CALDERWOOD & HARKNESS LLP Attorneys at Law 2200 Ross Avenue, Suite 3600 Dallas, Texas 75201 Telephone: (214) 558-7400 Facsimile: (214) 558-7401 www.calderwoodharkness.com
February 5, 2024
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL
Ridgeline Freight Carriers LLC
Attn: Gerald "Gerry" Brashear, Managing Member
7820 South Meridian Avenue Oklahoma City, Oklahoma 73159
Gerald Brashear, individually 2314 Quail Creek Drive Edmond, Oklahoma 73034
Re: Demand for Payment — Breach of Dedicated Freight Services Agreement dated April 15, 2022 between Stonefield Logistics Group Inc. and Ridgeline Freight Carriers LLC; Personal Guaranty of Gerald Brashear
Dear Mr. Brashear:
This firm represents Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), a Texas corporation with its principal office located at 4100 Commerce Street, Suite 1200, Dallas, Texas 75226. We write to you in your dual capacity as Managing Member of Ridgeline Freight Carriers LLC ("Ridgeline" or "Carrier") and in your individual capacity as personal guarantor of certain obligations arising under the contract described below. The purpose of this letter is to make formal demand for payment of all amounts owed by Ridgeline and by you, Gerald Brashear ("Brashear"), jointly and severally, arising from Ridgeline's material breach of the Dedicated Freight Services Agreement dated April 15, 2022 (the "DFSA" or the "Agreement") and from your personal guaranty obligations executed in connection therewith.
Please be advised that this letter constitutes a pre-suit demand. In the event that full payment of the amounts set forth herein is not received within the time period specified below, Stonefield is prepared to, and will, file a lawsuit to recover all damages, costs, fees, and other relief to which it is entitled. We urge you to treat this matter with the utmost seriousness and to respond promptly.
I. Background — The Dedicated Freight Services Agreement
On April 15, 2022, Stonefield, as "Shipper," and Ridgeline, as "Carrier," entered into the DFSA, a comprehensive dedicated transportation services agreement governing the provision of freight carriage services for Stonefield's Texas retail distribution operations. The Agreement was the product of extensive arm's-length negotiations between the parties and was executed by you, Mr. Brashear, on behalf of Ridgeline in your capacity as Managing Member, and by Stonefield's Chief Operating Officer, Mark Hensley, on behalf of Stonefield.
The material terms of the DFSA, relevant to this demand, are summarized as follows:
Term. The DFSA provides for an initial term of thirty-six (36) months, commencing on April 15, 2022 and running through April 14, 2025 (Section 2.1 of the DFSA).
Scope of Services. Under the Agreement, Ridgeline committed to providing a minimum of twelve (12) dedicated Class 8 tractor-trailers, each operated by a qualified, licensed commercial driver, for Stonefield's Texas retail distribution lanes. These dedicated units were to service daily routes between Stonefield's distribution centers located in Dallas, Houston, San Antonio, and Austin, Texas, on a continuous, year-round basis. The dedicated nature of the service commitment was a critical element of the DFSA, as Stonefield's retail customers depended upon reliable, consistent delivery schedules, and Stonefield structured its distribution network around the availability of Ridgeline's dedicated fleet (Sections 4.1 through 4.5 of the DFSA).
Minimum Monthly Revenue Commitment. Section 3.2 of the DFSA establishes a Minimum Monthly Revenue Commitment of Three Hundred Twenty-Five Thousand Dollars ($325,000) per month. This monthly commitment corresponds to an annual revenue floor of Three Million Nine Hundred Thousand Dollars ($3,900,000) and a total contract value over the full thirty-six (36) month term of Eleven Million Seven Hundred Thousand Dollars ($11,700,000). The Minimum Monthly Revenue Commitment was designed to ensure that Ridgeline would maintain sufficient equipment, drivers, and operational capacity to service Stonefield's lanes without interruption, and to provide Ridgeline with the revenue certainty necessary to support its capital investment in dedicated assets.
Liquidated Damages. The DFSA contains a liquidated damages provision at Section 14.3, the terms of which are described in detail below.
Consequential Damages Carve-Out. Section 14.4 of the DFSA provides a negotiated carve-out to any general limitation on consequential damages, permitting Stonefield to recover actual re-procurement costs incurred as a result of Ridgeline's material default, to the extent such costs are not otherwise captured by the liquidated damages amount.
Personal Guaranty. In consideration of Stonefield's agreement to enter into the DFSA, you, Gerald Brashear, as the Managing Member and sole owner of Ridgeline, executed a personal, unconditional guaranty of Ridgeline's obligations arising under Section 14 of the DFSA (the "Personal Guaranty"), set forth at Section 14.5 of the Agreement. The Personal Guaranty is capped at Three Million Dollars ($3,000,000). This guaranty was a material inducement to Stonefield's willingness to enter into the DFSA and to commit its distribution operations to Ridgeline's dedicated service.
Governing Law and Forum Selection. The DFSA is governed by and construed in accordance with the laws of the State of Texas, without regard to conflict-of-laws principles (Section 18.1). The DFSA further contains a mandatory forum selection clause designating Dallas County, Texas as the exclusive forum for the resolution of any disputes arising under or in connection with the Agreement (Section 18.2). Both Ridgeline and Brashear consented to personal jurisdiction in Dallas County, Texas, and waived any objection to venue therein.
A complete copy of the DFSA, including the Personal Guaranty at Section 14.5, is enclosed with this letter for your reference.
II. Ridgeline's Material Breach of the DFSA
Despite Ridgeline's clear and unequivocal contractual commitment to provide a minimum of twelve (12) dedicated Class 8 tractor-trailers for Stonefield's distribution lanes, Ridgeline has materially breached the DFSA by progressively reducing the number of trucks available and ultimately ceasing freight operations entirely. The timeline of Ridgeline's default is as follows:
Beginning in or around July 2023, Ridgeline began failing to provide the contractually required minimum of twelve (12) dedicated trucks for Stonefield's lanes. Over the ensuing months, Ridgeline progressively and without adequate explanation reduced the number of trucks it made available, creating significant service disruptions across Stonefield's Texas retail distribution network. Routes that had previously been serviced on a daily basis experienced delays, missed pickups, and scheduling failures that directly impacted Stonefield's customer relationships and retail operations.
By October 2023, Ridgeline was deploying as few as four (4) trucks on any given day — a mere one-third of the twelve-truck minimum required under the DFSA. This dramatic reduction in available capacity made it impossible for Stonefield to maintain its retail delivery schedules and forced Stonefield to begin sourcing emergency replacement carriers on the spot market at significantly elevated rates.
On October 18, 2023, Stonefield sent written notice of material breach to Ridgeline and to you, Mr. Brashear, via certified mail and email, as required under the notice provisions of the DFSA (Section 16.1). That notice specifically identified the nature of the default — namely, Ridgeline's failure to maintain the required twelve-truck dedicated fleet — and demanded that Ridgeline cure its defaults within thirty (30) calendar days, in accordance with Section 14.1 of the Agreement. A copy of this cure notice is enclosed.
The thirty-day cure period expired on November 17, 2023, without any cure by Ridgeline. During the cure period, Ridgeline made no meaningful effort to restore truck availability to the contractually required levels. To the contrary, service levels continued to deteriorate.
On or about December 8, 2023, Ridgeline ceased all freight operations entirely, abandoning all service commitments under the DFSA. No advance notice of this cessation was provided to Stonefield. Ridgeline's drivers were removed from Stonefield's lanes without warning, and Ridgeline made no arrangements for any transition of services. This complete abandonment of the DFSA left Stonefield with no dedicated carrier for its Texas distribution network and forced Stonefield to undertake an emergency re-procurement process at substantial cost.
Ridgeline's failures have not been cured at any time and remain uncured as of the date of this letter.
On December 22, 2023, Stonefield's General Counsel, Diane Ostrowski, sent a formal demand letter to Ridgeline and to you, Mr. Brashear, demanding payment of damages arising from Ridgeline's breach. A copy of that demand letter is enclosed. As of the date of this letter, no payment has been received. No substantive response to Ms. Ostrowski's demand has been provided by Ridgeline, by you individually, or by any counsel on your behalf.
III. Damages Demanded
Based on the foregoing material breach and the applicable provisions of the DFSA, Stonefield demands payment of the following amounts:
A. Liquidated Damages Under Section 14.3 of the DFSA
Section 14.3 of the DFSA provides that, upon Carrier's material default and failure to cure within the thirty (30) day cure period set forth in Section 14.1, Carrier shall be obligated to pay liquidated damages to Shipper in an amount equal to the greater of: (a) twenty-five percent (25%) of the remaining unpaid Minimum Monthly Revenue Commitment for the unexpired portion of the Term; or (b) Five Hundred Thousand Dollars ($500,000).
The parties expressly agreed in the DFSA that the liquidated damages amount set forth in Section 14.3 represents a reasonable estimate, as of the date of the Agreement, of the losses that Stonefield would sustain as a result of Carrier's material default, taking into account the costs of re-procurement of dedicated freight services, disruption to Stonefield's distribution operations, harm to Stonefield's customer relationships, and reputational damage — losses that the parties acknowledged would be inherently difficult to calculate with precision at the time of breach.
The liquidated damages calculation is as follows:
Date of Default (Expiration of Cure Period): November 17, 2023
Contract Expiration Date: April 14, 2025
Remaining Months in the Unexpired Term: 17 months (November 17, 2023 through April 14, 2025)
Remaining Minimum Monthly Revenue Commitment: $325,000 × 17 months = $5,525,000
Liquidated Damages (25% of Remaining Commitment): $5,525,000 × 0.25 = $1,381,250
Alternative Floor Amount Under § 14.3(b): $500,000
Because $1,381,250 exceeds the $500,000 floor, the liquidated damages amount due under Section 14.3 of the DFSA is One Million Three Hundred Eighty-One Thousand Two Hundred Fifty Dollars ($1,381,250).
B. Re-Procurement Damages Under Section 14.4 of the DFSA
Section 14.4 of the DFSA provides a consequential damages carve-out that specifically permits Stonefield to recover its actual, documented re-procurement costs incurred as a direct result of Carrier's material default, to the extent such costs exceed or are not otherwise captured by the liquidated damages amount under Section 14.3. This provision reflects the parties' negotiated agreement that certain categories of consequential loss — and in particular the premium costs of emergency freight procurement — should not be subject to any general limitation on consequential damages that might otherwise apply.
Following Ridgeline's default and ultimate abandonment of service, Stonefield was forced to take immediate action to maintain its Texas retail distribution network. Specifically, Stonefield was compelled to engage emergency spot-market freight carriers at significantly higher rates than those contemplated by the DFSA, incur surge pricing premiums attributable to the short-notice nature of the procurement, and pay substitute carrier mobilization and setup fees to bring replacement capacity online. These costs were incurred to prevent a complete collapse of Stonefield's retail distribution operations and to preserve its customer relationships, which had been built over years of reliable service.
Stonefield's documented re-procurement costs incurred during the period from November 18, 2023 (the date immediately following expiration of the cure period) through January 15, 2024 total One Million Fifty-Six Thousand Two Hundred Fifty Dollars ($1,056,250). These costs are supported by invoices, purchase orders, rate confirmations, and other contemporaneous business records, all of which will be made available in any litigation proceeding.
C. Total Demand
The total amount demanded is calculated as follows:
Stonefield expressly reserves the right to seek additional amounts in litigation, including but not limited to: (i) pre-judgment interest at the rate of 5.00% per annum under Texas Finance Code Section 304.003, accruing from November 17, 2023 (the date of default); (ii) attorneys' fees and costs of litigation as provided under Section 14.6 of the DFSA; (iii) court costs; and (iv) all other relief to which Stonefield may be entitled at law or in equity. These additional amounts are not included in the demand set forth in this letter but will be pursued vigorously in the event litigation becomes necessary.
IV. Personal Guaranty of Gerald Brashear
As noted above, Mr. Brashear executed a personal, unconditional guaranty of Ridgeline's obligations arising under Section 14 of the DFSA. The Personal Guaranty, set forth at Section 14.5 of the Agreement, is absolute and unconditional, and is not subject to any conditions precedent other than the occurrence of a material default by Ridgeline and the expiration of the applicable cure period — both of which have occurred.
The Personal Guaranty is capped at Three Million Dollars ($3,000,000). The total amount demanded herein — Two Million Four Hundred Thirty-Seven Thousand Five Hundred Dollars ($2,437,500) — is well within the $3,000,000 guaranty cap.
Accordingly, Mr. Brashear is jointly and severally liable with Ridgeline for the full amount demanded. Formal demand is hereby made upon Gerald Brashear, individually, for payment of the full sum of $2,437,500.00.
V. Demand for Payment and Deadline
Stonefield hereby demands that Ridgeline Freight Carriers LLC and Gerald Brashear, jointly and severally, pay the sum of Two Million Four Hundred Thirty-Seven Thousand Five Hundred Dollars ($2,437,500.00) within ten (10) calendar days of receipt of this letter.
Payment should be made by one of the following methods:
(a) Wire Transfer. Payment may be made by wire transfer to an account to be designated by Calderwood & Harkness LLP upon confirmation by Ridgeline or Brashear that payment will be made. Please contact the undersigned to obtain wire transfer instructions.
(b) Certified or Cashier's Check. Alternatively, payment may be made by certified check or cashier's check made payable to "Stonefield Logistics Group Inc." and delivered to:
Calderwood & Harkness LLP
Attn: Priya Anand
2200 Ross Avenue, Suite 3600 Dallas, Texas 75201
Time is of the essence with respect to this demand. Partial payments will not be accepted unless expressly agreed to in writing by Stonefield.
VI. Consequences of Failure to Pay
If full payment of the amount demanded is not received within the ten (10) calendar day period specified above, Stonefield will promptly file suit against Ridgeline Freight Carriers LLC and Gerald Brashear, individually, in the District Court of Dallas County, Texas, or such other court of competent jurisdiction in Dallas County as may be appropriate, consistent with the forum selection clause set forth in Section 18.2 of the DFSA.
In such litigation, Stonefield will seek to recover the following:
(a) The full $2,437,500.00 in damages as set forth in this letter;
(b) Pre-judgment interest at the rate of 5.00% per annum under Texas Finance Code Section 304.003, accruing from November 17, 2023 (the date of default) through the date of judgment;
(c) Attorneys' fees and costs of litigation, as expressly provided under Section 14.6 of the DFSA, which provides for the recovery of reasonable attorneys' fees by the prevailing party in any action to enforce the Agreement;
(d) All court costs, filing fees, and other expenses of litigation; and
(e) All other relief to which Stonefield may be entitled at law or in equity, including but not limited to post-judgment interest and costs of collection.
Stonefield reserves all rights and remedies available to it under the DFSA, under the Personal Guaranty, and under applicable state and federal law. No right or remedy is waived by this letter, and nothing in this letter shall be construed as a limitation on the relief that Stonefield may seek in litigation or otherwise.
VII. Reservation of Rights
This letter is not intended to be, and shall not be construed as, a waiver of any of Stonefield's rights or remedies under the DFSA, under applicable law, or otherwise. Stonefield expressly reserves all such rights and remedies, including but not limited to the right to seek additional damages that may be discovered or that may continue to accrue, the right to amend or supplement its claims, and the right to pursue any and all theories of recovery available under the DFSA or under applicable law. The enumeration of specific damages in this letter shall not be construed to limit the scope of damages or relief that Stonefield may seek.
VIII. Direction of Communications
All communications regarding this matter should be directed exclusively to the undersigned at Calderwood & Harkness LLP. Please do not contact Stonefield or any of its officers, directors, or employees directly regarding the subject matter of this letter.
If Ridgeline or Mr. Brashear is currently represented by legal counsel, we respectfully request that such counsel contact the undersigned immediately so that all future communications may be directed accordingly. We note that Meridian Holloway PLLC, and specifically Nathan Holloway, Managing Partner, previously represented Ridgeline in connection with certain matters. If that firm or any other firm continues to represent Ridgeline or Mr. Brashear in this matter, Stonefield requests prompt written confirmation of such representation so that we may direct our communications appropriately.
Stonefield sincerely hopes to resolve this matter without the necessity of litigation. Our client has no desire to incur the time and expense of a lawsuit if this dispute can be resolved promptly and in full through the payment demanded herein. However, please be assured that Stonefield is fully prepared to pursue all available legal remedies to protect its interests, and will not hesitate to do so if the demand set forth in this letter is not satisfied within the time prescribed.
We await your prompt response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand, Partner 2200 Ross Avenue, Suite 3600 Dallas, Texas 75201 Telephone: (214) 558-7418 Facsimile: (214) 558-7401
Email: panand@calderwoodharkness.com
cc: (via email)
Diane Ostrowski, General Counsel, Stonefield Logistics Group Inc. Douglas Carmichael, Calderwood & Harkness LLP Jeffrey Park, Calderwood & Harkness LLP
Enclosures:
1.  Copy of Dedicated Freight Services Agreement dated April 15, 2022 (including Personal Guaranty at § 14.5)
2.  Copy of Stonefield's Written Cure Notice dated October 18, 2023
3.  Copy of Stonefield's Formal Demand Letter dated December 22, 2023
Category | Amount
Liquidated Damages Under § 14.3 | $1,381,250.00
Re-Procurement Damages Under § 14.4 | $1,056,250.00
Total | $2,437,500.00