808 F. Supp. 2d 853
W.D. Va.2011Background
- Traxys and Concept entered into a written coal sales contract dated Dec 17, 2007 for ~4,000 tons/month at $78/ton, with a 1-year term (2008) and two optional 1-year extensions (2009, 2010) under a Special Provisions collar of $73–$83/ton.
- The contract included a General Terms and Conditions provision allocating damages and making remedies exclusive, and a New York choice-of-law clause applicable under UCC 2-107(a).
- Concept, after acquiring by AM in 2008, repudiated or failed to perform 2009 coal deliveries and did not provide delivery schedules, while Traxys maintained it could perform and sought 2009 and 2010 tonnage under the contract.
- Traxys exercised its 2009 option under the Special Provisions on Oct 17, 2008, but Concept did not deliver 2009 coal or schedule deliveries; later communications suggested ongoing disputes about the contract’s existence.
- Traxys alleged breach of contract for 2008 shortfalls and failure to deliver 2009 and 2010 tonnage; the court awarded damages totaling $4,167,760 based on market-priced shortfalls.
- The court determined that Concept breached in 2009 and that Traxys remained ready to perform for 2010, despite no formal 2010 election, resulting in liability for 2010 damages as well.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract term and binding extension | Contract includes two 1-year options for 2009 and 2010. | Contract term is only 1 year with termination provisions; options are illusory. | Contract contemplated 1-year term with two reciprocal options for 2009 and 2010. |
| 2009 tonnage obligation and repudiation | Traxys validly elected 2009 tonnage; Concept breached by failing to deliver. | Traxys' conduct and silence excused Concept's nonperformance; no delivery schedules. | Concept breached 2009; Traxys entitled to remedies for 2009. |
| 2010 tonnage and election requirement | No further formal election needed after 2009 breach; damages for 2010 allowed. | Election required for 2010; no valid election. | Concept liable for 2010 damages; Traxys not required to make a futile election. |
| Damages calculation | Damages based on market price vs contract price; expert Schwartz credible. | Ash content and other factors reduce market price; Scott’s method unreliable. | Damages awarded: $42,696 (2008), $800,367 (2009), $3,324,697 (2010) = $4,167,760 total; Schwartz favored. |
| Remedies and costs | Exclusive remedy provisions cap damages and allow prejudgment interest and legal costs. | Costs and interest should follow standard procedures. | Judgment for principal damages; separate order to address prejudgment interest and legal costs. |
Key Cases Cited
- Terwilliger v. Terwilliger, 206 F.3d 240 (2d Cir. 2000) (contract interpretation—ambiguity and extrinsic evidence relevance under NY law)
- First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162 (2d Cir. 1998) (breach claim elements under New York law)
- Compagnie Financiere de CIC et de l'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153 (2d Cir. 2000) (contract ambiguity and interpretation; reliance on integrated agreement)
- Nycal Corp. v. Inoco PLC, 988 F. Supp. 296 (S.D.N.Y. 1997) (extrinsic evidence when contract language is ambiguous)
- Broadwall Am., Inc. v. Bram Will-El LLC, 32 A.D.3d 748 (N.Y. App. Div. 2006) (option contract viability and exercise timing under NY law)
- New Windsor Volunteer Ambulance Corps., Inc. v. Meyers, 442 F.3d 101 (2d Cir. 2006) (material breach and contract remedies under NY law)