Empire State Fuel Corp. v Warbasse-Cogeneration Tech.
Annotate this CaseDecided on November 28, 2007
Supreme Court, New York County
Empire State Fuel Corp., Plaintiff,
against
Warbasse-Cogeneration Technologies, Partnership, L.P., and Amalgamated Warbasse Houses, Inc., Defendants.
601266/06
Attorneys for Plaintiff Empire State Fuel Corp.
Krol & O'Connor
320 West 81st Street
New York, New York 10024
(212) 595-8009
Att: Igor Krol, Esq.
Attorneys for Defendant Warbasse-Cogeneration Technologies
Moses & Singer LLP
405 Lexington Avenue
New York, New York 10174
Att: Robert D. Lillienstein, Esq.
(212) 554-7800Fax 212 554-7700
Attorneys for Defendant Amalgamated Warbasse houses, Inc.
Baker Greenspan & Bernstein, Esq.
2099 Bellmore Avenue
Bellmore, New York 11710
Att: Robert L. Bernstein, Jr., Esq.Fax 516 783 3311
(516) 783-3300
Helen E. Freedman, J.
In this action, Empire State Fuel Corp. ("Empire") sues Warbasse-Cogeneration Technologies Partnership ("Warbasse") and Amalgamated Warbasse Houses ("Amalgamated"), for payments for fuel it delivered to defendants in the early 2000's. Defendants interpose cross-claims against each other. Empire now moves for an order granting it summary judgment against both defendants. Amalgamated opposes the motion and cross-moves for summary [*2]judgment against Empire and Warbasse. Warbasse opposes both motions.
For the reasons set forth below, Empire's motion is granted against Warbasse, and it is
denied as to Amalgamated. Amalgamated's cross-motion is granted against Empire, and denied
as to Warbasse. Warbasse's cross-claim against Amalgamated survives for determination at trial,
while Amalgamated's cross-claim against Warbasse is dismissed.
Background
The historic relationship between Empire, Warbasse and Amalgamated is relevant to understanding the motions before the court. Amalgamated is a cooperative apartment complex built in Brooklyn in the 1960's with a small on-site power plant. Empire is a distributor of petroleum products which sold fuel to Amalgamated for several years. In 1987, Amalgamated entered into several agreements with Warbasse, including an "Energy Purchase and Sale Agreement" and a "Facility Site Lease," for the construction of a larger cogeneration plant ("the plant") on Amalgamated's premises. Pursuant to these agreements, Amalgamated leased a portion of its premises to Warbasse to build and operate the plant. Warbasse, which owned the plant, agreed to sell electricity and thermal energy generated by the plant to Amalgamated to be used by the residents of the complex. The parties also agreed that any output produced in excess of Amalgamated's needs could be sold to a third party. Although Amalgamated had previously purchased fuel directly from Empire, after 1988, Empire sold and delivered fuel to the cogeneration plant, and Amalgamated purchased the electricity and thermal energy generated by that plant from Warbasse.
On December 27, 2000, Warbasse and Empire entered into a written contract providing in relevant part as follows:
[Warbasse] agrees to purchase entire fuel supply from [Empire] during the contract period. .
. . The purchase period for the lock-in rate for Kerosene will be from January 1st 2001 for the
first 300,000 gallons of product at the rate of $1.3700 per gallon, plus any applicable tax you
may be required to pay. Any additional product will be sold at fair market value.
This contract was drafted on Empire's letterhead and identified Warbasse as the
customer. In January 2001, Empire delivered 300,000 gallons of fuel at the locked-in price.
Thereafter, Empire continued to deliver fuel to the plant on a regular basis at daily fluctuating
prices representing the fair market value.
The ordering and delivery of the fuel at issue took place according to the following procedure. Every morning, Amalgamated's Chief Engineer Vincent Sellitti measured the quantity of fuel left in the tanks to run the plant; he then called David Perry, an employee of a Warbasse's agent corporation, to receive approval for ordering fuel from Empire; lastly, he called Empire to schedule a delivery.[FN1] Upon receiving the fuel, Sellitti collected the delivery tickets and sent a copy to Perry.
At some unspecified time before Empire and Warbasse entered into their written contract, Sellitti sent Empire a fax drafted on Warbasse's letterhead, directing Empire to send its invoices [*3]to Warbasse's offices in Harrison, New York. At that location, Perry used the invoices sent by Empire and the delivery tickets received from Sellitti to prepare accounts payable which he submitted to Robert Beningson, an officer of Warbasse. Beningson had authority to decide which invoices would be paid.
Empire continued to deliver fuel to the plant and send invoices to Warbasse until March
2003 when the outstanding balance reached $1,000,000. At this time, Empire called for a
meeting with Warbasse to discuss payment of future deliveries and repayment of amounts owed
on the overdue accounts. During the meeting, Beningson explained that Warbasse had failed to
pay the invoices because of various financial problems. Warbasse then agreed that it would
prepay for future deliveries and that it would begin paying down the balance owed in monthly
installments. Amalgamated was not invited to nor present at that meeting. During the ensuing
months, Warbasse did prepay for future deliveries and managed to reduce the outstanding
balance to $648,244.08. In mid-2005, Warbasse stopped making payments towards the overdue
accounts. By letter dated August 22, 2005, Empire notified Warbasse that it would file a legal
action to collect the amounts owed to it if the outstanding balance were not paid in full.Empire
commenced the underlying action in April 2006, asserting breach of contract, accounts stated,
and quantum meruit claims against Warbasse, and a quantum meruit claim
against Amalgamated. Defendants interposed cross-claims against each other. Warbasse alleges
that Amalgamated owes Warbasse $130,700, approximately the value of 70,800 gallons of fuel
that were left in the tanks after Warbasse was allegedly forced off Amalgamated's property
sometime in 2005. Amalgamated's cross-claim seeks compensation from Warbasse for any
potential damages for which it is liable to Empire.
Contentions
Empire contends that Warbasse is liable for the unpaid invoices pursuant to their December 2000 contract, or in quantum meruit because the fuel was delivered to the plant owned by Warbasse. Moreover, Empire argues that it has a viable account stated claim because Warbasse never objected to or complained about the invoices and statements of account received from Empire.
Alternatively, Empire contends that Amalgamated is liable based on quantum meruit if the contract with Warbasse expired once Empire delivered a certain quantity of fuel at a fixed price in January 2001, and if the contract does not govern the sale of the fuel at issue here. Empire contends that it had a long-standing business relationship with Amalgamated, while Warbasse was simply an entity to which Empire sent invoices and from which it received payments.
In its cross-motion, Amalgamated contends that once Empire began to sell fuel to Warbasse and receive payments from it, Amalgamated, under its contract with Warbasse, was only responsible to pay for the energy generated by the plant. Further, Amalgamated contends that the fuel at issue here was ordered and delivered pursuant to the December 2000 contract between Empire and Warbasse. Amalgamated points out that it was not a party to that contract, it was not invoiced for the fuel, and it did not make any payments to Empire.
In opposition to both motions, Warbasse contends that its December 2000 contract with
Empire expired in 2001. Thereafter, it was Amalgamated that allegedly ordered the fuel,
accepted its delivery and benefited from its use. Thus, Warbasse's position is that Amalgamated
[*4]is liable to Empire for the unpaid invoices.
Discussion
I.Empire Is Entitled To Summary Judgment Against Warbasse.
Warbasse's failure to pay for fuel delivered to the plant constitutes a breach of the December 2000 contract with Empire. This contract clearly governs purchases of fuel beyond the quantity for which the price was locked-in where its last sentence specifically provides that, "[a]ny additional product will be sold at fair market value." Even assuming that the agreement expired in January 2001, a renewal of a contract may be implied from the parties' conduct where, as here, the parties continue to business together as before. See Levina v. Citybank, N.A., 16 AD3d 160 (1st Dep't 2005); Daskolopoulos v. European Am. Bank & Trust Co., 104 AD2d 1020 (2d Dep't 1984). Here, after January 2001, Empire continued to sell fuel and send invoices to Warbasse for at least two more years. The meeting and agreement between Empire and Warbasse occurred in 2003. Beningson testified that Warbasse's failure to make certain payments was due to financial problems and not to Warbasse's refusal to acknowledge its contractual obligations.
Further, Empire is entitled to recover the amounts owed to it based on accounts stated. "An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due." Ryan Graphics, Inc. v. Bailin, 39 AD3d 249 (1st Dep't 2007) (quoting Jim-Mar Corp v. Aquatic Constr., 195 AD2d 868 (3d Dep't 1998). "[E]ither retention of bills without objection or partial payment may give rise to an account stated." Morrison Cohen Singerand Weinstein, LLP v. Waters, 13 AD3d 51 (1st Dep't 2004). Here, Warbasse received the relevant invoices and did not object to them. Rather, it negotiated a form of repayment with Empire and continued to pay down the balance for several months afterward.
Since Warbasse has failed to raise an issue of fact sufficient to call into question its liability on the unpaid invoices, Empire is entitled to summary judgment against Warbasse.
II.Amalgamated Is Entitled To Summary Judgment Against Empire.
Empire moves and Amalgamated cross-moves for summary judgment on the quantum meruit claim. To recover under a theory of implied in law contract, a "plaintiff must prove that it performed work or services for the defendant which resulted in defendant's unjust enrichment." Kapral's Tire Svc, Inc. v. Aztek Tread Corp., 124 AD2d 1011 (4th Dep't 1986); Joan Hansen & Co., Inc. v. Everlast World's Boxing Headquarters Corp., 296 AD2d 103 (1st Dep't 2002).It is not enough that the defendant received a benefit from the activities of the plaintiff; if services were performed at the behest of someone other than the defendant, the plaintiff must look to that person for recovery. Kagan v. K-Tel Entertainment, Inc., 172 AD2d 375 (1st Dep't 1991) (internal citations omitted).
The relevant issue here is establishing whether Sellitti was acting on behalf of Amalgamated or Warbasse when he ordered fuel from Empire. In agency law, a principal may delegate authority to an agent by words which expressly and directly authorize the agent to do a delegable act, and the principal is bound by the acts of the agent within the scope of the delegated authority. See Rolfe v. Hewitt, 227 NY 486 (1920), superseded by statute on other grounds, Morris v. Snappy Car Rentals, Inc., 84 NY2d 21 (1994). From the stand point of a third person, the scope of the authority of an agent includes also the authorization which has apparently been [*5]conferred upon the agent. See Enright v. Asplundh Tree Expert Co., 271 A.D. 847 (3d Dep't 1946). Here, Sellitti had both express and apparent authority to order and accept fuel on behalf of Warbasse. Sellitti testified that he called Empire only after receiving express authorization from a Warbasse's agent. Further, by making several payments to Empire, Warbasse "gave rise to the appearance" that Sellitti had the authority to order fuel for Warbasse. Even though Sellitti made the telephone requests, Empire delivered fuel to the plant pursuant to Warbasse's authorization to buy it; thus, it must look to Warbasse to collect on the unpaid invoices.Empire argues that Amalgamated is nonetheless liable because it benefited from the use of the fuel delivered. However, Amalgamated asserts that there is no question that it paid Warbasse pursuant to the terms of their "Energy Purchase and Sale Agreement," and that if there were such a dispute, it would be irrelevant here because Warbasse had a binding contract with Amalgamated under which it is entitled to payment for the energy. Thus, Amalgamated is not unjustly enriched, as claimed by Empire.
Since summary judgment is granted to Amalgamated as against Empire, Amalgamated's cross-claim seeking compensation from Warbasse is dismissed as moot.
III.Amalgamated's Cross-Motion Against Warbasse.
In its cross-motion, Amalgamated also seeks dismissal of Warbasse's cross-claim for $130,700, the approximate value of some fuel still in the tanks when Warbasse was allegedly forced off Amalgamated's property in 2005. Amalgamated contends that Empire made its last delivery of fuel to Warbasse in March 2003, and that the fuel in the tanks in 2005 was not ordered by Warbasse. Amalgamated further argues that even if Warbasse ordered that fuel, it should recover its value from other entities, such as Con Edison, to whom Warbasse sold the energy generated in excess of Amalgamated's needs. Warbasse contends that that fuel is part of its stocked inventory. Computer records show that there were several deliveries billed to Warbasse well after March 2003. Based on the above, Warbasse has raised a sufficient issue of fact as to whether Amalgamated owes Warbasse money for the fuel left in the tanks. Thus, Amalgamated's cross-motion is denied as against Warbasse.
For the foregoing reasons, Empire's motion for summary judgment is granted against Warbasse and it is denied as to Amalgamated; Amalgamated's cross-motion for summary judgment is granted against Empire and denied as to Warbasse; Amalgamated's cross-claim against Warbasse is dismissed as moot.
Accordingly, it is
ORDERED that plaintiff's motion is granted to the extent that summary judgment is granted against Warbasse-Cogeneration Technologies Partnership, L.P. ("Warbasse"), on the first, second, and third causes of action in the complaint; and it is further
ORDERED that plaintiff's motion for summary judgment against Amalgamated Warbasse Houses, Inc. ("Amalgamated"), on the fourth cause of action in the complaint is denied, and it is further
ORDERED that Amalgamated's cross-motion for summary judgment against plaintiff is granted to the extent that the fourth cause of action in the complaint is severed and dismissed, and it is further
ORDERED that Amalgamated's cross-motion for summary judgment against Warbasse is denied, and it is further [*6]
ORDERED that Amalgamated's cross-claim against Warbasse is dismissed as moot, and it is further
ORDERED that Warbasse's cross-claim against Amalgamated shall continue, and it is further
ORDERED that the Clerk is directed to sever and dismiss the fourth cause of action in the complaint, and Amalgamated's cross-claim against Warbasse, and it is further
ORDERED that the Clerk is directed to enter judgment in favor of plaintiff against Warbasse-Cogeneration Technologies Partnership, L.P., in the amount of $648,244.08, with interest as calculated by the Clerk at the rate of 9% per annum from September 30th, 2005, plus costs and disbursements as taxed by the Clerk upon the submission of a proper bill of costs, and it is further
ORDERED that the parties are directed to appear for a pre-trial conference on December
7th, 2007, at 9:30 a.m. in courtroom 208, 60 Centre Street, New York, New York 10007.
Dated: November 28th, 2007
Enter:
_________________________
Helen E. Freedman, J.S.C.
Footnotes
Footnote 1:Sometime before 2002,
Warbasse contracted out its duties pursuant to its contract with Amalgamated to York Research
Corporation. In 2002, York went bankrupt. York's former employees set up Jasper Energy which
became Warbasse's agent vis-à-vis Amalgamated.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
