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EBC, Inc. v. Clark Building Systems

November 13, 2008

EBC, INC. AND STATE STEEL SUPPLY, INC., PLAINTIFFS,
v.
CLARK BUILDING SYSTEMS, INC., AMERICAN COMPOST CORPORATION, A & M COMPOSTING, INC. AND SOLID WASTE SERVICES, INC. DOING BUSINESS AS J.P. MASCARO & SONS, DEFENDANTS.



The opinion of the court was delivered by: Nora Barry Fischer, United States District Judge

MEMORANDUM OPINION

I. INTRODUCTION*fn1

This action is before the Court on Plaintiff State Steel Supply, Inc.'s ("State Steel" or "Plaintiff")*fn2 claims of unjust enrichment and fraudulent inducement against Defendants American Compost Corporation, A & M Composting and Solid Waste Services, Inc., doing business as J.P. Mascaro & Sons ("Defendants").*fn3 A non-jury trial was conducted on Plaintiff's claims on May 5 and May 6, 2008 before the undersigned Judge. At the conclusion of Plaintiff's case-in-chief, Plaintiff made an oral motion for reconsideration of the Court's earlier Memorandum Opinion and Order granting Defendants' motion for summary judgment as to Plaintiff's breach of contract claim. Transcript of Trial Proceedings 5/6/08 ("Tr. 5/6/08") at 137-138. In addition, Defendants moved for judgment in their favor on Plaintiff's unjust enrichment and fraudulent inducement claims under Rule 52(c) of the Federal Rules of Civil Procedure. Tr. 5/6/08 at 139:6-11. Pursuant to a Court Order, the parties have submitted proposed findings of fact and conclusions of law to the Court. Based on the following, Plaintiff's Motion is DENIED and Defendants' Motions are GRANTED.

II. PROCEDURAL HISTORY

This action was initially filed on November 7, 2005 by Plaintiffs EBC, Inc. and State Steel against Defendants Clark Building Systems, Inc., American Compost Corporation, A & M Composting, Inc. and Solid Waste Services, Inc. (Docket No. 1). Plaintiffs alleged that Defendants were liable to them under theories of breach of contract, unjust enrichment, fraudulent inducement and account stated. Id. Defendants American Compost Corporation, A & M Composting, Inc. and Solid Waste Services, Inc. filed their Answer on January 11, 2006. (Docket No. 7). Defendant Clark did not file any Answer or responsive pleading nor did it join the other Defendants' Answer.*fn4 The parties then proceeded to discovery. A settlement conference was conducted on December 12, 2006 before the Honorable David S. Cercone at which time the matter did not settle. (Docket No. 18).

On March 28, 2007, Defendants filed a Motion for Summary Judgment, (Docket No. 34), Brief in Support (Docket No. 35) and Concise Statement of Material Facts (Docket No. 35-2). Then, on March 29, 2007, Defendants filed corresponding appendices. (Docket No. 39). In reply, Plaintiffs filed a motion for extension of time to file a brief in opposition to Defendants' motion on April 23, 2007. (Docket No. 40). On April 27, 2007, the matter was reassigned from the Honorable David S. Cercone to the undersigned Judge. (Docket No. 41). The first motion for extension of time was then granted by the Court on May 1, 2007 (Docket No. 42), and a second motion for extension of time (Docket No. 43) was granted on May 16, 2007. Then, on May 25, 2007, Plaintiffs filed their Brief in Opposition, Counterstatement of Facts and corresponding appendices in response to Defendants' Motion for Summary Judgment. (Docket Nos. 45-48). Defendants also requested an extension of time in which to file their Reply brief (Docket No. 49), which was granted by the Court on June 7, 2007 (Docket No. 51). Thereafter, Defendants filed their Reply Brief (Docket No. 52), Response to Plaintiffs' Counterstatement of Facts (Docket No. 54) and supplemental appendices (Docket No. 56). A second settlement conference was held on July 17, 2007, at which time the parties engaged in settlement negotiations, but the case was not resolved. (Docket No. 60). Each party then filed supplemental briefs updating any changes in the law in their previous briefs relating to Defendants' motion. (Docket Nos. 63 & 64).

Prior to the Court's resolution of Defendants' pending motion, on November 14, 2007, Plaintiff EBC filed a Motion to Dismiss its claims against Defendants under Rule 41(a)(2) of the Federal Rules of Civil Procedure. (Docket No. 65). Plaintiff EBC requested that its claims be dismissed without prejudice as it no longer desired to pursue the litigation. Id. Such Motion was granted by the Court on the same day. (Docket No. 66). Pursuant to said Motion, Plaintiff EBC was then dismissed from the case.

This Court issued a Memorandum Opinion and Order on December 21, 2007, granting in part and denying in part Defendants' Motion for Summary Judgment. (Docket Nos. 70-71); EBC, Inc. et al. v. Clark Bldg. Systems et al, Civ. A. No. 05-1549, 2007 WL 4563518, 2007 U.S. Dist. LEXIS 93817 (W.D.Pa. Dec 21, 2007). Specifically, the Court granted Plaintiff's breach of contract and account stated claims but denied its unjust enrichment and fraudulent inducement claims. Id. Thereafter, on January 4, 2008, Plaintiff filed a Motion for Reconsideration regarding the Court's grant of summary judgment on its breach of contract claim. (Docket No. 72). By Memorandum Order of January 16, 2008, the Court denied Plaintiff's Motion for Reconsideration, upholding the earlier Memorandum Opinion and Order that Defendants were entitled to summary judgment as to Plaintiff's breach of contract claim. (Docket No. 76); EBC, Inc. et al. v. Clark Bldg. Systems et al, Civ. A. No. 05-1549, 2008 WL 169743, 2008 U.S. Dist. LEXIS 3728 (W.D.Pa. Jan 16, 2008). Subsequently, on January 22, 2008, Plaintiff filed a Motion for Reconsideration regarding the Court's Memorandum Order of January 16, 2008, denying its first Motion for Reconsideration (Docket No. 77), which was also denied by this Court on February 5, 2008 (Docket No. 81).

Relating to the bench trial, Plaintiff filed its Pretrial Statement on January 9, 2008. (Docket No. 73). Defendants filed their Pretrial Statement on January 23, 2008. (Docket No. 78). This Court issued a Pretrial Order on February 7, 2008. (Docket No. 83). Thereafter, both parties filed Supplemental Pretrial Statements, Plaintiff on February 14, 2008 (Docket No. 85), and Defendants on February 15, 2008 (Docket No. 86). Subsequently, on February 14, 2008, Plaintiff filed a Motion for Order to Allow Testimony of Christopher Nielson (Docket No. 84), which was denied by the Court on March 3, 2008 (Docket No. 99). Then, in yet another attempt to save its breach of contract claim, Plaintiff filed a series of motions on February 20, 2008. (Docket No. 87). Specifically, Plaintiff filed alternative motions for certification of appeal under Rule 54(b) of the Federal Rules of Civil Procedure, for an interlocutory order under 28 U.S.C. § 1292(b), and to allow the trial testimony of Adrienne Chizek regarding its breach of contract claim. Id. Said motions were all denied by Memorandum Order of the Court on March 17, 2008. Id.; EBC, Inc. et al. v. Clark Bldg. Systems et al, Civ. A. No. 05-1549, 2008 WL 728541, 2008 U.S. Dist. LEXIS 21018 (W.D.Pa. Mar 17, 2008).

Pursuant to the Court's Pretrial Order, the parties filed designations and counter-designations of deposition testimony by the April 21 and 28 deadlines set forth therein. (See Docket Nos. 103, 104, 108, 111, 112). On April 30, 2008, the parties filed their Joint Trial Stipulations.*fn5 (Docket No. 113). Thereafter, on May 1, 2008, the parties filed Joint Exhibit List Volumes I (Docket No. 116) and II (Docket No. 114), and Plaintiff (Docket No. 117) and Defendants (Docket No. 115) filed their list of disputed exhibits. On May 5, 2008, the Court held a Pretrial Exhibit Hearing at which time it entertained argument as to the disputed exhibits. (Docket No. 120). Also, on May 5, 2008, Defendants filed a trial brief. (Docket No. 119). Immediately after the Pretrial Exhibit Hearing, the bench trial commenced. Plaintiff proceeded to put on its case-in-chief for two days, May 5 and 6, 2008. (See Docket Nos. 122, 123). During its case-in-chief, Plaintiff offered the testimony of the following individuals: (1) Solomon Wansor, the former President of Clark Building Systems, Inc.; (2) Jeffrey Smith, the former Treasurer and Secretary of Clark Building Systems, Inc.; (3) William Fox, Jr., General Counsel for Defendants (per cross-examination); and (4) Adrienne Berg, President of Plaintiff State Steel. Id.

Plaintiff rested its case on May 6, 2008 and, at that time, made an oral motion for reconsideration of the Court's Memorandum Opinion and Order granting Defendants' motion for summary judgment as to Plaintiff's breach of contract claim. Tr. 5/6/08 at 137:18-138:17. Defendants then made oral motions for judgment in their favor under Rule 52(c) of the Federal Rules of Civil Procedure as to Plaintiff's claims of unjust enrichment and fraudulent inducement. Tr. 5/6/08 at 139:6-11. Upon consideration of the argument set forth by counsel for both parties and the evidence presented at trial, the Court found that it was inclined to deny Plaintiff's motion for reconsideration of its breach contract claim and grant Defendants' motions for judgment in their favor as to Plaintiff's unjust enrichment and fraudulent inducement claims. Tr. 5/6/08 at 173:3-10. As Defendants had submitted a trial brief (and Plaintiff had not), the Court ordered that the parties file proposed findings of fact and conclusions of law and set an appropriate briefing schedule. (Docket No. 119); Tr. 5/6/08 at 173:3-174:16.

The trial transcript was filed with the Court on June 16, 2008. (Docket Nos. 122, 123). Thereafter, on July 1, 2008, the Court issued an Order amending the briefing schedule in this matter. (Docket No. 124). In accordance with that Order, on July 16, 2008, Plaintiff filed its Brief in Opposition to Defendants' Oral Motion for Judgment as a Matter of Law (Docket No. 125) and Proposed Findings of Fact and Conclusions of Law (Docket No. 127). On August 15, 2008, Defendants responded by filing their Proposed Findings of Fact and Conclusions of Law (Docket No. 128) and Supplemental Brief in Support of their Rule 52(c) Motion for Judgment in Their Favor (Docket No. 129). The Court then granted Plaintiff's Motion for Leave to File a Reply Brief, which was filed by Plaintiff on August 29, 2008. (Docket No. 133). The pending motions are now fully briefed and ripe for disposition.

III. LEGAL STANDARD

Rule 52(c) of the Federal Rules of Civil Procedure provides that:

[i]f a party had been fully heard on an issue during a non-jury trial and the court finds against the party on that issue, the court may enter judgment against the party on a claim ... that, under the controlling law, can be maintained ... only with a favorable finding on that issue.

FED. R. CIV. P. 52(c). When ruling on a motion under Rule 52(c), the Court does not "draw any inferences in the non-movant's favor nor concern itself with whether the non-movant has made out a prima facie case. Instead, the court's task is to weigh the evidence, resolve any conflicts in it, and decide for itself where the preponderance lies." Giant Eagle, Inc. v. Fed. Ins. Co., 884 F. Supp 979, 982 (W.D. Pa. 1995)(citing 9A CHARLES A. WRIGHT AND ARTHUR R. MILLER, FEDERALPRACTICE AND PROCEDURE: Civil 2d, § 2573.1). The Court is also required to assess the credibility of witnesses to determine whether Plaintiff has "demonstrated a factual and legal right to relief by a preponderance of the evidence." Parker v. Long Beach Mortg. Co., 534 F.Supp.2d 528, 535-536 (E.D.Pa. 2008)(citing Rego v. ARC Water Treatment Co. of PA., 181 F.3d 396, 399 (3d Cir.1999) (holding that "[i]n cases in which a district court enters a judgment under Rule 52(c), the district court can resolve disputed factual questions.")). Further, "[c]redibility determinations alone are insufficient to satisfy the requirements of Rule 52(c)." Parker, 534 F.Supp.2d at 536 (citing Newark Branch NAACP v. City of Bayonne, 134 F.3d 113 (3d Cir.1998)). Lastly, "[a] judgment on partial findings must be supported by findings of fact and conclusions of law as required by Rule 52 (a)."

FED. R. CIV. P. 52(c).

Accordingly, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a).

IV. FINDINGS OF FACT*fn6

A. A & M Composting Facility

Defendants operate the A & M composting facility in Manheim, Lancaster County, Pennsylvania. (Docket No. 113, Joint Trial Stipulations, at 1). A severe snowstorm caused the building roof at the A & M Composting facility to collapse in February 2003. Id. at 2. As a result, the entire building required replacement. Id. at 3. Defendants contracted with general contractor Clark Building Systems, Inc., a company that manufactured pre-engineered metal buildings at its Clark, Pennsylvania location, to fabricate three steel buildings to replace the collapsed building. Joint Trial Ex. 13. As discussed in further detail below, the parties agreed that time was of the essence in the performance of this contract because of Defendants' obligations under an agreement to provide composting services at the A & M Composting facility with a governmental entity. Id. at ¶¶ 9, 14; Joint Trial Ex. 18. Clark, in turn, contracted with Plaintiff State Steel, a company in the business of selling steel, to supply steel for the construction of the buildings. Tr. 5/6/08 at 99-101. This dispute arises out of non-payment for the steel provided by Plaintiff that was incorporated into Defendants' buildings at the A & M Composting facility.

B. Witness Credibility

1. Solomon Wansor - President and C.E.O. of Clark Building Systems, Inc.

Clark Building Systems, Inc. is a named defendant in this matter but, to date, no attorney has entered an appearance on its behalf and Clark has not attempted to defend this action in any manner. Despite this fact, Solomon Wansor testified at trial as a witness for Plaintiff State Steel. See Tr. 5/5/08 at . He was the former President and Chief Executive Officer of Clark Building Systems, Inc., a company that manufactured pre-engineered metal buildings, which he founded in 1989. Tr. 5/5/08 at 61. Wansor testified that Clark went bankrupt and is no longer in existence. Tr. 5/5/08 at 73-74. During his testimony at trial, Wansor alleged several times that Defendants had caused Clark, and specifically, he and his sons, to go bankrupt. Tr. 5/5/08 at 70, 74. Having reviewed the trial record and observed Wansor's demeanor as he offered testimony at trial, the Court finds that Wansor has a bias against Defendants given his allegations and the fact that his company remains a defendant in this matter. In addition, the Court did not find him to be a credible witness. Tr. 5/6/08 at 172-173.

2. Jeffrey Smith - Secretary and Treasurer of Clark Building Systems, Inc.

Jeffrey Smith also testified for Plaintiff pursuant to a subpoena and was paid a witness fee. Tr. 5/6/08 at 64. He was the former Secretary and Treasurer at Clark. Smith worked at Clark from the time he graduated college in 1995 until it closed in 2005. Tr. 5/5/08 at 124. He had formerly worked at Clark while he was in college where he obtained a degree in business administration finance. Tr. 5/5/08 at 124-125. His job duties steadily enlarged until the point where he became Secretary and Treasurer. As Treasurer, Smith only paid Clark's suppliers upon the approval of its owner, Wansor. Tr. 5/6/08 at 11. Smith also has a familial relationship to Wansor, as he is the brother-in-law to Wansor's son. Tr. 5/5/08 at 62. (As indicated in several of the admitted exhibits in this case, Wansor's sons were involved with Clark, which appears to have been a family business. Smith also testified that he was not aware of the status of Clark's bankruptcy. Tr. 5/6/08 at 64.) The Court found that portions of Smith's testimony which directly contradicted evidence of record lacked credibility, including his testimony that he was not aware of the contractual agreement between Clark and Defendants, yet he had signed the document as a witness to its execution.

3. William F. Fox, Jr., Esq. - General Counsel of Defendants

Plaintiff also offered the testimony of William F. Fox, Jr., Esq., General Counsel for Defendants American Compost Corporation, A & M Composting and Solid Waste Services, Inc., doing business as J.P. Mascaro & Sons, as if on cross examination. Tr. 5/6/08 at 66. Fox was admitted to practice law in Pennsylvania in 1975 and has served in the General Counsel role for Defendants since October of 1990. Id. He testified that Defendants are his sole source of income, but has no equity interest in the companies. Tr. 5/6/08 at 84. The Court found Fox's testimony to be credible.*fn7

4. Adrienne Berg (formerly Chizek) - President and Owner, State Steel Supply

The last witness to testify in Plaintiff's case was Adrienne Berg (formerly Chizek) the owner and President of Plaintiff State Steel, a company in the business of selling steel. Tr. 5/6/08 at 100. She testified that she started the business in 1989. Tr. 5/6/08 at 100. Berg testified that she had one year of college education and that prior to starting the business she was a housewife. Tr. 5/6/08 at 136. Prior to this lawsuit, Clark had been a customer of Plaintiff for 10-12 years while Defendants had never been customers of Plaintiff. Tr. 5/6/08 at 116-117. Aside from the lawsuit, Plaintiff did not file any other claims against Clark relating to the payment of the invoices. Tr. 5/6/08 at 135. The only attempts at recovering these sums due and owing from Clark were by calling Clark and requesting that money be sent. Tr. 5/6/08 at 135. Finally, aside from counsel representing Plaintiff in this action, Plaintiff did not have legal assistance in any attempt to recover this debt. Id. Except for an important discrepancy further detailed below, the Court found Berg's testimony to be credible. However, the Court also recognizes that given Berg's role as principal of Plaintiff, she has an inherent bias against Defendants.

C. Contractual Agreement between Clark and Mascaro Defendant A & M Composting

One of the Defendants, A & M Composting, and Clark entered into a written agreement dated April 14, 2004 entitled "Contract for Purchase of Fabricated Steel Buildings." Joint Trial Ex. 13 at 1. The agreement was drafted by Defendants' general counsel, William F. Fox, Jr. Tr. 5/6/08 at 66-67, 92. The agreement was signed by Defendants' President Pat Mascaro and General Counsel Fox on behalf of A & M, and for Clark by its President, Wansor, and Secretary and Treasurer, Smith.*fn8 Joint Trial Ex. 13 at 9; Tr. 5/5/08 at 61-62. Pursuant to that agreement, A & M Composting agreed to purchase and Clark agreed to manufacture and sell three fabricated steel buildings including: "a steel frame sheeted main building"; "an insulated office building"; and, "a sludge unloading building plus a covered runway and shed." Joint Trial Ex. 13 at ¶ 1. While Clark agreed to fabricate and sell the three buildings to A & M Composting, Clark was not responsible for any of the following: erecting the buildings, galvanizing any of the buildings' components or providing A & M with the anchor bolts required for the project, each of which was to be provided or performed by a third party. Id. at ¶¶ 3-5. The total purchase price for the project was $2,418,476.00, including a base price of $2,363.876.00 for the project buildings and a freight charge of $54,600.00. Id. at ¶ 6. The purchase price was to be paid by A & M according to the following schedule:

* an initial down payment upon the signing of this Contract $90,000.00

* a second down payment within 7 days after the signing of this Contract $507,619.00

* the balance of the Purchase Price to be paid pursuant to phased delivery invoices $1,820,857.00

* total purchase price $2,418,476.00

Id. at ¶ 6.

The total purchase price of $2,418,476.00 to be paid by A & M under the agreement was "a fixed and firm price" which would "not be increased or decreased because of fluctuations, if any, in Clark's raw material costs." Id. The agreement includes only the aforementioned total purchase price and does not specify any itemized costs for the project components, including steel. After the initial down payment of $90,000 was made by A & M to Clark, a second down payment of $507,619.00 was to be deposited in a joint checking account in the names of Clark and A & M Composting and "[t]he money in this account [was] to be used to pay suppliers of the raw materials

! a second down payment within necessary for Clark to fabricate the Project Buildings." Id. The Project Buildings were "to be delivered by Clark in phased segments in accordance with the delivery sequence and schedule" and after delivery, Clark was to invoice A & M with a proportionate phased invoice of the remaining balance of $1,820,857.00 based on the components of the buildings that were delivered. Id. at ¶ 7. Further, "A & M [agreed] to pay each phase invoice within seven days of delivery for those Project Building components delivered without defect," except for a ten percent (10%) retainage fee which would be withheld by A & M from each phase invoice. Id. These retained sums were to be paid to Clark within ten (10) days of the final and satisfactory delivery of each component of the Project Buildings. Id.

The agreement further provided that Clark would use the highest degree of care in meeting the phased delivery time schedule and that Clark understood and agreed that time was of the essence in the performance of the contract as A & M was unable to re-open its "compost facility business operations until the Project Buildings [were] fabricated and delivered by Clark and thereafter erected by a third party contractor chosen by A & M." Id. at ¶¶ 9, 14. Finally, the agreement provided that Clark had made the necessary arrangements to secure the raw materials needed for the fabrication of the Project Buildings and that the unavailability of raw materials would not constitute a force majeure justifying a delay in the delivery time schedule. Id. at ¶ 9.

D. Agreement and Transactions between Clark and Plaintiff

After contracting with A & M to fabricate the buildings, Clark reached an agreement with Plaintiff to supply steel for the job. Tr. 5/5/08 at 71, 125-127; Tr. 5/6/08 at 99-102; Joint Trial Ex. 1. Clark chose Plaintiff because of all the steel suppliers with which they had spoken, Plaintiff had the lowest price. Tr. 5/5/08 at 126. Plaintiff and Clark had maintained an amicable business relationship for 10 to12 years during which Plaintiff supplied steel to Clark. Tr. 5/6/08 at 100-118. Plaintiff considered Clark a good customer other than that they were "slow" to pay on occasion. Tr. 5/6/08 at 118. (The contractual agreement, if any, between these parties was not entered into evidence at the bench trial.) Defendants were not customers of Plaintiff State Steel. Tr. 5/6/08 at ...


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