Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civil No. 84-1736.
SLOVITER and MANSMANN, Circuit Judges, and SCIRICA, District Judge.*fn*
In this diversity action for contract damages under Michigan law, we consider the certified question whether the district court was correct in applying the parol evidence rule of the Michigan Uniform Commercial Code to exclude from the court's consideration extrinsic evidence offered to support an alternative interpretation of a contract which, from the linguistic perspective of the court, appears to be facially unambiguous. We find that the district court erred in refusing to consider all proffered evidence when determining whether, as a matter of law, the contract was reasonably susceptible of more than one interpretation. Therefore we will reverse the entry of partial summary judgment for the plaintiff.
Plaintiff Tigg Corporation ("Tigg") is a Pennsylvania corporation which manufactures filtration systems intended for industrial and commercial liquids. Defendant Down Corning Corporation ("Dow Corning") is a Michigan corporation engaged in, among other things, the manufacture of silicone fluid used in electrical transformers.*fn1
In late 1981 representatives of Tigg and Dow Corning met in Pittsburgh, Pennsylvania, to discuss the possibility of a joint development effort directed toward a system for filtering polychlorinated biphenyls ("PCBs") from silicone fluids used to cool electrical transformers. This technology was eventually designated as the "RetroSil" system.
On February 9, 1982 Tigg and Dow Corning entered into a preliminary agreement for the joint development effort which contemplated that Tigg would supply two components for use in the RetroSil system, adsorbers and control stations. On June 11, 1982 Tigg and Dow Corning entered into the written agreements that are the subject of the present dispute, the "Adsorber Agreement" and the "Control Station Agreement." The contracts provided for expected quantity requirements as well as annual minimums. Dow Corning failed to purchase the specified minimums for 1983 and 1984, and Tigg filed this suit.
The contracts were drafted by Dow Corning's attorney and the disputed provisions of the Control Stations agreement*fn2 read as follows:
DOW CORNING shall purchase from TIGG, and TIGG shall sell to DOW CORNING, the Control Stations specified in Paragraph 1.3 in the quantities specified in Paragraph 1.4.
RetroSil TM Control produced exclusively for DOW CORNING in accordance with the DOW CORNING ...