1012-00005 · Stonefield Logistics Group · Pleadings & Court Filings

answer-affirmative-defenses-counterclaim-final.docx DOCUMENT Litigation

125 / 150 ← → ✕

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S ANSWER TO PLAINTIFF'S AMENDED COMPLAINT, AFFIRMATIVE DEFENSES, AND COUNTERCLAIM

Filed: January 13, 2023

Defendant Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102, by and through its undersigned counsel, Calderwood & Harkness LLP, respectfully submits this Answer to the Amended Complaint of Plaintiff Vantor Holdings Corp. ("Vantor"), filed December 2, 2022, together with its Affirmative Defenses and Counterclaim.

PRELIMINARY STATEMENT

Vantor's Amended Complaint seeks approximately $95.4 million in damages arising from Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315). Vantor's claims are meritless. Stonefield validly terminated the TSA for Cause under Section 13.1(a) after Vantor's wholly owned subsidiary, Vantor Transport Services LLC ("VTS"), committed repeated and severe material breach of the TSA's Service Level Obligations ("SLOs") across every performance metric during the fourth quarter of 2021, and failed to cure those breaches within the 30-day period prescribed by Section 13.2 of the TSA.

The undisputed facts demonstrate that VTS unilaterally and secretly reassigned approximately 85 tractors — more than 20% of the committed fleet capacity — from Stonefield's dedicated lanes to another shipper's account, causing on-time pickup rates, on-time delivery rates, tender acceptance rates, and equipment availability to plummet far below the contractually required thresholds, while cargo claims spiked to more than double the permissible ratio. Far from being a victim, VTS is the author of its own misfortune. Vantor now seeks to turn VTS's own operational dereliction into a windfall by pursuing nearly $100 million in damages against the very counterparty that VTS betrayed.

Stonefield respectfully denies all claims for relief asserted in the Amended Complaint, asserts fourteen affirmative defenses, and interposes a counterclaim seeking a declaratory judgment confirming the validity of Stonefield's termination and that no liquidated damages or other amounts are owed to Vantor or VTS under the TSA.

PART I

ANSWER TO AMENDED COMPLAINT

Stonefield answers each numbered paragraph of the Amended Complaint as set forth below. To the extent any allegation contained in the Amended Complaint is not specifically admitted herein, it is denied. Headings and sub-headings used in the Amended Complaint are not allegations of fact and do not require a response; to the extent any response is deemed necessary, they are denied. Stonefield reserves the right to amend or supplement this Answer as discovery proceeds and additional facts become known.

SECTION I: THE PARTIES

Paragraph 1. Stonefield admits that Vantor Holdings Corp. is a corporation organized and existing under the laws of the State of New York, with its principal place of business located at 580 Eighth Avenue, 14th Floor, New York, New York 10018.

Paragraph 2. Stonefield admits that Vantor Transport Services LLC is a limited liability company organized and existing under the laws of the State of New York and that VTS is a wholly owned subsidiary of Vantor Holdings Corp. Stonefield denies, however, that Vantor Holdings Corp. is a proper party to assert claims under the TSA, as VTS — not Vantor Holdings Corp. — was the signatory counterparty to the TSA. Stonefield expressly reserves the defense that Vantor Holdings Corp. is not the real party in interest within the meaning of Federal Rule of Civil Procedure 17, but does not move on that basis at this time.

Paragraph 3. Stonefield admits that Stonefield Logistics Group Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business located at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield further admits that its registered agent for service of process in the State of Delaware is Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. Stonefield denies any characterization of its business operations, financial condition, corporate strategy, or motives contained in Paragraph 3 of the Amended Complaint that is inaccurate, incomplete, or misleading.

Paragraph 4. Stonefield admits that this Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a), based on complete diversity of citizenship between the parties (Stonefield is a citizen of Delaware and Texas; Vantor is a citizen of New York), and that the amount in controversy exceeds $75,000, exclusive of interest and costs.

Paragraph 5. Stonefield admits that venue is proper in the United States District Court for the Southern District of New York pursuant to the forum selection clause set forth in Section 16 of the TSA, and pursuant to 28 U.S.C. § 1391(b).

Paragraph 6. Stonefield admits that Nikolai Vantorovich is the Chief Executive Officer and Founder of Vantor Holdings Corp. Stonefield lacks sufficient knowledge or information to form a belief as to the remaining allegations in this paragraph regarding Mr. Vantorovich's personal background and business history, and on that basis denies them.

Paragraph 7. Stonefield admits, upon information and belief, that VTS operates a fleet of approximately 650 owned tractors and approximately 2,100 trailers. Stonefield lacks sufficient knowledge or information to admit or deny the remaining allegations in this paragraph concerning VTS's employee headcount, terminal locations, or historical revenue, and on that basis denies them.

Paragraph 8. Stonefield denies the allegations of this paragraph to the extent they characterize Vantor's or VTS's financial condition, creditworthiness, or industry reputation, as Stonefield lacks sufficient knowledge or information to form a belief as to those matters. Stonefield specifically denies any allegation that VTS's financial condition or business reputation was harmed by Stonefield's conduct.

Paragraph 9. Stonefield affirmatively states that Stonefield's majority equity owner is Ridgeline Capital Partners, LP, through Ridgeline Fund III, LP, which holds approximately 72% of Stonefield's outstanding equity, following a leveraged buyout completed in 2017 at an enterprise value of approximately $680 million. Stonefield admits that its Chief Executive Officer is Marcus Denton, its Chief Financial Officer is Priya Ramachandran, and its General Counsel is Tobias Wren. Stonefield denies any allegation in this paragraph that characterizes the purposes, motives, or strategy of Ridgeline Capital Partners, LP or its affiliates in connection with the TSA or Stonefield's operations, to the extent such characterizations are inaccurate or misleading.

Paragraph 10. Stonefield lacks sufficient knowledge or information to form a belief as to the allegations contained in Paragraph 10 regarding Vantor's additional corporate subsidiaries, affiliates, and their respective operations, and on that basis denies them.

SECTION II: THE TRANSPORTATION SERVICES AGREEMENT

Paragraph 11. Stonefield admits that the TSA was executed on March 15, 2019, between Stonefield Logistics Group Inc. (in the capacity of "Shipper-Broker") and Vantor Transport Services LLC (in the capacity of "Carrier-Provider"). Stonefield further admits that the TSA was drafted by Ashford Meridian LLP, acting as outside counsel on behalf of Stonefield. The TSA speaks for itself, and Stonefield denies any characterization, paraphrase, or summary of the TSA's terms that is incomplete, inaccurate, or misleading.

Paragraph 12. Stonefield admits that the TSA provided for a five-year initial term commencing on April 1, 2019 and expiring on March 31, 2024, subject to one automatic two-year renewal unless either party delivered written notice of non-renewal at least 180 calendar days prior to the expiration of the initial term. The TSA speaks for itself with respect to the specific terms and conditions of renewal, and Stonefield denies any characterization thereof that is inconsistent with the plain text of the agreement.

Paragraph 13. Stonefield admits that VTS agreed, pursuant to the TSA, to provide dedicated and on-demand full-truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors as identified in Schedule A to the TSA, and that VTS committed to maintaining minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to Stonefield freight. Stonefield denies any allegation that VTS performed these obligations consistently throughout the life of the contract, and affirmatively states that VTS's compliance deteriorated materially beginning in Q3 2021.

Paragraph 14. Stonefield admits that the TSA is governed by and shall be construed in accordance with the laws of the State of New York, without regard to conflict-of-law principles, as set forth in the governing law provision of the TSA.

Paragraph 15. Stonefield admits that the TSA contained an Annual Committed Volume ("ACV") of $43.2 million in transportation charges per contract year, yielding a total five-year minimum commitment of $216 million over the initial term. Stonefield denies any allegation that the ACV obligation operated without qualification, and affirmatively states that the ACV was subject to adjustment pursuant to the force majeure provisions of Section 12.1 of the TSA, which Stonefield properly invoked during Contract Year 2 as described further herein.

Paragraph 16. Stonefield admits that per-mile rates for each designated lane were set forth in Schedule B to the TSA and were subject to annual adjustment pursuant to the Rate Adjustment Mechanism in Section 5.3, which provided for rate adjustments on each April 1 based on a blended index of 70% diesel fuel index and 30% Consumer Price Index for All Urban Consumers (CPI-U). Stonefield denies any allegation or inference that the Rate Adjustment Mechanism was unusual, onerous, or that Stonefield sought to avoid its application through bad-faith conduct.

Paragraph 17. Stonefield admits that VTS was required, pursuant to the SLOs set forth in the TSA, to maintain the following minimum performance thresholds: (i) on-time pickup rate of at least 95%; (ii) on-time delivery rate of at least 93%; (iii) cargo claims ratio of no more than 0.5% of gross transportation revenue; (iv) tender acceptance rate of at least 90%; and (v) equipment availability compliance of at least 85% of committed fleet capacity (i.e., at least 340 of 400 committed tractors). The TSA speaks for itself regarding the detailed definitions and measurement methodologies applicable to each SLO.

Paragraph 18. Stonefield admits the existence of Section 14.2 of the TSA and does not dispute the textual quotation set forth in Paragraph 18 of the Amended Complaint, provided that such quotation is complete and accurate. Stonefield denies, however, that the liquidated damages clause set forth in Section 14.2 is enforceable under applicable law. Stonefield affirmatively states that the liquidated damages formula (75% of the ACV multiplied by the number of years remaining in the initial term) produces results that are grossly disproportionate to any actual or reasonably anticipated harm and constitutes an unenforceable penalty under governing New York law. Stonefield further states that actual damages were readily calculable at the time of contracting from known operating margins, market conditions, and industry benchmarks, rendering the liquidated damages provision unnecessary and unreasonable.

Paragraph 19. Stonefield admits the text of Section 13.1 of the TSA, including the provision that either party may terminate the TSA for "Cause" upon a material breach that remains uncured for 30 calendar days after the breaching party's receipt of written notice specifying the breach with reasonable particularity. The TSA speaks for itself, and Stonefield denies any characterization of Section 13.1 that is incomplete or inaccurate.

Paragraph 20. Stonefield admits that Section 13.2 of the TSA requires the terminating party to deliver a written Cure Notice specifying with reasonable particularity the alleged material breach or breaches forming the basis for termination. Stonefield affirmatively states that it fully complied with this requirement in its January 18, 2022 Cure Notice.

Paragraph 21. Stonefield admits the existence and text of Section 12.1 of the TSA governing force majeure events and the procedures for invoking force majeure relief. Stonefield affirmatively states that it timely and properly invoked force majeure under Section 12.1 for the period of April 2020 through September 2020 in connection with the material adverse effects of the COVID-19 pandemic on nationwide freight demand and Stonefield's business operations. The invocation was communicated in writing to VTS by letter dated April 14, 2020 from Tobias Wren to Sandra Milescu, and VTS did not object to or dispute the invocation at any time prior to the commencement of this litigation.

Paragraph 22. Stonefield admits the existence of Section 7.4 of the TSA, which required VTS to provide substitute equipment or surge capacity in the event of equipment shortfalls, mechanical breakdowns, driver unavailability, or other circumstances affecting VTS's ability to meet its fleet commitments. Stonefield affirmatively states that VTS chronically failed to comply with this obligation during Q4 2021 and into Q1 2022.

Paragraph 23. Stonefield admits that Schedule C to the TSA identifies 14 designated "Primary Lanes" that are subject to exclusivity provisions. Stonefield denies that the exclusivity provisions of Schedule C extended to any lane beyond those 14 designated Primary Lanes. Stonefield affirmatively states that Schedule C, Section 2(b) expressly distinguishes "Secondary Lanes" from "Primary Lanes" and provides that exclusivity restrictions do not apply to Secondary Lanes. Accordingly, Stonefield was free to engage alternative carriers for transportation services on any Secondary Lane without violating the TSA.

Paragraph 24. Stonefield admits the existence of a mutual waiver of consequential damages in Section 15.1 of the TSA, which provides that neither party shall be liable to the other for any indirect, incidental, consequential, special, or punitive damages arising out of or related to the TSA, regardless of the form of action, whether in contract, tort, strict liability, or otherwise, and regardless of whether such damages were foreseeable.

Paragraph 25. Stonefield admits that the TSA contained a mandatory pre-litigation dispute resolution provision in Section 16, requiring the parties to engage in a 30-day executive negotiation period before initiating any litigation or other formal legal proceeding. Stonefield admits that this requirement was satisfied prior to the filing of the original Complaint in this action.

Paragraph 26. The TSA speaks for itself. Stonefield admits undisputed textual provisions of the TSA to the extent accurately quoted or paraphrased in this paragraph, and denies any characterization, inference, or construction that is inconsistent with the plain language of the TSA.

Paragraph 27. The TSA speaks for itself. Stonefield admits undisputed textual provisions of the TSA to the extent accurately quoted or paraphrased in this paragraph, and denies any characterization, inference, or construction that is inconsistent with the plain language of the TSA.

Paragraph 28. The TSA speaks for itself. To the extent this paragraph characterizes the intent or purpose of any TSA provision, Stonefield denies such characterization to the extent it is inconsistent with the actual text of the TSA.

Paragraph 29. Stonefield admits undisputed textual provisions referenced in this paragraph to the extent they are accurately quoted. Stonefield denies any allegation or inference that Stonefield breached, intended to breach, or acted in bad faith with respect to any term of the TSA.

Paragraph 30. Stonefield denies the allegations of this paragraph to the extent they contain characterizations, summaries, or paraphrases of TSA provisions that are inaccurate, incomplete, or misleading. The TSA speaks for itself.

SECTION III: PERFORMANCE UNDER THE TSA

Paragraph 31. Stonefield admits that during Contract Year 1 ("CY1"), running from April 1, 2019 through March 31, 2020, both parties performed their obligations under the TSA substantially without material dispute.

Paragraph 32. Stonefield admits that during CY1, Stonefield tendered freight to VTS in an aggregate amount meeting or exceeding the CY1 ACV of $43.2 million, and that VTS's performance metrics were generally within the required SLO thresholds throughout CY1.

Paragraph 33. Stonefield admits the general allegations of this paragraph regarding CY1 performance to the extent they are consistent with Stonefield's records and the TSA's terms. Stonefield denies any allegation that the smooth performance during CY1 created an obligation to maintain any particular pattern of conduct beyond what the TSA required.

Paragraph 34. Stonefield admits that the parties' relationship during CY1 was commercially productive and that both parties benefited from the TSA during that period.

Paragraph 35. Stonefield admits the general allegations of this paragraph to the extent they accurately describe CY1 performance. To the extent this paragraph contains characterizations of Stonefield's satisfaction with VTS's services or any other subjective assessments, Stonefield lacks sufficient information to admit or deny such allegations and on that basis denies them.

Paragraph 36. Stonefield denies that it breached the ACV obligation during Contract Year 2 ("CY2"), running from April 1, 2020 through March 31, 2021. Stonefield affirmatively states that it properly and timely invoked force majeure under Section 12.1 of the TSA for the period of April 2020 through September 2020, covering the first six months of CY2, as a direct result of the unprecedented disruption to nationwide freight demand caused by the COVID-19 pandemic. The force majeure invocation was communicated in writing on April 14, 2020, and VTS did not object or dispute the invocation. Accordingly, the adjusted ACV for CY2 was $21.6 million (calculated as $43.2 million multiplied by six-twelfths, reflecting the six non-force-majeure months of CY2).

Paragraph 37. Stonefield denies Vantor's allegation that Stonefield's CY2 volume shortfall was $11.4 million. That figure is calculated against the unadjusted full-year ACV of $43.2 million and improperly ignores Stonefield's valid force majeure invocation. Stonefield affirmatively states that it actually tendered $31.8 million in transportation charges to VTS during CY2, exceeding the adjusted ACV of $21.6 million by $10.2 million. Accordingly, Stonefield not only satisfied its ACV obligation during CY2, but substantially exceeded it.

Paragraph 38. Stonefield denies any allegation that its force majeure invocation was invalid, untimely, or pretextual. The COVID-19 pandemic caused a documented decline in freight volumes across the transportation industry during the first half of 2020, as reflected in publicly available data from the American Trucking Associations, the Dunmore Systems, and other industry sources.

Paragraph 39. Stonefield denies the remaining allegations in this paragraph to the extent they assert that any CY2 volume shortfall constituted a material breach of the TSA.

Paragraph 40. Stonefield denies the allegations of this paragraph. To the extent Vantor alleges that Stonefield's CY2 performance created a pattern or practice of non-compliance, Stonefield denies that allegation and states that its CY2 performance was not only compliant but exceeded the adjusted ACV by a substantial margin.

Paragraph 41. Stonefield admits that it tendered approximately $36.5 million in transportation charges to VTS during the partial Contract Year 3 ("CY3") period running from April 1, 2021 through January 31, 2022, a period of ten months out of the twelve-month contract year.

Paragraph 42. Stonefield denies that any CY3 volume shortfall constituted a material breach of the TSA. The CY3 ACV shortfall alleged by Vantor — $6.7 million against the full-year ACV of $43.2 million — improperly fails to account for the proration of the contract year, given that the TSA was terminated effective March 4, 2022 and the full twelve-month CY3 period never elapsed. Moreover, any shortfall in CY3 volume was directly and proximately attributable to VTS's own severe performance failures, which forced Stonefield to divert freight to alternative carriers out of operational necessity in order to meet its own customers' requirements and avoid supply chain disruptions.

Paragraph 43. Stonefield denies the allegations of this paragraph to the extent they assert that Stonefield was obligated to continue tendering the full ACV to a carrier that was materially breaching its service obligations and had secretly redirected more than 20% of its dedicated fleet capacity to another shipper.

Paragraph 44. Stonefield denies the remaining allegations in this paragraph.

Paragraph 45. Stonefield denies that it violated any exclusivity provision of the TSA through its use of alternative carriers. Stonefield admits that it engaged Cascade Freight Systems Inc., an Ohio corporation headquartered in Columbus, Ohio, and Briarwood Trucking Co., a Virginia corporation headquartered in Arlington, Virginia, to provide supplemental truckload transportation services. Stonefield affirmatively states that its use of Cascade and Briarwood was limited exclusively to Lanes 8 through 14, all of which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA and are not subject to any exclusivity restriction.

Paragraph 46. Stonefield denies that its engagement of alternative carriers on Secondary Lanes constituted a breach of the TSA or any duty of good faith and fair dealing. Stonefield affirmatively states that the diversion of freight to Cascade and Briarwood on Lanes 8 through 14 was a direct, necessary, and commercially reasonable response to VTS's declining tender acceptance rates, which fell to 71.4% in Q4 2021 against a contractually required SLO of 90%. Stonefield was not required to suffer operational disruption and customer dissatisfaction while waiting indefinitely for VTS to meet its obligations.

Paragraph 47. Stonefield denies the remaining allegations in this paragraph.

Paragraph 48. Stonefield denies that its termination of the TSA was pretextual, motivated by bad faith, or designed to avoid the April 2022 rate adjustment. Stonefield admits, as a matter of ordinary business planning and financial forecasting, that it was aware that the Rate Adjustment Mechanism in Section 5.3 of the TSA would produce an increase in per-mile rates effective April 1, 2022, from a weighted average of approximately $2.87 per mile to approximately $3.28 per mile, representing an increase of approximately 14.3%.

Paragraph 49. Stonefield denies that awareness of a contractually mandated and fully anticipated rate adjustment constitutes evidence of bad faith, pretext, or wrongful motive. The rate adjustment was a known and agreed-upon term of the TSA, calculated by reference to objective indices. Stonefield's decision to terminate was based exclusively on VTS's uncured material breach of the SLOs, and objective Cause for termination existed independently of any consideration of future rate increases.

Paragraph 50. Stonefield denies the remaining allegations of this paragraph.

SECTION IV: STONEFIELD'S TERMINATION OF THE TSA

Paragraph 51. Stonefield admits that Raymond Hess, Director of Contract Compliance at Stonefield, sent a written Cure Notice dated January 18, 2022 (the "Cure Notice") to Sandra Milescu, Chief Operating Officer of Vantor and VTS, via both overnight courier (Severin Partners LLC tracking number 7891-2034-5567) and electronic mail. Stonefield admits that the Cure Notice identified the following material breaches of the TSA's Service Level Obligations, based on VTS's Q4 2021 performance data:

(a) On-time pickup rate: 78.2%, against a required SLO of ≥ 95%;

(b) On-time delivery rate: 81.6%, against a required SLO of ≥ 93%;

(d) Equipment availability: approximately 248 tractors available for Stonefield freight, representing 62% of the committed fleet capacity of 400 tractors, against a required SLO of ≥ 85% (i.e., at least 340 tractors);

(e) Cargo claims: 16 claims filed during November and December 2021, totaling $387,400 in claimed damages, yielding a claims ratio of approximately 1.07% of gross transportation revenue for that period, against a required SLO of ≤ 0.5%; and

(f) Chronic failure to provide substitute equipment or surge capacity as required under Section 7.4 of the TSA.

Stonefield affirmatively states that the Cure Notice satisfied the "reasonable particularity" requirement of Section 13.2 by specifying each performance metric at issue, the applicable SLO threshold, and VTS's actual performance figure for the relevant measurement period.

Paragraph 52. Stonefield admits that the cure period prescribed by Section 13.2 of the TSA was 30 calendar days from VTS's receipt of the Cure Notice, and that VTS received the Cure Notice on January 18, 2022, making the cure period expiration date February 17, 2022.

Paragraph 53. Stonefield admits that Derek Pruitt, Vice President of Business Development for Vantor, sent a letter dated February 14, 2022 (the "Cure Response") to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, purporting to respond to the Cure Notice. Stonefield admits that the Cure Response acknowledged "operational challenges" experienced by VTS. Stonefield denies, however, that the Cure Response constituted a cure, a substantial cure, or any meaningful remediation of the identified material breaches.

Specifically, the Cure Response: (i) acknowledged that VTS had experienced service deficiencies across multiple metrics; (ii) attributed those deficiencies to external factors, including a nationwide driver shortage and alleged volume shortfalls by Stonefield; (iii) disputed the cargo claims data cited in the Cure Notice; and (iv) asserted that VTS had "substantially cured" the deficiencies — but failed to provide any supporting data, documentation, or verifiable evidence of actual remediation. The Cure Response did not demonstrate that any SLO metric had been restored to compliance. Post-cure-period performance data confirmed that VTS's failures continued unabated.

Stonefield further denies that Stonefield's volume tenders, lane assignments, or any other conduct by Stonefield caused or contributed to VTS's performance failures.

Paragraph 54. Stonefield admits that Tobias Wren, General Counsel of Stonefield, sent a formal termination letter dated March 4, 2022 (the "Termination Letter") to Vantor Holdings Corp. and Vantor Transport Services LLC, via overnight courier and electronic mail, stating that VTS had failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the 30-day cure period prescribed by Section 13.2, and that the TSA was terminated effective immediately for Cause pursuant to Section 13.1(a).

Stonefield denies that the termination was wrongful, pretextual, in bad faith, or otherwise constituted a breach of the TSA by Stonefield.

Paragraph 55. Stonefield admits that at the time of the Termination Letter (March 4, 2022), approximately 2 years and 27 days remained in the TSA's initial five-year term (which was scheduled to expire on March 31, 2024).

Paragraph 56. Stonefield denies all allegations that the termination of the TSA was wrongful.

Paragraph 57. Stonefield denies all allegations that the termination was pretextual or motivated by Stonefield's desire to avoid the April 2022 rate adjustment or to renegotiate the TSA on more favorable terms.

Paragraph 58. Stonefield denies all allegations that VTS's performance deficiencies were caused by or attributable to Stonefield's conduct, including Stonefield's volume tenders, freight allocation decisions, or use of alternative carriers on Secondary Lanes.

Paragraph 59. Stonefield affirmatively states that VTS's performance failures were self-inflicted and directly caused by VTS's own misconduct. In October 2021, VTS unilaterally and without notice to Stonefield reassigned approximately 85 tractors — more than 20% of the minimum committed fleet of 400 tractors — from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co. This undisclosed fleet redeployment is confirmed by the November 12, 2021 internal email from Sandra Milescu, COO of VTS, to Nikolai Vantorovich, CEO of Vantor, which stated: "We've pulled 85 tractors off the SLG dedicated lanes to cover [Northwind] commitments. SLG won't notice until January."

Paragraph 60. Stonefield denies the remaining allegations of this paragraph. VTS's decision to secretly divert a substantial portion of its committed fleet to another customer — while expecting Stonefield to continue tendering full ACV volumes — constitutes the paradigmatic material breach for which the termination-for-Cause provisions of the TSA were designed.

Paragraph 61. Stonefield denies that it committed any material breach of the TSA.

Paragraph 62. Stonefield denies that it failed to tender the ACV in any contract year, as addressed in detail above. Stonefield's CY2 tenders of $31.8 million exceeded the force-majeure-adjusted ACV of $21.6 million by $10.2 million. The CY3 partial-year tenders of $36.5 million over ten months reflect both proration and the operational necessity of diverting volume away from a carrier that was materially breaching its service obligations.

Paragraph 63. Stonefield denies that it violated any exclusivity provision of the TSA. As set forth above, Stonefield's use of Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited to Lanes 8 through 14, all of which are non-exclusive Secondary Lanes under Schedule C, Section 2(b).

Paragraph 64. Stonefield denies that the September 22, 2021 email from Janet Kirkwood to Carlos Medina constitutes evidence of wrongful motive, pretext, or bad faith. The email — which stated: "VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract." — reflects legitimate operational concerns by Stonefield's carrier management personnel about VTS's deteriorating performance. The email expressly references volume diversion only on Lanes 8 through 14, which are non-exclusive Secondary Lanes, and contemplates exercise of Stonefield's contractual right to terminate for Cause in the event VTS failed to improve its performance.

Paragraph 65. Stonefield denies the remaining allegations of this paragraph.

SECTION V: PRE-LITIGATION DISPUTE RESOLUTION

Paragraph 66. Stonefield admits that Vantor, through its counsel Caldwell Royce & Shapiro LLP, sent a demand letter to Stonefield dated April 8, 2022, asserting claims for damages in the aggregate amount of approximately $95.4 million.

Paragraph 67. Stonefield admits that Tobias Wren, General Counsel of Stonefield, responded to the demand letter by letter dated April 29, 2022, rejecting the demand in its entirety and invoking the mandatory executive negotiation period set forth in Section 16 of the TSA.

Paragraph 68. Stonefield admits that executive negotiation meetings were conducted between the parties in accordance with Section 16, including an in-person meeting on May 16, 2022 attended by Marcus Denton (CEO, Stonefield) and Nikolai Vantorovich (CEO, Vantor), and a follow-up telephonic meeting on June 3, 2022.

Paragraph 69. Stonefield admits that the executive negotiation process did not result in a resolution of the dispute between the parties.

Paragraph 70. Stonefield admits the allegations in this paragraph to the extent they are consistent with the foregoing admissions regarding the executive negotiation process.

Paragraph 71. Stonefield admits that the mandatory 30-day executive negotiation period required by Section 16 of the TSA was satisfied before Vantor initiated this litigation by filing the original Complaint on September 12, 2022.

Paragraph 72. Stonefield admits the allegations in this paragraph to the extent they state that the pre-litigation dispute resolution requirements of the TSA were complied with by both parties.

SECTION VI: VANTOR'S CLAIMED DAMAGES

Paragraph 73. Stonefield denies that Vantor is entitled to any damages whatsoever, whether in the amount of $95.4 million or any other amount.

Paragraph 74. Stonefield denies that Vantor is entitled to liquidated damages under Section 14.2 of the TSA. The termination was for Cause under Section 13.1(a), not a termination "other than for Cause" as required to trigger the liquidated damages provision of Section 14.2. Because the predicate condition for liquidated damages has not been met, no liquidated damages are owed.

Paragraph 75. In the alternative, and without conceding that the termination was other than for Cause, Stonefield denies that the liquidated damages clause in Section 14.2 is enforceable under New York law. The formula set forth in Section 14.2 — which calculates liquidated damages as 75% of the ACV multiplied by the number of years remaining in the initial term — produces a result of approximately $67.23 million (75% × $43.2 million × 2.075 years). This amount is grossly disproportionate to any actual or reasonably anticipated harm that VTS could suffer as a result of the TSA's early termination and constitutes an unenforceable penalty. Under the two-part test for enforceability of liquidated damages provisions under New York law, the clause fails on both prongs: (i) the amount is not a reasonable estimate of probable damages at the time of contracting, and (ii) actual damages were not difficult to ascertain, as they were readily calculable from VTS's known operating margins, publicly available market rates, and standard industry financial metrics.

Paragraph 76. Stonefield denies the remaining allegations in this paragraph concerning liquidated damages.

Paragraph 77. Stonefield denies that Vantor is entitled to lost profits in the amount of $18.7 million or any other amount. To the extent liquidated damages are sought and are deemed applicable, a simultaneous award of lost profits would constitute an impermissible double recovery under New York law, as both theories compensate for the identical alleged harm — the loss of future contract value.

Paragraph 78. In the alternative, even if liquidated damages are not applicable, Stonefield denies that Vantor's lost profits calculation is supportable. Vantor's calculation relies on an assumed operating margin of 12%, which is unsupported by VTS's actual financial performance and is inflated relative to industry benchmarks for asset-based truckload carriers. Furthermore, the lost profits calculation fails to account for VTS's own material breaches, which reduced the value of the contract and would have continued to impair VTS's performance for the remainder of the term.

Paragraph 79. Stonefield denies the remaining allegations in this paragraph concerning lost profits.

Paragraph 80. Stonefield denies that Vantor is entitled to $5.2 million or any other amount for alleged stranded asset costs. The claimed stranded asset costs — including accelerated depreciation on tractors and trailers acquired for the Stonefield contract and costs associated with early termination of equipment leases — are consequential damages that fall squarely within the scope of the mutual waiver of consequential damages set forth in Section 15.1 of the TSA. These are indirect losses flowing from the termination, not direct damages arising under the contract.

Paragraph 81. Stonefield denies the remaining allegations in this paragraph.

Paragraph 82. Stonefield denies the remaining allegations in this paragraph.

Paragraph 83. Stonefield denies that Vantor is entitled to $2.87 million or any other amount for workforce reduction costs. Severance payments, unemployment insurance costs, and related expenses incurred in connection with the termination of approximately 180 drivers and support staff are consequential damages barred by the mutual waiver in Section 15.1 of the TSA.

Paragraph 84. Stonefield denies the remaining allegations in this paragraph.

Paragraph 85. Stonefield denies the remaining allegations in this paragraph.

Paragraph 86. Stonefield denies that Vantor is entitled to $1.4 million or any other amount for alleged mitigation costs. These costs are consequential damages barred by Section 15.1 of the TSA. Further, even if such costs were recoverable, Vantor's mitigation efforts were inadequate and commercially unreasonable in light of the robust freight market conditions prevailing in Q1 and Q2 of 2022, during which period spot rates for truckload freight were elevated approximately 35% above historical averages. VTS's freed capacity — including the approximately 85 tractors that VTS had previously redeployed to the Northwind account, plus additional tractors made available by the TSA's termination — could and should have been promptly deployed to serve other shippers at prevailing market rates.

Paragraph 87. Stonefield denies the remaining allegations in this paragraph.

Paragraph 88. Stonefield denies the remaining allegations in this paragraph.

Paragraph 89. Stonefield denies all general damages allegations contained in this paragraph. Stonefield affirmatively states that Vantor's damages claims are based on the expert report of Dr. Philip Trask of Trask Greystone & Associates, located at 400 Madison Avenue, Suite 900, New York, New York 10017, and that Dr. Trask's report relies on flawed methodology, inflated margin assumptions, and fails to account for VTS's own material breaches and failure to mitigate. As demonstrated by the rebuttal expert report of Dr. Evelyn Rosser of Kensington Analytics Group LLC, located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103, Vantor's maximum possible damages — under the most favorable assumptions and assuming arguendo that the termination was wrongful — are no greater than $8.2 million.

Paragraph 90. Stonefield denies the remaining allegations in this paragraph.

Response to Prayer for Relief. Stonefield denies that Vantor is entitled to any relief whatsoever, whether monetary, declaratory, injunctive, equitable, or otherwise. Stonefield specifically denies that Vantor is entitled to damages, liquidated damages, lost profits, consequential damages, pre-judgment interest, attorneys' fees, costs, or any other form of recovery. Stonefield reserves the right to seek its own costs, disbursements, and any other relief to which it may be entitled.

PART II

AFFIRMATIVE DEFENSES

Without assuming the burden of proof on any issue for which it does not bear such burden, and without waiving any right to assert additional defenses as they may become apparent through discovery or otherwise, Defendant Stonefield Logistics Group Inc. asserts the following affirmative defenses to the Amended Complaint:

FIRST AFFIRMATIVE DEFENSE Valid Termination for Cause Under Section 13.1(a)

Vantor's claims are barred, in whole or in part, because Stonefield validly terminated the TSA for Cause under Section 13.1(a). VTS committed material breach of the TSA's Service Level Obligations across all five performance metrics during Q4 2021, and failed to cure those breaches within the 30-calendar-day cure period prescribed by Section 13.2 of the TSA. Specifically, VTS's Q4 2021 performance fell below the contractually required thresholds on every measured SLO: on-time pickup rate of 78.2% (against a required 95%); on-time delivery rate of 81.6% (against a required 93%); tender acceptance rate of 71.4% (against a required 90%); equipment availability of 62% of committed fleet capacity (against a required 85%); and cargo claims ratio of 1.07% (against a maximum permitted 0.5%). VTS's February 14, 2022 Cure Response did not demonstrate actual remediation of any deficiency and was not accompanied by any verifiable evidence that any SLO metric had been restored to compliance. Because the termination was validly effected for Cause, the liquidated damages provision of Section 14.2 is not triggered, and no liquidated damages or other termination-related payments are owed to Vantor or VTS.

SECOND AFFIRMATIVE DEFENSE Unenforceability of Liquidated Damages Clause as a Penalty

Even if the termination were deemed not to be for Cause, which Stonefield expressly denies, Vantor's claim for liquidated damages under Section 14.2 of the TSA is barred because the liquidated damages clause is unenforceable as a penalty under New York law. The liquidated damages formula — 75% of the $43.2 million ACV multiplied by the number of years remaining in the initial term — produces a result of approximately $67.23 million, an amount that is grossly disproportionate to any actual or reasonably anticipated harm. The liquidated damages clause fails both prongs of the enforceability test established under New York law: first, the liquidated damages amount does not constitute a reasonable estimate of probable damages at the time of contracting; and second, actual damages were not difficult to ascertain at the time of contracting, as they were readily calculable from VTS's known operating margins, publicly available market rates for truckload freight, and standard industry financial metrics. Accordingly, the clause constitutes an unenforceable penalty and is void.

THIRD AFFIRMATIVE DEFENSE Failure to Mitigate

Vantor's claims are barred, in whole or in part, because Vantor failed to exercise reasonable efforts to mitigate its alleged damages following the March 4, 2022 termination of the TSA. The freight market in Q1 and Q2 of 2022 was characterized by robust demand and elevated pricing, with spot rates for truckload freight approximately 35% above historical averages. VTS had substantial available capacity — including freed tractors, trailers, and trained drivers — that could have been promptly deployed to serve other shippers and generate revenue. Despite these favorable market conditions, Vantor failed to take adequate or commercially reasonable steps to replace the revenue lost by the TSA's termination. Notably, Derek Pruitt, Vice President of Business Development for Vantor, was unable to identify any specific mitigation steps taken by Vantor when questioned at his deposition on July 10, 2023. Any damages to which Vantor might otherwise be entitled must be reduced by the amounts that Vantor could have avoided through the exercise of reasonable mitigation efforts.

FOURTH AFFIRMATIVE DEFENSE Force Majeure — ACV Adjustment (Section 12.1)

Vantor's claim that Stonefield breached the ACV obligation during CY2 is barred because Stonefield properly and timely invoked force majeure under Section 12.1 of the TSA for the period of April 2020 through September 2020 in connection with the material adverse impacts of the COVID-19 pandemic on nationwide freight demand. The force majeure invocation was communicated in writing to VTS on April 14, 2020, and was not objected to by VTS at any time prior to the commencement of this litigation. Accordingly, the CY2 ACV was properly adjusted to $21.6 million, reflecting a pro-rata reduction for the six-month force majeure period. Stonefield's actual CY2 tenders of $31.8 million exceeded the adjusted ACV by $10.2 million. Vantor's allegation of an $11.4 million CY2 shortfall is based on the unadjusted ACV and is factually and legally incorrect.

FIFTH AFFIRMATIVE DEFENSE No Exclusivity Violation

Vantor's claim that Stonefield violated the exclusivity provisions of the TSA is barred because Stonefield's engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited exclusively to Lanes 8 through 14, all of which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. The exclusivity provisions of Schedule C apply only to the 14 designated "Primary Lanes" and do not extend to Secondary Lanes. Stonefield did not engage any alternative carrier on any Primary Lane. Accordingly, Stonefield did not violate any exclusivity obligation under the TSA.

SIXTH AFFIRMATIVE DEFENSE Contributory Breach / Unclean Hands

Vantor's claims are barred, in whole or in part, by the doctrine of contributory breach and the equitable doctrine of unclean hands. VTS's own material breach of the TSA — specifically, its unilateral, undisclosed reassignment of approximately 85 tractors from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co., in October 2021 — was the direct and proximate cause of VTS's performance failures and any resulting harm. VTS's misconduct is confirmed by the November 12, 2021 internal email from Sandra Milescu, COO of VTS, to Nikolai Vantorovich, CEO of Vantor, in which Ms. Milescu acknowledged the redeployment and predicted that Stonefield would discover it until January 2022. VTS cannot recover damages caused by its own wrongful, deliberate, and concealed conduct. Vantor's claims are barred by the equitable principle that one who comes into court must come with clean hands.

SEVENTH AFFIRMATIVE DEFENSE First-to-Breach Doctrine / Prior Material Breach

Vantor's claims are barred by the first-to-breach doctrine. VTS committed the first material breach of the TSA by unilaterally reducing the fleet capacity dedicated to Stonefield's freight in October 2021, well before any alleged volume shortfall or other performance deficiency by Stonefield and well before the termination on March 4, 2022. Under the first-to-breach doctrine as applied under New York law, VTS's prior material breach of the TSA excused Stonefield's subsequent performance obligations and independently validated Stonefield's termination of the agreement.

EIGHTH AFFIRMATIVE DEFENSE Waiver

To the extent any performance obligation of Stonefield was not strictly performed during the term of the TSA, Vantor waived any claim based on such non-performance through its own conduct. Specifically, Vantor continued to perform under the TSA without objection, failed to issue any cure notice to Stonefield at any time during the term of the TSA, accepted Stonefield's freight tenders throughout the relevant periods, and otherwise acquiesced in Stonefield's manner of performance. Vantor's failure to assert any claim of breach by Stonefield during the life of the contract — despite having actual knowledge of the facts and circumstances on which its present claims are based — constitutes a waiver of any right to assert such claims now.

NINTH AFFIRMATIVE DEFENSE Estoppel

Vantor is estopped from asserting claims based on Stonefield's volume tenders, lane assignments, or use of alternative carriers because Vantor's own conduct — particularly VTS's undisclosed fleet redeployment in October 2021 — induced the very conditions of which Vantor now complains. By secretly withdrawing more than 20% of its committed fleet capacity from Stonefield's dedicated lanes, VTS caused the performance failures that necessitated Stonefield's diversion of volume to alternative carriers and ultimately led to the termination. Vantor cannot now claim injury from the predictable consequences of its own misconduct.

TENTH AFFIRMATIVE DEFENSE Setoff

Stonefield is entitled to set off against any damages award the amount of losses and damages sustained by Stonefield as a result of VTS's material breach of the TSA, including but not limited to: (i) costs incurred to engage alternative carriers (Cascade Freight Systems Inc. and Briarwood Trucking Co.) at rates in excess of the TSA rates to replace capacity that VTS failed to provide; (ii) operational disruption, including delayed shipments, customer complaints, and service penalties imposed by Stonefield's own customers; and (iii) administrative costs associated with managing the transition of freight volumes from VTS to alternative carriers.

ELEVENTH AFFIRMATIVE DEFENSE Consequential Damages Waiver (Section 15.1)

Vantor's claims for stranded asset costs ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million) are barred as consequential damages by the mutual waiver of consequential damages set forth in Section 15.1 of the TSA. These three categories of claimed damages — totaling $9.47 million — are consequential in nature. They represent indirect costs flowing from the termination of the TSA, not direct damages under the contract. Stranded asset depreciation and lease termination costs are consequential to the loss of the contract, not a direct measure of contract damages. Severance and unemployment costs for terminated drivers and support staff are an indirect consequence of the termination, not a direct contractual obligation. Mitigation costs, by their very nature, are consequential. All three categories fall within the scope of the Section 15.1 waiver and are unrecoverable.

TWELFTH AFFIRMATIVE DEFENSE Duplicative Damages / Prohibition on Double Recovery

Vantor's simultaneous claims for liquidated damages ($67.23 million) and lost profits ($18.7 million) are duplicative and impermissible under New York law. Both theories of recovery seek compensation for the identical alleged harm — the loss of future contract value resulting from the TSA's early termination. Under well-settled New York law, a party may not recover both liquidated damages and actual damages for the same breach. Vantor must elect between these theories and cannot recover both. To the extent Vantor seeks recovery under both theories simultaneously, such claims must be dismissed or limited to a single recovery.

THIRTEENTH AFFIRMATIVE DEFENSE Failure to State a Claim / Standing

To the extent that Vantor Holdings Corp. — as opposed to its wholly owned subsidiary VTS — asserts claims arising under the TSA, such claims are barred because Vantor Holdings Corp. is not a signatory to the TSA and lacks standing to enforce its terms. The TSA was executed by and between Stonefield Logistics Group Inc. and Vantor Transport Services LLC. Vantor Holdings Corp. is not a party to the TSA, is not identified as a third-party beneficiary, and has no independent contractual right to assert claims under the agreement. Stonefield preserves this defense under Federal Rule of Civil Procedure 17 without waiving any other defense.

FOURTEENTH AFFIRMATIVE DEFENSE Reservation of Defenses

Stonefield reserves the right to assert additional affirmative defenses as they become apparent through the course of discovery and the further development of the factual record in this action. This reservation is made without waiver of any defense or objection available to Stonefield under applicable law, the Federal Rules of Civil Procedure, or the Local Rules of this Court.

PART III

COUNTERCLAIM

DEFENDANT/COUNTERCLAIM-PLAINTIFF STONEFIELD LOGISTICS GROUP INC.'S COUNTERCLAIM AGAINST PLAINTIFF/COUNTERCLAIM-DEFENDANT VANTOR HOLDINGS CORP.

Defendant and Counterclaim-Plaintiff Stonefield Logistics Group Inc. ("Stonefield"), by and through its undersigned counsel, Calderwood & Harkness LLP, brings this Counterclaim against Plaintiff and Counterclaim-Defendant Vantor Holdings Corp. ("Vantor") and states as follows:

Nature of Counterclaim

1. Stonefield brings this Counterclaim for declaratory judgment pursuant to 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57, seeking a declaration from this Court that: (a) Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA") was valid and for Cause under Section 13.1(a) of the TSA; (b) no liquidated damages or other amounts are owed by Stonefield to Vantor or Vantor Transport Services LLC ("VTS") under Section 14.2 of the TSA or otherwise; and (c) VTS committed material breach of the TSA, thereby excusing Stonefield's further performance obligations thereunder.

Parties to Counterclaim

2. Counterclaim-Plaintiff Stonefield Logistics Group Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield's Chief Executive Officer is Marcus Denton, its Chief Financial Officer is Priya Ramachandran, and its General Counsel is Tobias Wren.

3. Counterclaim-Defendant Vantor Holdings Corp. is a corporation organized and existing under the laws of the State of New York, with its principal place of business at 580 Eighth Avenue, 14th Floor, New York, New York 10018. Vantor is the parent company and sole equity owner of Vantor Transport Services LLC, which was the counterparty to the TSA.

Jurisdiction and Venue

4. This Court has subject-matter jurisdiction over this Counterclaim pursuant to 28 U.S.C. § 1332(a), based on complete diversity of citizenship between the parties and an amount in controversy exceeding $75,000, exclusive of interest and costs. This Court also has supplemental jurisdiction over this Counterclaim pursuant to 28 U.S.C. § 1367, as the Counterclaim arises out of the same transaction or occurrence as the claims asserted in Vantor's Amended Complaint.

5. Venue is proper in this District pursuant to the forum selection clause set forth in Section 16 of the TSA and pursuant to 28 U.S.C. § 1391(b).

Factual Allegations. The TSA

6. On March 15, 2019, Stonefield Logistics Group Inc. (as "Shipper-Broker") and Vantor Transport Services LLC (as "Carrier-Provider") executed the Transportation Services Agreement (Contract Reference No. SLG-VTS-2019-0315). The TSA was drafted by Ashford Meridian LLP, acting as outside counsel for Stonefield, and was the product of arm's-length negotiation between sophisticated commercial parties represented by counsel.

7. The TSA provided for a five-year initial term commencing April 1, 2019 and expiring March 31, 2024, with one automatic two-year renewal subject to 180-day non-renewal notice by either party.

8. Under the TSA, VTS committed to providing dedicated and on-demand full-truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors, and to maintaining minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to Stonefield's freight.

9. Stonefield committed to tendering an Annual Committed Volume of $43.2 million in transportation charges per contract year, subject to force majeure adjustments under Section 12.1.

10. The TSA established Service Level Obligations that VTS was required to maintain throughout the term of the agreement, including: (a) on-time pickup rate of at least 95%; (b) on-time delivery rate of at least 93%; (c) cargo claims ratio of no more than 0.5% of gross transportation revenue; (d) tender acceptance rate of at least 90%; and (e) equipment availability compliance of at least 85% of committed fleet capacity.

11. Section 13.1(a) of the TSA provided that either party could terminate the TSA for "Cause" upon a material breach by the other party that remained uncured for 30 calendar days after the breaching party's receipt of written notice specifying the breach with reasonable particularity. Section 13.2 prescribed the procedures for delivering a written Cure Notice.

12. Section 14.2 of the TSA contained a liquidated damages provision applicable only to terminations "other than for Cause."

13. The TSA is governed by the laws of the State of New York.

VTS's Performance and Material Breach

14. During Contract Year 1 (April 1, 2019 through March 31, 2020), both parties performed their obligations under the TSA substantially without material dispute.

15. During Contract Year 2 (April 1, 2020 through March 31, 2021), Stonefield properly invoked force majeure under Section 12.1 for the period of April through September 2020 due to the COVID-19 pandemic's impacts on freight demand. Stonefield tendered $31.8 million during CY2, exceeding the force-majeure-adjusted ACV of $21.6 million by $10.2 million.

16. Beginning no later than the third quarter of 2021, VTS began to fail materially in its performance under the TSA. VTS's service quality deteriorated across multiple SLO metrics, and VTS failed to provide timely notice of or explanation for the degradation in its performance.

17. In October 2021, VTS unilaterally reassigned approximately 85 tractors — more than 20% of the minimum committed fleet of 400 tractors — from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co., without providing any notice to or obtaining any consent from Stonefield.

18. Sandra Milescu, Chief Operating Officer of VTS, confirmed this reassignment in her internal email dated November 12, 2021 to Nikolai Vantorovich, Chief Executive Officer of Vantor, in which she stated: "We've pulled 85 tractors off the SLG dedicated lanes to cover [Northwind] commitments. SLG won't notice until January." Ms. Milescu further confirmed the reassignment and the absence of any notice to Stonefield during her deposition on August 4, 2023, at which she acknowledged that the reassignment was made for "commercial necessity" but was unable to explain why Stonefield was not notified, stating only that it was "an operational decision."

19. As a direct and proximate result of VTS's undisclosed fleet redeployment, VTS's Q4 2021 performance metrics fell dramatically below the contractually required SLO thresholds:

(a) On-time pickup rate: 78.2%, against a required SLO of ≥ 95% — a shortfall of 16.8 percentage points;

(b) On-time delivery rate: 81.6%, against a required SLO of ≥ 93% — a shortfall of 11.4 percentage points;

(e) Cargo claims ratio: 1.07% of gross transportation revenue, based on 16 claims in November and December 2021 totaling $387,400, against a required SLO of ≤ 0.5% — more than double the permissible maximum.

20. In addition to the foregoing SLO failures, VTS chronically failed to provide substitute equipment or surge capacity as required under Section 7.4 of the TSA, despite repeated requests from Stonefield's operations team during November 2021 and January 2022.

21. VTS's failures, individually and collectively, constituted material breach of the TSA under Section 13.1(a). The breaches were not isolated or de minimis — they reflected a systematic withdrawal of dedicated resources from Stonefield's account, deliberately concealed from Stonefield, that caused VTS to fail every performance metric by a substantial margin.

The Cure Notice and Failure to Cure

22. On January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, delivered a written Cure Notice to Sandra Milescu, COO of VTS, via overnight courier and electronic mail. The Cure Notice identified each of the material breaches described in Paragraphs 19 and 20 above with reasonable particularity, specifying each performance metric, the applicable SLO threshold, and VTS's actual performance figure for the Q4 2021 measurement period. The Cure Notice satisfied the requirements of Section 13.2 of the TSA.

23. The Cure Notice provided VTS a cure period of 30 calendar days from receipt, expiring February 17, 2022, within which to cure the identified material brea

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S ANSWER TO PLAINTIFF'S AMENDED COMPLAINT, AFFIRMATIVE DEFENSES, AND COUNTERCLAIM
Filed: January 13, 2023
Defendant Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102, by and through its undersigned counsel, Calderwood & Harkness LLP, respectfully submits this Answer to the Amended Complaint of Plaintiff Vantor Holdings Corp. ("Vantor"), filed December 2, 2022, together with its Affirmative Defenses and Counterclaim.
PRELIMINARY STATEMENT
Vantor's Amended Complaint seeks approximately $95.4 million in damages arising from Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315). Vantor's claims are meritless. Stonefield validly terminated the TSA for Cause under Section 13.1(a) after Vantor's wholly owned subsidiary, Vantor Transport Services LLC ("VTS"), committed repeated and severe material breach of the TSA's Service Level Obligations ("SLOs") across every performance metric during the fourth quarter of 2021, and failed to cure those breaches within the 30-day period prescribed by Section 13.2 of the TSA.
The undisputed facts demonstrate that VTS unilaterally and secretly reassigned approximately 85 tractors — more than 20% of the committed fleet capacity — from Stonefield's dedicated lanes to another shipper's account, causing on-time pickup rates, on-time delivery rates, tender acceptance rates, and equipment availability to plummet far below the contractually required thresholds, while cargo claims spiked to more than double the permissible ratio. Far from being a victim, VTS is the author of its own misfortune. Vantor now seeks to turn VTS's own operational dereliction into a windfall by pursuing nearly $100 million in damages against the very counterparty that VTS betrayed.
Stonefield respectfully denies all claims for relief asserted in the Amended Complaint, asserts fourteen affirmative defenses, and interposes a counterclaim seeking a declaratory judgment confirming the validity of Stonefield's termination and that no liquidated damages or other amounts are owed to Vantor or VTS under the TSA.
PART I
ANSWER TO AMENDED COMPLAINT
Stonefield answers each numbered paragraph of the Amended Complaint as set forth below. To the extent any allegation contained in the Amended Complaint is not specifically admitted herein, it is denied. Headings and sub-headings used in the Amended Complaint are not allegations of fact and do not require a response; to the extent any response is deemed necessary, they are denied. Stonefield reserves the right to amend or supplement this Answer as discovery proceeds and additional facts become known.
SECTION I: THE PARTIES
Paragraph 1. Stonefield admits that Vantor Holdings Corp. is a corporation organized and existing under the laws of the State of New York, with its principal place of business located at 580 Eighth Avenue, 14th Floor, New York, New York 10018.
Paragraph 2. Stonefield admits that Vantor Transport Services LLC is a limited liability company organized and existing under the laws of the State of New York and that VTS is a wholly owned subsidiary of Vantor Holdings Corp. Stonefield denies, however, that Vantor Holdings Corp. is a proper party to assert claims under the TSA, as VTS — not Vantor Holdings Corp. — was the signatory counterparty to the TSA. Stonefield expressly reserves the defense that Vantor Holdings Corp. is not the real party in interest within the meaning of Federal Rule of Civil Procedure 17, but does not move on that basis at this time.
Paragraph 3. Stonefield admits that Stonefield Logistics Group Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business located at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield further admits that its registered agent for service of process in the State of Delaware is Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801. Stonefield denies any characterization of its business operations, financial condition, corporate strategy, or motives contained in Paragraph 3 of the Amended Complaint that is inaccurate, incomplete, or misleading.
Paragraph 4. Stonefield admits that this Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a), based on complete diversity of citizenship between the parties (Stonefield is a citizen of Delaware and Texas; Vantor is a citizen of New York), and that the amount in controversy exceeds $75,000, exclusive of interest and costs.
Paragraph 5. Stonefield admits that venue is proper in the United States District Court for the Southern District of New York pursuant to the forum selection clause set forth in Section 16 of the TSA, and pursuant to 28 U.S.C. § 1391(b).
Paragraph 6. Stonefield admits that Nikolai Vantorovich is the Chief Executive Officer and Founder of Vantor Holdings Corp. Stonefield lacks sufficient knowledge or information to form a belief as to the remaining allegations in this paragraph regarding Mr. Vantorovich's personal background and business history, and on that basis denies them.
Paragraph 7. Stonefield admits, upon information and belief, that VTS operates a fleet of approximately 650 owned tractors and approximately 2,100 trailers. Stonefield lacks sufficient knowledge or information to admit or deny the remaining allegations in this paragraph concerning VTS's employee headcount, terminal locations, or historical revenue, and on that basis denies them.
Paragraph 8. Stonefield denies the allegations of this paragraph to the extent they characterize Vantor's or VTS's financial condition, creditworthiness, or industry reputation, as Stonefield lacks sufficient knowledge or information to form a belief as to those matters. Stonefield specifically denies any allegation that VTS's financial condition or business reputation was harmed by Stonefield's conduct.
Paragraph 9. Stonefield affirmatively states that Stonefield's majority equity owner is Ridgeline Capital Partners, LP, through Ridgeline Fund III, LP, which holds approximately 72% of Stonefield's outstanding equity, following a leveraged buyout completed in 2017 at an enterprise value of approximately $680 million. Stonefield admits that its Chief Executive Officer is Marcus Denton, its Chief Financial Officer is Priya Ramachandran, and its General Counsel is Tobias Wren. Stonefield denies any allegation in this paragraph that characterizes the purposes, motives, or strategy of Ridgeline Capital Partners, LP or its affiliates in connection with the TSA or Stonefield's operations, to the extent such characterizations are inaccurate or misleading.
Paragraph 10. Stonefield lacks sufficient knowledge or information to form a belief as to the allegations contained in Paragraph 10 regarding Vantor's additional corporate subsidiaries, affiliates, and their respective operations, and on that basis denies them.
SECTION II: THE TRANSPORTATION SERVICES AGREEMENT
Paragraph 11. Stonefield admits that the TSA was executed on March 15, 2019, between Stonefield Logistics Group Inc. (in the capacity of "Shipper-Broker") and Vantor Transport Services LLC (in the capacity of "Carrier-Provider"). Stonefield further admits that the TSA was drafted by Ashford Meridian LLP, acting as outside counsel on behalf of Stonefield. The TSA speaks for itself, and Stonefield denies any characterization, paraphrase, or summary of the TSA's terms that is incomplete, inaccurate, or misleading.
Paragraph 12. Stonefield admits that the TSA provided for a five-year initial term commencing on April 1, 2019 and expiring on March 31, 2024, subject to one automatic two-year renewal unless either party delivered written notice of non-renewal at least 180 calendar days prior to the expiration of the initial term. The TSA speaks for itself with respect to the specific terms and conditions of renewal, and Stonefield denies any characterization thereof that is inconsistent with the plain text of the agreement.
Paragraph 13. Stonefield admits that VTS agreed, pursuant to the TSA, to provide dedicated and on-demand full-truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors as identified in Schedule A to the TSA, and that VTS committed to maintaining minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to Stonefield freight. Stonefield denies any allegation that VTS performed these obligations consistently throughout the life of the contract, and affirmatively states that VTS's compliance deteriorated materially beginning in Q3 2021.
Paragraph 14. Stonefield admits that the TSA is governed by and shall be construed in accordance with the laws of the State of New York, without regard to conflict-of-law principles, as set forth in the governing law provision of the TSA.
Paragraph 15. Stonefield admits that the TSA contained an Annual Committed Volume ("ACV") of $43.2 million in transportation charges per contract year, yielding a total five-year minimum commitment of $216 million over the initial term. Stonefield denies any allegation that the ACV obligation operated without qualification, and affirmatively states that the ACV was subject to adjustment pursuant to the force majeure provisions of Section 12.1 of the TSA, which Stonefield properly invoked during Contract Year 2 as described further herein.
Paragraph 16. Stonefield admits that per-mile rates for each designated lane were set forth in Schedule B to the TSA and were subject to annual adjustment pursuant to the Rate Adjustment Mechanism in Section 5.3, which provided for rate adjustments on each April 1 based on a blended index of 70% diesel fuel index and 30% Consumer Price Index for All Urban Consumers (CPI-U). Stonefield denies any allegation or inference that the Rate Adjustment Mechanism was unusual, onerous, or that Stonefield sought to avoid its application through bad-faith conduct.
Paragraph 17. Stonefield admits that VTS was required, pursuant to the SLOs set forth in the TSA, to maintain the following minimum performance thresholds: (i) on-time pickup rate of at least 95%; (ii) on-time delivery rate of at least 93%; (iii) cargo claims ratio of no more than 0.5% of gross transportation revenue; (iv) tender acceptance rate of at least 90%; and (v) equipment availability compliance of at least 85% of committed fleet capacity (i.e., at least 340 of 400 committed tractors). The TSA speaks for itself regarding the detailed definitions and measurement methodologies applicable to each SLO.
Paragraph 18. Stonefield admits the existence of Section 14.2 of the TSA and does not dispute the textual quotation set forth in Paragraph 18 of the Amended Complaint, provided that such quotation is complete and accurate. Stonefield denies, however, that the liquidated damages clause set forth in Section 14.2 is enforceable under applicable law. Stonefield affirmatively states that the liquidated damages formula (75% of the ACV multiplied by the number of years remaining in the initial term) produces results that are grossly disproportionate to any actual or reasonably anticipated harm and constitutes an unenforceable penalty under governing New York law. Stonefield further states that actual damages were readily calculable at the time of contracting from known operating margins, market conditions, and industry benchmarks, rendering the liquidated damages provision unnecessary and unreasonable.
Paragraph 19. Stonefield admits the text of Section 13.1 of the TSA, including the provision that either party may terminate the TSA for "Cause" upon a material breach that remains uncured for 30 calendar days after the breaching party's receipt of written notice specifying the breach with reasonable particularity. The TSA speaks for itself, and Stonefield denies any characterization of Section 13.1 that is incomplete or inaccurate.
Paragraph 20. Stonefield admits that Section 13.2 of the TSA requires the terminating party to deliver a written Cure Notice specifying with reasonable particularity the alleged material breach or breaches forming the basis for termination. Stonefield affirmatively states that it fully complied with this requirement in its January 18, 2022 Cure Notice.
Paragraph 21. Stonefield admits the existence and text of Section 12.1 of the TSA governing force majeure events and the procedures for invoking force majeure relief. Stonefield affirmatively states that it timely and properly invoked force majeure under Section 12.1 for the period of April 2020 through September 2020 in connection with the material adverse effects of the COVID-19 pandemic on nationwide freight demand and Stonefield's business operations. The invocation was communicated in writing to VTS by letter dated April 14, 2020 from Tobias Wren to Sandra Milescu, and VTS did not object to or dispute the invocation at any time prior to the commencement of this litigation.
Paragraph 22. Stonefield admits the existence of Section 7.4 of the TSA, which required VTS to provide substitute equipment or surge capacity in the event of equipment shortfalls, mechanical breakdowns, driver unavailability, or other circumstances affecting VTS's ability to meet its fleet commitments. Stonefield affirmatively states that VTS chronically failed to comply with this obligation during Q4 2021 and into Q1 2022.
Paragraph 23. Stonefield admits that Schedule C to the TSA identifies 14 designated "Primary Lanes" that are subject to exclusivity provisions. Stonefield denies that the exclusivity provisions of Schedule C extended to any lane beyond those 14 designated Primary Lanes. Stonefield affirmatively states that Schedule C, Section 2(b) expressly distinguishes "Secondary Lanes" from "Primary Lanes" and provides that exclusivity restrictions do not apply to Secondary Lanes. Accordingly, Stonefield was free to engage alternative carriers for transportation services on any Secondary Lane without violating the TSA.
Paragraph 24. Stonefield admits the existence of a mutual waiver of consequential damages in Section 15.1 of the TSA, which provides that neither party shall be liable to the other for any indirect, incidental, consequential, special, or punitive damages arising out of or related to the TSA, regardless of the form of action, whether in contract, tort, strict liability, or otherwise, and regardless of whether such damages were foreseeable.
Paragraph 25. Stonefield admits that the TSA contained a mandatory pre-litigation dispute resolution provision in Section 16, requiring the parties to engage in a 30-day executive negotiation period before initiating any litigation or other formal legal proceeding. Stonefield admits that this requirement was satisfied prior to the filing of the original Complaint in this action.
Paragraph 26. The TSA speaks for itself. Stonefield admits undisputed textual provisions of the TSA to the extent accurately quoted or paraphrased in this paragraph, and denies any characterization, inference, or construction that is inconsistent with the plain language of the TSA.
Paragraph 27. The TSA speaks for itself. Stonefield admits undisputed textual provisions of the TSA to the extent accurately quoted or paraphrased in this paragraph, and denies any characterization, inference, or construction that is inconsistent with the plain language of the TSA.
Paragraph 28. The TSA speaks for itself. To the extent this paragraph characterizes the intent or purpose of any TSA provision, Stonefield denies such characterization to the extent it is inconsistent with the actual text of the TSA.
Paragraph 29. Stonefield admits undisputed textual provisions referenced in this paragraph to the extent they are accurately quoted. Stonefield denies any allegation or inference that Stonefield breached, intended to breach, or acted in bad faith with respect to any term of the TSA.
Paragraph 30. Stonefield denies the allegations of this paragraph to the extent they contain characterizations, summaries, or paraphrases of TSA provisions that are inaccurate, incomplete, or misleading. The TSA speaks for itself.
SECTION III: PERFORMANCE UNDER THE TSA
Paragraph 31. Stonefield admits that during Contract Year 1 ("CY1"), running from April 1, 2019 through March 31, 2020, both parties performed their obligations under the TSA substantially without material dispute.
Paragraph 32. Stonefield admits that during CY1, Stonefield tendered freight to VTS in an aggregate amount meeting or exceeding the CY1 ACV of $43.2 million, and that VTS's performance metrics were generally within the required SLO thresholds throughout CY1.
Paragraph 33. Stonefield admits the general allegations of this paragraph regarding CY1 performance to the extent they are consistent with Stonefield's records and the TSA's terms. Stonefield denies any allegation that the smooth performance during CY1 created an obligation to maintain any particular pattern of conduct beyond what the TSA required.
Paragraph 34. Stonefield admits that the parties' relationship during CY1 was commercially productive and that both parties benefited from the TSA during that period.
Paragraph 35. Stonefield admits the general allegations of this paragraph to the extent they accurately describe CY1 performance. To the extent this paragraph contains characterizations of Stonefield's satisfaction with VTS's services or any other subjective assessments, Stonefield lacks sufficient information to admit or deny such allegations and on that basis denies them.
Paragraph 36. Stonefield denies that it breached the ACV obligation during Contract Year 2 ("CY2"), running from April 1, 2020 through March 31, 2021. Stonefield affirmatively states that it properly and timely invoked force majeure under Section 12.1 of the TSA for the period of April 2020 through September 2020, covering the first six months of CY2, as a direct result of the unprecedented disruption to nationwide freight demand caused by the COVID-19 pandemic. The force majeure invocation was communicated in writing on April 14, 2020, and VTS did not object or dispute the invocation. Accordingly, the adjusted ACV for CY2 was $21.6 million (calculated as $43.2 million multiplied by six-twelfths, reflecting the six non-force-majeure months of CY2).
Paragraph 37. Stonefield denies Vantor's allegation that Stonefield's CY2 volume shortfall was $11.4 million. That figure is calculated against the unadjusted full-year ACV of $43.2 million and improperly ignores Stonefield's valid force majeure invocation. Stonefield affirmatively states that it actually tendered $31.8 million in transportation charges to VTS during CY2, exceeding the adjusted ACV of $21.6 million by $10.2 million. Accordingly, Stonefield not only satisfied its ACV obligation during CY2, but substantially exceeded it.
Paragraph 38. Stonefield denies any allegation that its force majeure invocation was invalid, untimely, or pretextual. The COVID-19 pandemic caused a documented decline in freight volumes across the transportation industry during the first half of 2020, as reflected in publicly available data from the American Trucking Associations, the Dunmore Systems, and other industry sources.
Paragraph 39. Stonefield denies the remaining allegations in this paragraph to the extent they assert that any CY2 volume shortfall constituted a material breach of the TSA.
Paragraph 40. Stonefield denies the allegations of this paragraph. To the extent Vantor alleges that Stonefield's CY2 performance created a pattern or practice of non-compliance, Stonefield denies that allegation and states that its CY2 performance was not only compliant but exceeded the adjusted ACV by a substantial margin.
Paragraph 41. Stonefield admits that it tendered approximately $36.5 million in transportation charges to VTS during the partial Contract Year 3 ("CY3") period running from April 1, 2021 through January 31, 2022, a period of ten months out of the twelve-month contract year.
Paragraph 42. Stonefield denies that any CY3 volume shortfall constituted a material breach of the TSA. The CY3 ACV shortfall alleged by Vantor — $6.7 million against the full-year ACV of $43.2 million — improperly fails to account for the proration of the contract year, given that the TSA was terminated effective March 4, 2022 and the full twelve-month CY3 period never elapsed. Moreover, any shortfall in CY3 volume was directly and proximately attributable to VTS's own severe performance failures, which forced Stonefield to divert freight to alternative carriers out of operational necessity in order to meet its own customers' requirements and avoid supply chain disruptions.
Paragraph 43. Stonefield denies the allegations of this paragraph to the extent they assert that Stonefield was obligated to continue tendering the full ACV to a carrier that was materially breaching its service obligations and had secretly redirected more than 20% of its dedicated fleet capacity to another shipper.
Paragraph 44. Stonefield denies the remaining allegations in this paragraph.
Paragraph 45. Stonefield denies that it violated any exclusivity provision of the TSA through its use of alternative carriers. Stonefield admits that it engaged Cascade Freight Systems Inc., an Ohio corporation headquartered in Columbus, Ohio, and Briarwood Trucking Co., a Virginia corporation headquartered in Arlington, Virginia, to provide supplemental truckload transportation services. Stonefield affirmatively states that its use of Cascade and Briarwood was limited exclusively to Lanes 8 through 14, all of which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA and are not subject to any exclusivity restriction.
Paragraph 46. Stonefield denies that its engagement of alternative carriers on Secondary Lanes constituted a breach of the TSA or any duty of good faith and fair dealing. Stonefield affirmatively states that the diversion of freight to Cascade and Briarwood on Lanes 8 through 14 was a direct, necessary, and commercially reasonable response to VTS's declining tender acceptance rates, which fell to 71.4% in Q4 2021 against a contractually required SLO of 90%. Stonefield was not required to suffer operational disruption and customer dissatisfaction while waiting indefinitely for VTS to meet its obligations.
Paragraph 47. Stonefield denies the remaining allegations in this paragraph.
Paragraph 48. Stonefield denies that its termination of the TSA was pretextual, motivated by bad faith, or designed to avoid the April 2022 rate adjustment. Stonefield admits, as a matter of ordinary business planning and financial forecasting, that it was aware that the Rate Adjustment Mechanism in Section 5.3 of the TSA would produce an increase in per-mile rates effective April 1, 2022, from a weighted average of approximately $2.87 per mile to approximately $3.28 per mile, representing an increase of approximately 14.3%.
Paragraph 49. Stonefield denies that awareness of a contractually mandated and fully anticipated rate adjustment constitutes evidence of bad faith, pretext, or wrongful motive. The rate adjustment was a known and agreed-upon term of the TSA, calculated by reference to objective indices. Stonefield's decision to terminate was based exclusively on VTS's uncured material breach of the SLOs, and objective Cause for termination existed independently of any consideration of future rate increases.
Paragraph 50. Stonefield denies the remaining allegations of this paragraph.
SECTION IV: STONEFIELD'S TERMINATION OF THE TSA
Paragraph 51. Stonefield admits that Raymond Hess, Director of Contract Compliance at Stonefield, sent a written Cure Notice dated January 18, 2022 (the "Cure Notice") to Sandra Milescu, Chief Operating Officer of Vantor and VTS, via both overnight courier (Severin Partners LLC tracking number 7891-2034-5567) and electronic mail. Stonefield admits that the Cure Notice identified the following material breaches of the TSA's Service Level Obligations, based on VTS's Q4 2021 performance data:
(a) On-time pickup rate: 78.2%, against a required SLO of ≥ 95%;
(b) On-time delivery rate: 81.6%, against a required SLO of ≥ 93%;
(c) Tender acceptance rate: 71.4%, against a required SLO of ≥ 90%;
(d) Equipment availability: approximately 248 tractors available for Stonefield freight, representing 62% of the committed fleet capacity of 400 tractors, against a required SLO of ≥ 85% (i.e., at least 340 tractors);
(e) Cargo claims: 16 claims filed during November and December 2021, totaling $387,400 in claimed damages, yielding a claims ratio of approximately 1.07% of gross transportation revenue for that period, against a required SLO of ≤ 0.5%; and
(f) Chronic failure to provide substitute equipment or surge capacity as required under Section 7.4 of the TSA.
Stonefield affirmatively states that the Cure Notice satisfied the "reasonable particularity" requirement of Section 13.2 by specifying each performance metric at issue, the applicable SLO threshold, and VTS's actual performance figure for the relevant measurement period.
Paragraph 52. Stonefield admits that the cure period prescribed by Section 13.2 of the TSA was 30 calendar days from VTS's receipt of the Cure Notice, and that VTS received the Cure Notice on January 18, 2022, making the cure period expiration date February 17, 2022.
Paragraph 53. Stonefield admits that Derek Pruitt, Vice President of Business Development for Vantor, sent a letter dated February 14, 2022 (the "Cure Response") to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, purporting to respond to the Cure Notice. Stonefield admits that the Cure Response acknowledged "operational challenges" experienced by VTS. Stonefield denies, however, that the Cure Response constituted a cure, a substantial cure, or any meaningful remediation of the identified material breaches.
Specifically, the Cure Response: (i) acknowledged that VTS had experienced service deficiencies across multiple metrics; (ii) attributed those deficiencies to external factors, including a nationwide driver shortage and alleged volume shortfalls by Stonefield; (iii) disputed the cargo claims data cited in the Cure Notice; and (iv) asserted that VTS had "substantially cured" the deficiencies — but failed to provide any supporting data, documentation, or verifiable evidence of actual remediation. The Cure Response did not demonstrate that any SLO metric had been restored to compliance. Post-cure-period performance data confirmed that VTS's failures continued unabated.
Stonefield further denies that Stonefield's volume tenders, lane assignments, or any other conduct by Stonefield caused or contributed to VTS's performance failures.
Paragraph 54. Stonefield admits that Tobias Wren, General Counsel of Stonefield, sent a formal termination letter dated March 4, 2022 (the "Termination Letter") to Vantor Holdings Corp. and Vantor Transport Services LLC, via overnight courier and electronic mail, stating that VTS had failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the 30-day cure period prescribed by Section 13.2, and that the TSA was terminated effective immediately for Cause pursuant to Section 13.1(a).
Stonefield denies that the termination was wrongful, pretextual, in bad faith, or otherwise constituted a breach of the TSA by Stonefield.
Paragraph 55. Stonefield admits that at the time of the Termination Letter (March 4, 2022), approximately 2 years and 27 days remained in the TSA's initial five-year term (which was scheduled to expire on March 31, 2024).
Paragraph 56. Stonefield denies all allegations that the termination of the TSA was wrongful.
Paragraph 57. Stonefield denies all allegations that the termination was pretextual or motivated by Stonefield's desire to avoid the April 2022 rate adjustment or to renegotiate the TSA on more favorable terms.
Paragraph 58. Stonefield denies all allegations that VTS's performance deficiencies were caused by or attributable to Stonefield's conduct, including Stonefield's volume tenders, freight allocation decisions, or use of alternative carriers on Secondary Lanes.
Paragraph 59. Stonefield affirmatively states that VTS's performance failures were self-inflicted and directly caused by VTS's own misconduct. In October 2021, VTS unilaterally and without notice to Stonefield reassigned approximately 85 tractors — more than 20% of the minimum committed fleet of 400 tractors — from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co. This undisclosed fleet redeployment is confirmed by the November 12, 2021 internal email from Sandra Milescu, COO of VTS, to Nikolai Vantorovich, CEO of Vantor, which stated: "We've pulled 85 tractors off the SLG dedicated lanes to cover [Northwind] commitments. SLG won't notice until January."
Paragraph 60. Stonefield denies the remaining allegations of this paragraph. VTS's decision to secretly divert a substantial portion of its committed fleet to another customer — while expecting Stonefield to continue tendering full ACV volumes — constitutes the paradigmatic material breach for which the termination-for-Cause provisions of the TSA were designed.
Paragraph 61. Stonefield denies that it committed any material breach of the TSA.
Paragraph 62. Stonefield denies that it failed to tender the ACV in any contract year, as addressed in detail above. Stonefield's CY2 tenders of $31.8 million exceeded the force-majeure-adjusted ACV of $21.6 million by $10.2 million. The CY3 partial-year tenders of $36.5 million over ten months reflect both proration and the operational necessity of diverting volume away from a carrier that was materially breaching its service obligations.
Paragraph 63. Stonefield denies that it violated any exclusivity provision of the TSA. As set forth above, Stonefield's use of Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited to Lanes 8 through 14, all of which are non-exclusive Secondary Lanes under Schedule C, Section 2(b).
Paragraph 64. Stonefield denies that the September 22, 2021 email from Janet Kirkwood to Carlos Medina constitutes evidence of wrongful motive, pretext, or bad faith. The email — which stated: "VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract." — reflects legitimate operational concerns by Stonefield's carrier management personnel about VTS's deteriorating performance. The email expressly references volume diversion only on Lanes 8 through 14, which are non-exclusive Secondary Lanes, and contemplates exercise of Stonefield's contractual right to terminate for Cause in the event VTS failed to improve its performance.
Paragraph 65. Stonefield denies the remaining allegations of this paragraph.
SECTION V: PRE-LITIGATION DISPUTE RESOLUTION
Paragraph 66. Stonefield admits that Vantor, through its counsel Caldwell Royce & Shapiro LLP, sent a demand letter to Stonefield dated April 8, 2022, asserting claims for damages in the aggregate amount of approximately $95.4 million.
Paragraph 67. Stonefield admits that Tobias Wren, General Counsel of Stonefield, responded to the demand letter by letter dated April 29, 2022, rejecting the demand in its entirety and invoking the mandatory executive negotiation period set forth in Section 16 of the TSA.
Paragraph 68. Stonefield admits that executive negotiation meetings were conducted between the parties in accordance with Section 16, including an in-person meeting on May 16, 2022 attended by Marcus Denton (CEO, Stonefield) and Nikolai Vantorovich (CEO, Vantor), and a follow-up telephonic meeting on June 3, 2022.
Paragraph 69. Stonefield admits that the executive negotiation process did not result in a resolution of the dispute between the parties.
Paragraph 70. Stonefield admits the allegations in this paragraph to the extent they are consistent with the foregoing admissions regarding the executive negotiation process.
Paragraph 71. Stonefield admits that the mandatory 30-day executive negotiation period required by Section 16 of the TSA was satisfied before Vantor initiated this litigation by filing the original Complaint on September 12, 2022.
Paragraph 72. Stonefield admits the allegations in this paragraph to the extent they state that the pre-litigation dispute resolution requirements of the TSA were complied with by both parties.
SECTION VI: VANTOR'S CLAIMED DAMAGES
Paragraph 73. Stonefield denies that Vantor is entitled to any damages whatsoever, whether in the amount of $95.4 million or any other amount.
Paragraph 74. Stonefield denies that Vantor is entitled to liquidated damages under Section 14.2 of the TSA. The termination was for Cause under Section 13.1(a), not a termination "other than for Cause" as required to trigger the liquidated damages provision of Section 14.2. Because the predicate condition for liquidated damages has not been met, no liquidated damages are owed.
Paragraph 75. In the alternative, and without conceding that the termination was other than for Cause, Stonefield denies that the liquidated damages clause in Section 14.2 is enforceable under New York law. The formula set forth in Section 14.2 — which calculates liquidated damages as 75% of the ACV multiplied by the number of years remaining in the initial term — produces a result of approximately $67.23 million (75% × $43.2 million × 2.075 years). This amount is grossly disproportionate to any actual or reasonably anticipated harm that VTS could suffer as a result of the TSA's early termination and constitutes an unenforceable penalty. Under the two-part test for enforceability of liquidated damages provisions under New York law, the clause fails on both prongs: (i) the amount is not a reasonable estimate of probable damages at the time of contracting, and (ii) actual damages were not difficult to ascertain, as they were readily calculable from VTS's known operating margins, publicly available market rates, and standard industry financial metrics.
Paragraph 76. Stonefield denies the remaining allegations in this paragraph concerning liquidated damages.
Paragraph 77. Stonefield denies that Vantor is entitled to lost profits in the amount of $18.7 million or any other amount. To the extent liquidated damages are sought and are deemed applicable, a simultaneous award of lost profits would constitute an impermissible double recovery under New York law, as both theories compensate for the identical alleged harm — the loss of future contract value.
Paragraph 78. In the alternative, even if liquidated damages are not applicable, Stonefield denies that Vantor's lost profits calculation is supportable. Vantor's calculation relies on an assumed operating margin of 12%, which is unsupported by VTS's actual financial performance and is inflated relative to industry benchmarks for asset-based truckload carriers. Furthermore, the lost profits calculation fails to account for VTS's own material breaches, which reduced the value of the contract and would have continued to impair VTS's performance for the remainder of the term.
Paragraph 79. Stonefield denies the remaining allegations in this paragraph concerning lost profits.
Paragraph 80. Stonefield denies that Vantor is entitled to $5.2 million or any other amount for alleged stranded asset costs. The claimed stranded asset costs — including accelerated depreciation on tractors and trailers acquired for the Stonefield contract and costs associated with early termination of equipment leases — are consequential damages that fall squarely within the scope of the mutual waiver of consequential damages set forth in Section 15.1 of the TSA. These are indirect losses flowing from the termination, not direct damages arising under the contract.
Paragraph 81. Stonefield denies the remaining allegations in this paragraph.
Paragraph 82. Stonefield denies the remaining allegations in this paragraph.
Paragraph 83. Stonefield denies that Vantor is entitled to $2.87 million or any other amount for workforce reduction costs. Severance payments, unemployment insurance costs, and related expenses incurred in connection with the termination of approximately 180 drivers and support staff are consequential damages barred by the mutual waiver in Section 15.1 of the TSA.
Paragraph 84. Stonefield denies the remaining allegations in this paragraph.
Paragraph 85. Stonefield denies the remaining allegations in this paragraph.
Paragraph 86. Stonefield denies that Vantor is entitled to $1.4 million or any other amount for alleged mitigation costs. These costs are consequential damages barred by Section 15.1 of the TSA. Further, even if such costs were recoverable, Vantor's mitigation efforts were inadequate and commercially unreasonable in light of the robust freight market conditions prevailing in Q1 and Q2 of 2022, during which period spot rates for truckload freight were elevated approximately 35% above historical averages. VTS's freed capacity — including the approximately 85 tractors that VTS had previously redeployed to the Northwind account, plus additional tractors made available by the TSA's termination — could and should have been promptly deployed to serve other shippers at prevailing market rates.
Paragraph 87. Stonefield denies the remaining allegations in this paragraph.
Paragraph 88. Stonefield denies the remaining allegations in this paragraph.
Paragraph 89. Stonefield denies all general damages allegations contained in this paragraph. Stonefield affirmatively states that Vantor's damages claims are based on the expert report of Dr. Philip Trask of Trask Greystone & Associates, located at 400 Madison Avenue, Suite 900, New York, New York 10017, and that Dr. Trask's report relies on flawed methodology, inflated margin assumptions, and fails to account for VTS's own material breaches and failure to mitigate. As demonstrated by the rebuttal expert report of Dr. Evelyn Rosser of Kensington Analytics Group LLC, located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103, Vantor's maximum possible damages — under the most favorable assumptions and assuming arguendo that the termination was wrongful — are no greater than $8.2 million.
Paragraph 90. Stonefield denies the remaining allegations in this paragraph.
Response to Prayer for Relief. Stonefield denies that Vantor is entitled to any relief whatsoever, whether monetary, declaratory, injunctive, equitable, or otherwise. Stonefield specifically denies that Vantor is entitled to damages, liquidated damages, lost profits, consequential damages, pre-judgment interest, attorneys' fees, costs, or any other form of recovery. Stonefield reserves the right to seek its own costs, disbursements, and any other relief to which it may be entitled.
PART II
AFFIRMATIVE DEFENSES
Without assuming the burden of proof on any issue for which it does not bear such burden, and without waiving any right to assert additional defenses as they may become apparent through discovery or otherwise, Defendant Stonefield Logistics Group Inc. asserts the following affirmative defenses to the Amended Complaint:
FIRST AFFIRMATIVE DEFENSE Valid Termination for Cause Under Section 13.1(a)
Vantor's claims are barred, in whole or in part, because Stonefield validly terminated the TSA for Cause under Section 13.1(a). VTS committed material breach of the TSA's Service Level Obligations across all five performance metrics during Q4 2021, and failed to cure those breaches within the 30-calendar-day cure period prescribed by Section 13.2 of the TSA. Specifically, VTS's Q4 2021 performance fell below the contractually required thresholds on every measured SLO: on-time pickup rate of 78.2% (against a required 95%); on-time delivery rate of 81.6% (against a required 93%); tender acceptance rate of 71.4% (against a required 90%); equipment availability of 62% of committed fleet capacity (against a required 85%); and cargo claims ratio of 1.07% (against a maximum permitted 0.5%). VTS's February 14, 2022 Cure Response did not demonstrate actual remediation of any deficiency and was not accompanied by any verifiable evidence that any SLO metric had been restored to compliance. Because the termination was validly effected for Cause, the liquidated damages provision of Section 14.2 is not triggered, and no liquidated damages or other termination-related payments are owed to Vantor or VTS.
SECOND AFFIRMATIVE DEFENSE Unenforceability of Liquidated Damages Clause as a Penalty
Even if the termination were deemed not to be for Cause, which Stonefield expressly denies, Vantor's claim for liquidated damages under Section 14.2 of the TSA is barred because the liquidated damages clause is unenforceable as a penalty under New York law. The liquidated damages formula — 75% of the $43.2 million ACV multiplied by the number of years remaining in the initial term — produces a result of approximately $67.23 million, an amount that is grossly disproportionate to any actual or reasonably anticipated harm. The liquidated damages clause fails both prongs of the enforceability test established under New York law: first, the liquidated damages amount does not constitute a reasonable estimate of probable damages at the time of contracting; and second, actual damages were not difficult to ascertain at the time of contracting, as they were readily calculable from VTS's known operating margins, publicly available market rates for truckload freight, and standard industry financial metrics. Accordingly, the clause constitutes an unenforceable penalty and is void.
THIRD AFFIRMATIVE DEFENSE Failure to Mitigate
Vantor's claims are barred, in whole or in part, because Vantor failed to exercise reasonable efforts to mitigate its alleged damages following the March 4, 2022 termination of the TSA. The freight market in Q1 and Q2 of 2022 was characterized by robust demand and elevated pricing, with spot rates for truckload freight approximately 35% above historical averages. VTS had substantial available capacity — including freed tractors, trailers, and trained drivers — that could have been promptly deployed to serve other shippers and generate revenue. Despite these favorable market conditions, Vantor failed to take adequate or commercially reasonable steps to replace the revenue lost by the TSA's termination. Notably, Derek Pruitt, Vice President of Business Development for Vantor, was unable to identify any specific mitigation steps taken by Vantor when questioned at his deposition on July 10, 2023. Any damages to which Vantor might otherwise be entitled must be reduced by the amounts that Vantor could have avoided through the exercise of reasonable mitigation efforts.
FOURTH AFFIRMATIVE DEFENSE Force Majeure — ACV Adjustment (Section 12.1)
Vantor's claim that Stonefield breached the ACV obligation during CY2 is barred because Stonefield properly and timely invoked force majeure under Section 12.1 of the TSA for the period of April 2020 through September 2020 in connection with the material adverse impacts of the COVID-19 pandemic on nationwide freight demand. The force majeure invocation was communicated in writing to VTS on April 14, 2020, and was not objected to by VTS at any time prior to the commencement of this litigation. Accordingly, the CY2 ACV was properly adjusted to $21.6 million, reflecting a pro-rata reduction for the six-month force majeure period. Stonefield's actual CY2 tenders of $31.8 million exceeded the adjusted ACV by $10.2 million. Vantor's allegation of an $11.4 million CY2 shortfall is based on the unadjusted ACV and is factually and legally incorrect.
FIFTH AFFIRMATIVE DEFENSE No Exclusivity Violation
Vantor's claim that Stonefield violated the exclusivity provisions of the TSA is barred because Stonefield's engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited exclusively to Lanes 8 through 14, all of which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. The exclusivity provisions of Schedule C apply only to the 14 designated "Primary Lanes" and do not extend to Secondary Lanes. Stonefield did not engage any alternative carrier on any Primary Lane. Accordingly, Stonefield did not violate any exclusivity obligation under the TSA.
SIXTH AFFIRMATIVE DEFENSE Contributory Breach / Unclean Hands
Vantor's claims are barred, in whole or in part, by the doctrine of contributory breach and the equitable doctrine of unclean hands. VTS's own material breach of the TSA — specifically, its unilateral, undisclosed reassignment of approximately 85 tractors from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co., in October 2021 — was the direct and proximate cause of VTS's performance failures and any resulting harm. VTS's misconduct is confirmed by the November 12, 2021 internal email from Sandra Milescu, COO of VTS, to Nikolai Vantorovich, CEO of Vantor, in which Ms. Milescu acknowledged the redeployment and predicted that Stonefield would discover it until January 2022. VTS cannot recover damages caused by its own wrongful, deliberate, and concealed conduct. Vantor's claims are barred by the equitable principle that one who comes into court must come with clean hands.
SEVENTH AFFIRMATIVE DEFENSE First-to-Breach Doctrine / Prior Material Breach
Vantor's claims are barred by the first-to-breach doctrine. VTS committed the first material breach of the TSA by unilaterally reducing the fleet capacity dedicated to Stonefield's freight in October 2021, well before any alleged volume shortfall or other performance deficiency by Stonefield and well before the termination on March 4, 2022. Under the first-to-breach doctrine as applied under New York law, VTS's prior material breach of the TSA excused Stonefield's subsequent performance obligations and independently validated Stonefield's termination of the agreement.
EIGHTH AFFIRMATIVE DEFENSE Waiver
To the extent any performance obligation of Stonefield was not strictly performed during the term of the TSA, Vantor waived any claim based on such non-performance through its own conduct. Specifically, Vantor continued to perform under the TSA without objection, failed to issue any cure notice to Stonefield at any time during the term of the TSA, accepted Stonefield's freight tenders throughout the relevant periods, and otherwise acquiesced in Stonefield's manner of performance. Vantor's failure to assert any claim of breach by Stonefield during the life of the contract — despite having actual knowledge of the facts and circumstances on which its present claims are based — constitutes a waiver of any right to assert such claims now.
NINTH AFFIRMATIVE DEFENSE Estoppel
Vantor is estopped from asserting claims based on Stonefield's volume tenders, lane assignments, or use of alternative carriers because Vantor's own conduct — particularly VTS's undisclosed fleet redeployment in October 2021 — induced the very conditions of which Vantor now complains. By secretly withdrawing more than 20% of its committed fleet capacity from Stonefield's dedicated lanes, VTS caused the performance failures that necessitated Stonefield's diversion of volume to alternative carriers and ultimately led to the termination. Vantor cannot now claim injury from the predictable consequences of its own misconduct.
TENTH AFFIRMATIVE DEFENSE Setoff
Stonefield is entitled to set off against any damages award the amount of losses and damages sustained by Stonefield as a result of VTS's material breach of the TSA, including but not limited to: (i) costs incurred to engage alternative carriers (Cascade Freight Systems Inc. and Briarwood Trucking Co.) at rates in excess of the TSA rates to replace capacity that VTS failed to provide; (ii) operational disruption, including delayed shipments, customer complaints, and service penalties imposed by Stonefield's own customers; and (iii) administrative costs associated with managing the transition of freight volumes from VTS to alternative carriers.
ELEVENTH AFFIRMATIVE DEFENSE Consequential Damages Waiver (Section 15.1)
Vantor's claims for stranded asset costs ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million) are barred as consequential damages by the mutual waiver of consequential damages set forth in Section 15.1 of the TSA. These three categories of claimed damages — totaling $9.47 million — are consequential in nature. They represent indirect costs flowing from the termination of the TSA, not direct damages under the contract. Stranded asset depreciation and lease termination costs are consequential to the loss of the contract, not a direct measure of contract damages. Severance and unemployment costs for terminated drivers and support staff are an indirect consequence of the termination, not a direct contractual obligation. Mitigation costs, by their very nature, are consequential. All three categories fall within the scope of the Section 15.1 waiver and are unrecoverable.
TWELFTH AFFIRMATIVE DEFENSE Duplicative Damages / Prohibition on Double Recovery
Vantor's simultaneous claims for liquidated damages ($67.23 million) and lost profits ($18.7 million) are duplicative and impermissible under New York law. Both theories of recovery seek compensation for the identical alleged harm — the loss of future contract value resulting from the TSA's early termination. Under well-settled New York law, a party may not recover both liquidated damages and actual damages for the same breach. Vantor must elect between these theories and cannot recover both. To the extent Vantor seeks recovery under both theories simultaneously, such claims must be dismissed or limited to a single recovery.
THIRTEENTH AFFIRMATIVE DEFENSE Failure to State a Claim / Standing
To the extent that Vantor Holdings Corp. — as opposed to its wholly owned subsidiary VTS — asserts claims arising under the TSA, such claims are barred because Vantor Holdings Corp. is not a signatory to the TSA and lacks standing to enforce its terms. The TSA was executed by and between Stonefield Logistics Group Inc. and Vantor Transport Services LLC. Vantor Holdings Corp. is not a party to the TSA, is not identified as a third-party beneficiary, and has no independent contractual right to assert claims under the agreement. Stonefield preserves this defense under Federal Rule of Civil Procedure 17 without waiving any other defense.
FOURTEENTH AFFIRMATIVE DEFENSE Reservation of Defenses
Stonefield reserves the right to assert additional affirmative defenses as they become apparent through the course of discovery and the further development of the factual record in this action. This reservation is made without waiver of any defense or objection available to Stonefield under applicable law, the Federal Rules of Civil Procedure, or the Local Rules of this Court.
PART III
COUNTERCLAIM
DEFENDANT/COUNTERCLAIM-PLAINTIFF STONEFIELD LOGISTICS GROUP INC.'S COUNTERCLAIM AGAINST PLAINTIFF/COUNTERCLAIM-DEFENDANT VANTOR HOLDINGS CORP.
Defendant and Counterclaim-Plaintiff Stonefield Logistics Group Inc. ("Stonefield"), by and through its undersigned counsel, Calderwood & Harkness LLP, brings this Counterclaim against Plaintiff and Counterclaim-Defendant Vantor Holdings Corp. ("Vantor") and states as follows:
Nature of Counterclaim
1. Stonefield brings this Counterclaim for declaratory judgment pursuant to 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57, seeking a declaration from this Court that: (a) Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA") was valid and for Cause under Section 13.1(a) of the TSA; (b) no liquidated damages or other amounts are owed by Stonefield to Vantor or Vantor Transport Services LLC ("VTS") under Section 14.2 of the TSA or otherwise; and (c) VTS committed material breach of the TSA, thereby excusing Stonefield's further performance obligations thereunder.
Parties to Counterclaim
2. Counterclaim-Plaintiff Stonefield Logistics Group Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield's Chief Executive Officer is Marcus Denton, its Chief Financial Officer is Priya Ramachandran, and its General Counsel is Tobias Wren.
3. Counterclaim-Defendant Vantor Holdings Corp. is a corporation organized and existing under the laws of the State of New York, with its principal place of business at 580 Eighth Avenue, 14th Floor, New York, New York 10018. Vantor is the parent company and sole equity owner of Vantor Transport Services LLC, which was the counterparty to the TSA.
Jurisdiction and Venue
4. This Court has subject-matter jurisdiction over this Counterclaim pursuant to 28 U.S.C. § 1332(a), based on complete diversity of citizenship between the parties and an amount in controversy exceeding $75,000, exclusive of interest and costs. This Court also has supplemental jurisdiction over this Counterclaim pursuant to 28 U.S.C. § 1367, as the Counterclaim arises out of the same transaction or occurrence as the claims asserted in Vantor's Amended Complaint.
5. Venue is proper in this District pursuant to the forum selection clause set forth in Section 16 of the TSA and pursuant to 28 U.S.C. § 1391(b).
Factual Allegations. The TSA
6. On March 15, 2019, Stonefield Logistics Group Inc. (as "Shipper-Broker") and Vantor Transport Services LLC (as "Carrier-Provider") executed the Transportation Services Agreement (Contract Reference No. SLG-VTS-2019-0315). The TSA was drafted by Ashford Meridian LLP, acting as outside counsel for Stonefield, and was the product of arm's-length negotiation between sophisticated commercial parties represented by counsel.
7. The TSA provided for a five-year initial term commencing April 1, 2019 and expiring March 31, 2024, with one automatic two-year renewal subject to 180-day non-renewal notice by either party.
8. Under the TSA, VTS committed to providing dedicated and on-demand full-truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors, and to maintaining minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to Stonefield's freight.
9. Stonefield committed to tendering an Annual Committed Volume of $43.2 million in transportation charges per contract year, subject to force majeure adjustments under Section 12.1.
10. The TSA established Service Level Obligations that VTS was required to maintain throughout the term of the agreement, including: (a) on-time pickup rate of at least 95%; (b) on-time delivery rate of at least 93%; (c) cargo claims ratio of no more than 0.5% of gross transportation revenue; (d) tender acceptance rate of at least 90%; and (e) equipment availability compliance of at least 85% of committed fleet capacity.
11. Section 13.1(a) of the TSA provided that either party could terminate the TSA for "Cause" upon a material breach by the other party that remained uncured for 30 calendar days after the breaching party's receipt of written notice specifying the breach with reasonable particularity. Section 13.2 prescribed the procedures for delivering a written Cure Notice.
12. Section 14.2 of the TSA contained a liquidated damages provision applicable only to terminations "other than for Cause."
13. The TSA is governed by the laws of the State of New York.
VTS's Performance and Material Breach
14. During Contract Year 1 (April 1, 2019 through March 31, 2020), both parties performed their obligations under the TSA substantially without material dispute.
15. During Contract Year 2 (April 1, 2020 through March 31, 2021), Stonefield properly invoked force majeure under Section 12.1 for the period of April through September 2020 due to the COVID-19 pandemic's impacts on freight demand. Stonefield tendered $31.8 million during CY2, exceeding the force-majeure-adjusted ACV of $21.6 million by $10.2 million.
16. Beginning no later than the third quarter of 2021, VTS began to fail materially in its performance under the TSA. VTS's service quality deteriorated across multiple SLO metrics, and VTS failed to provide timely notice of or explanation for the degradation in its performance.
17. In October 2021, VTS unilaterally reassigned approximately 85 tractors — more than 20% of the minimum committed fleet of 400 tractors — from Stonefield's dedicated lanes to the account of another shipper, Northwind Distribution Co., without providing any notice to or obtaining any consent from Stonefield.
18. Sandra Milescu, Chief Operating Officer of VTS, confirmed this reassignment in her internal email dated November 12, 2021 to Nikolai Vantorovich, Chief Executive Officer of Vantor, in which she stated: "We've pulled 85 tractors off the SLG dedicated lanes to cover [Northwind] commitments. SLG won't notice until January." Ms. Milescu further confirmed the reassignment and the absence of any notice to Stonefield during her deposition on August 4, 2023, at which she acknowledged that the reassignment was made for "commercial necessity" but was unable to explain why Stonefield was not notified, stating only that it was "an operational decision."
19. As a direct and proximate result of VTS's undisclosed fleet redeployment, VTS's Q4 2021 performance metrics fell dramatically below the contractually required SLO thresholds:
(a) On-time pickup rate: 78.2%, against a required SLO of ≥ 95% — a shortfall of 16.8 percentage points;
(b) On-time delivery rate: 81.6%, against a required SLO of ≥ 93% — a shortfall of 11.4 percentage points;
(c) Tender acceptance rate: 71.4%, against a required SLO of ≥ 90% — a shortfall of 18.6 percentage points;
(d) Equipment availability: approximately 248 tractors available for Stonefield freight, representing 62% of the committed fleet capacity of 400 tractors, against a required SLO of ≥ 85% (i.e., at least 340 tractors) — a shortfall of 23 percentage points;
(e) Cargo claims ratio: 1.07% of gross transportation revenue, based on 16 claims in November and December 2021 totaling $387,400, against a required SLO of ≤ 0.5% — more than double the permissible maximum.
20. In addition to the foregoing SLO failures, VTS chronically failed to provide substitute equipment or surge capacity as required under Section 7.4 of the TSA, despite repeated requests from Stonefield's operations team during November 2021 and January 2022.
21. VTS's failures, individually and collectively, constituted material breach of the TSA under Section 13.1(a). The breaches were not isolated or de minimis — they reflected a systematic withdrawal of dedicated resources from Stonefield's account, deliberately concealed from Stonefield, that caused VTS to fail every performance metric by a substantial margin.
The Cure Notice and Failure to Cure
22. On January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, delivered a written Cure Notice to Sandra Milescu, COO of VTS, via overnight courier and electronic mail. The Cure Notice identified each of the material breaches described in Paragraphs 19 and 20 above with reasonable particularity, specifying each performance metric, the applicable SLO threshold, and VTS's actual performance figure for the Q4 2021 measurement period. The Cure Notice satisfied the requirements of Section 13.2 of the TSA.
23. The Cure Notice provided VTS a cure period of 30 calendar days from receipt, expiring February 17, 2022, within which to cure the identified material brea