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STEVE MARCHIONDA & ASSOCS. v. WEYERHAUSER CO.

July 13, 1998

STEVE MARCHIONDA & ASSOCIATES, Plaintiff,
v.
WEYERHAUSER COMPANY, d/b/a Weyerhauser Paper Company, Defendant.



The opinion of the court was delivered by: LARIMER

DECISION AND ORDER

 Plaintiff, Steve Marchionda & Associates ("SM&A"), a New York corporation, commenced this breach of contract action in New York State Supreme Court, Yates County, on December 18, 1997. Defendant, Weyerhaeuser Company d/b/a Weyerhaeuser Paper Company ("Weyerhaeuser"), a Washington corporation, removed the action to this court on January 8, 1998 on the ground of diversity of citizenship. Weyerhaeuser has moved for partial summary judgment.

 BACKGROUND

 SM&A is a New York corporation engaged in the trucking business. In June 1990, SM&A and Weyerhaeuser entered into a contract whereby SM&A agreed to ship freight tendered to it by Weyerhaeuser. In return, Weyerhaeuser agreed to pay SM&A at various rates per mile as set forth in the contract.

 Weyerhaeuser also agreed to provide SM&A with no fewer than ninety loads per calendar quarter, and SM&A agreed to ship at least ninety loads per quarter. If either party did not meet this minimum in a given quarter, that party was to pay the other $ 100 for each "shortfall load." The contract stated that it was to remain in effect for two years, and that thereafter it would automatically renew for one-year periods unless either party served written notice on the other not less than sixty days prior to the end of the existing period that the party did not wish to extend the agreement. It also stated that the contract would "be governed and construed in accordance with the laws of North Carolina and the United States, as applicable."

 According to plaintiff, throughout the term of the contract, Weyerhaeuser continually failed to meet its ninety-load minimum. It is not apparent from the present record whether Weyerhauser ever paid the $ 100 penalty provided for by the contract.

 Plaintiff also alleges that in early 1997, Weyerhaeuser informed SM&A that it had decided to turn over management of its distribution system to J.B. Hunt ("Hunt"), a nationwide trucking company. It appears that because he heard nothing from either Weyerhaeuser or Hunt about SM&A being used to ship freight once Hunt took over, Marchionda's president, Steven C. Marchionda ("Marchionda"), inferred that Weyerhaeuser did not intend to use SM&A to ship any more freight.

 On April 24, 1997, Marchionda wrote to Margaret Taylor, Weyerhaeuser's Transportation Operations Manager, reminding her that the contract was still in existence, and stating that Weyerhaeuser's "volume commitments continue in effect until the contract is canceled, as do the penalties for not performing therein." Marchionda Aff. Ex. D. The following day, Marchionda faxed Taylor a letter instructing her to "consider this as written notice of our intention not to extend the Agreement past it's [sic] expiration date of June 25th, 1997." Id. Ex. E. He added that once SM&A had finished reviewing its shipping records, it "would be in a position to advise you of the amount due SM&A for failure to provide 90 loads per calendar quarter pursuant to the contract." Id.

 In an invoice dated July 14, 1997, SM&A informed Weyerhaeuser that Weyerhaeuser owed SM&A $ 86,900 for 869 shortfall loads. It is not apparent what if any response was forthcoming from Weyerhaeuser, but on December 18, 1997, SM&A filed the complaint in this action in state court. The complaint alleges that defendant has breached the contract, and that there is an account stated between the parties that Weyerhaeuser neither objected to or controverted. Plaintiff seeks damages of $ 86,900 plus interest from July 14, 1997.

 Defendant has now moved for partial summary judgment dismissing most of plaintiff's claims as time-barred. Defendant contends that the applicable statute of limitations in this case is that contained in the Interstate Commerce Commission Termination Act, 49 U.S.C. § 14705(a). That statute provides that a "carrier providing transportation or service subject to jurisdiction under chapter 135 must begin a civil action to recover charges for transportation or service provided by the carrier within 18 months after the claim accrues." Chapter 135 provides in pertinent part that "the Secretary [of Transportation] and the [Surface Transportation] Board have jurisdiction, as specified in this part, over transportation by motor carrier and the procurement of that transportation, to the extent that passengers, property, or both, are transported by motor carrier ..." in interstate or foreign commerce. Defendant maintains that the only timely portion of plaintiff's claim is that which accrued after June 17, 1996, eighteen months prior to the commencement of this action. Defendant contends that at most, plaintiff would therefore be entitled only to $ 31,000, based on a calculation of ninety loads per quarter for the 3.44 quarters between June 17, 1996, and April 24, 1997, when plaintiff gave notice of his intent to terminate the contract.

 In the alternative, defendant argues that this action would be governed by North Carolina's three-year statute of limitations for contract actions. That would limit plaintiff's recoverable time period to the twenty-eight months between December 1994 and April 1997.

 In response, plaintiff contends that 49 U.S.C. § 14705(a) does not apply because by its terms, it covers only actions "to recover charges for transportation or service ..." Plaintiff states that this action is not to recover such charges, but to recover contractual liquidated damages due to defendant's failure to provide plaintiff at least ninety loads per quarter. Plaintiff adds that even if § 14705(a) does apply, the limitation period did not begin to run until June 25, 1997, which was Weyerhaeuser's last date to complete its performance under the contract.

 Plaintiff also contends that North Carolina's three-year statute of limitations does apply, but that under North Carolina law, where there is a continuing contractual relationship between the parties, the limitations period does not begin to run until the date that final performance is called for. Here, plaintiff states, Weyerhaeuser had until June 24, 1997 *fn1" ...


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