Acciona Windpower N. Am., LLC v. City of W. Branch
| Decision Date | 04 September 2015 |
| Docket Number | No. C14–0033,C14–0033 |
| Citation | 128 F.Supp.3d 1105 |
| Parties | Acciona Windpower North America, LLC, Plaintiff, v. City of West Branch, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Kevin J. Caster, Theresa C. Davis, Dana L. Oxley, Shuttleworth & Ingersoll, PLC, Cedar Rapids, IA, for Plaintiff.
Brian Andrew Melhus, William John Miller, Dorsey & Whitney, LLP, Des Moines, IA, for Defendant.
RULINGS ON MOTIONS FOR SUMMARY JUDGMENT
I. INTRODUCTION ...––––
II. PROCEDURAL HISTORY ...––––
III. RELEVANT FACTS ...––––
A. The Agreement ...––––
B. The Parties' Performance ...––––
IV. DISCUSSION ...––––
A. Did Acciona Perform its Obligations Under the Agreement? ...––––
B. Did West Branch Perform its Obligations Under the Agreement? ...––––
C. Has Acciona Suffered Damages? ...––––
D. What About a Rebate which was "Obligated for Appropriation" but not Paid? ...––––
E. Summary ...––––
V. ORDER ...––––
I. INTRODUCTION
On the 4th day of August, 2015, this matter came on for hearing on the Motion for Partial Summary Judgment (docket number 37) filed by Plaintiff Acciona Windpower North America, LLC ("Acciona") on June 15, 2015, and the Motion for Summary Judgment (docket number 38) filed by Defendant City of West Branch ("the City" or "West Branch") on the same day. Acciona was represented by its attorneys, Theresa C. Davis and Dana L. Oxley. West Branch was represented by its attorneys, William J. Miller and Brian A. Melhus.
II. PROCEDURAL HISTORY
On March 7, 2014, Acciona filed a complaint seeking damages for the City's alleged breach of contract, and seeking specific performance. After its motion to dismiss (asserting a lack of subject matter jurisdiction) was denied, West Branch filed an answer on June 10, 2014.
On July 7, 2014, the Court adopted a proposed Scheduling Order and Discovery Plan submitted by the parties. Also at that time, the case was referred to me for the conduct of all further proceedings and the entry of judgment, in accordance with 28 U.S.C. § 636(c)and the consent of the parties. After consulting with counsel, this matter was set for a non-jury trial beginning on October 19, 2015.
III. RELEVANT FACTS
A. The Agreement
In January 2008, Acciona and the City executed an Amended Tax Increment Development Agreement ("the Agreement"). The Agreement stated that Acciona "intends to expand its business and to thereby generate employment opportunities within West Branch's Urban Renewal Area." Specifically, with the City's assistance in the form of tax rebates, Acciona intended to undertake an urban renewal project which would create a substantial number of new jobs in West Branch.
Under the terms of the proposal, ACCIONA will undertake the Project consisting of certain improvements as set forth in Section II (hereinafter "Minimum Improvements") to be completed in the Project Area by ACCIONA, and will create approximately 110 new full-time jobs in a period of not to exceed five (5) years commencing May, 2007, if the City will agree to assist the Project by rebating to ACCIONA, for a period of eight years, incremental property taxes actually paid with respect to the Minimum Improvements and received under Iowa Code Section 403.19by the City (hereinafter "City Contribution"), Code of Iowa.
Amended Tax Increment Development Agreement at 1 (Plaintiff's App. 2).
According to the Agreement, the City determined that "the Project is consistent with the objectives of the Plan for the Urban Renewal Area and that development of the Project Area and the Urban Renewal Area by construction of the Minimum Improvements is in the vital and best interests of the City." Accordingly, the City found that "the use of City funds to finance the City Contribution is in accord with the provisions of the applicable laws under which the Project will be undertaken, including, but not limited to, Iowa Code chapter 403."
Acciona agreed that it "will cause the Minimum Improvements to be constructed in the Project Area" in accordance with the terms of the Agreement. Among other things, the Minimum Improvements required a capital investment of at least $11 million, "[t]he creation of approximately 110 new, full-time jobs within a period of not to exceed five (5) years," and the payment of a median wage for new non-management production jobs of at least $14.57 per hour. The Agreement required that "[t]he Minimum Improvements shall be completed within a five-year period beginning May, 2007." See Plaintiff's App. 3.
In consideration of the Minimum Improvements pledged by Acciona, the City agreed "to assist in the Project by rebating to ACCIONA, or its successor in interest with written consent of the City, that percentage of incremental taxes actually paid with respect to the Minimum Improvements and received under Iowa Code Chapter 403.19 by the City, as set forth in the attached Exhibit B, for a period of eight years beginning with the tax year in which property taxes on the completed value of the Minimum Improvements are first paid."1 The Agreement further provided:
Amended Tax Increment Development Agreement, Section II (Plaintiff's App. 4).
B. The Parties' Performance
Steven Cieslak, Director of Finance for Acciona, states in a supporting affidavit that Acciona "completed construction of its facility in March 2009, having spent in excess of $20,000,000 on the building remodeling and on new machinery and equipment for the expanded facility."2 Cieslak further avers that Acciona had created 158 new jobs as of May 2008, and by May 2009 had created 188 jobs. According to Cieslak, Acciona had 123 jobs in May 2010, and 115 jobs in May 2011. Acciona underwent a "reduction in force" in March 2012, however, reducing the number of full-time employee positions to 102. According to Cieslak's first affidavit, Acciona had 102 jobs in May 2012 (the deadline established in the Agreement).3
In its resistance, West Branch cites the deposition testimony of Joe Baker, who the City identifies as Acciona's former chief executive officer. In response to questioning by the City's attorney, Baker agreed with Cieslak's letter to the city administrator dated May 9, 2013, stating that Acciona had 102 employees as of May 2012.4 Baker was then asked "[w]ould you have any idea of where those employees were located specifically?" Baker initially answered: "No, not off the top of my head."5 Baker then testified that 60 or 70% of Acciona's total employment "typically were located physically in West Branch."6 According to Baker, "that's my memory."7
In a later affidavit, Cieslak clarified that the employment numbers cited in his first affidavit included employees performing jobs not based in West Branch. Acciona manufactures wind turbines at its plant in West Branch. Acciona also installs, services, and manages wind turbines at its customers' locations throughout the country. Accordingly, Acciona has employees who are not based in West Branch, employees who work at the West Branch facility, and "field employees" who perform jobs at the WestBranch facility when there are no projects to manage in the field. According to Cieslak, the jobs described as " 'based in West Branch if not at project' were filled by individuals who maintained residences in the West Branch area and who also perform jobs at the West Branch facility when they were not working on a project at a customer's location, what we refer to as being out in the field."8 In its supplemental appendix, Acciona produced detailed payroll records for its employees during the relevant time period. In his second affidavit, Cieslak provides a table showing the number of employees in each category:
5/12/2012 5/28/2011 5/15/2010 5/30/2009 5/31/2008
Not based in WB 9 13 18 20 21
Permanent in WB 76 84 85 139 119
Based in WB if not at
project 16 14 22 29 27
Total 101 111 125 188 158
Permanent in WB or
Based in WB if not at
project in field 92 98 107 168 146
Affidavit of Steven Cieslak at 2–3, ¶ 5 (Plaintiff's Supp.App. 92–93).
Initially, the City rebated a percentage of the incremental property taxes pursuant to the terms of the Agreement. The City paid Acciona $144,225 in fiscal year 2010, $186,899 in fiscal year 2011, and $113,077 in fiscal year 2012.9
On November 5, 2012, the City passed a resolution obligating a rebate to Acciona in the amount of $265,140, representing a percentage of incremental taxes paid by Acciona for fiscal year...
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