Jeff Coniber,
DOING BUSINESS AS JEFF CONIBER TRUCKING, Plaintiff,
against
Center Point Transfer Station, Inc., MATTHEW W.
LOUGHRY AND KENNETH LOUGHRY, Defendants.
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41453
Michael M. Mohun, J.
The Court conducted a non-jury trial in the above-captioned matter on October 27,
29 and 30; November 3, 5, 6, 17; and December 1, 2014.
Upon the evidence presented at the trial and upon all the proceedings previously had
herein, after considered the Plaintiff's Proposed Findings of Fact/Conclusions of Law
submitted by Steven E. Feder, Esq., attorney for the plaintiff, dated January 15, 2015 ,
and the Defendants' Request for Findings of Fact, submitted by E. Robert Fussell, Esq.,
attorney for the defendants, dated January 16, 2015, the Court renders the following
Decision in compliance with §4213 of the Civil Practice Law and
Rules.
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
1. The plaintiff owns
and operates a trucking business. He seeks in this law suit to recover from the defendants
monies owed him under a Waste Hauling Agreement dated October 19, 2007.
2. Defendants Kenneth and Matthew Loughry, father and son, are the sole owners and
officers of the defendant, Center Point Transfer Station Inc. [hereinafter, "CP"]. CP was
the operating company for the Loughry's solid waste transfer station located at 119 River
Road, Scottsville, New York. During the period relevant to the law suit, CP had no
employees.
3. Matthew and Kenneth Loughry also own and operate LT
Disposal, Inc. [hereinafter, "LT"], through which they run a garbage collection and
hauling business. The Loughrys had been in the garbage collection and hauling business
for some years before incorporating CP and opening the transfer station. Neither of them
had any prior experience running a transfer station. To the extent needed, the Loughrys
used employees of LT to operate the transfer station. It appears that CP periodically
would reimburse LT for wage costs.
4. The complaint states five (5) causes
of action. During the trial, the plaintiff withdrew, with no opposition from the
defendants, the second and fifth causes of action. The three (3) remaining causes of
action allege breach of the October 19, 2007, Agreement seeking [*2]damages, including late fees and lost profits.
5.
At the trial, the plaintiff called to the stand Peggy Coniber, wife of plaintiff; Edward
Fosdick, expert witness; and plaintiff Jeff Coniber. The defendants called to the stand
Steven Beardsley, Official of the Bank of Castile; Raymond Duerr, Director of Landfill
Sales, Casella Corp.; Brian Lanpher, truck driver; Michael Wolf, truck driver; Kenneth
Loughry, defendant; Mark Cole, owner of M & T Trucking; Christopher Maggoli,
former employee of defendant CP; Sean Buchwald, truck driver; Matthew Loughry,
defendant; and Connie Loughry, Kenneth Loughry's wife and Matthew Loughry's
mother.
6. The October 19, 2007, Waste Hauling Agreement was signed by
the plaintiff and both Matthew and Kenneth Loughry. The signature line reserved for
Matthew Loughry to sign a second time as "President" of CP was left blank.
7. The first paragraph of the Waste Hauling Agreement identifies the parties to the
contract in the following manner. After the names of all three defendants are given, they
are designated, collectively, as the "Supplier." The plaintiff is the designated the
"Hauler."
8. The testimony indicated that the Waste Hauling Agreement was drafted by
an attorney hired by the plaintiff. Clause No.1 of the agreement states that when the
"Supplier's" transfer station begins operation, Hauler will haul deposited garbage to
landfills in Angelica, New York, and Canandaigua, New York. Clause #2 provides that
Hauler will be compensated for the tonnage hauled, and it promises Hauler a minimum
of 100 tons per day. Thirty days advance notice must be given to Hauler "[i]f Supplier
needs more than 450 tons per day hauled." Clause #3 makes Hauler responsible to
"supply all rolling stock necessary to fulfill this agreement." Clause #4 sets the initial
hauling rates at "$11.00 per ton for waste hauled to Canandaigua and $14.65 per ton for
waste hauled to Angelica." Clause #4 also establishes a "fuel surcharge" to be added to
the rates, and it provides that the rates "shall be adjusted upward on each one year
anniversary from the effective date of this contract at a rate of $.33 per ton."
9. Clause #5 states that the effective date of the agreement shall be "the date the
Supplier's Transfer Station is complete and ready for operation," and it provides that the
contract between the parties "shall continue for a five (5) year period and may be
extended thereafter by mutual agreement of the parties." Clause #6 requires that "Hauler
shall be paid in full on the next Tuesday following each week of the contract." A five
percent penalty is to be added to any payments more than 3 days late, and "unpaid
accounts shall accrue simple interest at the rate of 2% per month or fraction thereof."
10. Clause #7 makes the agreement binding "upon the parties, their heirs,
successors and assigns." Clause #8 directs that the agreement shall be governed by the
laws of New York. Clause #8 also states that disputes arising out of the agreement are to
be resolved by binding arbitration. (The Court notes that the plaintiff waived arbitration
by bringing this claim, and the defendants chose not to move pursuant to CPLR
§7503[a] to compel arbitration.) Finally, clause #9 permits Hauler to assign his
interest in the contract to an LLC "so long as he retains the controlling interest in such
Limited Liability Company or Corporation."
11. The transfer station began
operating on November 15, 2007. The plaintiff provided hauling to CP from that date
onward until May 4, 2009, at which point a heated confrontation occurred at the transfer
station between the plaintiff and Kenneth Loughry. The plaintiff claims that Kenneth
Loughry unilaterally terminated the contract on May 4, 2009, by [*3]angrily ordering him to remove himself and his equipment
from the transfer station property. Kenneth Loughry described the conversation slightly
differently in his testimony. He indicated that when the plaintiff, shouting, demanded to
know whether he, Kenneth Loughry, wanted the plaintiff and his equipment off the
property, he, Loughry, calmly answered him in the affirmative.
12. While the
plaintiff hauled for CP, he was paid by CP in accordance with the provisions of clause #4
of the Waste Hauling Agreement — including the fuel surcharge and the
scheduled upward adjustments in the basic rates.
13. Although it appears to
be undisputed that the Waste Hauling Agreement accurately reflected the terms of the
understanding that existed between the Plaintiff and CP with regard to compensation, the
defendants nonetheless contend that the Waste Hauling Agreement was a sham which the
parties never intended to be a binding contract. In support of this contention, Kenneth
Loughry testified that when the plaintiff presented him with the proposed agreement on
October 19, 2007, he immediately informed the plaintiff that he would not agree "to bind
CP for 5 years." He also testified that he told the plaintiff that he did not wish to agree to
the payment schedule, the late payment penalty or the interest charge on unpaid
balances.
14. The Court finds it significant, however, that Kenneth and
Matthew Loughry chose to sign the agreement without crossing out these offending
clauses to which, they now claim, they never agreed. Asked to explain why he would
sign a purported agreement even though, according to him, no actual agreement had been
reached, Kenneth Loughry offered only that he did so after the plaintiff told him, "I won't
hold you to it."
15. The evidence established that Kenneth and Matthew Loughry are
experienced businessmen. Notably, Kenneth has held positions as a senior executive in
several banks, in addition to running his own businesses. The Court finds it not credible
that these experienced businessmen would sign a document purporting to be a waste
hauling agreement with the plaintiff — a document which includes fairly elaborate
terms giving the appearance of having been the product of negotiations between the
parties — unless they intended that the document should, in fact, be a binding
contract. Furthermore, the defendants have advanced no credible reason why they would
have signed the Waste Hauling Agreement — in the absence of an intention to be
bound by it.
16. Certainly, no experienced businessman would sign a
complete written agreement with a 5-year term involving a great deal of money merely
because the other party orally promised him that "I won't hold you to it." Nor is it
credible that the Loughrys — in the absence of an intention to actually be bound
by the Waste Hauling Agreement — would sign it simply because the plaintiff, as
they claim, had been very insistent that they do so in order that he have documentation to
support a bank loan. In this regard, the Court found it highly significant that Kenneth
Loughry, on cross-examination, declined to say that the agreement was signed so as to
deceive the plaintiff's bank regarding the nature of the plaintiff's business relationship
with CP. Either the Waste Hauling agreement was a sham, as the defendants claim, in
which case it follows that the bank would be deceived by relying on it, or it was not
sham.
17. From the evidence, the Court concludes that the Waste Hauling
Agreement is what it purports to be: a binding agreement between the parties who signed
it. The defendants have failed to show that it was intended to be fraudulent or illusory.
18. In addition, contrary to the arguments of defense counsel, the fact that
the corporate defendant, CP, was to operate the transfer station, rather than by the
Loughrys in their personal capacities, did not preclude Kenneth and Matthew Loughry,
the controlling officers of CP, from binding themselves personally by signing the
contract. Similarly, the Court rejects defense counsel's argument that the contract must be
found to be void as impossible with respect to the Loughrys, personally. The Court is not
persuaded by defense counsel's argument that since all garbage deposited at the transfer
station would actually belong to the operating company, CP, the Loughrys, personally,
could not possibly "supply" the plaintiff with any waste. The contract obviously
contemplates that the Loughrys will "supply" waste to the plaintiff through CP, the
corporation that they control.
19. The Court also rejects defense counsel's
contention that the contract was void as illegal because no operating permit had been
issued at the time it was signed. The required permit was issued before the transfer
station opened. The fact that the permit went to CP, not to the Loughrys personally, also
did not render the contract void with respect to the Loughrys. As noted above, the
Loughrys owned and controlled CP. Nothing prevented them from operating a transfer
station through their corporate alter-ego, CP, using the operating permit issued to CP.
20. With regard to the liability of the corporate defendant, CP, the Court finds
that, despite the lack of a signature explicitly on behalf of CP on the Waste Hauling
Agreement, CP made itself liable under the agreement by accepting the benefits of the
agreement from November 15, 2007, until May 4, 2009. Given that Kenneth and
Matthew Loughry, the owners and controlling officers of CP, both signed the contract,
CP obviously must be said to have known of the agreement's existence from its
inception. And the contract, of course, includes CP as a party. Despite this imputed
knowledge on the part of the corporation, however, no action was taken by CP to
repudiate or clarify this allegedly unauthorized agreement. On the contrary, from the
opening of the transfer station until the final breach of the contract, CP paid the plaintiff
in accordance with the hauling rate terms stated in the Waste Hauling Agreement. Under
these circumstances, the Loughrys cannot now claim that the lack of an authorized
signature relieves the corporation of liability. By accepting the benefits of the agreement
for some 18 months, CP must be deemed to have ratified the contract with respect to
itself.
21. Having found that the defendants were bound by the Waste
Hauling Agreement, the Court further finds that the defendants breached the agreement
when they unilaterally terminated their relationship with the plaintiff on May 4, 2009.
22. From the evidence, the Court also finds that the defendants have not shown
that the plaintiff was in breach of the agreement prior to the termination. It is true that the
testimony showed that the defendants had become very dissatisfied with the plaintiff's
performance prior to May 4, 2009, but it appears that the primary source of the Loughry's
growing dissatisfaction with the plaintiff was not a breach of the contract by the plaintiff,
but a circumstance which the contract did not contemplate at all.
23. According to the testimonies of Kenneth and Matthew Loughry, State
regulations prohibited them from leaving garbage on the floor of the transfer station
overnight. It is not clear whether the Loughrys were aware of the existence of this
regulation when they signed the contract. It is clear, however, that the implications of the
regulation were not considered by them when the contract was drafted.
24.
To reach either of the landfills before closing time, a loaded truck had to leave the
transfer station by 2:30 pm. Garbage deposited at the transfer station after that time could
not be trucked to a landfill before the following day. Consequently, on days when large
quantities of garbage arrived at the transfer station after 2:30 pm, the defendants, seeking
to comply with the regulation, were faced with the problem of finding receptacles in
which to store the garbage overnight off the floor.
25. It appears that the
defendants considered it the plaintiff's obligation under the agreement to provide extra,
empty trailers for the overnight storage of late arriving garbage. The Court's reading of
the Waste Hauling Agreement finds no support for this claim. The contract requires only
that the plaintiff shall "provide the necessary tractors and trailers to transfer waste
products" to the specified landfills, and for this purpose he must "supply all rolling stock
necessary . ." It does not contain any provision requiring that the plaintiff must "transfer"
all garbage deposited at the transfer station to a landfill on the same day that it arrives.
Nor does it say anything about the plaintiff being responsible for the storage of garbage
which cannot immediately be taken to a landfill because the landfills are closed.
26. Having determined that the plaintiff has shown that the defendants are liable for the
breach the contract, it remains to assess the plaintiff's damages. With respect to the
plaintiff's claim for lost profits, contrary to the argument of defense counsel, the claim is
not speculative. The Waste Hauling Agreement specifies the hauling rates which will
prevail, and it specifies that the defendants are to provide the plaintiff with a minimum of
100 tons of garbage per day to haul. From these terms, coupled with the plaintiff's proof
with respect to projected profits, the plaintiff's lost profits from the early termination of
the contract can easily be calculated. Also, the evidence did not establish a failure on the
part of the plaintiff to mitigate damages.
27. The agreement left to the
discretion of the defendants the choice of the destination for each load — whether
it should go to the Canandaigua landfill or the Angelica landfill. The proof showed that
the plaintiff's profit for any given load was less, however, if that load went to
Canandaigua rather than Angelica. Thus, since the contract does not obligate the
defendants to send any loads to Angelica, had the contract continued in effect after May
4, 2009, it must be assumed for the purpose of calculating lost profits that all future loads
would have gone to Canandaigua. Using this assumption, along with the 100-ton
minimum and the plaintiff's costs and rate of profit as shown by the proof, the Court has
determined that the amount of the plaintiff's lost profits over the remainder to the 5-year
term of the contract is $755,125.58.
28. With respect to the plaintiff's claim
for late payment penalties and interest under the Waste Hauling Agreement, the Court
finds that the defendants are additionally indebted to the plaintiff in the amount of
$4,884.44.
NOW, THEREFORE, based upon the foregoing, and for
the reasons set forth above, it is hereby
ORDERED that judgment be
entered herein in plaintiff's favor against the defendants jointly and severally in the
amount of $760,010.02, plus the costs and disbursements of this action.
Dated:March 23, 2015
Warsaw, New York
____________________________
HON. MICHAEL M.
MOHUN
Acting Justice of the Supreme Court