Buffalo Biodiesel elucidates agreement with attorney general

By Ron Kotrba | February 18, 2016

New York Attorney General Eric T. Schneiderman announced an agreement Feb. 18 with Buffalo Biodiesel Inc.—a company that collects, cleans and sells used cooking oil from restaurants to biodiesel producers—regarding more than 600 breach-of-contract lawsuits filed over the past few years against businesses in Western New York and surrounding states.

The lawsuits began when restaurants with which Buffalo Biodiesel had oil supply agreements started “bucking” signed contracts without notification, said Buffalo Biodiesel President Sumit Majumdar.

“I’m a grown-up, I can deal with people flipping oil collectors,” Majumdar told Biodiesel Magazine. “But not a thousand.”

According to the attorney general’s office, the agreement requires Buffalo Biodiesel to withdraw all applications it made for default judgments, to vacate default judgments it has taken against unrepresented businesses, and return any money collected on judgments. The attorney general’s office also stated Buffalo Biodiesel has agreed to provide notice to businesses of its intent to sue before it files any new court actions in order to give the businesses the opportunity to resolve matters without a lawsuit.

Majumdar said the company did, in fact, settle with many parties before hearings took place since the best resolution for the company, according to him, was resumption of oil collection.

The attorney general’s office stated that “Buffalo Biodiesel sought thousands of dollars, sometimes as much as tens of thousands of dollars, in damages from ‘mom and pop’ restaurants.”

Majumdar said Buffalo Biodiesel never wanted money damages from those claimed in breach. “We wanted the oil,” he said. “But in city court, you can’t ask for specific performance”—meaning a court order that businesses honor their contracts—“you can only ask for money.”

While honoring contracts is paramount, Majumdar said the vast majority of business Buffalo Biodiesel conducts with restaurants is done on a handshake, not on a contract.

“Our legal system rightfully allows for parties to sue when a breach of contract occurs, but that right should not be used as a license to unjustly bully and intimidate small businesses,” Schneiderman said. “The agreement announced today required the termination of hundreds of pending lawsuits filed against mom and pop businesses that lack the financial resources to fight costly court battles.”

“The fact is, we have a right to due process,” Majumdar said. “Maybe we rocked the boat with so many filings, but contracts need to be enforced.” Majumdar said Buffalo Biodiesel did not seek to file interference-of-purchase lawsuits against oil collectors that took his accounts.

The lawsuits that were improperly filed in city court, according to Majumdar, can be refiled in New York’s Supreme Court—the state’s trial-level court, not its highest appeals court as the name would suggest.

“There’s still a bunch of guys going to court,” Majumdar said. “We went from filing 600 lawsuits two years ago, and last year that dropped by 90 percent. That’s because people hear we enforce our contracts.”

Majumdar said he believes some of the contract breaches were triggered by racism. “I was accused of being a Muslim and an Arab,” he said. “And it gets dirtier and dirtier. Don’t get me wrong though, the super vast majority of people we deal with are darn good people who are just happy we are supporting the biodiesel industry.”

Buffalo Biodiesel currently has nearly 10,000 accounts, and over 11 years of operations it has signed 13,000 accounts from seven states. Majumdar said his business collects and processes nearly 3 MMgy of used cooking oil and sells to biodiesel producers such as Hero BX.

Majumdar said the clerk default judgments will be vacated per the agreement with the attorney general, but he added that those granted before a judge will not be vacated.

Buffalo Biodiesel has two ongoing appeals still in play, Majumdar said, one concerning a default judgment won in county court that was remanded back to the city and another regarding jurisdiction for a Pennsylvania breach case. 

 

 
 
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