CAMDENTON, Mo. (Sept. 16, 2022) -- A civil jury this afternoon determined that the city of Richland is legally liable for a breach of contract by the city, which was renting a city-owned factory building to the Earth to Go business and a related operation, Biodegradable Food Service. Jurors awarded the Earth to Go business $620,000 in damages, with attorney fees to be determined in a subsequent Oct. 20 court hearing before Judge Aaron Koeppen.
The decision today after nearly four hours of deliberation and a five-day jury trial could have returned a much larger verdict against the city, which had accused the companies and their owner Kevin Duffy, of "squatting" by refusing to pay rent. The company accused the city of failing to repair a roof causing hundreds of thousands of dollars of damage to its equipment and inventory.
Lawsuits were filed in 2018 but the case dates back to 2014 when, according to the company, conditions at what was then a city-owned facility had deteriorated to the point that the company could no longer manufacture its biodegradable food service products and sell them to customers.
Today's case went to the jury about 12:50 p.m. and the jury returned its verdicts about 4:30 p.m. The Earth To Go verdict and damage assessment was signed by 10 jurors; nine of the 12 were required in a civil trial to reach a verdict. The Biodegradable Food Service verdict, which held the city liable but imposed no financial penalty, was unanimous.
"This is a day we have looked forward to since August 2015," said Earth to Go attorney George Restovich. "They can run, they can't hide. Today is their day; they've been running for six years."
Restovich said Duffy wanted to take existing but problematic technology and improve it as part of his vision to create biodegradable packaging containers that could replace styrofoam and plastic.
"You saw one finished product, the bowl and the nine-inch plate," Restovich said. "(The Richland building) had everything he needed. The one thing he didn't have was a sound, waterproof, watertight roof, and he didn't know that at the time."
While the city turned against Earth to Go after several changes of mayors and the loss of former City Administrator Greg Stratman, Restovich said the city, which lost its major employer years ago when the Lee Jeans factory left town, was hopeful Earth to Go would bring a major boost to local employment and municipal finances, and supported Duffy's vision for environmentally friendly packaging.
"This was a concept that the city was extremely excited about because it was bringing a large employer," Restovich said.
Problems began when water began getting into the building through the roof and damaging equipment and inventory.
"The city had an obligation and they failed. They had an obligation to provide my client with a watertight roof and to make necessary repairs," Restovich said. "(The city) can't let that hole in the ceiling sit there without being damaged... What they (city officials) have the gall to say is Mr. Duffy was not damaged."
Restovich cited numerous problems including a $350,000 piece of equipment that hasn't worked since water damage.
"It's the city which has failed my client, possibly a byproduct of politics," Restovich said. "The water came down, the roof came down... the water damage ruined his business."
The attorney for Richland's insurance company, Bradley Hansmann, said the two businesses owned by Duffy were in trouble long before the water damage. Hansmann said the machinery and mechanical equipment had been bought by Duffy at scrap value from Detroit Tool, and while Duffy had hoped to improve the technology to meet federal standards for biodegradable packaging, the start-up company, like many other start-ups, was failing.
"All I have to do is use Mr. Duffy's words against himself," Hansmann said in citing a divorce document in which Duffy minimized the value of his own company and the value of its equipment, and said the products being produced in Richland didn't meet standards for biodegradable products.
"My question to you is, "Are you allowed to come into one court proceeding and say one thing, and come into another court proceeding and say something different'?" Hansmann asked the jurors. "You're allowed to weigh the credibility of someone who says two different things."
Hansmann also pointed to statements by Alan Clark, a former St. Robert city administrator and former Waynesville city council member who previously worked as the general manager at Earth to Go while Duffy, whose company was based in Oregon, wasn't often in Missouri. According to Hansmann, Clark in a 2018 legal deposition said Duffy closed the Richland factory down in 2014 "for unknown reasons."
"According to Mr. Clark, they could not have started those machines up," Hansmann told the jurors, and said the worst of the water damage was in 2015, after the factory had shut down.
Hansmann said Duffy and his companies had no valid grounds to refuse to pay rent, the city was trying to fix the roof, and was therefore not in breach of its contract to Duffy and his companies.
"We have a squatter in our building who won't move, who isn't paying rent," Hansmann said. "If they hate the building so much, why don't they move?.... This equipment has never made a commercially viable product. It is scrap."
In his rebuttal to the city's arguments, Restovich said Hansmann was trying to confuse what he said was the core issue, that the city had breached its contract by refusing to make necessary repairs.
"I want to make sure the jury is fully clear and is not fooled by the trickery you have just seen performed," Restovich said. "They're trying to tell you the value of the business is zero, when they are they cause of it... I'm asking you to send a message to the city."
The jury sent part of the message Restovich wanted. While Duffy and his companies had asked for $2 million in damages and didn't get that full amount, they did receive favorable jury verdicts on both breach-of-contract counts and about a third of the dollar amount requested for damages.