Oil supplier and law firm square off over locked-in heating oil price

October 29, 2009

AUBURN — A local law firm is hoping a judge will rule that it isn't on the hook for paying for thousands of gallons of high-priced heating oil.

If the firm is on the hook for the pricier oil, it hopes it will only have to pay a 75-cent-per-gallon penalty for that oil.

By contrast, a Lisbon Falls oil supplier, which is suing the law firm, wants the judge to confirm its belief that the firm was bound by a contract to pay the supplier the high per-gallon price it locked in during the summer of 2008.

Androscoggin County Superior Court Justice Thomas Delahanty II said Wednesday he plans to review documents in the case and make a decision as soon as possible.

Judy Metcalf represented Downeast Energy Corp. at the hearing held at the Androscoggin County Superior Court library. She said a lawyer at the local law firm — Linnell, Choate and Webber — committed to buying 4,055 gallons of heating oil at about $4.36 per gallon in July 2008 when the price of oil was high. If the law firm's office used less than that amount by the end of May, it would be obligated to pay only for the amount it actually used last winter at the locked-in price, she said.

After taking delivery of 1,119 gallons of Downeast's oil at the locked-in price, the law firm refused to take further deliveries. Metcalf argued Wednesday that the law firm owed the oil supplier the difference between the agreed-upon price and the price at which Downeast ended up selling the remaining oil (nearly 3,000 gallons.) After the hearing, Metcalf said that difference totaled roughly $6,000.

Downeast sued last winter for breach of contract and is seeking compensation for the loss it took on the oil promised to the law firm, along with damages and costs.

Sonia Buck, a lawyer at the local law firm represented that firm Wednesday, saying the document Metcalf referred to was never a binding contract requiring the firm to buy all of its oil from Downeast because the oil supplier never confirmed the terms of the agreement by sending back a signed copy. Moreover, Downeast's proposal didn't contain language that required it be the only supplier the law firm could use during the winter.

A lawyer at the firm wrote to Downeast in November, saying he never got a signed contract from the supplier and, for that reason, was canceling the pricing arrangement.

Metcalf pointed to that letter as proof that the law firm had treated the proposal as a contract.

If Justice Delahanty were to rule that the law firm had breached its contract with Downeast, Buck argued the firm should only have to pay a 75-cent-per-gallon penalty referenced in Downeast's proposal.

"If this is not a contract for Downeast to deliver a little over 4,000 gallons" at the locked-in price, then, "What is it?" Delahanty asked Buck.

"It is a pricing proposal," she said.

If heating oil had risen last winter to a higher per-gallon price than the law firm had agreed to in July 2008 instead of dropping to a much lower price, "We wouldn't even be here, would we?" Delahanty asked Buck.

Under that scenario, Buck said her firm might still have bought its oil from a different supplier because the firm didn't believe the proposal obligated it to buy only from Downeast.

 

Courtesy of the Sun Journal

By Christopher Williams, Staff Writer

cwilliam@sunjournal.com