The opinion of the court was delivered by: James Knoll Gardner, United States District Judge
The undersigned presided over a non-jury trial conducted March 1 and 2, 2011 on the Complaint of plaintiff Fabral, Inc. against defendants B&B Roofing Company, Inc. ("Roofing"), B&B Metals of Middlesboro, Inc. ("Middlesboro"), B&B Metals, LLC ("LLC") (each doing business as B&B Roofing & Metals, Inc.), and Gary M. Brewster. *fn1 At the close of the trial, I took the matter under advisement. Hence, this Adjudication.
Plaintiff is a supplier of construction materials. Plaintiff sued defendants for breach of a Credit Application and Agreement. In its Complaint, plaintiff seeks damages for amounts due on outstanding invoices for construction materials sold to defendants, late charges, attorneys' fees, and costs.
At the conclusion of the non-jury trial on March 2, 2011, I directed the parties to file proposed findings of fact and conclusions of law. Subsequently, on May 2, 2011, separate proposed findings of fact and conclusions of law were filed by plaintiff and defendants (collectively).
In the within Adjudication, I make Findings of Fact based upon the evidence adduced at trial, and Conclusions of Law based upon the legal principles and standards discussed in this Adjudication.
Based upon those Findings of Fact and Conclusions of Law, and the law applicable to this contract action, I entered a Verdict dated September 30, 2011, which accompanies this Adjudication.
In that Verdict, I find in favor of plaintiff and against defendant Roofing in the amount of $2,553,696.67. I also find in favor of plaintiff and against defendant Middlesboro in the amount of $816,577.12, and against defendant LLC in the amount of $1,737,119.55.
At the close of plaintiff's case-in-chief at the trial of this matter, defendants made an oral motion on the record for judgment on partial findings pursuant to Federal Rule of Civil Procedure 52. Pursuant to Rule 52(c), I declined to render any judgment until the close of the evidence.
Thereafter, pursuant to Fed.R.Civ.P. 52(a)(1), based upon the Findings of Fact and Conclusions of Law stated separately in this Adjudication, I entered an Order and Judgment under Federal Rule of Civil Procedure 58, which will be filed immediately after the filing of the within Verdict and Adjudication. In that Order and Judgment, I denied defendants' motion for judgment on partial findings. Specifically, I entered judgment on the Verdict in favor of plaintiff and against the B&B defendants in the amounts specified in the Verdict as described above.
Jurisdiction in this case is based upon diversity of citizenship pursuant to 28 U.S.C. § 1332.
Venue is proper pursuant to 28 U.S.C. § 1391(b) because the events giving rise to plaintiff's claims allegedly occurred in Lancaster, Lancaster County, Pennsylvania, which is within this judicial district. Moreover, by contract, the parties agreed to venue in this district. *fn2
The procedural history of this matter is set forth more fully in my February 24, 2011 Opinion disposing of plaintiff's motion for summary judgment. To the extent it is not restated here, I incorporate that recitation of the procedural history.
This dispute arises from a business relationship wherein plaintiff Fabral, Inc., a supplier of construction materials, supplied construction materials to defendants B&B Metals of Middlesboro, Inc. and B&B Metals, LLC. Together with defendant B&B Roofing Company, Inc., defendants Middlesboro and LLC did business under the fictitious name B&B Roofing & Metals, Inc. (the "d/b/a").
Plaintiff's three-count Complaint filed January 21, 2009 alleges breach of contract against Middlesboro, LLC, and Roofing (collectively, "B&B defendants") (Count I); breach of contract against defendant Gary M. Brewster (Count II); and a claim for unjust enrichment against all defendants (Count III). The Complaint alleges that the B&B defendants by a credit agreement, and defendant Brewster by a personal guaranty, are obligated to pay for all materials supplied to the B&B defendants by plaintiff, but are in default.
By Order and Opinion dated February 24, 2011, I granted in part, denied in part, and dismissed in part as moot, Plaintiff's Motion for Summary Judgment. Specifically, on Count I, judgment was entered in favor of plaintiff and against defendant Middlesboro in the amount of $498,136.98 and against defendant LLC in the amount of $1,039,822.37 on liability and compensatory damages only. I reserved for trial the issue of attorneys' fees, costs, and interest. In the same Order, I denied the motion for summary judgment against defendant Roofing.
In the February 24, 2011 Order, I entered judgment on Count II in favor of plaintiff and against defendant Brewster in the amount of $1,537,959.35 plus interest at the rate of twelve percent per annum or the maximum rate permitted by law, whichever is less, from January 12, 2009 until paid in full.
Finally, in the February 24, 2011 Order, I dismissed Count III as moot. I also dismissed the motion for summary judgment as moot to the extent that it sought judgment in plaintiff's favor on defendants' counterclaims, because defendants had withdrawn their counterclaims. Thus, the issues at trial were limited to attorneys' fees, costs, and interest owed by the B&B defendants on Count I, and whether Roofing is liable to plaintiff for breach of the Credit Application and Agreement ("Agreement").
On March 1, 2011, the first day of trial in this matter, counsel for defendants advised me that defendant Brewster had filed a bankruptcy petition in the United States Bankruptcy Court for the Eastern District of Tennessee. The parties agreed that the filing of that petition acted as an automatic stay of any proceedings against Mr. Brewster, including this action, pursuant to 11 U.S.C. § 362(a).
However, plaintiff sought to proceed against the B&B defendants. Defendants did not object to proceeding against the non-bankrupt parties. *fn3 Accordingly, in the absence of objection, I entered an Order dated March 1, 2011 (Document 94) staying all proceedings against Mr. Brewster pending further order of the bankruptcy court.
In the same Order I directed that all proceedings in this matter, including the non-jury trial, would proceed against Roofing, Middlesboro, and LLC. Nothing in this Adjudication should be construed as adjudicating Mr. Brewster's rights in any respect. *fn4
At trial, five witnesses testified. Plaintiff called Cathy Curtosi, who was previously employed as plaintiff's credit and collection manager; Don Smith, Fabral's territorial manager; and Carol Branch, the director of credit and collections for Fabral's parent company, Euramax. In its case-in-chief, plaintiff also called as of cross-examination Gary Brewster and James W. Yancey, Roofing's office manager and salesman, respectively. In their case-in-chief, defendants also called Mr. Brewster as a witness.
At the close of plaintiffs' case-in-chief, defendants moved for judgment on partial findings pursuant to Federal Rule of Civil Procedure Rule 52(c). As permitted by that Rule, I deferred my ruling on defendants' motion until the close of the evidence, and took the motion under advisement.
On March 2, 2011, the second day of trial, at the close of defendants' case-in-chief, the parties made their closing arguments, and I took the matter under advisement. I also directed counsel to obtain a transcript of the entire non-jury trial and to submit numbered, written proposed findings of fact and conclusions of law on all of the issues, disputes, and contentions of the parties with specific citations to the trial record, and with citation to legal authority supporting each conclusion of law.
The parties filed their respective proposed findings of fact and conclusions of law on May 2, 2011.
Based upon the testimony and evidence adduced at trial, *fn5 the pleadings, record papers, and the parties' post-trial submissions, I make the following Findings of Fact.
1. Fabral is a corporation incorporated in the State of Delaware, and has its principal place of business at 3449 Hempland Road, Lancaster, Pennsylvania 17601.
2. B&B Roofing Company, Inc. ("Roofing") is a corporation incorporated in the State of Tennessee, and has its principal place of business at 18231 Alberta Street, Oneida, Tennessee 37841.
3. Until July 1, 2006, Roofing did business under the trade name "B&B Roofing and Metals, Inc."
4. Roofing was formed as a business corporation in the State of Tennessee on January 25, 1994.
5. During the period from November 4, 2003 until July 1, 2006, Roofing purchased metal roofing products at wholesale, and sold them at retail.
6. During the period from November 4, 2003 until July 1, 2006, plaintiff Fabral was one of the suppliers to Roofing of metal roofing products for resale pursuant to a Credit Application and Agreement ("Agreement").
7. Roofing bought and sold metal products until July 1, 2006, when it ceased retail operations.
8. Gary M. Brewster has been the Owner and President of Roofing since its formation.
9. B&B Metals of Middlesboro, Inc. ("Middles-boro") is a corporation incorporated in the Commonwealth of Kentucky and has its principal place of business at 110 N. 13th Street, Middlesboro, Kentucky 40965.
10. Middlesboro also does business under the trade name "B&B Roofing and Metals, Inc."
11. Middlesboro was formed as a business corporation in the Commonwealth of Kentucky on July 1, 2007.
12. B&B Metals, LLC ("LLC") is a limited liability company, the members of which are all domiciled in the State of Tennessee. Its principal place of business is at 18231 Alberta Street, Oneida, Tennessee 37841.
13. LLC also does business under the trade name "B&B Roofing and Metals, Inc."
14. LLC was formed as a limited liability company in the State of Tennessee on August 9, 2006.
Credit Application and Agreement
15. In November 2003, Fabral employee Don Smith gave Gary Brewster the Agreement for Mr. Brewster to fill out and sign.
16. Mr. Smith was the salesman for the B&B defendants' account with Fabral from August 2003 until late 2008, and had primary responsibility for that account while defendants were customers of Fabral.
17. Mr. Smith did not complete the Agreement. Rather, he put his name on the Agreement in the blank space next to the term "Fabral Sales Representative", and Mr. Brewster filled in the rest of the Agreement.
18. Specifically, Mr. Brewster filled in the following information on the Agreement under "Corporation":
a. State of Incorporation: "TN";
b. Date of Incorporation: "1992";
c. Federal ID#: "62-1556152";
d. President: "Gary M. Brewster";
e. Vice-President: "Patricia L. Brewster";
f. Secretary/Treasurer: "Kenneth W. Blaker".
19. Roofing's Federal ID number was 62-1556152, the same number listed by Mr. Brewster in the Credit Application and Agreement.
20. The application also indicated that the applicant's name is "B&B Roofing & Metals Inc." and included a physical address of 18231 Alberta Street, Oneida, TN 37841 with a mailing address of P.O. Box 5237, Oneida, TN 37841 and a phone number of 423-569-6674.
21. Under the "Bank Reference Authorization" section of the application, Mr. Brewster listed "First Trust Savings Bank" and the contact person as "Gerald Pike", and supplied phone and fax numbers for the bank.
22. Under the "Trade References" section of the application, Mr. Brewster listed the following companies: "Baird & Wilson Sheet Metal"; "Wholesale Roofing Supply Inc."; "Exterior Metals Inc."; and "Towe Iron Works". He also supplied an address, phone number, and fax number for each.
23. Mr. Brewster filled in the following information in the application under "Additional Business Information":
a. Is Sales Tax to be Included on Invoices?: "No";
b. Describe Type of Business: "Retail Roofing".
24. The part of the Agreement showing that sales tax was not to be included on invoices indicates that the corporate entity which signed the Agreement was a reseller of metal products at the time of the application.
25. On November 4, 2003, Mr. Brewster signed the Agreement as President of "B&B Roofing & Metals, Inc."
26. "B&B Roofing & Metals Inc." is a fictitious entity that is not incorporated, but is the "d/b/a" (doing business as) trade name for Roofing, Middlesboro and LLC.
27. As of November 4, 2003, neither Middlesboro nor LLC had been formed.
28. In the Credit Application and Agreement, Mr. Brewster provided corporate information and references that related solely and exclusively to Roofing.
29. Mr. Brewster signed the Agreement on behalf of Roofing.
30. As the Owner and President of Roofing, Mr. Brewster had the authority to bind Roofing to the Agreement.
31. After Mr. Brewster completed the Credit Application and Agreement, he sent it to Fabral's credit department.
32. The practice of Fabral's credit department was to perform a bank check based upon the bank information provided in a credit application, and to check the trade references listed on the application.
33. Fabral did not check any type of corporate credit to ascertain if B&B Roofing and Metals, Inc. was a corporate entity.
The Agreement's Non-Delegation Clause
34. The Agreement at page 2 contains the following provision, under "FABRAL, INC. GENERAL TERMS AND CONDITIONS OF SALE":
PAYMENT TERMS. All sales are cash prior to production except when credit has been approved by the credit manager. Upon approval of credit, terms are net cash thirty [(]30[)] days from date of invoice, unless otherwise specified.
35. The Agreement at page 3 also provides, under "FABRAL, INC. GENERAL TERMS AND CONDITIONS OF SALE":
DELEGATION. Neither Buyer nor Seller may delegate the performance of any obligation without the written permission of the other.
Fabral's Acquisition of Mountain Metals
36. In March 2006, Fabral acquired Mountain Metals Manufacturing Corporation ("Mountain Metals").
37. When Fabral acquired Mountain Metals, Fabral inherited the B&B defendants' outstanding balance owed to Mountain Metals of over one million dollars.
38. At the time Fabral acquired Mountain Metals, defendants had accounts payable to Fabral (that had been previously owed to Mountain Metals) which were 360 or more days past due.
39. At the time Fabral acquired Mountain Metals, Fabral had no customers other than defendants who had accounts payable of more than 360 days past due.
40. Fabral's payment terms for defendants were stricter than those which Mountain Metals had previously imposed on defendants.
41. Within a few months after Fabral acquired Mountain Metals, Mr. Brewster closed Roofing's retail operations effective July 1, 2006 and formed LLC in August 2006.
Formation of Middlesboro and LLC
42. On August 9, 2006, Mr. Brewster formed LLC as a limited liability company qualified to do business in the State of Tennessee.
43. Neither Mr. Brewster nor James Yancey, who was employed by Roofing for the past thirteen years as the office manager and salesman, ...