IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MLEA, INC., as successor in interest to : CIVIL ACTION

Engineered Gas Systems, LLP and :

Main Line Engineering Associates :

: NO. 02 CV 4393

Plaintiff, :

:

v. :

:

Atlantic Recycled Rubber, Inc., et al. :

:

Defendants. :

DEFENDANTS, ATLANTIC RECYCLED RUBBER, INC.’S AND

RECOVERY TECHNOLOGIES GROUP, INC.’S PRETRIAL MEMORANDUM

Defendants, Atlantic Recycled Rubber, Inc. (“ARR”) and Recovery Technologies Group, 

Inc. (“RTG”), submit this Pretrial Memorandum pursuant to Local Rule of Civil Procedure 

16.1(c).

I. NATURE OF THE ACTION AND BASIS OF JURISDICTION

Plaintiff MLEA, Inc., as successor in interest to Engineered Gas Systems, LLP and Main 

Line Engineering Associates, (collectively “Plaintiff” or “MLEA”) filed a Complaint against 

ARR, Recovery Technologies Group, Inc. ("RTG"), and Casella Waste Systems, Inc. (“Casella”) 

alleging the failure to pay for engineering plans and certain equipment with an alleged value of 

approximately $1.6 million. MLEA seeks to recover against ARR directly on claims of alleged 

breach of contract, promissory estoppel and unjust enrichment, and also seeks to impose liability 

upon defendants RTG and Casella through some sort of alter ego/veil piercing theory. 

Defendant RTG has filed a Counterclaim on two $75,000 Promissory Notes executed by 

Plaintiff for a total of $150,000, plus interest, costs and attorneys’ fees.

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Jurisdiction is proper under 28 U.S.C. § 1332(a)(1) and (2), because the parties are 

corporate citizens of either different states or of a state and a foreign state, and the matter in 

controversy exceeds $75,000, exclusive of interest and costs. Venue is proper under 28 U.S.C. § 

1391(a)(2).

II. STATEMENT OF FACTS

In the summer of 2000, ARR began to transform its traditional tire-recycling 

operation in Truro, Nova Scotia, Canada (the "Truro facility") into a cryogenic facility.1 However, to utilize the cryogenic procedure, ARR was required to purchase and ship liquid 

nitrogen for the Truro facility from a vendor in Maine. The shipment of liquid nitrogen to Truro 

was cost-prohibitive, and ARR began to investigate more cost-efficient methods to supply liquid 

nitrogen for the Truro facility. One option was to have a plant built on-site that would produce 

liquid nitrogen for use in the Truro facility. 

In response to informal discussions between Messer (predecessor to plaintiff MLEA)

and ARR, Messer, through its then-consultant and salesman, George Timberlake, submitted a 

written offer to construct such a plant in August 2000. Realizing how important RTI-Canada 

considered third-party financing through a leasing agreement, Messer sent RTI-Canada a 

September 13, 2000 revised offer letter in which Timberlake stated that it had already "arranged 

a lease through National Fleet Leasing, . . .." Notwithstanding Timberlake’s representation, lease 

financing was never put in place. 

RTI-Canada responded to Messer’s September 13, 2000 letter indicating that it was 

the intent of RTI-Canada to accept Messer’s proposal for the Plant if and only if an operating 

 1

 ARR (formerly known as Atlantic Trucking and Lime Spreading Limited) was purchased by KTI Recycling of 

Canada, Inc. in June 2000. KTI Recycling of Canada, Inc. changed its name to Recovery Technologies (Canada), 

Inc. (“RTI-Canada”).

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lease agreement could be worked out and the Canadian and local authorities agreed to the 

construction of the Plant. 

Beginning in October 2000, Messer began attempting to make arrangements for the 

operating lease with National Fleet Leasing which Timberlake had represented was already 

approved. By his letter of November 20, 2000, Timberlake represented that Messer was having 

difficulty getting information for the envisioned lease and that the “lease approval cycle” would 

take up more time. Timberlake, therefore, requested that a purchase order be issued for the 

purchase of “long lead and critical use items” in the amount of $155,000, which was the total 

purchase price for those items. The items Timberlake requested that a purchase order be issued 

for included: (1) a feed breaker; (2) a transformer and (3) a cryogenic storage tank. In his 

November 20th letter, Timberlake agreed that Messer would buy back the items described in his 

letter at the same price as soon as the lease was approved and that the items would then be 

included in the lease. 

On December 1, 2000, in reliance on Mr. Timberlake’s representations about having 

difficulty getting information for the lease and the resulting delay, ARR issued purchase order 

#715258 with the stipulations that: (1) the items identified in that purchase order would be re- purchased by Messer when the system lease was approved; (2) that payment of the purchase 

order would be from the proceeds of the lease; and (3) ARR could return the equipment to 

Messer for full credit in the event that ARR and Messer did not proceed with the lease. At that 

point, Timberlake fully understood that ARR was the customer and the entity with which he was 

transacting business. 

By his letter of December 11, 2000, Timberlake again represented that Messer was 

having difficulty getting information for the envisioned lease and that the “normal lease cycle” 

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would “jeopardize [ARR’s] April target date.” Timberlake, therefore, requested that a “second 

temporary equipment order” be issued for a down payment of $298,000 on various items 

identified in his letter. Timberlake never suggested in his letter and never mentioned in any 

discussion with any ARR representative the idea that he was proposing that either ARR or RTG 

pay any amount other than the $298,000. This purchase order was intended to be a “stop-gap 

measure to allow for the Lease Agreement later on.” Indeed, in sending his December 11th

solicitation, it was Timberlake’s intention to secure nothing other than a purchase order for 

$298,000. 

In his December 11th letter, Timberlake agreed that if the proposed $298,000 

purchase order issued, Messer would buy back the items described in his letter at the same price 

as soon as the lease was approved and that the items would then be included in the lease. In 

reliance on Timberlake’s December 11th representations about having difficulty getting 

information for the lease, and that the “normal lease cycle” would “jeopardize our April target 

date” and that the amount of the purchase order was limited to $298,000, ARR issued purchase 

orders 715260 and 715261 with the stipulations that: (1) the items identified in that purchase 

order would be re-purchased by Messer when the system lease was approved; (2) that payment 

of the purchase order would be from the proceeds of the lease; and (3) ARR could return the 

equipment to Messer for full credit in the event that ARR and Messer did not proceed with the 

lease. Timberlake thereafter represented that the leasing company had objected to the 

stipulation that Messer purchase back the equipment identified in his December 11th letter. ARR

representatives, John Riordan and Bill Meckert, discussed this issue and relying solely upon the 

truthfulness of Timberlake’s representations about the objections of the leasing company to the 

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Messer purchase stipulation to purchase orders 715260 and 715261, requested that Steve 

Benison, ARR’s General Manager, remove the stipulations that Messer purchase back the 

equipment identified in his December 11th letter. ARR acted upon that request and did, in fact, 

remove those stipulations. However, irrespective of ARR’s removal of the stipulations in purchase orders 

715260 and 715261, Timberlake never proposed and ARR never agreed to pay any amounts over 

and above the $298,000 that Timberlake proposed in his December 11th letter. Nor did 

Timberlake ever discuss with any ARR representative any amount other than the $298,000 in 

connection with his request that ARR issue the “second temporary equipment order.” 

Similarly, MLEA never requested or proposed at any time that ARR pay for 

engineering drawings and specifications allegedly required for the ordering of the equipment in 

any of the above-referenced purchase orders. It is undisputed that ARR never agreed to pay for 

such engineering drawings.

In approximately December, 2000, Messer decided to disband its engineering 

division. At that point, Timberlake, who was then neither a Messer or an EGS employee, 

decided that he and Messer employee, Manny Menendez, would attempt to persuade Messer to 

transfer the Truro project to EGS, which would operate as an affiliate of Plaintiff MLEA. At the 

same time, on January 18, 2001, EGS became a distributor for MG Generon, Inc., a wholly- owned subsidiary of Messer MG Industries, Inc. Under the distributorship agreement, EGS was 

to purchase all of its requirements for membrane equipment systems from MG Generon. By letter agreement dated January 19, 2001 (“Four Way agreement”), Messer, MG 

Generon, MLEA and ARR agreed that Messer was undergoing ownership and organizational 

changes, that Messer was being disbanded and that the Truro project was being transferred to 

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EGS. The Four Way agreement confirmed that the purchase orders previously issued by ARR 

were to be “funded by the lease, when the lease is executed” but that the financial and 

commercial terms would now be between ARR and EGS. Signatories to this letter were ARR, 

MLEA, Messer and MG Generon. RTG was not a signatory to the letter. 

Upon receiving the executed Four Way agreement, EGS proceeded to develop more 

formal and detailed purchase orders and engineering plans and specifications for the equipment 

identified in the ARR purchase orders. EGS then placed orders with various third party vendors 

for the purchase of that equipment. To the extent that Plaintiff relied upon any representations in 

performing those engineering services, developing plans and specifications, and ordering the 

equipment identified in the ARR purchase orders, all of those representations were made prior to 

and included Plaintiff’s receipt of the Four Way agreement on January 19, 2001. Thereafter, EGS took over responsibility for the Truro project, including the procuring of the operating lease

for the Truro project. However, because EGS, unlike Messer, was a small, new company, EGS 

was unable to obtain the operating lease.

By letter dated February 27, 2001, EGS requested that a purchase order be issued for 

the entire Plant. EGS also requested that payment be made on the previously issued purchase 

orders – orders which were supposed to be funded through a lease. Moreover, in response to 

concerns raised by ARR, RTG and Casella regarding the Plant’s warranty, for the first time, EGS 

indicated that the proposed Plant might not be able to meet the production capacity of 30 tons per 

day. 

In response, RTI-Canada paid EGS $100,750.00 on March 9, 2001 as payment for 

EGS's January 25, 2001 invoice for $100,750.00. This invoice corresponded to the down 

payments for the feed breaker and transformer, and purchase and installation of the storage tank 

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that were the subject of ARR Purchase Order #715258, the first purchase order. ARR received 

delivery of the storage tank, but it did not receive the transformer or feed breaker. Thus, ARR 

had a credit of approximately $12,400.00.

In April 2001, in a letter to MG Generon, one of its vendors, Plaintiff admitted that 

"[t]here never was a written contract or signed purchase order for the entire facility between 

Messer or Generon and ARR". EGS further admitted that "[s]ince January [2001], we have 

finished the facility design and have ordered essentially all the equipment in spite of the fact that 

we have yet to obtain a written contract or signed PO for the facility, and have been paid on 

only the smaller of the two initial POs." Mr. DelGaizo also admitted that the "[Truro] project . . . 

has collapsed." 

On April 24, 2001 and on June 12, 2001, EGS forwarded executed copies of proposed 

contracts to RTG and ARR, respectively. Neither was signed by ARR or RTG. 

In late August 2001, in an attempt to provide plaintiff with some financial assistance 

while the parties continued to see if a deal could be reached, RTG agreed to loan EGS $150,000. 

RTG’s Counterclaim asserts that Plaintiff owes RTG more than $150,000.00 in connection with 

the loan that RTG made to Plaintiff – a loan memorialized by two promissory notes and a 

security agreement that Plaintiff duly executed. The promissory notes were secured by the 

engineering plans, modifications thereto and the foundation drawings for the Plant (collectively 

the “Plans”). Plaintiff’s President and CEO, Mr. DelGaizo, has admitted that Plaintiff signed the 

two promissory notes (the ”Notes”) and the security agreement, and that Plaintiff received two 

checks for $75,000 each. Pursuant to those Notes, Plaintiff agreed to pay RTG a total of 

$150,000 plus interest at the rate of 8%, together with all costs of collection, including attorneys’

fees. According to the terms of the Notes, the Notes were deemed to be immediately due and 

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payable upon any “Event of Default.” The Notes defined an “Event of Default” as including 

“[i]f Theodore DelGaizo shall fail to deliver a personal guarantee” of the Notes to RTG by 

September 5, 2001. DelGaizo admitted at his deposition that, despite the requirement that he 

personally guarantee the Notes, DelGaizo never executed any personal guarantee of the Notes. It 

is therefore undisputed that Plaintiff has not paid all or any part of the amount due under the 

Notes and that Plaintiff is in default on those Notes as a result of DelGaizo’s failure to personally 

guarantee payment of those Notes. 

EGS continued to submit proposals to RTG through early 2002, at which time it became 

clear to RTG and ARR that EGS was not able to offer a Plant with acceptable terms that would 

meet ARR’s needs. Accordingly, the discussions with EGS ceased and this litigation was 

commenced.

III. ITEMIZED DAMAGES

Defendant RTG seeks damages on its Counterclaim in the amount of $150,000, plus 

interest, cost and attorneys’ fees. Plaintiff agreed under the Promissory Notes and related 

Security Agreement to pay $150,000 plus eight percent interest per annum. The interest due, 

from September 5, 2001 through February 10, 2004 at the stated interest rate of eight percent per 

annum, is $28,999.95. Plaintiff also agreed in the Promissory Notes and Security Agreement 

that, in the event of default, RTG was entitled to recover the cost of collection, including 

attorneys’ fees and costs.

IV. LEGAL ISSUES & AUTHORITY

Defendants RTG and ARR filed Motions for Summary Judgment, Or Alternatively for 

Partial Summary Judgment on February 10, 2004 (“Motions”). The Motions raise various legal 

issues that will need to be addressed prior to trial. Plaintiff’s responses to the Motions are due on 

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March 15, 2004. Depending on the resolution of the Motions, Defendants will likely file 

motions in limine to address various evidentiary issues.

V. DEFENDANTS’ WITNESS LIST

Defendants identify the following witnesses who they may call at trial either live or 

through deposition testimony. Defendants reserve the right to call any witnesses identified in 

Plaintiff’s witness list and Defendant Casella Waste Systems, Inc.’s witness list. In addition, 

Defendants reserve the right to call additional witnesses who may be necessary for impeachment 

or rebuttal. The following witnesses may be called to testify regarding liability and damages 

issues.

1.

2.

Roderick Alewijnse

27 S. Wyoming Avenue

Ardmore, PA 19003-1226

James R. Anderson

Atlantic Recycled Rubber, Inc.

1225 Franklin Boulevard

Cambridge, Ontario, Canada N1R 7E5

3. Steven Benison

c/o Brian W. Stilwell

Burchell MacDougall

710 Prince Street

Truro, Nova Scotia Canada B2N 5H1

4. James Bohlig

Casella Waste Systems, Inc.

25 Greens Hill Lane

Rutland, VT 05701

5. Alan Cohen

804 Cypress Blvd. 

Pompano Beach, Florida 33069

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6. Theodore J. DelGaizo, P.E., Esquire

MLEA, Inc.

211 Welsh Pool Road, No. 120

Exton, PA 19341

7. Richard Kelley, Jr.

Recovery Technologies Group, Inc.

499 West Branch

Manchester, VT 05255

8. George William Meckert

440 E. 20th Street, Apt. 7E

New York, NY 10009-8208

9. Manuel Menendez

MLEA, Inc.

211 Welsh Pool Road, No. 120

Exton, PA 19341

10. James Petrie

Recovery Technologies Group, Inc.

1125 Franklin Blvd.

Cambridge, ON, Canada N1R 7ES

11. Ross Pirasteh

130 E. 65th Street

New York, NY 10021

12. Martin J. Sergi

Recover Technologies Group, Inc.

7000 Boulevard East

Guttenberg, NJ 07093

13.

14.

Barry Smith

108 West Clay Creek Lane

Kennett Square, PA 19348

George Timberlake

MLEA, Inc.

211 Welsh Pool Road, No. 120

Exton, PA 19341

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15. Robert E. Wetzel, Esquire

Recovery Technologies Group, Inc.

20 Braeburn Lane

Barrington Hills, IL 60010

VI. SCHEDULE OF TRIAL EXHIBITS

Defendants identify the exhibits, attached hereto as Exhibit “A”, which they may 

introduce into evidence at trial. Defendants reserve the right to offer demonstrative exhibits at 

trial, as well as introduce or use any exhibits identified in Plaintiff’s exhibit list and Defendant 

Casella Waste Systems, Inc.’s exhibit list and any documents produced in this litigation. Defendants also reserve the right to introduce all pleadings, discovery responses, Plaintiffs' 

admissions from the Complaint and portions of the depositions of Mr. DelGaizo, Mr. Menendez, 

Mr. Benison, as well as portions of the trial testimony of Mr. DelGaizo and Mr. Menendez in the 

case of Generon IGS, Inc. v. MLEA, Chester County CCP, No.02-00973. Defendants reserve

the right to introduce into evidence exhibits which may be necessary for impeachment or 

rebuttal. 

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VII. ESTIMATED TRIAL TIME

Trial is estimated at 4-5 days.

Dated: February 18, 2004 Respectfully submitted,

ECKERT SEAMANS CHERIN

 & MELLOTT, LLC

By:

John F. O’Riordan, Esquire

Heather E. Rennie, Esquire

Attorney I.D. Nos. 59311 & 69715

1515 Market Street, Ninth Floor

Philadelphia, PA 19102

(215) 851-8400

Attorneys for Defendants Atlantic 

Recycled Rubber, Inc. and 

Recovery Technologies Group, Inc.

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CERTIFICATE OF SERVICE

I, Heather E. Rennie, Esquire, hereby certify that on February 18, 2004, I served a true 

and correct copy of the foregoing Defendants, Atlantic Recycled Rubber, Inc.’s and Recovery 

Technologies Group, Inc.’s Pretrial Memorandum via first-class mail upon the following: 

Philip J. Katauskas, Esquire

Pepper Hamilton LLP

3000 Two Logan Square

18th & Arch Streets

Philadelphia, PA 19103-2799

Brian J. McCormick, Jr., Esquire

Buchanan Ingersoll

Professional Corporation

Eleven Penn Center, 14th Floor

1835 Market Street

Philadelphia, PA 19103

Heather E. Rennie, Esquire

M0446203.DOC

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