Cyanco International, LLC v. Minerales de Occidente, S.A. de C.V.

Filing 75

ORDER. The Court's prior order denying Defendant's Motion for Summary Judgment (Document No. 23 ) is hereby VACATED. The Court further ORDERS that Defendant Minerales De Occidente, S.A. De C.V.'s Motion for Summary Judgment, (Document No. 17 ) is GRANTED. The Court further ORDERS that Defendant's requested declaratory judgment, pursuant to the Federal Declaratory Judgment Act, is hereby GRANTED as follows: (1) Cyanco failed to maintain an export license to ship cyanide as r equired by the Contract; (2) Cyanco's failure to maintain an export license to ship cyanide to the constituted an incurable breach of the Contract; (3) Minosa had no obligation to continue ordering cyanide from Cyanco during the period after Cya nco allowed the license to lapse; (4) Based on Cyanco's failure to maintain an export license to ship cyanide, (5) Minosa had the right to terminate the Contract; (6) Minosa did not breach the Contract; (7) Minosa did not repudiate the Contract; and (8) Minosa validly terminated the Contract effective May 19, 2023. THIS IS A FINAL JUDGMENT. Case terminated on 03/11/2025 (Signed by Judge David Hittner) Parties notified. (jww4)

United States District Court
Southern District of Texas

ENTERED
March 11, 2025

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CYANCO INTERNATIONAL,
LLC

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Plaintiff,
V.

MINERALES DE OCCIDENTE, S.A.
DE C.V.,
Defendant.

Nathan Ochsner, Clerk

Civil Action No. H-23-3713

ORDER
Pending before the Court is a reconsideration of the Court's prior order
denying defendant's motion for summary judgment (Document No. 25). Having.
reconsidered the motion, initial and supplemental submissions, and applicable law,
the Court determines that the Court's prior order must be vacated, and Defendant's
motion for summary judgment .should be granted.
I. BACKGROUND
This is a breach of contract case. Plaintiff Cyanco International, LLC
("Cyanco") is a producer and supplier of sodium cyanide in the gold mining industry.
On November 30, 2018, Cyanco entered into a business relationship with Defendant
Minerales De Occidente, S.A. DE C.V. (hereinafter "Minosa"), an openpit heapleach mining company operating in western Honduras. The parties entered into a
sales

agreement

("the

Contract"),

under
1

which

Minosa

agreed

to

purchase its annual requirement of sodium cyanide from Cyanco through December
31, 2026. As part of their Contract, the parties agreed "to maintain all licenses,
permits, authorizations, and registrations required to be held by each Party under
applicable Laws for purposes of manufacturing, transporting, using, handling, and
disposing of [cyanide]." 1 More specifically, in order to comply with both the terms
of the Contract and United States Federal Export Administration Regulations,
Cyanco was required to maintain an export license to ship cyanide to Honduras given
its volatile chemical nature. See 15 C.F.R. 742.2.
The parties do not disp~te that Cyanco applied for and obtained a valid export
license with a shipping capacity of 8,000 metric tons of sodium cyanide. However,
Minosa contends that a Spring 2023 accounting of received cyanide shipments
revealed Cyanco had exceeded the 8,000 metric tons permitted under their export
license. Minosa further contends that federal regulations prohibited them from
continuing to purchase from suppliers who fail to maintain a valid export license. 2
Thus, on March 30, 2023, Minosa gave Cyanco notice that they believed the contract

1

Defendant's Motion for Summary Judgment, Document No. 17, Exhibit A-1 at§
12.2 (The Contract).
2

Under 15 C.F.R. § 750.7(±), the authorization to export cyanide is limited to the
quantity specified on the license, and the exporter must ensure that its exports do not exceed
either the quantity or value stated in the license. The EAR plainly states that "[i]f you have
already shipped the full quantity of items approved on your license ... [n]o further
shipment may be made under the license." 15 C.F.R. § 750.ll(a).

2

had been materially breached based on Cyanco' s failure to maintain a valid export
license. On April 19, 2023, Minosa gave Cyanco notice that Minosa was terminating
the Contract effective May 19, 2023.
Based on the foregoing, on October 3, 2023, Cyanco filed suit in this Court
pursuant to diversity jurisdiction, asserting a single claim for breach of contract,
contending that Minosa lacked the proper justification to terminate the contract. 3 On
December 28, 2023, Minosa filed its answer seeking a declaratory judgment that
Cyanco failed to maintain an export license to ship cyanide as required by the
Contract, and as a result, Minosa had the right to terminate the Contract. On March
1, 2024, Minosa filed a motion for summary judgment, which the Court denied on
April 22, 2024. The Court now, sua sponte, seeks to reconsider the merits of
Minosa's summary judgment motion. In doing so, the Court provided notice of its
intent to reconsider Minosa's motion at the final pretrial conference, and allowed the
parties the opportunity to submit supplemental briefing to aid the Court's

3

In the Complaint, Cyanco sought "compensatory damages in an amount to be
proven at trial." Complaint, Document No. 1 at 11. In the parties' joint pretrial order,
Cyanco sought damages in "an amount exceeding over $10 million." Joint Pretrial Order,
Document No. 47 at 9. At the final pretrial conference before the Court, Cyanco stated on
the record that they are now seeking over $24 million in damages. See Final Pretrial
Conference Hearing, Document No. 69.

3

reconsideration of the merits of Minosa' s summary judgment motion. Cyanco
availed itself of the Court's offer, and Minosa elected to forgo any further briefing. 4
II. STANDARD OF REVIEW
The Fifth Circuit has made clear that a district court may reconsider a
previously denied summary judgment motion, sua sponte. See Baig v. McDonald,
749 Fed. Appx. 238,241 (5th Cir. 2018) (holding that the district court did not abuse
its discretion in granting summary judgment upon reconsideration, sua sponte, after
having previously denied a summary judgment motion in a perfunctory manner).
The Fifth Circuit has further clarified that " [a] trial court has the authority to
reconsider and revise a prior ruling 'for any reason it deems sufficient, even in the
absence of new evidence or an intervening change in or clarification of the
substantive law.'" AIG Specialty Insurance Company v. Agee, 2025 WL 655069 (5th
Cir. 2025) (citing Austin v. Kroger Tex., L.P., 8644 F.3d 326, 336 (5th Cir. 2017)).
Summary judgment is proper when "there is no genuine dispute as to any
material fact and the movant is entitled to a judgment as a matter of law." Fed. R.
Civ. P. 56(a). The Court must view the evidence in a light most favorable to the
nonmovant. Coleman v. Haus. Indep. Sch. Dist., 113 F.3d528, 533 (5th Cir. 1997).
.

.

Initially, the movant bears the burden of presenting the basis for the motion and the

4

See Cyanco 's Supplement to its Response in Opposition to Minosa 's Motion for
Summary Judgment, Document No. 71.

4

elements of the causes of action upon which the nonmovant will be unable to
establish a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). The burden then shifts to the nonmovant to come forward with specific
facts showing there is a genuine dispute for triaL See Fed. R. Civ. P. 56(c);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). "A

dispute about a material fact is 'genuine' if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party." Bodenheimer v. PPG Indus.,
Inc., 5 F.3d 955, 956 (5th Cir. 1993) (citation omitted).

The nonmoving party's bare allegations, standing alone, are insufficient to
create a material dispute of fact and defeat a motion for summary judgment. If a
reasonable jury could not return a verdict for the nonmoving party, then summary
judgment is appropriate. Liberty Lobby, Inc., 477 U.S. at 248. The nonmovant's
burden cannot be satisfied by "conclusory allegations, unsubstantiated assertions, or
'only a scintilla of evidence.'" Turner v. Baylor Richardson Med. Ctr., 476 F .3 d 337,
343 (5th Cir. 2007) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994)). Uncorroborated self-serving testimony cannot prevent summary judgment,
especially if the overwhelming documentary evidence supports the opposite
scenario. Vais Arms, Inc. v. Vais, 383 F3d 287, 294 (5th Cir. 2004). Furthermore, it
is not the function of the Court to search the record on the nonmovant' s behalf for
evidence which may raise a fact issue. Topalian v. Ehrman, 954 F.2d 1125, 1137
5

n.30 (5th Cir. 1992). Therefore, "[a]lthough we consider the evidence and all
reasonable inferences to be drawn therefrom in the light most favorable to the
nonmovant, the nonmoving party may not rest on the mere allegations or denials of
its pleadings but must respond by setting forth specific facts indicating a genuine
issue for trial." Goodson v. City ofCorpus Christi, 202F.3d 730, 735 (5th Cir. 2000).
III. LAW & ANALYSIS
On March 1, 2024, Minosa moved for summary judgment, contending there
was no material question of fact for a jury regarding whether Cyanco breached its
contract with Minosa by failing to maintain the required export license. In response,
Minosa argued that there was no evidence that Cyanco breached the sales contract,
and that there was indisputable evidence that Minosa wrongfully terminated the
Contract early. After having provided notice to the parties at the Court's final pretrial
conference, the Court will now reconsider the arguments raised by the parties in their
respective briefings related to summary judgment, sua sponte, in addition to •
supplemental briefing offered to the parties. 5 Upon reviewing the aforementioned, it
becomes clear that Minosa contends Cyanco breached their Contract by failing to

5

See Defendant's Motion for Summary Judgment, Document No. 17; Plaintiff's
Response in Opposition to Defendant's Motion/or Summary Judgment, Document No. 21;
Defendant's Reply in Support ofits Motion for Summary Judgment, Document No. 24; and
Cyanco 's Supplement to its Response in Opposition to Minosa 's Motion for Summary
Judgment, Document No. 71.

6

maintain an export license, which rendered Cyanco unable to ship sodium cyanide
to Minoa, which in tum, excused Minosa's further per~ormance and permitted
Minosa to terminate the Contract. In response, Cyanco argues that it both: ( 1)
maintained the required export license; and (2) timely cured the breach alleged by
Minosa. 6
The parties do not dispute that Cyanco first obtained Export License .
Dl 170758 ("the Export License") in 2019, as required by the U.S. Federal Export
Administration Regulations ("EAR"). Under the EAR. the authorization to export
cyanide is limited to the quantity specified on the license, and the exporter must
ensure that its exports do not exceed either the quantity or value stated in the license.
See 15 C.F.R. § 750.7(±). The EAR explicitly states that ''[i]f you have already

shipped the full quantity of items approved on your license ... [n]o further.shipment
may be made under the license." 15 C.F.R. § 750.l l(a). The EAR also offers clear
guidance to potential purchasers seeking to acquire goods from an exporter who has
reached their respective license limit, by explicitly stating "[n]o person may engage
in any transaction or take any other action prohibited by or contrary to ... the EAR,

6

Cyanco further contends that the term "maintain" was not defined in the Contract
or the federal regulations applicable to this matter. For purposes of this matter, the court
will adopt the Texas Supreme Court's definition of "maintain" as being "[t]o keep up,
preserve, bear the cost of, keep unimpaired, [or] keep in good order." Big Three Welding
Equip. Co. v. Crutcher, Rolfs, Cummings, Inc., 229 S.W.2d 600, 603 (Tex. 1950) (citing
BLACK'S LAW DICTIONARY, 3d Ed. at 1143).

7

or any order, license or authorization issued thereunder." 15 C.F.R. § 764.2(a).
Furthermore, 15 C.F.R. § 764.2(e) provides that "[n]o person may order, buy, .. .
use, ... in whole or in part, or conduct negotiations to facilitate such activities .. .
with knowledge that a violation of ECRA, the EAR, or any order, license, or
authorization issued thereunder, has occurred, is about to occur, or is intended to
occur in connection with the item."
Here, the parties do not dispute that Cyanco's Export License permitted
Cyanco to ship up to 8,000 metric tons of sodium cyanide. Yet, the record is clear
that Cyanco exported a total of 10,640 metric tons of sodium cyanide to Minosa
under that license. 7 Minosa contends that Cyanco •did not have a valid license to
export the additional 2,640 metric tons of sodium cyanide, and the action of shipping
the excess cyanide constituted both a violation of federal regulation and a material
breach of the Contract. Based on the foregoing, Minosa gave Cyanco notice that
Cyanco was in breach of the Contract on March 30, 2023. After receiving no
response from Cyanco, Minosa sent a second notice on April 19,· 2023~ stating that
it was terminating the Contract with Cyanco effective May 19, 2023.
First, Cyanco contends in response that its alleged breach was not material
because there was no stoppage in sodium cyanide· shipments, meaning Minosa's
ordinary course of business was not disrupted. Minosa contends that once they

7

See Defendant's Motion for Summary Judgment, Document No. 17, Exhibit A.

8

became aware of a violation of the EAR, Minosa was no longer able to lawfully
order any additional sodium cyanide from Cyanco under the applicable regulations,
thus excusing further performance by Minosa. Cyanco offers no rebuttal. A plain
reading of the applicable federal regulation is clear, with 15 C.F.R. § 764.2(e)
providing that "[n]o person may order, buy, ... use, ... in whole or in part, or
conduct negotiations to facilitate such activities ... with knowledge that a violation
of ECRA, the EAR, or any order, license, or authorization issued thereunder, has
occurred, is about to occur, or is intended to occur in connection with the item."
Considering the applicable regulation and the undisputed facts in the record, the
Court finds that no genuine issue of material fact exists with regards to whether
Cyanco materially breached the Contract, as Cyanco shipped in excess of the Export
License limits, and Minosa had clear directions from the EAR that they were no
longer permitted to purchase from Cyanco after discovering Cyanco had violated the
terms of their Export License.
Second~ Cyanco contends that Minosa failed to allow Cyanco the opportunity
to cure their alleged breach, referencing for the Court the Contract's language stating
their ability to "remedy such breach within thirty (30) days after its receipt of written
notice detailing the breach from the non~breaching party." 8 Cyanco further contends

8

Plaintiff's Response to Defendant's Motion for Summary Judgment, Document
No. 21 at Ex. A-1 at 2 (the Contract).

9

that its subsequent acquisition of a new export license cured its failure to maintain
the initial export license. In response, Minosa offers a plethora of authority for the
proposition that a failure to maintain something amounts to an incurable breach of
contract in similar contexts where that failure resulted in a violation of the law. 9
Cyanco offers no caselaw or legal argument to the contrary. Considering the fact that
Cyanco's failure to maintain the Export License, in and of itself, resulted in a
violation of federal law, the Court finds that Cyanco's breach of the Contract was
incurable. 10

9

See Fed. Eng'rs v. Relyant Glob., LLC, 2022 LEXIS 241879, at *15 (E.D. Tenn.
2022) (holding that a party does not have a right to retroactively cure a violation of the
law); AgTech Sci., LLC v. Blue Circle Dev., LLC, 2020 WL 1975375, at *4 (E.D. Ky. 2020)
(finding a failure to maintain licenses and conduct business in compliance with the law
amounted to incurable breach that permitted termination of contract); D&D Realty Trust v.
Borgeson, 2015 WL 5098626 (Mass. Dist. Ct. 2015) (finding that an intermittent failure to
insure property was a material breach); Kyung Sik Kim v ldylwood, NY., LLC, 886
N.Y.S.2d 337 (1st Dep't 2009) (finding that tenants could not cure failure to continuously
maintain insurance coverage, because prospective insurance coverage for the remaining
lease term would not protect the owner against claims arising during period of noncoverage); Las Americas, Inc. v. American Indian Neighborhood Dev. Corp., 2004 WL
2710061 (Minn Ct. App. 2004) (finding that a failure to maintain liability insurance could
not have been corrected by tenant by paying insurance premiums or obtaining coverage
after the fact).
10

Minosa also notes for the Court that Cyanco failed to inform Minosa that it had
obtained a new export license until June 19, 2023, several months after Minosa sent the
required thirty-day written notice of its intent to terminate the contract. Cyanco offers no
justification other than stating "nothing in the Sales Contract required Cyanco to provide
MINOSA with a copy of its export license for shipping sodium cyanide." Plaintiff's
Response to Defendant's Motion for Summary Judgment, Document No. 21 at 11.

10

Cyanco offers no other basis upon which to survive Minosa' s motion for
summary judgment. Based on the foregoing, the Court finds that Minosa has
proffered summary judgment evidence such to show there is no genuine issue of
material fact remaining in this matter. Accordingly, the Court finds that the Court's
prior order should be vacated, and Minosa' s motion for summary judgment should
be granted.
IV .. CONCLUSION
Based on the foregoing, the Court hereby
ORDERS that the Court's prior order denying Defendant's Motion for

Summary Judgment (Document No. 23) is hereby VACATED. The Court further
ORDERS that Defendant Minerales De Occidente, S.A. De C.V.'s Motion

for Summary Judgment, (Document No. 17) is GRANTED. The Court further
ORDERS that Defendant's requested declaratory judgment, pursuant to the

Federal Declaratory Judgm~nt Act, is hereby GRANTED as follows: (1) Cyanco
failed to maintain an export license to ship cyanide as required by the Contract; (2)
Cyanco's failure to maintain an export license to ship cyanide to the constituted an
incurable breach of the Contract; (3) Minosa had no obligation to continue ordering
cyanide from Cyanco during the period after Cyanco allowed the license to lapse;
(4) Based on Cyanco' s failure to maintain an export license to ship cyanide, (5)
Minosa had the right to terminate the Contract; (6) Minosa did not breach the
11

Contract; (7) Minosa did not repudiate the Contract; and (8) Minosa validly
terminated the Contract effective May 19, 2023.
THIS IS A FINAL JUDGMENT.

SIGNED at Houston, Texas, on this _J}_ day of March, 2025.

~~

~DHITTNER·
United States District Judge

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