JLM Tank Truck Service, Inc. v. Star Enterprise

97-1726 (U.S. Dist. Ct. D. N.J. 1999) (Unpublished)
  • Opinion Date: March 2, 1999

CONTRACTS; ORAL AGREEMENTS—Communications between parties following an alleged contract breach can be evidentiary of the terms of the alleged contract.

A trucking company alleged that a gasoline distributor entered into a three year oral contract wherein the distributor offered and promised to make branded gasoline and diesel products available to the trucking company for interstate transportation and thereafter honored the contract for only twenty-three months. The trucking company contended that the oral agreement was enforceable because it was a “motor contract carrier” within the meaning of the Interstate Commerce Commission Termination Act of 1995 (ICCTA) and that the ICCTA preempts state contract law, including the statute of frauds. In addition, it contended that in the motor contract carrier industry, oral contracts are considered binding “as long as there is a history of performance between the carrier and the shipper evidencing a contract.” The gasoline distributor responded that the alleged oral contract was not governed by the ICCTA because the carrier was not a “motor contract carrier” until it received an operating permit from the Federal Highway Administration nearly two years after it began transporting petroleum products for the distributor. Although the carrier’s status as a “contract carrier” was a hotly contested issue, the Court was unable to resolve it based on the record. However, giving the carrier the benefit of all favorable inferences, there was no evidence in the record that could reasonably support a finding that an oral contract existed. This was true despite the testimony of the carrier’s president that he negotiated and ratified the contract terms with the distributor’s representative and that the distributor actually performed for two years prior to the alleged breach, implying that such performance was evidence of the oral contract. It turned out, however, that the individual thought to be the distributor’s representative was, in fact, an employee of the petroleum products manufacturer and that the trucking company never alleged or otherwise suggested that it believed the representative to have the authority to bind the distributor. In addition, although the two year performance was surely evidence of an ongoing business relationship, the Court did not find that it lent support to the carrier’s claim of a three year contract, as opposed to a two year contract, or an at-will contract. Most damaging to the carrier’s claim, however, was the fact that it subsequently participated in a contract bidding process that covered a three year period inclusive of the final year of the alleged three year contract. That is, the carrier was bidding for a contract that allegedly it had already made. In addition, in the course of the bidding process, the distributor wrote four letters, none of which made any mention of the alleged oral contract. In fact, after its bid was rejected, when it wrote of its disappointment with not having been chosen as the carrier, it still did not write of its belief that its oral three year contract still had one year to run.