The former president of Rustick LLC is suing her former
partners, alleging fraud and misrepresentation by company officials
in acquiring the McKean County Landfill.
The former official asserts that Rustick officials will not be
involved in Hutchins for the long term, as promised by Dick Welch
when he proposed a deal to the McKean County Solid Waste Authority
three years ago.
That’s according to a lawsuit filed in Schuylkill County Court
by Maria Casey, who up until April 5, was president of Rustick. She
was removed by telephone by the votes of partners Richard Godshall,
Welch and Michael Figge, whom she has filed suit against.
“Rustick was formed for the sole intent and purpose of owning
and operating the McKean landfill located in Sergeant Township,
McKean County,” Casey alleges in the suit.
Also named as plaintiffs are Rustick and M.L. Lyon, a management
company – in which Casey says she owns 75 percent of the shares –
which administered the payroll for management personnel of Rustick.
Casey alleges Rustick was harmed by the actions of Welch and
Godshall; and that Godshall and Figge breached the trust of
Rustick.
Rustick is also named as a defendant in the suit.
In the suit, Casey describes that she began working with Welch
in 2003 on “his goal to acquire a solid waste landfill facility in
Pennsylvania.”
After “many months of effort,” the two targeted McKean County as
a potential site for landfill acquisition. In November of 2004,
Rustick was chosen by the McKean County SWA as the qualified bidder
for the landfill.
From that time until August 2005, Casey worked with multiple
financing entities, including Merrill-Lynch, to secure the project.
As part of this, a Private Placement Memorandum was prepared by
Merrill-Lynch in which Rustick made “certain representations
regarding its intentions to operate the project.”
“In particular, Rustick represented that it would be installing
a rail spur within six months after closing as well as enlarging
the landfill site in order to implement its Future-Fill concept,”
the suit states. The concept “envisions a maximum recovery of
useful products by recycling the majority of waste brought to the
landfill facility. The end result is a minimal amount of waste
deposited in the landfill facility itself.”
In fact, this concept was what Welch had represented to the SWA
when he first brought his proposal to their attention in June of
2004, saying the landfill in McKean County could be a model for the
future.
However, Casey’s suit alleges, Welch had no intention of
sticking around to see that happen.
In December of 2005, Casey discovered correspondence from the
president of Mainland Technologies LLC to Godshall, inquiring as to
his and Welch’s desires to sell their shares of Rustick.
Casey confronted both men “as to why they would want to sell
their interests in derogation of Rustick’s commitment to the McKean
project as well as numerous representations that it was in this
project for the long run,” the suit reads.
Welch acknowledged that he was looking to sell his shares in
Rustick, the suit states.
She accuses Welch and Godshall of fraudulently inducing her to
become a member of Rustick “to use her services and legal acumen”
while making representations to everyone involved that “Rustick
planned to operate the facility not only as a landfill with rail
access but also as a state of the art recycling center.”
“In reality, neither Godshall nor Welch intended to have Rustick
own and/or operate the landfill to achieve and of these results;
rather, they intended to flip or sell the project shortly after
closing to benefit their individual interests,” the suit reads.
“Even if Godshall’s and Welch’s conduct was not intentionally
deceitful, it was, at the very least, negligent in that Godshall
and Welch had a duty to disclose to Casey and Rustick that they
were seeking to sell their respective interests in Rustick,” the
suit states.
And to date, there is no rail spur at the landfill.
Casey also is suing on behalf of M.L. Lyon, which administered
the payroll for herself, Godshall, Figge and Michael Manderfeld,
the operations manager at the McKean Landfill.
She alleges that payroll and tax obligations have not been met
by Rustick, which may subject Rustick to fines and penalties and
civil and criminal sanctions from the Internal Revenue Service.
Also, the suit states that Casey’s contract could only be
terminated by a 90-day written notice, which she never received.
However, she has not been paid since April 1, the suit states.
In a preliminary objection filed by Fox Rothschild LLP, on
behalf of Welch, Godshall, Figge and Rustick, the attorneys argue
that M.L. Lyon cannot collect past wages, as that right is reserved
for an employee. M.L. Lyon is a company. Casey herself was not a
plaintiff at that count, the objection states.
And the rest of the suit should be dismissed, the attorneys
argue, saying Casey does not have the standing to sue on behalf of
Rustick, as the complaint would have to be authorized by a majority
of other members.
They also argue that Rustick cannot be a plaintiff and defendant
in the same lawsuit.
In addition, the objection states that Casey does not give
sufficient detail to support her claims of fraud or
misrepresentation. She also accuses Welch and Godshall of
conspiring to commit fraud.
“Casey’s claim on behalf of Rustick must fail,” the objection
states, “because agents of an entity cannot conspire among
themselves under Pennsylvania law.”
In her claim for negligent misrepresentation by Welch and
Godshall for not disclosing their plans to sell their interests in
Rustick, “Casey fails to identify a specific misrepresentation or
omission directed towards her or Rustick.”
The objection reads, “By her pleading, Casey admits that the
purported misrepresentations were not intended to induce her to act
to her detriment, but instead, were directed towards others.”
Attached to Casey’s suit were Bradford Era articles in which
Welch spoke about his long-term plans for the McKean Landfill.
Casey refers to the alleged misrepresentations as being towards the
general public and the press.
The attorneys also argue that the alleged misrepresentations are
not supported in the suit by exact statements or claims.
Fox Rothschild is asking for the case to be dismissed. There was
no indication of when the matter might be heard in Schuylkill
County Court.
