Burrstone Energy Ctr., LLC v. Cummins Ne., Inc.
| Decision Date | 31 July 2015 |
| Docket Number | No. A833/2014.,A833/2014. |
| Citation | 28 N.Y.S.3d 647 (Table) |
| Parties | Burrstone Energy Center, LLC, Plaintiff, v. Cummins Northeast, Inc., and CUMMINS NORTHEAST, LLC, Defendants. |
| Court | New York Supreme Court |
Hinckley, Allen & Snyder LLP, Albany, Attorneys for Plaintiff (James J. Barriere and Christopher V. Fenlon, of counsel).
Nixon Peabody LLP, Albany, Attorneys for Defendants (Samuel Goldblatt and Leah Threatte Bojnowski, of counsel).
In this commercial action, defendant Cummins Northeast LLC ("Cummins LLC" or "defendant") moves, pre-discovery, for partial summary judgment on its counterclaims seeking a declaratory judgment that it lawfully terminated a maintenance agreement with plaintiff Burrstone Energy Center, LLC ("Burrstone") (the first and second counterclaims) and for dismissal of the breach of contract and wrongful termination of contract claims asserted against it in the amended complaint (the fourth and fifth causes of action). Burrstone moves for partial summary judgment on the issues of defendants' liability on its breach of contract and wrongful termination causes of action (the first, third, fourth, and fifth causes of action) and for dismissal of defendant's first counterclaim, which seeks a declaration that the maintenance agreement expired without renewal. Defendant Cummins Northeast Inc. ("Cummins Northeast") cross-moves for partial summary judgment dismissing the breach of contract and wrongful termination of contract claims alleged against it (the first, second, and third causes of action).
Burrstone is a company formed to construct and operate a co-generation plant, and Cummins Northeast was an authorized distributor of parts and service for Cummins power generators. On September 28, 2009, Burrstone and Cummins Northeast entered into a Maintenance Agreement ("Agreement") whereby Cummins Northeast would service and maintain four generators ("GenSets") purchased by Burrstone in exchange for payment of a specified annual fee. With respect to the duration of the Agreement, the contract states as follows:
In November 2010, defendant allegedly purchased the assets of Cummins Northeast comprising its distribution, sales and service business, including rights and obligations under the Agreement. Following this transaction, Cummins Northeast changed its name to CNE Lights Out, Inc. ("Lights Out"), wound up its affairs and later was dissolved under Massachusetts law.
Beginning in 2011, Burrstone experienced problems with certain GenSets, which Cummins LLC repaired. However, defendant requested reimbursement for these services, asserting that the repair work was caused by Burrstone's failure to properly maintain and/or operate the GenSets. Burrstone refused to provide reimbursement to defendant.
On May 15, 2014, Cummins LLC notified Burrstone that it did not intend to renew the Agreement beyond its initial five-year term, which was set to expire on September 28, 2014. Defendant then completed a scheduled major maintenance ("M5 maintenance") on one of the GenSets. On July 9, 2014, after the M5 maintenance was complete, Burrstone objected in writing to defendant's notice of non-renewal and asserted that Cummins LLC was obliged to continue to perform under the Agreement "for its entire 10 year term". In August 2014, Cummins LLC notified Burrstone that it was immediately terminating the Agreement pursuant to Sections 7.6 and 11.2 based upon Burrstone's failure to timely remit payment on two invoices. Burrstone objected and demanded that defendant continue to perform.
Burrstone commenced this action shortly thereafter, seeking damages for defendants' alleged breach of contract and wrongful termination of the Agreement. Cummins LLC seeks a declaratory judgment that it was within its rights to not renew the Agreement and the recovery of certain maintenance costs. Following joinder of issue, each party has moved for summary judgment. Oral argument on the motions was held on July 8, 2015, and this Decision and Order follows.
"To prevail on a motion for summary judgment, the moving party must establish prima facie entitlement to judgment as a matter of law by adducing sufficient competent evidence to show that there are no issues of material fact" (Staunton v. Brooks, 2015 N.Y. Slip Op 05248, *2 [3d Dept June 18, 2015] [citations omitted]; see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986] ). If the movant fails to satisfy this initial burden, the motion must be denied, "regardless of the sufficiency of the opposing papers" (Alvarez, 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ). But if the movant satisfies the initial burden, the burden shifts to the nonmoving party to demonstrate that material issues of fact or a legal defense to the claim exist (id. ).
Burrstone contends that it is entitled to summary judgment on its first and fourth causes of action, alleging that defendant did not have the unilateral right to terminate the Agreement at the end of five years and that defendant's refusal to continue to perform constitutes a breach of the Agreement. Cummins LLC's first counterclaim seeks a declaration that it had the right to decline to renew the Agreement after five years, that its notice of non-renewal was effective and, therefore, the Agreement expired on September 28, 2014.
In interpreting the Agreement, the Court must be "guided by basic principles of contract interpretation which instruct that a contract should be construed to give effect to the parties' intent as gleaned from the four corners of the document itself, provided that its terms are clear and unambiguous" (Elmira Teachers' Assn. v. Elmira City School Dist., 53 A.D.3d 757, 759, 861 N.Y.S.2d 195 [3d Dept 2008], lv denied 11 NY3d 709 [2008] ). Contract language must be interpreted in accordance with the plain and ordinary meaning of the words used (see South Rd. Assocs., LLC v. International Bus. Machines Corp., 4 N.Y.3d 272, 277 [2005] ; Elmira Teachers' Assn., 53 A.D.3d at 759, 861 N.Y.S.2d 195 ). Further, the Court should refrain from placing undue emphasis upon any particular word or phrase or reading the contract in a manner that renders any portion thereof meaningless (see Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324–325 [2007] ; South Rd. Assocs., 4 N.Y.3d at 277, 793 N.Y.S.2d 835, 826 N.E.2d 806 ; Stevens & Thompson Paper Co., Inc. v. Niagara Mohawk Power Corp., 49 A.D.3d 1011, 1013, 853 N.Y.S.2d 423 [3d Dept 2008] ).
Whether an agreement is ambiguous is a question of law for the Court (Mary Imogene Bassett Hosp. v. Cannon Design, Inc., 127 A.D.3d 1377, 1379 [3d Dept 2015] ; see Consedine v. Portville Cent. School Dist., 12 N.Y.3d 286, 293 [2009] ; South Rd. Assocs., 4 N.Y.3d at 277, 793 N.Y.S.2d 835, 826 N.E.2d 806 ). "An agreement is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion" (Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244 [2014] [internal quotation marks and citations omitted] ). Ambiguity exists, however, "when specific language [in the agreement] is susceptible of two reasonable interpretations' " (id., quoting State of New York v. Home Indem. Co., 66 N.Y.2d 669, 671 [1985] ; see Wiggins v. Kopko, 94 A.D.3d 1268, 1269, 942 N.Y.S.2d 666 [3d Dept 2012] ; Angelino v. Freedus, 69 A.D.3d 1203, 1205, 893 N.Y.S.2d 668 [3d Dept 2010] ; Pozament Corp. v. AES Westover, LLC, 27 A.D.3d 1000, 1001, 812 N.Y.S.2d 154 [3d Dept 2006] ).
Central to the parties' dispute is Section 2.1 of the Agreement, which states that "[t]he length of this agreement is 5 years then 1 five year renewable for a total of a 10 year agreement." No party contends that this language is ambiguous; rather, each side insists that its interpretation is the only reasonable one.
In that regard, Burrstone argues that Section 2.1, when read together with the other provisions of the Agreement, unambiguously provides for a contract term of ten years. While not entirely clear as to whether renewal at the expiration the initial five-year period occurs automatically or is triggered at its unilateral option, Burrstone contends that, either way, the result is the same: the Agreement has a term of ten years, unless terminated for cause or by the mutual agreement of the parties.
In support of this position, Burrstone first relies on references in Section 2.1 of the Agreement to a ten-year term. Burrstone emphasizes the...
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