CMB Infrastructure Grp. IX, LP v. Cobra Energy Inv. Fin., Inc.

• Decision Date: 15 November 2021
• Docket Number: Case No.: 2:21-cv-00214-JAD-DJA
• Citation: 572 F.Supp.3d 950
• Parties: CMB INFRASTRUCTURE GROUP IX, LP et al., Plaintiffs v. COBRA ENERGY INVESTMENT FINANCE, INC. et al., Defendants
• Court: U.S. District Court — District of Nevada

572 F.Supp.3d 950

CMB INFRASTRUCTURE GROUP IX, LP et al., Plaintiffs

v.COBRA ENERGY INVESTMENT FINANCE, INC. et al., Defendants

Case No.: 2:21-cv-00214-JAD-DJA

United States District Court, D. Nevada.

Signed November 15, 2021

John Stewart Poulos, Lewis Brisbois Bisgaard & Smith LLP, Sacramento, CA, Adam J. Pernsteiner, Matthew Cavanaugh, Lewis Brisbois Bisgaard & Smith, LLP, Las Vegas, NV, for Plaintiffs.

Colby Balkenbush, D. Lee Roberts, Jr., Weinberg Wheeler Hudgins Gunn & Dial, LLC, Las Vegas, NV, Geoffrey Crisp, Weil & Drage, APC, Jeremy R. Kilber, W&D Law, LLP, Henderson, NV, James Bryan Saylor, Pro Hac Vice, Philip Robben, Pro Hac Vice, Sojin Yoon, Pro Hac Vice, William Escobar, Pro Hac Vice, Kelley Drye & Warren LLP, New York, NY, for Defendants Cobra Energy Investment Finance, Inc., Cobra Energy Investment, LLC, Cobra Industrial Services, Inc., Cobra Thermosolar Plants, Inc., Cobra Instalaciones Y Servicios SA.

Colby Balkenbush, D. Lee Roberts, Jr., Weinberg Wheeler Hudgins Gunn & Dial, LLC, J. Christopher Jorgensen, Lewis Roca Rothgerber Christie LLP, Las Vegas, NV, Geoffrey Crisp, Weil & Drage, APC, Jeremy R. Kilber, W&D Law, LLP, Henderson, NV, James Bryan Saylor, Pro Hac Vice, Philip Robben, Pro Hac Vice, Sojin Yoon, Pro Hac Vice, William Escobar, Pro Hac Vice, Kelley Drye & Warren LLP, New York, NY, for Defendant ACS Servicios Comunicaciones y Energia S.L.

J. Christopher Jorgensen, Lewis Roca Rothgerber Christie LLP, Las Vegas, NV, Jayant W. Tambe, Pro Hac Vice, Laura Washington Sawyer, Pro Hac Vice, Jones Day, New York, NY, for Defendant Banco Santander, S.A.

D. Lee Roberts, Jr., Colby Balkenbush, Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC, Las Vegas, NV, James Bryan Saylor, Pro Hac Vice, Philip Robben, Pro Hac Vice, Sojin Yoon, Pro Hac Vice, William Escobar, Pro Hac Vice, Kelley Drye & Warren LLP, New York, NY, for Defendant Tonopah Solar Energy, LLC.

Order Denying Motion to Remand; Resolving Motions to Dismiss; Granting in Part and Denying as Moot in Part Request for Jurisdictional Discovery; Granting Motion to Compel Arbitration; and Staying Case

[ECF Nos. 17, 24, 51, 52, 53, 60]

Jennifer A. Dorsey, United States District Judge The Crescent Dunes Project brought together numerous Nevadan, Texan, Californian, Delawarean, and Spanish entities and their subsidiaries; the United States Department of Energy; the Nevada Power Company; and hundreds of millions of dollars through a series of contracts and guaranties to fund, construct, and operationalize a solar-thermal power plant in Tonopah, Nevada. As a result of alleged misfeasance, nonfeasance, and malfeasance, the project failed, and the plant is now nonoperational. Through a half dozen motions, the project's diverse cast of characters asks this court to untangle their web of relationships and determine the consequences of those acts and omissions. By this order, I deny plaintiffs’ motion to remand, dismiss with prejudice plaintiffs’ claim for aiding and abetting tortious interference with contract, grant the Cobra defendants’ motion to compel arbitration, and stay the remainder of this case except to permit limited jurisdictional discovery and motion practice as to Santander.

Background¹

The three plaintiffs are two California limited partnerships—CMB Infrastructure Investment Group IX, LP (CMB 9) and CMB Infrastructure Investment Group XI, LP (CMB 11)—and a Texas limited-liability company, CMB Export, LLC (CMBE).² Collectively, plaintiffs sue eight defendants: ACS Servicios Comunicaciones y Energia, S.L. (ACS), a Spanish corporation; Banco Santander, S.A. (Santander), a Spanish corporation; Tonopah Solar Energy, LLC (TSE), a Delaware company; and the Cobra defendants—Cobra Energy Investment, LLC (CEI), a Delaware company; Cobra Energy Investment Finance, Inc. (CEIF), a Delaware corporation; Cobra Industrial Services, Inc. (CISI), a Delaware corporation; Cobra Instalaciones y Servicios S.A. (CISSA), a Spanish corporation; and Cobra Thermosolar Plants, Inc. (CTPI), a Nevada corporation.³

Under the Second Amended and Restated Limited Liability Agreement of Tonopah Solar Investments, LLC (TSI Agreement), SolarReserve, Inc.’s (SR) indirect subsidiary, SolarReserve CSP Finance, LLC (SRCSP), and CEI each hold a 50% membership interest in Tonopah Solar Investments, LLC (TSI).⁴ TSI wholly owns Tonopah Solar Energy Holdings I, LLC (TSEH 1), which wholly owns Tonopah Solar Energy Holdings II, LLC (TSEH 2), which controls TSE.⁵ Under the agreement that formed TSEH 1, the five-member TSEH 1 board consisted of one Santander appointee, two SR appointees, two CEI appointees.⁶ The Crescent Dunes Project (the Project) is owned by TSE, was constructed by CTPI, and was operated by CTPI and SR's affiliates.⁷ CTPI's obligations as to the construction of the solar-thermal power plant in Tonopah, Nevada (the Plant) were laid out in its Engineering, Procurement, and Construction contract (EPC Contract) with TSE.⁸ CTPI's responsibilities under the EPC Contract were unconditionally guaranteed by ACS.⁹

To finance construction of the Plant, SRCSP and ACS's indirect subsidiary, CEIF, obtained loans totaling $170 million from CMB 9 and CMB 11.¹⁰ The loans were evidenced by two loan agreements, one between CMB 9 and SRCSP (the Group 9 Loan) and guaranteed by SR, and the other between CMB 11 and CEIF (the Group 11 Loan) and guaranteed by CISSA.¹¹ In addition, TSE—an indirect subsidiary of SRCSP and CEI's Delawarean joint venture, Tonopah Solar Investments, LLC (TSI)¹² —obtained a $715 million United States Department of Energy (DOE)-guaranteed loan from the Federal Financing Bank (FFB), memorialized in the Loan Guaranty Agreement (LGA) signed by SR, CEI, and TSE.¹³ The loans were to be repaid through revenue generated from a power purchase agreement (PPA) between TSE and the Nevada Power Company (NV Energy), as well as other sources.¹⁴ Under the LGA, DOE had the right to appoint an additional TSEH 1 board member.¹⁵ But in 2018, on DOE's insistence, the TSEH 1 board was reconstituted to four members—one SR appointee, one CEI appointee, and two DOE appointees.¹⁶

Since its delivery, the Plant has failed to meet its power-generation requirements, has been offline for significant periods of time, and is now nonoperational.¹⁷ The Project is insolvent, and the Group 9 Loan agreement, the LGA, and the PPA are in default.¹⁸ Plaintiffs claim that the Plant is poorly constructed, and more than 9,000 distinct defects and seven major defects that affect its safety and regular use have been identified.¹⁹ Despite these foundational issues preventing provisional acceptance—a contractually defined milestone following a series of conditions precedent—from being achieved, SR, Santander, and the DOE amended the contract to deem it achieved anyway and transferred control of the incomplete Plant to TSE.²⁰ Plaintiffs allege that following the premature handover, TSE discovered an additional 2,000 warranty claims.²¹

According to plaintiffs, CEIF, CTPI, and their affiliates conspired to hide the defects from plaintiffs through nondisclosures, misrepresentations, and lies about the progress of construction and the Plant's quality, all to prevent CMBE from enforcing its contractual rights and mitigating the losses suffered by CMB 9 at a time when mitigation would have substantially satisfied the Group 9 Loan.²² The Group 9 Loan remains entirely unsatisfied.²³ SR—which was forced out of the Project by the defendants and DOE—and SRCSP assigned their claims under the TSI Agreement to plaintiffs.²⁴ In July 2020, TSE filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, and plaintiffs asked that court to consider their claims in this lawsuit when developing TSE's reorganization plan.²⁵

In state court, plaintiffs sued (1) CEIF for fraud and breach of the Group 11 Loan agreement for failure to make required disclosures and misleading plaintiffs about the Project's progress; (2) TSE and CEI for fraud in amending the EPC contract to deem provisional acceptance achieved when it was not, failure to disclose that prematurity, and misleading plaintiffs that defects would be resolved and that the Project was complete; (3) ACS, CISSA, CISI, and CEI for aiding and abetting fraud by directing nondisclosure and failing to correct misleading disclosures; (4) Santander for aiding and abetting fraud as to the provisional acceptance and by providing its proxy and later selling its interest in the Project to the Cobra defendants to prevent disclosures or material corrections from being made; (5) all defendants for intentional tortious interference with and/or aiding and abetting tortious interference with contractual relations for withholding information about the Project's failures as relevant to the Group 9 Loan agreement; (6) CEI for breach of the implied covenant of good faith and fair dealing as to the TSI Agreement for intentionally depriving SRCSP of the benefits of its bargain under that agreement; (7) Cobra defendants for aiding and abetting CEI's breach of the implied covenant of good faith and fair dealing; (8) TSE and the Cobra defendants for intentional tortious interference with contractual relations as to the TSI Agreement for expelling SRCSP from that agreement; (9) CEI for breach of fiduciary duties owed to SRCSP under the TSI Agreement; and (10) TSE and the Cobra defendants for aiding and abetting CEI's breach of fiduciary duties.²⁶ The defendants removed the action to this court.²⁷ Plaintiffs move to remand;²⁸ the Cobra defendants move to compel arbitration;²⁹ and Santander,³⁰ ACS,³¹ and TSE³² each move to dismiss.

Discussion

I. Santander and ACS's motions to dismiss [ECF Nos. 51, 52, 53]

Santander raises a statute-of-limitations defense and moves to dismiss for want of personal jurisdiction and failure to state a claim. ACS also moves to dismiss for want of personal jurisdiction. Plaintiffs request that the court grant them jurisdictional discovery if...