CSX Transp., Inc. v. Recovery Express, Inc.

Freight railroad CSX Transportation Inc. (CSX) sued alleging Recovery Express Inc. (Recovery) and Interstate Demolition and Environmental Corp. (IDEC) (defendants) failed to pay after buying out-of-service railcars from CSX. Recovery and IDEC were separate businesses but used the same address. Recovery officers Thomas Trafton and Nancy Marto partnered in IDEC as a joint venture with Albert Arillotta and another person. Because of Trafton’s and Marto’s interests, Recovery shared offices, telephones, fax machines, and e-mail services with IDEC. Arillotta sent an e-mail from albert@recoveryexpress.com to Len Whitehead Jr. at CSX expressing interest in buying railcars for scrap from their existing location, CSX’s railyard. Despite never having worked for Recovery, Arillotta said he was “from interstate demolition and recovery express we are interested in buying rail cars for scrap paying you a percentage of what the amm market indicator is” without capitalization or punctuation. Whitehead and Arillotta subsequently spoke by telephone and proceeded with the deal. CSX allegedly prepared and sent sales-order forms confirming the terms. Arillotta went to CSX’s railyard, disassembled the railcars, and hauled them away. When CSX sent IDEC invoices for the railcars totaling $115,757, Marto called Whitehead, but evidently Arillotta had told Whitehead not to speak to Marto as Whitehead did not return Marto’s calls until a check from Arillotta purporting to pay the invoices bounced. Recovery and IDEC refused to pay, and CSX sued for breach of contract and on equitable grounds to recover the $115,757. Whitehead said he believed Arillotta was representing and authorized to act for both Recovery Express and IDEC because of Arillotta’s statements to him and Recovery email address. Meanwhile, IDEC became defunct because of fraud by Arillotta and failed to appear in the lawsuit.