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Deere & Co. v. Exelon Generation Acquisitions, LLC

Superior Court of Delaware, New Castle

March 7, 2014

DEERE & COMPANY, a Delaware corporation, Plaintiff,
v.
EXELON GENERATION ACQUISITIONS, LLC, a Delaware limited liability company, Defendant.

Submitted: November 1, 2013

Peter J. Walsh, Jr., Esq., and Matthew F. Davis, Esq., Potter, Anderson & Corroon, Wilmington, Delaware. Attorneys for Plaintiff.

Sean J. Bellew, Esq., Ballard Spahr, Wilmington, Delaware. Attorney for Defendant.

OPINION

James T. Vaughn, Jr Judge

The plaintiff, Deere & Co., has filed this action against Exelon Generation Acquisitions, LLC seeking a declaratory judgment and damages in connection with an August 30, 2010 purchase agreement (the "Purchase Agreement").

Exelon has filed a Motion to Dismiss the Complaint Under Civil Rule 12(b)(6).

FACTS

The allegations in the complaint include the following: Deere had been developing wind generation projects and owned wind generation assets through subsidiaries. Exelon purchased those assets pursuant to the Purchase Agreement. In three projects Deere had obtained power purchase agreements. A power purchase agreement is a contract between a party who generates electricity, in this case Deere's subsidiaries through the wind generation projects, and a party who agrees to purchase the electricity for resale to retail customers. A power purchase agreement is a valuable asset for the party generating the electricity.

Section 2.6(a) of the Purchase Agreement provided for an earn-out to be paid to Deere when each of three identified wind projects under development reached certain milestones. The three wind projects that were subject to earn-outs (defined in the Purchase Agreement as the "Michigan Wind Projects") were the three for which a power purchase agreement had been obtained. There were no earn-out provisions for any other development projects which Exelon was acquiring as part of the transaction. The Michigan Wind Projects were thus treated differently in the Purchase Agreement because they had power purchase agreements.

One of the Michigan Wind Projects was the Blissfield Wind Project, which was described in the Purchase Agreement as "the wind project under development in Lenawee County, Michigan, by Blissfield Wind Energy, LLC, with a nameplate capacity of 81 megawatts."[1] The other two Michigan Wind Projects were identified in the agreement with similar phraseology, that is by county of location, project name, and capacity of megawatts.

Section 2.6(a)(iii) of the Purchase Agreement specifies Exelon's earn-out obligation for the Blissfield Wind Project. It states: "[a]t such time as . . . the Blissfield Wind Project achieves Completion of Development and Commencement of Construction, Buyer shall deliver to Seller an amount equal to $14, 000, 000."[2]

Furthermore, the Purchase Agreement requires Exelon to use "all reasonable efforts" to develop the Michigan Wind Projects, but also permits Exelon to cease development of and abandon those Projects in certain circumstances. Section 2(b) provided, in pertinent part, as follows:

In the event Buyer reasonably determines that continuing to proceed with any one or more of the Michigan Wind Projects would not be commercially reasonable and thereafter determines to permanently cease development of and abandon such Michigan Wind Project(s), Buyer shall so inform Seller, including the reason therefor and thereafter Buyer shall have no further obligation to Seller in connection with such development; provided that if within three (3) years thereafter the Completion of Development and Commencement of Construction of a particular Michigan Wind Project (including, for the avoidance of doubt, the direct or indirect sale of such Michigan Wind Project prior to the Commercial Operation Milestone Date (as defined in the applicable Michigan PPA) to a Person engaged in the Business) occurs, then Buyer shall have the payment obligations set forth in this Section 2.6 with respect to such Michigan Wind Project.[3]

After entering into the Purchase Agreement, Exelon continued to develop the Blissfield Wind Project, but encountered difficulties trying to develop the project in Lenawee County. Specifically, the township where the Blissfield Wind Project was located imposed zoning restrictions in July ...


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