CLEAN EARTH DREDGING TECHNOLOGIES, INC. v. SLRD COMPANY- MULLICA HILL, LLC
Filing
28
OPINION. Signed by Judge Joseph E. Irenas on 5/2/2013. (TH, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CLEAN EARTH DREDGING
TECHNOLOGIES, INC.,
HONORABLE JOSEPH E. IRENAS
Plaintiff,
CIVIL ACTION NO. 12-1989
(JEI/KMW)
v.
SLRD COMPANY – MULLICA HILL,
LLC,
OPINION
Defendant.
APPEARANCES:
GREENBERG & TRAURIG, LLP
Eric Aronson & Laurie Ann Poulos
200 Park Avenue
Florham Park, NJ 07932
Counsel for Plaintiff
LIPMAN, ANTONELLI, BATT, GILSON, ROTHMAN & CAPASSO
Steven L. Rothman
110 North Sixth Street
P.O. Box 729
Vineland, NJ 08362
Counsel for Defendant
Irenas, Senior District Judge:
This is a breach of contract case.
Plaintiff Clean Earth
Dredging Technologies, Inc. (“Clean Earth”) claims, among other
things, that Defendant SLRD Company – Mullica Hill, LLC (“SLRD”)
breached its contract with Clean Earth by closing a landfill
site to Clean Earth and that SLRD has been unjustly enriched by
refusing to return prepayments that Clean Earth made to SLRD.
1
Defendant SLRD counterclaims that Clean Earth has breached the
contract by failing to pay SLRD for site maintenance performed
under the contract.
Presently before the Court is Clean Earth’s
Motion for Summary Judgment on Counts I and III of its Second
Amended Complaint as well as on Count II of SLRD’s Second
Amended Counterclaim. 1 (Dkt. No. 21)
For the reasons stated
herein, Clean Earth’s motion will be granted in part and denied
in part.
I.
For the purposes of this Motion, the Court resolves any
factual disputes in favor of the Defendant, SLRD. 2
This dispute
centers on the removal and delivery of Fill Materials, which, in
this particular case, consist of “recycled, lightly contaminated
1
The Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1).
2
In deciding a motion for summary judgment, the Court must construe the facts
and inferences in a light most favorable to the non-moving party. Pollock v.
Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).
In its reply brief, Clean Earth urges this Court to deem admitted all
facts in Clean Earth’s Statement of Undisputed Material Facts, as SLRD failed
to submit a responsive statement with its Brief in Opposition pursuant to
Local Rule 51.6. (P.’s Reply Br. 1, 4-5) After Clean Earth called attention
to this omission, SLRD filed its Rule 51.6 Responsive Statement of Material
Facts. (Dkt. No. 24) In a letter to the Court dated November 27, 2012,
counsel for SLRD represented that counsel for Clean Earth acknowledged that
the responsive statement had been omitted in error. (Dkt. No. 25) Clean
Earth subsequently filed a reply to SLRD’s Rule 51.6 statement. (Dkt. No.
26) Given that SLRD cured its failure to file the responsive statement,
Clean Earth was able to file a reply to that statement, and counsel have
acknowledged that the original failure to file the responsive statement was
in error, the Court will not deem admitted all facts in Clean Earth’s
Statement of Undisputed Material Facts. See, e.g., N.J. Envtl. Fed’n v.
Wayne Twp., 310 F. Supp. 2d 681, 689 (D.N.J. 2004) (declining to deem facts
admitted despite failure to file a Rule 56.1 statement where the party cured
the failure and the opposing party was given the opportunity to respond to
the statement).
2
soils and alternate fill materials.” (Decl. of Eric S. Aronson,
Esq. (“Aronson Decl.”) Ex. B (“Supply Agreement”) ¶ 1.1.1)
These Fill Materials are used to fill depressions in the ground
or change the grade of land.
Clean Earth is a Pennsylvania corporation that removes,
processes, and receives Fill Materials and then transports and
disposes of those materials.
(SUMF 3 ¶¶ 1-2)
SLRD is a New
Jersey limited liability company that operates the Henry Harris
landfill site in Harrison Township, New Jersey (“the Site”).
(Id. ¶ 3)
The Site is in the process of being redeveloped so
that commercial warehouses may be erected on top of the
landfill.
The Site’s redevelopment is subject to a February 7,
2006 Closure Plan Approval (“the Closure Plan”) issued by the
New Jersey Department of Environmental Protection (“NJDEP”).
(Id. ¶¶ 4-5)
As part of the Closure Plan, the Site must be
capped, filled, and graded in accordance with applicable law and
permits.
(Id. ¶ 5)
On April 17, 2006, Clean Earth and SLRD entered into a Soil
Supply Agreement (“the Agreement”) in which Clean Earth agreed
to supply and deliver Fill Materials to the Site and SLRD agreed
to accept delivery of those Fill Materials.
Agreement)
(Id. ¶¶ 8-9; Supply
The Agreement incorporated the Closure Plan.
3
(SUMF
SUMF refers to Plaintiff’s Statement of Undisputed Material Facts submitted
in support of its Motion for Summary Judgment (Dkt. No. 21) pursuant to Local
Rule 56.1.
3
¶ 6)
Under the Agreement, Clean Earth initially had a limited
interim exclusive license “to supply Fill Materials to the Site”
(Supply Agreement ¶ 2.1.1), which Clean Earth could convert to a
permanent exclusive license.
(Id. ¶ 2.1.2)
If Clean Earth
chose to make the exclusive license permanent, SLRD was required
“to accept all Fill Materials delivered to the Site by Supplier
[Clean Earth], with the understanding that the Site will require
approximately two million . . . cubic yards of Fill Materials.”
(Id.)
To maintain its exclusive license, Clean Earth was required
to both supply the Site with a minimum of 20,000 tons of Fill
Materials per month and pay SLRD for those materials on a
monthly basis.
(Id. ¶ 2.1.4)
The payment was calculated based
on the Tipping Fees that Clean Earth owed.
(Id.)
The Agreement
defines Tipping Fees as “the amounts payable by Supplier upon
delivery of Fill Materials to the Site.”
(Id. ¶ 1.1.1)
The
Tipping Fees for the first 25,000 tons of Fill Materials
delivered to the Site were set at $10.00 per ton.
(Id. ¶ 3.2.1)
For quantities above 25,000 tons, “the applicable Tipping Fee
shall be equal to fifteen ($15.00) dollars per ton.”
(Id.
¶ 3.2.2)
In the event that Clean Earth could not meet its monthly
minimum tonnage, it had two options.
First, Clean Earth could
make a payment, termed a “Catch Up Payment,” to SLRD.
4
The Catch
Up Payment would be calculated by taking the difference between
the amount of Fill Materials that Clean Earth delivered and the
monthly minimum tonnage and then multiplying that amount by the
$15.00 Tipping Fee.
(Id. ¶ 2.1.4(i))
Any Catch Up Payments
made would be used to offset future Tipping Fees for any Fill
Materials delivered that were in excess of the minimum monthly
delivery.
(Id.)
Second, Clean Earth could choose to “convert
the Exclusive Supply License to a non-exclusive license such
that Redeveloper may solicit one or more third parties to
provide soils to the Site.”
(Id. ¶ 2.1.4(ii))
If Clean Earth
chose the second option, “the Advance Payment 4 and any Catch Up
Payments [would] continue to be credited against future Tipping
Fees . . . fully offset.”
(Id.)
There have been three amendments to the Agreement since its
execution.
The first amendment occurred on October 11, 2006 and
was made in response to certain preconditions imposed by the
NJDEP before Phase I of the Closure Plan could begin.
That
amendment suspended some of the parties’ obligations until those
preconditions were met and Phase I began.
(“Horne Decl.”) Ex. A 1-2)
(Decl. of Brian Horne
The amendment stated, “All terms and
conditions of the Agreement shall remain in effect, except as
4
The “Advance Payment” refers to an initial payment of $250,000 that Clean
Earth was required to make to SLRD within ten days after the Agreement was
executed. (Supply Agreement ¶ 3.4.4)
5
specifically modified by the terms of this letter agreement.”
(Id. ¶ 6)
The second amendment took place on July 6, 2010.
This
amendment was made in response to a Notice of Violation that
SLRD received on April 5, 2010 from the NJDEP Bureau of Solid
Waste Compliance and Enforcement and to “current market
conditions.”
(Horne Decl. Ex. B (“July 6, 2010 Amendment”) 1)
The parties “desire[d] to modify certain terms of the Agreement
and to suspend certain obligations of the Parties with respect
to the Agreement.”
(Id.)
In this amendment, the parties
agreed, inter alia, to amend the Agreement so that SLRD could
accept fill materials from other sources as long as those
materials were in compliance with the needs of the Site and
Clean Earth approved the alternative sources ahead of time.
(Id. ¶ 1)
Even though SLRD could accept materials from third
parties, SLRD and Clean Earth agreed that Clean Earth’s
Exclusive Supply License would remain in effect and SLRD’s
acceptance of materials from third parties would not constitute
a violation of that license.
(Id. ¶ 2)
Further, any materials
accepted from a third party would count toward Clean Earth’s
monthly minimum requirement, and Clean Earth was entitled to a
commission from the tipping fees that SLRD received from these
sources.
(Id.)
6
In addition, the amendment reiterated that if Clean Earth
chose
to convert the Exclusive Supply License to a non-exclusive
license, the outstanding balance of all Advance Payments
and Catch-Up Payments shall be credited against all Tipping
Fees due to Redeveloper for Fill Material delivered to the
Site and all future Tipping fees payable by Supplier (and
not just for fees payable for Fill Materials in excess of
the monthly minimum quantity).
(Id. ¶ 8)
Finally, the amendment stated, “All terms and
conditions of the Agreement shall remain in effect, except as
specifically modified by the terms of this letter agreement, or
any prior or subsequent written instrument signed by the Parties
in accordance with the Agreement.”
(Id. ¶ 12)
The third amendment to the Agreement took place on March
20, 2011 in response to “market conditions, allegations of
default on the part of Clean Earth and discussions concerning
the possible purchase of the landfill by Clean Earth.”
¶ 81)
(RSMF 5
Under the terms of that amendment, Clean Earth agreed to
pay SLRD $450,000 as an advance payment toward future Tipping
Fees (Horne Decl. Ex. C (“March 20, 2011 Amendment”) ¶ 1), and
the parties agreed to waive other Catch Up Payments that Clean
Earth would have been required to make.
(Id. ¶ 2)
The
amendment reaffirmed Clean Earth’s Exclusive Supply License and
confirmed that Clean Earth was not in default of the Agreement.
5
RSMF refers to Defendant’s Responsive Statement of Material Facts.
No. 24)
7
(Dkt.
(Id.)
Finally, the parties once again agreed, “All terms and
conditions of the Agreement shall remain in effect, except as
specifically modified by the terms of this letter agreement, or
any prior or subsequent written instrument signed by the Parties
in accordance with the Agreement.”
(Id. ¶ 8)
In October 2011, Clean Earth entered into an agreement
(“Ash Disposal Agreement”) with Hilltop Enterprises, Inc.
(“Hilltop”) to dispose all of the fly ash material generated at
the Chambers Cogeneration facility in Carney’s Point, New Jersey
(“Carney’s Point”).
(SUMF ¶ 39)
The fly ash material qualified
as Fill Material under the Agreement between Clean Earth and
SLRD.
Under the Ash Disposal Agreement, Clean Earth received
fly ash material on a daily basis from Carney’s Point, which it
then delivered to the Site.
(Id. ¶ 40)
The Ash Disposal
Agreement initially qualified only two locations at which the
fly ash material could be disposed:
the Site and Clean Earth of
North Jersey, Inc.’s Kearny, New Jersey facility (“CENJ”).
(Aronson Decl. Ex. I (“Ash Disposal Agreement”) 2)
That same month, Clean Earth exercised its option to become
a non-exclusive licensee under paragraph 2.1.4(ii) of the
Agreement.
(RSMF ¶ 87)
October 2011.
(Id. ¶ 89)
Clean Earth did not pay its invoice for
Beginning in November 2011, SLRD
asserted that it wanted to increase the Tipping Fees from $15.00
to $40.00 per ton (id. ¶ 90) and indicated that it would
8
restrict Clean Earth’s access to the Site if Clean Earth did not
agree to the increased Tipping Fees.
(SUMF ¶ 44)
In response to this dispute, the parties entered into an
Interim Agreement on November 15, 2011.
(Id. ¶ 45)
Clean Earth
agreed to pay its October 2011 invoice and prepay for its
November and December deliveries of Fill Materials.
The
prepayments were calculated using the $15.00 per ton Tipping
Fee.
(Horne Decl. Ex. D (“Interim Agreement”) ¶¶ 1-3)
For its
part, SLRD agreed to continue to allow Clean Earth unrestricted
access to the Site to deliver Fill Materials for the duration of
the Interim Agreement.
(Id. ¶ 5)
SLRD also agreed to meet with
Clean Earth “in an attempt to resolve all outstanding
contractual disputes.”
(Id. ¶ 4)
includes the following provision:
The Interim Agreement
“This Interim Agreement,
while binding on the parties during the period covered
hereunder, shall not be construed to waive or modify the terms
of provisions of the Soil Supply Agreement in any way and the
entire Agreement shall remain in full force and effect.”
(Id.
at 2)
On January 30, 2012, the parties extended the Interim
Agreement through March 31, 2012 “to allow the parties
additional time to address the ongoing disputes regarding the
Soil Supply Agreement.”
(Horne Decl. Ex. E (“Extension”) 1)
Under the terms of the Extension, Clean Earth agreed to “pay or
9
pre-pay for the anticipated quantity of Fill Material to be
delivered in the months of January 2012 through March 2012 at
the contract Tipping Fee of $15.00 per ton.”
(Id. ¶ 1)
SLRD
agreed to keep the Site open to Clean Earth without restriction
until the Interim Agreement Extension expired.
(Id. ¶ 2)
SLRD
further promised
that it [would] not interfere with nor impede nor hinder in
any way, directly or indirectly, the delivery of such Fill
Material by Supplier to the Site and shall only deny access
to Supplier if required to do so under NJDEP direction, or
if Supplier fails to pay or pre-pay for fill materials
contemplated herein.
(Id.)
As with the Interim Agreement, the Extension states,
“This Interim Agreement, shall not be construed to waive or
modify the terms or provisions of the Soil Supply Agreement,
except as specifically provided herein, and the entire Agreement
shall remain in full force and effect.”
(Id. at 1)
On Friday, March 30, 2012, SLRD threatened to close the
Site to Clean Earth.
(SUMF ¶ 48)
The following day, March 31,
2012, Clean Earth sent a written default notice to SLRD,
demanding that it keep the Site open.
Agreement expired that day.
(Id. ¶ 49)
The Interim
On April 1, 2012, SLRD closed the
Site to Clean Earth (RSMF ¶ 96), and Brian Horne, SLRD’s
Managing Member, emailed Clean Earth’s President, Steve Sands,
to advise him of the closure.
(SUMF ¶ 50)
In his email, Mr.
Horne indicated that he was closing the Site in response to
10
Clean Earth’s withdrawal from the Agreement.
(Id.)
Clean Earth
attempted to deliver Fill Materials to the Site on Monday, April
2, 2012, but was turned away.
(Id. ¶ 52)
At the time, the only Fill Materials that Clean Earth was
delivering to the Site were fly ash materials from Carney’s
point.
(Id. ¶ 56)
After SLRD closed the Site to Clean Earth,
Clean Earth began delivering the fly ash materials to CENJ,
which was the only other approved disposal location under the
Ash Disposal Agreement.
(Id. ¶ 42)
CENJ charged tipping fees
of $89.00 per ton and is located further from Carney’s Point.
(Id. ¶ 58)
Clean Earth delivered the fly ash materials to CENJ
from April 1 to April 6, 2012.
(Id. ¶¶ 57 & 61)
Beginning on April 9, 2012, Clean Earth began delivering
materials to the Gloucester County landfill (“GCIA”), an
alternative disposal location for which Clean Earth obtained
approval.
(Id. ¶ 60)
Initially, Clean Earth paid tipping fees
of $22.50 per ton to GCIA through a broker; GCIA now charges
directly Clean Earth tipping fees of $17.00 per ton.
(Id.)
Clean Earth continues to dispose of the fly ash material at
GCIA.
(Id. ¶ 61)
Clean Earth initiated this action on April 3, 2012 (Dkt.
No. 1) and has amended its Complaint twice.
The Second Amended
Complaint (Dkt. No. 6) contains seven counts, including claims
for breach of contract, conversion, unjust enrichment, tortious
11
interference with contractual relations, indemnification,
accounting, and specific performance.
(Second Am. Compl.)
SLRD
filed a counterclaim alleging that Clean Earth owes SLRD
$13,000.00 under the terms of the January 30, 2012 extension of
the Interim Agreement.
(Countercl. 9)
On August 13, 2012, SLRD
amended its Counterclaim to add a second count.
(Dkt. No. 17)
In the second count of its Second Amended Counterclaim,
SLRD alleges that Clean Earth is in default of paragraph 2.2.7
of the Agreement for failure to pay an invoice for costs
associated with its obligations pursuant to that paragraph.
Paragrah 2.2.7 provides,
Redeveloper will, at its sole cost and expense, prepare the
Site for receipt of the Fill Materials prior to
commencement of the Supply Obligations, including
installation of soil and erosion control measures as
required by any governmental agency having jurisdiction, if
required, with the understanding that all of the same,
including all soil and erosion control measures, will be
maintained by Supplier, at its sole cost and expense, after
commencement of the Work.
(Supply Agreement ¶ 2.2.7)
SLRD claims that paragraph 2.2.7
imposes an obligation on Clean Earth to maintain “all soil and
erosion control measures . . . at its sole cost and expense.”
(Second Am. Countercl. 10)
SLRD has admitted that Clean Earth
was not in default of its obligation to maintain the Site under
paragraph 2.2.7. (Aronson Decl. Ex. C ¶ 48)
On June 26, 2012, SLRD sent Clean Earth an invoice “for the
costs expended on [Clean Earth’s] behalf associated with
12
paragraph 2.2.7 as it relates to soil Erosion and Control
Measures.”
(Aronson Decl. Ex. O)
The description of services
on the invoice is for “soil conservation, construction and
maintenance” at a rate of $1,005,517.26, which is also the total
amount billed to Clean Earth.
costs included in the invoice.
(Id.)
There were no itemized
According to SLRD, the invoice
covers costs associated with maintaining the Site over the
course of several years.
(RSMF ¶ 110)
To date, Clean Earth has
not paid the invoice.
Clean Earth has moved for summary judgment on its breach of
contract and unjust enrichment claims, Counts I and III of its
Second Amended Complaint, respectively, and on Count II of
SLRD’s Second Amended Counterclaim.
II.
“[S]ummary judgment is proper ‘if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.’”
Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P.
56(c)).
In deciding a motion for summary judgment, the Court
must construe the facts and inferences in a light most favorable
13
to the non-moving party.
Pollock v. Am. Tel. & Tel. Long Lines,
794 F.2d 860, 864 (3d Cir. 1986).
“‘With respect to an issue on which the non-moving party
bears the burden of proof, the burden on the moving party may be
discharged by ‘showing’ – that is, pointing out to the district
court – that there is an absence of evidence to support the
nonmoving party’s case.’”
Conoshenti v. Public Serv. Elec. &
Gas, 364 F.3d 135, 145-46 (3d Cir. 2004) (quoting Celotex, 477
U.S. at 323).
The role of the Court is not “to weigh the
evidence and determine the truth of the matter, but to determine
whether there is a genuine issue for trial.”
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
Anderson v.
“Only disputes
over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary
judgment.”
Id. at 249.
Where the meaning of contract language is at issue, a party
is entitled to summary judgment “only if the contract language
is unambiguous,” such that it “is subject to only one reasonable
interpretation.”
Arnold M. Diamond, Inc. v. Gulf Coast Trailing
Co., 180 F.3d 518, 522 (3d Cir. 1999).
While “the threshold
inquiry as to whether contract terms are ambiguous is a legal
question,” the interpretation of an ambiguous contract term is
left to the factfinder.
Teamsters Indus. Employees Welfare Fund
14
v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 135 n.2 (3d Cir.
1993).
III.
Clean Earth has moved for summary judgment on two of its
affirmative claims and one of SLRD’s counterclaims.
The Court
will address each claim in turn.
A.
Clean Earth first argues that it is entitled to summary
judgment on Count I of its Second Amended Complaint for breach
of contract.
To succeed on a breach of contract claim in New
Jersey, the plaintiff must establish “that the parties entered
into a valid contract, that the defendant failed to perform his
obligations under the contract and that the plaintiff sustained
damages as a result.”
Murphy v. Implicito, 920 A.2d 678, 689
(N.J. Super. App. Div. 2007).
Neither party disputes the validity of the original Soil
Supply Agreement executed on April 17, 2006.
Instead Clean
Earth and SLRD disagree as to whether the Agreement remains in
effect.
SLRD argues that “the history of amendment and
renegotiation of the Supply Agreement has left it open to
interpretation and continued renegotiation.”
15
(D’s Br. in Opp.
9)
But despite SLRD’s assertions to the contrary, it is clear
that the Agreement remains in effect.
First, there is no record evidence that shows that the
contract ceased to be in effect when Clean Earth became a nonexclusive licensee in October 2011.
Despite Mr. Horne’s
deposition testimony that he believed that Clean Earth’s
decision to convert to a non-exclusive licensee “negate[d] the
majority of [the] contract” (Horne Decl. Ex. L 34:20-21), there
is nothing in the Supply Agreement to support his contention.
Four provisions of the Supply Agreement mention the exclusive
license.
(See Supply Agreement ¶¶ 2.1.1, 2.1.2, 2.1.4 & 2.2.2)
Of these provisions, only paragraph 2.1.4 discusses what will
happen if Clean Earth converts to a non-exclusive license.
This
paragraph contemplates a circumstance in which Clean Earth could
choose to become a non-exclusive licensee if it could not meet
its monthly minimum tonnage of Fill Material.
¶ 2.1.4)
(Supply Agreement
That paragraph reserves the rights that were available
to Clean Earth as an exclusive licensee:
“In the event of
[Clean Earth’s conversion to a non-exclusive license], the
Advance Payment and any Catch Up Payments shall continue to be
credited against future Tipping Fees payable by [Clean Earth]
until fully offset.”
(Id.)
By expressly maintaining these
particular rights, this paragraph demonstrates that the
16
Agreement was intended to remain in effect even after Clean
Earth’s conversion to a non-exclusive licensee.
Second, although there were four subsequent amendments to
the Supply Agreement, all of them express a clear intent to
preserve the original Agreement.
The July 6, 2010, and March
10, 2011 amendments state, “All terms and conditions of the
Agreement shall remain in effect, except as specifically
modified by the terms of this letter agreement, or any prior or
subsequent written instrument signed by the Parties in
accordance with the Agreement.”
Mar. 10, 2011 Amendment ¶ 8)
(July 6, 2010 Amendment ¶ 12;
Similarly, the November 15, 2011
Interim Agreement provides, “This Interim Agreement, while
binding on the parties during the period covered hereunder,
shall not be construed to waive or modify the terms or
provisions of the Soil Supply Agreement in any way and the
entire Agreement shall remain in full force and effect.”
(Interim Agreement 2)
The January 30, 2012 Extension of the
Interim Agreement likewise states, “This Interim Agreement shall
not be construed to waive or modify the terms or provisions of
the Soil Supply Agreement, except as specifically provided
herein, and the entire Agreement shall remain in full force and
effect.”
(Extension 1)
This language is unambiguous:
notwithstanding any
temporary amendments or suspension of obligations, the parties
17
clearly intended the initial Agreement to remain in effect and
control all other obligations.
Thus, the first element – the
existence of a valid contract – is met.
The second element of a breach of contract claim is whether
the defendant failed to perform his obligations under the
contract.
Here, Clean Earth argues that the Supply Agreement
requires SLRD to keep the Site open to Clean Earth and allow
Clean Earth to deliver Fill Materials to offset the $1.187
million that Clean Earth has already paid to SLRD.
Clean Earth
further argues that SLRD cannot accept materials from third
parties because SLRD was required to give Clean Earth’s
materials priority.
(P.’s Br. 15)
SLRD contends that its
obligation to accept fill materials on a priority basis from
Clean Earth ended once Clean Earth chose to become a nonexclusive licensee and that it had no obligation to keep the
Site open to Clean Earth or accept Clean Earth’s Fill Materials
once Clean Earth stopped making prepayments.
(D.’s Br. in Opp.
9-10)
Clean Earth’s argument rests on reading two clauses of
paragraphs 2.1.4 and 2.2.2 of the Agreement in tandem:
The Supply Agreement requires SLRD to accept delivery of
Fill Materials delivered to the Site by Clean Earth “on a
priority basis in such amounts as necessary to fully
utilize” that prepayment. [Supply Agreement ¶ 2.2.2] Even
after Clean Earth converted its exclusive license to a nonexclusive license, the Supply Agreement required that “the
Advance Payment and any Catch Up Payments shall continue to
18
be credited against future Tipping Fees payable by [Clean
Earth] until fully offset.” [Id. ¶ 2.1.4]
(P.’s Br. 15)
The Court examines each of these clauses.
Clean Earth relies on paragraph 2.2.2 of the Supply
Agreement in support of its contention that SLRD must accept
materials from Clean Earth on a priority basis as long as SLRD
“hold[s] a balance of advanced payments made by Clean Earth.”
(P.’s Br. 5)
Paragraph 2.2.2 provides,
Redeveloper shall accept delivery of Fill Materials
delivered to the Site by Supplier in accordance with the
terms and conditions of this Agreement. Notwithstanding
any Exclusive Supply License . . . , Redeveloper may accept
delivery of materials from MART to the extent that MART is
entitled to make delivery of materials to Redeveloper under
a previously executed Strategic Alliance Agreement which
expires February 1, 2007. Supplier shall not extend or
modify the terms of its Strategic Alliance Agreement with
MART and Supplier represents that materials delivered by
MART to the site shall be subject to payment of tipping
fees in a minimum amount of $15.00 per ton. Notwithstanding
the foregoing, Redeveloper shall accept all Fill Materials
provided by Supplier on a priority basis in such amounts as
necessary to fully utilize credit against Tipping Fees
against the Advance Payment made by Supplier.
(Supply Agreement ¶ 2.2.2 (emphasis added))
Clean Earth points
to the highlighted clause and argues that it applies even though
Clean Earth opted to become a non-exclusive licensee.
Apart
from this provision, the Agreement is silent as to whether SLRD
is required to accept materials from Clean Earth on a priority
basis.
While Clean Earth’s interpretation of that clause is
reasonable, it is not the only possible reading.
19
When read with the rest of the paragraph, the clause lends
itself to a different interpretation.
Most of the paragraph
discusses how Clean Earth and SLRD would proceed under the
exclusive license if a third party, MART, delivered fill
materials to the Site.
Only after Clean Earth’s and SLRD’s
respective obligations in that situation are detailed does the
clause at issue here appear.
Thus, a reasonable reading of that
provision is that SLRD’s obligation to accept Clean Earth’s Fill
Materials on a priority basis applied only if SLRD was accepting
materials from MART at the same time.
Because this clause is
subject to more than one interpretation, the Court cannot say
that the Agreement unambiguously requires SLRD to accept
materials from Clean Earth on a priority basis.
Nor can the Court say that the clause unambiguously
requires SLRD to keep the Site open to Clean Earth until the
$1.187 million advance payment is fully offset now that Clean
Earth is no longer an exclusive licensee.
Again, it is not
clear whether the provision applies outside the context of the
exclusive license relationship.
Clean Earth also argues that paragraph 2.1.4 imposes an
obligation on SLRD to accept delivery of Fill Materials to
offset the $1.187 million prepayment even after Clean Earth
became a non-exclusive licensee.
(P.’s Br. 15)
The specific
provision on which Clean Earth relies states that in the event
20
that Clean Earth converts to a non-exclusive license, “the
Advance Payment and any Catch Up Payments shall continue to be
credited against future Tipping Fees payable by [Clean Earth]
until fully offset.”
(Supply Agreement ¶ 2.1.4)
While this
clause might impose an obligation on SLRD to use any advance
payments that Clean Earth makes to offset future Tipping Fees in
a non-exclusive license situation, in the absence of a provision
that requires SLRD to accept materials from Clean Earth, the
clause has no teeth. 6
As such, the Court cannot find that
summary judgment is warranted on Clean Earth’s breach of
contract claim. 7
B.
Clean Earth next argues that it is entitled to summary
judgment on its unjust enrichment claim because SLRD has
accepted $1.187 million in prepayments from Clean Earth but will
not allow Clean Earth to deliver materials such that Clean Earth
may benefit from the prepayments.
(P.’s Br. 17)
6
Though most of paragraph 2.2.2 could be read to apply only in the context of
an exclusive license relationship, the first sentence seems to stand on its
own. That sentence might impose an obligation on SLRD to remain open and
accept delivery of Clean Earth’s Fill Materials for as long as the Agreement
is in effect. (Supply Agreement ¶ 2.2.2) But as Clean Earth has not argued
that this sentence provides the foundation for SLRD’s breach, the Court is
reluctant to rely on it.
7
As the second element of breach of contract is unmet here, the Court need
not address the damages element this claim.
21
“Under New Jersey law, ‘[t]he constructive or quasicontract is the formula by which enforcement is had of a public
duty raised to prevent unjust enrichment or unconscionable
benefit or advantage.’”
Suburban Transfer Serv., Inc. v. Beech
Holdings, Inc., 716 F.2d 220, 226 (3d Cir. 1983) (quoting West
Caldwell v. Caldwell, 138 A.2d 402, 412 (N.J. 1958)).
“To
establish unjust enrichment, a plaintiff must show both that
defendant received a benefit and that retention of that benefit
without payment would be unjust.”
VRG Corp. v. GKN Realty
Corp., 641 A.2d 519, 554 (N.J. 1994).
Where “an express
contract exists concerning the identical subject matter,” a
plaintiff cannot recover on a theory of unjust enrichment.
Suburban Transfer, 716 F.2d at 226-27.
While it is undisputed that Clean Earth paid SLRD $1.187
million in prepayments, which have not been offset by delivery
of Fill Materials, and that SLRD refuses to accept delivery of
Clean Earth’s Fill Materials, the Court will not grant summary
judgment in favor of Clean Earth on its unjust enrichment claim.
Unjust enrichment is a quasi-contractual remedy and thus will
not be imposed where an express contract governs the rights of
the parties involved.
See Suburban Transfer, 716 F.2d at 226;
Van Orman v. American Ins. Co., 680 F.2d 301, 311 (3d Cir. 1982)
(construing New Jersey law); St. Paul Fire & Marine Ins. Co. v.
Indemnity Ins. Co., 158 A.2d 825, 828 (N.J. 1960).
22
In making
its breach of contract argument, Clean Earth has contended
vigorously that there is a valid contract here.
That contract
controls here.
The Agreement as well as the subsequent Amendments and
Interim Agreement indicate that prepayments will be used to
offset future Tipping Fees.
In addition, the November 15, 2011
Interim Agreement and the January 30, 2012 Extension both state
that if the amount of Clean Earth’s prepayments made for the
months of November 2011 through March 2012 exceeded the volumes
actually delivered for those months, SLRD would refund those
payments to Clean Earth.
(Interim Agreement 2; Extension 2)
Thus, the subject matter at issue here falls squarely within the
contract’s terms.
As it is clear that the prepayment is governed by the
parties’ express agreement, breach of contract, not unjust
enrichment, is the proper avenue for Clean Earth to recover its
prepayment.
Accordingly, the Court will deny summary judgment
on Clean Earth’s unjust enrichment claim. 8
C.
Finally, Clean Earth seeks summary judgment on Count II of
8
The Court’s denial of summary judgment here does not prevent Clean Earth
from raising this claim at trial as an alternative theory of liability should
its breach of contract claim fail.
23
SLRD’s Second Amended Counterclaim. 9
SLRD claims that Clean
Earth failed to pay an invoice for $1,005,517.26 for costs that
SLRD allegedly incurred pursuant to paragraph 2.2.7 of the
Agreement, which provides,
Redeveloper [SLRD] will, at its sole cost and expense,
prepare the Site for receipt of the Fill Materials prior to
commencement of the Supply Obligations, including
installation of soil and erosion control measures as
required by any governmental agency having jurisdiction, if
required, with the understanding that all of the same,
including all soil and erosion control measures, will be
maintained by Supplier [Clean Earth], at its sole cost and
expense, after commencement of the Work.
(Supply Agreement ¶ 2.2.7)
SLRD asserts that this paragraph
requires Clean Earth to bear the cost of any maintenance
performed on the Site, even if Clean Earth did not perform the
maintenance itself.
The Court disagrees.
Paragraph 2.2.7 indicates only that SLRD was responsible
for preparing the Site at its sole expense and that Clean Earth
had a responsibility to maintain the Site.
If Clean Earth
performed any maintenance, then it would bear the cost and
expense of doing so.
The language does not contemplate a
scenario in which a party other than Clean Earth would perform
maintenance on the Site and then bill Clean Earth for that
maintenance at a later date.
At most, paragraph 2.2.7 would
allow SLRD to claim that Clean Earth breached its obligation to
9
SLRD’s Second Amended Counterclaim (Dkt. No. 17) contains two counts.
Although Clean Earth’s papers repeatedly refer to “SLRD’s counterclaim,” the
arguments contained therein address only Count II of SLRD’s Counterclaim.
24
perform maintenance on the Site.
However, SLRD admits that
Clean Earth was not in default of its obligation to maintain the
Site.
(Aronson Decl. Ex. C ¶ 48)
Rather, SLRD claims that
Clean Earth’s default is based on Clean Earth’s failure to pay
the SLRD’s invoice for work that SLRD undertook.
But as Clean
Earth is not obligated under paragraph 2.2.7 to pay another
party for work which that party performed to maintain the Site,
Clean Earth is not required to pay SLRD’s invoice for work that
SLRD chose to undertake. 10
Accordingly, the Court will grant
summary judgment in favor of Clean Earth on Count II of SLRD’s
Second Amended Counterclaim.
IV.
For the foregoing reasons, summary judgment will be granted
in favor of Plaintiff on Count II of Defendant’s Second Amended
Counterclaim.
Summary judgment will be denied as to Counts I
and III of Plaintiff’s Second Amended Complaint.
An appropriate
Order accompanies this Opinion.
Date:
May 2, 2013
/s/ Joseph E. Irenas ______
Joseph E. Irenas, S.U.S.D.J.
10
The Court takes no position as to whether SLRD actually incurred the
alleged costs in the course of performing maintenance on the Site.
25
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