## Facts

- Sherwin Alumina L.P. manufactured calcined alumina at its Texas plant and supplied AluChem, Inc., an Ohio buyer that depended on certain grades (RC1, SC2, SC10) for its business.
- The parties entered a supply relationship in 2001 and executed a written, automatically renewable two-year supply contract in 2002 (with later amendments).
- The contract made Sherwin AluChem’s exclusive supplier for specified calcined alumina grades produced using “kiln 8” at Sherwin’s plant.
- Kiln 8 operated under a temporary environmental permit and experienced numerous dust-emission “reportable events” requiring reporting to Texas regulators.
- Citing these environmental and operational difficulties, Sherwin asserted the contract’s force majeure clause and sought to suspend or terminate its supply obligations, filing suit for declaratory relief regarding the parties’ rights.
- The market for calcined alumina was tight, with few producers; for SC2, there was only one other North American manufacturer besides Sherwin.
- AluChem attempted to obtain substitute supply but was unable to secure an adequate alternative source.
- AluChem moved for summary judgment seeking enforcement of the contract and specific performance compelling continued supply.

## Issues

1. Whether Sherwin was excused from performance under the contract’s force majeure clause based on kiln 8 emissions and related regulatory/permitting conditions.
2. Whether AluChem was entitled to specific performance under Texas UCC § 2-716 due to scarcity and inability to cover.

## Decision

- The court granted AluChem’s motion for summary judgment in its entirety.
- The court held that the asserted emissions and regulatory/permitting problems did not qualify under the force majeure clause to excuse Sherwin’s performance.
- The court held that AluChem was entitled to specific performance under Texas UCC § 2-716 because the market conditions and lack of available substitutes constituted “other proper circumstances.”
- The court ordered enforcement of Sherwin’s contractual obligation to supply the specified calcined alumina according to the contract’s terms.

## Legal Principles

- Force majeure clauses are construed according to their terms; the party invoking the clause must show the claimed event falls within the clause and excuses performance as contemplated by the agreement.
- Conditions that are foreseeable, part of ordinary regulatory risk, or within the obligor’s reasonable control generally do not excuse performance under a force majeure clause absent clear contractual language.
- Under Texas UCC § 2-716, specific performance may be awarded where goods are unique or where “other proper circumstances” exist.
- “Other proper circumstances” can be shown by commercial unavailability, a tight market with few producers, an exclusive supply arrangement, and the buyer’s inability to cover despite diligent efforts.
- Summary judgment is appropriate when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law.

## Conclusion

The court enforced an exclusive long-term supply contract for scarce calcined alumina, rejecting the seller’s force majeure defense tied to emissions and permitting difficulties and awarding the buyer specific performance under Texas UCC § 2-716 due to the tight market and inability to obtain substitutes.


Sherwin Alumina L.P. v. AluChem, Inc., 512 F. Supp. 2d 957 (S.D. Tex. 2007)