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ROSSI v. STANDARD ROOFING

March 26, 1997

JOSEPH ROSSI, et al., Plaintiffs,
v.
STANDARD ROOFING, INC., et al, Defendants.



The opinion of the court was delivered by: POLITAN

 ORIGINAL ON FILE WITH CLERK OF THE COURT

 Re: Joseph Rossi, Rossi Florence Corp., and Rossi Roofing, Inc. v. Standard Roofing, Inc., et al.

 Civil Action No. 92-5377 (NHP)

 Dear Counsel:

 This matter comes before the Court on motions by defendants -- Standard Roofings, Inc., Arzee Roofing Supply Corp., GAF Corporation, Allied Roofing, Inc., Servistar Corp., Robert Higginson (deceased), William Higginson, Alvin Roth, Cary Roth, Joseph Licciardello, and Wood Fibre Industries, Inc. -- for summary judgment dismissing the Complaint of plaintiffs, Joseph Rossi, Rossi Florence Corp., and Rossi Roofing, Inc. Oral argument was heard on the motion on October 23, 1996, and the parties thereafter provided the Court with additional submissions. For the reasons outlined herein, defendants' motions are GRANTED.

 STATEMENT OF FACTS

 Notwithstanding the voluminous nature of the parties' submissions in this case, the factual basis of the dispute is fairly straightforward, if somewhat lengthy.

 Plaintiff Joseph Rossi ("Rossi") has been working in the roofing and siding distribution market in northern New Jersey ("North Jersey") since 1972. Plaintiffs Rossi-Florence Corp. ("Rossi-Florence") and Rossi Roofing, Inc., ("Rossi Roofing") are siding and roofing distributors that Joseph Rossi formed in North Jersey. They are no longer in business. For ease of reference, the entities that are plaintiffs in this action will be referenced as either "Rossi" or "plaintiff."

 Defendants Standard Roofings, Inc., ("Standard") and Arzee Supply Corporation ("Arzee") are distributors of roofing and siding materials in North Jersey. Defendants GAF Corporation *fn1" ("GAF") and Wood Fiber Industries, Inc., ("Wood Fiber") are suppliers of roofing products in North Jersey. Defendant Servistar Corp. ("Servistar") is a buying group, with some roofing and siding distributors as members, doing business in northern New Jersey.

 Defendant William Higginson is currently a shareholder and President of Standard; defendant Joseph Licciardello is Vice President of Standard; defendant Alvin Roth is a shareholder and the President of Arzee; defendant Cary Roth is Alvin's son and a branch manager at Arzee.

 Standard employed Rossi from 1972 until he was terminated in September of 1988, at which time he was the manager of Standard's Cedar Knoll branch. The reasons for his discharge are in dispute. Rossi alleges that Standard fired him because he refused to obey Standard's request to cooperate with Arzee in setting prices. Standard claims that Rossi was fired because of his poor work performance, Standard's high payroll expense (which it attributed to Rossi), Rossi's personal expenses charged to Standard, his concentration on his extraneous business ventures to the detriment of Standard, and the failure of the Cedar Knolls branch to achieve profits commensurate with its sales.

 Immediately after Standard fired Rossi, he began planning to open his own roofing and siding distributorship at a building he owned, which was located adjacent to Standard and on the same block as Arzee. Because of his employment at Standard, Rossi had knowledge about off-invoice, volume and nonvolume confidential rebates that some distributors get from many of the manufacturers in the roofing and siding industry. These rebates are periodic credits against purchases that the manufacturer issued to the distributors. Rossi alleges that distributors and suppliers feared that he would pass these rebates on to his customers, thereby lowering the prices of roofing and siding products in northern New Jersey.

 Rossi believes that because of his past refusal to participate in price fixing, his aggressive pricing, and his potency as a competitor, Standard and Arzee, together with Allied, agreed to prevent Rossi from succeeding as a competitor in the northern New Jersey roofing and siding market. Additionally, Rossi contends that those defendants caused suppliers, including manufacturers, other distributors and buying groups to refuse to deal with Rossi-Florence, Rossi Roofing, and Joseph Rossi.

 Rossi asserts that in late 1988 or 1989, representatives of various manufacturers informed him that distributors Standard, Allied, and/or Arzee pressured manufacturers not to deal with Rossi. Rossi alleges that he entered into a joint business venture with Richard Droesch, President of the Florence Corporation (a roofing, siding, and window distributorship located at Huntington, Long Island), because Florence Corporation already had product lines. Jon Bieselin, an employee of Droesch, also entered into the business arrangement. On December 1, 1988, the three incorporated the Rossi-Florence Corporation in the State of New Jersey.

 Rossi proffers several statements by various persons to support his contention that defendants conspired to keep him out of business. Specifically, Rossi claims that Licciardello, Vice-President of Standard, visited him in December of 1988 at the new business location and informed him that, if he went into business, Standard and Arzee "would do anything they could . . . to keep him out of business." Additionally, a Standard employee testified that he heard Higginson state that Higginson intended to stop Rossi from competing against him.

 Plaintiff asserts that subsequent to Krusa's threat, a similar incident occurred in 1988 in connection with Certainteed, a major siding supplier to both Droesch's Long Island corporation and Arzee. Plaintiff alleges that Droesch received a call from Al Roth of Arzee in December of 1988. During that conversation, Roth allegedly asked Droesch if he was opening a distributorship with Joe Rossi in North Jersey. When Droesch responded affirmatively to that question, Al Roth then stated that he was not happy about it and threatened to open a distributorship in Long Island if Droesch followed through with the Rossi-Florence distributorship.

 In January of 1989, Droesch informed Rossi that he wanted to withdraw from Rossi-Florence because he believed that their corporation would not have the necessary product lines to succeed and that the available substitute products would not suffice. He also told Rossi that he was worried that if he moved forward with their joint venture, his own business in Long Island would be endangered. Joe Rossi and Droesch then reached an agreement whereby Rossi would return $ 65,000 to Droesch and Bieselin and discontinue use of the Florence name.

 After the breakup of Rossi-Florence, Rossi Roofing was incorporated in New Jersey on February 2, 1989, with Joe Rossi and Georgia Rossi as the corporate directors. Rossi Roofing obtained a $ 900,000 bank credit line, which was guaranteed by Joe and Georgia Rossi. In March of that same year, Anthony Lipari invested in Rossi Roofing with the intention that he would be a 50% shareholder.

 Rossi Roofing was able to buy vinyl siding and roofing products from the Bird Corporation, a manufacturer. However, Rossi contends that he was unable to buy roofing product from Celotex, another manufacturer that supplied Standard, Arzee, and Allied. The representative of Celotex said that he could not sell to Rossi because it would not be allowed by his boss.

 Though Rossi Roofing was able to directly secure products from some manufacturers, for example, Gold Bond and Bird, it was unable to get products from some other manufacturers. Manufacturers including Certainteed, Wolverine and Wood Fiber refused to sell their products to Rossi Roofing. Rossi contends that the manufacturers refused to deal with him because of pressure exerted on them by defendant distributors. Because Rossi Roofing was unable to purchase the products it wanted directly from manufacturers, it attempted and actually succeeded in buying some of them through other distributors.

 In March of 1989, Rossi Roofing purchased GAF product from Passaic Metals, a roofing and siding distributor in North Jersey. After learning this, Bill Higginson of Standard called his competitor, Frank Gurtman, the President of Passaic Metals, and threatened to open a branch near Passaic Metals and put him out of business if Gurtman continued to sell to Rossi. Shortly thereafter, Gurtman explained to Rossi that he could not sell him product because he feared retaliation. However, Gurtman did sell some products to Rossi Roofing after Rossi convinced him to do so. *fn2"

 Rossi also bought GAF product from DiNaso & Sons, a roofing and siding distributor located in Staten Island. Plaintiff purports that DiNaso's GAF salesmen visited DiNaso & Sons during 1989 and asked them not to sell to Rossi. Despite their request, DiNaso sold GAF product to Rossi.

 When Rossi Roofing attempted to purchase more slatelines for the James Street Common Condominium project from DiNaso, DiNaso told Rossi Roofing there would be a $ 1.00/sq increase in the price, as GAF had increased DiNaso's price for slateline. Thus, Rossi Roofing was unable to supply James Street Commons with the additional GAF slatelines it needed for subsequent buildings because of the increased price.

 In July of 1989, Rossi Roofing entered into a Membership Agreement with the buying group Hardware Wholesalers, Inc. ("HWI"). Rossi Roofing joined HWI because it could not get the products Rossi Roofing needed directly from manufacturers.

 On July 26, 1989, Rossi Roofing placed an order for GAF product with David Heine, Division Manager of Commodities at HWI. Part of the order was scheduled to be picked up the next day. When a Rossi Roofing employee went to pick up the partial order, he was advised by GAF Shipping Department employee Ken Rupert that his superior, District Sales Manager Bud Krusa, had decided that GAF would not release the order to Rossi Roofing.

 Joe Rossi went with his attorney, Joseph Gioia, to the South Bound Brook Facility where the order was being held. After speaking with several HWI and GAF employees, Rossi then spoke to Krusa by the telephone. Krusa told Rossi, "I am not selling to you. The distribution is filled. GAF requires no other distributors." Rossi Roofing never obtained GAF product directly through GAF or through HWI. Instead it had to resort to buying the shingles from Strober Supply *fn3" at a marked-up price.

 On August 4, 1989, Rossi Roofing went to the Celotex plant to pick up an order placed through HWI. Celotex failed to supply the order, stating that it was a mistake. *fn4"

 Another company of which Joe Rossi was a principal, Far Hills Lumber and Hardware Corporation, also known as L.V. Ludlow & Co. ("Far Hills"), joined the buying group Servistar on July 31, 1989. Rossi attempted to buy GAF product for Rossi Roofing through Far Hills and Servistar.

 On August 2 and 3, 1989, Far Hills placed orders for GAF Timberlines through Servistar's Building Materials Department. Rossi had Far Hills place the GAF orders for the purpose of reselling the GAF product to Rossi Roofing. These orders were filled by GAF and resold by Far Hills to Rossi Roofing. After this transaction was completed, GAF employee Mary Lou Sperr heard that Rossi Roofing was connected to Far Hills.

 Standard's Cedar Knolls/Morristown Branch Manager, Joseph Licciardello, also learned that Rossi Roofing had purchased GAF product from Far Hills. Jorge Esteves, a Standard employee, heard Licciardello state that "That's the last time we're going to be seeing any GAF across the street. They got the -- they were getting the loads through Ludlow [Far Hills], which is American Hardware [the prior name of Servistar]. That's how Joe Rossi was getting GAF and he's going to put an end to that. 'Never going to see another GAF load across the street.'"

 On August 11, 1989, Far Hills placed another order of GAF product through Servistar. On August 14, 1989, a Servistar employee informed Far Hills that the GAF order would not be filled, and that GAF had cut Far Hills off from getting GAF product because of Joe Rossi's involvement with Far Hills.

 Defendant Wood Fiber manufactures Structodek FS. Structodek FS is a product with a membrane attached which commercial roofers use to eliminate the need to lay a separate underlayment before applying a built-up bitumen-type roof over a rough surface. Joe Rossi asked Carl Loser of Wood Fiber to sell their products to Rossi Roofing. Loser told Rossi there was pressure from Allied and Standard not to sell to Rossi and that he did not think he could sell to Rossi Roofing.

 Despite Loser's negative response to Rossi's request, Rossi Roofing ordered a trailer load of Structodek FS in June of 1989. Structodek gave Rossi Roofing a ship date of July 5th. On June 27, 1989, Carl Loser informed Rossi Roofing that they could not ship the material to him because it was in a difficult position.

 At the end of Rossi Roofing's fiscal year, September 30, 1989, Rossi Roofing had lost approximately $ 350,000. Having been unable to buy GAF and other products, Rossi saw no possibilities of getting the products he needed to allow Rossi Roofing to succeed.

 On December 18, 1989, Joseph Rossi, Rossi Roofing, and American Builders & Contractors Supply Co., Inc., ("ABC Supply") entered into an Asset Purchase Agreement pursuant to which ABC Supply agreed to purchase the assets of Rossi Roofing. The sale of Rossi Roofing's assets to ABC Supply occurred on January 8, 1990.

 Joseph and Georgia Rossi were also sued on their personal guarantees for uncollected accounts receivables of Rossi Roofing by a number of Rossi Roofing's creditors. Joseph Rossi is still personally paying off the debt owed to the bank on the Rossi Roofing's line of credit.

 On January 8, 1990, ABC opened it doors to the public and hired Joseph Rossi to manage the branch. The Morristown/Cedar Knolls location which Rossi managed for ABC did over $ 5.5 million in sales in 1990, its first year of operation. During 1993, the fourth and final year Rossi managed that location, the sales had increased to over $ 11 million.

 On January 31, 1994, Jim Murray, ABC's District Manager, came to the Morristown/Cedar Knolls location and announced that ABC was selling that location to Bradco Supply. Consequently, Rossi later negotiated an agreement with Allied Building Supply. Allied opened a location on Rossi's property in ...


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