Intelligen Power Sys., LLC v. Dventus Techs. LLC, 14 Civ. 7392 (PAE)
| Decision Date | 02 June 2015 |
| Docket Number | 14 Civ. 7392 (PAE) |
| Parties | INTELLIGEN POWER SYSTEMS, LLC, Plaintiff, v. dVENTUS TECHNOLOGIES LLC, Defendant. |
| Court | U.S. District Court — Southern District of New York |
In May 2013, plaintiff Intelligen Power Systems, LLC ("Intelligen") entered into a supply agreement under which defendant dVentus Technologies LLC ("dVentus") was to produce specialized electrical equipment for Intelligen. Intelligen alleges that dVentus failed to deliver the equipment, even when given far more time to perform than the parties had agreed upon. Intelligen's Amended Complaint ("AC") brings claims for (1) fraudulent inducement, (2) breach of contract, and (3) replevin. dVentus now moves to dismiss the AC. For the reasons set forth below, the Court denies the motion to dismiss the breach of contract and fraudulent inducement claims, but dismisses the replevin claim.
Intelligen is a New York LLC whose President is David Lesser and whose Chief Operating Officer is Sal Cona. AC ¶¶ 12, 18, 19. Intelligen manufactures cogenerationequipment for onsite production of combined heat and power ("CHP"). Id. ¶ 17. Cogeneration is the process by which electricity and useful heat are simultaneously created. As Intelligen explains:
Cogeneration is the process whereby a single fuel source, such as natural gas, is used to produce both electrical and thermal energy. An onsite cogeneration system is more efficient than a utility operated central power plant because thermal energy that would be otherwise wasted is captured and used at the facility. Producing electricity creates heat. Cogeneration equipment captures that heat and uses it to supply hot water, steam, space heating and cooling. The result is a much more efficient use of fuel which can generate substantial savings for the end user while lowering their carbon footprint. . . . Intelligen's cogeneration systems use a natural gas fired engine to spin a generator to produce electricity. Con Edison requires an inverter based system be used at the interface between the electrical generator at the building and the Con Edison utility grid. Intelligen sought to incorporate [electrical e]quipment into its standardized package for projects in the Con Edison territory . . . .
Id. ¶¶ 2, 4. To give one example, producing electricity often results in some wasted energy, but cogeneration efficiently avoids this result.
Significant here, the New York State Energy Research and Development Authority ("NYSERDA") offers incentive programs to encourage use of cogeneration. Id. ¶ 3. However, Intelligen needed specialized electrical equipment (the "Equipment") to achieve the necessary efficiencies in Con Edison territory and thereby qualify for NYSERDA incentives. Id. ¶ 4.
The dispute here arose after dVentus contacted Intelligen, seeking to supply Intelligen with the Equipment.2 Id. ¶ 22. A Michigan LLC, dVentus is "a renewable energy technology company that develops and manufactures innovative and customized solutions for energy conversion and energy management systems." Id. ¶¶ 13, 20. Its CEO is Daniel Gizaw. Id. ¶ 21. For its part, Intelligen was interested in working with dVentus because Intelligen had received an order for a project that required the inclusion of this Equipment in order to obtain a NYSERDA incentive. Id. ¶ 5.
In June 2012, dVentus first contacted Intelligen, seeking to supply Intelligen with the Equipment it needed. Id. ¶ 22. On June 14, 2012, a dVentus marketing employee (Fana Abay) sent Cona an email touting dVentus's qualifications, "broad experience," and certifications. Id. ¶¶ 23-24.
Between September 2012 and May 2013, the principals of the two entities had several direct conversations, as Gizaw spoke by telephone, Skype, or in person with Lesser and/or Cona. Id. ¶ 26. These "discussions focused on dVentus convincing Intelligen that dVentus readily possessed the design, engineering and manufacturing capabilities to produce the Equipment." Id.
The parties' communications during this period included the following. On November 26, 2012, Gizaw gave a telephonic presentation, in which he "represented that he had a generator and converter package designed for the wind turbine industry which could be easily adapted to" Intelligen's needs. Id. ¶ 33. On January 27, 2013, Gizaw confirmed by email "that the delivery[of the Equipment] would take 20 weeks 'if everything looks good.'" Id. ¶ 36.3 In a conference call on March 15, 2013, "Gizaw represented that he had six engineers who would be assigned Equipment fabrication." Id. ¶ 38. On March 18, 2013, Gizaw emailed Cona with a price estimate and "an estimated lead-time of 16 weeks, plus 4 weeks for testing, plus the time to ship components from Ethiopia to Ann Arbor," Michigan. Id. ¶ 40. On April 13, 2013, at an in-person meeting at Intelligen's factory in New York, Gizaw stated that lead times for the first set of units was "approximately sixteen weeks," and that later deliveries would be faster. Id. ¶¶ 41-42. Gizaw also stated that the equipment would be partly made at dVentus's facility in Ethiopia, and then shipped to its Michigan facility for final assembly and testing. Id. ¶ 41. On April 24, 2013, shortly before Intelligen and dVentus entered into the Supply Agreement ("SA"), Intelligen submitted a purchase order to dVentus for the equipment at issue, for a total amount of $201,050.00 (the "Purchase Order"). Id. ¶ 49; see also Juckniess Decl. Ex. 2; Lesser Decl. Ex. 3.
On May 7, 2013, the parties executed the SA. AC ¶ 50; see also Juckniess Decl. Ex. 4; Lesser Decl. Ex. 2. Among its provisions, the SA states that it would continue in effect until December 31, 2015, "unless terminated earlier in accordance with the provisions hereof." SA § 1.1. It also provides that all purchase orders between the parties would be governed by the SA. Id. § 1.3. It further provides that dVentus can "postpone delivery free of charge for a maximum of 4 weeks." Id. § 8.4. The SA also contains a merger clause and a limitation on liability clause. Id. §§ 14, 17.
Intelligen alleges that, "[c]ontemporaneously with the execution of the [SA], on or about May 7, 2013, and thus as part of the contract between the parties, dVentus submitted the Invoiceto Intelligen which demanded a deposit of $78,551.00 for the Equipment ordered pursuant to the Purchase Order." AC ¶ 50. The Invoice has a "Ship Date" column, in which "16 Wks est" is written. Juckniess Decl. Ex. 3; Lesser Decl. Ex. 4; see also AC ¶ 51. On May 9, 2013, Intelligen paid dVentus the $78,551. AC ¶ 52. On September 6, 2013, Intelligen provided dVentus with its own parts and equipment, as requested by dVentus for design and testing. Id. ¶ 53.
Intelligen expected a September 2013 delivery of the Equipment. Id. ¶ 66. On a May 16, 2013 conference call, Gizaw told Lesser and Cona that dVentus had ordered "the long lead time components." Id. ¶ 63. In July 2013, however, dVentus pushed back the delivery date for the equipment from September 2013 to October 2013. Id. ¶ 69. In mid-August 2013, Gizaw confirmed that the delivery was on schedule. Id. ¶ 65. In October 2013, Intelligen continued to seek updates, but "dVentus became increasingly non-responsive," id. ¶ 67; and when the parties were in contact, "dVentus was unwilling to provide specifics," id. ¶ 68.
On October 29, 2013, "Gizaw admitted that dVentus had not ordered any parts," despite his earlier representations to the contrary. Id. ¶ 70.
On December 3, 2013, "dVentus agreed to come to New York to discuss the status of the project" in a meeting to be held on December 6. Id. ¶ 73. On December 5, however, Gizaw canceled the trip. Id. That month, Gizaw "again pushed the date of delivery back," this time to February 2014—"five months after the Equipment was originally promised." Id. ¶ 74.
As of March 2014, the equipment still had not been delivered and dVentus would not give Intelligen a firm delivery date. Id. ¶ 76.
By letter dated March 21, 2014, Intelligen accused dVentus of anticipatorily repudiating the agreement. Id. ¶ 77. dVentus failed to cure its alleged breach within 15 days, the time provided by the SA to cure. Id. ¶ 78.
On April 28, 2014, Intelligen filed suit in New York State Supreme Court in Manhattan, alleging fraudulent inducement, breach of contract, and replevin. See Dkt. 1, Ex. A. Intelligen had difficulty serving dVentus's sole member, Gizaw, then in Ethiopia at dVentus's factory. See Dkt. 16; Dkt. 19.
In September 2014, dVentus removed this case. See Dkt. 1. On Intelligen's motion to remand, this Court found the removal timely because Intelligen's summons with notice had not identified Intelligen's member(s) or their citizenship and therefore had not triggered the running of the statutory 30-day deadline for removal. See id., Ex. A; Dkt. 30.
On January 6, 2015, Intelligen filed its initial Complaint, Dkt. 37, precipitating dVentus's first motion to dismiss, Dkt. 43.
On February 23, 2015, Intelligen filed its AC, the operative complaint here. See Dkt. 49. The AC brings three causes of action: (1) fraudulent inducement, based on seven allegedly false and material statements that dVentus made between September 2012 and May 2013; (2) breach of contract, based on dVentus's alleged failure to deliver the Equipment within about 16 weeks, or alternatively, within a "reasonable time" under the New York Uniform Commercial Code; and (3) replevin, based on dVentus's alleged refusal to return certain of Intelligen's parts.
On March 16, 2015, dVentus again moved to dismiss, Dkt. 56, and filed a memorandum of law in support, Dkt. 57 ("Def. Br."), and an accompanying declaration, Dkt. 58 ("Juckniess Decl."). On April 6, 2015, Intelligen submitted a memorandum of law in opposition to themotion to dismiss, Dkt. 63 ("Pl. Br."), and an accompanying declaration, Dkt. 62 (...
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