White Const. Co. v. Martin Marietta Materials, 5:05-cv-328-Oc-10GRJ.

CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida
Citation633 F.Supp.2d 1302
Docket NumberNo. 5:05-cv-328-Oc-10GRJ.,5:05-cv-328-Oc-10GRJ.
PartiesWHITE CONSTRUCTION COMPANY, INC., a Florida corporation, Limerock Industries, Inc., a Florida corporation, Plaintiffs, v. MARTIN MARIETTA MATERIALS, INC., a foreign corporation, Martin Marietta Materials of Florida, LLC, a foreign limited liability company, Defendants.
Decision Date07 April 2009

George E. Spofford, IV, Michael Byrley Colgan, Timothy Allen Andreu, Glenn, Rasmussen, Fogarty & Hooker, P.A., Tampa, FL, for Plaintiffs.

David Thomas Knight, Lara J. Tibbals, Brian L. Josias, Marie A. Borland, Hill Ward Henderson, Tampa, FL, for Defendants.

ORDER

WM. TERRELL HODGES, District Judge.

This case is before the Court for consideration of Defendants Martin Marietta Materials, Inc. and Martin Marietta Materials of Florida, LLC's Motion for Final Summary Judgment, (Doc. 80), to which Plaintiffs White Construction Company, Inc. and Limerock Industries, Inc., have filed a response in opposition (Doc. 101). Upon due consideration, and for the reasons discussed below, the Court concludes that the Defendants' motion is due to be granted in part and denied in part.1

Undisputed Material Facts
I. The Parties

Plaintiffs White Construction Company, Inc. ("White Construction") and Limerock Industries, Inc. ("Limerock Industries"), (collectively "the Plaintiffs") are both Florida corporations engaged in the construction business with their principal places of operation in Chiefland, Levy County, Florida. The late Luther White, Sr. and his wife were the majority stockholders of both corporations, and they were considered sister corporations. A large portion of White Construction's and Limerock Industries' work was devoted to road construction projects for the Florida Department of Transportation.

Since the 1950s, both White Construction and Limerock Industries have operated a limerock mining facility in Taylor County, Florida, known as the "Cabbage Grove" Quarry. The mining operations conducted at Cabbage Grove included the production, marketing, distribution, and sale of limerock, crushed rock, and other aggregate products that are traditionally used in road construction projects. The limerock at Cabbage Grove is very valuable because it is the only source of hard aggregate rock north of the oolite seam near Miami, Florida, and the Plaintiffs invested millions of dollars into its operations at the quarry. They renewed the lease on the land on several occasions, installed equipment to conduct mining, and moved other equipment to the property for use in mining operations.

The owner of Cabbage Grove during the relevant time period of this case was Foley Timber and Land Company, Limited Partnership ("Foley"), and until April 1, 2002, the Plaintiffs leased Cabbage Grove from Foley to conduct their mining operations. White Construction and Limerock Industries also leased land for its mining operations at two other quarries located in Marion County, Florida—the O'Neal Quarry, and the Clifton Quarry. However, Cabbage Grove was considered the "crown jewel" of the Plaintiffs' mining operations because of its high value.

Defendant Martin Marietta Materials, Inc. ("Martin Marietta") is a North Carolina corporation with its principal place of business in Raleigh, North Carolina. Martin Marietta is a well-known and experienced mining company with an established distribution network in Florida and throughout the United States. It is the second largest supplier of limerock aggregate in the United States, and has extensive operations throughout the Southeast.

Defendant Martin Marietta Materials of Florida, LLC ("Martin Marietta Florida") is a Delaware limited liability company and a wholly owned subsidiary of Martin Marietta. Martin Marietta Florida's principal place of business is in Raleigh, North Carolina, and its sole member is Martin Marietta. Martin Marietta created Martin Marietta Florida in 2002 as a vehicle to facilitate the execution of the Mining Services Agreement with White Construction and Limerock Industries.2

II. The Letter of Intent

In the late 1990s, Martin Marietta approached White Construction and Limerock Industries about possibly purchasing the mining operations at Cabbage Grove, as well as certain other real property. The negotiations were ultimately unsuccessful; however, in late 1998 and early 1999, Martin Marietta renewed discussions with the Plaintiffs about purchasing their interest in Cabbage Grove. On January 29, 1999, the Parties entered into a confidentiality agreement whereby White Construction provided Martin Marietta various documents, including a copy of White Construction's mining lease with Foley.3

In March 2000, before this second round of negotiations concluded, the State of Florida initiated criminal proceedings against White Construction. The proceedings resulted in the indictment of White Construction for several crimes in connection with its dealings with the Florida Department of Transportation, including charges of racketeering and grand theft. In May 2002, the criminal charges were expanded to include individual charges against Luther White, Sr., his son Luther White, Jr., and Luther White III. Limerock Industries has never been named as a defendant in any criminal proceedings.

At some point between March 2000 and September 2001, Martin Marietta became aware of the criminal proceedings against White Construction. Martin Marietta did not, however, cease its discussions with the Plaintiffs concerning Cabbage Grove. These discussions ultimately resulted in the execution of a Letter of Intent ("LOI") between Martin Marietta Materials and Limerock Industries on September 27, 2001. (Doc. 44-2).4

The LOI memorialized Limerock Industries' interest in selling and Martin Marietta's interest in purchasing "certain of the assets related to the operation of Limerock [Industries], specifically those conducted at the Cabbage Grove Quarry in Taylor County, Fla., O'Neal Quarry in Marion County, Fla., and Clifton Quarry in Marion County, Fla." (Doc. 44-2, p. 1). The first page of the LOI stated, in relevant part:

This non-binding letter describes the basic terms of the proposed transaction, along with various examinations of Limerock that must be concluded to the satisfaction of [Martin Marietta] prior to the execution of a legally binding agreement. THIS LETTER EXPRESSES THE INTENT OF THE PARTIES FOR DISCUSSION PURPOSES ONLY FOR USE IN DRAFTING A DEFINITIVE CONTRACT. THIS LETTER IS NOT INTENDED TO CREATE NOR SHOULD IT BE CONSTRUED AS CREATING ANY LEGAL OBLIGATION TO CONCLUDE THIS TRANSACTION UNDER THE TERMS OUTLINED HEREIN OR ON ANY OTHER TERMS OR CONDITIONS NOR IS IT INTENDED TO CREATE ANY OTHER OBLIGATION EXCEPT FOR THE OBLIGATIONS SET FORTH IN PARAGRAPHS E AND F.

(Id., p. 1) (emphasis in original).

The LOI provided that once it was signed by both parties, Martin Marietta would begin to draft a "definitive contract to the mutual satisfaction of the parties hereto." Id. The LOI listed several terms and conditions which the parties anticipated the definitive contract would contain, along with other terms to be negotiated at a future date. Some of the terms included in the LOI were an anticipated purchase price of $15,500,000 for all of the assets used in Limerock Industries' operations at the three quarries, including all real property, plants, and equipment used at each quarry; an additional payment of up to $1,161,000 for product inventory that was saleable in the normal course of business within one year from the date of the contract's closing; and a separate payment for all outstanding accounts receivable at the time of closing.5 (Doc. 44-2, pp. 1-3). The LOI also provided that Limerock Industries would facilitate the renegotiation of the leases at each quarry under terms satisfactory to Martin Marietta, including the right to mine, blast, quarry, and remove deposits from the land, and that the parties would execute and record a Memorandum of Lease in the land records for the jurisdictions where each quarry was located. Id. at p. 3.

The LOI stated that the "definitive contract" would include appropriate representations, warranties, and guarantees by Luther White, Sr. and the shareholders of Limerock Industries as to Limerock Industries' contractual obligations. The LOI also stated that "[t]he definitive contract would further provide that consummation of the transaction would be contingent upon the fulfillment of certain conditions," such as a good faith due diligence review of all corporate records, and approval of the transaction by the officers and directors of both Limerock Industries and Martin Marietta. (Doc. 44-2, pp. 4-5).

The LOI listed a closing date for the definitive contract of March 1, 2002, and that Limerock Industries would refrain from negotiating with any third parties for the sale of the shares or assets of the mining operations until after that date. The LOI also provided that "either party, without further obligation or liability to the other, may terminate this letter of intent or the negotiations resulting from it, merely by giving written notice to the other." (Doc. 44-2, p. 6).

III. The O'Neal and Clifton Leases

Following execution of the LOI, the Parties began the process of due diligence, which included Martin Marietta examining the existing quarry leases, verifying the quality of the limestone aggregate, and examining the title and encumbrances on the equipment Limerock Industries was proposing to sell under the LOI. The Parties also made various attempts to negotiate the terms of a definitive asset purchase agreement and a supply agreement, as well as a non-compete agreement for the Plaintiffs. Over the next several months, the Parties circulated various drafts of the agreements, and...

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