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Southeastern Chester County Refuse Authority v. BFI Waste Services of Pennsylvania, LLC

Superior Court of Delaware, Kent

June 1, 2015

SOUTHEASTERN CHESTER COUNTY REFUSE AUTHORITY, Plaintiff,
v.
BFI WASTE SERVICES OF PENNSYLVANIA, LLC, Defendant.

Submitted: April 13, 2015

Brian T. Jordan, Esquire of Jordan Law LLC, Wilmington, Delaware; attorneys for the Plaintiff.

Joseph C. Schoell, Esquire of Drinker Biddle & Reith LLP, Wilmington, Delaware, attorneys for the Defendant.

MEMORANDUM OPINION

Jeffrey J Clark, J.

I. INTRODUCTION

Plaintiff Southeastern Chester County Refuse Authority ("SECCRA") has sued Defendant BFI Waste Service of Pennsylvania, LLC's ("BFI") for unpaid tipping fees for the use of SECCRA's solid waste facility. As alleged in the complaint, Signature Waste, LLC ("Signature") owed the tipping fees to SECCRA for use of its facility in June and July 2011 for solid waste disposal. BFI purchased Signature in June 2011. SECRRA now sues BFI, as a successor-in-interest, for these unpaid tipping fees owed by Signature. Specifically, SECCRA sues BFI for (1) breach of contract, (2) breach of the duty of good faith and fair dealing, and (3) for an alternative claim of unjust enrichment.

BFI has filed a motion to dismiss SECCRA's complaint pursuant to Superior Court Civil Rule 12(b)(6). BFI alleges, inter alia, that (1) an assignment by Signature to SECCRA of the right to sue BFI for these unpaid tipping fees is not valid; (2) an anti-assignment clause in the asset purchase agreement (hereinafter, "APA") between Signature and BFI absolves BFI of liability for Signature's obligations; (3) SECRRA's claim is champertous and thus unenforceable; and (4) SECCRA fails to state a claim for both the unfair dealing and unjust enrichment claims. For the following reasons, Defendant BFI's Rule 12(b)(6) motion is DENIED, with the exception of its motion to dismiss the unfair dealing claim which is GRANTED.

II. PLED FACTS AND PROCEDURAL HISTORY

On June 15, 2011, BFI entered into the APA with Signature, and Signature's principal, Brian Lockhart, wherein BFI purchased Signature's assets and its contractual rights. The APA between Signature and BFI contained an anti-assignment clause addressing the non-assignability of obligations in the APA, providing the following:

16.1. Assignment. This Agreement may not be assigned (except by operation of Law) or otherwise transferred without the express written consent of the Seller [i.e. Signature] and Buyer [i.e. BFI] (which may be granted or withheld in the sole and absolute discretion of Seller and Buyer); provided, however, that Buyer may assign this Agreement to an Affiliate of Buyer or any successor of Buyer to the Business without the consent of Seller or Member.[1]

Shortly after closing, SECCRA asserted a claim against Signature for uncollected disposal fees attributed to their prior business operations and announced its intent to pursue BFI– as Signature's successor-in-interest– for the unpaid tipping fees at issue in this suit. Next, by letter dated November 29, 2011, BFI and Signature, acknowledging that this claim was pending, further modified the APA and agreed– in relevant part– to the following:

[o]n or about the Closing Date, [SECCRA] asserted a claim against [Signature] for unpaid disposal fees due for waste delivery by [Signature] to the SECCRA Community Landfill ... and stated that SECCRA would attempt to collect any unpaid amount of such disposal fees from [BFI] as a successor-in-interest to [Signature]. [Signature] and [Brian Lockhart] acknowledge and agree that the uncollected disposal fees constitute an Excluded Liability pursuant to the Purchase Agreement and [BFI] is entitled to indemnification from [Signature] and [Brian Lockhart] for any Losses incurred in connection with any Excluded Liabilities.[2]

Recognizing an increased likelihood of future litigation, BFI used the November 29th modification to bargain for additional assurances. Specifically, the modifications allowed BFI to retain $50, 000.00 from the Holdback Funds subject to the following conditions:

Retained Funds. [BFI] shall be permitted to retain the Retained Funds as security for any Losses that [BFI] may incur in connection with the SECCRA Claim or otherwise until such time as [Signature] provides a copy of a written settlement agreement executed by [BFI] and SECCRA that (a) fixes the amount of disposal fees due from [Signature] to SECCRA in connection with the SECCRA Claim, and (b) includes an express acknowledgment that [BFI] will not have any liability to SECCRA in connection with the SECCRA Claim. Within ten business days of receipt of such a settlement agreement, [BFI] shall transfer to [Signature] by wire transfer of immediately available funds any portion of the Retained Funds ...

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