A Texas judge handed down a split decision in civil litigation, mostly favoring Material Partnerships Inc. over two units of Formosa Plastics Group. Harris County District Judge Patricia Hancock awarded MPI almost $3.4 million in net damages. She signed the final order March 6 in Houston.
MPI's award recognized Formosa's "unjust enrichment" in withholding commissions on resin sales. The judge also recognized Formosa's breach-of-contract counterclaim and reduced what could have been a higher net award to the resin distributor.
Joel Burgower, owner and president of Houston-based MPI, expressed relief.
"I am satisfied but not elated," Burgower said in a telephone interview. "I am pleased that the court recognized there was a partnership between Formosa and Material Partnerships."
Formosa lawyer Mark Elvig expects Formosa Plastics Corp. USA of Livingston, N.J., and Formosa Plastics Corp. Texas of Point Comfort, Texas, to appeal the commissions portion of the case within 30 days.
Formosa began producing polyolefins in Texas in late 1993. MPI had marketing contacts and customers and, for more than three years, worked with Formosa in developing the market without receiving commissions. Sales approached $60 million, including $19 million to Carlisle Plastics Inc., $11.6 million to Goldmark Plastics International Inc. and $8.5 million to Sonoco Products Co., according to the judgment.
Formosa abruptly ended the relationship in 1997 after gaining knowledge about the distributing business, MPI and its customers, according to William Rucker of Houston, the lead lawyer representing MPI.
MPI sued in July 1997, and Formosa countersued four months later. MPI amended the suit to add the commission claims in September 1998.
The evidential portion of the trial took six days in 1999.
Hancock awarded $3.8 million plus interest to MPI on the unjust enrichment cause of action. But she also awarded Formosa USA $598,000 plus interest and $280,000 in lawyers' fees, for the full amount of MPI's overdue payments for resin purchases.
"We proved they hadn't paid for it," Elvig said by telephone.
Formosa USA began operations in 1982. The vertically integrated manufacturer produces olefins, high and linear low density polyethylene, polypropylene, chlor-alkali and other resins and commodity chemicals. Formosa USA is the North American arm of Formosa Plastics Group of Taipei, Taiwan.
Burgower established MPI in 1992. The small firm exported about 60 percent of its brokered resin transactions last year. Sourcing for the remainder is split between domestic and foreign resin makers. Burgower withheld sales figures.
Following the 1997 split, MPI lost about 75 percent of its sales and cut expenses by about 67 percent, he said.
Burgower said he is considering an appeal of the overdue payments award.