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$15 Million Settlement in Case of Contract and Verbal Assurances

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Michael B. Pasternak, Attorney at Law, Beachwood, Ohio

Culminating 12 years of litigation, Ohio Attorney Michael B. Pasternak recovered $15.6 million in a breach of contract case between to paving companies based on a one-page handwritten agreement and oral assurances to build an asphalt plant in Ohio.

The settlement, which rises to $24 million when $8.4 million in prejudgment interest is added, came after mediation in Cranpark Inc. v. Rogers Group, Inc., No. 10-4143, US District Court for the Northern District of Ohio.

The tortuous case was filed in 2004, was dismissed in 2010 on the defendant's motion for summary judgment, was revived by the Sixth US Circuit Court of Appeals in April 2012, was tried to a $15.6 million verdict in 2013, was dismissed in post-trial motions, and was again revived by the Sixth Circuit in April 2016.

Attorney Jon Yarger tried the case for nearly 10 years with Pasternak, but Yarger did not live to see the final outcome and died in August 2015.

Plan for asphalt plant

The case began in 1998 when Rogers Group (RGI), a Nashville-based corporation doing business in Ohio, sought out Hardrives (Cranpark is the successor in interest). RGI, which sells construction aggregate, wanted Hardrives to build a new asphalt plant in Youngstown, facilitate rail access, share development of logistics and costs, coordinate local development and zoning, and be a RGI customer.

For six months starting in March 1998, RGI salesman Tom Stump and RGI Vice President Greg Gould held meetings with Hardrives' founder James Sabatine to discuss the plans.

Cranpark argued that the parties agreed to jointly establish a facility in Youngstown that would house both a new asphalt plant for Hardrives and a distribution terminal for RGI.

On September 1, 1998, Gould and Sabatine memorialized certain terms on a single
handwritten sheet of notebook paper. The writing lists prices for specific types of aggregate, along with additional terms, including a minimum purchase requirement of 210k tons of aggregate to obtain the listed prices, rail transport at $4.00 or less.


Cranpark argued it was a contract; RGI argued it was an incomplete and conditional writing. Based on assurances from RGI, Hardrives ordered a $1.5 million asphalt plant on Dec. 15,

Cranpark argued it was a contract; RGI argued it was an incomplete and conditional writing. Based on assurances from RGI, Hardrives ordered a $1.5 million asphalt plant on Dec. 15, 1998 and began placing bids for projects based on the prices set forth in the agreement.

Cranpark argued that RGI used the prices in the Youngstown deal to negotiate a separate, better deal for rail service to RGI's Macedonia, Ohio, distribution terminal. In February 1999 Stump told Sabatine that RGI was walking away from the deal. Gould also wrote a letter on March 11, 1999, stating that the 1998 handwritten agreement was not a contract.

Cranpark argued that promissory estoppel applied to prevent RGI from denying the existence of the contract:

  • RGI induced Hardrives into believing there was a viable contract, including jointly printing and distributing literature about the Youngstown plant.
  • Hardrives relied on the agreement and used RGI aggregate to design all of its mixes including a $6 million airport project.
  • Hardrives reasonably relied on RGI's representations, including 25 organizational meetings, celebration dinners after the City of Youngstown Council approved their agreement, RGI's hiring of a Youngstown plant manager and RGI's furnishing of a detailed schematic drawing for planned storage facilities.
  • Hardrives relied to its detriment, went out of business and was forced to sell most of its assets to meet its debt.

In its Sep 5, 2012, ruling reviving Cranpark's case, the Sixth Circuit held, "the fact that the September 1, 1998 writing does not explicitly reference a joint facility does not preclude a finding that creating such a facility was the predominant purpose of the writing. Gould admitted in his deposition that RGI wanted a low-risk, low capital project and therefore wanted "to have free land, a tax abatement for five years, not pay for any capital improvements for rail access ... have a locked in price for railing in the aggregate ... [and] multiyear pricing for Hardrives." These terms are all included in the September 1, 1998 writing."

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