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Boc Group, Inc. v. Chevron Chemical Company

April 03, 2003

BOC GROUP, INC., PLAINTIFF-RESPONDENT,
v.
CHEVRON CHEMICAL COMPANY, LLC, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Union County, UNN-L- 0534-99.

Before Judges Skillman, Cuff and Winkelstein.

The opinion of the court was delivered by: Winkelstein, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 19, 2003

Plaintiff contracted with defendant to deliver liquid nitrogen, primarily from its Michoud, Louisiana plant, to defendant's oil refinery production facility located in Belle Chase, Louisiana. Defendant uses liquid nitrogen to ensure the safe operation of its plant. Defendant claims that plaintiff repeatedly failed to timely deliver the liquid nitrogen, dropping the liquid nitrogen to dangerously low levels, compromising the safety of plant personnel. Although the contract provided that if plaintiff failed to deliver the liquid nitrogen as required defendant's sole remedy would be to purchase the product from another supplier and charge plaintiff for the additional expenses incurred, defendant did not do so, but instead terminated plaintiff's services.

Plaintiff sued defendant for breach of contract, and defendant counterclaimed. Each sought damages. The Law Division granted plaintiff's motion for partial summary judgment on liability, and defendant agreed to dismiss its counterclaim. After a damages trial before a jury, plaintiff was awarded a judgment in the amount of $1,200,000.

Defendant appealed, challenging the Law Division's denial of its motion to dismiss the complaint on the grounds of forum non conveniens; its grant of summary judgment on the issue of liability; and various evidentiary rulings at the damages trial. We conclude that defendant's arguments are without merit. Accordingly, we affirm.

I.

Plaintiff is a Delaware corporation that produces liquid nitrogen. Its principal place of business is in Murray Hill, New Jersey, with a regional office in Houston, Texas.

Defendant, also a Delaware corporation, has its principal place of business in San Francisco, California.

On October 1, 1991, the parties entered into a procurement contract, whereby plaintiff would supply defendant with "[a]ll [of defendant's] requirements" for bulk nitrogen. Plaintiff would deliver the nitrogen by tank trucks to Chevron's Oak Pointe Plant in Belle Chase. The contract, prepared and executed by defendant in California, was originally effective from October 1, 1991, to September 30, 1994, and was extended until August 31, 2000.

Defendant uses liquid nitrogen to "prevent fires and explosions within process equipment and systems and to assure instrumentation and control system reliability in critical process units." The nitrogen "protects plant personnel and the public from accidental toxic material discharges and prevents product contamination [from] oxygen . . . which would reduce product quality and performance." More specifically, nitrogen is used to regulate the oxidation of petrochemicals (oil). Many petrochemicals at defendant's plants are maintained at high temperatures, and to keep them from quickly oxidizing, defendant keeps a nitrogen purge in the petrochemical tanks. If the nitrogen purge is not sustained, oxygen quickly enters the tank and whatever build-ups of petrochemicals which may have otherwise oxidized slowly, will oxidize quickly, resulting in an explosion. Defendant also uses nitrogen "as a control substance for processes that produce nitrogen sulfide, . . . a very deadly gas," which needs to be "managed very carefully."

The contract was a "requirement" contract ) deliveries were based on how much liquid nitrogen defendant had in its tanks. As a result, plaintiff typically made deliveries seven days a week, and sometimes several times a day.

Under the contract's terms, defendant's exclusive remedy if plaintiff failed to timely deliver the ...


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