PITTSBURGH – A state court judge has overruled preliminary objections filed by West Mifflin Area School District, in litigation it is now facing from a school bus company that alleged the District breached the contract between the two parties.
Sun Coach Lines, LLC of McKeesport first filed suit in the Allegheny County Court of Common Pleas on Nov. 15 versus West Mifflin Area School District, of West Mifflin.
“Sun Coach provides school bus transportation for Pennsylvania school districts and their students throughout the Western and Central Pennsylvania regions, including WMASD. Sun Coach provides school bus transportation for WMASD pursuant to a Transportation Agreement entered into by the parties as of July 1, 2016 and terminating June 30, 2026,” the suit said.
“The Transportation Agreement is a bulk rate or ‘Requirements’ contract whereby Sun Coach was to provide all transportation needs for the WMASD for a set yearly fee. Bulk rate or ‘Requirements’ contracts are risk assessment based contracts where the carrier is pressed to be as efficient as possible and use the least number of buses to transport students. The greater the number of buses required, the less profitable the fixed price contract becomes. There have been few, if any, problems in the business relationship between Sun Coach and WMASD under the Transportation Agreement.”
The suit added that Paragraph 20 of the Transportation Agreement provides that “in the event of unusual circumstances, such as changes in state or federal taxes, laws or specifications, increased insurance or surety premiums or any other condition which causes any of the Contractor’s operating costs hereunder to increase at a rate in excess of any negotiated escalation increases, then the parties shall determine a reasonable and just amount to cover such increase.”
Furthermore, the suit continued that since 2021, there has been a well-documented regional and national shortage of school bus drivers, the defendant was aware of the shortage and despite the shortage, the plaintiff has continued to provide all of its required services per the agreement with the defendant.
“However, to combat this shortage and to maintain the drivers who operate for the benefit of WMASD, Sun Coach has had to raise the hourly rate paid to its drivers from $21/hour to $29/hour. This was undertaken to match the rates being paid by school districts in other local areas. Despite no adjustment in the amount paid by WMASD, Sun Coach has paid the WMASD drivers $29/hour since Aug. 23, 2021 (the first quarter of the 2021-2022 school year), for a total additional expense of $283,522.68 for the 2021-2022 school year. Sun Coach has continued its increased pay levels for its drivers for the 2022-2023 school year, and in doing so has successfully managed to keep its drivers servicing the WMASD contract. Sun Coach’s total additional expense for the 2022-2023 school year is $348,635.94, for a total additional expense of $632,158.65,” the suit stated.
“Accordingly, counsel for Sun Coach and then-solicitor for WMASD had informal and productive discussions throughout 2022 regarding adjusting the Transportation Agreement pursuant to Paragraph 20 of that Agreement in order to address the additional costs incurred by Sun Coach to combat the driver shortage. Sun Coach reduced its request to writing on Oct. 17, 2022. On that date, Sun Coach learned that the solicitor at WMASD had changed, and the new solicitor, Andrews & Price, responded in writing via email on Nov. 10, 2022. In that email, the solicitor for WMASD indicated that WMASD categorically refused to pay any portion of the additional expenses incurred by Sun Coach during the 2021-2022 school year, despite the fact that WMASD previously indicated a willingness to do so, and Sun Coach relied on that promise in continuing to negotiate in good faith into the 2022-2023 school year. WMASD also informed Sun Coach on Nov. 10, 2022 that it ‘would be willing to have discussions toward paying an amount approximating the 2022-2023 request of $348,635.94, but would require the parties’ contract to terminate at the end of 2022-2023 to do so.”
The suit argued that the well-publicized bus driver shortage is plainly an “Industry Change” and/or “unusual circumstance” that requires the parties to “determine a reasonable and just amount” to cover Sun Coach’s increased operating costs under Paragraph 20 of the parties’ Transportation Agreement, and that by refusing to comply with Paragraph 20 of the Transportation Agreement, WMASD is blatantly and in bad faith breaching the Transportation Agreement.
WMASD filed preliminary objections in the case on Dec. 9, arguing that the suit’s count for unjust enrichment should be thrown out for lack of sufficiency in the pleading.
“Sun Coach’s claim for unjust enrichment should be dismissed because Sun Coach fails to plead any facts other than an express contract between the parties. A claim for unjust enrichment arises from a quasi-contract. A quasi-contract imposes a duty, not as a result of any agreement, whether express or implied, but in spite of the absence of an agreement, when one party receives unjust enrichment at the expense of another,” the objections stated.
“The elements of unjust enrichment are benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. A cause of action for unjust enrichment arises only when a transaction is not subject to a written or express contract. While a claim asserting a breach of contract may be pleaded alternatively with the claim of unjust enrichment, the claims raised in the separate counts of the complaint must allege that there is not an express contract.”
The defendants countered that because Sun Coach has not pled any other theory of contract except the express contract, it cannot proceed on a claim of unjust enrichment.
“If a plaintiff fails to prove a cause of action on an express contract, he may not then attempt to prove his case in quasi-contract, unless his complaint originally, or as amended, sets forth a cause of action in quasi-contract. Based upon the foregoing, the District respectfully requests that this Honorable Court enter an order dismissing Count II of Sun Coach’s complaint, sounding in unjust enrichment,” the objections concluded.
The plaintiffs submitted an opposition brief to the objections on Dec. 28, which countered them and sought their overruling by the presiding judge.
“Defendant’s sole objection seeks to dismiss Sun Coach’s ‘unjust enrichment’ claim with prejudice. Detrimental to defendant’s preliminary objections is that there is no claim for unjust enrichment in the complaint. Instead, there are claims for breach of contract and promissory estoppel. A claim for promissory estoppel requires different elements than a claim for unjust enrichment and, therefore, is not interchangeable. Because defendant’s preliminary objections are for a non-existing claim, the objections should be overruled as moot,” the brief stated.
“Sun Coach’s complaint alleges that WMASD promised Sun Coach that it would negotiate the resolution of Sun Coach’s increased expenses in good faith despite having no intentions to do so. Relying on WMASD’s representations, Sun Coach continued to operate and service the WMASD for the 2022-2023 school year. In accepting all factual allegations as true and gleaning all reasonable inferences from the complaint in favor of the non-moving party, it is reasonable for this Court to infer Sun Coach would have ceased operations if WMSAD had not insisted on continued negotiations which WMSAD had no intention of following through on. Because of WMSAD’s representations, Sun Coach’s operating expenses continued to accrue and it is operating at a loss due to the increased driver cost. Sun Coach has adequately pleaded its claim for promissory estoppel to surpass the preliminary objection stage.”
UPDATE
On Feb. 2, Allegheny County Court of Common Pleas Judge Alan D. Hertzberg overruled the defense’s preliminary objections.
“Upon consideration of the preliminary objections filed by defendant West Mifflin Area School District, the response filed by plaintiff and after oral argument, it is hereby ordered that defendant’s preliminary objections are overruled,” Hertzberg said.
For counts of breach of contract and unjust enrichment/promissory estoppel, the plaintiff is seeking damages exceeding $50,000 and costs and expenses of this litigation, along with such other relief as the Court deems just and proper.
The plaintiff is represented by Ray F. Middleman and Shane D. Valenzi of Whiteford Taylor & Preston, in Pittsburgh.
The defendant is represented by Joseph W. Cavrich and Casey P. Rankin of Andrews & Price, also in Pittsburgh.
Allegheny County Court of Common Pleas case GD-22-014026
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com