United States District Court, E.D. New York
Christopher Merrick, Esq., Kennan Cohen & Howard PC, Jenkintown, PA, John Joseph Morris, Esq., Kelly, Rode & Kelly, LLP, Mineola, NY, for Plaintiff.
Brian Lee Gardner, Esq., Sullivan Gardner, P.C., New York, NY, for Defendant.
MEMORANDUM & ORDER
JOANNA SEYBERT, District Judge.
Currently pending before the Court is: (1) plaintiff CSX Transportation, Inc.'s ("Plaintiff") motion for summary judgment (Docket Entry 56), and (2) defendant Emjay Environmental Recycling, Ltd.'s ("Defendant") cross-motion for summary judgment (Docket Entry 57). For the following reasons, Plaintiff's motion for summary judgment is GRANTED and Defendant's motion is DENIED.
Plaintiff operates as an interstate rail carrier. (Pl.'s 56.1 Stmt., Docket Entry 48-1, ¶ 1.) Defendant is a transfer station which generates revenue by charging customers to place construction and demolition debris, municipal solid waste, and recyclables at its facility. (Pl.'s 56.1 Stmt. ¶¶ 2-3.) After Defendant separates the materials, it sends the waste to off-site landfills for disposal. (Pl.'s 56.1 Stmt. ¶ 4.) For example, Defendant sent the waste to landfills in various locations, including Ohio, via rail. (Pl.'s 56.1 Stmt. ¶¶ 6-7; Def.'s 56.1 Counterstmt. ¶¶ 6-7.)
"Between 2010 and 2012 all of [Defendant's] rail shipments were moved via a combination of the New York and Atlantic Railway Company (NY&A'), [Plaintiff], and the Ohio Central Railway Company (OHCR')." (Pl.'s 56.1 Stmt. ¶ 10.) NY&A provided carrier service from Defendant's facility in Brentwood, New York to an interchange point with Plaintiff. (Pl.'s 56.1 Stmt. ¶ 11.) Plaintiff then provided "long haul carriage" to Ohio, where the OHCR transported the freight to its final destination. (Pl.'s 56.1 Stmt. ¶¶ 12-13.)
Although the parties dispute the exact nature and consequences of the contracts, they agree that Plaintiff and Defendant entered into several agreements to govern the transport of Defendant's freight. (Pl.'s 56.1 Stmt. ¶ 18; Def.'s 56.1 Counterstmt. ¶ 18.) For example, Plaintiff and Defendant entered into "Contract CSXT 85189" and "Contract 18699." (Pl.'s 56.1 Stmt. ¶ 18.) Contract CSXT 18699 provided that it was in effect from January 1, 2010 through December 31, 2010 and Contract CSXT 85189 provided that it was effective from April 1, 2011 through March 31, 2013. (Pl.'s 56.1 Stmt. ¶¶ 19-20.) Both provided:
CAR SUPPLY: If [CSX] is to furnish cars, [CSX] will do so on a non-guaranteed basis subject to availability and distribution considerations....
PAYMENT AND CREDIT: Payment of all rates and charges that may accrue and become due from Industry to CSXT in connection with this Contract shall be made within the timeframes set forth in, and subject to the finance charges, late charges, and other provisions of Section 16, Tariff CSXT 8100 series (Merchandise).... If [Defendant] fails to pay all rates and charges as required by this paragraph, CSXT may, without limitation, cancel or suspend its performance under, or terminate this Contract. [Defendant] may not set off or withhold any payment due under this Contract in any dispute with any Carrier.
ENTIRE UNDERSTANDING: This Contract represents the entire understanding of the parties, may not be modified without their written consent, shall be construed (except for matters referring to or traditionally governed by or construed under federal laws, regulations, or case law) according to the laws of the State of Florida without regard to its conflict of laws rules, and has been executed by the duly authorized representatives of the parties.
(Pl.'s 56.1 Stmt. ¶ 21; Merrick Decl., Docket Entry 56-3, Ex. 4.) For each shipment of commodity, Defendant paid a single "through rate" directly to Plaintiff. (Def.'s 56.1 Stmt. ¶¶ 13-14.) According to Plaintiff, it then pays NY&A and OHCR for their participation in the shipment of Defendant's freight, regardless of whether Defendant has paid Plaintiff. (Pl.'s 56.1 Counterstmt., Docket Entry 49-2, ¶ 15.)
For a period of time, Defendant apparently shipped freight through Plaintiff. According to Plaintiff, however, Defendant began accruing an outstanding balance, causing Defendant's wire transfers to be rejected for insufficient funds. (Pl.'s 56.1 Stmt. ¶ 26.) On July 19, 2011, Defendant's President, Michael Cholowsky, executed a Promissory Note on behalf of Defendant. (Pl.'s 56.1 Stmt. ¶ 27; Def.'s 56.1 Counterstmt. ¶ 27.) The Promissory Note pertains to a loan of $334, 998 to cover unpaid freight charges from November 2010 through April 2011. (Pl.'s 56.1 Smt. ¶ 28.) Pursuant to the Promissory Note, Defendant gave Plaintiff a $50, 000 down payment. (Pl.'s 56.1 Stmt. ¶¶ 29, 31; Def.'s 56.1 Counterstmt. ¶¶ 29, 31.) According to Plaintiff, Defendant did not make any further payments. (Pl.'s 56.1 Stmt. ¶ 32.) Plaintiff additionally maintains that, after the Promissory Note, it continued to ship Defendant's freight between January 2011 and July 2012, incurring $519, 704.72 in freight charges that Defendant also did not pay to Plaintiff. (Pl.'s 56.1 Stmt. ¶¶ 34, 36.)
Plaintiff and Defendant now each move for summary judgment. The Court will first address the applicable legal standard before turning to the parties' motions more specifically.
I. Legal Standard
Summary judgment is only appropriate where the moving party can demonstrate that there is "no genuine dispute as to any material fact" and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). In considering this question, the Court considers "the pleadings, depositions, answers to interrogatories and admissions on file, together with any other firsthand information including but not limited to affidavits." Nnebe v. Daus, 644 F.3d 147, 156 (2d Cir. 2011) (citation omitted); see also FED. R. CIV. P. 56(c). "In assessing the record to determine whether there is a genuine issue to be tried... the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997). The burden of proving that there is no genuine issue of material fact rests with the moving party. Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citing Heyman v. Com. & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975)). Once that burden is met, the non-moving party must "come forward with specific facts, " LaBounty v. Coughlin, 137 F.3d 68, 73 (2d Cir. 1998), to demonstrate that "the evidence is such that a reasonable jury could return a verdict for the nonmoving party, " Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 218 (1986). "Mere conclusory allegations or denials will not suffice." Williams v. Smith, 781 F.2d 319, 323 (2d Cir. 1986). And "unsupported allegations do not create a material issue of fact." Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000), superseded by statute on other grounds as stated in Ochei v. Coler/Goldwater Mem'l Hosp., 450 F.Supp.2d 275, 282 (S.D.N.Y. 2006).
"The same standard applies where, as here, the parties filed cross-motions for summary judgment...." Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001) (citing Terwilliger v. Terwilliger, 206 F.3d 240, 244 (2d Cir. 2000)). Thus, even if both parties move for summary judgment and assert the absence of any genuine issues of material fact, "a district court is not required to grant judgment as a matter of law for one side or the other." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993). "Rather, each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales, 249 F.3d at 121 (citation omitted).
II. Subject Matter Jurisdiction
Initially, the Court notes that Defendant seeks dismissal, asserting that the Court lacks subject matter jurisdiction over this action. Specifically, Defendant maintains that Plaintiff, NY&A, and OHCR formed a joint venture, precluding relief to Plaintiff alone, that Plaintiff cannot maintain the action individually, and that, alternatively, the action must be dismissed based on misjoinder. The Court will address each of these arguments in turn. (Defs.' Br. for S.J., Docket Entry 59, at 7-19.)
A. Joint Venture
Defendant maintains that the rail transportation services at issue were undertaken by a joint venture and that this Court lacks subject matter jurisdiction over the action "brought in its correct form." (Def.'s Br. for S.J. at 7-8.) The Court disagrees.
The citizenship of a joint venture depends upon the citizenship of each of its members. See Schiavone Constr. Co. v. City of N.Y., 99 F.3d 546, 548 (2d Cir. 1996) ("For diversity purposes, the citizenship of a joint venture is the citizenship of each of its members."). Here, it is undisputed that NY&A and Defendant are both citizens of New York. Accordingly, if there is a joint venture, there would no longer be diversity of citizenship between the parties, thus divesting the Court of jurisdiction.
In determining whether there was a joint venture, the Court will use Florida law. The three contracts that governed the terms and conditions of Defendant's shipments-CSXT 85189, CSXT 18699, and CSXT 10812 (the "Rail Service Contracts")-and which underlie the Promissory Note, contain a Florida choice of law provision. (See generally Rail Service Contracts, Ex. 4 to Merrick Decl.) Given that this Court allegedly sits in diversity jurisdiction and given New York law, the contractual choice of law provision governs. See New Falls Corp. v. Lall, No. 09-CV-4809, 2010 WL 2076937, at *2 (E.D.N.Y. May 18, 2010) ("A federal court exercising diversity jurisdiction applies the law of the forum state, including its choice of law rules, to determine the applicable substantive law." (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 497, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000) ("New York law is clear in cases involving a contract with an express choice-of-law provision: Absent fraud or violation of public policy, a court is to apply the law selected in the contract as long as the state has sufficient contacts with the transaction.").
Under Florida law, "a joint venture is a special combination of two or more persons, who, in some specific venture, seek a profit jointly without the existence between them of any actual partnership, corporation, or other business entity." Offices Togolais Des Phosphates v. Mulberry Phosphates, Inc., 62 F.Supp.2d 1316, 1324 (M.D. Fla. 1999) (internal quotation marks and citation omitted). It is "created when two or more entities combine their property or time or a combination of the two to carry out a single business enterprise for profit." Id.
Defendant begins by pointing the Court to Norfolk Southern Railway Co. v. Emjay Environmental Recycling, Ltd., in which Judge Thomas C. Platt found that the real party plaintiff was a joint venture between the plaintiff, Norfolk Southern, and NY&A. No. 09-CV-1322, 2012 WL 976056 (E.D.N.Y. Mar. 19, 2012). There, Plaintiff, Defendant, and NY&A executed a transportation contract in which the parties were jointly referred to as "Railroad." Id. at *1. Like here, the contract itself involved the transport of Defendant's construction and demolition debris via railway. Id . In response to the counterclaim filed by Defendant, the plaintiff filed a third-party complaint against NY&A. Id. at *2. Although the plaintiff withdrew ...