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Messer Griesheim Industries11/10/2005
Background
This is the third occasion we have had to consider an appeal in this litigation. Our opinion from the second appeal sets forth a good summary of what gave rise to this lawsuit. Finding no need to reinvent the wheel, we quote liberally from that opinion to set forth the general background:
Cryotech of Kingsport, Inc., (hereinafter "Cryotech") operates gas purification facilities and produces food grade liquid carbon dioxide. The Appellee, Eastman Chemical [Company] (hereinafter "Eastman"), owns and operates a coal gasification plant in Kingsport. The Appellant, Messer Griesheim, Inc., d/b/a MG Industries (hereinafter "Messer"), is a distributor of liquid carbon dioxide, which it purchases in bulk and sells to customers for various food and medical uses.
In 1988 Cryotech and Eastman entered into an agreement pursuant to which Cryotech would purchase a carbon dioxide rich waste stream (hereinafter "feedgas") from Eastman which Eastman had, prior to that time, vented into the atmosphere. The price paid to Eastman by Cryotech under the agreement was determined by the concentration of carbon dioxide in the feedgas and the volume of feedgas to be purchased was measured by the amount of carbon dioxide Cryotech shipped to its customers.
At the same time it entered [into] the feedgas agreement Cryotech also entered into a lease of land belonging to Eastman adjacent to Eastman's Kingsport plant and constructed thereon a carbon dioxide purification facility.
Cryotech's purification facility became operational in 1992 and Cryotech began selling carbon dioxide to Messer and other customers. Shortly after operations began Cryotech began experiencing problems due to chemical contaminants in the feedgas it was purchasing from Eastman. In spring of 1993, Eastman discovered the presence of hydrogen cyanide (hereinafter "HCN"), a toxic and potentially lethal substance, on Cryotech's catalyst and informed Cryotech of this finding. The feedgas agreement had not included HCN in a description designated "Typical Composition of Carbon Dioxide Gas" and deposition testimony indicates that Eastman had previously represented that it had never detected any cyanide in the feedgas. Because of resulting increased purification costs, Cryotech withheld payment for the feedgas and eventually owed Eastman an arrearage of over one million dollars.
Cryotech began monitoring the HCN content of the feedgas more than once a day and frequently discussed the results of such monitoring with Eastman representatives. In late 1993 Cryotech detected increasing levels of HCN and complained to Eastman about the increased cost of its removal. Eastman sought to determine the cause of the increased HCN levels and endeavored to assist Cryotech in identifying better and less expensive ways Cryotech could remove the HCN. Eastman also took some actions in its own facility to try to reduce the HCN content of the feedgas. In 1996 Eastman installed its own HCN analyzer to prepare for compliance with new EPA regulations; however, this analyzer exhibited various problems and was ultimately determined to be an unreliable measure of HCN levels.
In March of 1996 Messer began selling carbon dioxide obtained from Cryotech to a large manufacturer of carbonated beverages. Shortly thereafter, this manufacturer notified Messer that it was receiving customer complaints regarding the odor and/or taste of its beverages. Testing revealed the presence of HCN in Cryotech's carbon dioxide and thereafter Eastman discontinued supplying feedgas to [Cryotech]. Subsequently, several of Messer's other customers claimed that their product had been adulterated by the contaminated carbon dio
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