Justia Contracts Opinion Summaries

When Exelon Generation Acquisitions purchased Deere & Company’s wind energy business, it agreed to make earn-out payments to Deere if it reached certain milestones in the development of three wind farms that were underway at the time of the sale. Included in the sale was a binding power purchase agreement Deere secured from a local utility to purchase energy from the wind farm once it became operational. One of the three projects at issue in this appeal, the Blissfield Wind Project (in Lenawee County, Michigan) could not come to fruition because of civic opposition. Exelon managed to acquire another nascent wind farm from a different developer (Gratiot County, Michigan). Exelon managed to persuade the local utility to transfer the power purchase agreement there. The Gratiot County site was successful. Deere learned of Exelon’s success with the new site (and use of the power purchase agreement) and sue to recover the earn-out payment. Deere argued the earn-out payment obligation traveled from the Lenawee County farm to the Gratiot County farm. Exelon denied that it relocated the project, instead, it was prevented from developing the Blissfield farm by forces beyond its control. The Superior Court sided with Deere’s interpretation of the power purchase agreement, and ordered Exelon to pay the earn-out. The Delaware Supreme Court disagreed with this interpretation of the purchase agreement and reversed. View "Exelon Generation Acquisitions, LLC v. Deere & Company" on Justia Law

The Oak Ridge, Tennessee uranium-enrichment facilities for the Manhattan Project, the World War II effort to build the first atomic bomb, have been inactive since the mid-1980s. The Department of Energy has worked to clean up the hazardous waste and hired Bechtel, a global engineering and construction firm. Bechtel hired Eagle to help decontaminate the complex, which required the demolition of buildings and equipment across the 2,200-acre complex and removal of radioactive nuclear waste, followed by decontamination of the soil and groundwater to make the site safe for redevelopment. Eagle’s work proved significantly more challenging and expensive than either party anticipated. Their contract allowed Bechtel to make changes; if those changes caused Eagle’s costs to increase, Bechtel was to make equitable adjustments in price and time for performance. Eight years after completing its work, Eagle filed suit, seeking compensation for its extra work and for excess waste that Eagle removed. The district court awarded Eagle the full amount of each request, plus interest and attorney’s fees. The Sixth Circuit affirmed the award of damages and attorney’s fees, but remanded so that the court can recalculate the interest to which Eagle is entitled under the Tennessee Prompt Pay Act. View "Eagle Supply & Manufacturing L.P. v. Bechtel Jacobs Co." on Justia Law

Respondent, who owned a ranch, sued Petitioner, which produced natural gas on the ranch, for underpayment of royalties and underproduction of its lease. The parties resolved their dispute with two agreements that contained an arbitration provision. Respondent later sued Petitioner for environmental contamination and improper disposal of hazardous materials on the ranch. Before arbitration commenced, Respondent asked the Railroad Commission (RRC) to investigate contamination of the ranch by Petitioner. Meanwhile, an arbitration panel awarded Respondent $15 million for actual damages and $500,000 for exemplary damages. At issue on appeal was whether the RRC had exclusive or primary jurisdiction over Respondent’s claims, precluding the arbitration, and whether the arbitration award should be vacated for the evident partiality of a neutral arbitrator or because the arbitrators exceeded their powers. The Supreme Court answered in the negative, holding (1) because Respondent’s claims were inherently judicial, the doctrine of primary jurisdiction did not apply, and vacatur was not warranted for failure to abate the arbitration hearing; and (2) the arbitrators did not exceed their authority. View "Forest Oil Corp. v. El Rucio Land & Cattle Co." on Justia Law

Nearly 20 years after defendants built, sold, and leased back a Rockport Indiana coal-burning power plant, they committed, in a consent decree resolving lawsuits involving alleged Clean Air Act violations at their other power plants, to either make over a billion dollars of emission control improvements to the plant, or shut it down. The sale and leaseback arrangement was a means of financing construction. Defendants then obtained a modification to the consent decree providing that these improvements need not be made until after their lease expired, pushing their commitments to improve the air quality of the plant’s emissions to the plaintiff, the investors who had financed construction and who would own the plant after the 33-year lease term. The district court held this encumbrance did not violate the parties’ contracts governing the sale and leaseback, and that plaintiff’s breach of contract claims precluded it from maintaining an alternative cause of action for breach of the covenant of good faith and fair dealing. The Sixth Circuit reversed, holding that a Permitted Lien exception in the lease unambiguously supports the plaintiff’s position and that the defendants’ actions “materially adversely affected’ plaintiff’s interests. View "Wilmington Trust Co. v. AEP Generating Co." on Justia Law

Plaintiff Givaudan Fragrances Corporation (Fragrances) faced liability as a result of environmental contamination from a manufacturing site that a related corporate entity operated in a facility in Clifton. The issue this case presented for review involved Fragrances' effort to obtain insurance coverage for environmental claims brought by governmental entities in response to discharges of hazardous substances that occurred during the pertinent policy periods running through January 1, 1986. Fragrances claimed that the defendant insurance companies (defendants) wrote liability policies for Givaudan Corporation during those relevant years. Fragrances argued that it was entitled, either as an affiliate of Givaudan Corporation or by operation of an assignment of rights, to have the insurers provide it with coverage for that environmental liability. Defendants claimed that they insured Givaudan Corporation as their named insured, not Fragrances, and that any assignment to Fragrances was invalid because defendants did not consent to the assignment, as was required for a valid assignment according to the language of the insurance policies. Therefore, collectively, defendants refused to honor Fragrances' right to bring insurance contract claims against them. Fragrances filed its complaint in February 2009 seeking a declaratory judgment that it was entitled to coverage under the policies. In February 2010, while the declaratory judgment action was pending, Fragrances notified defendants that Givaudan Roure Flavors Corporation (corporate successor-in-interest to Givaudan Corporation) planned to assign its post-loss rights under the insurance policies to Fragrances. Defendants refused to consent to the assignment. Nevertheless, Flavors executed the assignment to Fragrances. Both sides moved for summary judgment. Because Fragrances was not acquired by Givaudan Corporation during the policy period, the trial court determined that it could not be an affiliated corporation covered under the policies. The court also determined that the assignment in this case was an assignment of policies, which could not be assigned. The court denied Fragrances' motion and granted defendants' cross-motion for summary judgment. The Appellate Division reversed and remanded, explaining that although the anti-assignment clauses in the occurrence policies at issue would prevent an insured from transferring a policy without the consent of the insurer, once a loss occurs, an insured s claim under a policy may be assigned without the insurer s consent.The Supreme Court affirmed, concluding that, once an insured loss has occurred, an anti-assignment clause in an occurrence policy may not provide a basis for an insurer s declination of coverage based on the insured's assignment of the right to invoke policy coverage for that loss. The assignment at issue in this case was a post-loss claim assignment and therefore the rule voiding application of anti-assignment clauses to such assignments applied. View "Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co." on Justia Law

Williams Alaska Petroleum owned the North Pole refinery until 2004. Williams knew that the then-unregulated chemical sulfolane was present in refinery property groundwater, but it did not know that the sulfolane had migrated off the refinery property via underground water flow. Flint Hills Resources Alaska bought the North Pole refinery from Williams in 2004 pursuant to a contract that contained detailed terms regarding environmental liabilities, indemnification, and damages caps. Almost immediately the Alaska Department of Environmental Conservation informed Flint Hills that sulfolane was to be a regulated chemical and that Flint Hills needed to find the source of the sulfolane in the groundwater. The Department contacted Flint Hills again in 2006. Flint Hills’s environmental contractor repeatedly warned Flint Hills that sulfolane could be leaving the refinery property and that more work was necessary to ascertain the extent of the problem. In 2008, Flint Hills drilled perimeter wells and discovered the sulfolane was migrating beyond its property and had contaminated drinking water in North Pole. A North Pole resident sued Flint Hills and Williams, and Flint Hills cross-claimed against Williams for indemnification. After extensive motion practice the superior court dismissed all of Flint Hills’s claims against Williams as time-barred. Flint Hills appealed. After review, the Supreme Court held that the superior court correctly applied the contract’s damages cap provision, but concluded that the court erred in finding Flint Hills’s contractual indemnification claims and part of its statutory claims were time-barred. The Court also affirmed the court’s dismissal of Flint Hills’s equitable claims. View "Flint Hills Resources Alaska, LLC v. Williams Alaska Petroleum, Inc." on Justia Law

For more than a century, Asarco LLC and its predecessors operated a lead smelting facility (the Site). For almost fifty years, Atlantic Richfield Company’s predecessor operated a zinc fuming plant on land leased from Asarco at the Site. Atlantic Richfield subsequently sold the plant and related property to Asarco. Due to extensive contamination at the Site, the Environmental Protection Agency determined that Asarco was obligated to fund cleanup efforts at the Site. After conducting extensive remediation at the Site, Asarco filed a complaint seeking contribution pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) from Atlantic Richfield, asserting that Atlantic Richfield was liable under CERCLA for its equitable share of costs related to the Site’s cleanup. The federal district court granted summary judgment for Atlantic Richfield, concluding that Asarco’s claims were untimely under CERCLA’s statute of limitations. Asarco then commenced the present action against Atlantic Richfield alleging several state-law claims. The district court granted Atlantic Richfield’s motion for judgment on the pleadings on the ground that the doctrine of claim preclusion barred Asarco’s claims. The Supreme Court affirmed, holding that claim preclusion barred Asarco’s action because Asarco could have brought its state-law claims before the federal district court in Asarco I. View "Asarco LLC v. Atlantic Richfield Co." on Justia Law

Defendant-appellant Northrop Grumman Systems Corporation appealed a judgment of approximately $1.1 million plus interest, costs, and attorney fees of approximately $1.8 million in favor of plaintiff-respondent Hot Rods, LLC. This case involved an environmentally compromised property Hot Rods purchased from Northrop and the alleged damages stemming from environmental cleanup and related issues. The matter was tried by a referee pursuant to stipulation, and judgment was entered by the trial court, adopting the referee’s recommendations. Northrop alleged numerous errors. Upon review, the Court of Appeal found that there was language in the referee’s statement of decision indicating Northrop had negligently misrepresented certain facts, but did not find any damages were proximately caused, nor did the referee award any damages on that cause of action. The Court concluded the referee erred in admitting certain evidence, and that a finding of negligent misrepresentation was therefore improper, and not sufficiently supported by substantial evidence. The Court reversed the bulk of the damages award, and remanded for a reconsideration of which party was the prevailing party, and therefore entitled to attorney fees. View "Hot Rods v. Northrop Grumman Systems Corp." on Justia Law

James Pyne, who died during these proceedings, was the founder and sole stockholder of Remet Corporation. Pyne sold Remet’s stock and facilities, along with real property he had been leasing to Remet, to Burmah Castro Holding, Inc. The sales agreement contained an indemnification provision obligating Pyne to indemnify, defendant, and holder the buyer harmless for certain environmental losses. Remet later received a letter from the Department of Environmental Conservation (DEC) notifying Remet that it was a potentially responsible party for environmental contamination at the Erie Canal Site adjacent to Remet’s real property. Remet filed notices of claim against Pyne’s estate seeking indemnification for environmental liabilities under the sales agreement. Remet then brought this action against the Estate asserting claims for contractual and common-law indemnification. Supreme Court granted Remet summary judgment on liability. The Appellate Division reversed, concluding that DEC’s letter did not require Remet to take action. The Court of Appeals reversed, holding (1) the letter was sufficiently coercive and adversarial as to require action in connection with any environmental law pursuant to the sales agreement; and (2) Remet was entitled to contractual indemnification for past and future environmental losses arising out of DEC’s investigation and remediation of the Erie Canal Site. View "Remet Corp. v. Estate of Pyne" on Justia Law

In 2001, Furnival and its insurer agreed to a Pollution and Remediation Legal Liability Policy, detailing $10 million in liability protection; a 10-year coverage period; and insurance coverage for 12 Furnival locations, including the Elizabethtown Landfill Site, which Furnival was obligated to clean up under a consent decree with the federal government. Insurer knew about the consent decree when the Policy issued. The Policy Endorsements list five reasons for which insurer may “refuse to offer a renewal extension of coverage,” and states that insurer “shall not cancel nor non-renew this Policy except for the reasons stated above.” None of the listed reasons for non-renewal occurred. In 2006, the parties increased the Policy’s limit to $14 million. After the term expired, insurer sent Furnival’s insurance broker its version of a renewal offer, providing $5 million of coverage over a one-year term, omitting coverage for Elizabethtown, the only previously insured site for which Furnival had made a claim, refusing to renew the same terms. The Third Circuit vacated a ruling in favor of insurer, holding that, for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract. View "Indian Harbor Ins. Co v. F&M Equip., Ltd" on Justia Law