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EBC, Inc. v. Clark Building Systems

December 21, 2007

EBC, INC. AND STATE STEEL SUPPLY INC. PLAINTIFFS,
v.
CLARK BUILDING SYSTEMS AND AMERICAN COMPOST CORPORATION AND A & M COMPOSTING, INC. AND SOLID WASTE SERVICES, INC. D/B/A DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM OPINION

This is an action for alleged breach of contract, fraudulent misrepresentation, unjust enrichment and account stated. Plaintiffs EBC, Inc. ("EBC")*fn1 and State Steel Supply, Inc. ("State Steel") entered into an agreement with Defendant Clark ("Clark"), a subcontractor, who in turn had an agreement with Defendant A & M Composting ("A&M"). Clark agreed to be the general contractor in the fabrication of a new steel building for A&M, and Clark turned to EBC and State Steel as subcontractors to help supply building material for the project. (Docket No. 35-2 at 27 & 55). In May of 2004, a letter sent from the general counsel of A&M offered to pay EBC and State Steel directly, with the approval of Clark, for any of the materials EBC and State Steel provided to Clark. (Docket No. 1 at 9-12).

Pending before this Court is Defendant A&M's Motion for Summary Judgment. (Docket No. 35) and Plaintiffs' Brief in Opposition to Summary Judgment (Docket No. 45). After careful consideration and for the reasons outlined below, this Court grants Defendant A&M's Motion for Summary Judgment with respect to the breach of contract and account stated claims but denies the same with respect to the unjust enrichment and fraudulent inducement claims.

FACTS

On April 14, 2004, Defendants Clark*fn2 and A&M entered into an agreement whereby Clark would manufacture and fabricate a new steel compost building of approximately 465,000 square feet for A&M.*fn3 (Defendant A&M's Concise Statement of Undisputed and Material Facts, Docket No. 35-2 at 12). The new building was a necessity for A&M, because in February of 2003 A&M's composting plant collapsed during a snowstorm causing $10 million dollars in damage and requiring extensive, EPA-monitored clean-up of the sewage sludge in the plant. (DE 35-2 at 8). The value of the new contract to replace the old sludge plant amounted to $2,428,476. (DE 35-2 at 13). In late-April and early-May of 2004, respectively, Clark entered into purchase order contracts with the EBC and State Steel to supply materials to Clark for the fabrication of the new building. (DE 35-2 at 27 & 55)

On May 26, 2004, William Fox, Defendant A&M's General Counsel, sent a letter to both EBC and State Steel.*fn4 The letters were identical and advised both entities that A&M would pay them directly, with Clark's permission, for any materials they supplied to Clark for the A&M building. (Docket No. 1 at 9-12). These payments would then, in turn, be credited to the amount A&M owed Clark under the terms of their agreement. Id. The parties dispute why these letters were sent to EBC and State Steel. They suggest that the letters were provided because of concerns about the solvency of Clark, thus requiring them to realistically question Clark's ability and willingness to pay for the building materials. (Plaintiff's Response to Defendant A&M's Concise Statement of Facts, Docket No. 46 at 33-35 & 78). In fact, the Plaintiffs aver that the letters were written after EBC and State Steel demanded adequate assurance of payment from one or more of the defendants. (Docket No. 1 at 19). However, Adrienne Chizek, the owner of State Steel admitted in a deposition that she does not remember the reason the letter was sent, and furthermore that if A&M submitted payment in full to Clark, she would not have expected A&M to also pay State Steel.*fn5 (Docket No. 69, at 26, line 11). The Plaintiffs also contend that Defendant A&M was concerned about Clark's ability to manage the job financially, and complete it in a timely fashion. Therefore Defendant A&M sent the letters to EBC and State Steel to guarantee the continued supply of steel and related building materials to the job site. Id. As such, they claimed these letters created independent and enforceable contracts between them and A&M. Defendant A&M, however, contends that the letters were merely letters of accommodation that proposed direct and more convenient payment arrangements from Defendant A&M to the Plaintiffs. Id.

By November 30, 2004, A&M's balance to Clark was paid in full. (Docket No. 46 at 90). Clark, however, still had outstanding invoices for materials received from EBC in the amount of $117,781.95, and from State Steel in the amount of $214,958.20. Id. EBC and State Steel contend that these unpaid invoices are for materials directly used by Clark in the construction of A&M's new sludge plant. Id. At 92. Neither Defendants A&M nor Clark paid the Plaintiffs pursuant to these invoices and as a result, Plaintiffs filed this lawsuit asserting claims based on theories of breach of contract, fraudulent inducement, unjust enrichment, and account stated on November 7, 2005.*fn6 (Docket No. 1 at ¶¶ 19, 20-43).

In their Complaint, EBC and State Steel allege that the May 26, 2004 letters created a contract between them and Defendant A&M which A&M then breached by refusing to pay the invoices for steel and other materials supplied to Clark for construction of A&M's building. (Docket No. 1 at ¶¶ 21-23; Docket No. 46 at 5-6). In the alternative, if this Court finds that no contract exists between the parties as a result of the letters in question, EBC and State Steel next contend that Defendants were unjustly enrichment by the delivery of these products which were used in the completion of Defendant A&M's new building. (Docket No. 1 at ¶¶ 36-39). Additionally, EBC and State Steel claim that Defendant A&M fraudulently induced them into the delivery of these materials. (Docket No. 1 at ¶¶ 28-35). Finally, EBC and State Steel contend that they have an account stated claim as Defendant A&M has unpaid and overdue accounts with them relating to the materials they provided to Defendant A&M. (Docket No. 1 at ¶¶ 40-43).

Defendant A&M argues there are no genuine issues of material fact before this Court and therefore, moves for summary judgment on the counts outlined above. State Steel, the remaining plaintiff, counters that the circumstances of this case create issues of fact which must be tried before this Court.

STANDARD

Summary judgment under Fed. R. Civ. P. 56(c) is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Woodside v. Sch. Dist. of Phila. Bd. of Educ., 248 F.3d 129, 130 (3d Cir. 2001), quoting Foehl v. United States, 238 F.3d 474, 477 (3d Cir. 2001) (citations omitted). In deciding a summary judgment motion, the court must "view the evidence . . . through the prism of the substantive evidentiary burden" to determine "whether a jury could reasonably find either that the plaintiff proved his case by the quality and quantity of the evidence required by the governing law or that he did not." Anderson v. Consol. Rail Corp., 297 F.3d 242, 247 (3d Cir. 2002), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986).

While the non-moving party will bear the burden of proof at trial, the moving party's burden can be "discharged by 'showing' -- that is, pointing out to the District Court -- that there is an absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party has carried this burden, the burden shifts to the non-moving party who cannot rest on the allegations of the pleadings and must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). Thus, the non-moving party cannot rest on the pleadings, but instead must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial," Fed. R. Civ. P. 56(e), and cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Celotex, 477 U.S. at 325). The non-moving party must respond "by pointing to sufficient cognizable evidence to create material issues of fact concerning every element as to which the non-moving party will bear the burden of proof at trial." Simpson v. Kay Jewelers, Div. of Sterling, Inc., 142 F.3d 639, 643 n. 3 (3d Cir. 1998), quoting Fuentes v. Perskie, 32 F.3d 759, 762 n.1 (3d Cir. 1994).

In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence "is to be believed and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255 (1986); see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004.); and Doe v. County of Centre, Pa., 242 F.3d 437, 446 (3d Cir. 2001) (court must view facts in the light most favorable, draw all reasonable inferences, and resolve all doubts, in favor of the non-moving party).

ANALYSIS

1. Breach of ...


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