1006-00005 · Crestline Packaging Solutions LLC · Pleadings

original-petition.docx DOCUMENT Litigation

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CAUSE NO. 342-2021-04871-TX

IN THE 342ND JUDICIAL DISTRICT COURT

TARRANT COUNTY, TEXAS

PLAINTIFF'S ORIGINAL PETITION

TO THE HONORABLE JUDGE OF SAID COURT:

Plaintiff Crestline Packaging Solutions LLC ("CPS") files this Original Petition against Defendant Ridgeway Freight Services Inc. ("Ridgeway") and respectfully shows the Court as follows:

I. DISCOVERY CONTROL PLAN

1. Plaintiff intends that discovery be conducted under Level 2 of Texas Rule of Civil Procedure 190.3.

II. PARTIES

2. Plaintiff Crestline Packaging Solutions LLC is an Ohio limited liability company duly organized and existing under the laws of the State of Ohio, with its principal place of business located at 4500 Needmore Road, Dayton, Ohio 45424. CPS is authorized to transact business in the State of Texas and maintains ongoing commercial operations within this State. CPS may be served through its counsel of record, Calderwood & Harkness LLP, 1001 Fannin Street, Suite 4200, Houston, Texas 77002.

3. Defendant Ridgeway Freight Services Inc. is a Texas corporation organized and existing under the laws of the State of Texas, with its principal place of business located at 7200 East Lancaster Avenue, Fort Worth, Texas 76112. Ridgeway may be served with process through its registered agent, National Registered Agents of Texas Inc., at 1999 Bryan Street, Suite 900, Dallas, Texas 75201.

III. JURISDICTION AND VENUE

4. This Court has subject-matter jurisdiction over this action because the amount in controversy exceeds the minimum jurisdictional limits of this Court. CPS seeks monetary damages in excess of $1,000,000.00, exclusive of interest, costs, and attorneys' fees.

5. Venue is proper in Tarrant County, Texas, pursuant to:

(a) Section 14.4 of the Master Transportation Services Agreement between CPS and Ridgeway dated April 15, 2019 (the "MTSA"), which provides that exclusive venue for any dispute arising out of or related to the MTSA shall lie in a court of competent jurisdiction in Tarrant County, Texas; and

(b) Texas Civil Practice and Remedies Code §15.002(a)(1), because all or a substantial part of the events or omissions giving rise to the claims asserted herein occurred in Tarrant County, Texas, and because Ridgeway's principal office is located in Tarrant County, Texas.

IV. FACTUAL BACKGROUND

6. On or about April 15, 2019, CPS and Ridgeway entered into the MTSA, a written agreement pursuant to which Ridgeway agreed to provide full truckload ("FTL") and less-than-truckload ("LTL") freight transportation services to CPS for the shipment of CPS's corrugated packaging products, specialty containers, and related materials between CPS's manufacturing and distribution facilities located in Ohio, Indiana, and Texas. The specific rates applicable to Ridgeway's transportation services were set forth in the Rate Schedule attached as Exhibit B to the MTSA (the "Rate Schedule"). The fuel surcharge formula governing fuel-related adjustments to the base transportation rates was set forth in Exhibit C to the MTSA (the "Fuel Surcharge Schedule"). The MTSA, together with all exhibits and schedules attached thereto, constituted the complete agreement between the parties with respect to the transportation services described therein.

7. The MTSA and its Rate Schedule established specific, negotiated rates for each of the primary shipping lanes serviced by Ridgeway on behalf of CPS. The per-mile FTL rates for the principal shipping lanes were as follows:

(a) Ohio to Texas (OH→TX): $2.18 per mile;

(b) Indiana to Texas (IN→TX): $2.04 per mile; and

The Rate Schedule further established per-hundredweight LTL rates of $14.60 per hundredweight ("cwt") for Class 70 shipments. The Fuel Surcharge Schedule set forth in Exhibit C provided that fuel surcharges were to be calculated using the U.S. Department of Energy ("DOE") Weekly Retail On-Highway Diesel Price as published for the same week in which the shipment was tendered by CPS to Ridgeway. Additionally, the MTSA provided for a 2.5% annual rate escalator, effective each April 15 beginning April 15, 2020, applicable to base transportation rates only and expressly excluding the fuel surcharge component.

8. CPS performed all of its obligations under the MTSA in a timely and satisfactory manner. CPS tendered its shipments to Ridgeway in accordance with the scheduling and notification requirements of the MTSA, provided accurate load information and documentation, maintained insurance as required, and cooperated fully with Ridgeway's drivers and dispatchers in the loading and unloading of freight at CPS's facilities.

9. CPS further performed its payment obligations under the MTSA by making timely payment of all invoices rendered by Ridgeway within the net-thirty-day payment terms specified in MTSA §10.1. During the period from approximately February 2019 through March 2021—a span of approximately twenty-six (26) months—Ridgeway submitted a total of 9,843 invoices to CPS. These invoices totaled $12,318,209.46 in the aggregate. CPS paid each of these invoices in full and within the contractually specified payment period.

10. In early 2021, CPS engaged an independent freight audit firm to conduct a comprehensive review of all invoices submitted by Ridgeway during the term of the MTSA. That audit revealed that Ridgeway had systematically overbilled CPS by a total of $1,847,632.19. The correct aggregate amount due to Ridgeway under the contractual rates and formulas set forth in the MTSA was $10,470,577.27—not the $12,318,209.46 that Ridgeway invoiced and CPS paid. The overcharges identified by the audit fall into four distinct categories:

(a) Inflated Per-Mile Rates: $1,104,891.53. On 4,217 of the 9,843 invoices submitted by Ridgeway—representing approximately 42.8% of all invoices—Ridgeway applied per-mile FTL and LTL rates that were between 8% and 12% higher than the rates set forth in the Exhibit B Rate Schedule. The inflated rates were not authorized by the MTSA, were not the product of the contractual 2.5% annual rate escalator, and were not supported by any written amendment or modification to the Rate Schedule. The total overcharge attributable to these inflated per-mile rates is $1,104,891.53.

(b) Improper Fuel Surcharge Calculations: $387,412.66. Ridgeway calculated fuel surcharges on its invoices using a seven-day lagging DOE Weekly Retail On-Highway Diesel Price index—that is, the DOE diesel price published for the week prior to the week of shipment—rather than the same-week DOE diesel index expressly required by Exhibit C to the MTSA. During periods of rising diesel prices, this methodology systematically produced fuel surcharges lower than those properly due; conversely, during periods of falling diesel prices, this methodology systematically produced fuel surcharges higher than those properly due. Over the course of the 26-month period, the net effect of Ridgeway's deviation from the contractually required fuel surcharge formula resulted in aggregate overcharges to CPS in the amount of $387,412.66.

(c) Unauthorized Accessorial Charges: $241,008.00. Ridgeway billed CPS for liftgate service fees, detention charges, and re-delivery fees totaling $241,008.00. These accessorial charges were not authorized under the terms of the MTSA, which required prior written approval from CPS for any accessorial charges. Ridgeway did not obtain such prior written approval for any of the accessorial charges at issue. Moreover, Ridgeway failed to provide the delivery documentation required by MTSA §7.3 to substantiate the purported basis for such charges. CPS did not request liftgate services, did not cause detention, and did not request or require re-delivery on the occasions in question.

(d) Duplicate Invoices: $114,320.00. Eighty-three (83) invoices submitted by Ridgeway were duplicates of prior invoices for the same shipments. CPS paid both the original and the duplicate invoices, resulting in double payments totaling $114,320.00. Ridgeway failed to identify or disclose these duplicate submissions, and failed to refund or credit the duplicate payments to CPS.

11. On February 8, 2021, CPS sent Ridgeway a written dispute notice in accordance with MTSA §11.2, identifying each of the categories of overcharges described above, providing supporting documentation from the independent freight audit, and demanding that Ridgeway correct the overbillings and remit the sum of $1,847,632.19 to CPS. Ridgeway acknowledged receipt of CPS's dispute notice on February 10, 2021, through its Vice President of Operations, Gerald T. Mayhew.

12. MTSA §11.2 provided for a thirty (30)-day good-faith resolution period following delivery of a written dispute notice, during which the parties were to attempt in good faith to resolve any billing dispute. That thirty-day period expired on March 12, 2021. Despite CPS's repeated efforts to engage Ridgeway in meaningful discussions regarding the identified overcharges—including a telephonic conference on February 25, 2021, and a written follow-up on March 4, 2021—Ridgeway failed to provide adequate relief. Ridgeway offered only a lump-sum "goodwill adjustment" of $218,500.00, representing less than 12% of the total overcharges, and categorically denied that any systematic overbilling had occurred. Ridgeway provided no audit, analysis, or documentation to support its position that the invoiced amounts were correct.

13. CPS rejected Ridgeway's inadequate offer by written correspondence dated March 15, 2021. On March 22, 2021, CPS issued a thirty (30)-day termination notice under MTSA §9.2, citing Ridgeway's material breach of the MTSA as grounds for termination. The thirty-day notice period expired, and the MTSA terminated by its terms, on April 22, 2021. Ridgeway did not cure its breach or offer any further adjustment during the notice period.

14. Prior to filing this action, CPS presented its claim to Ridgeway and demanded payment of the full amount of the overcharges by letter dated June 18, 2021, sent via certified mail to Ridgeway's principal office and to its registered agent. Through its counsel, Bartlett, Hogue & Sinclair LLP, Ridgeway rejected CPS's demand in writing on July 2, 2021. CPS has exhausted all reasonable pre-suit efforts to resolve this dispute, and this litigation has become necessary.

V. CAUSES OF ACTION

COUNT I — BREACH OF CONTRACT

15. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.

16. The MTSA is a valid, binding, and enforceable contract between CPS and Ridgeway. The MTSA was supported by adequate consideration, was executed by authorized representatives of both parties, and governed the rights and obligations of CPS and Ridgeway with respect to the transportation services provided by Ridgeway during the term of the agreement.

17. CPS fully performed all of its obligations under the MTSA, including without limitation its obligations to tender shipments in accordance with the MTSA's scheduling requirements, to provide accurate load documentation, and to pay all invoices rendered by Ridgeway within the net-thirty-day payment terms set forth in MTSA §10.1.

18. Ridgeway breached the MTSA by:

(a) billing CPS at per-mile and per-hundredweight rates in excess of the rates set forth in the Exhibit B Rate Schedule, in violation of MTSA §§4.1 and 4.2;

(b) calculating fuel surcharges using a seven-day lagging DOE diesel index rather than the same-week DOE diesel index required by Exhibit C to the MTSA, in violation of MTSA §4.3;

(c) billing CPS for liftgate, detention, and re-delivery accessorial charges without prior written authorization from CPS and without supporting delivery documentation, in violation of MTSA §§5.1 and 7.3; and

(d) submitting eighty-three (83) duplicate invoices for shipments previously invoiced and paid, in violation of MTSA §10.2 and the implied covenant of good faith and fair dealing.

19. As a direct and proximate result of Ridgeway's breach of the MTSA, CPS has suffered actual damages in the amount of $1,847,632.19, representing the aggregate amount of overcharges paid by CPS to Ridgeway in excess of the amounts properly due under the contractual rate schedules and terms of the MTSA.

COUNT II — MONEY HAD AND RECEIVED

20. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.

21. Ridgeway received from CPS the sum of $1,847,632.19 in excess of the amounts due and owing to Ridgeway under the terms of the MTSA. These funds were paid by CPS to Ridgeway in reliance on Ridgeway's invoices, which CPS has now determined overstated the amounts properly due by the aggregate sum of $1,847,632.19. Ridgeway holds these excess funds, which in equity and justice belong to CPS.

22. In equity and good conscience, Ridgeway should not be permitted to retain the sum of $1,847,632.19, which represents payments made by CPS in excess of the amounts due under the parties' agreement. CPS is entitled to recovery of $1,847,632.19 as money had and received.

COUNT III — COMMON-LAW FRAUD

23. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.

24. By submitting invoices to CPS reflecting inflated per-mile rates, improper fuel surcharge calculations, unauthorized accessorial charges, and duplicate billings, Ridgeway made material misrepresentations of fact to CPS concerning the amounts due and owing from CPS to Ridgeway under the MTSA. Each invoice submitted by Ridgeway constituted an implicit and explicit representation that the charges reflected therein were calculated in accordance with the rates, formulas, and terms of the MTSA and were properly due and owing from CPS.

25. These representations were false. The amounts billed by Ridgeway on 4,217 of 9,843 invoices exceeded the amounts that were actually due under the contractual rate schedules, fuel surcharge formulas, and accessorial charge provisions of the MTSA. The duplicate invoices represented charges for shipments that had already been invoiced and paid in full.

26. Ridgeway knew that its representations were false, or alternatively, made them recklessly and without regard to their truth or falsity. The systematic nature of the overbilling—affecting 42.8% of all invoices (4,217 of 9,843) over a 26-month period, encompassing four distinct categories of overcharges, and totaling $1,847,632.19—demonstrates that Ridgeway's conduct was not the product of isolated billing errors but rather a deliberate and sustained pattern of inflating charges beyond the contractually agreed rates and terms.

27. Ridgeway made these misrepresentations with the intent that CPS would rely upon the invoiced amounts as accurate statements of the amounts due under the MTSA and would pay the inflated sums stated therein. Ridgeway's invoices were presented to CPS as formal demands for payment, and Ridgeway expected and intended that CPS would pay the amounts stated on each invoice.

28. CPS justifiably relied on Ridgeway's invoices as accurate reflections of the amounts due under the MTSA and paid the amounts stated therein in full. CPS's reliance was reasonable given the volume of invoices, the complexity of the rate calculations, the parties' ongoing commercial relationship, and CPS's reasonable expectation that Ridgeway would comply with its contractual obligations in preparing its invoices.

29. As a proximate result of Ridgeway's fraud, CPS suffered actual damages in the amount of $1,847,632.19, representing the total amount of overcharges paid by CPS to Ridgeway.

30. Ridgeway's conduct, as alleged herein, constitutes fraud entitling CPS to the recovery of exemplary damages under Texas Civil Practice and Remedies Code §41.003. Ridgeway's systematic and sustained pattern of overbilling, involving misrepresentations on thousands of invoices over a period of more than two years, was committed with actual awareness of the falsity of the invoiced amounts, or with conscious indifference to the rights of CPS, and warrants the imposition of exemplary damages to punish Ridgeway's wrongful conduct and to deter similar conduct in the future.

COUNT IV — UNJUST ENRICHMENT

31. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.

32. In the alternative, and to the extent the Court determines that the MTSA does not govern the parties' rights with respect to any particular overcharge or category of overcharges identified herein, Ridgeway has been unjustly enriched by its receipt and retention of $1,847,632.19 in overpayments from CPS. Ridgeway obtained the benefit of these payments, which were conferred upon it by CPS in reliance on Ridgeway's inaccurate invoices. Ridgeway's retention of these overpayments is without legal justification and at the expense of CPS.

33. It would be unconscionable for Ridgeway to retain the benefit of CPS's overpayments. Under the circumstances, equity requires that Ridgeway disgorge the sum of $1,847,632.19, and CPS is entitled to restitution in that amount.

VI. DAMAGES

34. As a result of the acts and omissions of Ridgeway described herein, CPS seeks recovery of the following damages:

(a) Actual damages in the amount of $1,847,632.19, representing the total overcharges paid by CPS to Ridgeway in excess of the amounts properly due under the MTSA;

(b) Contractual interest at the rate of 1.5% per month, as provided by MTSA §10.3, calculated from the date of each overpayment through the date of judgment;

(c) Pre-judgment interest at the applicable statutory rate on all damages awarded, from the date each element of damage accrued through the date of judgment;

(d) Reasonable and necessary attorneys' fees and costs of court, as authorized by Texas Civil Practice and Remedies Code §38.001 et seq., and as may be proven at trial, including fees incurred through trial, any post-trial motions, and any appeal of this matter; and

(e) Exemplary damages pursuant to Texas Civil Practice and Remedies Code §41.003, in an amount to be determined by the trier of fact sufficient to punish Ridgeway for its fraudulent conduct and to deter similar conduct in the future.

VII. CONDITIONS PRECEDENT

35. All conditions precedent to CPS's right to recover on each of its claims asserted herein have been performed, have occurred, or have been waived, including without limitation the presentment of claims required by Texas Civil Practice and Remedies Code §38.002.

VIII. JURY DEMAND

36. Pursuant to Texas Rule of Civil Procedure 216, CPS hereby demands a trial by jury on all issues so triable and tenders herewith the appropriate jury fee.

IX. PRAYER

WHEREFORE, PREMISES CONSIDERED, Plaintiff Crestline Packaging Solutions LLC respectfully prays that upon final hearing, this Court enter judgment in favor of Plaintiff and against Defendant Ridgeway Freight Services Inc. for:

(a) Actual damages in the amount of $1,847,632.19;

(b) Contractual interest at the rate of 1.5% per month from the date of each overpayment through the date of judgment;

(d) Reasonable and necessary attorneys' fees and costs of court;

(e) Exemplary damages in an amount to be determined by the trier of fact;

(f) Post-judgment interest at the applicable legal rate; and

(g) Such other and further relief, at law or in equity, to which Crestline Packaging Solutions LLC may show itself justly entitled.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Yuki Nakamura Texas Bar No. 24098712

Carlos Espinoza Texas Bar No. 24103548

1001 Fannin Street, Suite 4200 Houston, Texas 77002 Telephone: (713) 555-0140 Facsimile: (713) 555-0141

Email: ynakamura@calderwoodharkness.com

Email: cespinoza@calderwoodharkness.com

Francesca Morano Ohio Bar No. 0087431 250 West Street, Suite 1800 Columbus, Ohio 43215 Telephone: (614) 555-0190 Facsimile: (614) 555-0191

Email: fmorano@calderwoodharkness.com

ATTORNEYS FOR PLAINTIFF CRESTLINE PACKAGING SOLUTIONS LLC

CRESTLINE PACKAGING SOLUTIONS LLC,

Plaintiff,

RIDGEWAY FREIGHT SERVICES INC.,

Defendant.

CAUSE NO. 342-2021-04871-TX
IN THE 342ND JUDICIAL DISTRICT COURT
TARRANT COUNTY, TEXAS
PLAINTIFF'S ORIGINAL PETITION
TO THE HONORABLE JUDGE OF SAID COURT:
Plaintiff Crestline Packaging Solutions LLC ("CPS") files this Original Petition against Defendant Ridgeway Freight Services Inc. ("Ridgeway") and respectfully shows the Court as follows:
I. DISCOVERY CONTROL PLAN
1. Plaintiff intends that discovery be conducted under Level 2 of Texas Rule of Civil Procedure 190.3.
II. PARTIES
2. Plaintiff Crestline Packaging Solutions LLC is an Ohio limited liability company duly organized and existing under the laws of the State of Ohio, with its principal place of business located at 4500 Needmore Road, Dayton, Ohio 45424. CPS is authorized to transact business in the State of Texas and maintains ongoing commercial operations within this State. CPS may be served through its counsel of record, Calderwood & Harkness LLP, 1001 Fannin Street, Suite 4200, Houston, Texas 77002.
3. Defendant Ridgeway Freight Services Inc. is a Texas corporation organized and existing under the laws of the State of Texas, with its principal place of business located at 7200 East Lancaster Avenue, Fort Worth, Texas 76112. Ridgeway may be served with process through its registered agent, National Registered Agents of Texas Inc., at 1999 Bryan Street, Suite 900, Dallas, Texas 75201.
III. JURISDICTION AND VENUE
4. This Court has subject-matter jurisdiction over this action because the amount in controversy exceeds the minimum jurisdictional limits of this Court. CPS seeks monetary damages in excess of $1,000,000.00, exclusive of interest, costs, and attorneys' fees.
5. Venue is proper in Tarrant County, Texas, pursuant to:
(a) Section 14.4 of the Master Transportation Services Agreement between CPS and Ridgeway dated April 15, 2019 (the "MTSA"), which provides that exclusive venue for any dispute arising out of or related to the MTSA shall lie in a court of competent jurisdiction in Tarrant County, Texas; and
(b) Texas Civil Practice and Remedies Code §15.002(a)(1), because all or a substantial part of the events or omissions giving rise to the claims asserted herein occurred in Tarrant County, Texas, and because Ridgeway's principal office is located in Tarrant County, Texas.
IV. FACTUAL BACKGROUND
6. On or about April 15, 2019, CPS and Ridgeway entered into the MTSA, a written agreement pursuant to which Ridgeway agreed to provide full truckload ("FTL") and less-than-truckload ("LTL") freight transportation services to CPS for the shipment of CPS's corrugated packaging products, specialty containers, and related materials between CPS's manufacturing and distribution facilities located in Ohio, Indiana, and Texas. The specific rates applicable to Ridgeway's transportation services were set forth in the Rate Schedule attached as Exhibit B to the MTSA (the "Rate Schedule"). The fuel surcharge formula governing fuel-related adjustments to the base transportation rates was set forth in Exhibit C to the MTSA (the "Fuel Surcharge Schedule"). The MTSA, together with all exhibits and schedules attached thereto, constituted the complete agreement between the parties with respect to the transportation services described therein.
7. The MTSA and its Rate Schedule established specific, negotiated rates for each of the primary shipping lanes serviced by Ridgeway on behalf of CPS. The per-mile FTL rates for the principal shipping lanes were as follows:
(a) Ohio to Texas (OH→TX): $2.18 per mile;
(b) Indiana to Texas (IN→TX): $2.04 per mile; and
(c) Texas to Ohio (TX→OH): $2.22 per mile.
The Rate Schedule further established per-hundredweight LTL rates of $14.60 per hundredweight ("cwt") for Class 70 shipments. The Fuel Surcharge Schedule set forth in Exhibit C provided that fuel surcharges were to be calculated using the U.S. Department of Energy ("DOE") Weekly Retail On-Highway Diesel Price as published for the same week in which the shipment was tendered by CPS to Ridgeway. Additionally, the MTSA provided for a 2.5% annual rate escalator, effective each April 15 beginning April 15, 2020, applicable to base transportation rates only and expressly excluding the fuel surcharge component.
8. CPS performed all of its obligations under the MTSA in a timely and satisfactory manner. CPS tendered its shipments to Ridgeway in accordance with the scheduling and notification requirements of the MTSA, provided accurate load information and documentation, maintained insurance as required, and cooperated fully with Ridgeway's drivers and dispatchers in the loading and unloading of freight at CPS's facilities.
9. CPS further performed its payment obligations under the MTSA by making timely payment of all invoices rendered by Ridgeway within the net-thirty-day payment terms specified in MTSA §10.1. During the period from approximately February 2019 through March 2021—a span of approximately twenty-six (26) months—Ridgeway submitted a total of 9,843 invoices to CPS. These invoices totaled $12,318,209.46 in the aggregate. CPS paid each of these invoices in full and within the contractually specified payment period.
10. In early 2021, CPS engaged an independent freight audit firm to conduct a comprehensive review of all invoices submitted by Ridgeway during the term of the MTSA. That audit revealed that Ridgeway had systematically overbilled CPS by a total of $1,847,632.19. The correct aggregate amount due to Ridgeway under the contractual rates and formulas set forth in the MTSA was $10,470,577.27—not the $12,318,209.46 that Ridgeway invoiced and CPS paid. The overcharges identified by the audit fall into four distinct categories:
(a) Inflated Per-Mile Rates: $1,104,891.53. On 4,217 of the 9,843 invoices submitted by Ridgeway—representing approximately 42.8% of all invoices—Ridgeway applied per-mile FTL and LTL rates that were between 8% and 12% higher than the rates set forth in the Exhibit B Rate Schedule. The inflated rates were not authorized by the MTSA, were not the product of the contractual 2.5% annual rate escalator, and were not supported by any written amendment or modification to the Rate Schedule. The total overcharge attributable to these inflated per-mile rates is $1,104,891.53.
(b) Improper Fuel Surcharge Calculations: $387,412.66. Ridgeway calculated fuel surcharges on its invoices using a seven-day lagging DOE Weekly Retail On-Highway Diesel Price index—that is, the DOE diesel price published for the week prior to the week of shipment—rather than the same-week DOE diesel index expressly required by Exhibit C to the MTSA. During periods of rising diesel prices, this methodology systematically produced fuel surcharges lower than those properly due; conversely, during periods of falling diesel prices, this methodology systematically produced fuel surcharges higher than those properly due. Over the course of the 26-month period, the net effect of Ridgeway's deviation from the contractually required fuel surcharge formula resulted in aggregate overcharges to CPS in the amount of $387,412.66.
(c) Unauthorized Accessorial Charges: $241,008.00. Ridgeway billed CPS for liftgate service fees, detention charges, and re-delivery fees totaling $241,008.00. These accessorial charges were not authorized under the terms of the MTSA, which required prior written approval from CPS for any accessorial charges. Ridgeway did not obtain such prior written approval for any of the accessorial charges at issue. Moreover, Ridgeway failed to provide the delivery documentation required by MTSA §7.3 to substantiate the purported basis for such charges. CPS did not request liftgate services, did not cause detention, and did not request or require re-delivery on the occasions in question.
(d) Duplicate Invoices: $114,320.00. Eighty-three (83) invoices submitted by Ridgeway were duplicates of prior invoices for the same shipments. CPS paid both the original and the duplicate invoices, resulting in double payments totaling $114,320.00. Ridgeway failed to identify or disclose these duplicate submissions, and failed to refund or credit the duplicate payments to CPS.
11. On February 8, 2021, CPS sent Ridgeway a written dispute notice in accordance with MTSA §11.2, identifying each of the categories of overcharges described above, providing supporting documentation from the independent freight audit, and demanding that Ridgeway correct the overbillings and remit the sum of $1,847,632.19 to CPS. Ridgeway acknowledged receipt of CPS's dispute notice on February 10, 2021, through its Vice President of Operations, Gerald T. Mayhew.
12. MTSA §11.2 provided for a thirty (30)-day good-faith resolution period following delivery of a written dispute notice, during which the parties were to attempt in good faith to resolve any billing dispute. That thirty-day period expired on March 12, 2021. Despite CPS's repeated efforts to engage Ridgeway in meaningful discussions regarding the identified overcharges—including a telephonic conference on February 25, 2021, and a written follow-up on March 4, 2021—Ridgeway failed to provide adequate relief. Ridgeway offered only a lump-sum "goodwill adjustment" of $218,500.00, representing less than 12% of the total overcharges, and categorically denied that any systematic overbilling had occurred. Ridgeway provided no audit, analysis, or documentation to support its position that the invoiced amounts were correct.
13. CPS rejected Ridgeway's inadequate offer by written correspondence dated March 15, 2021. On March 22, 2021, CPS issued a thirty (30)-day termination notice under MTSA §9.2, citing Ridgeway's material breach of the MTSA as grounds for termination. The thirty-day notice period expired, and the MTSA terminated by its terms, on April 22, 2021. Ridgeway did not cure its breach or offer any further adjustment during the notice period.
14. Prior to filing this action, CPS presented its claim to Ridgeway and demanded payment of the full amount of the overcharges by letter dated June 18, 2021, sent via certified mail to Ridgeway's principal office and to its registered agent. Through its counsel, Bartlett, Hogue & Sinclair LLP, Ridgeway rejected CPS's demand in writing on July 2, 2021. CPS has exhausted all reasonable pre-suit efforts to resolve this dispute, and this litigation has become necessary.
V. CAUSES OF ACTION
COUNT I — BREACH OF CONTRACT
15. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.
16. The MTSA is a valid, binding, and enforceable contract between CPS and Ridgeway. The MTSA was supported by adequate consideration, was executed by authorized representatives of both parties, and governed the rights and obligations of CPS and Ridgeway with respect to the transportation services provided by Ridgeway during the term of the agreement.
17. CPS fully performed all of its obligations under the MTSA, including without limitation its obligations to tender shipments in accordance with the MTSA's scheduling requirements, to provide accurate load documentation, and to pay all invoices rendered by Ridgeway within the net-thirty-day payment terms set forth in MTSA §10.1.
18. Ridgeway breached the MTSA by:
(a) billing CPS at per-mile and per-hundredweight rates in excess of the rates set forth in the Exhibit B Rate Schedule, in violation of MTSA §§4.1 and 4.2;
(b) calculating fuel surcharges using a seven-day lagging DOE diesel index rather than the same-week DOE diesel index required by Exhibit C to the MTSA, in violation of MTSA §4.3;
(c) billing CPS for liftgate, detention, and re-delivery accessorial charges without prior written authorization from CPS and without supporting delivery documentation, in violation of MTSA §§5.1 and 7.3; and
(d) submitting eighty-three (83) duplicate invoices for shipments previously invoiced and paid, in violation of MTSA §10.2 and the implied covenant of good faith and fair dealing.
19. As a direct and proximate result of Ridgeway's breach of the MTSA, CPS has suffered actual damages in the amount of $1,847,632.19, representing the aggregate amount of overcharges paid by CPS to Ridgeway in excess of the amounts properly due under the contractual rate schedules and terms of the MTSA.
COUNT II — MONEY HAD AND RECEIVED
20. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.
21. Ridgeway received from CPS the sum of $1,847,632.19 in excess of the amounts due and owing to Ridgeway under the terms of the MTSA. These funds were paid by CPS to Ridgeway in reliance on Ridgeway's invoices, which CPS has now determined overstated the amounts properly due by the aggregate sum of $1,847,632.19. Ridgeway holds these excess funds, which in equity and justice belong to CPS.
22. In equity and good conscience, Ridgeway should not be permitted to retain the sum of $1,847,632.19, which represents payments made by CPS in excess of the amounts due under the parties' agreement. CPS is entitled to recovery of $1,847,632.19 as money had and received.
COUNT III — COMMON-LAW FRAUD
23. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.
24. By submitting invoices to CPS reflecting inflated per-mile rates, improper fuel surcharge calculations, unauthorized accessorial charges, and duplicate billings, Ridgeway made material misrepresentations of fact to CPS concerning the amounts due and owing from CPS to Ridgeway under the MTSA. Each invoice submitted by Ridgeway constituted an implicit and explicit representation that the charges reflected therein were calculated in accordance with the rates, formulas, and terms of the MTSA and were properly due and owing from CPS.
25. These representations were false. The amounts billed by Ridgeway on 4,217 of 9,843 invoices exceeded the amounts that were actually due under the contractual rate schedules, fuel surcharge formulas, and accessorial charge provisions of the MTSA. The duplicate invoices represented charges for shipments that had already been invoiced and paid in full.
26. Ridgeway knew that its representations were false, or alternatively, made them recklessly and without regard to their truth or falsity. The systematic nature of the overbilling—affecting 42.8% of all invoices (4,217 of 9,843) over a 26-month period, encompassing four distinct categories of overcharges, and totaling $1,847,632.19—demonstrates that Ridgeway's conduct was not the product of isolated billing errors but rather a deliberate and sustained pattern of inflating charges beyond the contractually agreed rates and terms.
27. Ridgeway made these misrepresentations with the intent that CPS would rely upon the invoiced amounts as accurate statements of the amounts due under the MTSA and would pay the inflated sums stated therein. Ridgeway's invoices were presented to CPS as formal demands for payment, and Ridgeway expected and intended that CPS would pay the amounts stated on each invoice.
28. CPS justifiably relied on Ridgeway's invoices as accurate reflections of the amounts due under the MTSA and paid the amounts stated therein in full. CPS's reliance was reasonable given the volume of invoices, the complexity of the rate calculations, the parties' ongoing commercial relationship, and CPS's reasonable expectation that Ridgeway would comply with its contractual obligations in preparing its invoices.
29. As a proximate result of Ridgeway's fraud, CPS suffered actual damages in the amount of $1,847,632.19, representing the total amount of overcharges paid by CPS to Ridgeway.
30. Ridgeway's conduct, as alleged herein, constitutes fraud entitling CPS to the recovery of exemplary damages under Texas Civil Practice and Remedies Code §41.003. Ridgeway's systematic and sustained pattern of overbilling, involving misrepresentations on thousands of invoices over a period of more than two years, was committed with actual awareness of the falsity of the invoiced amounts, or with conscious indifference to the rights of CPS, and warrants the imposition of exemplary damages to punish Ridgeway's wrongful conduct and to deter similar conduct in the future.
COUNT IV — UNJUST ENRICHMENT
31. CPS incorporates by reference all allegations set forth in Paragraphs 1 through 14 above as though fully set forth herein.
32. In the alternative, and to the extent the Court determines that the MTSA does not govern the parties' rights with respect to any particular overcharge or category of overcharges identified herein, Ridgeway has been unjustly enriched by its receipt and retention of $1,847,632.19 in overpayments from CPS. Ridgeway obtained the benefit of these payments, which were conferred upon it by CPS in reliance on Ridgeway's inaccurate invoices. Ridgeway's retention of these overpayments is without legal justification and at the expense of CPS.
33. It would be unconscionable for Ridgeway to retain the benefit of CPS's overpayments. Under the circumstances, equity requires that Ridgeway disgorge the sum of $1,847,632.19, and CPS is entitled to restitution in that amount.
VI. DAMAGES
34. As a result of the acts and omissions of Ridgeway described herein, CPS seeks recovery of the following damages:
(a) Actual damages in the amount of $1,847,632.19, representing the total overcharges paid by CPS to Ridgeway in excess of the amounts properly due under the MTSA;
(b) Contractual interest at the rate of 1.5% per month, as provided by MTSA §10.3, calculated from the date of each overpayment through the date of judgment;
(c) Pre-judgment interest at the applicable statutory rate on all damages awarded, from the date each element of damage accrued through the date of judgment;
(d) Reasonable and necessary attorneys' fees and costs of court, as authorized by Texas Civil Practice and Remedies Code §38.001 et seq., and as may be proven at trial, including fees incurred through trial, any post-trial motions, and any appeal of this matter; and
(e) Exemplary damages pursuant to Texas Civil Practice and Remedies Code §41.003, in an amount to be determined by the trier of fact sufficient to punish Ridgeway for its fraudulent conduct and to deter similar conduct in the future.
VII. CONDITIONS PRECEDENT
35. All conditions precedent to CPS's right to recover on each of its claims asserted herein have been performed, have occurred, or have been waived, including without limitation the presentment of claims required by Texas Civil Practice and Remedies Code §38.002.
VIII. JURY DEMAND
36. Pursuant to Texas Rule of Civil Procedure 216, CPS hereby demands a trial by jury on all issues so triable and tenders herewith the appropriate jury fee.
IX. PRAYER
WHEREFORE, PREMISES CONSIDERED, Plaintiff Crestline Packaging Solutions LLC respectfully prays that upon final hearing, this Court enter judgment in favor of Plaintiff and against Defendant Ridgeway Freight Services Inc. for:
(a) Actual damages in the amount of $1,847,632.19;
(b) Contractual interest at the rate of 1.5% per month from the date of each overpayment through the date of judgment;
(c) Pre-judgment interest at the applicable legal rate;
(d) Reasonable and necessary attorneys' fees and costs of court;
(e) Exemplary damages in an amount to be determined by the trier of fact;
(f) Post-judgment interest at the applicable legal rate; and
(g) Such other and further relief, at law or in equity, to which Crestline Packaging Solutions LLC may show itself justly entitled.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Yuki Nakamura Texas Bar No. 24098712
Carlos Espinoza Texas Bar No. 24103548
1001 Fannin Street, Suite 4200 Houston, Texas 77002 Telephone: (713) 555-0140 Facsimile: (713) 555-0141
Email: ynakamura@calderwoodharkness.com
Email: cespinoza@calderwoodharkness.com
Francesca Morano Ohio Bar No. 0087431 250 West Street, Suite 1800 Columbus, Ohio 43215 Telephone: (614) 555-0190 Facsimile: (614) 555-0191
Email: fmorano@calderwoodharkness.com
ATTORNEYS FOR PLAINTIFF CRESTLINE PACKAGING SOLUTIONS LLC
CRESTLINE PACKAGING SOLUTIONS LLC,
Plaintiff,
v.
RIDGEWAY FREIGHT SERVICES INC.,
Defendant.