Pennsy Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania

Case Name: Pennsy Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania
Citation: Pennsylvania Superior Court; 895 A.2d 595 (2006)
Plaintiff/Appellant: Pennsy Supply, Inc.
Defendant/Appellee: American Ash Recycling Corp. of Pennsylvania

Issue: Whether consideration existed in the contract between the plaintiff and defendant when defendant allegedly avoided disposal costs by supplying plaintiff materials at no cost.

Key Facts: The plaintiff had secured a subcontractor job for the paving of driveways and parking lots. The project specifications included a notice of availability of a material known as AggRite that could be used for base aggregates and was available at no cost from the defendant. The plaintiff contacted the defendant, informed them on the amount it needed, picked it up, and used it for the paving work. Two months after the paving work was completed, there were substantial defects in the pavement and the plaintiff had to perform remedial work which cost the plaintiff $250,000. Furthermore, it incurred an additional $133,000 to dispose of the AggRite it had received from the defendant. The plaintiff filed a five-count complaint alleging (1) breach of contract, (2) breach of implied warranty of merchantability, (3) breach of express warranty of merchantability, (4) breach of warranty of fitness for a particular purpose, (5) promissory estoppel.

Procedural History: The defendant filed demurrers to all five counts and the trial court sustained the demurrers and dismissed the complaint. The trial court believed the defendant only made a conditional gift to the plaintiff and therefore the contract did not have consideration. They stated that the disposal costs were a mere condition of the defendant’s gift.

Holding: The trial court erred in its dismissal because if the alleged facts are proven, it would show consideration because the promise induced the detriment of incurring disposal costs and the detriment of those disposal costs induced the promise from the defendant.

Reasoning: If the complaint is true that the defendant “actively promotes the use of AggRite as a building material” to be used for purposes the plaintiff was engaging in, then by the defendant providing the materials free of charge, they are seeking others to dispose of the material in order to avoid incurring the disposal costs itself. The material provided by the defendant saved the defendant thousands of dollars in disposal costs it otherwise would have incurred.
The Superior Court also examined whether consideration is lacking because the plaintiff did not allege (or understand) the defendant’s avoidance of disposal costs during the bargaining process between the parties. The court did not believe this was necessary because for consideration to exist “the promise and the consideration be in “the relation of reciprocal conventional inducement, each for the other”” (O. Holmes).

Judgment: The Superior Court reversed the trial court’s decision of dismissing the Complaint and remanded it back to the trial court for further proceedings.

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