North American Dismantling Corp. v. Cate Street Capital, Inc., 042519 NHSUP, 218-2017-CV-00545

Docket Nº:218-2017-CV-00545
Opinion Judge:Richard B. McNamara,, Presiding Justice.
Party Name:North American Dismantling Corporation v. Cate Street Capital, Inc., CSC Group Holdings, LLC., NewCo Energy, LLC, Berlin Station, LLC, and Burgess BioPower, LLC
Case Date:April 25, 2019
Court:Superior Court of New Hampshire
 
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North American Dismantling Corporation

v.

Cate Street Capital, Inc., CSC Group Holdings, LLC., NewCo Energy, LLC, Berlin Station, LLC, and Burgess BioPower, LLC

No. 218-2017-CV-00545

Superior Court of New Hampshire, Merrimack

April 25, 2019

ORDER

Richard B. McNamara,, Presiding Justice.

The Plaintiff, North American Dismantling Corporation ("NADC"), moves to amend its Complaint - which the Court earlier characterized as a Petition for Discovery - in order to make substantive claims. The First Amended Complaint asserts a breach of contract claim against Berlin Station, LLC ("Berlin Station"). (First Amend. Compl. ¶ 1.) It asserts a claim for declaratory judgment against Cate Street Capital, Inc. ("Cate Street"), CSC Group Holdings, LLC ("CSC"), NewCo Energy, LLC ("NewCo"), and Burgess BioPower, LLC ("Burgess"). (Id. ¶ 2.) It asserts a claim of equitable estoppel against Cate Street, CSC, NewCo, Berlin Station and Burgess. (Id. ¶ 3.) Finally, it asserts a cause of action against Cate Street, CSC, NewCo and Burgess for tortious interference with contractual relations and civil conspiracy to tortiously interfere with contractual relations. (Id. ¶ 4.)

The Defendants object and also move for summary judgment, alleging in substance that any amendment would be futile. On summary judgment the parties have briefed only one issue-whether a so-called Earn-Out obligation in an agreement between NADC and Laidlaw was transferred to any of the Defendants.

For the following reasons, NADC's Motion to Amend is GRANTED and the Defendants' Joint Motion for Summary Judgment is DENIED as genuine issues of material fact exist on the issue of whether Berlin Station is obligated to NADC under a so-called Earn-Out obligation.

I

These claims arise from the construction of a biomass power plant in Berlin, New Hampshire. This case's procedural history is unusual. In 2017, NADC brought a declaratory judgment action against Cate Street, CSC, NewCo, Berlin Station and Burgess seeking an order permitting NADC to review documents identified in Exhibit B to its Complaint to determine whether the Defendants were complying with the terms of a certain Asset Purchase Agreement entered into by NADC and Laidlaw Berlin PioPower, LLC ("Laidlaw") in May 2008 (the "NADC/Laidlaw APA"). NADC alleged that the NADC/Laidlaw APA entitled NADC to five percent (5%) of the cash flow of a "Biomass Project"[1] from companies that Cate Street manages. The Defendants moved to dismiss because NADC could not identify any entity actually obligated to NADC under the NADC/Laidlaw APA.

On October 17, 2017, the Court denied the Defendant's Motion to Dismiss, construing NADC's claim as a Petition for Equitable Discovery in accordance with RSA 498:1. Discovery has since proceeded and NADC has determined that it has been provided with sufficient information to seek leave to amend and bring the claims set forth in the First Amended Complaint. (Pl.'s Mot. for Leave to File First Amend. Compl. at 4.) The Defendants have filed an Objection on the ground of futility. They purport to demonstrate futility in their Motion for Summary Judgment.

II

NADC first argues that the Motion for Summary Judgment is procedurally improper and must be denied because it seeks to dispose of the First Amended Complaint on a summary judgment standard before the case has reached the pleading stage. (Pl.'s Obj. to Joint Mot. for Summ. J. [hereinafter "Pl.'s Obj."] at 1.) Nonetheless, it has responded to the merits of the Defendants' motion.

Superior Court Rule 12 (g) provides in relevant part that "[m]otions for summary judgment shall be filed, defended and disposed of in accordance with the provisions of RSA 491:8-a." The statute specifically states that "[a] party against whom a claim, counterclaim, or crossclaim is asserted or a declaratory judgment is sought, may, at any time, move for a summary judgment in his favor as to all or any part thereof." RSA 491-A: 8-a, I (emphasis added). Although NADC only recently filed the First Amended Complaint, this case has been pending since 2017 solely for the purpose of allowing NADC to pursue discovery. The parties have indeed engaged in significant discovery. During the pendency of the action, the Court has conducted a number of discovery conferences, in accordance with Standing Order 10 of the Business and Commercial Dispute Docket. NADC even concedes it has in fact obtained the information it sought in its original complaint against the Defendants.

Moreover, responding to a Complaint by a Motion to Dismiss instead of an answer is specifically authorized by Superior Court Rule 9(b). On a Motion to Dismiss, the trial court may consider any documents whose authenticity is not disputed or documents sufficiently referred to in the Complaint. Beane v. Beane, 160 N.H. 708, 711 (2010).In this case, the issue that must be decided is essentially whether a so-called "Earn-Out" provision in the NADC/Laidlaw APA was transferred to any of the Defendants via transactions memorialized in various writings. NADC has responded to the Motion for Summary Judgment on the merits and, while both parties have filed affidavits in support of their memoranda, the ultimate determination of the rights and liabilities of the parties must be made based upon the language of documents to which both parties have access. Under these circumstances, the Court GRANTS the Motion to Amend and will address the merits of the summary judgment motion.

III

Although the Court's decision must be based upon the precise language of the documents, the gist of the transactions can be set forth in summary form. NADC is attempting to recover from the Defendants the benefit of a contract that NADC entered into with Laidlaw. In May 2008, NADC entered into the NADC/Laidlaw APA with Laidlaw by which NADC agreed to sell land and other assets it owned in Berlin, New Hampshire, to Laidlaw with the expectation that Laidlaw would use the land and other assets to develop and operate a biomass power plant. Laidlaw did not have the capital to build such a plant itself and so the parties contemplated at the time that Laidlaw would later enter into a sale and leaseback with an entity which could provide the capital for the power plant whereby Laidlaw would transfer the land to the entity, which would then lease the site back to Laidlaw to build and operate the power plant.

Laidlaw was required to pay NADC $5 million for the assets. It also agreed to a so-called "Earn-Out," which is the central issue in this lawsuit. Under the Earn Out, Laidlaw agreed that it would provide NADC part of the profit it made from operating the biomass plant it intended to build and operate after the plant was constructed.

In December 2008, Laidlaw, NADC, and an entity called PJPD2 entered into a so-called Development Closing (the "PJPD Assignment and Amendment") pursuant to which Laidlaw assigned all of its right and title in the NADC/Laidlaw APA to PJPD. NADC then conveyed its real estate to PJPD at this time. The PJPD Assignment and Amendment specifically referenced an October 2008 "Letter Agreement" that Laidlaw and NewCo had entered into, which provided in substance that PJPD would capitalize and Laidlaw would build and operate a power plant pursuant to a sale and leaseback.

Laidlaw, however, was not ultimately able to complete the agreement it entered into and essentially withdrew from the project. NewCo, or its wholly-owned subsidiaries, eventually entered into an agreement with a different entity, Berlin Station, to build a new power plant, which was larger and much more expensive than the power plant referenced in the Letter Agreement, the NADC/Laidlaw APA, and the PJPD Assignment and Amendment.

As is often the case, the Court must determine from the documents what the parties intended when a transaction does not go as planned. The critical dispute between the parties is whether the Earn-Out obligation Laidlaw assumed in the NADC/Laidlaw APA survived Laidlaw's withdrawal from the project and transferred to another entity.

The intent of the parties can be determined by analysis of the language of 5 transactions referenced in the pleadings.

A. The May 9, 2008 NADC/Laidlaw APA between NADC and Laidlaw

On May 9, 2008, NADC and Laidlaw entered into the NADC/Laidlaw APA that gave Laidlaw the right to purchase a portion of the former Frazier Mill Site in Berlin (the "Project Site") from NADC for the development of a power plant. (Aff. Of Robert J. Desrosiers in Supp. of Defs.' Joint Mot. for Summ. J. [hereinafter "Desrosiers Aff."] ¶ 4.) The documents establish that NADC and Laidlaw contemplated that Laidlaw would enter into a sale and leaseback arrangement with a third party which had sufficient capital to finance a biomass power plant (the "Biomass Project").3 (See, e.g., Compl., Ex...

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