Edf Renewable Dev. Inc. v. Cnty. of Suffolk

Decision Date17 November 2016
Docket NumberCV 13-3361
PartiesEDF RENEWABLE DEVELOPMENT. INC., Plaintiff, v. COUNTY OF SUFFOLK, Defendant.
CourtU.S. District Court — Eastern District of New York
FINDINGS OF FACT AND CONCLUSIONS OF LAW

(Shields, MJ.)

APPEARANCES:

BLANK ROME, LLP

BY: HARRIS N. COGAN, ESQ.

BRUCE MICHAEL GORMAN, JR., ESQ.

RITHER ALABRE, ESQ.

Attorneys for Plaintiff

405 Lexington Avenue

New York, New York 10174

DENNIS M. BROWN, ESQ., SUFFOLK COUNTY ATTORNEY

BY: JOHN RICHARD PETROWSKI, ESQ., MEGAN O'DONNELL, ESQ.,

ASSISTANT COUNTY ATTORNEYS

100 Veterans Memorial Highway

P.O. Box 6100

Hauppauge, New York 11788

Attorneys for Defendant

SHIELDS, Magistrate Judge,

Plaintiff EDF Renewable Development, Inc. commenced this action on or about June 12, 2013, against Defendant County of Suffolk alleging claims for breach of contract, promissory estoppel and breach of the covenant of good faith and fair dealing. After completion of discovery and the denial of cross-motions for summary judgment, see Docket Entry ("DE") Nos. 36, 40 and 43, the parties consented to the jurisdiction of this Court for all purposes. DE 51-52. A non-jury trial commenced on May 9, 2016 and concluded on May 13, 2016. DE 61-66. On June 30, 2016, the parties submitted proposed findings of fact and conclusions of law. DE 67 and 68. Upon consideration of those submissions and the proceedings herein, this constitutes the Court's Findings of Fact and Conclusions of Law.

FINDINGS OF FACT
I. The Parties and the Witnesses Who Testified at the Trial
1. Plaintiff EDF Renewable Development, Inc. ("EDF") is a company located in San Diego, California that has been engaged in the renewable energy business. EDF's business ventures have, over time, included solar energy and wind energy programs. Nolan Tr. 35-36.
2. EDF's corporate predecessor was known as enXco Development Corporation ("enXco"). enXco owned membership interests in Eastern Long Island Solar Project, LLP ("ELISP"). ELISP is the corporate entity that entered into the contract with the County of Suffolk (the "County") that forms the basis of this lawsuit.
3. While EDF has sold its ownership interest in ELISP, ELISP has assigned its rights in the contractual claims herein to EDF. For convenience, this Court refers to the contracting party (and the Plaintiff herein) as EDF. Throughout the trial the parties referred to EDF when referring to the actions of its corporate predecessor, enXco. This Court similarly refers herein to EDF to encompass references to the acts of its predecessor corporate entity.
4. EDF presented the factual testimony of: (1) Gerard Nolan ("Nolan") and (2) Lee Connor ("Connor"). Nolan and Connor both served as EDF Project Managers for the overall project forming the basis of this lawsuit as well as earlier completed projects. They hadpersonal knowledge of all aspects of the projects and exercised hands-on control over all aspects thereof. EDF also presented the factual testimony of Keith Feldmann, a principle of Eldor Contracting Corporation ("Eldor"). Eldor is an electrical construction company that served, essentially, as the general contractor for the project forming the basis of this action.
5. The County presented the factual testimony of: (1) Michael Monaghan ("Monaghan"), Llewelyn Johnson ("Johnson") and Robert Hardie ("Hardie"). Monaghan, Johnson and Hardie were all employees of the County working at the Suffolk County Department of Public Works ("DPW") on the project forming the basis of this lawsuit during the relevant time period.
6. The County also presented the factual testimony of Lisa Broughton ("Broughton"). Broughton was employed as the Director of the Suffolk County Department of Energy during the relevant time period. Like Nolan and Connor, Monaghan, Johnson, Hardie and Broughton had personal involvement and knowledge of the project at issue.
7. The County's final factual witness was Dennis Brown, Esq. ("Brown"). Brown was employed as the Chief Deputy County Executive to Suffolk County Executive Steven Bellone ("Bellone"). Cohen assumed this position when Bellone became the Suffolk County Executive in January of 2012.
8. EDF presented the expert testimony of Maryellen Sebold ("Sebold'), a Certified Public Accountant and a Managing Director at the consulting firm of BDO USA, LLP.
9. The County presented the expert testimony of James Smith ("Smith"), a professor at Stony Brook University and a consultant with Bison Technology Corporation.
10. The Court has reviewed the credentials of both Sebold and Smith and holds that both were properly qualified as experts and competent to offer expert testimony in this matter. The Court gives weight to the testimony of each of these witnesses as described below.
II. EDF's Contract with LIPA: The Power Purchase Agreement
11. In or around 2008, EDF responded to a request for proposals issued by the Long Island Power Authority ("LIPA") to generate up to 20 megawatts of solar power on Long Island (the "2008 RFP"). EDF was the successful bidder in the 2008 RFP.
12. In January of 2010, pursuant to the solar power generation envisioned by the 2008 RFP, EDF and LIPA entered into a 20-year contract for the sale of electricity to be produced by EDF and sold to LIPA (the "Power Purchase Agreement" or the "PPA"). The Power Purchase Agreement gave EDF the right to sell electricity - measured in megawatts ("MW") - to LIPA. See Contract for the Purchase and Sale of Solar Energy, Renewable Energy Certificates and Capacity Between Long Island Power Authority and Eastern Long Island Solar Project, LLC, dated January 27, 2010. Plaintiff's Trial Exhibit ("Pl. Exh.") 1, 25.
13. As extended and amended, the Power Purchase Agreement set a final deadline of December 31, 2012 for EDF to complete its installation of solar panels to generate the electricity envisioned by the PPA. Nolan Tr. 39.
14. EDF planned to generate the power called for in the PPA by installing solar panels as carports in parking lots. Thus, EDF needed to locate appropriate sites to host those carports.
15. In 2009, after becoming aware of the opportunity to be involved in the solar energy project envisioned by the PPA, the County applied to act as a host site for the erection of the EDF solar panel carports. Broughton Tr. 546-47.
16. The County was an ardent supporter of the carport project. Broughton Tr. 580. The project would not only foster green environment concerns but, in addition, the leasing of County-owned land to EDF would result in the overall generation of approximately $10 million in rental payments. Broughton Tr. 581.
III. The Lease Agreements between EDF and the County
17. While the County initially envisioned construction of solar carports only at the parking lot at its H. Lee Dennison municipal building in Hauppauge, New York, it thereafter engaged in discussions with EDF to construct carports at other parking lots located throughout the County, including LIRR parking lots. Broughton Tr. 548; Nolan Tr. 43.
18. It was ultimately agreed that solar panel carports would be constructed by EDF at seven parking lots located on land owned by the County. Thereafter, EDF entered into seven separate lease agreements with the County allowing EDF to construct solar panel carports on County owned land (the "Lease Agreements"). See Nolan Tr. 43-44.
19. The seven sites where solar panel carports were to be installed pursuant to the Lease Agreements were referred to at trial as: (1) Brentwood; (2) North Country; (3) the Cohalan Court Complex; (4) Riverhead; (5) the Dennison Building; (6) Deer Park, and (7) Ronkonkoma (collectively the "Carport Sites").
20. While separate agreements were entered into for each of the Carport Sites, the Lease Agreements were all dated March 22, 2010, were for terms of twenty years, and contained identical substantive provisions. See, e.g., Pl. Exh. 4 (Lease Agreementpertaining to Cohalan Court Complex; Pl. Exh. 5 (Lease Agreement pertaining to Ronkonkoma LIRR Station); Pl. Exh. 6 (Lease Agreement pertaining to Deer Park LIRR Station); Nolan Tr. 74.
21. The lease agreement that is the subject of this lawsuit is the agreement entered into between EDF and the County to construct solar panel carports at the Ronkonkoma LIRR station parking lot (the "Ronkonkoma Lease Agreement"). Pl. Exh. 5.
22. Among the parties' contractual obligations as set forth in each of the Lease Agreements, including the Ronkonkoma Lease Agreement, was the contractual duty to cooperate as set forth in Section 35 of each of the Lease Agreements and discussed in greater detail below ("Section 35"). See, e.g., Pl. Exhs. 4, 5, 6 at 28.
IV. EDF's Purchases of Solar Panels and Steel for the Carport Project
23. In order to fulfill its obligations under the Lease Agreements, EDF was required to purchase solar panels and steel to be used in construction. These materials were ordered and purchased by EDF after the signing of the Lease Agreements, but prior to the issuance of any building permits. Nolan Tr. 51; Connor Tr. 254.
24. Ensuring a sufficient amount of solar panels for construction was important for EDF because, at or around the execution of the 2010 Lease Agreements, there was a global shortage of such panels. Nolan Tr. 52; Connor Tr. 255.
25. While the County took the position that no such global shortage existed, the Court finds, based upon the evidence and documents presented, that it was reasonable for EDF to believe that such a shortage existed in 2010 when the Lease Agreements were executed.
26. In view of the global shortage in solar panels, and to take advantage of economies of scale, EDF made the decision to purchase solar panels pursuant to a Master SalesAgreement, also referred to as a "Frame" agreement, with a company known as "Suntech." Suntech was a manufacturer of solar panels. See Nolan Tr. 53.
27. EDF's Frame Agreement with Suntech not only locked in a particular price, but also ensured that EDF would have a sufficient number of solar panels on hand to complete carport construction once building permits were issued. Nolan Tr.
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