Pro-Tech Energy Solutions, LLC v. Cooper
| Decision Date | 30 July 2015 |
| Docket Number | 14 CVS 20452 |
| Citation | 2015 NCBC 73 |
| Court | Superior Court of North Carolina |
| Parties | PRO-TECH ENERGY SOLUTIONS, LLC, individually and derivatively in the right of SOLARGREEN ECO-INDUSTRIAL SOLAR PARK 1, LLC, Plaintiff, v. PRAETHER COOPER, SOLAR GREEN DEVELOPMENT, LLC, and Beneficial Party SOLARGREEN ECO-INDUSTRIAL SOLAR PARK 1, LLC, Defendants. |
Essex Richards, P.A., by John T. Daniel for Plaintiff Pro-Tech Energy Solutions, LLC.
Parker, Poe, Adams and Bernstein, LLP, by Eric H. Cottrell and Sye T. Hickey for Defendants Praether Cooper and Solar Green Development, LLC.
ORDER AND OPINION ON DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT
{1} THIS MATTER is before the Court upon Defendants Praether Cooper ("Cooper") and Solar Green Development, LLC's ("Solar Green") (collectively, "Defendants") Motion for Partial Summary Judgment on Defendants' counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing ("Motion for Partial Summary Judgment" or the "Motion") in the above-captioned case.
{2} After considering the Motion, briefs in support of and in opposition to the Motion, the appropriate evidence of record, and the arguments of counsel at a hearing on July 1, 2015, the Court hereby DENIES Defendants' Motion for Partial Summary Judgment.
{3} Plaintiff Pro-Tech Energy Solutions, LLC ("Plaintiff" or "Pro-Tech") has alleged claims, both individually and derivatively on behalf of SolarGreen Eco-Industrial Solar Park 1, LLC ("Solar Park 1" or the "Company"), arising out of Pro-Tech's entry into, and Pro-Tech's business relationship with Defendants under, the Company's Limited Liability Company Operating Agreement dated July 1, 2014 (the "Operating Agreement").
{4} Pro-Tech filed a Verified Complaint, Motion for Injunctive Relief and Motion for Waiver of the ninety-day waiting period for derivative claims on November 4, 2014, asserting claims against Defendants for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, fraudulent inducement, securities fraud in violation of N.C. G.S. § 78A-8 of the North Carolina Securities Act (the "NCSA"), and violation of N.C. G.S. § 57D-1-1 of the North Carolina Limited Liability Company Act (the "LLC Act").
{5} Prior to designation of this case to the Business Court, Resident Superior Court Judge Yvonne Mims Evans entered a Temporary Restraining Order ("TRO") against Defendants on November 6, 2014. (TRO, Nov. 6, 2014). On November 12, 2014, Superior Court Judge Jesse B. Caldwell extended the TRO with the parties' consent until November 20, 2014. (Consent Order Extending TRO, Nov. 14, 2014.) On November 20, 2014, Resident Superior Court Judge Linwood O. Foust extended the TRO a second time, again with consent of the parties, until January 13, 2015. (Second Consent Order Extending TRO, Nov. 11, 2014.)
{6} On December 5, 2014, this case was designated as a mandatory complex business case, and subsequently assigned to the undersigned on December 9, 2014. {7} Defendants filed their Answer to Plaintiff's Verified Complaint and Counterclaims on December 29, 2014, alleging counterclaims against Plaintiff for breach of contract and breach of the implied covenant of good faith and fair dealing.
{8} On January 6, 2015, this Court extended the TRO, again with consent of the parties, until the Court's hearing on Plaintiff's Motion for Preliminary Injunction, then scheduled for March 10, 2015. (Order Notice Hr'g, Jan. 6, 2015.)
{9} The Court dissolved the TRO, however, on March 5, 2015, based on Plaintiff's Withdrawal of Motion for Injunctive Relief, and the hearing on Plaintiff's Motion for Preliminary Injunction was thereafter cancelled.
{10} On April 29, 2015, Plaintiff filed a Motion for Dissolution of, Appointment of a Receiver for, and Injunctive Relief Related to Solar Park 1, LLC (the "Motion for Dissolution"). The Court will resolve the Motion for Dissolution by separate Order.
{11} On May 22, 2015, Defendants filed the Partial Motion for Summary Judgment.
{12} The Court held a hearing on the Motion on July 1, 2015, at which all parties were represented by counsel. The Motion is now ripe for resolution.
{13} While findings of fact are not necessary or proper on a motion for summary judgment, "it is helpful to the parties and the courts for the trial judge to articulate a summary of the material facts which he considers are not at issue and which justify entry of judgment." Collier v. Collier, 204 N.C.App. 160, 161–62, 693 S.E.2d 250, 252 (2010). The Court limits its recitation of the background to the facts and allegations that are relevant for purposes of resolving the Motion.
{14} Solar Green is a North Carolina limited liability company, and at all relevant times Cooper has served as Solar Green's President and Chief Executive Officer. (Compl. ¶¶ 7, 11; Answer ¶ 11.) Defendants have been engaged for several years in an "approximately 280-megawatt project that Solar Green is developing in Hertford (Perquimans County), North Carolina." (Answer ¶ 1.)
{15} On November 21, 2013, Solar Green entered into a Strategic Partnership Agreement with BE Solar and Blue Earth, Inc. (collectively, "Blue Earth") to develop four projects, three of which were part of the Solar Park 1 Project, and the fourth, a separate project identified as "Dominion (a/k/a Davis Ln)" (the latter project hereinafter referred to as the "Davis Lane Project").
{16} On December 18, 2013, Solar Green entered into an Interconnection Services Agreement with Virginia Electric and Power Company d/b/a Dominion North Carolina Power ("Dominion") for a 14-megawatt generation facility located at "200 Davis Lane, along U.S. Hwy 17, in Hertford (Perquimans County), North Carolina, " which was the location of the Davis Lane Project. (First Cooper Aff., Ex. 3, p. 30.)[1]Pursuant to the terms of the Strategic Partnership Agreement, Blue Earth paid $157, 589.78 to Dominion on January 10, 2014, as a deposit for the Interconnection Services Agreement Solar Green had entered with Dominion concerning the Davis Lane Project ("the Interconnection Deposit"). (Countercl. ¶¶ 4–6, Ex. 1). Cooper subsequently agreed to reimburse the Interconnection Deposit to Blue Earth after Blue Earth was rejected as an equity sponsor by the bank that offered to supply state tax equity for Solar Green's various projects. (Countercl. ¶¶ 7–8; First Cooper Aff. ¶ 12; Pl.'s Mem. Inj. Relief ¶ 8(a–b); First Winters Aff. ¶ 11.43.)
{17} Several months later, on March 26, 2014, Solar Green formed the Company as a North Carolina limited liability company with its principal place of business in Hertford, North Carolina. (Compl. ¶¶ 7, 11; Answer ¶ 11.) Solar Green formed the Company "for the purpose of developing, constructing and installing a 19 Megawatt Solar PV System at 1436 Ocean Highway South in Hertford, North Carolina" (the "Ocean Highway Project"). (Compl. ¶ 11, Ex. 1, Art. III.)[2]
{18} Pro-Tech and Solar Green are the only two members of the Company, and each has a fifty percent (50%) ownership interest. (Compl. ¶¶ 1, 7; Answer ¶ 1.) Pro-Tech and Solar Green entered into the Operating Agreement for the Company on July 1, 2014. [3] By the terms of the Operating Agreement, the Company is managed by two managers, Defendant Cooper and the chief operating officer of Pro-Tech, Guy Winters ("Winters"). (Compl. Ex. 1, § 4.2; First Winters Aff. ¶ 2.) The parties agree that the success of the Ocean Highway Project largely depends on the availability of the North Carolina Business Energy Tax Credit, which is set to expire on December 31, 2015. (Compl. ¶ 31; Answer ¶ 31.)
{19} Significantly for the resolution of this Motion, the Operating Agreement states that "[t]he agreement of both Managers shall be required on any matter to be decided by the Managers" and calls for dissolution of the Company if, inter alia, a decree of judicial dissolution is issued or upon the occurrence of "any other event which makes it unlawful, impossible, or impractical to carry on the business of the Company." (Compl. Ex. 1, §§ 4.5, 9.1.)
{20} Under the terms of the Operating Agreement, Solar Green agreed, among other things, to contribute a signed and executed Interconnection Services Agreement for the Project with Dominion, which was to be valued at fifty percent of the membership interests in the Company. (Compl. Ex. 1, § 5.1.) In purported compliance with its obligation, Solar Green contributed to the Company the Interconnection Services Agreement Solar Green had previously obtained from Dominion for the Davis Lane Project with funds provided by Blue Earth. (First Cooper Aff. ¶¶ 18, 21.) Despite close proximity to one another, the Davis Lane Project and the Ocean Highway Project are "separate and distinct" and at different locations. (First Cooper Aff. ¶ 15.)
{21} In exchange for its fifty percent membership interest in the Company, Pro-Tech agreed in the Operating Agreement to contribute $50, 000.00 cash immediately upon execution of the Operating Agreement, plus an additional contribution of $350, 000.00 to be paid in installments "within ten days of a written request by the Managers." (Compl. Ex. 1, § 5.1.)
{22} Pro-Tech paid the initial $50, 000.00 capital contribution on July 2, 2014. (Compl. ¶ 15; Answer ¶ 15.) Pro-Tech's additional capital contribution of $350, 000.00 was to pay for the five items listed in Exhibit C to the Operating Agreement, allocated as follows: (1) $157, 531.00 to reimburse Solar Green for the Interconnection Deposit it had agreed to reimburse Blue Earth; (2) $136, 469.00 payable to Dominion for Substation Upgrades; (3) $21, 000.00 to reimburse Solar Green for the real...
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