SL EC, LLC v. Ashley Energy, LLC
| Decision Date | 07 December 2020 |
| Docket Number | Case No. 4:18-CV-01377-JAR |
| Parties | SL EC, LLC, et al., Plaintiffs, v. ASHLEY ENERGY, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendants' Motion for Partial Summary Judgment. (Doc. 129). The motion is fully briefed and ready for disposition. For the following reasons, the motion will be denied.
In their haste to execute complex financial transactions over a late summer weekend, the parties to this dispute glossed over peripheral matters, like who, if anyone, would be responsible for hundreds of thousands of dollars in outstanding attorneys' fees. Those fees are at issue on this motion for partial summary judgment. A detailed review of the circumstances underlying this case is necessary given the fact-intensive issues raised by the instant motion.
This case concerns a historic steam power plant located in downtown St. Louis (the "Plant"). Until August 2017, the Plant was owned by Trigen-St. Louis Energy Corporation ("Trigen"), and the City of St. Louis held an assignable right to purchase the Plant. (Doc. 139 at ¶¶ 1-2). The city assigned this right to Plaintiff SL EC, LLC ("SLEC"), a company solely owned and controlled by Plaintiff Michael Becker ("Becker"). (Id. at ¶ 2). In May 2016, after realizingSLEC lacked sufficient funds to purchase the Plant outright, Becker approached Defendant Mason Miller ("Miller"), a member of Defendant Power Investments, LLC ("Power Investments") and partner at Defendant Miller Wells, PLLC ("Miller Wells"). Becker proposed to Miller that Power Investments and others provide funding in exchange for equity in the Plant. (Id. at ¶¶ 14-16).
In October 2016, SLEC executed an agreement (the "Client Agreement") engaging Plaintiff Davis & Garvin, LLC ("D&G") and Bick & Kistner, PC ("B&K") to provide legal counsel regarding the "negotiation, acquisition, and closing of the purchase of the [Plant]." (Doc. 90-1 at 1-2). On November 23, 2016, SLEC created Defendant Ashley Energy, LLC ("Ashley Energy"), the vehicle which would ultimately be used to purchase the Plant. (Doc. 139 at ¶ 5).
Becker and SLEC's plans quickly deteriorated. Throughout 2017, the parties worked to arrange financing for the purchase of the Plant. (Doc. 131-1 at 70-106). On May 15, 2017, Ashley Energy executed an Asset Purchase Agreement with Trigen to purchase the Plant. On August 3, 2017, however, Jim Davis ("Davis") of D&G informed Miller that SLEC could not afford to retain any ownership in Ashley Energy. (Id. at 59). Over the following few days, the parties negotiated and executed a Membership Interest Purchase Agreement ("MIPA") and Assignment and Assumption of Membership Interests Agreement ("Assignment Agreement"). Pursuant to these agreements, SLEC sold its entire membership interest in Ashley Energy to Power Investments for a total purchase price of approximately $1.7 million.
The communications relating to the execution of these agreements are integral to the current dispute. After being informed that SLEC would not retain any ownership in Ashley Energy, Miller promptly responded that Ashley Energy "intends to proceed in the transaction without . . . SLEC." (Doc. 131-1 at 59). The next day, Davis e-mailed Miller a rough summary ofthe proposed transaction between SLEC and Power Investments. (Doc. 90-1 at 4). The following morning, Miller responded with a draft agreement reflecting these terms and noted that he "need[ed] to get this done today," presumably to shore up the financing arrangements. (Id. at 5). Davis responded that very morning with six comments on the draft agreements, including the following critical language:
Related to the above, I have explained that as a result of John and [Becker's] behavior, I am not sure how I get paid for any of the work I've done over the last year or so. I realize that isn't your fault and if the deal doesn't close, it won't matter. Notwithstanding, if I am going to continue to work towards a resolution, I'm not interested in doing it for free. There are 2 opportunities: get paid at closing from the budgeted closing costs; and/or from Ashley Energy. [Becker] doesn't intend to work for Ashley [Energy]. That creates an opportunity to assist with the transition and get paid over time. (Id. at 6).
Still on the morning of August 5, 2017, Miller provided responses to Davis' comments, including the following regarding Davis' desire to get paid:
Two ways I can assist: 1. If there's any room in the closing costs for any of us, I'll stick you and my firm on there pro rata for whatever we can get. 2. I'm going to need local help, with the city, etc. Assuming [Becker] signs, consider yourself hired (there won't be a conflict at that point, in fact, it's probably in [Becker's] interest). (Id. at 9).
That evening, Davis e-mailed signature pages to the MIPA while noting that "some areas require further refinement but, due to time limitations, will have to be addressed as time and priorities permit." (Id. at 10). Davis' e-mail identified 13 matters requiring subsequent clarification, including:
Davis noted that the signature pages were being provided "with the condition that the above [13 comments] accurately reflects our agreement and that these additions and/or changes will be made to the final draft of the [MIPA]." (Id.). Miller quickly responded: (Id. at 12).
Davis followed up again the next day, August 6th, asking Miller to "confirm [his] agreement to the additional terms/revisions as set forth in the email yesterday." Davis asked if any items required further discussion since otherwise he would "assume we have an agreement on terms." (Id. at 14). Miller responded within a few hours: "Agreed and confirmed." (Id. at 15). On Tuesday, August 8th, Davis sent Miller a revised version of the MIPA purportedly incorporating the agreed upon changes. (Id. at 24). Miller requested a few minor changes but otherwise stated he could obtain the necessary signatures. (Id. at 25). The final MIPA and Assignment Agreement were sent to Miller later that day.
Less than a month later, after Ashley Energy closed on its acquisition of the Plant, Davis reached out to Miller to see "where things stand regarding . . . my invoice." (Id. at 33). Miller responded as follows:
Finally, as far as payment of . . . your invoice, as I've mentioned, we have to get into our winter cash flow positive months to start chopping at those. As soon as we turn that corner, we'll be able to pay those down. Alternatively, if we get some cash in from other sources - perhaps financing - we might be able to make progress earlier. (Id.).
After this exchange, the communications between Davis and Miller transitioned from collegial e-mails to formal, pre-litigation letters. On September 13, 2017, Davis sent a letter to Miller requesting "immediate payment of my invoice for legal fees related to the acquisition of the [Plant]" and threatening litigation if payment was not received. (Id. at 36). This case soonfollowed. Defendants now seek summary judgment on Counts I, II, III(b),1 IV, and V of Plaintiffs' Second Amended Complaint.
Under Fed. R. Civ. P. 56, a movant is entitled to summary judgment if they can "show that there is no genuine dispute as to any material fact" and they are "entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). In determining whether summary judgment is appropriate, the evidence must be viewed in the light most favorable to the nonmoving party. Osborn v. E.F. Hutton & Co., Inc., 853 F.2d 616, 619 (8th Cir. 1988). The burden of proof is on the moving party and a court should not grant a summary judgment motion unless it is convinced that there is no evidence to sustain a recovery under any circumstances. City of Mt. Pleasant, Iowa v. Associated Elec. Co-op., Inc., 838 F.2d 268, 273 (8th Cir. 1988). The nonmovant, however, "'must do more than simply show that there is some metaphysical doubt as to the material facts,' and must come forward with 'specific facts showing that there is a genuine issue for trial.'" Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 587-87 (1986)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
In Count I of Plaintiffs' Second Amended Complaint, D&G claims that Ashley Energy breached its contractual obligation to pay legal fees in the amount of $156,263.50 plus interest and other costs. (Doc. 90 at ¶¶ 54-61). Under Missouri law, the elements to recover for breach of contract are "(1) the existence of an enforceable contract between [the parties to the action], (2)that mutual obligations had arisen under its terms, (3) that [the party or parties being sued] had not performed obligations imposed by the contract and (4) that [the party seeking recovery] was thereby damaged." Superior Ins. Co. v. Universal Underwriters Ins. Co., 62 S.W.3d 110, 118 (Mo.App. 2001) (quoting Trimble v. Pracna, 51 S.W.3d 481, 506 (Mo.App. 2001)). The key issue on this motion for partial summary judgment is whether there exists an enforceable contract making Ashley...
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