Steel Dynamics, Inc. announced that a Michigan circuit court judge has dismissed General Motors Corporation's lawsuit against SDI over an alleged multi-year steel purchase agreement.
Oakland County (Michigan) Circuit Court Judge Gene Schnelz issued his ruling from the bench, granting Steel Dynamics' motion to dismiss GM's lawsuit on the basis that GM had failed in its March 18, 2004, complaint to state a legally valid claim against SDI.
In granting Steel Dynamics' motion to dismiss GM's complaint, Judge Schnelz, from the bench, questioned the wisdom of GM's decision to bring its original complaint based upon a January 22, 2003, GM-drafted letter to SDI. The court noted that the GM letter, by its very terms, simply constituted "a framework for the future" and contained a provision negating the existence of any GM obligation to purchase any minimum tonnages of steel or any minimum percentage of GM's requirements of the designated flat-rolled steel products. Furthermore, GM reserved the right to unilaterally terminate at any time.
GM had argued that it was entitled to purchase steel at January 2003 pricing for the balance of 2004. Steel Dynamics contended that GM's so-called agreement was legally unenforceable because of a lack of mutuality of obligation -- that is, that GM cannot legally enforce an obligation upon SDI to sell when GM disclaimed any obligation to purchase -- and the court agreed.
"We are delighted that our position in this controversy with General Motors … has now been fully vindicated and that the court has determined that for there to be a legally binding contract both parties must have enforceable obligations,” said Keith Busse, SDI's President and Chief Executive Officer. “As a company, we are committed to honoring our obligations, and we do so every day, even if circumstances turn against us in a particular transaction. However, we felt strongly that General Motors' attempt to take advantage of the dramatic increase in the market price of steel by asserting a one-way obligation against us was wrong and should be opposed."