Csx Transp., Inc. v. Recovery Express, Inc.

• Decision Date: 01 February 2006
• Docket Number: No. CIV.A.04-12293-WGY.
• Citation: 415 F.Supp.2d 6
• Parties: CSX TRANSPORTATION, INC., Plaintiff, v. RECOVERY EXPRESS, INC., in its own right, and d/b/a Interstate Demolition and Environmental Corp., Defendants.
• Court: U.S. District Court — District of Massachusetts

Page 6

415 F.Supp.2d 6

CSX TRANSPORTATION, INC., Plaintiff, v.RECOVERY EXPRESS, INC., in its own right, and d/b/a Interstate Demolition and Environmental Corp., Defendants.

No. CIV.A.04-12293-WGY.

United States District Court, D. Massachusetts.

February 1, 2006.

Jonathan F. Ball, Janssen Keenan & Ciardi, P.C., Philadelphia, PA, Wesley S. Chused, Looney & Grossman LLP, Boston, MA, Paul D. Keenan, Janssen Keenan & Cardi P.C., Philadelphia, PA, for Plaintiff.

Kevin P. McMahon, Law Office of Kevin P. McMahon, Quincy, for Recovery Express, Inc., Defendant.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I.INTRODUCTION

This is a breach of contract and related equitable action brought by the plaintiff, CSX Transportation, Inc.("CSX"), against the defendants, Recovery Express, Inc.("Recovery") and Interstate Demolition and Environmental Corp.("IDEC").The case against Recovery turns on the application of that doctrine within the law of agency known as "apparent authority"; specifically, how large a cloak of such authority is provided by access to an e-mail address with a defendant's domain name.

A.Undisputed Facts

CSX is in the business of selling out-ofservice railcars and parts.SeeCompl.[Doc. No. 1]("Compl.")¶ 8.It is a Virginia corporation with its principal place of business in Florida.Compl.¶ 3.Recovery is a Massachusetts corporation with its principal place of business in Boston.Compl.¶ 4;Answer [Doc. No. 8]¶ 4("Admitted").IDEC was a Delaware corporation with its principal place of business at the same address in Boston.Affidavit of Nancy E. Marto[Doc. No. 18]("Marto Aff.")¶¶ 4, 8 & Ex. B.It is now defunct.MartoAff. ¶ 2.At all relevant times, IDEC and Recovery shared offices in Boston.MartoAff. ¶ 4.

On August 22, 2003, Albert Arillotta("Arillotta"), a "partner" at IDEC, Id.¶ 3, sent an e-mail to Len Whitehead, Jr.("Whitehead") of CSX expressing interest in buying "rail cars as scrap", Mem. in Support of Mot. for Summ. J.[Doc. No. 17]("Recovery's Mem."), Ex.A, E-mail from Albert Arillotta to Len Whitehead, Jr.(Aug. 22, 2003)("the E-mail").Arillotta represented himself to be "from interstate demolition and recovery express".Id.The e-mail address from which Arillotto sent this inquiry was "albert@recoveryexpress.com".Id.The entire e-mail—horrendous grammar and all—is reproduced here:

From: Albert Arillotta[albert@recoveryexpress.com]

Sent: Friday, August 22, 2003 4:57 PM

To: Whitehead, Len Jr.

Subject: purchase of out service railcars

lynn this is albert arillotta from interstate demolition and recovery express we are interested in buying rail cars for scrap paying you a percentage of what the amm maket indicator is there are several locations i suggest to work at the exsisting location of the rail cars. we will send you a brochure and financials per your request our address is the following:

interstate demolition/recoveryexpress

180 canal street 5th floor boston mass 02114

phone number 617-523-7740

fax number 617-367-3627

email address albert @recoveryexpress.com

thank you for your time

There apparently were subsequent phone calls between Whitehead and Arillotta, Decl. of Len Whitehead, Jr.[Doc. No. 20]("Whitehead Decl.")¶ 2, but the substance of the calls is not recounted.Id.CSX alleges that it prepared and forwarded sales order forms which "confirm[ed] the agreed[-]upon terms [of the sale] to IDEC."Compl.¶ 9.Neither CSX nor Recovery has provided copies of these forms.Apparently, Arillotta and Whitehead proceeded with this proposed deal.

The railcars were "delivered ... to the location specified by Arillotta ...."Compl.¶ 11.Recovery claims that this location was, in fact, CSX's own railyard, to which Arillotta went himself, disassembled the cars, and transported them away.Recovery's Mem.at 3.There is no direct evidence on point, but the original e-mail from Arillotta supports Recovery's assertion.The E-mailat 1("[I] suggest work at the existing location of the rail cars.").There is no evidence proffered as to the current disposition of the scrap railcars (i.e., where they are) or their proceeds.

After delivery, CSX sent invoices for the scrap railcars totaling $115,757.36 addressed to IDEC at its Boston office (shared with Recovery).Recovery's Mem., Ex. B. Nancy E. Marto ("Marto"), officer and registered agent of Recovery and "partner" in IDEC, states that, upon receipt of the invoices, she attempted several times to contact Whitehead to inquire about them.MartoAff. ¶ 10;see alsoPl.'s Opp'n to Def. Recovery Express's Mot. for Summ. J.[Doc. No. 19]("Pl.'s Mem."), Ex. A.She says that Whitehead never returned her calls.MartoAff. ¶ 10; Pl.'s Mem., Ex. A.This was apparently because Arillotta had told him not to speak to her.¹MartoAff. ¶ 10.Not until a check from Arillotta to CSX purporting to pay the invoices bounced did Whitehead call Marto.Id.

Because Recovery and IDEC refused to pay CSX, CSX brought this action alleging (1) breach of contract, Compl.¶¶ 14-18, (2) account stated, Compl.¶¶ 19-22, (3) unjust enrichment, Compl. ¶¶ 23-26, and (4) quantum meruit, Compl.¶¶ 27-31.

Whitehead states that "[a]t all times during [his] dealing with Mr. Arillotta, [he] believed [Arillotta] was representing, and authorized to act on behalf of, Recovery Express and Interstate Demolition."WhiteheadDecl. ¶ 6.Whitehead apparently based this belief on the E-mail's domain name—recoveryexpress.com²—and the representations of Arillotta to him both in the E-mail and in subsequent telephone conversations.Id.¶¶ 2-3.All invoices were addressed to IDE C, Recovery's Mem., Ex. B, though Whitehead states that Arillotta represented that he was "acting on behalf of Recovery Express", Whitehead Decl. ¶ 2."At no time prior to CSX's delivery of the rail cars ... did anyone inform [Whitehead] that Mr. Arillotta was not authorized to represent or transact business on behalf of either Recovery Express or Interstate Demolition."Id.¶ 6.

Recovery claims that Arillotta never worked for it.Recovery's Mem.at 3.How Arillotta acquired a Recovery e-mail address is explained thus: Marto and Thomas R. Trafton("Trafton"), Recovery's President and Treasurer, Marto Aff., Ex.A., became involved in another venture along with Arillotta and Dominic Ignagni—IDEC.Id.¶¶ 2-3.Because of Marto's and Trafton's "personal interest in IDEC", the "fledgling" company was allowed to share the offices and some resources of Recovery, including telephones and facsimile machines—and, apparently, e-mail services.Id.¶ 4.Other than physical resources, there is no evidence that Recovery ever shared anything with IDEC—assets, funds, books of business, bank accounts, or insurance coverage.Id.¶¶ 11-12.

B.Procedural Posture

CSX filed its Complaint[Doc. No. 1] in of 2004 alleging breach of contract by Recovery and IDEC and related equitable claims.IDEC is now defunct, MartoAff. 112, and has made no appearance in this litigation.Recovery has moved for summary judgment [Doc. No. 16].

C.Summary Judgment Standard

Summary judgment is warranted if, after reviewing the facts in the light most favorable to the non-moving party, no genuine issues of material fact remain, and the moving party is entitled to judgment as matter of law.Fed.R.Civ.P. 56(c);Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986).A "genuine" issue of fact is one that a reasonable jury, on the record before the Court, could resolve in favor of either party.Anderson,477 U.S. at 248, 106 S.Ct. 2505.A fact is material when it "might affect the outcome of the suit under the governing law."Hayes v. Douglas Dynamics, Inc.,8 F.3d 88, 90(1st Cir.1993)(citingAnderson,477 U.S. at 248, 106 S.Ct. 2505).

In making its determination, the Court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor.Anderson,477 U.S. at 255, 106 S.Ct. 2505.The movant has the initial burden of production, which it can meet either by offering evidence to disprove an element of the plaintiff's case or by demonstrating an "absence of evidence to support the non-moving party's case."Celotex Corp. v. Catrett,477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986).Once the movant has met its burden, the non-moving party must "go beyond the pleadings, and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a material issue for trial."Id. at 323, 106 S.Ct. 2548(internal quotation marks omitted).When facts asserted by the moving party go unrebutted, the Court must still search the record on its own for genuine issues of material fact.SeeStepanischen v. Merchants Despatch Transp. Corp.,722 F.2d 922, 930(1st Cir.1983).

D.Jurisdiction

Federal jurisdiction is proper under Title 28, Section 1332(diversity) of the U.S.Code. CSX is a Virginia corporation with its principal place of business in Florida.Compl.¶ 3.Recovery is a Massachusetts corporation with its principal place of business in Boston.Id.¶ 4;Answer¶ 4("Admitted.").IDEC is a now-defunct corporation which was chartered in Delaware, MartoAff. ¶ 2 & Ex. B, and had its principal place of business in Boston, Marto Aff. Ex. A.The amount in controversy exceeds $75,000.SeeCompl.¶¶ 16-18(claiming damages of $115,757.36, plus interest); Recovery's Mem., Ex. B (showing invoices sent to Recovery's address totaling the same).

II.DISCUSSION

A.Contract (Legal) Claims

At base, what this case is about is CSX's attempt, having been duped by a fraudulent agent of Recovery, to shift the consequences of its own gullibility to someone else.The primary legal vehicle by which it seeks to do this is the contract doctrine of "apparent authority".

First, however, CSX genuflects to the possibility that Arillotta was granted actual authority by Recovery.Compl.¶ 7....