Micro Capital Investors, Inc. v. Broyhill Furniture Industries, Inc.

Facts

Defendant owned the Harper Plant and Harper Warehouse. The Plant and Warehouse shared a wall and also shared a heating system. The heating system consisted of two wood-burning boilers that used wood waste from the furniture manufacturing process. The boilers sent steam to radiators in the Warehouse and also produced steam energy to run machinery and equipment in the Plant. In 2005, The Woodsmiths Company attempted to purchase the Plant, but it could not obtain financing. Woodsmiths then worked with two investors, Whittier Group, Inc. and the plaintiff, to purchase the Plant as well as the machinery and equipment. The plaintiff purchased the property while Whittier purchased the machinery and the equipment. The Plant, machinery, and equipment were then leased to Woodsmiths.

In November 2005, the parties executed an Amendment to the Agreement of Sale. Section 10 of the Agreement provided that the Warehouse did not contain its own heating system and would need to be serviced with sufficient heat from the heating system in the Plant. It further provided that “Buyer may charge Seller for one-fourth (1/4th) the total heating bill for the Premises and the Leased Warehouse…” Defendant was not charged for heat until February 2009 when Woodsmiths sent a letter to defendant seeking compensation of $384,342. Defendant paid $50,000 and offered to pay more when it received proof that heat was actually supplied to the Warehouse. In October 2009, Woodsmiths sent another letter to defendant with an updated cost breakdown showing the amount owed as $459,968. Defendant again refused to pay due to insufficient documentation.  In December 2009, plaintiff filed suit against defendant alleging it had invoiced defendant $474,302 for heating costs.