Synergics Energy Servs., LLC v. Algonquin Power Fund (America), Inc.
| Decision Date | 20 June 2014 |
| Docket Number | Civil Action No. ELH-13-2257 |
| Parties | SYNERGICS ENERGY SERVICES, LLC, Plaintiff, v. ALGONQUIN POWER FUND (AMERICA), INC., et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Synergies Energy Services, LLC ("Synergies"), plaintiff, filed suit against defendants Algonquin Power Fund (America), Inc. ("Algonquin"), and Eagle Creek Renewable Energy, LLC ("Eagle Creek").1 Suit arises from Synergies's sale to Algonquin in 2000 of a hydroelectric power plant located in New Jersey, and Algonquin's transfer of that plant to Eagle Creek in 2013.2 In the Complaint, Synergics asserts three contract claims against Algonquin (Counts I through III). In Count IV, Synergies seeks a declaration as to its rights and Algonquin's obligations pursuant to two contracts dating from 2000. See Complaint ¶ 32. Synergics's sole claim concerning Eagle Creek, which is contained in Count IV, is Synergics's request that the Court establish "a trust in favor of Synergics" and require Eagle Creek "to place all cash flow and revenue" earned from the hydroelectric power plant into the trust. See id. ¶ 33; see also id. ¶ 40.
Now pending is Eagle Creek's motion to dismiss, based upon a lack of personal jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2), and for failure to state a claim upon which relief may be granted, pursuant to Fed. R. Civ. P. 12(b)(6). See ECF 11 ("Motion to Dismiss") and ECF 11-1 (the supporting memorandum, "Mem."); ECF 32 (); ECF 37 () (the "Supplemental Memorandum" or "Supp. Mem."). Eagle Creek's Motion to Dismiss is supported by the Declaration of Bernard Cherry, the company's chief executive officer ("CEO"), dated September 19, 2013. See ECF 11-2 ("Cherry Decl."). Plaintiff opposes the Motion to Dismiss. See ECF 27 () and ECF 28 (the supporting memorandum, "Opp."); ECF 38 () (the "Supplemental Opposition" or "Supp. Opp."). In ECF 38, plaintiff has also moved to strike an exhibit attached to Eagle Creek's Supplemental Memorandum (the "Motion to Strike"). Eagle Creek filed an opposition (ECF 39), and Synergics replied (ECF 40).
Also pending is Algonquin's motion to dismiss Synergics's claim for attorneys' fees (ECF 14), to which it has attached a supporting memorandum (ECF 14-1). Synergics opposes Algonquin's motion (ECF 22, 23), and Algonquin replied (ECF 29).3
No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I will grant Eagle Creek's motion to dismiss for lack of personal jurisdiction. I willdeny, as moot, both Eagle Creek's motion to dismiss under Rule 12(b)(6) and Synergics's Motion to Strike. And, I will deny Algonquin's motion to dismiss the claim for attorneys' fees.
In September 2000, Synergics Energy Development, Inc. and Great Falls Investors, LLC entered into a Purchase and Sale Agreement with Algonquin (the "2000 Purchase Agreement," attached to the Complaint as Exhibit A, ECF 1-2).4 Pursuant to its terms, Algonquin agreed to purchase the general and limited partnership interests in the Great Falls Hydroelectric Company Limited Partnership (the "Great Falls Project Company"), which owns a hydroelectric power plant located on the Passaic River in Paterson, New Jersey (the "Hydroelectric Plant"). Compl. ¶ 6. Pursuant to the 2000 Purchase Agreement, Algonquin was required to pay, in addition to a lump sum due at closing, monthly royalties to Synergics. Id. ¶ 7. The royalty obligation was set forth in a separate agreement (the "Royalty Agreement," attached to the Complaint as Exhibit B). In 2007, the obligations and assets of Synergics Energy Development, Inc. and Great Falls Investors, LLC were assigned to plaintiff, Synergics Energy Services, LLC. Compl. ¶ 8.
The 2000 Purchase Agreement sets forth several avenues by which Algonquin is permitted to transfer its interests in the Hydroelectric Plant. See 2000 Purchase Agreement, Art. VII, § 7.10. Of relevance here, Art. III, § 3.2(c) of the 2000 Purchase Agreement provides: "In the event [Algonquin] sells, transfers or assigns the Hydroelectric Plant or the Interests or otherwise disposes of any of its rights under [the 2000 Purchase Agreement], it shall pay to Synergics a lump sum payment," to be calculated as specified therein (the "Transfer Payment"). See Compl. ¶ 9.
In general, Algonquin must obtain written consent from Synergics to transfer its interest in the Hydroelectric Plant. See Art. VII, § 7.10; Compl. ¶ 15. However, Synergics's consent is not required where Algonquin either (a) assigns its obligations and liabilities under the 2000 Purchase Agreement and certain conditions are met, or (b) makes a Transfer Payment to Synergics. Compl. ¶ 15. Specifically, Art. VII, § 7.10 of the 2000 Purchase Agreement provides:
[Algonquin] shall not directly or indirectly . . . transfer, sell, assign or otherwise dispose of all or a portion of the Interests,5 its interests in [the] Hydroelectric Plant, or a controlling interest in the [Great Falls Project Company] or [Algonquin], without Synergics's prior written consent; provided that such consent shall not be required if (A)(i) such assignment, transfer or other transaction is with a creditworthy entity that, in Synergics' reasonable opinion, has the financial and technical capability to perform hereunder, and (ii) [Algonquin] delivers an assignment and assumption of the obligations and liabilities under this Agreement and the Royalty Agreement, duly executed by such entity, in form and substance reasonably satisfactory to Synergics; or (B) [Algonquin] makes the Transfer Payment.
Art. X, § 10.6 of the 2000 Purchase Agreement contains a provision titled "Governing Law." It states:
This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, U.S.A., as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. Any and all disputes arising out of or in connection with this Agreement shall be adjudicated in the federal or state courts located in the State of Maryland, U.S.A. to whose jurisdiction the parties hereby irrevocably submit for such purposes.
In the Complaint, Synergics asserts: "Algonquin's failure to obtain Synergics' written consent prior to transferring its interest in the Hydroelectric Plant, or in the alternative, assigning its obligations and liabilities to Eagle Creek under the [2000] Purchase Agreement and theRoyalty Agreement or making a transfer payment to Synergics, constitutes a breach of the [2000] Purchase Agreement, causing Synergics to suffer damages." Compl. ¶ 17.
Synergics also maintains that Algonquin must "obtain approval of Synergics prior to any negotiations or discussions related to its Interests in the Hydroelectric Plant and any transactions that may be contemplated." Compl. ¶ 18. As Synergics notes, id., the 2000 Purchase Agreement states, in a subsection titled "Public Statements":
The Seller and the Buyer agree that they will consult with each other in advance of making any public announcement or press release, or otherwise disclosing any information, relating to the execution of [the 2000 Purchase Agreement] or any transactions contemplated hereby, or otherwise relating to the Interests, the [Great Falls Project Company], or the Hydroelectric Plant and will negotiate in good faith with respect to the form, content and timing thereof and shall not issue any such release without the prior approval of the other party . . . .
2000 Purchase Agreement, Art. VII, § 7.5.
In June 2013, Eagle Creek entered into an agreement with Algonquin under which Eagle Creek purchased all of the membership interests of the Great Falls Project Company, a limited partnership organized under the laws of Maryland that owns the Hydroelectric Plant in Paterson, New Jersey. The two members of the Great Falls Project Company are Eagle Creek Northeast I, LLC ("Eagle Creek Northeast") and Great Falls Energy, LLC ("Great Falls Energy"). Eagle Creek Northeast, a Delaware limited liability company, is the sole limited partner of the Great Falls Project Company and owns a 98% limited partnership interest. Great Falls Energy, a Maryland limited liability company, is the sole general partner of the Great Falls Project Company, and owns a 2% general partnership interest. Cherry Decl. ¶¶ 15-17.
Although Great Falls Energy and Eagle Creek Northeast are both members of the Great Falls Project Company, Great Falls Energy is itself wholly owned by Eagle Creek Northeast. In turn, Eagle Creek Northeast is wholly owned by defendant Eagle Creek. Id. In other words,Eagle Creek's ownership of the two Maryland entities arises from its ownership of Eagle Creek Northeast.
According to Synergics, the June 2013 transaction between Algonquin and Eagle Creek qualified as a "transfer," as defined in the 2000 Purchase Agreement. Compl. ¶ 10. Shortly after the transaction, on or about July 8, 2013, Synergics received a copy of a letter from Algonquin indicating that Algonquin had sold its interests to Eagle Creek. Id. ¶ 19; see id. Exh. C (ECF 1-4, letter dated July 8, 2013). Synergics claims that Algonquin did not obtain Synergics's approval prior to its discussions and negotiations with Eagle Creek, as required under the 2000 Purchase Agreement. Compl. ¶ 20. Further, Synergics claims that a Transfer Payment became due at that time. Id. ¶ 10. Indeed, Synergics demanded that Algonquin make a Transfer Payment, pursuant to the 2000 Purchase Agreement and Royalty Agreement, but Algonquin has not done so. Id. ¶¶ 11-12.
Subsequently, on August 2, 2013, Synergics filed suit against Algonquin and...
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