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Deere & Co. v. Exelon Generation Acquisitions, LLC

Superior Court of Delaware, New Castle

November 10, 2014

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

Submitted: July 24, 2014.

Upon Consideration of Plaintiff's Motion to Dismiss Defendant's Counterclaims DENIED.

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

VAUGHN, Judge.

The plaintiff, Deere & Co., filed a complaint against the defendant, Exelon Generation Acquisitions, LLC, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. The dispute arises out of an August 30, 2010 purchase agreement (the "Agreement"). Previously in the litigation, Exelon filed a Motion to Dismiss all three of Deere's claims under Superior Court Civil Rule 12(b)(6). The Court dismissed Deere's breach of the implied covenant of good faith and fair dealing and unjust enrichment claims, but allowed Deere's breach of contract claim to proceed.

In its answer, Exelon asserted two counterclaims; recoupment and unjust enrichment. Deere has filed a Motion to Dismiss both counterclaims under Rule 12(b)(6).

FACTS

The facts are set forth in the Court's opinion concerning Exelon's Motion to Dismiss.[1] In 2010, Exelon purchased Deere's interest in specific wind generation projects and wind generation assets owned by Deere through subsidiaries. On August 30, 2010, the parties memorialized the terms of their contract in the Agreement. The Agreement identifies the Blissfield Wind Project as one of the wind generation projects that Exelon would acquire. The Blissfield Wind Project was described as "the wind project under development in Lenawee County, Michigan, by Blissfield Wind Energy, LLC, with a nameplate capacity of 81 megawatts."[2] Section 2.6 of the Agreement provided for an earn-out to be paid to Deere when the Blissfield Wind Project "achieves Completion of Development and Commencement of Construction."

In connection with the Blissfield Wind Project, Deere represented that it reasonably believed that the material permits were obtainable in the ordinary course.[3]This representation is expressly qualified, however, by disclosures that Deere included in the Seller Disclosure Schedule.[4] In the Seller Disclosure Schedule, Deere informed Exelon of the Riga Township Planning Committee's decision to impose a moratorium on wind energy projects and the potential obstacle that the moratorium could present in obtaining the necessary zoning approval. In Section 6.3 of the Agreement, Deere promised that before closing it would cause Deere Renewables to "conduct its business and operations in the ordinary course of business consistent with past practices and consistent with Prudent Industry Practices."

Deere's covenants and representations and warranties were subject to limiting provisions in the Agreement. Section 7.2 of the Agreement sets forth conditions to Exelon's obligations to close and states that the obligations of Exelon to "effect the Closing shall be subject to the satisfaction (or waiver, in whole or in part). . .of each of the following conditions." One of the conditions of the closing was that Deere preformed or complied with all obligations under the covenants, representations and warranties.[5] Additionally, the Agreement includes a survival clause which terminates the representations and warranties fifteen months after the closing date.[6] The transaction closed on December 9, 2010.

Following the close of the transaction, the Riga Township Board adopted changes to its zoning regulations that precluded the development of the Blissfield Wind Project. Ultimately, Exelon notified Deere that it was not commercially reasonable to continue development on the Blissfield Wind Project. Exelon acquired a different location and developed a wind project in Gratiot County, Michigan. A power purchase agreement that was used in connection with the Blissfield Wind Project was amended and used in connection with the wind project in Gratiot County.

In its complaint, Deere asserted that the Blissfield Wind Project had simply been relocated to Gratiot County, and that Exelon was required to pay the earn-out for the Blissfield Wind Project.

In support of its recoupment counterclaim, Exelon alleges that Deere breached two representations, Section 4.11(c)(iv) and Section 6.3, in the Agreement and, that as a result of the breach, Exelon should be able to reduce any recovery by Deere. In its unjust enrichment counterclaim, Exelon claims that Deere will be unjustly enriched if it is permitted to recover the entire earn-out amount without an offset for ...


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