Evergreen Engineering, Inc. v. Green Energy Team LLC

884 F. Supp. 2d 1049, 2012 WL 3150306, 2012 U.S. Dist. LEXIS 106435
CourtDistrict Court, D. Hawaii
DecidedJuly 31, 2012
DocketCivil No. 10-00676 LEK-BMK
StatusPublished
Cited by11 cases

This text of 884 F. Supp. 2d 1049 (Evergreen Engineering, Inc. v. Green Energy Team LLC) is published on Counsel Stack Legal Research, covering District Court, D. Hawaii primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evergreen Engineering, Inc. v. Green Energy Team LLC, 884 F. Supp. 2d 1049, 2012 WL 3150306, 2012 U.S. Dist. LEXIS 106435 (D. Haw. 2012).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART DEFEN-DANTICOUNTERCLAIM PLAINTIFF GREEN ENERGY TEAM LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON (a) COUNT I (BREACH OF CONTRACT) OF PLAINTIFF EVERGREEN ENGINEERING, INC.’S FIRST AMENDED COMPLAINT AND (b) COUNT III (BREACH OF CONTRACT) OF GREEN ENERGY TEAM LLC’S COUNTERCLAIM

LESLIE E. KOBAYASHI, District Judge.

Before the Court is Defendant/Counterclaim Plaintiff Green Energy Team LLC’s [1051]*1051■(“GET”) Motion for Partial Summary Judgment on (a) Count I (Breach of Contract) of Plaintiff Evergreen Engineering, Ine.’s First Amended Complaint and (b) Count III (Breach of Contract) of Green Energy Team LLC’s Counterclaim (“Motion”), filed on February 29, 2012. [Dkt. no. 51.] Plaintiff/Counterclaim Defendant Evergreen Engineering, Inc. (“Evergreen”) filed its memorandum in opposition on April 23, 2012, and GET filed its reply on May 9, 2012. [Dkt. nos. 60, 66.] This matter came on for hearing on June 25, 2012. Appearing on behalf of GET was Thomas E. Bush, Esq., and appearing on behalf of Evergreen were Mark T. Shklov, Esq., and Bennet J. Chin, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, GET’s Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

BACKGROUND

I. Factual Background

In 2006, GET was formed in the State of Hawai’i as a single-member LLC for the purpose of owning and operating a biomass-to-energy plant (“BTE plant”) on the Island of Kauai. [Concise Statement of Material Facts in Support of GET’s Motion, filed 2/29/12 (dkt. no. 52) (“Def.’s CSOF”), Decl. of Eric Knutzen (“Knutzen Deck”) at ¶ 3.] GET retained Emery Otruba, an engineer at Steam Plant Systems, Inc. (“SPS”), allegedly to do front-end engineering and conceptual design of a BTE plant with a turbine generator that would be fueled by locally produced wood waste products. [Def.’s CSOF, Deck of Brandon M. Segal (“Segal Deck”), Exh. A (excerpts of 1/9/12 Depo. of Emery Mark Otruba (“Otruba Depo.”)) at 34-35; Exh. F.] Otruba and SPS allegedly recommended the use of a gasification/boiler system developed by Chiptec Corporation (“Chiptec”). [Otruba Depo. at 48-50; Def.’s CSOF, Se-gal Deck, Exh. G at § 1.1.]

In March 2007, the Kauai Island Utility Cooperative (“KIUC”) and GET executed a Power Purchase Agreement (“PPA”) to build a BTE plant based on the Chiptec wood gasification system. [Def.’s CSOF, Knutzen Deck, Exh. P.] The PPA contained certain “milestone dates,” and provided that the failure to meet those dates could result in “delay damages” of thousands of dollars per day. [Id. at § 12.4(A).]

Otruba, who had since begun working for Evergreen, and John Solvason, a founding principal of Evergreen, allegedly lobbied GET to hire Evergreen to serve as the managing project engineer for the implementation of the BTE plant project. [Otruba Depo. at 57.] On or around December 16, 2007, Evergreen and GET entered into an agreement which consisted of the Amended Design Proposal and Attachment “A,” including General Conditions for Professional Services (collectively, the “Agreement”). [Def.’s CSOF, Segal Deck, Exh. L (Agreement).] GET claims that the relevant provision is the “performance guarantee” provision:

Overall plant performance guarantee will be achieved via guarantees by suppliers of individual equipment and the undertakings of the Contractor and certain project investors as well as by the undertaking of Evergreen in this Agreement. Equipment performance guarantees will be written into the specifications for each piece of major equipment with financial penalties for performance shortfalls. Factory performance test combined with on site performance testing will verify that equipment is achieving desired performance. A highly qualified design team is being proposed for this project with the necessary experience to design and support your project [1052]*1052during construction. The design will be performed in our Eugene, OR office. Evergreen will work together with your Construction Manager, Contractor and Owner’s Representative to ensure that your project is designed and built to the high standards you require in order to achieve your continual goals.

[Id. at 2.]

In June 2008, the State of Hawai’i Department of Health issued GET a Covered Source Air Permit that contemplated the use of two Chiptec biomass gasifier/boiler systems and was premised on expected usage of 201 tons of fuel per day. [Def.’s CSOF, Knutzen Decl. at ¶ 10; Exh. Q.] In an agreement between GET and Chiptec, Chiptec guaranteed that GET would not have to use more than 201 tons per day of Albizia and Eucalyptus wood feedstock fuel to operate the BTE plant. [Def.’s CSOF, Segal Deck, Exh. E at 2.] The parties dispute whether and to what extent Evergreen and GET knew that Chiptec’s calculations were incorrect.

In 2009, a review by one of GET’s lenders revealed an error in the fuel tonnage calculations for the BTE plant. In actuality, 240 tons of fuel per day were needed to operate the gasifier system at the required efficiency level. [Def.’s CSOF, Knutzen Deck at ¶ 15; Otruba Depo. at 128.] The error allegedly affected GET’s calculations regarding: (1) feed stock volume; (2) pro forma financials; (3) economic viability; (4) financing possibilities; and (5) various entitlements such as the covered source air permit. [Def.’s CSOF, Knutzen Deck at ¶ 16; Segal Deck, Exh. B (excerpts of 1/10/12 Depo. of John Solvason (“Solvason Depo.”)) at 133-34.] GET alleges that, in order to operate the BTE plant in accordance with the air permit, it would have to operate fewer hours or at a lower output than intended under the PPA. GET had to seek an amendment of the air permit, which has delayed the start date beyond the milestone deadline set forth in the PPA. [Def.’s CSOF, Knutzen Deck at ¶ 17.] GET claims that it was forced to change its business plan and abandon the gasification turbine system, which resulted in the loss of the benefits of the payments it made to Evergreen and other vendors. [Id. at ¶ 18.]

By the terms of the Agreement, GET was to pay Evergreen’s fee of $2,539,342.00 and any reimbursement associated with the scope of services. [Agreement at 19.] Evergreen alleges that GET made the first four payments to Evergreen totaling $344,384.49. [Evergreen’s Responsive Concise Statement, filed 4/23/12 (dkt. no. 61) (“Pltf.’s CSOF”), Deck of John Solvason (“Solvason Deck”), Exh. HH at I-4.] Between June 2008 and April 2009, Evergreen sent GET six invoices totaling $139,663.81, but GET only paid $17,979.62. [Id. at 5-10; Pltf.’s CSOF, Solvason Deck at ¶ 82.] Evergreen also states that it billed GET $98,892.73 for additional services outside the scope of the Agreement. [Pltf.’s CSOF, Solvason Deck, Exh. HH at II-12.]

Evergreen’s First Amended Complaint asserts four causes of action: Breach of Contract (Count I); Further Breach of Contract/Breach of Good Faith and Fail’ Dealing (Count II); Quantum Meruit/Unjust Enrichment (Count III); and Assumpsit/Aecount Stated (Count IV). The present Motion seeks summary judgment as to Count I only.

On December 21, 2010, GET filed its First Amended Counterclaim against Evergreen, Solvason and Otruba. [Dkt. no. 22-1.] It asserts five causes of action: Professional Malpractice and Negligence (Count I); Negligence Per Se (Count II); Breach of Contract (Count III); Breach of Express/Implied Warranty (Count IV); and Unjust Enrichment (Count V). The

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
884 F. Supp. 2d 1049, 2012 WL 3150306, 2012 U.S. Dist. LEXIS 106435, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evergreen-engineering-inc-v-green-energy-team-llc-hid-2012.