DG Whitefield, LLC v. Cate Street Capital, Inc., 071017 NHSUP, 218-2015-CV-1406

Docket Nº:218-2015-CV-1406
Opinion Judge:Richard B. McNamara, Presiding Justice
Party Name:DG Whitefield, LLC, et al. v. Cate Street Capital, Inc., et al.
Case Date:July 10, 2017
Court:Superior Court of New Hampshire
 
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DG Whitefield, LLC, et al.

v.

Cate Street Capital, Inc., et al.

No. 218-2015-CV-1406

Superior Court of New Hampshire, Merrimack

July 10, 2017

UNPUBLISHED OPINION

ORDER

Richard B. McNamara, Presiding Justice

The Plaintiffs, DG Whitefield, LLC ("Whitefield") and Indeck Energy-Alexandria, LLC ("Indeck"), brought a complaint against the Defendants, Cate Street Capital, Inc. ("Cate Street"), John Hallé, and Robert Desrosiers, 1 alleging breach of contract against Cate Street (Count I), abuse of process against Cate Street (Count II), violation of the Consumer Protection Act against Cate Street (Count III), malicious prosecution against Cate Street (Count IV), and civil conspiracy against all the Defendants (Count V), and seeking enhanced compensatory damages (Count VI) and attorney's fees and costs (Count VII). Before the Court is the Defendants' Motion to Dismiss. Based on the following, the Motion to Dismiss is GRANTED, as it relates to Count III and V, and DENIED, as it relates to Counts I-II and IV.

I

In ruling on a motion to dismiss, the Court must determine whether a plaintiff's allegations are "reasonably susceptible of a construction that would permit recovery." Bohan v. Ritzo, 141 N.H. 210, 212 (1996) (quotation omitted). This determination requires the Court to test the facts contained in the complaint against applicable law. Tessier v. Rockefeller, 162 N.H. 324, 330 (2011). In rendering such a determination, the Court "assume[s] the truth of all well-pleaded facts alleged by the plaintiff and construe[s] all inferences in the light most favorable to the plaintiff." Bohan, 141 N.H. at 213 (quotation omitted). "The plaintiff must, however, plead sufficient facts to form a basis for the cause of action asserted." Mt. Springs Water Co. v. Mt. Lakes Vill. Dist., 126 N.H. 199, 201 (1985). A Court "need not accept statements in the complaint which are merely conclusions of law." Id.

II

The following facts are derived from the allegations contained in the Plaintiff's First Amended Complaint. Cate Street and the Plaintiffs are competitors in the "competitive biomass power market, " in which "Cate Street knew at all relevant times that Plaintiffs were financially struggling." (Compl. ¶¶ 44, 167.) Cate Street is a developer of a 75 megawatt biomass fueled power plant located in Berlin, New Hampshire known as Berlin Station. (Compl. ¶¶ 40-41.) Both Whitefield and Indeck own and operate wood-fired biomass facilities in New Hampshire. (Compl. ¶¶ 10-11.)

On June 8, 2010, Public Service Company of New Hampshire ("PSNH") and Laidlaw Berlin BioPower, LLC ("LBB") executed a 20-year, $2 billion power purchase agreement ("PPA") for renewable energy certificates ("RECs") and electricity. (Compl. ¶ 45.) "At all relevant times, Cate Street controlled LBB." (Compl. ¶ 46.)

On July 26, 2010, PSNH filed a petition with the New Hampshire Public Utilities Commission ("PUC") to approve the PPA under RSA 362-F. (Compl. ¶ 47.) On August 17, 2010, LBB filed a petition to intervene in the PUC proceeding. (Compl. ¶ 48.) On September 24, 2010, the Plaintiffs and other independent biomass power producers ("Wood IPPs") also petitioned to intervene. (Compl. ¶ 50.) "Numerous other parties also petitioned to intervene, some that supported the Berlin Station Project and others that did not." (Compl. ¶ 50.) "PSNH and LBB objected only to the interventions of those that opposed the Berlin Station Project." (Compl. ¶ 51.) Following a hearing, the PUC granted the Plaintiffs' petition to intervene. (Compl. ¶¶ 53, 59.)

Shortly thereafter, LBB withdrew from the PUC proceeding. (Compl. ¶ 57.) "However, LBB, through Cate Street, continued to work cooperatively with PSNH during the PUC Proceeding." (Compl. ¶ 57.)

"After reviewing the PPA and its supporting testimony, Plaintiffs and the Wood IPPs filed a motion to dismiss PSNH's petition for approval of the PPA, arguing that the PUC did not have the statutory authority to award the requested relief." (Compl. ¶ 60.) The PUC denied the Plaintiffs' motion to dismiss on January 14, 2011. (Compl. ¶ 66.) Following six days of evidentiary hearings, the PUC conditionally approved the PPA on April 18, 2011 in a two-to-one vote, but reduced the PPA's value to $1.3 billion. (Compl. ¶¶ 67-68.) The Plaintiffs allege that during the pendency of the PUC proceeding, Cate Street and Hallé, Cate Street's president, "engaged in improper efforts to assert political pressure on the PUC in order to cause it to approve the PPA as submitted on an expedited basis." (Compl. ¶ 95.)

The Plaintiffs and other Wood IPPs subsequently appealed the PUC's decision to the New Hampshire Supreme Court. (Compl. ¶ 75.) PSNH then moved for summary dismissal of the appeal on August 2, 2011. (Compl. ¶ 85.) On August 18, 2011, the Supreme Court denied PSNH's motion and set the matter for oral argument before the full court. (Compl.¶ 90.) The Plaintiffs allege that after they filed the appeal, "Cate Street waged an aggressive public relations campaign to discredit and shame them into withdrawing it." (Compl. ¶ 105.) "As part of this effort, Cate Street defamed Plaintiffs by publishing ads that portrayed them as engaging in acts of extortion and blackmail." (Compl. ¶ 107.) "The purpose of these public relations efforts and accompanying false statements was to force Plaintiffs to withdraw their Appeal and to wrongfully cause them economic harm." (Compl. ¶ 112.)

During this time, the Plaintiffs and other Wood IPPs, the Defendants, PSNH, PUC staff, and the New Hampshire Department of Economic Development "engaged in extensive settlement discussions to resolve all of the outstanding issues related to the PUC process" with the assistance of the Governor's office. (Compl. ¶ 77.) "These negotiations continued over approximately six weeks and involved significant back and forth between and among the principals and counsel for Plaintiffs, Cate Street and PSNH. Representatives from the Governor's office, DRED and the PUC also continued to participate throughout the negotiations and to provide input and suggestions." (Compl. ¶ 125.) These discussions ultimately culminated in a settlement agreement ("the Settlement Agreement") on August 19, 2011. (Compl. ¶ 92.) Specifically, the parties entered into the Settlement Agreement, a support agreement requiring the Plaintiffs to "support certain legislative interests of PSNH, " a REC price support agreement between Whitefield and Cate Street, a REC price support agreement between Indeck and Cate Street, a facility sales option agreement between Whitefield and Cate Street, and five individual PPAs with the Wood IPPs and Indeck. (Compl. ¶ 128.) The PUC subsequently "approved the Settlement Agreement and found that it and the Five PPAs were in the public interest." (Compl. ¶ 131.)

Cate Street entered into the Settlement Agreement upon advice of counsel and released all its claims against the Plaintiffs based upon conduct relating to the Berlin Station Project, the PUC proceedings, and the Supreme Court appeal. (Compl. ¶ 83.) Additionally, one of the Settlement Agreement's requirements was for the Plaintiffs to withdraw their Supreme Court appeal of the PUC's decision. (Compl. ¶ 92.) Because of the withdrawal of the Plaintiffs' appeal, "Cate Street was able to quickly close on the financing for the Berlin Station Project." (Compl. ¶ 93.)

Pursuant to the REC price support agreements and the facility sales option agreement, "and to provide security for the obligations contained therein, " Cate Street placed $4.5 million into escrow with Wells Fargo. (Compl. ¶ 139.) All but $1 million of the escrow funds have been released, with the $1 million remaining in escrow "to secure funds that are the subject of a motion to attach." (Compl. ¶ 140.) Cate Street has not made any payments to the Plaintiffs "arising from or related to" the REC price support agreements or the facility option agreement. (Compl. ¶ 141.)

In 2013, Cate Street brought a declaratory judgment action against the Plaintiffs ("the Underlying Litigation") in which it alleged that the price support and sales option agreements, intertwined within the Settlement Agreement the parties had executed in 2011, were void. The Plaintiffs allege that Hallé, knowing the Plaintiffs were "financially pressed, " told the investors in the Berlin Station Project that a lawsuit could be filed against the Plaintiffs in order to "increase cash flow and return on investments, " and that the Defendants used the Underlying Litigation as a way to address the concerns of their investors and as a "future source of cash to buttress investor returns." (Compl. ¶¶ 187, 194.) The Plaintiffs contend that the Defendants "use aggressive litigation tactics and threats of litigation as a business tool, " and that Cate Street...

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