NEW YORK CSX
Transportation Inc. has filed a lawsuit against New Era
Recycling Solutions LLC and Harmon Scrap Metal LLC, alleging
that New Era fraudulently obtained 16 scrap rail cars belonging
to CSX and sold them to Harmon.
Jacksonville, Fla.-based CSX
filed the complaint in U.S. District Court in Tennessee, citing
counts of unjust enrichment and conversion.
CSX claims in the lawsuit
against Independence, Ky.-based New Era and Cornersville,
Tenn.-based Harmon Scrap that it entered an agreement with a
company called Scrap Masters in October 2011 for
the sale of 16 rail cars located at a CSX-owned property in
Cornersville. The deal followed a request-for-bid process in
which Scrap Masters proffered the highest bid, at $244,160.
"Soon after the agreement was
reached between CSX and Scrap Masters, the 16 rail cars at
issue were cut up and removed from CSX property by a different
company known as Harmon Scrap without CSXs permission,"
the lawsuit states.
Owner Camuel Harmon is alleged
to have produced an agreement between Harmon Scrap and New Era
in which "Harmon Scrap paid $284,914.65 to New Era for the same
16 rail cars that CSX had agreed to sell to Scrap Masters," the
suit alleges. CSX was subsequently unable to contact Scrap
New Era allegedly submitted a
bid to CSX under the fictitious company name of Scrap Masters,
and "New Era, under the guise of Scrap Masters, induced CSX to
accept its bogus companys offer over those of legitimate
competing bidders," the lawsuit claims.
"Because the sales agreement was
between CSX and the bogus entity Scrap Masters, New Era had
positioned itself such that it would receive the scrap rail
cars but avoid any actual obligation to pay CSX," the lawsuit
However, New Era owner Shawn
Snelling told AMM on Nov. 21 that Scrap Masters is a
viable entity and that his company had helped broker the deal
between Scrap Masters and CSX for the rail cars.
Snelling has receipts proving
that New Era has paid Scrap Masters for the rail cars, he said,
although he couldnt recall the name of his contact at
Scrap Masters. Snelling also said he wasnt aware of the
lawsuit and its allegations.
Meanwhile, the lawsuit said that
Harmon Scrap "defied CSXs possession and ownership rights
when it removed the scrap rail cars from CSXs property
The lawsuit also alleges a count
of trespass against Harmon, saying that "only the buyer, Scrap
Masters, was permitted to enter the scrap rail cars" under the
terms of the original sales agreement.
Harmon Scrap co-owner Kay Harmon
told AMM that her company had paid New Era in full for
the metal and was "talking with CSX," also denying any
awareness of legal proceedings.