PSC Metals denied damages claim over ill-fated transaction

A federal judge in Nashville, Tennessee, has denied a request by Mayfield Heights, Ohio-based PSC Metals to collect $21.6 million from Kentucky-based Southern Recycling LLC  after an unsuccessful negotiation to purchase assets from Southern Recycling.

According to an online article by Law360, PSC had alleged that Southern breached an exclusivity clause pertaining to the negotiated purchase of assets valued at around $27 million. The sale of the PSC assets to Southern did not take place.

U.S. District Judge Aleta A. Trauger says a letter of intent (LOI) signed by the two parties did not provide a path to the $21.6 million in “expectancy damages” sought by PSC. Such damages must be “actually foreseen or are reasonably foreseeable” and caused by the offending party, according to the order issued by the judge.

According to the Law360 article, that standard was not met in this case, since the nonbinding LOI did not include a proposed deal’s terms or their enforceability. “Because Southern did not agree in any legal sense to the LOI’s substantive terms, it could not reasonably have foreseen that it might be liable for expectancy damages based on those terms by breaching the exclusivity provision,” the judge ruled.

Additionally, the LOI did not include a clause requiring the parties to negotiate in good faith, which the judge determined “was another blow to PSC’s effort to receive higher damages,” according to Law360.

The judge also ruled that PSC’s request for a lower $90,000 material damage amount could remain contested in court, as that amount was not tied to the “expectancy” argument. A legal representative for Southern Recycling says this claim also will be contested by Southern.

PSC Metals currently has operations in several states, including seven in Tennessee, with one of those in Nashville.

Southern Recycling operates three facilities in Kentucky and two in Tennessee, with one of those in Nashville.