Laredo Ridge Wind, LLC v. Neb. Pub. Power Dist.

• Decision Date: 24 August 2021
• Docket Number: No. 20-1956,20-1956
• Parties: LAREDO RIDGE WIND, LLC; Broken Bow Wind, LLC; Crofton Bluffs Wind, LLC, Plaintiffs - Appellees v. NEBRASKA PUBLIC POWER DISTRICT, Defendant - Appellant Nebraska Public Power District, Counter Claimant - Appellant v. Laredo Ridge Wind, LLC; Crofton Bluffs Wind, LLC; Broken Bow Wind, LLC, Counter Defendants - Appellees Nebraska Public Power District, Third Party Plaintiff - Appellant v. Elkhorn Ridge Wind, LLC, a Delaware Limited Liability Company, Third Party Defendant - Appellee
• Court: U.S. Court of Appeals — Eighth Circuit

11 F.4th 645

LAREDO RIDGE WIND, LLC; Broken Bow Wind, LLC; Crofton Bluffs Wind, LLC, Plaintiffs - Appellees

v.NEBRASKA PUBLIC POWER DISTRICT, Defendant - Appellant

Nebraska Public Power District, Counter Claimant - Appellant

v.Laredo Ridge Wind, LLC; Crofton Bluffs Wind, LLC; Broken Bow Wind, LLC, Counter Defendants - Appellees

Nebraska Public Power District, Third Party Plaintiff - Appellant

v.Elkhorn Ridge Wind, LLC, a Delaware Limited Liability Company, Third Party Defendant - Appellee

No. 20-1956

United States Court of Appeals, Eighth Circuit.

Submitted: March 18, 2021

Filed: August 24, 2021

Rehearing and Rehearing En Banc Denied October 19, 2021

Steven D. Davidson, Kenneth W. Hartman, Spencer R. Murphy, Baird & Holm, Omaha, NE, for Plaintiffs-Appellees.

Brian J. Brislen, Jason W. Grams, William Maxwell Lamson, Jr., Michael L. Storey, Cathy Trent-Vilim, Lamson & Dugan, Omaha, NE, for Defendant-Appellant.

Before GRUENDER, BENTON, and GRASZ, Circuit Judges.

GRASZ, Circuit Judge.

Nebraska Public Power District ("NPPD") appeals the district court's¹ grant of summary judgment in favor of four of NPPD's wind-farm affiliates. NPPD argues that these affiliates breached their power purchase agreements by transferring control of their parent companys’ ownership interests without NPPD's written consent. We affirm.

I. Background

NPPD is a public utility company that provides electric power throughout most of the state of Nebraska. Starting in 2008, NPPD entered into power purchase agreements ("PPAs") with Elkhorn Ridge Wind, LLC ("Elkhorn"); Laredo Ridge Wind, LLC ("Laredo"); Broken Bow Wind, LLC ("Broken Bow"); and Crofton Bluffs Wind, LLC ("Crofton") (collectively, the "Project Entities"). Each Project Entity owns and operates its own wind-energy-generation facility. Under the PPAs, NPPD agreed to purchase all of the energy produced by the Project Entities for a period of twenty years.

Each Project Entity sits at the bottom of a multi-tiered ownership structure that includes many subsidiary holding companies. The Project Entities were initially built, owned, operated, and maintained by Edison Mission Energy, a Delaware corporation ("Edison"). From their inception, the Project Entities have outsourced the performance of their operation and maintenance duties to third parties.

Each of the PPAs contains an identical change-of-control provision requiring NPPD's written consent for any Project Entity to transfer a majority of its "direct ownership interests" to a non-Edison entity. Each PPA also contained anti-assignment provisions, prohibiting the Project Entity from assigning the PPA "or any of its rights or obligations under" the PPA.

In 2012, Edison filed for bankruptcy protection. In the course of the bankruptcy case, NRG Energy, Inc. ("NRG") purchased Edison and all of the Edison affiliates tasked with operating the Project Entities. The entities that were sold and transferred between Edison and NRG were "upstream of the Project Entities by many tiers of intermediate ownership." The Project Entities became subsidiaries of NRG Energy Gas & Wind Holdings, Inc., even though the Project Entities never obtained NPPD's written consent for the NRG transaction.

In 2018, NRG sold its Zephyr Renewables LLC² subsidiary, a parent of the Project Entities, to Global Infrastructure Partners ("GIP"). The entities transferred between NRG and GIP were also "upstream of the Project Entities by many tiers of intermediate ownership." The Project Entities never obtained NPPD's written consent for the GIP transaction either.

After the GIP transaction, NPPD served notices of default on each Project Entity, seeking termination of each of the PPAs. NPPD stated that the Project Entities caused an event of default during both the 2014 NRG acquisition and the 2018 GIP acquisition.

Three of the Project Entities (Laredo, Broken Bow, and Crofton) sued NPPD seeking (1) a declaratory judgment that they did not breach the change-of-control provision, and (2) an injunction preventing NPPD from terminating the PPAs. NPPD filed a third-party petition to bring the fourth Project Entity, Elkhorn, into the case, which the district court granted.

The Project Entities filed a motion for summary judgment. The district court granted the Project Entities’ summary judgment motion, concluding that the NRG and GIP transactions involved transfer of ownership interests in the Project Entities’ upstream parents, not the Project Entities themselves, which did not breach the PPAs. The district court also granted the Project Entities’ request for a permanent injunction. NPPD now appeals.

II. Discussion

We review the district court's grant of summary judgment de novo. Johnson v. City of Shorewood , 360 F.3d 810, 817 (8th Cir. 2004). Summary judgment is appropriate when, in viewing the evidence in the light most favorable to the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Guardian Fiberglass, Inc. v. Whit Davis Lumber Co. , 509 F.3d 512, 515 (8th Cir. 2007).

We review the district court's award of a permanent injunction for abuse of discretion. Forest Park II v. Hadley , 336 F.3d 724, 731 (8th Cir. 2003). "Abuse of discretion occurs if the district court reaches its conclusion by applying erroneous legal principles or relying on clearly erroneous factual findings." Id .

A. Change of Control

1. Contract Interpretation

Nebraska law governs this appeal. Under Nebraska law, "a court faced with a question of contract interpretation must first determine whether the contract is ambiguous." Home Instead, Inc. v. Florance , 721 F.3d 494, 498 (8th Cir. 2013) ; accord City of Sidney v. Mun. Energy Agency of Neb. , 301 Neb. 147, 917 N.W.2d 826, 843 (2018). "[T]he determination of whether a contract is ambiguous is a matter of law." McCormack v. Citibank, N.A. , 100 F.3d 532, 538 (8th Cir. 1996) ; accord Big River Const. Co. v. L & H Props., Inc. , 268 Neb. 207, 681 N.W.2d 751, 756 (2004) ("The meaning of a contract, and whether a contract is ambiguous, are questions of law."). A court determines whether ambiguity exists on an objective basis, reviewing the contract as a whole. See Home Instead , 721 F.3d at 498 ; accord Big River , 681 N.W.2d at 756 ("A contract must be construed as a whole, and, if possible, effect must be given to every part thereof.").

" ‘A written contract which is expressed in clear and unambiguous language is not subject to interpretation or construction,’ and a court simply must give effect to that language." Home Instead , 721 F.3d at 498 ; accord McCormack , 100 F.3d at 538 ; accord City of Sidney , 917 N.W.2d at 843. "[T]here is a strong presumption that a written instrument correctly expresses the intention of the parties" and "parties are bound by the terms of the contract even though their intent may be different from that expressed in the agreement." Bedrosky v. Hiner , 230 Neb. 200, 430 N.W.2d 535, 539 (1988).

"A contract is only ambiguous ‘when the instrument at issue is susceptible of two or more reasonable but conflicting interpretations or meanings.’ " McCormack , 100 F.3d at 538 (quoting Boyles v. Hausmann , 246 Neb. 181, 517 N.W.2d 610, 615 (1994) ); see also Home Instead , 721 F.3d at 498. Ambiguity in a contract creates a question of fact. Home Instead , 721 F.3d at 499 ("When it is established that a contract is ambiguous, the meaning of its terms is a matter of fact to be determined in the same manner as other questions of fact."); Bedrosky , 430 N.W.2d at 540 ("When it is established that a contract is ambiguous, ... summary judgment is improper.").

Each of the PPAs contains a "Permitted Transactions" provision stating:

Seller shall not: (a) consolidate or merge with any other Person, or reorganize, consolidate, Change Control or change the form of [Project Entities’] business organization from a limited liability company; ... or (c) assign this Agreement, or any of its rights or obligations under this Agreement (each, a "Transaction") to any Person (the "Transferee"), whether in a single transaction or series of transactions, unless such Transaction is expressly approved in writing by NPPD ... and any Transaction in the absence of such consent shall be void and of no legal effect.

"Change Control" means the sale or transfer after the Effective Date of a majority of the direct ownership interests in Seller. ...

No assignment or transfer of this Agreement shall relieve a Party of its obligations hereunder.

Further, each PPA states that a change-of-control transaction performed without NPPD's written approval qualifies as an event of default.

2. Ownership Interests

NPPD argues the change-of-control provision is ambiguous because the term "direct ownership interests" is subject to multiple interpretations. The Project Entities counter that the term "direct ownership interests" has a common, unambiguous meaning, which was properly considered by the district court in its decision to grant summary judgment in the Project Entities’ favor. We conclude that the term "direct ownership interests" is unambiguous.

It is undisputed that the PPAs do not define "direct ownership interests." However, the law supports the Project Entities’ argument that here "ownership interests" and certainly "direct ownership" can only be reasonably interpreted to mean ownership of membership units in a limited liability company.

NPPD primarily relies on the dissent in Dole Food Co. v. Patrickson , 538 U.S. 468, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003), to argue that ownership encompasses a wide variety of interests. NPPD's argument is misplaced for two reasons. First, as a dissenting opinion it is not controlling precedent. We will not conjure up ambiguity from the Dole dissent when none exists. Second, the Dole majority opinion, while helpful in identifying the common meaning of "ownership," has limited value due to the term's interpretation solely within the context of the Foreign Sovereign Immunities Act...