Arnold Transp. Servs., Inc. v. Framaur Assocs., LLC
| Decision Date | 03 January 2017 |
| Docket Number | Civil Action No. 14-4280 (FLW) (LHG) |
| Parties | ARNOLD TRANSPORTATION SERVICES, INC. Plaintiff, v. FRAMAUR ASSOCIATES, LLC, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Not for Publication
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Before the Court is the motion of Arnold Transportation Services, Inc. ("Plaintiff" or "Arnold") for summary judgment on its Complaint for breach of contract against Framaur Associates, LLC ("Defendant"), seeking $1,368,398.01 in compensatory damages, plus sanctions in the form of attorney's fees and costs under Fed. R. Civ. P. 11(b). Plaintiff contends that Defendant failed to pay for transportation services rendered and invoiced to Defendant pursuant to the parties' agreement and engaged in bad faith delay in proceedings before this Court. Defendant does not oppose the motion. For the reasons set forth below, the Court grants Plaintiff's motion on its breach of contract claim and will enter judgment in the amount of $1,368,398.01 plus prejudgment interest in the Order to follow; Defendant's counterclaims are dismissed; and Plaintiff's request for Rule 11(b) sanctions is denied without prejudice, with leave granted to file a separate motion within 30 days of this Opinion and the Order to follow.
Plaintiff Arnold is a tractor-trailer shipping carrier and Defendant Framaur is a shipping broker. In or around August 2012, Arnold and Framaur entered into a dedicated shipping agreement (the "Agreement"). Plaintiff's Statement of Undisputed Material Fact ("Statement"), ¶ 5; Bretl Decl. at ¶ 5 and Ex. 2. The Agreement sets forth the terms under which Arnold was to ship MillerCoors beer from Elkton, Virginia, and Eden, North Carolina, to a number of locations, primarily in New Jersey and New York. Statement at ¶¶ 7-8; Bretl Decl. at ¶ 6. Under the Agreement, Arnold was required to dedicate certain of its tractors and trailers for Framaur's exclusive use in shipping the beer. Bretl Decl. at ¶6. Arnold was required to dedicate five tractors and 15 trailers to the Elkton, Virginia, route, providing a capacity of 15 loads per week, and to dedicate 10 tractors and 30 trailers to the Eden, North Carolina, route, providing a capacity of 30 loads per week. Statement at ¶¶ 7-8. The standard practice in such "dedicated equipment" contracts is that the broker or customer, in this case Framaur, dictates how the dedicated equipment will be used by the carrier, in this case Arnold, who is obligated to make the equipment available to the broker or customer. Bretl Decl. at ¶ 13. The Agreement governs only the 15 tractors and 45 trailers dedicated by Arnold to Framaur. Id. Accordingly, although the Agreement does not preclude Framaur from requesting additional equipment from Arnold over and above the dedicated equipment, it does not supply the terms under which such equipment would be provided, which would have to be negotiated separately. Id.
The Agreement went into effect on September 1, 2012. Statement at ¶ 5; Bretl Decl. at Ex. 2. From its original effective date until in or around March 2014, the Agreement provided that Framaur would be billed by Arnold for the use of Arnold's tractors and trailers based on the mileage driven at a rate of $1.40 per mile. Statement at ¶ 10; Bretl Decl. at ¶ 8. The Agreement also provided that Framaur would be charged for a minimum of 2,350 miles per tractor per week, regardless of the actual mileage driven. Statement at ¶ 9; Bretl Decl. at ¶ 8. This provision reflected the fact that Arnold had "dedicated" the tractors and trailers to Framaur, such that theycould not be made available to other customers, even if Framaur, who was empowered to dictate how the tractors and trailers would be used, did not in fact use them in a given week or used them in a limited manner. Statement at ¶ 6. Payment was to be made within 45 days of receipt of an invoice for services. Id. at ¶ 14.
In addition to the mileage charge, the Agreement provided that Framaur was responsible for other charges and expenses associated with the operation of the tractors and trailers, including tolls and a fuel surcharge. Bretl Decl. at ¶ 9.
Because the Agreement was a "dedicated equipment" contract, it also provided that Framaur was responsible for the round trip of each Arnold tractor-trailer making the beer deliveries. Statement at ¶ 11; Bretl Decl. at ¶ 10. Under standard, non-dedicated contracts, the broker or customer pays only for the mileage traveled while the goods are being transported from their origin to their destination. The customer does not pay for the tractor-trailer's return trip to its origin point or base. Under dedicated equipment contracts, the broker or customer pays a reduced mileage rate, but must pay for both legs of the tractor-trailer's trip. Because of this responsibility, dedicated equipment contracts, including the Agreement, grant the broker or customer the right to transport a second load of goods from at or around the destination point back to the at or around the origin point on any given return trip. If the broker or customer opts to have the tractor-trailer transport such goods on the return trip, they are referred to as a "backhaul load." Bretl Decl. at ¶ 10.
Under the Agreement, backhaul loads were contracted at Framaur's discretion. Statement at ¶ 12. If Framaur itself arranged for a backhaul load, it would receive 100% of the revenue from the customer paying to have goods transported by the Arnold tractor-trailer on its returntrip. Bretl Decl. at ¶ 11. If Arnold arranged for a backhaul load for Framaur, Framaur received 90% of the revenue from the return trip, with the 10% going to Arnold as a finders' fee. Id.
The Agreement was originally set to terminate on September 6, 2015. Bretl Decl. at Ex. 2. On March 19, 2014, Arnold1 reached out to Framaur to explain that Arnold required a per mile price increase in order to make a profit. Statement at ¶ 22; Bretl Decl. at ¶ 14. On March 20, 2014, Arnold proposed in an e-mail to amend the Agreement to increase the mileage charge from $1.40 to $1.70 per mile for the dedicated equipment. Statement at ¶ 23; Bretl Decl. at ¶ 14. On March 27, 2014, Arnold sent another email clarifying that the 2,350 mile weekly minimum would remain in place if the $1.70 per mile price were agreed upon. Statement at ¶ 24; Bretl Decl. at ¶ 15. On March 28, 2014, Framaur2 responded to Arnold's e-mail and proposed new contract terms, including the following:
Bretl Decl. at Ex. 3.
On March 29, 2014, Arnold responded, again by e-mail, stating "i will get document drafted asap." Id. Arnold also stated that it would make 20 tractors available to Framaur as of "monday" (the next Monday after Arnold's email being March 31, 2014) and that pricing would be "$1.70 as of monday." Id. at ¶ 15. Ex. 3; Statement at ¶¶ 26-27. Framaur did not object to Arnold's statement that the new price would go into effect on the coming Monday. Bretl Decl. at ¶ 15. Arnold began sending Framaur invoices reflecting the new, $1.70 price shortly thereafter. Framaur did not raise the issue of price or object to the $1.70 per mile price until shortly before July 8, 2014, when the Complaint in this action was filed. Bretl Decl. at ¶ 16.
Arnold's standard billing practice with Framaur was to send Framaur a spreadsheet each week invoicing the mileage fees and other expenses that had been incurred that week and updating Framaur's total outstanding obligation to Arnold. Bretl Decl. at ¶ 17. Beginning in February 2014, Arnold and Framaur engaged in regular conference calls, usually held on a weekly basis, to review the week's spreadsheet. Id. at ¶ 18. During these calls, Framaur raised only one objection to the charges that had been invoiced; Framaur claimed that Arnold billed Framaur for weekly minimum mileage on tractors that were not in fact available for Framaur's use in the preceding week. The parties referred to these disputed charges as "deficit miles." Prior to the initiation of this litigation, and without conducting a full investigation into the "deficit mileage" claim, Arnold agreed with Framaur to discount the amount of the unpaid invoices by $112,331.80 to resolve Framaur's objection. Id.; Statement at ¶ 2.
From November 2012 to April 2014, Defendant Framaur Associates, LLC ("Framaur") failed to pay $1,480,729.80 invoiced by Plaintiff Arnold. Statement at ¶1; Bretl. Decl. ¶¶ 3-4, 20, Ex. 1A. Accounting for the $112,331.80 deduction to resolve the "deficit mileage" issue, $1,368,398.01 remains outstanding. Statement at ¶ 2; Bretl Decl. at ¶ 20, Ex. 1A. Of that total,$1,134,231.23 originated from invoices that were entirely unpaid by Framaur. Statement at ¶ 3; Bretl Decl. ¶¶ 3-4, Ex. 1A. The remaining $234,166.78 originated from invoices that Framaur partially paid, but refused to pay in full. Statement at ¶ 4. The parties referred to these partial payments as "short pays." On May 19, 2014, Framaur objected to $63,933.81 of the short pays on the grounds that Arnold had not reported the mileage properly. Bretl Decl. at ¶ 21. Framaur has not provided any explanation for the remainder of the short pays. Id.
In an e-mail dated July 1, 2014, Framaur acknowledged that it owed $938,714.30 of the $1,368,398.01 claimed by Arnold. Bretl Decl. at ¶ 22. Framaur disputed the remaining balance on the grounds that (i) it never agreed to increase the per mile charge to $1.70 from $1.40 (a $65,405.10 deduction); (ii) Arnold failed to provide proof of deliveries ("PODs") for certain shipments (a $119,782.013 deduction); and (iii) Arnold double-billed or overbilled Framaur on...
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