Hanwha Azdel, Inc. v. C&D Zodiac, Inc.

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 6:12-cv-00023-NKM-RSB Copies to all parties and the district court/agency. [999598539].. [14-1654]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1654

HANWHA AZDEL, INC., f/k/a Azdel, Inc.,
Plaintiff – Appellant,
v.
C&D ZODIAC, INC.,
Defendant – Appellee,
and
NEENAH TECHNICAL MATERIALS, INC.,
Movant – Appellee.

Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg.
Norman K. Moon, Senior
District Judge. (6:12−cv−00023−NKM−RSB)

Argued:

March 26, 2015

Decided:

June 9, 2015

Before GREGORY, KEENAN, and WYNN, Circuit Judges.

Affirmed in part, vacated in part, reversed in part, and
remanded by unpublished opinion. Judge Wynn wrote the opinion,
in which Judge Gregory and Judge Keenan joined.

ARGUED: Frank Kenneth Friedman, WOODS ROGERS, PLC, Roanoke,
Virginia, for Appellant.
Bevin Ray Alexander, Jr., FREEMAN,
DUNN, ALEXANDER, GAY, LUCY & COATES, PC, Lynchburg, Virginia;
James
W.
Evans,
CHOATE,
HALL
&
STEWART
LLP,
Boston,

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Massachusetts, for Appellees. ON BRIEF: Francis H. Casola, Erin
B. Ashwell, WOODS ROGERS, PLC, Roanoke, Virginia, for Appellant.
Robert P. Silverberg, Claire L. Shapiro, SILVERBERG, GOLDMAN &
BIKOFF, LLP, Washington, D.C.; J. Barrett Lucy, FREEMAN, DUNN,
ALEXANDER, GAY, LUCY & COATES, PC, Lynchburg, Virginia, for
Appellee C&D Zodiac, Inc.; Mark D. Cahill, Jared M. Barnes,
CHOATE, HALL & STEWART LLP, Boston, Massachusetts, for Appellee
Neenah Technical Materials, Inc.

Unpublished opinions are not binding precedent in this circuit.

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WYNN, Circuit Judge:
Hanwha

Azdel,

thermoplastic

Inc.

composite

(“Azdel”),
sheet

the

product

manufacturer
called

of

a

“Aero-Lite,”

entered into an agreement with aircraft sidewall manufacturer
C&D

Zodiac,

aircraft

Inc.

(“C&D”)

sidewalls

for

to

use

American

Aero-Lite

Airlines

to

manufacture

(“American”).

The

relationship deteriorated when the Aero-Lite sidewalls did not
live up to American’s expectations.

C&D never paid Azdel for

the sheets of Aero-Lite that it ordered or that Azdel delivered
while the parties were working together.
partner

in

Crane

&

Co.

(“Crane”),

C&D later found a

whose

product

proved

successful for use in sidewall manufacturing and met American’s
expectations.
Azdel
contract

filed

price

this

of

144

lawsuit

to

recover

sheets

of

2000

inter

alia

1)

the

grams-per-square-meter

(“gsm”) Aero-Lite it delivered to C&D and which C&D forwarded to
its

forming

facility

to

be

molded

into

sidewalls;

2)

the

contract price of the remaining sheets of Aero-Lite reflected in
C&D’s original purchase order; 3) the contract price of eight
sheets of a lighter 1320 gsm Aero-Lite product it delivered to
C&D; and 4) damages for C&D’s disclosure of Azdel’s confidential
information

to

Crane.

summary judgment.

The

parties

filed

cross-motions

for

The district court denied Azdel’s motion and

granted C&D’s motion in toto.

On appeal, Azdel challenges the
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district

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court’s

summary

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judgment

rulings

and

its

denial

of

Azdel’s motion to compel discovery of certain documents from
Crane.
We affirm the district court’s grant of summary judgment to
C&D on Azdel’s confidentiality claims, and further rule that the
district court did not err in denying Azdel’s motion to compel.
However,

we

reverse

the

district

court’s

grant

of

summary

judgment to C&D because we hold that C&D accepted the 144 sheets
of

2000

gsm

Aero-Lite

by

taking

actions

inconsistent

with

Azdel’s ownership of those sheets; accordingly, we grant summary
judgment to Azdel as to this claim.
district

court’s

grant

of

summary

We likewise reverse the
judgment

to

C&D

regarding

Azdel’s delivery of the eight sheets of 1320 gsm Aero-Lite and
grant

summary

judgment

accepted these sheets.

to

Azdel

on

this

claim

because

C&D

Finally, we hold that the district court

acted prematurely in granting summary judgment to C&D regarding
C&D’s liability under the original purchase order.

Whether C&D

terminated is a question that must be resolved by a jury.

We

therefore affirm in part, reverse in part, and vacate in part
the

district

court’s

rulings

and

termination issue.

I.
A.
4

remand

for

trial

on

the

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In

March

Understanding
work

together

Airlines.

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2008,

Azdel

(“MOU”)
to

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and

C&D

memorializing

provide

executed
the

aircraft

a

Memorandum

of

agreement

to

parties’

sidewalls

for

American

The MOU was a preliminary agreement that would govern

the parties’ relationship while they worked to establish a more
permanent contract.

Azdel was to manufacture sheets made of

2000 gsm Aero-Lite to be molded by C&D into aircraft sidewalls
for American.

The MOU also provided that the parties would work

together to develop a “next-generation Aero-Lite material” and
set out a development schedule for that product.

J.A. 2186.

The parties “anticipate[d] a 20-year commitment . . . during
which AZDEL [would] offer C&D exclusivity of supply for” various
programs.

J.A. 2185 ¶¶ 2-3.

with “Most Favored Pricing.”

Azdel also agreed to provide C&D
J.A. 2186 ¶ 5.

The parties agreed that Azdel would manufacture 2000 gsm
Aero-Lite according to a “Specification” prepared by C&D and
modified as a result of feedback from Azdel.

The Specification

was “fairly generic” and labeled as proprietary to C&D.
2033-35.

J.A.

Azdel warranted only that its product would comply

with the Specification and expressly disclaimed any warranty of
fitness for a particular purpose.

Indeed, Paragraph 9 of the

agreement stated in no uncertain terms:
The Parties agree that suitability of the Product for
the American Airlines 757 program has been extensively
tested and investigated.
AZDEL warrants only that
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Products
sold
to
C&D
will
conform
to
C&D’s
specifications in effect at the time of manufacture
and agreed in writing between AZDEL and C&D.
AZDEL
expressly disclaims any warranty of fitness for a
particular purpose.
J.A. 2189-90 ¶ 9 (emphasis added).
The MOU required C&D to provide six-month forecasts of its
Aero-Lite
“[t]he

requirements
Parties

requirements
times.”

because,

acknowledge

for

[2000

J.A. 2189.

gsm

according
that

to

the

AZDEL’s

Aero-Lite]

agreement,

supply

result

in

chain

long

lead

As a result, such forecasts were “binding

in that C&D will be committed to later issue a purchase order
for not less than the material requirements forecasted.”
2189 ¶ 7.B.
weeks

J.A.

Purchase orders were to be issued at least twelve

before

the

anticipated

ship

date.

C&D

could

make

reasonable changes in quantities or delivery dates by issuing
notice to Azdel thirty days prior to the expected delivery date.
Any other changes to purchase orders that came with less than
thirty days’ notice were subject to acceptance by Azdel.
Azdel retained “[t]itle to any shipment of the Products”
until C&D paid “all sums due to Azdel for that shipment, or
until the Product is no longer in sheet form.”
While

the

MOU

severely

limited

the

J.A. 2189 ¶ 8.B.
extent

of

Azdel’s

warranties, C&D was protected by broad termination rights, as
laid out in Paragraph 11 of the agreement:

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C.
C&D shall have the right to terminate this MOU as well
as any open orders in connection thereto if:
(i) the
material does not perform as predicted and is deemed not
suitable for C&D’s intended use, conversion, or processing;
and C&D has given the required 60 days’ notice and/or (ii)
the customer requests C&D to switch back to conventional
material/manufacturing methods.
J.A. 2190 ¶ 11.
In

addition

to

obligations

regarding

Aero-Lite,

the

confidentiality

establishing

the

the

and

MOU

purchase

required

the

parties’

rights

delivery
parties

regarding certain information.

of

and

2000

to

gsm

maintain

Paragraph 12 of

the MOU provided that the MOU itself would remain confidential,
and referenced a “separate” “Confidentiality and Non-Disclosure
Agreement”

(“NDA”)

confidentiality

that

would

obligations.

J.A.

govern
2191

certain
¶

12.

other
The

NDA

prohibited the parties from disclosing confidential information
“conspicuously labeled” as such by the party seeking to prohibit
disclosure.

J.A. 2194.

The extensive list of materials that

was subject to non-disclosure included “costs and pricing” and
“prototypes.”

J.A. 2194.

however, was not protected.

Information “in the public domain,”
J.A. 2195.
B.

On April 8, 2008, C&D issued a purchase order for 2900
sheets of 2000 gsm Aero-Lite, with deliveries staggered over
eight

months

(the

“Original

Purchase

Order”).

The

Original

Purchase Order called for an initial 40-sheet delivery on June
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11, 2008; a 110-sheet delivery on July 1, 2008; and a 550-sheet
delivery on October 1, 2008.

The order identified the initial

40-sheet delivery as a “PRE-PRODUCTION REQUIREMENT.” J.A. 2350.
The 110 sheets scheduled for delivery on July 1st were labeled
as “FOR AUG. AND SEPT. REQUIREMENT.”

J.A. 2350.

According to

Chris Willis, Azdel’s project manager for Aero-Lite, the “preproduction” label reflected that to determine the suitability of
Azdel’s Aero-Lite sheets for American, C&D would have to mold
some sheets into sidewall panels, perform initial tests, and
present a sample sidewall to American for further testing.

C&D

employees shared that understanding.
On June 5, 2008, Azdel delivered a total of 144 sheets to
C&D.

Without

testing

the

sheets

for

conformity

with

the

Specification, C&D’s Quality Department forwarded the sheets on
to C&D’s forming facility to be molded into sidewalls.

C&D

employees

not

testified

that

C&D’s

Quality

Department

did

perform tests to determine whether to reject the product because
it believed the sheets of Aero-Lite were “samples, outside of
production requirements.”
At

some

point,

J.A. 2023.

C&D

delivered were warped.

determined

that

the

sheets

Azdel

The sheets were varyingly described as

having “an extreme ‘saddle’ type curl,” J.A. 2515, and “severely
twisted,” J.A. 1706.

C&D hoped that the application of heat and

pressure during the molding process would mitigate the warpage
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problem and proceeded to mold some of the sheets of Aero-Lite
into sidewalls.

Unfortunately, as one Azdel employee put it,

the “[w]arped sheets mold[ed] into warped parts.”

J.A. 1114.

C&D took a sample sidewall to American for a fit check in
late June 2008.
with C&D’s

Jay Zoller of American outlined eleven issues

product,

including

the

“slightly twisted” and too heavy.

fact

that

the

J.A. 1704.

panels

were

Zoller asked C&D

to provide American with an action plan to address the issues he
identified.
existing

C&D sent a Change Request to American, asking that

Aero-Lite

conventional

sidewalls

“crushcore”

be

used

in

product

that

place

C&D

had

of

C&D’s

previously

manufactured and used until a lighter weight Aero-Lite product
could be developed.

The request was never signed by American.

C&D thus returned to providing conventional crushcore panels to
American.
On

July

2,

2008,

C&D

sent

a

detailed

e-mail

to

Azdel

outlining American’s problems with the sidewalls and noting that
the 2000 gsm sheets of Aero-Lite “definitely can not be used for
sidewall production.”
C&D

was

“investigating

J.A. 886.
a

number

The e-mail also stated that
of

projects

suitable application for [the 2000 gsm] sheets.”

to

find

a

J.A. 886.

more
C&D

further indicated that it would “continue to work with Azdel on
processing the curled material as time permits so that we all

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get a better understanding of it, and can eliminate [the curl].”
J.A. 887.
When
other

asked

Azdel

about

the

employees,

status

Willis

of

of

the

Azdel

October
stated

delivery

“C&D

has

by
not

committed to taking anyone [sic] 2000 gsm at this time. . . .
All

of

this

product

should

be

put

on

hold.”

J.A.

1480.

According to Willis, he had this impression based on previous
conversations
believed

that

with
the

C&D

personnel.

purchase

order

Other
had

employees

not

been

at

Azdel

terminated,

stating, “If they want to cancel their current orders they must
update

their

release.

All

orders

remain

customer cancels or revises their release.”

valid

until

the

J.A. 1478.

In

response to Azdel’s request for a clarification of the status of
the order, C&D issued a revised purchase order on September 17,
2008, zeroing out all installments with a “0.00” notation (the
“Revised Purchase Order”).

J.A 2353-54.

Twelve days later, C&D generated reports indicating that
the 2000 gsm Aero-Lite had been nonconforming, i.e., did not
meet the Specification.

But C&D never provided those reports to

Azdel. 1
Thereafter, Azdel manufactured some lighter weight sheets
of

Aero-Lite,

and

C&D

molded

1

and

tested

several

of

these

C&D conceded below that whether Azdel’s product conformed
to C&D’s specifications is a disputed issue of material fact.
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On April 24, 2009, C&D ordered twenty sample sheets

of 1320 gsm Aero-Lite based upon a single $15,000 price for the
entire lot.

In September 2008 and April 2009, Azdel issued

sample quotations and pricing letters for C&D’s purchase of 1320
gsm

Aero-Lite.

The

pricing

letter

and

quotations

were

all

marked confidential.
Azdel manufactured more than fifty sheets of the 1320 gsm
product but found only eight sheets worthy of delivery.

C&D

formed

these

that

the

panels

were

conditions”

and

“passed.”

sheets
tested

into

panels

“under

J.A. 957.

and

American

informed
Airlines

Azdel

When C&D inquired as to whether Azdel

would produce the remaining sheets required by the twenty-sheet
order,
sheets.

Azdel

indicated

that

it

would

not

produce

any

more

C&D could not complete its full qualifications process

without a full delivery.

Azdel billed C&D $6000 for those

sheets on a per sheet basis in August 2009.

C&D told Azdel it

would pay for them after they were approved by American.

Azdel

never received payment for the eight sheets it delivered.
C.
On

October

development
expectations.

of

30,
a

2009,
product

C&D
that

contacted
would

Crane
meet

regarding
American’s

Crane produced a product similar to Aero-Lite

called Composite Aerospace Board (“CAB”) that ultimately proved
acceptable to American.
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C&D provided Crane with the same or a similar version of
C&D’s specifications that had been attached to the MOU.
addition,

during

C&D’s

negotiations

with

Crane,

it

In

provided

Crane with a spreadsheet entitled “Historic Pricing Board.”

The

spreadsheet contained tiered pricing for various quantities of
product at various weights.

Some of the prices were the same or

similar to prices that appeared in Azdel’s pricing letters that
had been marked confidential.

C&D’s historic pricing for the

1300 gsm product in certain quantities was the same as Azdel’s
pricing for Aero-Lite, but pricing for the 1300 gsm product in
other

quantities

differed.

The

historic

pricing

board

also

included prices for 1200 gsm and 2000 gsm products not reflected
in Azdel’s pricing letters.
In

March

2010

Crane

provided

testing of its CAB product.

C&D

a

report

of

Crane’s

The report reflected that CAB had

been tested against a sheet of Azdel’s 1350 gsm Aero-Lite, a
separate product ordered by C&D from Azdel in October 2008.

C&D

at times referred to 1320 gsm as 1350 gsm because certain steps
in processing resulted in a weight increase.
the

photographs

attached

to

the

testing

On the other hand,

report

identify

the

Azdel product as 1500 gsm.

The Crane witness who authored the

report

Azdel

testified

that

the

commercially available” product.

12

product

tested

J.A. 1902-03.

had

been

“a

There is no

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evidence that the panel or shipping papers associated with it
were marked confidential.
D.
Azdel’s original complaint raised three causes of action
for breach of contract alleging that C&D failed to pay Azdel for
Aero-Lite sheets pursuant to the MOU (Counts I-III).

Count I

alleged that C&D failed to pay Azdel for the 144 sheets of AeroLite

delivered

under

the

Original

Purchase

Order,

and

for

undelivered but manufactured sheets produced pursuant to that
purchase order.
did

terminate

Count II alleged in the alternative that if C&D
the

MOU

and

open

purchase

orders,

C&D

was

obligated to reimburse Azdel for raw materials, work in process,
and finished goods on hand at the time of the termination in
accordance with Paragraph 11.D of the MOU. 2

Count III sought

$6000 in compensation for the sample sheets of 1320 gsm AeroLite that Azdel provided pursuant to an April 24, 2009 purchase
order.
Following discovery, Azdel amended its complaint to include
two additional causes of action (Counts IV and V), alleging that
C&D breached confidentiality provisions contained in the MOU and
the

parties’

non-disclosure

agreement.

2

The

district

court

Azdel makes no effort to challenge the district court’s
dismissal of Count II on appeal.
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bifurcated the damages portion of Counts IV and V from liability
issues.
Azdel
discovery

supplemented
from

its

Crane.

discovery

Over

the

requests,

course

of

now

seeking

discovery,

Crane

withheld or redacted certain documents it alleged were subject
to

the

common

interest

privilege

pursuant

to

a

common

legal

interest it held with SABIC, a non-party that supplied resin to
Azdel throughout the development of Aero-Lite.
compel production of these documents.

Azdel moved to

A magistrate judge denied

Azdel’s objection, and the district court adopted the magistrate
judge’s recommendation, holding that “the record is sufficient
to establish that the disputed documents were communicated in
furtherance of a common legal interest between Crane and SABIC.”
J.A. 1255.
The parties filed cross-motions for summary judgment.

The

district court granted C&D’s motion as to all counts and denied
Azdel’s motion.

This appeal ensued.

II.
We
judgment

review
de

the

novo,

nonmoving party.
(4th Cir. 2011).

grant

or

drawing

denial
all

of

a

inferences

motion
in

for

favor

summary
of

the

Okoli v. City of Baltimore, 648 F.3d 216, 220
Summary judgment may be granted only where

“there is no genuine dispute as to any material fact and the
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movant is entitled to judgment as a matter of law.”

Libertarian

Party of Va. v. Judd, 718 F.3d 308, 312–13 (4th Cir. 2013)
(internal quotation marks omitted).

A dispute is genuine if “a

reasonable jury could return a verdict for the nonmoving party.”
Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir.
2012).

A fact is material if it “might affect the outcome of

the suit under the governing law.”

Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986).
This matter is in federal court on diversity jurisdiction
pursuant to 28 U.S.C. § 1332.

The parties agree that Virginia

law applies to Azdel’s claims arising from the MOU and related
purchase

orders,

and

that

California

law

applies

to

Azdel’s

claims under the NDA. 3
A.
We first address Azdel’s contention that C&D violated the
MOU’s

confidentiality

provision

and

the

NDA

by

disclosing

confidential information to Crane during its development of CAB,
Crane’s alternative to Aero-Lite.
1.
Azdel first argues that C&D breached the NDA by disclosing
Azdel’s confidential pricing information to Crane.

There is no

question that the “Historic Pricing Board” that C&D provided
3

The NDA’s choice of law provision provides that it shall
be construed in accordance with California law.
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Crane contained prices that were the same or similar to prices
contained in two of Azdel’s pricing letters, each of which was
labeled “confidential.”

J.A. 2363, 2398.

Nor is there any

question that the NDA prohibited C&D from disclosing “cost and
pricing” information that Azdel marked as confidential.

J.A.

2194 ¶ (C).
Yet the pricing board was not a reflection of past prices;
rather, it was an indication of what C&D would be willing to pay
for

Crane’s

product.

Nothing

in

the

parties’

agreements

prohibited C&D from indicating to third parties what it would be
willing to spend. 4

To the extent the pricing board contained

historic prices, C&D did not disclose that they were Azdel’s.
And while several of the prices that C&D gave Crane were the
same as Azdel’s, others were not.
district

court’s

ruling

that

Thus, we find no error in the

C&D

did

not

disclose

Azdel’s

confidential pricing information in violation of the NDA.
2.
Azdel next contends that C&D violated the NDA by giving
Crane a sheet of Azdel’s prototype 1320 gsm Aero-Lite so that it

4

We do not mean to suggest that a company’s pricing scheme
cannot be the subject of a confidentiality agreement.
We hold
only that no violation of the NDA occurred here, where
disclosure of prices that partially aligned with Azdel’s was
incidental to C&D’s pricing negotiations.

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tested

against

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Crane’s

CAB.

The

parties

dispute

whether C&D provided a prototype 1320 gsm sheet of Aero-Lite or
a 1350 gsm sheet of commercially available material.
As an initial matter, there is no evidence in the record to
suggest that any of the 1320 gsm sheets of Aero-Lite or any of
the shipping papers accompanying the 1320 gsm sheets that Azdel
delivered

to

prototypes.

C&D

identified

the

sheets

as

confidential

The only document marked confidential in connection

with the 1320 gsm sheets is an internal order form for the 1320
gsm sheets.

However, that order form also described the 1320

gsm sheets as “commercial.”
Azdel
prototype

argues
sheets

that
of

the

J.A. 2543.
parties

Aero-Lite

did

not

themselves

to

intend
be

for

marked

the
as

confidential, noting that C&D’s plant manager testified that he
would not expect a confidential prototype to be stamped with the
word “confidential.”

Azdel would thus read out of the NDA the

requirement that “Confidential Information . . . shall at all
times

be

conspicuously

labeled

by

the

disclosing

Party

as

‘Confidential,’” or read into it an exception for “prototypes.”
J.A. 2194.
Even assuming that such an exception could be read into the
NDA, the evidence in the record does not support an inference
that the sheet tested by Crane was a prototype sheet of 1320
gsm.

Crane’s testing report identified the sheet as “1350 gsm”
17

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not

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“1320

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gsm,”

and

the

Pg: 18 of 38

photographs

attached

to

report identify the Azdel product as “1500 gsm.”

the

testing

J.A. 1031.

While a Crane employee testified that he could not recall the
weight of the Aero-Lite sheet tested, he did recall that it was
“commercially available.”

J.A. 1902-03.

Furthermore, though

there is evidence in the record suggesting that C&D had, at
times, referred to Azdel’s 1320 gsm as 1350 gsm, this alone
would not support a reasonable inference that the sheet tested
by Crane was in fact 1320 gsm. 5
In sum, based on this record, no reasonable juror could
conclude that C&D’s disclosure of Azdel’s product violated the
NDA.

We therefore hold that the district court did not err in

granting summary judgment for C&D on this claim.
3.
Finally, Azdel argues that C&D violated its confidentiality
obligations

by

disclosing

specifications

Specification referenced in the MOU.

similar

to

the

Azdel concedes that it

failed to mark the Specification confidential and, therefore,

5

Azdel also argues that the 1350 gsm Aero-Lite was also not
commercially available and was therefore covered under the NDA.
This argument has been made for the first time on appeal and is
therefore waived.
See Karpel v. Inova Health Sys. Servs., 134
F.3d 1222, 1227 (4th Cir. 1998) (“We have repeatedly held that
issues raised for the first time on appeal generally will not be
considered.”).

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that the Specification does not receive protection under the
NDA.

However,

nonetheless
disclosure

Azdel

covered
of

by

“this

contends
Paragraph

MOU.”

that
12

J.A.

of

2191

the

Specification

the
¶

MOU,

12.

which

is
bars

Because

the

Specification was referenced in and attached to the MOU, Azdel
reasons that it is a part of the MOU for purposes of Paragraph
12.
In

support

Orthopaedics,

of

P.C.

this
v.

argument,

Peyton,

in

Azdel

which

cites

the

Countryside

Supreme

Court

of

Virginia stated, “where two papers are executed at the same time
or contemporaneously between the same parties, in reference to
the same subject matter, they must be regarded as parts of one
transaction,

and

receive

the

same

construction

as

if

several provisions were in one and the same instrument.”

their
541

S.E.2d 279, 284 (Va. 2001) (internal quotation marks omitted).
This uncontroversial statement of Virginia contract law has no
bearing on whether the Specification is subject to the MOU’s
confidentiality provision.

Countryside Orthopaedics was merely

referencing

maxim

the

familiar

that

“[w]here

a

business

transaction is based upon more than one document executed by the
parties, the documents will be construed together to determine
the

intent

of

the

parties.”

Id.

omitted).

19

(internal

quotation

marks

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question

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before

not

us

is

whether

the

MOU

and

the

Specification ought to be construed alongside one another as
part of the same transaction.

Rather, the success of Azdel’s

claim hinges on whether, by using the term “MOU” in Paragraph
12, the parties intended to allow Azdel to prevent disclosure of
C&D’s specifications.
Crucially,

the

We conclude that they did not.
Specification

was

conspicuously

marked

as

proprietary to C&D and included the following disclaimer: “THE
INFORMATION CONTAINED HEREIN MUST NOT BE REPRODUCED OR COPIED OR
OTHERWISE

DISCLOSED

IN

WHOLE

OR

APPROVAL OF C&D ZODIAC, INC.”

IN

PART

J.A. 2198.

WITHOUT

THE

In fact, the MOU

refers to the Specification as “C&D’s specifications.”
9.

WRITTEN

2189 ¶

In addition, Paragraph 12 of the MOU refers to attachments

to the MOU as “separate” from the MOU.

For example, Paragraph

12 provides, “Refer to Attachment ‘A’ for details in the form of
a separate Confidentiality and Non-Disclosure Agreement between
the Parties.”

J.A. 2191 (emphasis added). 6

In sum, it is clear that the parties did not intend for the
term “this MOU” to apply to C&D’s specifications.

Thus, the

district

of

court

correctly

held

6

that

disclosure

C&D’s

Because
we
hold
that
C&D
did
not
breach
its
confidentiality obligations to Azdel, we need not reach the
issue of whether the district court erred in dismissing Azdel’s
claims for failure to put forward evidence that C&D’s breach
caused actual damages.
20

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specifications

did

not

Pg: 21 of 38

violate

the

MOU’s

confidentiality

provision.
B.
We next address Azdel’s claim that it is entitled to the
contract

price

of

the

144

sheets

of

2000

gsm

Aero-Lite

it

shipped to C&D and which C&D forwarded to its forming facility
to be molded into aircraft sidewalls.
Generally, where a buyer accepts goods but does not pay for
them, the seller is entitled to recover the contract rate for
the goods.
the

See Va. Code § 8.2-607(1) (“The buyer must pay at

contract

(remedies

of

rate

for

seller);

any
see

goods
also

accepted.”);
Green

Hill

id.

Corp.

Corp., 891 F.2d 286 (4th Cir. 1989) (unpublished).
Virginia

Uniform

Commercial

Code,

acceptance

of

§

8.2-703

v.

Greenko

Under the

goods

occurs

when the buyer
(a) after a reasonable opportunity to inspect the goods
signifies to the seller that the goods are conforming or
that he will take or retain them in spite of their
nonconformity; or
(b) fails to make an effective rejection, but such
acceptance does not occur until the buyer has had a
reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller’s ownership .
. . .
Va. Code § 8.2-606(1).
A reasonable inspection may occur “at any reasonable place
and time and in any reasonable manner,” id. § 8.2-513(1), and
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the

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“place

parties.”

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or

method

of

Pg: 22 of 38

inspection”

may

be

“fixed

by

the

Id. § 8.2-513(4).

Notably, Official Comment 4 to Va. Code § 8.2-606 states
that

“the

provisions

of

paragraph

(c)

are

subject

to

the

sections dealing with rejection by the buyer which permit the
buyer to take certain actions with respect to the goods pursuant
to his options and duties imposed by those sections, without
effecting an acceptance of the goods.”
buyer’s

reasonable

inspection

would

In other words, where a

be

otherwise

inconsistent

with the seller’s ownership of the goods, such inspection on the
part of the buyer will not be deemed an acceptance.

However,

the meaning of “inspection” is limited to “the buyer’s check-up
on whether the seller’s performance is in accordance with [the
parties’] contract.”

Official Comment 9 to § 8.2-513.

Azdel contends that when C&D’s quality department forwarded
the sheets of Aero-Lite to its forming facility to be molded
into sidewalls, C&D acted inconsistently with Azdel’s ownership
of the sheets and thereby accepted them.
C&D’s

molding

inconsistent
Molding

the

with

of

the

Azdel’s

Aero-Lite

sheets
ownership

into

of

We agree.
Aero-Lite

of

sidewalls

the

was

clearly

Aero-Lite

sheets.

was

a

substantial

modification that irreversibly altered the condition of Azdel’s
product.

Moreover, the parties contemplated that the molding of

the sheets of Aero-Lite constituted a point of no return with
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respect to ownership of Azdel’s product.

Azdel lost title as

soon as they were no longer in sheet form.

See J.A. 2189 ¶ 8

(stating that title to Azdel’s product will remain with Azdel
until

the

“Product

is

no

longer

in

precedent supports this conclusion.

sheet

form”).

Virginia

See, e.g., Moore & Moore

General Contractors, Inc. v. Basepoint, Inc., 485 S.E.2d 131,
133

(Va.

1997)

nonconforming

(holding

cabinets

that

a

contractor’s

constituted

an

act

installation

inconsistent

of

with

subcontractor’s ownership and amounted to acceptance of goods);
see also Laurence Anderson on the Uniform Commercial Code 3d., §
2-606:64

“Modification

of

Goods”

(“When

the

buyer

has

not

rejected the goods and has made a substantial modification to
them, the buyer is deemed to have accepted the goods.”).
The only way that C&D would not be required to pay for the
delivered sheets of 2000 gsm Aero-Lite is if its actions in
molding

the

sheets

into

sidewalls

and

presenting

them

to

American for a fit check constituted a reasonable inspection of
the goods, or if such a method of inspection was “fixed by the
parties.”

Va. Code § 8.2-513(4).

Below, the district court

concluded that “where [C&D] was not otherwise allowed to fully
test any Aero-Lite sheets, the type of reasonable inspection
agreed

upon

by

the

parties

included

the

molding

trials

that

Defendant conducted as well as the fit check to see how the
molded sheets would perform upon installation.”
23

J.A. 2159.

The

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district

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court

relied

in

Pg: 24 of 38

large

part

on

the

fact

that

the

purchase order issued by C&D states that the first scheduled
delivery of Aero-Lite was for “PRE-PRODUCTION,” and that the
parties understood that “pre-production” was a term designed to
allow C&D to internally evaluate the product and allow American
to sign off on the product.

J.A. 2157.

Thus, according to the

district court, actions taken by C&D that were inconsistent with
Azdel’s

ownership

because

C&D

had

of
not

the
yet

goods
had

did
the

not

effect

an

acceptance

opportunity

to

conduct

a

reasonable inspection.
Regardless of whether the initial delivery of Aero-Lite was
necessary

for

C&D

to

determine

the

suitability

of

Azdel’s

product for its own internal process or for American, the preproduction requirement has no bearing on whether the product
that Azdel delivered to C&D conformed to the parties’ contract,
i.e., complied with the Specification.

Under the Virginia UCC,

C&D’s reasonable inspection of Azdel’s product was limited to
determining whether the delivered sheets of 2000 gsm Aero-Lite
conformed to the Specification.

It does no good to say that

C&D’s molding of the sheets of Aero-Lite into sidewalls did not
constitute

an

acceptance

because

“[C&D]

allowed to fully test any Aero-Lite sheets.”

was

not

otherwise

J.A. 2159.

To the

contrary, the parties stipulated in their agreement that the
suitability

of

Azdel’s

product
24

had

been

extensively

tested.

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There is also no indication in the record that C&D would have
been prevented from testing the 2000 gsm sheets of Aero-Lite to
determine

whether

it

complied

with

the

Specification

before

molding them into sidewalls.

To permit C&D to condition its

acceptance

on

of

Azdel’s

product

its

determination

that

the

product is suitable to American would entirely eviscerate the
MOU’s

warranty

provision

and

the

parties’

bargained-for

allocation of risk.
The decision of the Supreme Court of Virginia in Twin Lakes
Manufacturing Co. v. Coffey, a case relied upon by C&D on appeal
and

cited

by

the

district

S.E.2d 864 (Va. 1982).

court

below,

is

inapposite.

281

In Twin Lakes, the court held that,

given the existence of latent structural defects in a mobile
home, the buyers of the mobile home did not waive the implied
warranty of merchantability when they installed the mobile home.
Id. at 866–67 (applying Va. Code. § 8.2-316(3)(b) (“[W]hen the
buyer before entering into the contract has examined the goods .
. . there is no implied warranty with regard to defects which an
examination
him.”)).
presented

ought
The
in

in

the

circumstances

to

court

did

not

address

this

case:

remotely

whether

a

buyer

have

revealed
the

who

to

question

irreversibly

modifies goods before inspecting them for compliance with the
buyer’s

own

specifications

accepts

Virginia UCC.
25

those

goods

under

the

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Lastly,

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while

provisions

Pg: 26 of 38

in

the

MOU

permitted

C&D

to

terminate the MOU as well as any purchase orders in the event
that “the material does not perform as predicted and is deemed
not suitable for C&D’s intended use, conversion, or processing,”
J.A. 2190 ¶ 11.C, C&D’s termination rights under the MOU do not
alter its obligations with respect to delivered goods under the
Virginia UCC.
Thus, the district court erred in denying Azdel’s claim
regarding the 144 sheets of delivered 2000 gsm Aero-Lite.
C.
Azdel also contends that C&D is liable for the sheets of
Aero-Lite it ordered pursuant to the Original Purchase Order.
The

district

court

held

that

C&D

terminated

the

Original

Purchase Order on July 2, 2008, when Del Pinto of C&D e-mailed
Willis of Azdel following the disappointing fit check.

In the

alternative, the district court held that C&D terminated the
Original Purchase Order on September 17 when it issued a revised
purchase order zeroing out all quantities of 2000 gsm Aero-Lite. 7

7

C&D also appears to contend in its briefs that the MOU
itself and perhaps any open purchase orders “self-terminated”
pursuant
to
what
it
terms
the
MOU’s
“self-termination
provision.”
Paragraph 6 of the MOU provides that “This MOU
shall begin on the Effective Date and shall remain in force for
the duration of the American Airlines 757 Program or until a
long-term agreement is executed between the Parties, whichever
occurs first.” J.A. 2188 ¶ 6. C&D implies that the MOU selfterminated as of the time American expressed dissatisfaction
with the 2000 gsm Aero-Lite sidewalls, i.e., after the fit
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1.
To determine whether C&D terminated the Original Purchase
Order,

we

must

termination
right

to

first

assess

whether

the

contract

were

under

terminate

the

Original

the

preconditions

met—whether

Purchase

Order

C&D
in

for

had

the

the

first

place. 8

The MOU gave C&D “the right to terminate this MOU as

well

any

as

material

does

open
not

orders

in

perform

connection
as

predicted

thereto
and

is

if:

(i)

the

deemed

not

suitable for C&D’s intended use, conversion, or processing, and
C&D

has

customer

given

the

requests

required
C&D

material/manufacturing

to

60

days’

switch

methods.”

notice

and/or

back

to

J.A.

2190

¶

(ii)

the

conventional
11.C.

The

district court concluded that both conditions were met in this

check.
Yet there is nothing in the MOU to suggest that
American’s failure to immediately accept the sidewalls would
constitute an end to the American Airlines 757 Program.
Thus,
C&D’s reliance on the self-termination provision is misplaced.
8

In addition to arguing that the preconditions for
termination were not met in this case, Azdel contends that
Paragraph 11 of the contract only permitted C&D to terminate the
MOU in conjunction with any purchase orders.
According to
Azdel, C&D and Azdel went on to produce 1320 gsm Aero-Lite under
the terms of the MOU, and therefore, “[b]y letting [C&D] walk
away from the 2000GSM Aero-Lite purchase order when it was not
walking away from the agreement,” we would be permitting C&D to
“have its cake and eat it too.” Appellant’s Br. at 57. Azdel’s
restrictive reading of paragraph 11.C is untenable.
This
provision gave C&D the right to terminate the MOU and any open
purchase orders in connection with the MOU.
It does not state
that C&D may terminate open purchase orders only when it
terminates the MOU.
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case.

We

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address

will

Pg: 28 of 38

precondition

each

for

termination

separately.
a.
We first consider whether Azdel had the right to terminate
the MOU as well as any open purchase orders under Paragraph
11.C(i).

That

right

hinges

on

a

determination

of

whether

Azdel’s product “did not perform as predicted and is deemed not
suitable for C&D’s intended use.”
Azdel

contends

that

J.A. 2190 ¶ 11.C(i).

Paragraph

11.C(i)

permitted

C&D

to

terminate the Original Purchase Order only if its product failed
to

meet

the

language

requirements

of

the

interpretation.

MOU

of

the

simply

Specification.
does

not

The

support

plain

Azdel’s

Notwithstanding the fact that the MOU provides

that “the parties agree that the suitability of the Product for
American Airlines 757 program has been extensively tested and
investigated,”

J.A.
C&D

2189
may

¶

9,

“deem”

Paragraph
Azdel’s

11.C(i)

product

clearly

contemplates

that

nonetheless

unsuitable.

Had the parties intended to limit C&D’s termination

rights to an instance in which Azdel’s product failed to comply
with the Specification, they easily could have done so.

They

did not.

Thus, C&D was permitted to terminate the MOU and open

purchase

orders

even

where

Azdel’s

product

satisfied

the

Specification if it determined that the product did not perform
as predicted and C&D deemed it unsuitable.
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Contrary to Azdel’s assertions, the record establishes that
Azdel’s 2000 gsm Aero-Lite did “not perform as predicted” and
was

“not

suitable

processing.”

for

J.A. 805.

C&D’s

intended

use,

conversion,

or

Though C&D hoped that molding the Aero-

Lite into sidewalls might ameliorate the warpage problem and
notwithstanding the prior extensive testing done on the product,
the

warped

Aero-Lite

resulted

in

warped

sidewalls

that

were

unsuitable for American’s use.
b.
We next consider whether C&D had the right to terminate the
Original Purchase Order under Paragraph 11.C(ii) of the MOU,
which gives C&D the right to terminate any open purchase orders
in the event that “the customer requests C&D switch back to
conventional material/manufacturing methods.”

J.A. 2190.

In

contrast to Paragraph 11.C(i), the termination rights conveyed
by Paragraph 11.C(ii) do not require sixty days’ notice.
Azdel
“switch

argues
back”

that
to

Paragraph 11.C(ii).

American
using
While

did

not

“request”

conventional
conceding

that

materials

that

American

C&D

under
never

affirmatively requested C&D to switch back to crushcore, C&D
nonetheless suggests that the term “requests” should be given a
broader

meaning.

After

the

fit

check,

American

gave

C&D

feedback and required C&D to create an action plan that, among
other things, reduced the weight of the product.
29

By requiring a

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product

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a

different

Pg: 30 of 38

weight,

C&D

contends

American

essentially requesting that C&D revert to crushcore.

was

C&D also

points to the fact that American had the “ultimate” decision of
what product it would use in its aircraft.
words,

according
C&D

to

resulted

in

American

ultimately

C&D,

because

reverting
had

J.A. 736.

American

back

to

discretion

took

actions

crushcore,
as

to

In other

and

whether

that

because
to

use

crushcore in its planes, American did in fact, in some sense of
the word, “request” that C&D “switch back” to crushcore.
C&D ignores uncontested evidence in the record precluding
such a holding.

Indeed, American’s own employee testified that

American did not make the decision to reject Aero-Lite, rather,
it “assumed [C&D] determined that it would not meet our needs,
because they changed materials.”

J.A. 1653.

Furthermore, it

was C&D that proposed it have crushcore on hand in the event
that

the

Aero-Lite

material

did

not

meet

American’s

expectations, and it was C&D’s choice to supply crushcore while
Aero-Lite

was

influence

on

development

being
the

developed.

decision

continued,

it

to

Given
use

can

the

crushcore

hardly

be

extent
while

said

that

of

C&D’s

Aero-Lite
American

“requested” that C&D “switch back” to conventional manufacturing
methods within the meaning of the MOU.

American was open to

accepting an Aero-Lite based product that met its needs.

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Because C&D did not have termination rights under Paragraph
11.C(ii), it could not terminate the Original Purchase Order
without giving Azdel sixty days’ notice of its intent to do so.
2.
We must next consider whether C&D provided an effective
notice
court

of

termination

concluded

and

under
C&D

the

Virginia

maintains

that

UCC.

The

effective

district

notice

of

termination was given on July 2, 2008, when Del Pinto of C&D
sent an e-mail to Willis of Azdel stating among other things
that Azdel’s 2000 gsm sheets of Aero-Lite “definitely can not be
used

for

sidewall

production”

and,

at

the

very

least,

on

September 17, 2008, when C&D issued its revised purchase order
zeroing out all ordered quantities of Azdel’s product.
Under the Virginia UCC, “[a] person ‘notifies’ or ‘gives’ a
notice or notification to another person by taking such steps as
may

be

reasonably

required

to

inform

the

other

person

in

ordinary course, whether or not the other person actually comes
to know of it.”

Va. Code § 8.1A-202(d).

In conducting this

analysis at the summary judgment stage we must be mindful that
under

the

UCC,

reasonableness

for

courts
the

typically

finder

of

reserve

fact.

See,

questions
e.g.,

of

Zidell

Explorations, Inc. v. Conval Int’l, Ltd., 719 F.2d 1465, 1473–74
(9th Cir. 1983) (reasonableness of notice of termination to be
decided by jury); St. Ansgar Mills, Inc. v. Streit, 613 N.W.2d
31

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289,

295

Filed: 06/09/2015

(Iowa

2000)

Pg: 32 of 38

(collecting

cases,

from

various

jurisdictions, holding that the determination of reasonableness
under the UCC is a factual question inappropriate for summary
judgment.); cf. Flowers Baking Co. of Lynchburg, Inc. v. R-P
Packing,

Inc.,

rejection

329

based

on

S.E.2d

462,

466-67

nonconforming

(Va.

goods

1985)

occurred

(whether
within

a

reasonable period of time is a question for the jury).
a.
We first address the July 2 e-mail.

C&D did not state in

its July 2 e-mail that it was terminating the Original Purchase
Order and in fact made no reference to that order whatsoever.
The

e-mail

even

alluded

to

other

uses

for

the

product,

indicating that C&D was “investigating a number of projects to
find a more suitable application for [the 2000 gsm] sheets.”
J.A. 886.

The e-mail also stated that C&D would “continue to

work with Azdel on processing the curled material.”
We
Willis

recognize

that

of

believed

Azdel

some

evidence
that

suggests

C&D

had

a

not

J.A. 887.
termination.
committed

to

additional sheets of Aero-Lite based on conversations he had had
with C&D personnel.
the

customer

no

Specifically, Willis stated that he “knew
longer

wanted

the

product”

“based

on

communications that had taken place . . . with Danny Martin.”
J.A. 699.

When asked about the status of the October delivery

by other Azdel employees, Willis stated “C&D is not committed to
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taking anyone [sic] 2000 gsm at this time. . . .
product should be put on hold.”

J.A. 1480.

All of this

However, others at

Azdel believed C&D remained committed to its orders of 2000 gsm
Aero-Lite, stating, “If they want to cancel their current orders
they must update their release.

All orders remain valid until

the customer cancels or revises their release.”

J.A. 1478.

In sum, one could conclude from the July 2 e-mail that C&D
wanted Azdel to treat the Original Purchase Order as having been
terminated.
reasonable

However, we are not convinced that this is the only
interpretation

circumstances.

of

the

e-mail

and

the

surrounding

We thus conclude that the district court acted

prematurely in removing this question from the province of a
jury.
b.
On the other hand, we agree with the district court that
the Revised Purchase Order issued on September 17 effectively
terminated the Original Purchase Order.

That document inserted

“0.00” as the amount due in connection with each delivery, added
“*** THIS LINE HAS BEEN REVISED ***” before each listed line
item, and in connection with all deliveries other than those
already delivered, stated, “CANCEL ORDER.”

J.A. 2354.

There is

only one way to read these changes to the purchase order.
Because we concluded above that C&D only had the right to
terminate the Original Purchase Order pursuant to 11.C(i), the
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Revised

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Purchase

Order

is

Pg: 34 of 38

only

effective,

as

a

termination,

sixty days after it was issued.

The district court concluded

that

Order

if

the

Revised

Purchase

was

the

only

valid

termination of the Original Purchase and the sixty-day notice
requirement

applied,

C&D

would

be

liable

for

“December

2008

through February 2009 deliveries totaling 1,650 sheets” but that
“Defendant would not be liable for the cost of the final 1,650
sheets.”
C&D’s

J.A. 2165.

July

2

e-mail

In the event that a jury concludes that
did

not

constitute

effective

notice

of

termination, we agree that C&D will be liable under the Original
Purchase

Order

in

accordance

with

the

district

court’s

assessment.
D.
Under Count III of the Complaint, Azdel seeks to recover
$6000 billed to C&D for the eight sheets of 1320 gsm Aero-Lite
delivered to C&D in August 2009.

C&D contends that it has no

obligation to pay for this partial delivery of eight out of
twenty ordered sheets because the purchase order for the 1320
gsm Aero-Lite was based upon a single $15,000 price for the
entire lot, and Azdel failed to complete the order.
Under Va. Code § 8.2-601, “if the goods or the tender of
delivery fail in any respect to conform to the contract, the
buyer may (a) reject the whole; or (b) accept the whole; or (c)
accept any commercial unit or units and reject the rest.”
34

Under

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Section

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8.2-607(2),

precludes

rejection

Pg: 35 of 38

“[a]cceptance
of

the

goods

of

goods

accepted

and

by

the

if

made

buyer
with

knowledge of a nonconformity cannot be revoked because of it
unless the acceptance was on the reasonable assumption that the
nonconformity would be seasonably cured but acceptance does not
of itself impair any other remedy provided by this title for
nonconformity.”
C&D contends that its order for twenty sheets of Aero-Lite
constituted a “commercial unit” under the UCC.

The mere fact

that the sheets were priced as a batch of twenty, however, does
not render them a commercial unit.

Further, C&D’s contention

that the twenty sheets were a unit is belied by the fact that it
told Azdel it was merely awaiting final approval from American
to “release Azdel for production,” J.A. 957, and that it would
pay for the 1320 gsm sheets when they received approval from
American.
C&D

never

Azdel delivered.
them,

and

rejected

the

eight

sheets

of

Aero-Lite

that

It formed them into sidewall panels, tested

promised

American’s approval.

to

pay

for

them

after

they

received

Under these circumstances, C&D must pay

for the eight sheets of 1320 gsm that it accepted.

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III.
Finally,
Azdel’s

Azdel

motion

district

to

court

privilege.

appeals

deemed

district

court’s

denial

of

certain

compel

the

Crane

documents

that

the

protected

under

the

common

interest

We review factual findings as to whether a privilege

applies for clear error, and the application of legal principles
de novo.

In re Grand Jury Subpoena, 341 F.3d 331, 334 (4th Cir.

2003).
“The joint defense privilege, an extension of the attorneyclient
share

privilege,
a

common

protects

interest

communications

in

between

litigation.”

In

re

parties

who

Grand

Jury

Subpoena: Under Seal, 415 F.3d 333, 341 (4th Cir. 2005) (citing
United
1989)).

States

v.

Schwimmer,

892

F.2d

237,

243–44

(2d

Cir.

The privilege allows “persons with a common interest to

‘communicate with their respective attorneys and with each other
to more effectively prosecute or defend their claims.’”

Id.

(quoting In re Grand Jury Subpoenas 89–3 and 89–4, John Doe 89–
129, 902 F.2d 244, 249 (4th Cir. 1990)).

The proponent of the

privilege has the burden to establish that the parties had “some
common

interest

about

a

legal

matter.”

Sheet

Metal

Workers

Int’l Ass’n v. Sweeney, 29 F.3d 120, 124 (4th Cir. 1994).
Importantly,

“it

is

unnecessary

that

there

be

actual

litigation in progress for this privilege to apply.”

United

States v. Aramony, 88 F.3d 1369, 1392 (4th Cir. 1996).

Indeed

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we

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have

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recognized

that

Pg: 37 of 38

“[w]hether

an

action

is

ongoing

or

contemplated . . . the rationale for the joint defense rule
remains unchanged.”

In re Grand Jury Subpoenas 89–3 and 89–4,

John Doe 89–129, 902 F.2d at 249.
While Azdel does not challenge the existence of a common
legal interest between Crane and SABIC, 9 it argues that Crane
failed to establish that it had a “joint legal strategy” with
SABIC.

Appellant’s Br. at 31.

Yet we have never held that in

order to assert the common legal interest privilege, the party
asserting the privilege must put forward evidence establishing
the details of a joint legal strategy.

Moreover, such a holding

would undermine the logic of our prior cases holding that the
privilege applies even to actions which are not “ongoing.”

See,

e.g., In re Grand Jury Subpoenas 89–3 and 89–4, John Doe 89–129,
902

F.2d

at

249.

We

therefore

affirm

the

district

court’s

denial of Azdel’s motion to compel.

9

claims
claims
into a
that a

Indeed, SABIC received a letter from Azdel outlining
that Azdel might bring against SABIC.
Because those
implicated Crane’s interests, Crane and SABIC entered
common interest agreement.
Thus, there can be no doubt
common legal interest existed between the two entities.
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IV.
For the foregoing reasons, we
AFFIRM IN PART,
VACATE IN PART,
REVERSE IN PART,
AND REMAND.

38