Clean Earth Dredging Techs., Inc. v. SLRD Co.

CLEAN EARTH DREDGING TECHNOLOGIES, INC., Plaintiff, v. SLRD COMPANY - MULLICA HILL, LLC, Defendant.

CIVIL ACTION NO. 12-1989 (JEI/KMW)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Date: May 2, 2013

HONORABLE JOSEPH E. IRENAS

OPINION

APPEARANCES:

GREENBERG & TRAURIG, LLP

Eric Aronson & Laurie Ann Poulos

Counsel for Plaintiff

LIPMAN, ANTONELLI, BATT, GILSON, ROTHMAN & CAPASSO

Steven L. Rothman

Counsel for Defendant

Irenas, Senior District Judge:

This is a breach of contract case. Plaintiff Clean Earth Dredging Technologies, Inc. ("Clean Earth") claims, among other things, that Defendant SLRD Company - Mullica Hill, LLC ("SLRD") breached its contract with Clean Earth by closing a landfill site to Clean Earth and that SLRD has been unjustly enriched by refusing to return prepayments that Clean Earth made to SLRD.Defendant SLRD counterclaims that Clean Earth has breached the contract by failing to pay SLRD for site maintenance performed under the contract. Presently before the Court is Clean Earth's Motion for Summary Judgment on Counts I and III of its Second Amended Complaint as well as on Count II of SLRD's Second Amended Counterclaim.¹ (Dkt. No. 21) For the reasons stated herein, Clean Earth's motion will be granted in part and denied in part.

I.

For the purposes of this Motion, the Court resolves any factual disputes in favor of the Defendant, SLRD.² This dispute centers on the removal and delivery of Fill Materials, which, in this particular case, consist of "recycled, lightly contaminatedsoils and alternate fill materials." (Decl. of Eric S. Aronson, Esq. ("Aronson Decl.") Ex. B ("Supply Agreement") ¶ 1.1.1) These Fill Materials are used to fill depressions in the ground or change the grade of land.

Clean Earth is a Pennsylvania corporation that removes, processes, and receives Fill Materials and then transports and disposes of those materials. (SUMF³ ¶¶ 1-2) SLRD is a New Jersey limited liability company that operates the Henry Harris landfill site in Harrison Township, New Jersey ("the Site"). (Id. ¶ 3) The Site is in the process of being redeveloped so that commercial warehouses may be erected on top of the landfill. The Site's redevelopment is subject to a February 7, 2006 Closure Plan Approval ("the Closure Plan") issued by the New Jersey Department of Environmental Protection ("NJDEP"). (Id. ¶¶ 4-5) As part of the Closure Plan, the Site must be capped, filled, and graded in accordance with applicable law and permits. (Id. ¶ 5)

On April 17, 2006, Clean Earth and SLRD entered into a Soil Supply Agreement ("the Agreement") in which Clean Earth agreed to supply and deliver Fill Materials to the Site and SLRD agreed to accept delivery of those Fill Materials. (Id. ¶¶ 8-9; Supply Agreement) The Agreement incorporated the Closure Plan. (SUMF¶ 6) Under the Agreement, Clean Earth initially had a limited interim exclusive license "to supply Fill Materials to the Site" (Supply Agreement ¶ 2.1.1), which Clean Earth could convert to a permanent exclusive license. (Id. ¶ 2.1.2) If Clean Earth chose to make the exclusive license permanent, SLRD was required "to accept all Fill Materials delivered to the Site by Supplier [Clean Earth], with the understanding that the Site will require approximately two million . . . cubic yards of Fill Materials." (Id.)

To maintain its exclusive license, Clean Earth was required to both supply the Site with a minimum of 20,000 tons of Fill Materials per month and pay SLRD for those materials on a monthly basis. (Id. ¶ 2.1.4) The payment was calculated based on the Tipping Fees that Clean Earth owed. (Id.) The Agreement defines Tipping Fees as "the amounts payable by Supplier upon delivery of Fill Materials to the Site." (Id. ¶ 1.1.1) The Tipping Fees for the first 25,000 tons of Fill Materials delivered to the Site were set at $10.00 per ton. (Id. ¶ 3.2.1) For quantities above 25,000 tons, "the applicable Tipping Fee shall be equal to fifteen ($15.00) dollars per ton." (Id. ¶ 3.2.2)

In the event that Clean Earth could not meet its monthly minimum tonnage, it had two options. First, Clean Earth could make a payment, termed a "Catch Up Payment," to SLRD. The CatchUp Payment would be calculated by taking the difference between the amount of Fill Materials that Clean Earth delivered and the monthly minimum tonnage and then multiplying that amount by the $15.00 Tipping Fee. (Id. ¶ 2.1.4(i)) Any Catch Up Payments made would be used to offset future Tipping Fees for any Fill Materials delivered that were in excess of the minimum monthly delivery. (Id.) Second, Clean Earth could choose to "convert the Exclusive Supply License to a non-exclusive license such that Redeveloper may solicit one or more third parties to provide soils to the Site." (Id. ¶ 2.1.4(ii)) If Clean Earth chose the second option, "the Advance Payment⁴ and any Catch Up Payments [would] continue to be credited against future Tipping Fees . . . fully offset." (Id.)

There have been three amendments to the Agreement since its execution. The first amendment occurred on October 11, 2006 and was made in response to certain preconditions imposed by the NJDEP before Phase I of the Closure Plan could begin. That amendment suspended some of the parties' obligations until those preconditions were met and Phase I began. (Decl. of Brian Horne ("Horne Decl.") Ex. A 1-2) The amendment stated, "All terms and conditions of the Agreement shall remain in effect, except asspecifically modified by the terms of this letter agreement." (Id. ¶ 6)

The second amendment took place on July 6, 2010. This amendment was made in response to a Notice of Violation that SLRD received on April 5, 2010 from the NJDEP Bureau of Solid Waste Compliance and Enforcement and to "current market conditions." (Horne Decl. Ex. B ("July 6, 2010 Amendment") 1) The parties "desire[d] to modify certain terms of the Agreement and to suspend certain obligations of the Parties with respect to the Agreement." (Id.) In this amendment, the parties agreed, inter alia, to amend the Agreement so that SLRD could accept fill materials from other sources as long as those materials were in compliance with the needs of the Site and Clean Earth approved the alternative sources ahead of time. (Id. ¶ 1) Even though SLRD could accept materials from third parties, SLRD and Clean Earth agreed that Clean Earth's Exclusive Supply License would remain in effect and SLRD's acceptance of materials from third parties would not constitute a violation of that license. (Id. ¶ 2) Further, any materials accepted from a third party would count toward Clean Earth's monthly minimum requirement, and Clean Earth was entitled to a commission from the tipping fees that SLRD received from these sources. (Id.)

In addition, the amendment reiterated that if Clean Earth chose

to convert the Exclusive Supply License to a non-exclusive license, the outstanding balance of all Advance Payments and Catch-Up Payments shall be credited against all Tipping Fees due to Redeveloper for Fill Material delivered to the Site and all future Tipping fees payable by Supplier (and not just for fees payable for Fill Materials in excess of the monthly minimum quantity).

(Id. ¶ 8) Finally, the amendment stated, "All terms and conditions of the Agreement shall remain in effect, except as specifically modified by the terms of this letter agreement, or any prior or subsequent written instrument signed by the Parties in accordance with the Agreement." (Id. ¶ 12)

The third amendment to the Agreement took place on March 20, 2011 in response to "market conditions, allegations of default on the part of Clean Earth and discussions concerning the possible purchase of the landfill by Clean Earth." (RSMF⁵ ¶ 81) Under the terms of that amendment, Clean Earth agreed to pay SLRD $450,000 as an advance payment toward future Tipping Fees (Horne Decl. Ex. C ("March 20, 2011 Amendment") ¶ 1), and the parties agreed to waive other Catch Up Payments that Clean Earth would have been required to make. (Id. ¶ 2) The amendment reaffirmed Clean Earth's Exclusive Supply License and confirmed that Clean Earth was not in default of the Agreement.(Id.) Finally, the parties once again agreed, "All terms and conditions of the Agreement shall remain in effect, except as specifically modified by the terms of this letter agreement, or any prior or subsequent written instrument signed by the Parties in accordance with the Agreement." (Id. ¶ 8)

In October 2011, Clean Earth entered into an agreement ("Ash Disposal Agreement") with Hilltop Enterprises, Inc. ("Hilltop") to dispose all of the fly ash material generated at the Chambers Cogeneration facility in Carney's Point, New Jersey ("Carney's Point"). (SUMF ¶ 39) The fly ash material qualified as Fill Material under the Agreement between Clean Earth and SLRD. Under the Ash Disposal Agreement, Clean Earth received fly ash material on a daily basis from Carney's Point, which it then delivered to the Site. (Id. ¶ 40) The Ash Disposal Agreement initially qualified only two locations at which the fly ash material could be disposed: the Site and Clean Earth of North Jersey, Inc.'s Kearny, New Jersey facility ("CENJ"). (Aronson Decl. Ex. I ("Ash Disposal Agreement") 2)

That same month, Clean Earth exercised its option to become a non-exclusive licensee under paragraph 2.1.4(ii) of the Agreement. (RSMF ¶ 87) Clean Earth did not pay its invoice for October 2011. (Id. ¶ 89) Beginning in November 2011, SLRD asserted that it wanted to increase the Tipping Fees from $15.00 to $40.00 per ton (id. ¶ 90) and indicated that it wouldrestrict Clean Earth's access to the Site if Clean Earth did not agree to the increased Tipping Fees. (SUMF ¶ 44)

In response to this dispute, the parties entered into an Interim Agreement on November 15, 2011. (Id. ¶ 45) Clean Earth agreed to pay its October 2011 invoice and prepay for its November and December deliveries of Fill Materials. The prepayments were calculated using the $15.00 per ton Tipping Fee....