In re Friedman's Exp., Inc.
| Decision Date | 19 April 1995 |
| Docket Number | Bankruptcy No. 93-21066T. Adv. No. 94-2326. |
| Citation | 180 BR 788 |
| Parties | In re FRIEDMAN'S EXPRESS, INC., Debtor. FRIEDMAN'S EXPRESS, INC., Plaintiff, v. SKF USA, INC., d/b/a CR Services and CR Industries, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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Joseph L. Steinfeld, Jr., Shawn, Mann & Neidermayer, Washington, DC, John T. Carroll, III, Swartz, Campbell & Detweiler, Philadelphia, PA, for plaintiff/debtor.
Theodore F. Claypoole, Gamble Hartshorn Alden, Columbus, OH, Allen G. Belenson, King of Prussia, PA, for defendant.
Presently before the Court are two Motions for Summary Judgment filed by Defendant SKF USA, Inc., d/b/a CR Services and CR Industries ("SKF"). In the first motion ("Motion I"), SKF seeks summary judgment against debtor/plaintiff, Friedman's Express, Inc. ("Debtor"), on the ground that Debtor lacks standing to bring the freight undercharge claims asserted in the complaint. In the alternative, SKF requests referral of Debtor's interstate claims to the Interstate Commerce Commission ("ICC") under the doctrine of "primary jurisdiction." SKF also requests referral of Debtor's intrastate claims to the Pennsylvania Public Utilities Commission ("PUC"). In the second motion ("Motion II"), SKF seeks summary judgment against Debtor on the ground that Debtor's claims are barred by the doctrines of accord and satisfaction and compromise and settlement.
The Court has jurisdiction over the parties and subject matter of this core proceeding pursuant to 28 U.S.C. §§ 1334, 157(a), 157(b)(1), 157(b)(2)(A), (E) and (O).
The following facts do not appear to be in dispute.
Debtor is a motor freight company existing under the laws of the Commonwealth of Pennsylvania, and is engaged in the business of transporting freight in both interstate and intrastate commerce. On April 6, 1993, Debtor filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1330 ("Code") in the Bankruptcy Court for the Eastern District of Pennsylvania ("Court"). Debtor has continued in the possession of its assets and management of its business as a debtor-in-possession pursuant to Code §§ 1107(a) and 1108, 11 U.S.C. §§ 1107(a), 1108.
During the period from 1990 through 1993, SKF was a customer of the Debtor. While a customer, SKF tendered shipments to Debtor for transportation in both interstate and intrastate commerce. Debtor alleges that an audit of its freight bills, conducted on its behalf by Trans-Allied Audit Co., Inc. ("Trans-Allied"), revealed that the freight charges which were previously invoiced to and paid by SKF were at rates which were lower than those Debtor was required to charge customers according to the applicable tariffs that Debtor had on file with the ICC. Debtor also contends that the audit revealed that the previous bills did not comply with applicable provisions of state law for goods shipped in intrastate commerce. Debtor alleges that as a result of the audit, it was determined that a balance in the amount of $225,495.11 was due from SKF for freight undercharges, penalties and interest. SKF was billed this amount by Trans-Allied, but SKF refused to tender payment. Accordingly, Debtor filed this complaint on September 26, 1994 to collect these sums. Debtor asserts that because ICC regulations do not permit a shipper to charge rates lower than those which are on file with the ICC, e.g., the "filed rate doctrine," Debtor is authorized to collect the freight "undercharges," or the difference between the previously charged rates and the filed rates applicable to the materials shipped.
On October 20, 1994, SKF filed an Answer to the Complaint in which SKF lists twenty one affirmative defenses to Debtor's claims and asserts a four count counterclaim against Debtor. In its counterclaim, SKF essentially seeks recoupment of any amounts for which it may be found liable to Debtor, plus costs and fees incurred in defending this action. While SKF admits that Debtor provided it with freight hauling services, SKF specifically denies owing any money to Debtor. Rather, SKF alleges that Debtor billed SKF at the rates the parties previously negotiated, and that SKF paid all the freight bills in full prior to the commencement of this proceeding. SKF contends that Debtor is seeking to rescind the parties' negotiated rate and is attempting instead to collect an unlawful or illegal rate for the previously rendered services. In addition, SKF alleges that some or all of the goods tendered to Debtor were shipped according to Debtor's authority as a "contract carrier" under ICC regulations, and therefore, Debtor's filed rates do not apply. Debtor filed an answer to SKF's counterclaim generally denying all of the allegations contained therein.
Prior to the filing of this adversary complaint, the parties negotiated a settlement of the undercharge claims ("Settlement"). SKF contends that the Settlement resolved all of the claims pending in this adversary case in consideration for a settlement payment of $14,000.00. It is undisputed that SKF made this payment on or about April 12, 1994, and that Trans-Allied, Debtor's agent, deposited the proceeds of the settlement check into Debtor's account on or about April 13, 1994. However, Debtor contends that the release it drafted as part of the settlement was altered by SKF without Debtor's permission or knowledge, and that this alteration substantively changed the release by including within it additional claims Debtor did not intend to compromise for the same $14,000.00 payment. On or about April 19, 1994, Debtor attempted to return the settlement payment to SKF by issuing SKF its own check in the amount of $14,000.00. SKF refused to accept the return of the funds and has insisted that all claims were settled pursuant to the agreement.
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."), applicable here pursuant to Rule 7056 of the Federal Rules of Bankruptcy Procedure ("Fed.R.Bankr.P."), summary judgment is proper when the record before the court, including any relevant pleadings, depositions, answers to interrogatories and admissions, together with any affidavits, show "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986).
On a motion for summary judgment the court's role is to determine "whether there is a genuine issue of fact to be determined at trial." Anderson, 477 U.S. at 249, 106 S.Ct. at 2511. In this regard, only facts that may affect the outcome of the cases are considered "material". Id. at 255, 106 S.Ct. at 2513. The moving party has the initial burden of demonstrating the absence of any genuine issues of fact, Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) and the evidence in the record is to be viewed in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). However, if the non-moving party fails to adduce sufficient evidence in connection with an essential element of the case for which it bears the burden of proof at trial, then the moving party is entitled to summary judgment in its favor as a matter of law. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552; J.F. Feeser, Inc. v. Serv-A-Portion, 909 F.2d 1524, 1531 (3rd Cir.1990), cert. denied, 499 U.S. 921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991).
MOTION II:
The Court will first consider Motion II since a determination favorable to SKF on the issues raised therein would eliminate the need to consider the issues raised in Motion I.
In support of the motion, SKF argues that the parties negotiated a settlement of the outstanding freight undercharges claimed to be due from CR Industries, Inc. ("CR Industries") (a company acquired by SKF on or about March 8, 1990), reduced their agreement to a writing, executed the written agreement and that Debtor accepted the contemplated settlement payment in satisfaction of all of the disputed claims. SKF contends that execution of the agreement and payment of the settlement amount constituted a valid contract to compromise and settle Debtor's claims and further, that Debtor's acceptance of the settlement payment constituted an accord and satisfaction of the disputed debt. SKF asserts that Debtor is now bound by its actions and is therefore, barred as a matter of law from maintaining this action to collect the alleged freight undercharges.
It is a well established principle that the law generally favors the settlement of disputes by the parties themselves. See generally Greentree Cinemas, Inc. v. Hakim, 289 Pa.Super. 39, 432 A.2d 1039, 1042 (1981). Thus, pending legal claims may generally be compromised and settled pursuant to a valid contract of settlement negotiated by the parties. See School Dist. of Phila. v. Framlau Corp., 15 Pa.Cmwlth. 621, 328 A.2d 866 (1974); Sanders v. Lawn Mutual Ins. Co., 194 Pa.Super. 491, 168 A.2d 758, 760-61 (1961). A disputed debt might also be resolved by accord and satisfaction.
An accord and satisfaction is generally defined as the discharge of a demand for payment "by the giving and acceptance of something different from, or less than, that to which the creditor is entitled." Shipping Corp. of India, Ltd. v. Sun Oil Co., 569 F.Supp. 1248, 1260 (E.D.Pa.1983). It is well established that the essential elements of an accord and satisfaction are: a) a disputed debt; b) a clear and unequivocal offer of payment in full satisfaction of the debt; and c) acceptance and retention of payment by the offeree. T.J. Trauner Assoc., Inc. v. Cooper-Benton, Inc., 820 F.2d 643, 645 (3rd Cir.1987); Goodway...
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