CC Disposal v. Veolia ES Valley View Landfill

NO. 4-10-0230 Filed 12/22/10
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
CC DISPOSAL, INC., a Corporation, ) Appeal from
Plaintiff-Appellee, ) Circuit Court of
v. ) Macon County
VEOLIA ES VALLEY VIEW LANDFILL, INC., ) No. 08MR565
an Illinois Corporation, d/b/a MACON )
COUNTY LANDFILL, ) Honorable
Defendant-Appellant. ) Thomas E. Little,
) Judge Presiding.
_________________________________________________________________
PRESIDING JUSTICE KNECHT delivered the opinion of the
court:
Defendant, Veolia ES Valley View Landfill, Inc.,
appeals after a bench trial from the trial court's decision it
materially breached its contract with plaintiff, CC Disposal,
Inc., and rescinding that contract. Defendant argues the trial
court erred in (1) finding the contract at issue required defen-
dant to operate its landfill on Saturdays; (2) failing to con-
sider whether plaintiff had an adequate remedy at law; and (3)
finding defendant's breach was a material breach justifying
rescission of the contract. We affirm.
I. BACKGROUND
Plaintiff operates a waste-collection business.
Plaintiff and other small, independent waste-collection companies
formed Macon County Landfill Corporation (Macon County Landfill)
to run a landfill in which the corporate shareholders could
dispose of their collected waste. They operated this landfill
for approximately 30 years. In 1998, the landfill was sold to a
company named Superior. As part of the sale, a solid-waste-
disposal agreement was entered into between Macon County Landfill
and each independent waste hauler. Each waste hauler signed
agreements with identical provisions. On July 18, 1998, plain-
tiff entered into one of these agreements with Macon County
Landfill.
The agreement required Macon County Landfill and its
successors to accept and dispose of all solid waste collected,
received, generated, or transported by the waste hauler, in this
case, plaintiff. The agreement required plaintiff to pay dis-
posal rates subject to a yearly adjustment. Plaintiff was
required to bring all waste it collected to Macon County Land-
fill. Attachments entitled "Exhibit A" and "Exhibit B" were
attached to the agreement. "Exhibit A," titled "Disposal Site,"
provided the name and address of the landfill. "Exhibit B,"
titled "Disposal Rates," set forth the initial rates at the
beginning of the contract. On its face, "Exhibit B" included
Macon County Landfill's address, telephone number, and hours and
days of operation, including Saturday from "7:00 to 1:30." The
body of the contract itself did not set forth requirements for
the hours and days of operation. Later, defendant became the
owner of Macon County Landfill and changed the name to Valley
View Landfill (Valley View).
On approximately January 1, 2008, defendant began
closing Valley View on Saturdays. Plaintiff complained to
defendant's personnel operating Valley View, to no avail. On
- 2 -
September 29, 2008, plaintiff filed its complaint for a declara-
tory judgment, alleging defendant breached the agreement by
failing to maintain Saturday hours at Valley View for collection
of waste and asking for a rescission of the contract. In Novem-
ber 2008, defendant reopened Valley View on Saturdays. On
November 12, 2008, defendant filed a motion to dismiss, arguing
there was no current controversy because it reopened Valley View
on Saturdays. On January 23, 2009, the trial court denied
defendant's motion to dismiss.
On September 3, 2009, plaintiff filed a motion for
summary judgment. On September 15, 2009, defendant filed a
response to plaintiff's motion for summary judgment and a motion
for summary judgment of its own. On September 21, 2009, plain-
tiff filed a response to defendant's motion for summary judgment.
On November 12, 2009, the trial court heard arguments on the
cross-motions for summary judgment. After taking the matter
under advisement, the court denied both motions for summary
judgment, finding (1) the only reasonable inference from the
evidence was that under the disposal agreement, including exhib-
its A and B attached thereto, Macon County Landfill was required
to be open for waste disposal on "Saturday from 7:00 to 1:30" and
(2) more than one reasonable inference could be drawn from the
evidence presented as to whether the Saturday closure of the
landfill was a "material and important breach" "in light of the
actual custom of persons in the performance of contracts similar
to the one involved in the specific case."
- 3 -
On January 5, 2010, a bench trial was held. David
Carter, plaintiff's current owner, testified Valley View had been
closed on Saturdays from January 2008 to November 2008. Defen-
dant presented some evidence Valley View had reopened on Satur-
days in May 2008. Carter found another landfill, Clinton Land-
fill, where he hauled his waste on Saturdays and continued to
haul it there after Valley View reopened on Saturdays. Although
Clinton Landfill was a 15- to 20-minute drive farther away than
Valley View, the parties stipulated the disposal rate at Clinton
was less expensive than that at Valley View. Carter also testi-
fied Clinton Landfill offered to take all of plaintiff's waste
for a rate $9 to $10 cheaper per ton than Valley View if plain-
tiff brought all of its waste there, thus improving plaintiff's
ability to be competitive in the marketplace.
Clifford Carter, plaintiff's previous owner, and Glenn
Lynch, previous owner of another independent garbage hauler, both
retired, testified they were part of the negotiations for the
agreement at issue as shareholders of Macon County Landfill.
Having a landfill open on Saturdays was very important to them,
and they would not have entered into the agreement absent a
provision requiring the landfill to be open on Saturdays.
Clifford and David Carter and Lynch all testified they
serviced both commercial and residential clients six days a week.
They had Saturday pickups, which were mostly commercial, and
needed a place to dump the waste collected that day. If waste
collected on Saturday sat in the their enclosed trucks until
- 4 -
Monday, there was a danger methane gas would accumulate, which
could lead to an explosion. Further, if their trucks were full
on Monday morning, they needed to begin their days with a stop at
the landfill to dump the accumulated waste before they could
start their pickup routes. This would put them behind schedule
as they would need to dispose of waste collected on Monday by the
3 p.m. closing time of the landfill on Monday. If they could not
finish their routes on Monday, they would start Tuesday's routes
behind schedule and never catch up for the week. This could
result in loss of customers and eventually the possibility of
going out of business.
David Carter was asked by defendant the costs incurred
by plaintiff for disposing of collected waste at Clinton Landfill
instead of Valley View. David Carter said he could not calculate
those costs, but he stated if he had not located Clinton Land-
fill, he would have gone out of business and those costs were
incalculable. Carter also stated, in addition to offering
plaintiff a lower rate to dispose of collected waste, Clinton
Landfill offered to purchase CC Disposal, Inc., from him and the
value of his business would be higher if it was free of the
contract with Valley View.
Christopher Rooney, regional manager for defendant,
testified he did not know why defendant stopped opening Valley
View on Saturdays as he did not work for it then. He presented
one disposal receipt for a private individual for a Saturday in
May 2008 to show Valley View was accepting waste on Saturdays.
- 5 -
Rooney testified to defendant's corporate plan of "vertical
integration" which meant both the taking over of independent
waste haulers by defendant in order to assure a steady supply of
waste for its landfills but also the entering into of long-term
contracts for independent haulers to bring their waste exclu-
sively to defendant's landfills. Rooney admitted the trend in
the waste-disposal industry was for large companies running many
landfills to obtain the hauling businesses supplying their
landfills.
Rooney was also asked to describe adjustments plaintiff
could have made to his business to eliminate the need for Satur-
day landfill service. He prefaced his testimony by saying he was
not familiar with how plaintiff's business was operated.
In closing argument, plaintiff argued one of the
primary purposes of the agreement in question was for the land-
fill to accept waste on Saturdays and the agreement would not
have been entered into without this provision, thus justifying
rescission based on a material breach. Defendant argued plain-
tiff failed to prove it lacked an adequate remedy at law, i.e.,
money damages, thus failing to prove a qualification for an
equitable remedy. Further, defendant argued plaintiff was
motivated to seek rescission instead of money damages due to
Clinton Landfill's offer to accept plaintiff's collected waste at
a lower rate.
The trial court found Valley View had been closed on
Saturdays from January 2008 to November 2008 but maintained
- 6 -
Saturday hours from November 2008 to the date of trial. However,
because Saturday hours were so important to waste haulers, the
court concluded defendant materially breached the agreement.
Accordingly, the court ordered rescission of the contract.
II. ANALYSIS
A. Contract Requirement of Maintaining Saturday Hours
Defendant argues the content of the agreement should
have led the trial court to conclude the agreement did not
require Saturday hours. Absent from the agreement is any term
explicitly requiring particular hours at the landfill. The sole
reference to hours is in an attachment to the contract entitled
"Exhibit B." Defendant argues the agreement does not purport to
incorporate the entirety of exhibit B into the contract as the
only reference to exhibit B in the body of the agreement is to
the initial rates for disposal of waste.
Defendant cites case law dealing with the interpreta-
tion of contract terms, such as whether terms are plain or
unambiguous. Plaintiff counters, arguing even if the contract
terms are ambiguous, thus allowing for extrinsic evidence to be
presented for interpretation of the meaning of the terms, defen-
dant forfeited his right to present such evidence because he did
not attempt to introduce it in the trial court.
The real issue here is not whether the words dealing
with hours of operation are ambiguous; they are clear. The issue
is whether "Exhibit B," an attachment to the contract, is part of
the contract and, therefore, its provisions are enforceable as
- 7 -
any other provision of the contract. The trial court found
exhibit B to be a part of the contract and Macon County Landfill
(predecessor of Valley View) would be open for and available for
waste disposal on Saturdays from 7 to 1:30 based on all the
evidence before it at the hearing on the cross-motions for
summary judgment. The evidence included an affidavit from Glenn
Lynch, who helped negotiate the agreement, stating a provision
for Saturday hours of operation was important to the agreement
and, thus, the provision for Saturday hours was included in the
agreement.
While it might have been clearer for the parties
negotiating the agreement to have included the hours the landfill
was required to be open in the body of the agreement, the attach-
ment "Exhibit B" was part of the agreement and set forth the
hours of operation for the landfill. Provision for modifying the
agreement is provided in article XIV of the agreement. If
defendant wanted to change a term or condition of the agreement,
it should have negotiated a written modification as provided
instead of unilaterally deciding to close the landfill on Satur-
day. The trial court did not err in finding "Exhibit B" to be
part of the contract agreed to by plaintiff and defendant's
predecessor. Defendant does not argue it is not bound to the
agreement as the successor owner of the Macon County Landfill.
Thus, defendant is required to open Valley View on Saturdays.
B. Did Adequate Remedy at Law Exist
Rescission of a contract is an equitable remedy. 23-25
- 8 -
Building Partnership v. Testa Produce, Inc., 381 Ill. App. 3d
751, 757, 886 N.E.2d 1156, 1163 (2008). "An equitable remedy is
not available where there is an adequate remedy at law." Newton
v. Aitken, 260 Ill. App. 3d 717, 720, 633 N.E.2d 213, 216 (1994).
Defendant argues rescission is not an available remedy in this
case as plaintiff had an adequate remedy at law.
A trial court's decision no adequate remedy at law
exists is reviewed for abuse of discretion. See Levitt Homes,
Inc. v. Old Farm Homeowners' Ass'n, 111 Ill. App. 3d 300, 317,
444 N.E.2d 194, 205 (1982). If a party's injury can be ade-
quately compensated through money damages, it has an adequate
remedy at law. See Lumbermen's Mutual Casualty Co. v. Sykes, 384
Ill. App. 3d 207, 230-31, 890 N.E.2d 1086, 1106 (2008). A party
seeking equitable relief has the burden of proving the inadequacy
of a legal remedy. See Kerasotes v. Estate of Kerasotes, 238
Ill. App. 3d 1020, 1030-31, 605 N.E.2d 643, 651 (1992).
Defendant argues the trial court abused its discre-
tion by failing to even consider whether an adequate remedy at
law existed and plaintiff did not meet its burden of proof in
proving the inadequacy of a legal remedy as money damages were
available to plaintiff and the contract need not have been
rescinded.
Defendant argues while David Carter testified he did
not know how damage to plaintiff could be calculated, defendant
contends the injuries plaintiff sustained were easily calculable.
The cost differential between disposing of waste at Valley View
- 9 -
Landfill and Clinton Landfill was stipulated to by the parties
and was negligible as noted by the trial court in its ruling on
the cross-motions for summary judgment. The court made the
finding Valley View was closed Saturdays for 11 months. Costs
for gasoline, excess mileage, and additional travel time could
have easily been calculated for those Saturdays. Economic damage
such as wear and tear on plaintiff's waste-hauling vehicle could
also be calculated. Taken together with the fact defendant had
reopened on Saturdays, plaintiff had an adequate remedy at law.
Defendant maintains plaintiff chose not to make calcu-
lations and present its damages. Plaintiff cannot avoid a legal
remedy by simply refraining from doing the simple math necessary
to calculate damages. Defendant contends--without any
explanation--(1) the trial court failed to consider the avail-
ability of legal remedy for plaintiff, thus abusing its discre-
tion and (2) rescission, an equitable remedy, is inappropriate
under these circumstances.
The trial court should have made a specific finding
plaintiff had no adequate remedy at law before proceeding to
consider equitable relief in the form of a rescission of the
contract. However, the court did not abuse its discretion in
ordering equitable relief in this case. Defendant's speculations
about how damages could be calculated were just that, specula-
tive, and the court was right to ignore them. David Carter,
owner of plaintiff, stated he did not know how to calculate the
damages sustained by plaintiff. Plaintiff was fortunate to find
- 10 -
another landfill to take its collected waste on Saturdays or it
would have been forced out of business. It is impossible to put
a dollar value on that.
Defendant argues even if the trial court found a breach
in the agreement, it could have ordered money damages to make
plaintiff whole and kept the original contract in place, preserv-
ing the original intent of the parties--the sale of the landfill
by the original shareholders of the landfill corporation and a
steady supply of waste for the new owners. A major portion of
the intent of the parties was the landfill be operated on Satur-
days for waste collection. Closing of Valley View on Saturday by
defendant destroyed the original intent of the parties.
C. Material Breach Justifying Rescission
Defendant argues rescission of the waste-disposal
agreement is a harsh result where defendant, successor of the
party involved in the contract negotiations, was deemed to have
committed a material breach by violating a contractual provision
which did not clearly appear on the face of the agreement, thus
leading defendant to interpret it as not constituting part of the
agreement.
Rescission is the cancellation of a contract and the
restoration of the parties to their status before the contract.
Newton, 260 Ill. App. 3d at 719, 633 N.E.2d at 216. Rescission
of a contract is an "extraordinary remedy." Finke v. Woodard,
122 Ill. App. 3d 911, 916, 462 N.E.2d 13, 16 (1984). However, a
material breach of a contract justifies rescission. Newton, 260
- 11 -
Ill. App. 3d at 719, 633 N.E.2d at 216. Defendant contends
contracts should not be rescinded unless the failure of the party
to perform is a total one. "The object of the contract must have
been defeated or rendered unattainable by his misconduct or
default." Weintz v. Hafner, 78 Ill. 27, 29 (1875). Orders of
rescission are reviewed for abuse of discretion. Newton, 260
Ill. App. 3d at 719, 633 N.E.2d at 215-16.
Defendant contends plaintiff proved only defendant's
failure to maintain Saturday hours resulted in a minor inconve-
nience and expense that could be cured by monetary damages.
Saturday closings did not fundamentally defeat the object of the
contract. Valley View was closed to plaintiff 48 of approxi-
mately 3,500 business days from the time of the execution of the
agreement to the date of the trial (about 1% of the days).
Defendant argues rescission should be a remedy of last resort;
used only where total breach occurred. Pursuant to the agree-
ment, plaintiff continued to haul waste to Valley View on week-
days and it was accepted there. Defendant contends finding this
conduct fundamentally defeated the contract was an abuse of
discretion.
Defendant argues rescission is particularly inappropri-
ate where a party is seeking redress on the basis a contract
later became inconvenient or ill-advised. David Carter testified
Clinton Landfill offered to take all of plaintiff's waste at $9
to $10 per ton cheaper than defendant, which would improve
plaintiff's ability to remain competitive in the marketplace.
- 12 -
Carter also testified Clinton offered to purchase his business
and the business would be more attractive to a potential buyer
without the agreement with defendant. It is not the duty or
function of a court to grant rescission of a contract voluntarily
entered into between competent parties because the agreement
later is "thought unwise or improvident." Scott & Fetzer Co. v.
Montgomery Ward & Co., 129 Ill. App. 3d 1011, 1022, 473 N.E.2d
421, 430 (1984). However, no evidence showed plaintiff had any
dealings with Clinton Landfill at all until defendant breached
its agreement with plaintiff or that plaintiff wanted out of the
agreement with defendant until after the breach.
When determining whether a breach is material, the test
for materiality is whether a breach is of such nature and impor-
tance, if anticipated in advance, the agreement would not have
been made. Galesburg Clinic Ass'n v. West, 302 Ill. App. 3d
1016, 1018, 706 N.E.2d 1035, 1037 (1999). Lynch and Clifford
Carter testified, if independent garbage haulers had anticipated
the then Macon County Landfill would not be open on Saturdays,
they never would have signed the agreement prohibiting them from
dumping at any other landfill.
In considering whether a breach of contract is mate-
rial, the trial court should consider several other factors
according to the Restatement (Second) of Contracts. Specifi-
cally, the court should consider (1) the extent to which the
injured party will be deprived of the benefit he reasonably
expected; (2) the extent to which the injured party can be
- 13 -
adequately compensated for the part of the benefit of which he
will be deprived; (3) the extent to which the party failing to
perform will suffer forfeiture; (4) the likelihood the party
failing to perform will cure his failure, taking account of all
the circumstances; and (5) the extent to which the behavior of
the party failing to perform comports with standards of good
faith and fair dealing. Rubloff CB Machesney, LLC v. World
Novelties, Inc., 363 Ill. App. 3d 558, 564, 844 N.E.2d 462, 467
(2006). In applying these factors, a court should keep in mind
the detrimental effect uncertainty of performance can have on
contracting parties. Restatement (Second) of Contracts §241,
Comment e, at 241 (1981).
David Carter testified not being able to dump on
Saturdays would disrupt and threaten the viability of his busi-
ness. Saturday service was of utmost importance for small,
independent operations. Plaintiff was deprived of a benefit it
reasonably expected and for which it could not adequately be
compensated. Although defendant did cure its failure by opening
the landfill, it did not do so until after plaintiff filed this
lawsuit, thus raising the question of whether its actions com-
ported with standards of good faith and fair dealing. Defendant
will suffer forfeiture of its contract with plaintiff, but that
does not outweigh the other factors. Plaintiff was entitled to
certainty of performance on the part of defendant.
Under these circumstances, it was not an abuse of
discretion for the trial court to fully rescind the solid-waste-
- 14 -
disposal agreement between plaintiff and defendant.
III. CONCLUSION
For the foregoing reasons, we affirm the trial court's
judgment.
Affirmed.
STEIGMANN and POPE, JJ., concur.
- 15 -