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Empire Trucking Co., Inc. v. Reading Anthracite Coal Co.

Superior Court of Pennsylvania

June 21, 2013

EMPIRE TRUCKING COMPANY, INC., Appellee
v.
READING ANTHRACITE COAL COMPANY, READING ANTHRACITE COMPANY, JOHN W. RICH, JR., D/B/A/ READING ANTHRACITE CONTRACTING COMPANY, LLC, BARAKAT ASSOCIATES, LTD., WMPI LAND CORP., JOHN W. RICH, JR., D/B/A/ WMPI PTY, LLC, JEFFREY A. GLIEM, FRANK DERRICK, MIKE BOSACK, AND KENNETH TROUTMAN, Appellants

Appeal from the Judgment Entered on March 7, 2012 In the Court of Common Pleas of Schuylkill County Civil Division at No(s): S-2745-2008.

BEFORE: BOWES, J., OLSON, J., and WECHT, J.

OPINION

WECHT, J.

Reading Anthracite Company ["Appellant"] appeals the March 7, 2012 judgment entered following a jury verdict. The jury found Appellant in breach of its contract with Empire Trucking ["Empire"] in the amount of $299, 495.18 and found Appellant to have intentionally interfered with Empire's contractual relationships. The jury awarded Empire $271, 000 in compensatory damages and $1.5 million in punitive damages. Appellant asks that we reverse the trial court's denial of judgment notwithstanding the verdict ["JNOV"] or, in the alternative, grant a new trial. We affirm.

The trial court summarized the factual history of this case as follows:

There is no factual dispute about the background information related to the business relationship between [Appellant] and Empire.
According to the evidence, [Appellant] is one of a number of companies owned and operated by the Rich family. [Appellant] is in the coal business. It operates numerous mining sites from which it extracts raw coal to be sized and processed for sale to its customers at its coal processing facility known as a breaker. Other than some stock trucks to move coal stock around its breaker property, [Appellant] has no trucks of its own to haul the coal from its mining sites to the breaker, and from the breaker to its customers. For approximately eighteen years leading up to the summer of 2008, it contracted with Empire to fulfill its trucking needs. (N.T. p. 230-32). Empire had some trucks of its own which were used to haul [Appellant's] coal, but it also entered into agreements with a number of other companies to use their trucks for hauling [Appellant's] coal.
Empire had written agreements with each of its subcontractors (hereinafter "subs") by which they leased their trucks to Empire and placed their trucks and their drivers under Empire's control. The agreements all provided for an initial term of one year and continued unless and until terminated by either of the parties. The subs operated under Empire's P.U.C. license and insurance and paid eight percent of their base trucking rates to Empire.
The base rate was an amount which Empire was to be paid per ton for hauling a particular material over a specified route. Every time a new hauling route was established, Gary Lorenz for Empire and William Cox (and later Jeff Gliem) for [Appellant] would negotiate and agree on a base rate per ton for that trip.
When hauling processed coal, Empire billed [Appellant] for each load hauled by its trucks and those of its subs. [Appellant], in turn, added the amount it was paying Empire to its customers' bills as [Appellant's] fee for transporting the coal to the customer's location.
When hauling raw coal, Empire did not invoice [Appellant] for the loads. Instead, the tonnage and trip were recorded by the weighmaster at [Appellant's] breaker on raw coal worksheets. The worksheets were forwarded to [Appellant's] central office, from where checks were then issued to Empire. The subs were paid only by Empire after Empire was paid by [Appellant]. Empire paid its subs the base rates assigned for the loads they hauled, less Empire's eight percent in accordance with the agreements between them.
A number of the subs had worked with Empire, hauling [Appellant's] raw and processed coal, for more than ten years. They had become very familiar with [Appellant's] operations, and [Appellant's] employees had come to know some of them quite well.
In 2000, the price of diesel fuel began to spike, which greatly increased the operating costs for Empire and its subs. At the time, William Cox was [Appellant's] director of operations. Lorenz of Empire sent Cox a fax requesting a fuel surcharge.
The fax included a schedule, which Lorenz said he obtained from the Department of Energy website. The schedule set forth the percentages to be used for a fuel surcharge based upon different price levels for diesel fuel. Cox agreed that the percentage
would be applied to the base rate for each trip, and the fuel prices were based on the price of diesel fuel at Jack Rich, Inc., another one of the Rich family's companies. The fuel surcharge was only applied when Empire and its subcontractors were hauling processed coal. [Appellant's] customers were notified that they would be billed for the fuel surcharge as part of the delivery cost.
[Appellant] has asserted that it was error to admit into evidence the schedule that the parties had used to calculate the fuel surcharge, because it was not authenticated as having come from the Department of Energy. Lorenz had testified that he had downloaded the schedule from a website that represented the schedule to be from the Department. [Appellant] objected on the basis that the website had not been properly authenticated.
[Appellant] has misinterpreted the court's ruling regarding the admissibility of the schedule in question. In the view of this court, it did not matter whether the Department of Energy had actually issued the schedule to be used for fuel surcharges. Testimony revealed that Lorenz had sent the schedule to Cox and proposed that it be used to calculate fuel surcharges. Cox accepted that proposal by a fax marked as Plaintiff's Exhibit No. 3. The undisputed testimony was that this schedule was used by both parties to calculate fuel surcharges to be added to the cost of transporting processed coal without interruption over the following eight years. There was no evidence that [Appellant's] acceptance of the surcharge schedule was dependent on the schedule having been created by the Department. The parties accepted the schedule as the appropriate level of surcharge to be used whatever the source of the schedule. At the time the surcharge was imposed, the price of fuel at Jack Rich, Inc. was $1.22 per gallon. As it rose from there, the percentage of the base rate billed to [Appellant's] customers as a fuel surcharge also rose. Each week, Empire would get the price of fuel from Jack Rich, Inc. and refer to the accepted schedule for the percentage to be applied to the base rate as a fuel surcharge. That surcharge was added to Empire's invoices to [Appellant]. [Appellant] then collected it from its customers. When Empire was paid on its invoices, it passed that surcharge onto whichever subcontractors hauled to the customers named on the invoices. This allowed Empire and its subs to recoup some of their increased fuel costs. Empire only kept the surcharge if one of its own trucks had made the delivery.
The fuel surcharge on hauling loads of processed coal continued to be calculated in this manner and passed on to [Appellant's] customers through at least the summer of 2008. Even though Empire and its subs were purchasing the same diesel fuel for their trucks when hauling raw coal from the mines, no fuel surcharge was paid to them on those trips until 2004.
In September of 2004, the price of fuel had risen high enough that a fuel surcharge of thirteen percent was being charged to [Appellant's] customers for processed coals. Lorenz sent Cox a letter asking that the fuel surcharge be added to loads of raw coal as well. Cox agreed, and [Appellant] started adding the fuel surcharge on its raw coal worksheets. These worksheets were sent to [Appellant's] accounting office where the fuel surcharge was added to the payments Empire received from [Appellant] for the raw coal loads. None of these facts were in dispute.
Sometime thereafter the fuel prices dropped to the point that no surcharge was needed. When they rose again in 2005, the surcharge was reinstated on the processed coal, but not on the raw coal loads.
By April of 2005, Cox had retired and was replaced as director of operations by Jeff Gliem. On April 15, 2005, Lorenz faxed Gliem a letter requesting that the fuel surcharge be reinstated on raw coal loads. Brian Rich, the president of [Appellant], acknowledged that Gliem spoke with him about paying Empire's truckers a fuel surcharge on raw coal loads and that he told Gliem to go ahead. Rich said that it was only fair to give them a surcharge on raw coal too.
Gliem met with Lorenz and explained that [Appellant] passed on the fuel surcharge for processed coal to its customers. Since [Appellant] would have to absorb any surcharge on raw coal loads, Gliem proposed setting the surcharge on raw coal at half what [Appellant] was charging its customers on processed coal. Lorenz agreed.
At the end of August of 2005, Empire sent Gliem a fax requesting that the fuel surcharge on raw coal loads be increased to 18%. At the same time the fuel surcharge being assessed to customers on processed coal loads was 23%. Gliem agreed, and the weighmaster began to enter the 18% on the raw coal worksheets beginning October 1, 2005.
On October 23, 2007, Gary Lorenz, Jr. faxed a letter to Gliem asking that the raw coal fuel surcharge be increased to 23%. Gliem asked Lorenz to explain why the increase was being requested. Lorenz provided him with a breakdown of how the truckers' costs had gone up, and Gliem agreed to the increase.
The price of fuel continued to spike so that by the end of May of 2008, the fuel surcharge that [Appellant] was assessing its customers on processed coal was up to 53%. Beginning the first of June 2008, the fuel surcharge on raw coal was increased to 33%. No one could say specifically how that came about, but the inference was that Empire had requested the increase. Clearly, [Appellant] had agreed to it, because their weighmaster began adding it onto the raw coal worksheets; and he testified that [Appellant's] main office instructed him how much of a surcharge to add.
Brian Rich, [Appellant's] president, testified that sometime in 2008, he was trying to determine why [Appellant's] profits had declined and focused on an increase in transportation costs. When he learned what was being paid to Empire for the fuel surcharge on raw coal loads, he became furious. He instructed Frank Derrick, his general manager, to meet with Gliem and the weighmaster and expressed his belief that someone in [Appellant's] ranks was getting kickbacks in exchange for the surcharges. Rich also instructed his accounting department to calculate how much the truckers' fuel costs had increased based on numbers he provided to his accountant. He instructed the accountant to use a base fuel price that was almost a dollar per gallon higher than the base fuel price that was being used to calculate the fuel surcharge assessed to [Appellant's] customers for processed fuel loads. Based on the numbers Rich provided, the accountant came up with a number for increased fuel expenses that was substantially less than what had been paid to Empire (and through Empire to its subs) over the preceding three years.
Even though Gliem had agreed to the raw coal fuel surcharge paid over that same time period, and Rich acknowledged that Gliem had the power to bind the company to his agreements, Rich decided to recoup the money that he believed to have been overpaid based on his accountant's calculations. Beginning with the payments due to Empire and its subs for work they had done in July of 2008, [Appellant] stopped paying Empire anything for its work. It was not just the fuel surcharge on raw coal loads that went unpaid. Empire ...

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