CSX Transportation, Inc. v. Emjay Environmental Recycling, Ltd.
Filing
69
MEMORANDUM & ORDER granting 56 Motion for Summary Judgment; denying 57 Motion to Dismiss for Lack of Jurisdiction; denying 57 Motion for Summary Judgment. For the foregoing reasons, Plaintiff's motion for summary judgment is GRANTED, and Defendant's motion for summary judgment is DENIED. The Clerk of the Court is directed to enter judgment in accordance with this Memorandum and Order and to mark this matter CLOSED. So Ordered by Judge Joanna Seybert on 8/20/2014. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------x
CSX TRANSPORTATION, INC.,
Plaintiff,
-against-
MEMORANDUM & ORDER
12-CV-1865(JS)(AKT)
EMJAY ENVIRONMENTAL RECYCLING, LTD.,
Defendant.
----------------------------------------x
APPEARANCES
For Plaintiff:
Christopher Merrick, Esq.
Kennan Cohen & Howard PC
165 Township Line Road, Suite 2400
Jenkintown, PA 19046
John Joseph Morris, Esq.
Kelly, Rode & Kelly, LLP
330 Old Country Road
Mineola, NY 11501
For Defendant:
Brian Lee Gardner, Esq.
Sullivan Gardner, P.C.
7 East 20th Street
New York, NY 10003
SEYBERT, District Judge:
Currently pending before the Court is: (1) plaintiff
CSX
Transportation,
judgment
(Docket
Inc.’s
Entry
(“Plaintiff”)
56),
and
motion
(2)
for
summary
defendant
Emjay
Environmental Recycling, Ltd.’s (“Defendant”) cross-motion for
summary judgment (Docket Entry 57).
Plaintiff’s
motion
for
summary
Defendant’s motion is DENIED.
For the following reasons,
judgment
is
GRANTED
and
BACKGROUND1
Plaintiff
operates
as
an
interstate
rail
(Pl.’s 56.1 Stmt., Docket Entry 48-1, ¶ 1.)
carrier.2
Defendant is a
transfer station which generates revenue by charging customers
to
place
construction
and
demolition
debris,
waste, and recyclables at its facility.
3.)
municipal
solid
(Pl.’s 56.1 Stmt. ¶¶ 2-
After Defendant separates the materials, it sends the waste
to off-site landfills for disposal.
(Pl.’s 56.1 Stmt. ¶ 4.)
For example, Defendant sent the waste to landfills in various
locations, including Ohio, via rail.
(Pl.’s 56.1 Stmt. ¶¶ 6-7;
Def.’s 56.1 Counterstmt. ¶¶ 6-7.)
“Between
shipments
Atlantic
were
2010
moved
Railway
and
via
Company
a
2012
all
combination
(‘NY&A’),
provided
Brentwood,
New
carrier
York
service
New
[Plaintiff],
and
the
to
(Pl.’s 56.1 Stmt. ¶ 11.)
an
rail
York
from
of
[Defendant’s]
the
Central Railway Company (‘OHCR’).”
NY&A
of
and
Ohio
(Pl.’s 56.1 Stmt. ¶ 10.)
Defendant’s
interchange
point
facility
with
in
Plaintiff.
Plaintiff then provided “long haul
The following material facts are drawn from the parties’ Local
Civil Rule 56.1 Statements (“56.1 Stmt.”) and Counterstatements
(“56.1 Counterstmt.”) and the evidence in support. Where
relevant, the Court will note specific factual disputes.
1
Defendant apparently denies this description but offers no
alternative characterization. (Def.’s 56.1 Counterstmt., Docket
Entry 48-2, ¶ 1.)
2
2
carriage” to Ohio, where the OHCR transported the freight to its
final destination.
Although
(Pl.’s 56.1 Stmt. ¶¶ 12-13.)
the
parties
dispute
the
exact
nature
and
consequences of the contracts, they agree that Plaintiff and
Defendant
transport
entered
of
into
Defendant’s
several
agreements
freight.
(Pl.’s
to
56.1
govern
Stmt.
¶
the
18;
Def.’s 56.1 Counterstmt. ¶ 18.)
For example, Plaintiff and
Defendant
CSXT
18699.”3
entered
into
“Contract
(Pl.’s 56.1 Stmt. ¶ 18.)
85189”
and
“Contract
Contract CSXT 18699 provided
that it was in effect from January 1, 2010 through December 31,
2010 and Contract CSXT 85189 provided that it was effective from
April 1, 2011 through March 31, 2013.
20.)
(Pl.’s 56.1 Stmt. ¶¶ 19-
Both provided:
CAR SUPPLY: If [CSX] is to furnish cars,
[CSX] will do so on a non-guaranteed basis
subject to availability and distribution
considerations . . . .
PAYMENT AND CREDIT: Payment of all rates and
charges that may accrue and become due from
Industry to CSXT in connection with this
Contract shall be made within the timeframes
set forth in, and subject to the finance
charges, late charges, and other provisions
of Section 16, Tariff CSXT 8100 series
(Merchandise) . . . . If [Defendant] fails
to pay all rates and charges as required by
this
paragraph,
CSXT
may,
without
NY&A and OHCR were also involved in these contracts, although
the parties dispute whether they were completely separate
signatories or were defined as a single “Carrier” with
Plaintiff. (See Pl.’s 56.1 Stmt. ¶ 18; Def.’s 56.1 Counterstmt.
¶ 18; Def.’s 56.1 Stmt., Docket Entry 49-1, ¶ 7.)
3
3
limitation,
cancel
or
suspend
its
performance
under,
or
terminate
this
Contract.
[Defendant] may not set off or
withhold any payment due under this Contract
in any dispute with any Carrier.
ENTIRE
UNDERSTANDING:
This
Contract
represents the entire understanding of the
parties, may not be modified without their
written consent, shall be construed (except
for matters referring to or traditionally
governed by or construed under federal laws,
regulations, or case law) according to the
laws of the State of Florida without regard
to its conflict of laws rules, and has been
executed
by
the
duly
authorized
representatives of the parties.
(Pl.’s 56.1 Stmt. ¶ 21; Merrick Decl., Docket Entry 56-3, Ex.
4.)
For each shipment of commodity, Defendant paid a single
“through rate” directly to Plaintiff.
(Def.’s 56.1 Stmt. ¶¶ 13-
14.)
According to Plaintiff, it then pays NY&A and OHCR for
their
participation
in
the
shipment
of
Defendant’s
regardless of whether Defendant has paid Plaintiff.
freight,
(Pl.’s 56.1
Counterstmt., Docket Entry 49-2, ¶ 15.)
For
freight
through
Defendant
Defendant’s
funds.
a
period
of
time,
Plaintiff.
began
wire
According
to
apparently
however,
causing
an
outstanding
balance,
transfers
to
be
for
President,
Michael
behalf
Defendant.
Counterstmt. ¶ 27.)
Cholowsky,
(Pl.’s
shipped
Plaintiff,
accruing
(Pl.’s 56.1 Stmt. ¶ 26.)
of
Defendant
rejected
insufficient
On July 19, 2011, Defendant’s
executed
56.1
a
Stmt.
Promissory
¶
27;
Note
Def.’s
on
56.1
The Promissory Note pertains to a loan of
4
$334,998
to
cover
unpaid
payment.
Note,
from
Defendant
gave
November
2010
Pursuant to the
Plaintiff
a
$50,000
down
(Pl.’s 56.1 Stmt. ¶¶ 29, 31; Def.’s 56.1 Counterstmt.
¶¶ 29, 31.)
further
charges
(Pl.’s 56.1 Smt. ¶ 28.)
through April 2011.4
Promissory
freight
According to Plaintiff, Defendant did not make any
payments.
additionally
(Pl.’s
maintains
56.1
that,
Stmt.
after
¶
the
32.)
Plaintiff
Promissory
Note,
it
continued to ship Defendant’s freight between January 2011 and
July
2012,
incurring
$519,704.72
in
freight
Defendant also did not pay to Plaintiff.
charges
that
(Pl.’s 56.1 Stmt.
¶¶ 34, 36.)
DISCUSSION
Plaintiff
judgment.
standard
and
Defendant
now
each
move
for
summary
The Court will first address the applicable legal
before
turning
to
the
parties’
motions
more
specifically.
I.
Legal Standard
Summary judgment is only appropriate where the moving
party can demonstrate that there is “no genuine dispute as to
any material fact” and that the moving party is entitled to
judgment
as
a
matter
of
law.
FED. R. CIV. P.
56(a).
Defendant’s counterstatement denies this, and many other
statements without any purported characterization of its own or
explanation as to why the statement is incorrect other than a
vague assertion that the statement is not supported. (See
Def.’s 56.1 Counterstmt. ¶ 28.)
4
5
In
considering this question, the Court considers “the pleadings,
depositions, answers to interrogatories and admissions on file,
together with any other firsthand information including but not
limited to affidavits.”
Nnebe v. Daus, 644 F.3d 147, 156 (2d
Cir. 2011) (citation omitted); see also FED. R. CIV. P. 56(c).
“In assessing the record to determine whether there is a genuine
issue to be tried . . . the court is required to resolve all
ambiguities and draw all permissible factual inferences in favor
of the party against whom summary judgment is sought.”
Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997).
McLee v.
The burden of
proving that there is no genuine issue of material fact rests
with the moving party.
Gallo v. Prudential Residential Servs.,
L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citing Heyman v. Com. &
Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975)).
Once that
burden is met, the non-moving party must “come forward with
specific facts,” LaBounty v. Coughlin, 137 F.3d 68, 73 (2d Cir.
1998),
to
demonstrate
that
“the
evidence
is
such
that
a
reasonable jury could return a verdict for the nonmoving party,”
Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505,
2510,
91
L.
Ed.
2d
202,
218
(1986).
allegations or denials will not suffice.”
781 F.2d 319, 323 (2d Cir. 1986).
“Mere
conclusory
Williams v. Smith,
And “unsupported allegations
do not create a material issue of fact.”
Weinstock v. Columbia
Univ., 224 F.3d 33, 41 (2d Cir. 2000), superseded by statute on
6
other grounds as stated in Ochei v. Coler/Goldwater Mem’l Hosp.,
450 F. Supp. 2d 275, 282 (S.D.N.Y. 2006).
“The same standard applies where, as here, the parties
filed cross-motions for summary judgment . . . .”
Morales v.
Quintel Entm’t, Inc., 249 F.3d 115, 121 (2d Cir. 2001) (citing
Terwilliger v. Terwilliger, 206 F.3d 240, 244 (2d Cir. 2000)).
Thus, even if both parties move for summary judgment and assert
the absence of any genuine issues of material fact, “a district
court is not required to grant judgment as a matter of law for
one side or the other.”
Heublein, Inc. v. United States, 996
F.2d 1455, 1461 (2d Cir. 1993).
must
be
examined
on
reasonable
inferences
motion
under
is
its
must
own
“Rather, each party’s motion
merits,
be
drawn
consideration.”
and
in
against
Morales,
each
the
249
case
party
F.3d
all
whose
at
121
(citation omitted).
II. Subject Matter Jurisdiction
Initially,
dismissal,
the
asserting
jurisdiction
over
that
this
Court
notes
that
the
Court
lacks
action.
Defendant
seeks
subject
matter
Specifically,
Defendant
maintains that Plaintiff, NY&A, and OHCR formed a joint venture,
precluding
relief
to
Plaintiff
alone,
that
Plaintiff
cannot
maintain the action individually, and that, alternatively, the
action must be dismissed based on misjoinder.
7
The Court will
address each of these arguments in turn.
(Defs.’ Br. for S.J.,
Docket Entry 59, at 7-19.)
A. Joint Venture
Defendant
maintains
that
the
rail
transportation
services at issue were undertaken by a joint venture and that
this Court lacks subject matter jurisdiction over the action
“brought in its correct form.”5
(Def.’s Br. for S.J. at 7-8.)
The Court disagrees.
The citizenship of a joint venture depends upon the
citizenship of each of its members.
See Schiavone Constr. Co.
v. City of N.Y., 99 F.3d 546, 548 (2d Cir. 1996) (“For diversity
purposes, the citizenship of a joint venture is the citizenship
of each of its members.”).
Here, it is undisputed that NY&A and
Defendant are both citizens of New York.
Accordingly, if there
Defendant seeks dismissal for lack of jurisdiction pursuant to
Federal Rule of Civil Procedure 12(b)(1). “A case is properly
dismissed for lack of subject matter jurisdiction under Rule
12(b)(1) when the district court lacks the statutory or
constitutional power to adjudicate it.” Makarova v. United
States, 201 F.3d 110, 113 (2d Cir. 2000). In resolving a motion
to dismiss for lack of subject matter jurisdiction, the Court
may consider affidavits and other materials beyond the pleadings
to resolve jurisdictional questions. See Morrison v. Nat’l
Australia Bank, Ltd., 547 F.3d 167, 170 (2d Cir. 2008). The
Court must accept as true the factual allegations contained in
the complaint, but it will not draw argumentative inferences in
favor of Plaintiffs because subject matter jurisdiction must be
shown affirmatively. See id.; Atlanta Mut. Ins. Co. v. Balfour
Maclaine Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992); Shipping
Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).
“A plaintiff asserting subject matter jurisdiction has the
burden of proving by a preponderance of the evidence that it
exists.” Makarova, 201 F.3d at 113.
5
8
is
a
joint
venture,
there
would
no
longer
be
diversity
of
citizenship between the parties, thus divesting the Court of
jurisdiction.
In determining whether there was a joint venture, the
Court will use Florida law.
The three contracts that governed
the terms and conditions of Defendant’s shipments--CSXT 85189,
CSXT 18699, and CSXT 10812 (the “Rail Service Contracts”)--and
which underlie the Promissory Note, contain a Florida choice of
law provision.
Merrick
Decl.)
(See generally Rail Service Contracts, Ex. 4 to
Given
that
this
Court
allegedly
sits
in
diversity jurisdiction and given New York law, the contractual
choice of law provision governs.
See New Falls Corp. v. Lall,
No. 09-CV-4809, 2010 WL 2076937, at *2 (E.D.N.Y. May 18, 2010)
(“A federal court exercising diversity jurisdiction applies the
law of the forum state, including its choice of law rules, to
determine the applicable substantive law.” (citing Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 497, 61 S. Ct. 1020, 85 L.
Ed. 1477 (1941)); Hartford Fire Ins. Co. v. Orient Overseas
Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000)
(“New York law is clear in cases involving a contract with an
express choice-of-law provision: Absent fraud or violation of
public policy, a court is to apply the law selected in the
contract as long as the state has sufficient contacts with the
transaction.”).
9
Under
combination
Florida
“a
two
of
law,
more
persons,
or
joint
venture
who,
in
is
a
some
special
specific
venture, seek a profit jointly without the existence between
them of any actual partnership, corporation, or other business
entity.”
Offices
Togolais
Des
Phosphates
v.
Mulberry
Phosphates, Inc., 62 F. Supp. 2d 1316, 1324 (M.D. Fla. 1999)
(internal quotation marks and citation omitted).
It is “created
when two or more entities combine their property or time or a
combination of the two to carry out a single business enterprise
for profit.”
Id.
Defendant
begins
by
pointing
the
Court
to
Norfolk
Southern Railway Co. v. Emjay Environmental Recycling, Ltd., in
which Judge Thomas C. Platt found that the real party plaintiff
was a joint venture between the plaintiff, Norfolk Southern, and
NY&A.
No. 09-CV-1322, 2012 WL 976056 (E.D.N.Y. Mar. 19, 2012).
There, Plaintiff, Defendant, and NY&A executed a transportation
contract
in
“Railroad.”
which
the
Id. at *1.
parties
were
jointly
referred
to
as
Like here, the contract itself involved
the transport of Defendant’s construction and demolition debris
via railway.
Id.
In response to the counterclaim filed by
Defendant, the plaintiff filed a third-party complaint against
NY&A.
Id. at *2.
Defendant
filed
Although the plaintiff withdrew that claim,
a
cross-claim
10
against
NY&A.
Id.
at
*3.
Ultimately,
Judge
Platt
determined
that
Norfolk
Southern
and
NY&A had engaged in a joint venture under Virginia law.
Norfolk Southern is distinguishable from the case at
bar.
Although the factual background is similar, the elements
of a joint venture under Virginia law are not synonymous with
the elements under Florida law.
venture
“consist[s]
of
the
Under Florida law, a joint
following
elements:
(1)
a
common
purpose; (2) a joint proprietary interest in the subject matter;
(3) the right to share profits and duty to share losses; and (4)
the right of joint control.”
Pinnacle Port Cmty. Ass’n, Inc. v.
Orenstein, 872 F.2d 1536, 1539 (11th Cir. 1989).
Thus,
the
Court
turns
to
the
relevant
considering first where there is a common purpose.
common
purpose,
for
example,
“where
each
party
elements,
There is a
need[s]
the
other, as in any partnership in which each partner brings to the
enterprise
capital,
skills,
labor,
knowledge not possessed by the other.”
2d
1211,
1213
(Fla.
Service
Contracts
provide
rail
Dist.
provide
contract
Ct.
App.
that
the
carriage
licensing,
resources,
or
Arango v. Reyka, 507 So.
1987).
Here,
“Carrier(s)
transportation
the
agree(s)
Rail
service
to
with
reasonable dispatch for Industry at the rates and subject to the
additional
terms
and
conditions
set
forth
in”
the
contract.
(Gardner Decl., Docket Entry 60, Exs. D-E; Merrick Decl., Ex.
4.)
11
Defendant asserts that the use of the word “Carrier”
shows that Plaintiff, NY&A, and OHCR were defined jointly, and
thus were involved in a joint venture.
12.)
While
Plaintiff
counters
that
(Def.’s Br. for S.J. at
“Carrier”
was
merely
a
drafting convenience, it does not necessarily dispute that such
contractual language can be sufficient to demonstrate a common
purpose.
(Pl.’s Opp. Br., Docket Entry 62, at 8); see, e.g.,
Progress Rail Servs. Corp. v. Hillsborough Reg’l Transit Auth.,
No.
04-CV-0200,
2005).
2005
WL
1051932,
at
*3
(M.D.
Fla.
Apr.
12,
Nonetheless, “the relationship created by the contract
must still establish the four required elements.”
Progress Rail
Servs. Corp., 2005 WL 1051932, at *3.
As
it
pertains
to
a
however, this element is lacking.6
joint
proprietary
interest,
“A joint proprietary interest
generally requires joint ownership of the subject matter of the
contract.”
Id.
Although Defendant asserts that there was a
joint proprietary interest because Plaintiff, NY&A, and OHCR had
a joint interest in the financial benefits and profits, this is
insufficient.
(Def.’s Br. for S.J. at 14); cf. Hung Kang Huang
v. Carnival Corp., 909 F. Supp. 2d 1356, 1362 (S.D. Fla. 2012)
(dismissing
joint
venture
theory
where
the
plaintiff
division of responsibility and sharing in losses).
pled
The parties
Notably, as outlined in Norfolk, Virginia law does not contain
an explicit element of joint proprietary interest. Norfolk
Southern R. Co., 2012 WL 976056, at *6 (defining Virginia law).
6
12
a
do
not
dispute
that
each
carrier
used
its
own
equipment,
employees, rail, etcetera during each leg of the journey.
(See,
e.g., Def.’s 56.1 Stmt. ¶ 21; Pl.’s 56.1 Counterstmt. ¶ 21.)
Each was responsible for its portion of the trip.
Thus, there
was no joint ownership of the subject matter of the contract.
See Skeen v. Carnival Corp., No. 08-CV-22618, 2009 WL 1117432,
at *4 (S.D. Fla. Apr. 24, 2009) (finding that the plaintiff did
not
adequately
contributed
its
plead
own
a
joint
assets
venture
individually
where
that
each
were
entity
used
to
conduct the business).
Although this alone ends the inquiry, the Court also
notes that the element of joint control is lacking in this case.7
“For
joint
venture
purposes,
the
parties
must
have
mutual
control over the subject matter of the venture and the authority
to bind one another with respect to the subject matter of the
venture.”
Here,
each
Progress Rail Servs. Corp., 2005 WL 1051932, at *3.
carrier
had
independent--and
exclusive--authority
over its portion of the transport, and there is no evidence to
suggest that the actions of any carrier could bind the others.
(See
CSXT
85189,
Merrick
Decl.
Ex.
4,
at
3
(“Each
of
the
participating Carriers is solely responsible for its portion of
the subject transportation.”).)
Under Virginia law, joint control is not an element, though a
“voice” in control and management is necessary. Norfolk
Southern R. Co., 2012 WL 976056, at *6.
7
13
Accordingly, Defendant’s motion is DENIED insofar as
it argues a lack of subject matter jurisdiction on the basis of
a joint venture.8
B. Joinder
Defendant additionally asserts that, even if there is
no joint venture, the funds due for the rail transportation
services
belong
to
Plaintiff
as
well
therefore they are necessary parties.
18.)
as
NY&A
and
OHCR,
and
(Def.’s Br. for S.J. at
Again, the Court disagrees.
Federal Rule of Civil Procedure 19(a) provides:
(1) Required Party. A person who is subject
to service of process and whose joinder will
not deprive the court of subject-matter
jurisdiction must be joined as a party if:
(A) in that person’s absence, the court
cannot accord complete relief among existing
parties; or
(B) that person claims an interest relating
to the subject of the action and is so
situated that disposing of the action in the
person’s absence may:
(i) as a practical matter impair or
impede the person’s ability to protect the
interest; or
(ii) leave an existing party subject to
a substantial risk of incurring double,
multiple,
or
otherwise
inconsistent
obligations because of the interest.
Similarly, to the extent that Defendant argues that Plaintiff
cannot maintain the action individually because the Rail Service
contracts were with a joint venture (Def.’s Br. for S.J. at 17),
Defendant’s motion is DENIED.
8
14
FED. R. CIV. P. 19(a).
“If a party is required to be joined under
Rule 19(a) but cannot be joined without depriving the court of
subject
matter
jurisdiction,
the
court
must
proceed
second step of the analysis under Rule 19(b).”
to
the
Mazzio v. Kane,
No. 14-CV-0616, 2014 WL 2866040, at *3 (E.D.N.Y. June 24, 2014).
Defendant
maintains
that
NY&A
and
OHCR
potentially
have an interest relating to the subject of the action and that
disposition
inconsistent
in
their
absence
obligations.
could
(Def.’s
subject
Br.
for
Defendant’s very premise is flawed, however.
Defendant
S.J.
at
to
19.)
Plaintiff is not
suing for any amounts that would include portions belonging to
NY&A and OHCR.
Rather, the Rail Service Contracts specifically
provide that Defendant’s obligations run directly to Plaintiff,
without
regard
to
NY&A
and
OHCR.
Merrick Decl. Ex. 4, at 5.)
OHCR
separately,
regardless
(See,
e.g.,
CSXT
18699,
In fact, Plaintiff pays NY&A and
of
whether
the
client
has
paid
(Fearington Dep., Ex. I to Gardner Decl., Docket Entry 60, at
64), and NY&A and OHCR are not privy to even knowing the rates
that
Plaintiff
Accordingly,
charges
adjudication
Defendant.
of
this
(CSXT
matter
18699
would
Defendant up to potential inconsistent obligations.
at
not
4.)
open
As this is
the only basis for Defendant’s assertion that NY&A and OHCR are
necessary parties, Defendant’s motion in this regard is DENIED.
15
III. Plaintiff’s Claims and Defendant’s Counterclaim
The
Court
thus
turns
to
the
substantive
merits
of
Plaintiff’s motion for summary judgment and Defendant’s crossmotion, beginning first with Plaintiff’s motion regarding its
first claim for breach of the Promissory Note.
A. Plaintiff’s Claim for Breach of the Promissory Note
Plaintiff asserts that summary judgment is appropriate
on this claim because it has established the necessary elements
and Defendant has not proffered a meritorious defense.
Br. for S.J., Docket Entry 56-1, at 6.)
The
Contracts,
Promissory
contains
a
Note,
The Court agrees.
unlike
Pennsylvania
(Pl.’s
the
choice
of
Rail
law
(Promissory Note, Ex. 5 to Merrick Decl., at 3.)
Service
provision.
To establish a
claim for breach of contract under Pennsylvania law, a plaintiff
must establish: “(1) the existence of a contract, including its
essential
terms,
(2)
a
breach
of
a
duty
contract[,] and (3) resultant damages.”
imposed
by
the
Ware v. Rodale Press,
Inc., 322 F.3d 218, 225 (3d Cir. 2003) (internal quotation marks
and citation omitted) (alteration in original).
Here,
Cholowsky,
Defendant
signed
Counterstmt.
¶
the
27
agrees
that
Promissory
(admitting
its
Note.
that
“a
president,
(See
Def.’s
document
Mr.
56.1
entitled
Promissory Note was executed by [Defendant’s] president, Michael
Cholowsky”).)
Defendant further admits that it made the $50,000
16
down
payment.
(Def.’s
56.1
Counterstmt.
¶
31.)
Moreover,
Plaintiff presents evidence to demonstrate that Defendant did
not make any further payments under the Promissory Note.
Fearington Decl.9, Ex. 8 to Merrick Decl., ¶¶ 7-8.)
(See
Defendant’s
witnesses do not dispute that payments were not made.
(Pannulla
Dep., Ex. 7 to Merrick Decl., at 77-78; Cholowsky Dep., Ex. 3 to
Merrick Decl., at 88.)
Rather than dispute Plaintiff’s ability to meet the
elements
of
a
breach
of
contract
claim,
Defendant’s
primary
opposition is that the court lacks subject matter jurisdiction
and/or
that
Plaintiff
failed
to
join
arguments that the Court has rejected.
Entry
63,
at
counterclaim,
precludes
9-11.)
asserting
summary
Plaintiff’s
Defendant
judgment
alleged
in
maintains
failure
Plaintiff’s
claims.
parties--
(Def.’s Opp. Br., Docket
further
Plaintiff’s
necessary
(Def.’s
to
favor
Opp.
on
Br.
that
its
perform,
both
at
of
18.)
Specifically, Defendant argues that “the allegations of [its]
Counterclaim that the rail services provided in 2011 and 2012
were poor and inadequate raise significant issues as to whether
Contrary to Defendant’s assertion in its 56.1 Counterstatement,
this declaration is admissible because Ms. Fearington is an
employee of Plaintiff with personal knowledge competent to
testify as to whether Plaintiff in fact received any payments
pursuant to the Promissory Note. See FED. R. CIV. P. 56(c)(4)
(“An affidavit or declaration used to support or oppose a motion
must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant
is competent to testify on the matters stated.”).
9
17
the promissory note was breached, and additionally as to whether
[Defendant] is entitled to a set-off from any funds determined
to be due on the promissory note.”
(Def.’s Opp. Br. at 18.)
However, the terms of the Promissory Note are clear
and unambiguous.
See Del. Valley Wholesale Florist, Inc. v. Ten
Pennies Florist, Inc., No. 05-CV-0309, 2005 WL 3307085, at *3
(E.D. Pa. Dec. 1, 2005) (holding that the court must determine
the intention of the parties through, if possible, the clear and
unambiguous terms of the contract (citing Bohler-Uddenhold Am.,
Inc.
v.
Ellenwood
2001)).
The
Grp.,
Inc.,
Promissory
247
Note
F.3d
79,
specifically
92-93
(3d
provides
Cir.
that
Defendant “has no defenses, objections, set offs, credits, or
other
claims
(Promissory
against
Note
at
[Plaintiff]
2.)
with
Defendant’s
regard
waiver
to
of
this
any
debt.”
and
all
defenses and set offs is not subject to any other reasonable
interpretation--nor does Defendant argue as much--and the Court
must enforce the clear terms of the contract.
Cf. Allegheny
Int’l, Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 142425 (3d Cir. 1994) (explaining that “[a] contract is ambiguous if
it
is
reasonably
susceptible
of
different
constructions
and
capable of being understood in more than one sense” and finding
that a release of claims would be enforceable if unambiguous);
G.R. Sponaugle & Sons, Inc. v. Hunt Constr. Grp., Inc., 366 F.
18
Supp. 2d 236, 243 (M.D. Pa. 2004) (enforcing an unambiguous
release of claims).
Accordingly, Plaintiff’s motion for summary judgment
on its first claim for breach of the Promissory Note is GRANTED.
B. Plaintiff’s Claim for Breach of the Rail Service
Contracts
Plaintiff also seeks summary judgment on its second
cause
of
action
Plaintiff
asserts
for
breach
that
of
the
Defendant’s
Rail
Service
defenses
are
Contracts.
meritless.
Defendant cross-moves for summary judgment on Plaintiff’s second
claim,
asserting
evidence.10
that
Plaintiff
relies
on
inadmissible
The Court agrees with Plaintiff.
The
elements
of
a
breach
of
contract
action,
as
established under Florida law,11 are: “(1) a valid contract, (2)
a material breach, and (3) damages.”
Bookworld Trade, Inc. v.
Daughters of St. Paul, Inc., 532 F. Supp. 2d 1350, 1357 (M.D.
Fla. 2007).
“In addition, in order to maintain an action for
breach of contract, a claimant must also prove performance of
its obligations under the contract or a legal excuse for its
nonperformance.”
Id.
(internal
quotation
marks
and
citation
omitted); see also Whitney Nat’l Bank v. SDC Cmtys., Inc., No.
In raising this argument, it appears that Defendant mistakenly
refers to Plaintiff’s “third” claim.
10
As stated previously, the Rail Service Contracts provide that
Florida law governs.
11
19
09-CV-1788, 2010 WL 1270264, at *3 (M.D. Fla. Apr. 1, 2010)
(listing performance as an element in addition to a contract,
breach, and damages).
The parties do not dispute that a contract existed.
Rather,
Defendant
argues,
in
part,
that
Plaintiff
cannot
establish a material breach because the invoices Plaintiff uses
to support its claim are inadmissible.
argues
that
the
invoices
“were
not
Specifically, Defendant
generated,
or
created,
contemporaneously with any of the shipments, or requests for
shipment, at issue in this matter.
Rather, the Invoices . . .
were printed out after the matter had been assigned to counsel
to institute a lawsuit.”
Defendant’s
First,
the
evidence
(Def.’s Br. for S.J. at 20.)
argument
fails
demonstrates
that
for
several
reasons.
Defendant’s
employees
themselves entered the information--from which the invoices were
created--into the ShipCSX system.
25-27; Fearington Decl. ¶ 10.)
invoices
exception.
are
hearsay,
they
(See, e.g., Pannulla Dep. at
Second, even assuming that the
fall
into
the
business
records
Federal Rule of Evidence 803, which sets forth the
business records exception, provides:
(6)
Records
of
a
Regularly
Conducted
Activity.
A record of an act, event,
condition, opinion, or diagnosis if:
(A) the record was made at or near the
time by--or from information transmitted by-someone with knowledge;
20
(B) the record was kept in the course
of a regularly conducted activity of a
business . . .
(C) making the record
practice of that activity;
was
a
regular
(D) all these conditions are shown by
the testimony of the custodian or another
qualified witness . . .; and
(E) neither the source of information
nor
the
method
or
circumstances
of
preparation
indicate
a
lack
of
trustworthiness.
FED. R. EVID. 803(6).
The
Fearington
Declaration
clearly
establishes
that
the invoices were kept in the regular course of business and
that
it
was
Plaintiff’s
maintain
such
records.
despite
Defendant’s
inherently
regular
practice
(Fearington
arguments,
troublesome
or
Decl.
the
to
¶
5.)
Court
inadmissible
generate
Moreover,
finds
about
and
nothing
the
invoices
because they were not printed out until litigation.
Potamkin
Cadillac Corp. v. B.R.I. Coverage Corp., 38 F.3d 627, 632 (2d
Cir.
1994)
(“A
electronically
business
on
record
computers
may
and
include
later
data
printed
stored
out
for
presentation in court, so long as the ‘original computer data
compilation
accordance
was
with
prepared
regular
pursuant
business
to
a
business
practice.’”
duty
(quoting
United
States v. Hernandez, 913 F.2d 1506, 1512-13 (10th Cir. 1990)).
21
in
Additionally, Defendant questions the trustworthiness
of
the
invoices
because
Plaintiff
maintained
the
ability
modify them and, in fact, the invoices were modified.
Br.
for
S.J.
at
20-21.)
However,
Ms.
Fearington
to
(Def.’s
made
only
limited changes, such as to change the “Direct Questions To”
section to list counsel.
at 54.)
(Fearing Dep., Ex. I to Gardner Decl.,
Given the circumstances surrounding the creation of the
invoices,
inputting
particularly
the
that
information,
Defendant
the
Court
was
finds
responsible
that
these
for
minor
modifications do not render the invoices inadmissible.
See,
e.g., In re Teligent, Inc., No. 01-12974, 2006 WL 1030417, at *9
(Bankr. S.D.N.Y. Apr. 13, 2006) (noting that the marked up bill
was “obviously generated by . . . [the] computerized record
system”); F.D.I.C. v. Kisosh Realty Corp., No. 90-CV-7900, 1992
WL 230156, at *3 (S.D.N.Y. Sept. 1, 1992) (finding that the
explanation
regarding
indicia
trustworthiness).
of
documents
of
this
notations
kind,
on
bills
Rather,
including
provided
courts
sufficient
regularly
admit
computer-generated
and
maintained documents that presumably could be modified at any
time.
See, e.g., Stein Hall & Co. v. S.S. Concordia Viking, 494
F.2d 287, 291 (2d Cir. 1974); see also U.S. v. Bonomolo, --- F.
App’x
----,
(affirming
2014
WL
admission
2016573,
of
at
*2
(2d
Cir.
computer-generated
May
19,
2014)
spreadsheets
at
trial); Mazzini v. Republic of Argentina, 282 F. App’x 907, 909
22
(2d
Cir.
2008)
(“We
reject
the
argument
that
the
account
statements, computer printouts of the account statements, and
custodial letters were inadmissible hearsay.”).
In fact, at
least some courts have accepted Plaintiff’s invoices as reliable
evidence without question.
CSX Transp., Inc. v. Blakeslee, No.
11-CV-0533, 2012 WL 3985169, at *2, 6 (D. Conn. Sept. 11, 2012);
CSX Transp., Inc. v. Am. Rigging & Crane Serv., Inc., No. 09-CV0043, 2009 WL 2781025, at *1 (S.D. Ohio Aug. 28, 2009).
Accordingly, Defendant’s motion for summary judgment
on
Plaintiff’s
second
claim
because
Plaintiff
has
failed
to
adduce admissible evidence in support is DENIED.
Thus, having determined that there was a contract and
a material breach, the Court turns to the remaining elements.
Clearly,
Plaintiff
has
established
damages.
Other
than
challenging the admissibility of the invoices, Defendant has not
come forward with any evidence to demonstrate that the shipments
were not made.
Rather, Defendant makes vague assertions that it
does not know whether each of the invoices reflects a legitimate
shipment and that there is no way of knowing such definitively.
Such
arguments,
judgment stage.
however,
are
not
sufficient
at
the
summary
See Tucker v. Banknorth, NA, 333 F. Supp. 2d
50, 55-56 (E.D.N.Y. 2004) (“‘The nonmovant cannot escape summary
judgment
merely
unspecified
by
disputed
vaguely
asserting
material
facts,
23
the
or
existence
defeat
the
of
some
motion
through mere speculation or conjecture.’” (quoting W. World Ins.
Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990)).
Finally,
the
Court
considers
whether
Defendant’s
counterclaim at all impacts Plaintiff’s ability to prove its
claim
for
unpaid
Contracts.
freight
Specifically,
charges
under
Defendant
the
asserts
Rail
that
Service
Plaintiff
failed to perform because the parties had an agreement (the
“Dispatch Commitment”) that Plaintiff would provide Defendant
with nine railcars per day.
(See Def.’s Am. Ans. & Counterclaim
(“Def.’s Ans.”), Docket Entry 38.)
Contract
CSXT
85189
and
Contract
The counterclaim references
CSXT
18699,
both
of
which
provided for “rail contract carriage transportation service to
[Defendant] with reasonable dispatch . . . .”
(See Merrick
Decl. Ex. 4, CSXT 85189 at 1; CSXT 18699 at 3.)
Defendant is correct that, if Plaintiff indeed failed
to perform as required, Plaintiff would not be able to maintain
its breach of contract action against Defendant.
See Hamilton
v. Suntrust Mortg. Inc., --- F. Supp. 2d ----, 2014 WL 1285859,
at *7 (S.D. Fla. Mar. 25, 2014) (“It is a fundamental principle
of Florida contract law that a material breach by one party
excuses the performance by the other.”).
Here, however, both
contracts referenced in the counterclaim unequivocally provide,
in writing, that “[i]f [CSX] is to furnish cars, [CSX] will do
so
on
a
non-guaranteed
basis
24
subject
to
availability
and
distribution considerations . . . .”
(See Merrick Decl. Ex. 4,
CSXT 85189 at 2; CSXT 18699 at 4.)
assertion,
this
provision
is
not
Contrary to Defendant’s
ambiguous.
See
49
C.F.R.
375.601 (defining “reasonable dispatch” as meaning in a timely
manner).
Thus, the written contracts between the parties flatly
contradict any assertion that Plaintiff agreed to provide at
least nine railcars per day to Defendant.
Moreover, one of Defendant’s 30(b)(6) witnesses, Scott
Pannulla, made clear during his deposition that any “Dispatch
Commitment”
contracts.
was
an
oral
agreement
(Pannulla Dep. at 98.)
contemporaneous
with
the
In fact, Defendant’s briefs
elucidate that it was their “understanding” that Plaintiff would
provide nine railcars a day based upon the general timelines for
the railcars to make a full roundtrip.
n.5.)
“Under
contemporaneous
Florida
oral
law,
agreement
(Def.’s Opp. Br. at 6 &
evidence
is
of
inadmissible
a
prior
to
vary
contradict the unambiguous language of a valid contract.”
or
or
Chase
Manhattan Bank v. Rood, 698 F.2d 435, 436 (11th Cir. 1983);
accord Ungerleider v. Gordon, 214 F.3d 1279, 1282 (11th Cir.
2000)12.
Nonetheless, this is the very type of evidence upon
which Defendant relies.
See, e.g., Sewell v. D’Allessandro &
This rule, known as the parol evidence rule, reflects
substantive law, and therefore must be applied by a court
sitting in diversity. See Ungerleider, 214 F.3d at 1282;
Madsen, Sapp, Mena, Rodriguez & Co., P.A. v. Palm Beach
Holdings, Inc., 899 So. 2d 435, 436 (Fla. Dist. Ct. App. 2005).
12
25
Woodyard, Inc., 709 F. Supp. 2d 1251, 1252 (M.D. Fla. 2010);
Madsen, Sapp, Mena, Rodriguez & Co., P.A., 899 So. 2d at 436
(holding that the parol evidence rule precluded evidence that an
accounting consultant orally advised the client that the fee
would be between $10,000 and $12,000).
There is an exception to the parol evidence rule when
the oral agreement induced the execution of a written contract.
See
Ungerleider,
214
F.3d
at
1282.
However,
and
although
Defendant does contend that the oral agreement induced it to
enter into business with Plaintiff (See Def.’s Ans. ¶¶ 76-83),
“the inducement exception does not apply where ‘the alleged oral
agreement relate[s] to the identical subject matter embodied in
the
written
express
agreement
provision
of
and
the
.
.
written
.
directly
contradict[s]
agreement.’”
Id.
an
(quoting
Linear Corp. v. Standard Hardware Co., 423 So. 2d 966, 968 (Fla.
App.
1
Dist.
1982)
(alterations
in
original)).
Here,
any
agreement to provide nine railcars a day directly contradicts
the written contracts which provide for no guarantee of the
amount of railcars.
See Regions Bank v. Old Jupiter, LLC, 449
F. App’x 818, 819-20 (11th Cir. 2011) (finding a contradiction
such that the exception does not apply); Sewell, 709 F. Supp. 2d
at 1252-53 (same).
Thus, the inducement exception does not
apply.
26
Accordingly, the Court finds that Plaintiff has met
all
of
the
necessary
elements
sufficient
to
grant
summary
judgment in its favor on its second counterclaim--there was a
valid
contract,
obligations,
damages.
pursuant
which
to
which
Defendant
Plaintiff
materially
performed
breached,
its
causing
Accordingly, Plaintiff’s motion for summary judgment
on its second claim for breach of the Rail Service Contracts is
GRANTED.
C. Defendant’s Counterclaims
Plaintiff also seeks summary judgment on Defendant’s
counterclaims.
The Court will address each of the counterclaims
in turn.
1. Defendant’s First Counterclaim for Breach of
Contract
As previously stated, Defendant asserts a counterclaim
for
breach
Service
of
contract,
Contracts--and
Contract
CSXT
alleging
that
specifically,
18699--Plaintiff
pursuant
Contract
agreed
to
to
CSXT
the
the
85189
Rail
and
Dispatch
Commitment, but breached that agreement by failing to provide
nine railcars per day.
(Def.’s Ans. ¶¶ 65-75.)
Plaintiff seeks
summary judgment on Defendant’s first counterclaim as it fails
due to the express terms of the contracts and due to Defendant’s
witnesses.
(Pl.’s Br. for S.J. at 14.)
27
In rendering a decision on Plaintiff’s second claim,
the Court has also determined that Defendant cannot sustain its
counterclaim under the parol evidence rule.
the
reasons
already
stated,
Plaintiff’s
Accordingly, for
motion
for
summary
judgment on Defendant’s first counterclaim (breach of contract)
is GRANTED.
2. Defendant’s Second Counterclaim for Breach of
Quasi-Contract
Defendant also asserts a counterclaim for breach of
“quasi-contract,” alleging, in the alternative, that Plaintiff
represented
service
that
needs,
it
could
including
and
by
would
providing
railcars per day, which it did not do.
Plaintiff
seeks
summary
judgment
meet
not
Defendant’s
less
than
rail
nine
(Def.’s Ans. ¶ 77.)
because,
inter
alia,
the
existence of the written car supply terms defeats the claim and
because Defendant lacks any affirmative evidence.
Again, the
Court agrees with Plaintiff.
Plaintiff assumes that New York law would apply to any
additional contracts or oral agreements.
16 n.6.)
(Pl.’s Br. for S.J. at
While Defendant does not directly contradict this
assumption, the Court finds that the outcome would be the same
under either New York or Florida law.
Both states’ laws provide
that, where there is a valid, written contract covering the same
subject matter, there can be no recovery in quasi-contract.
28
See
Landmark Equity Fund II, LLC v. Residential Fund 76, LLC, No.
13-CV-20122, 2014 WL 552974, at *7 n.7 (S.D. Fla. Feb. 12, 2014)
(noting that there was no difference between Florida and New
York law as to quasi-contract claims); U.S. E. Telecomms, Inc.
v. U.S. W. Commcn’s Servs., Inc., 38 F.3d 1289, 1296 (2d Cir.
1994)
(“The
contract
existence
governing
a
of
a
valid
particular
and
enforceable
subject
matter
written
ordinarily
precludes recovery in quasi-contract for events arising out of
the same subject matter.” (internal quotation marks and citation
omitted)); Karp v. Bank of Am., N.A., No. 12-CV-1700, 2013 WL
1121256, at *5 (M.D. Fla. Mar. 18, 2013) (“Under Florida law, a
plaintiff
cannot
pursue
a
quasi-contract
claim
for
unjust
enrichment when an express contract exists that concerns the
same subject matter.” (collecting cases)).
Service
Contracts--which
specifically
Here, given the Rail
contain
a
provision
regarding a non-guarantee on the amount of railcars--Defendant
cannot also recover in quasi-contract on this very same subject
matter.13
Accordingly, Plaintiff’s motion for summary judgment
The Court, therefore, will not consider any additional
arguments for summary judgment on this counterclaim. To the
extent that Plaintiff argues for dismissal of the quasi-contract
counterclaim because an agreement regarding railcar service
would fail on jurisdictional and preemption grounds, the Court
does not read the counterclaim to assert such a claim. Although
the counterclaim references service obligations, including the
Dispatch Commitment, the only service needs addressed in the
counterclaim itself is the Dispatch Commitment and the alleged
guarantee of nine railcars a day. Where, as here, Defendant has
13
29
on Defendant’s second counterclaim for breach of quasi-contract
is GRANTED.
3. Defendant’s Third Counterclaim for Breach of the
Implied Covenant of Good Faith and Fair Dealing
Finally,
Defendant’s
third
Plaintiff
also
counterclaim
seeks
for
summary
breach
of
judgment
the
on
implied
covenant of good faith and fair dealing arguing, in part, that
the written contracts require dismissal.
16.)
(Pl.’s Br. for S.J. at
Again, the Court agrees.
Similar
to
the
counterclaim
under
a
quasi-contract
theory, New York and Florida law are also similar in that a
claim for breach of the implied covenant of good faith and fair
dealing
may
be
duplicative
of
a
breach
of
contract
claim.
“Under New York law, parties to an express contract are bound by
an implied duty of good faith, but breach of that duty is merely
a breach of the underlying contract.”
Harris v. Provident Life
& Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002) (internal
quotation marks and citation omitted).
Thus, “New York law
. . . does not recognize a separate cause of action for breach
of the implied covenant of good faith and fair dealing when a
counsel, the Court will not liberally construe the claim. See
Nat’l Gear & Piston, Inc. v. Cummins Power Sys., LLC, 861 F.
Supp. 2d 344, 370 (S.D.N.Y. 2012) (“[G]iven that Plaintiff is
represented by counsel, the Court has no obligation to construe
its Complaint liberally . . . .” (internal quotation marks and
citation omitted) (alteration in original)).
30
breach of contract claim, based upon the same facts, is also
pled.”
Id. at 81.
Likewise, under Florida law, “a breach of the implied
duty may be dismissed as redundant where the conduct allegedly
violating the implied covenant is duplicative of the companion
cause of action alleging breach of contract.”
133 F. Supp. 2d 1311, 1319 (M.D. Fla. 2000).
Shibata v. Lim,
As such, “a party
can maintain a claim for breach of the implied duty only if it
is
based
on
allegations
different
from
accompanying breach of contract claim.”
Here,
implied
the
covenant
Commitment.
Defendant
infuses
it
identifiable
counterclaim
(See,
allegations,
only
is
e.g.,
its
Def.’s
of
its
Accordingly,
Plaintiff’s
Ans.
that
breach
motion
the
of
for
underlying
the
Id.
basis
breach
counterclaim
apparent
duplicative
is
those
¶¶
for
of
86,
with
Defendant’s
the
Dispatch
88.)
Although
some
amorphous
counterclaim
contract
summary
is
wholly
counterclaim.
judgment
on
Defendant’s third counterclaim is GRANTED, and the Court need
not consider any additional arguments in this regard.
CONCLUSION
For
the
foregoing
reasons,
Plaintiff’s
motion
for
summary judgment is GRANTED, and Defendant’s motion for summary
judgment is DENIED.
31
The Clerk of the Court is directed to enter judgment
in accordance with this Memorandum and Order and to mark this
matter CLOSED.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated: August
20 , 2014
Central Islip, NY
32
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