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Robert Wood Johnson University Hospital at Hamilton, Inc. v. Smx Capital, Inc.

United States District Court, Third Circuit

August 26, 2013

ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL AT HAMILTON, INC., Plaintiff,
v.
SMX CAPITAL, INC., Defendant.

OPINION

JOEL A. PISANO, District Judge.

Plaintiff Robert Wood Johnson University Hospital at Hamilton, Inc. ("Plaintiff") and Defendant SMX Capital, Inc. ("Defendant") entered into an Agreement whereby Defendant would construct solar panels on land it leased from Plaintiff and sell the solar energy to Plaintiff. The Agreement required five conditions precedent to be satisfied before the parties' rights and obligations became binding. The conditions were not satisfied. Plaintiff terminated the contract and brought this action for breach of contract and breach of the implied duty of good faith and fair dealing. Defendant's Motion to Dismiss [docket # 7] and Plaintiff's Cross-Motion for Leave to Amend [docket # 11] are presently before this Court. The Court held oral argument on July 25, 2013. See Fed.R.Civ.P. 78. For the reasons outlined below, this Court grants Defendant's Motion to Dismiss and denies Plaintiff's Cross-Motion to Amend.

I. BACKGROUND[1]

In 2011, Plaintiff issued a Request for Proposal ("RFP") to "select a vendor to finance, construct[, ] and operate a solar facility" on Plaintiff's campus. Compl. ¶ 7. Plaintiff selected Defendant, and on October 27, 2011, Plaintiff and Defendant entered a Solar Power Purchase Agreement ("Agreement") and a Lease. Compl. ¶ 8.

A. Terms of the Agreement

Under the Agreement, Plaintiff leased to Defendant a piece of property, upon which Defendant intended to "finance, construct, own and operate a Solar Facility" at its sole cost and expense. Compl., Ex. A, Recitals A-C. Plaintiff would then purchase "all of the Energy generated by the Solar Facility...." Id. at Recital B. The parties agreed that Plaintiff would pay a "flat rate... equal to eight and three quarters cents ($.0875) per kilowatt hour" for solar energy. Id. at 3.3(a). Moreover, the parties agreed that Defendant may have to expend $1.1 million to upgrade Plaintiff's existing utility service from 460V to 26kV as part of the installation of the Solar Facility. Id. at 3.3(c); Compl. ¶ 15. If, however, Defendant did not undertake the upgrade or the upgrade was completed for less than $1.1 million, the purchase price of $.0875 per kilowatt hour would be reduced by an appropriate amount. Id. The Agreement commenced on October 27, 2011 and would continue for approximately twenty years after the date that the Solar Facility began commercial operations. Id. at 2.1(a). Plaintiff could extend the term of the Agreement for an additional five years. Id. at 2.1(b).

The "rights and obligations of the Parties under this Agreement, " however, were "conditioned upon the satisfaction in full (or waiver) of the following conditions precedent[]":

(a) Defendant "shall have received evidence satisfactory to it that the Tax Incentives will be available to" it; (b) "all applicable governmental approvals, permits, contracts and agreements required for installation, operation and maintenance of the Solar Facility and the sale and delivery of Energy to...
[Plaintiff] as well as applicable certifications and authorizations have been obtained or can be obtained in due course and without unreasonable cost or delay;"
(c) Defendant "has obtained confirmation, satisfactory to it, that an Interconnection Agreement, in form and substance reasonably acceptable to... [Defendant], will be executed and delivered by the... [Plaintiff] in accordance with Section 5.1(e);"
(d) Defendant "has obtained confirmation, satisfactory to it, that the Solar Facility is eligible for the Utility's net metering service and related rules of service applicable to customer on-site generation of renewable energy";
(e) Defendant "has obtained from any mortgagees, bondholders and other lien holders with respect to the Facility Site or the Premises waivers of any interest in the Solar Facility or payments arising in connection therewith."
[Agreement, § 2.2.]

The Agreement provides that Defendant "shall make commercially reasonable efforts to achieve the results desired by" these conditions precedent "as ...


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