CC Disposal v. Veolia ES Valley View Landfill

• Court: Appellate Court of Illinois
• Decided: December 22, 2010
• Docket: 4-10-0230 Rel
• Status: Published

Opinion

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

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 -