable detail to the extent known.’ The APA’s notice provision, § 11.4, provides in relevant part: ‘All notices, consents, waivers and other communications under this [a]greement must be in writing and will be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally ₃₈₂recognized overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the individual (by name or title) designated below (or to such other address, facsimile number, e-mail address or individual as a party may designate by notice to the other parties) ….’ To properly notify the defendant, § 11.4 of the APA provides that the notice shall be sent to the defendant’s general counsel ‘with a simultaneous copy’ to the defendant’s outside counsel, Baker & McKenzie, LLP.

"Following the closing, the parties remained in regular contact because DuPont purchased only a portion of the Arkansas facility and the defendant continued to operate the remainder. Specifically, DuPont’s plant manager, Donald Kuhlmann, communicated with Fullerton, the defendant’s associate general counsel, and Frank DiCristina, one of the defendant’s plant managers. DuPont did not communicate with the defendant’s general counsel. DuPont subsequently discovered that certain areas of the plant required repair or replacement, and DuPont requested reimbursement pursuant to the defendant’s in- demnification obligations. Namely, DuPont asserted that certain refrigeration units were leaking refrigerant at an unacceptable rate, and the fire suppression systems were not operating within applicable laws at the time of the purchase. From the closing in 2008 until 2011, the parties held discussions and corresponded to resolve those deficiencies.⁵ During this ₃₈₃time, in March, 2009, the defendant filed for Chapter 11 bankruptcy. For the reorganized company to assume the APA, the defendant had to cure any prebankruptcy defaults under the APA. See 11 U.S.C. § 365 (b) (2006). This led to extensive negotiations between the parties over 'cure claims.’⁶ Ultimately, the parties summarized their positions on various items in a claims list, which included, among other things, the refrigeration and fire suppression system claims. These discussions did not resolve all of the claims, and the present action followed.

"DuPont commenced this action in June, 2014, asserting two claims sounding in breach of contract against the defendant. The complaint alleged violations of the side letter and §§ 3.16 and 3.17 of the APA. DuPont alleged that, in accordance with the APA and the side letter, the defendant is obligated to repair or replace refrigeration units that either are not properly working or violate applicable regulations, as well as certain fire suppression systems that did not comply with the applicable laws at the time of the sale. Specifically, in count one, DuPont alleged that the defendant breached the ₃₈₄APA because, at the time of closing, the defendant had been operating nine areas of the plant in violation of applicable fire safety laws and regulations. Count two alleged that multiple refrigeration units were leaking refrigerant at rates impermissible under applicable environmental law.

"After three and one-half years of pretrial litigation, the case was tried in January, 2018. On the last day of trial, the defendant claimed—for the first time, in a motion for a directed verdict—that DuPont failed to provide notice in accordance with the terms of the APA. The defendant argued that DuPont did not comply with the APA’s notice provision because it had been communicating with the defendant’s associate general counsel rather than the general counsel. The court requested briefing on the issue, and the plaintiff and the defendant submitted posttrial briefs. The plaintiff and the defendant agreed that, under § 11.16 of the APA, New York law governs this dispute. The defendant argued that New York law requires strict compliance with notice provisions in a contract and that the plaintiff failed to prove all the elements of breach of contract. The plaintiff disagreed and argued that New York law did not require strict compliance, and that the claims list and the correspondence between the parties to the APA satisfied New York law because they provided the defendant actual notice.

"The trial court determined that at no time after the closing did DuPont provide notice in accordance with § 11.4 of the APA. The court noted that a number of the plaintiff's exhibits submitted as proof of actual notice did not rise to the level of actual notice of a violation of the contract purchase provisions." (Footnotes in original.) E. I. du Pont de Nemours & Co. v. Chemtura Corp., supra, 336 Conn. at 196–201, 244 A.3d 130. Our Supreme Court reversed the judgment of the trial court on the ₃₈₅notice issue and remanded the case for further proceedings on the plaintiff's breach of contract claims. Id., at 217–18, 244 A.3d 130.

On remand, the parties agreed to submit the case to a different judge for adjudication based on the record from the first trial, including all...