URI COGENERATION v. Bd. of Governors for Higher Ed., Civ. A. No. 93-0474-L.
| Decision Date | 23 February 1996 |
| Docket Number | Civ. A. No. 93-0474-L. |
| Parties | URI COGENERATION PARTNERS, L.P. and Kingston Power Associates, Limited Partnership, Plaintiffs, v. BOARD OF GOVERNORS FOR HIGHER EDUCATION and University of Rhode Island, Defendants. |
| Court | U.S. District Court — District of Rhode Island |
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Gregory L. Benik, Robin-Lee Main, McGovern, Noel & Benik, Providence, RI, for Plaintiffs.
Curtis R. Diedrich, David J. Hatem, Warren D. Hutchison, Burns & Levinson, Boston, MA, Jay S. Goodman, Providence, RI, for Defendants.
Despite the best laid plans, the only sparks and steam ever produced by the URI cogeneration facility have been in this Court. This matter is before the Court on defendants' motion for clarification of the Court's September 15, 1994 denial of defendants' motion for summary judgment. The defendants, the Board of Governors for Higher Education for the State of Rhode Island (the "Board") and the University of Rhode Island ("URI") (collectively, the "Board"), seek an Order pursuant to Fed.R.Civ.P. 56(d) delineating what factual and legal issues remain for trial. Plaintiffs URI Cogeneration Partners, L.P., and Kingston Power Associates, L.P. (collectively, "UCP"), oppose the Board's motion, asserting by turn that genuine issues of fact exist as to every one of their claims, or that UCP should prevail as a matter of law.
To winnow out the numerous claims and defenses in this matter, the Court grants the Board's motion and issues the following Rule 56(d) Order. For the reasons set forth below, the Court concludes that (i) as a matter of law, the Board ratified the URI general counsel's termination of UCP; (ii) determination of whether the Board breached the agreement with UCP must await trial, as UCP has raised triable issues of fact with regards to chronology, substantial performance, and waiver; (iii) the contract's force majeure clause, as a matter of law, did not relieve UCP of its obligations under the agreement; (iv) under the express terms of the contract, UCP may not seek indirect, special or consequential damages; (v) resolution of the Board's counterclaim must await trial, as it is predicated on the same factual determinations that will support, or defeat, UCP's contract claims.
The Court will also treat the Board's motion for clarification as a motion for reconsideration under Fed.R.Civ.P. 56(c), insofar as the Court amends its earlier denial of summary judgment. The Court now grants summary judgment to the defendants on Count I of the Complaint, which alleges that URI and the Board breached the agreement through URI's allegedly unilateral termination of UCP, and on Counts VI and VII, which allege that URI tortiously interfered with the parties' agreement, since under Rhode Island law, a party may not tortiously interfere with its own contract.
A cogeneration facility is a power plant which produces both steam, for heat, and electricity, which may be transmitted to a local power grid and sold. The power sales subsidize the price of steam production, lowering the cost of heat available to the plant's owner. For this reason, URI became interested in building a cogeneration facility on its Kingston campus in the mid-eighties, a time when the school was simultaneously trying to replace its decaying heating plant and cut its energy costs.
In 1987, URI, the Board, and the state of Rhode Island began soliciting bids for the construction of a cogeneration facility. In time, the Board selected a group of developers (the future plaintiffs in this case), and negotiations began in earnest. For two years—from 1988 until 1990—the parties wrestled with the myriad issues involved in the plant's construction and operation before coming to agreement.
During this period, the question of zoning arose and coalesced into a major debate. The Board maintained that the on-campus construction site was not subject to local zoning, and that the plant could be built without permission from the South Kingstown Zoning Board. South Kingstown, in turn, asserted regulatory jurisdiction over the facility; a public meeting held on April 4, 1990 between URI, UCP and local residents only brought more questions—now environmental —to the fore. UCP, for its part, cared less about jurisdiction than about financing: the partnership's advisors believed that absent approval of the South Kingstown authorities, construction loans would not be available. The scope of the project had grown from 28 megawatts to 54 megawatts, with a concomitant rise in costs, and UCP was anxious to preserve an adequate supply of capital. Ultimately, choice of whether to seek zoning approval was left in UCP's hands.
On September 4, 1990, the parties met to sign the Energy Services Agreement ("ESA"), the contract governing the plant's design, construction and operation. Under the agreement, the "Customer" was, jointly, the Board of Governors for Higher Education for the State of Rhode Island and the University of Rhode Island. ESA at 6. The "Service Company" was Kingston Power Associates, Limited Partnership, id., a Rhode Island limited partnership with a principal place of business ("p.p.b.") in Boston, Massachusetts. KPA's general partner was Meridian Kingston Corporation and its limited partner was Meridian Power Corporation. Both were Massachusetts corporations with p.p.b. in Boston. Sometime thereafter, the parties also executed and delivered a Land Lease.
The exact dates on which the ESA and the Land Lease were executed and delivered must await determination at trial; no other factual issue so predominates this matter. The Board maintains that the ESA was executed on September 4, 1990, the day of the signing, Affidavit of Mary E. Kennard at ¶ 8, and the Land Lease was executed and delivered together with the ESA on September 11, 1990. Id. at ¶ 9. UCP has offered evidence that the fully executed ESA—additional signatures were procured after September 4—and Land Lease were delivered no earlier than September 20, 1990.1 William F. Quinn's Response to Defendants' First Set of Interrogatories at 3. Therefore, according to the Board, both the ESA and the Land Lease were fully executed and delivered by September 11, 1990; UCP argues for September 20, 1990 at the earliest.
Nine days would seem of little importance, were it not for the structure of the ESA. The contract entered into by the Board and UCP established a rigid and complicated schedule of deadlines, penalties and termination points in order to insure that the cogeneration facility would be built and operating within a set period of time. With age and frailty overwhelming the existing URI heating plant, the Board obviously wanted to guarantee that the cogeneration facility would replace it forthwith.
Section 5.2 of the ESA governs the projected milestones and penalties. As multiple claims and defenses arise out of this section, the Court will quote pertinent parts at length:
(Emphasis added.) The Milestone Start Date ("MSD") defined in § 5.2(a) was intended to be the date certain from which all the later milestones were to be determined. Unfortunately, the factual dispute over the exact date on which both the ESA and Land Lease were finally executed and delivered (September 11, 1990, or September 20, 1990, or later) means that, at this stage, the Milestone Start Date is a chimera.
Subsequent sections establish financing and licensing milestones:
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