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East Coast Resources, LLC v. Town of Hempstead

April 21, 2010


The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge


Before the court is the defendant's motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56. Plaintiff opposes the motion, asserting that there are issues of fact that necessitate a trial. For the following reasons, defendant's motion is granted in part and denied in part.


On or about July 13, 2004, defendant, the Town of Hempstead (the "Town"), awarded the plaintiff, East Coast Resources, LLC ("ECR"), contract number 34-2004, which governed the removal and transportation of certain agricultural waste from two Town-operated transfer facilities located in Oceanside and Merrick, New York to out-of-state recycling and composting facilities. (Def. R. 56.1 Statement ("Def. 56.1") ¶ 1; Pl. R. 56.1 Statement ("Pl. 56.1") ¶ 1.) The initial contract period was a two-year term, from July 13, 2004 through March 31, 2006, with three one-year extensions available "at the Town's option." (Def. 56.1 ¶¶ 2, 4; Pl. 56.1 ¶¶ 2; 4; Riverso Decl., Ex. A at 5.

While the contract did not provide for any minimum amount of agricultural waste to be shipped by ECR, expressly stating that "[n]o guarantee is given as to amounts of agricultural waste that will be available for shipping," it did provide the estimated payments to be made each year that the contract was in effect.*fn1 (Riverso Decl., Ex. A at 5.) Nothing in the contract specifies whether either party is entitled to recover its lost profits in the event of a breach. (Def. 56.1 ¶ 5; Pl. 56.1 ¶ 5.) On January 17, 2006, approximately two months prior to the expiration of the initial contract period, the Town exercised its option to extend the contract for one additional year, with the extension terminating March 31, 2007. (Def. 56.1 ¶ 6; Pl. 56.1 ¶ 6.)

By letter dated March 24, 2006, ECR advised the Commissioner of Sanitation, Richard T. Ronan ("Ronan"), that the parties had "a few issues" that needed addressing. (Riverso Decl., Ex. D.) Specifically, ECR advised Ronan that although pursuant to the parties' contract, "agricultural waste" is defined as "0% of contaminates in the material," the waste ECR was collecting from the Town contained "15% contaminates on average."*fn2 (Riverso Decl., Ex. D.) ECR informed Ronan that the presence of contaminates in the agricultural waste was "going to create a prohibitive situation from [its] recycling vendor," and enclosed a letter from one of its vendors, Nature's Choice, to demonstrate its point. (Riverso Decl., Ex. D.) ECR further advised Ronan that it had been notified by its other "organic recycler" that the product was "unacceptable," and enclosed that letter as well. (Riverso Decl., Ex. D.) ECR requested "a more stringent 'calling' of the material into proper contractual classifications." (Riverso Decl., Ex. D.)

ECR continued to perform its waste removal services for the Town until March 31, 2007. (Def. 56.1 ¶ 9; Pl. 56.1 ¶ 9.) On January 8, 2007, the Town exercised its option to renew the parties' contract for an additional year, terminating on March 31, 2008. (Def. 56.1 ¶ 10; Pl. 56.1 ¶ 10; Riverso Decl., Ex. E.) However, by letter dated February 9, 2007, ECR advised Ronan that due to certain circumstances outlined in the letter, it "must decline [the Town's] extension request." (Riverso Decl., Ex. E.) According to ECR's February 9, 2007 letter, its recycling vendor refused to accept any waste after March 1, 2007 without payment of a disposal fee that was ninety-five percent (95%) higher than the rate ECR was currently paying. (Riverso Decl., Ex. E.) Since "the new disposal rate . . . exceed[ed] the amount that the Town propose[d] to pay [ECR] for both transportation and disposal," ECR asserted that it "ha[d] no alternative but to decline the requested contract extension."*fn3 (Riverso Decl., Ex. E.) On March 28, 2007, ECR advised the Town that it would not perform under the parties' contract after March 31, 2007. (Def. 56.1 ¶ 12; Pl. 56.1 ¶ 12; Compl. ¶ 53.)

On April 17, 2007, the Town Council of the Town of Hempstead passed a resolution declaring that ECR was in breach of the parties' contract and recommended that the Town commence litigation to recover damages sustained as a result of ECR's purported breach. (Def. 56.1 ¶ 15; Pl. 56.1 ¶ 15; Riverso Decl., Ex. G.) Before the Town could do so, however, ECR commenced the instant litigation in the Eastern District of Virginia, alleging that the Town had breached the parties' contract by commingling agricultural and non-agricultural waste. (Def. 56.1 ¶ 16; Pl. 56.1 ¶ 16.) ECR seeks lost profits for the last two years of the contract extension options that ultimately did not come to fruition, from April 2007 to March 2009. (Def. 56.1 ¶ 20; Pl. 56.1 ¶ 20.) ECR also seeks lost profits stemming from an oral agreement it had to act as a subcontractor for the agricultural waste removal vendor for the County of Westchester (the "Westchester Subcontract"), which ECR asserts it was forced to abandon as a result of the termination of its contract with the Town. (Def. 56.1 ¶ 21; Pl. 56.1 ¶ 21.) ECR did not file a written verified claim with the Town Clerk regarding its breach of contract claim against the Town prior to instituting litigation. (Def. 56.1 ¶ 17; Pl. 56.1 ¶ 17.)

The Town now seeks summary judgment on the ground that ECR's failure to file a written verified claim against the Town before commencing litigation, as required under New York Town Law § 65(3), is fatal to this action. The Town further asserts that even if the Court excuses ECR's failure to file a notice of claim, ECR cannot recover its lost profits under the parties' contract because there was no contract in place for the time period for which ECR is seeking damages. Finally, the Town asserts that ECR cannot recover its lost profits under the Westchester Subcontract because such damages were not foreseeable to the parties at the time of contracting.


I. Legal Standard

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The burden is on the moving party to establish the lack of any factual issues. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The very language of this standard reveals that an otherwise properly supported motion for summary judgment will not be defeated because of the mere existence of some alleged factual dispute between the parties. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Rather, the requirement is that there be no "genuine issue of material fact." Id. at 248.

The inferences to be drawn from the underlying facts are to be viewed in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). When the moving party has carried its burden, the party opposing summary judgment must do more than simply show that "there is some metaphysical doubt as to the material facts." Id. at 586. Under Rule 56(e), the party opposing the motion "may not rest upon the mere allegations or denials of his pleadings, but . . . must set forth specific facts showing there is a genuine issue for trial." Anderson, 477 U.S. at 248.

When considering a motion for summary judgment, the district court "must also be 'mindful of the underlying standards and burdens of proof' . . . because the evidentiary burdens that the respective parties will bear at trial guide district courts in their determination of summary judgment motions." SEC v. Meltzer, 440 F. Supp. 2d 179, 187 (E.D.N.Y. 2006) (quoting Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir. 1988)) (internal citations omitted). "Where the non-moving party would bear the ultimate burden of proof on an issue at trial, the burden on the moving party ...

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