E. Me. Elec. Coop., Inc. v. First Wind Holdings, LLC
| Decision Date | 13 April 2017 |
| Docket Number | DOCKET NO. BCD-CV-15-048 |
| Parties | EASTERN MAINE ELECTRIC COOPERATIVE, INC., Plaintiff, v. FIRST WIND HOLDINGS, LLC, et al., Defendants. |
| Court | Maine Superior Court |
CUMBERLAND, SS.
BUSINESS AND CONSUMER COURT
Before the Court are the following post-trial motions: (1) Defendants First Wind Holdings, LLC ("First Wind"), Evergreen Gen Lead, LLC, Evergreen Wind Power III, LLC, Stetson Holdings, LLC, and Stetson Wind II, LLC's (collectively "Defendants") renewed motion for judgment as a matter of law, or, in the alternative, motion for a new trial or remittitur; (2) Plaintiff Eastern Maine Electric Cooperative, Inc.'s ("EMEC") motion for immediate execution or alternatively, an order that Defendants give a bond pending appeal; and (3) EMEC's bill of costs.
On December 23, 2011, EMEC, First Wind, on behalf of itself and any subsidiaries in involved in the transaction, and Bangor Hydro Electric Company ("Bangor Hydro" or "BHE") and its parent company Emera, Inc. ("Emera") entered into a Precedent Transmission Line Agreement (the "Precedent Agreement"). The Precedent Agreement incorporated a Term Sheet, which set forth certain terms for the sale of a transmission line known as the "Stetson Line" to EMEC and Bangor Hydro. The parties agree that the Precedent Agreement required them to negotiate in good faith to come a definitive agreement regarding the sale of the Stetson Line. The parties were ultimately unable to reach a definitive agreement. EMEC filed a complaint with the Superior Court on October 24, 2014. This action was then transferred to the Business and Consumer Docket. On November 18, 2016, a Penobscot County jury returned a verdict awarding damages to EMEC in the amount of $13,604,400.00 in lost profits. On November 21, 2016, the court entered judgment against Defendants.
Oral argument on all pending motions was held on January 31, 2017. The court considered the parties' written submission, the last of which was received on March 10, 2017. It has also reviewed its notes from trial as well as certain transcripts of witness testimony. For the reasons stated below, the court denies Defendants' renewed motion for judgment as a matter of law, Defendants' motion for a new trial or remittitur, and EMEC's motion for immediate execution or that Defendants give a bond pending appeal. The court defers consideration of EMEC's bill of costs pending the expiration of the appeal period or the conclusion on any appeal to the Law Court.
Pursuant to Maine Rule of Civil Procedure 50(a), the court may grant a motion for judgment as a matter of law if "viewing the evidence and all reasonable inferences therefrom most favorably to the party opposing the motion, a jury could not reasonably find for that party on an issue that under the substantive law is an essential element of the claim." M.R. Civ. P. 50(a). A party seeking judgment as a matter of law pursuant to Rule 50(b) following a trial must establish that "the adverse jury verdict was 'clearly and manifestly wrong.'" Me. Energy Recovery Co. v. United Steel Structures, Inc., 1999 ME 31, ¶ 5, 724 A.2d 1248 (citation omitted); M.R. Civ. P. 50(b). The court shall grant a motion for judgment as a matter of law following a trial "only if the jury was 'rationally compelled' to conclude that the moving party isentitled to judgment in its favor, and should deny the motion if 'based on all the evidence, reasonable minds could reach different conclusions on dispositive questions of fact.'" Tobin v. Barter, 2014 ME 51, ¶ 8, 89 A.3d 1088 (citation omitted). In other words, a motion for judgment as a matter of law will not be granted "if any reasonable view of the evidence could sustain a verdict for the opposing party." Id. (internal quotation and citation omitted).
To prevail on a breach of contract claim, a plaintiff must establish: (1) the parties had a legally binding contract; (2) the defendant breached a material term of the contract; and (3) defendant's breach caused the plaintiff to suffer damages. Id. ¶¶ 9-10, Whether a party has breached a material term of a contract and causation are questions of fact for the jury. Me. Energy Recovery Co., 1999 ME 31, ¶ 7, 724 A.2d 1248.
An agreement to negotiate in good faith toward the formation of another contract can itself be an enforceable contract so long as the agreement to negotiate in good faith otherwise meets the requirements to form a binding contract. Venture Assocs. Corp. v. Zenith Data Sys. Corp., 96 F.3d 275, 277 (7th Cir. 1996). "Good faith" requires both honesty in fact and that the party observes reasonable commercial standards of fair dealing. Darling's v. Ford Motor Co., 1998 ME 232, ¶ 14, 719 A.2d 111. In order to obtain an award of damages for the benefit of the bargain, the plaintiff must prove that one or more defendants acted in bad faith; that but for the bad faith, the parties would have reached a final agreement; that the loss of the final agreement was a foreseeable result of the bad faith; and the damages must be proven to a reasonable degree of certainty. Venture Assocs. Corp., 96 F.3d at 278; Restatement (Second) of Contracts §§ 347, 351-52.
Defendants assert they are entitled to judgment as a matter of law on five grounds: (1) there was insufficient evidence that Defendants failed to negotiate in good faith; (2) there was no evidence that parties could have obtained lender consent; (3) there was insufficient evidence of mutual assent to the terms of the Term Sheet; (4) the Precedent Agreement provided the sole remedy in the event a definitive agreement was not reached and lost profits were not reasonably foreseeable; and (5) there was insufficient evidence to find the Subsidiary Defendants liable. (Defs. Mot. 3-15.) The court addresses each issue in turn.
Defendants assert that no reasonable jury could find that Defendants breached their obligation to negotiate in good faith toward a definitive transmission line agreement to sell the Stetson Line. (Id. at 3-5.) Defendants assert that "the trial record was completely devoid of any evidence of dishonesty, improper tactics or deliberate misconduct" that would rise to the level of bad faith. (Id. at 5.) Defendants assert, rather, there was substantial evidence that First Wind worked diligently in negotiating towards a definitive agreement. (Id at 5-6.) Defendants also argue that the Precedent Agreement required that all "reasonable and customary terms" would be included in the final agreement and that the evidence at trial showed that insurance was a "reasonable and customary term." (Id. at 6.) In response, EMEC asserts that the jury could have found that Defendants failed to meet their obligation to negotiate in good faith in at least two ways: (1) Defendants demanded that EMEC obtain property insurance for the Stetson Line, an impossible task because such insurance does not exist; and (2) Defendants' demand that EMEC obtain insurance was not a part of the Precedent Agreement and was not a "reasonable and customary term." (Pl. Opp'n to Defs. Mot. 4-6.) In their supplemental brief, Defendants assertthat First Wind was not insisting on an impossible task, but rather, in good faith, seeking to deal with the issue of catastrophic loss. (Defs. Suppl. Br. 12-13.)
In support of their assertion, Defendants cite trial testimony from First Wind executive Adam Horwitz, EMEC chief executive Scott Hallowell, Emera executive Gerard Chasse, and exhibits tending to demonstrate that the Precedent Agreement and Term Sheet provided that "reasonable and customary terms" and "conditions on necessary consents" would be included in the definitive agreement; that First Wind was not "demanding" EMEC obtain insurance; that First Wind was trying to solve the problem of catastrophic loss; that the parties were working to find a solution that would keep the wind farms in no worse of a position after the transaction closed; that the parties did not know obtaining insurance would be problematic; that First Wind did not learn that insurance was not available for a transmission line until the summer of 2013; that First Wind contacted its own insurance broker to check if there was some other way to insure the Stetson Line; that First Wind's lenders would not have consented to the sale without insurance or some other protection in place; and that First Wind did not contact its lenders about obtaining consent without insurance because lenders generally prefer that a deal be finalized before seeking consents. (Jt. Exs. 45, 79, 107; Pl. Exs. 20, 24-25; Horwitz Tr. 43:15-44:1, 41:24-43:5, 125:13-22, 134:15-20, 135:2-9; Hallowell Tr. 136:13-22; Chasse Dep. 72:12-15, 18-21.)
However, the jury also received evidence demonstrating that First Wind was involved in the drafting of the Term Sheet and that obtaining insurance coverage for the transmission line was not an express term of the Precedent Agreement or Term Sheet. (Jt. Exs. 35, 44-45.) The jury heard testimony from Chasse that insurance was the "major issue" preventing a final agreement and that other issues were "mostly mechanical" and likely could have been worked out. (Chasse Dep. 129:5-130:2.)
The jury heard testimony from Hallowell and received exhibits demonstrating that obtaining insurance for the transmission line "was never anyone's plan"; that insurance was not a part of the Precedent Agreement or Term Sheet; that Defendants demanded many times that EMEC obtain insurance; that it was "impossible" for EMEC to obtain insurance for the transmission line; that Hallowell was perplexed by Defendants' demand; that even after EMEC told Defendants they could not obtain insurance, Defendants continued to demand EMEC obtain insurance; and that insurance was the only issue holding up completion of the deal. (Hallowell Tr. 93:9-96:4; Jt. Ex. 122.)
The jury also...
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