Law360 (March 5, 2021, 5:29 PM EST) -- The seller of a wind farm project says the buyer, Innogy, is unjustly trying to keep $70 million worth of tax credits by taking advantage of deadline leniency under the COVID-19 pandemic and manipulating the construction schedule to miss contractual deadlines.
The former owner of the project, Trireme Energy Holdings Inc, told a New York federal court Thursday that Innogy Renewables US LLC cynically took steps in the past year to profit from the pandemic by delaying the completion of the project. It's asking the court to reject Innogy's attempt to end much of its effort to enforce the contract through a dismissal effort to kill the seller's claims of broken contract, reformation and unjust enrichment.
Trireme said the delayed completion was designed to take advantage of a one-year Internal Revenue Service extension to apply for renewable tax credits. Instead of finishing the wind farm project known as the Cassadaga Project by the end of December — which would have triggered a contractual obligation to transfer credits worth an estimated $69.7 million to the former owner — Innogy delayed completion by two months, allowing it to receive the tax credits and keep them, according to Trireme.
"Plaintiffs ... have made no attempt to use a public health emergency for personal profit. Defendants, however, have a different approach," Trireme said. "Since the initial complaint was filed, defendants took a series of cynical steps to profit from the pandemic. They deliberately delayed meeting bargained-for contractual milestones in an effort to reap an unjustified $69.7 million windfall at plaintiffs' expense."
In a statement provided to Law360 Friday, John F. Baughman of The Law Offices of John F. Baughman said his firm was looking forward to pursuing Trireme's claims further.
"Innogy is trying to take advantage of the COVID-19 19 pandemic and denying Trireme the benefit of this bargain. Anyone who has lived through the last year knows that it is wrong," Baughman said.
In addition, Trireme told the court that Innogy's effort to dismiss those portions of the suit wouldn't even end the case, since the company had not targeted the entirety of the claims in the second and current amended complaint that include unjust enrichment, breach of contract and other concerns.
Susan Kay Leader, an attorney for Innogy with Akin Gump Akin Gump Strauss Hauer & Feld LLP, referred Law360 on Friday to the motion to dismiss that was filed Feb 3., but otherwise said that they planned on filing a reply brief in due time.
That motion argued, among other things, that, regardless of extenuating circumstances outside the contract, the two parties were sophisticated actors that had been operating on a contract for three years with specific stipulations that all commercially "reasonable" efforts to complete the project would be made ahead of that potential $69.7 million payout. Since all the boxes weren't checked in time, the contract did not require that the money be transferred, and Trireme can't shoehorn good faith into the contract just because it wants to, the motion said.
"It goes without saying that we vigorously contest liability and believe the case to a meritless money grab, but it's difficult for us to substantively comment on an opposition brief in advance of filing our reply brief," Leader said.
The suit stems from a December 2017 sales contract that passed ownership of the Cassadaga Project from Trireme to Innogy, with a stipulation that if the project was completed by December 2020, Innogy would pay Trireme the nearly $70 million. The project is a 37-turbine wind farm with the capacity to generate 125.5 megawatts of electricity, according to court documents.
After that sale, Innogy SE was acquired by E.ON in early 2018 and the assets were transferred as of July to the European renewable energy powerhouse RWE.
Trireme filed suit claiming that the new owners of the project were attempting to bypass that contractual deadline in July, claiming then that the company was doing everything in its power to ward off the payday, including drawing out the permitting process by submitting environmental and logistical plans to New York regulators more than a year after receiving the conditional OK of the project.
Even when the plans were submitted to the proper authorities, they were incomplete, the suit said. Consequently, a Clean Water Act permit needed for the project from the United States Army Corps of Engineers was "intentionally, unreasonably and unnecessarily delayed," Trireme said.
After the suit was filed, the complaint was amended twice, with the most recent version claiming that the new owners had put off completion of the project by just two months past the contractual deadline. Because of the pandemic, the two months would still allow the company to collect the tax credits but would let the owners keep the money instead of forking it over.
Trireme is represented by John F. Baughman and Nathaniel E. Marmon of The Law Offices of John F. Baughman and John Treat of JFB Legal PLLC.
Innogy is represented by Susan K. Leader and Zachary S. Newman of Akin Gump Strauss Hauer & Feld LLP.
The case is Trireme Energy Holdings Inc. et al v. Innogy Renewables US LLC et al, case number 1:20-cv-05015, in the United States District Court for the Southern District of New York.
--Additional reporting by Morgan Conley and Nadia Dreid. Editing by Peter Rozovsky.
Update: This story has been updated to include comment from Innogy's counsel.
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