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Clean Jersey Solar LLC v. John Caruso, 15-3173 (2016)

Court: Court of Appeals for the Third Circuit Number: 15-3173 Visitors: 43
Filed: Aug. 12, 2016
Latest Update: Mar. 03, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 15-3173 CLEAN JERSEY SOLAR LLC, Appellant v. EFFISOLAR ENERGY CORPORATION, a Canadian Corporation authorized to do business in the State of New Jersey v. JOHN M. CARUSO; SCOTT CARUSO On Appeal from the United States District Court for the District of New Jersey (District Court No.: 3:12-cv-02008) District Judge: Honorable Michael A. Shipp Submitted under Third Circuit LAR 34.1(a) on July 15, 2016 Before: SMITH, ROTH, and R
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                                                                 NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT


                                       No. 15-3173


                             CLEAN JERSEY SOLAR LLC,
                                              Appellant

                                             v.

           EFFISOLAR ENERGY CORPORATION, a Canadian Corporation
                 authorized to do business in the State of New Jersey

                                             v.

                         JOHN M. CARUSO; SCOTT CARUSO


                     On Appeal from the United States District Court
                              for the District of New Jersey
                          (District Court No.: 3:12-cv-02008)
                      District Judge: Honorable Michael A. Shipp


                       Submitted under Third Circuit LAR 34.1(a)
                                   on July 15, 2016

                Before: SMITH, ROTH, and RENDELL, Circuit Judges
                          (Opinion filed: August 12, 2016)



                                      O P I N I O N*


RENDELL, Circuit Judge:

       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
                                             1
       Clean Jersey Solar, L.L.C. (“Clean Jersey”) sued Effisolar Energy Corporation

(“Effisolar”) for breach of contract arising from a real-estate transaction in which

Effisolar had agreed to buy land from Clean Jersey which Effisolar was to convert into a

solar generating facility. The parties agree that Effisolar breached the agreement but

dispute damages. In accordance with the liquidated-damages clause in the contract, the

District Court awarded Clean Jersey the monies Effisolar had deposited up to the point of

the breach. Clean Jersey, however, contended that it was owed an additional $200,000 in

damages. The District Court disagreed and limited the award to the liquidated damages,

granting Effisolar’s motion to dismiss with respect to additional damages. Clean Jersey

appeals. We will affirm.

                                       BACKGROUND

       Clean Jersey agreed to sell Effisolar land on which a solar generating facility

would be built. Effisolar agreed with Clean Jersey that it (Effisolar) would purchase solar

engineering plans for the property from PJM Interconnection, LLC, a regional

transmission organization that operates electric transmission systems. The Agreement

specified that Effisolar would “be responsible for all PJM interconnections.” JA65. The

contract further stated that, in the event that Effisolar were to terminate the Agreement

for whatever reason, Clean Jersey would be entitled to the PJM plans “free and clear,

such that [Clean Jersey] shall have the right to proceed with these applications and

approvals and remove [Effisolar]’s name from same.” JA65. A provision of the contract,

which the District Court characterized as a “liquidated damages clause,” provided that:

“In the event [Effisolar] is in default, [Clean Jersey] shall be entitled to retain all of its

                                                2
Deposit monies as liquidated damages as well as free and clear ownership of all [PJM

plans].” JA68. After the Agreement, the parties signed an Amendment. In relevant part,

the Amendment stated that if Effisolar did not close on the property, Clean Jersey would

be entitled to “have the right to full ownership [of the PJM plans] free of any claims from

[Effisolar] or any of its subcontractors.” JA71.

       One day before Effisolar’s payment to PJM for the engineering plans was due,

Effisolar informed Clean Jersey that it would not make the payment to PJM. If payment

was not made, PJM would not create the engineering plans. Rather than lose the PJM

plans, Clean Jersey itself voluntarily paid $200,000 to PJM. Effisolar then informed

Clean Jersey it would not be purchasing the real estate, in breach of the contract. Clean

Jersey therefore retained Effisolar’s deposit in the amount of $309,500, and then filed suit

against Effisolar seeking an additional $200,000 for the payment made to PJM. Clean

Jersey moved for summary judgment on the issue, and Effisolar filed a motion to dismiss.

Clean Jersey urged that the provision regarding its right to the plans “free and clear”

meant that Effisolar should be required to pay for the plans if Effisolar defaulted. The

Court granted Effisolar’s Motion to Dismiss as to this issue, reasoning that the parties

bargained for specific damages, or liquidated damages, and that no additional damages

beyond those specified could be collected.

                               STANDARD OF REVIEW

       We review a grant of a motion to dismiss under a plenary standard. Delaware

Nation v. Pennsylvania, 
446 F.3d 410
, 415 (3d Cir. 2006). To survive a motion to

dismiss, a “complaint must contain sufficient factual matter, accepted as true, to ‘state a

                                              3
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 
556 U.S. 662
, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 
550 U.S. 544
, 570 (2007)).

                                      DISCUSSION1

       This case turns on the definition of “free and clear” in the liquidated-damages

clause.2 A liquidated-damages clause provides for agreed-upon damages in the event of a

breach by either party. See Restatement (Second) of Contracts § 356. When interpreting a

contract we determine the intentions of the parties based on the language used.

Onderdonk v. Presbyterian Homes of N.J., 
425 A.2d 1057
(N.J. 1981).

       Clean Jersey argues that it was owed the additional $200,000 it paid to PJM for the

plans because “free and clear” meant it was to receive the plans without any outstanding

balances due. Effisolar argues that (a) the liquidated-damages clause entitled Clean Jersey

to the retain the deposit monies, and no other monies; and (b) that “free and clear” merely

meant that Clean Jersey would have the right to the PJM plans without any claim of

ownership by Effisolar or its subcontractors.

       We conclude that “free and clear,” in the context of the contract, means only that

Clean Jersey had a right to the PJM plans and documents that were in existence at the

time of the breach without any claim to ownership of those plans by Effisolar. The

contract contains several provisions indicating that this “free and clear” reading is

1
  We have jurisdiction under 28 U.S.C. §1291. The District Court had diversity
jurisdiction under 28 U.S.C. §1332.
2
  We may consider the contract in our analysis of Effisolar’s Motion to Dismiss, as the
contract is a concededly authentic document that was attached as an exhibit to Clean
Jersey’s Answer to Effisolar’s counterclaims. See Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 
998 F.2d 1192
, 1196 (3d Cir. 1993).

                                              4
correct. In one provision, the parties agreed that, in the event Effisolar were to terminate

the Agreement for whatever reason, Clean Jersey would be entitled to the PJM plans

“free and clear, such that [Clean Jersey] shall have the right to proceed with these

applications and approvals and remove [Effisolar’s] name from the same.” JA65

(emphasis added). This language does not relate to Clean Jersey’s right to payment, but

rather its right to proceed with any applications or plans that were, at the time of the

breach, completed, without competing claims from Effisolar. Moreover, in an amendment

to the contract, the parties agreed that if Effisolar were not to close on the property, Clean

Jersey would be entitled to “full ownership [of the PJM plans] free of any claims from

[Effisolar] or any of its subcontractors.” JA71 (emphasis added). This again reveals that

the “free and clear” provision meant only that Effisolar could not make any claims to

ownership of those plans and applications, as they existed at the time of the breach.

Therefore, Clean Jersey is limited to the liquidated damages in the amount of the deposit,

$309,500, and cannot recover the $200,000 it voluntarily paid to PJM to produce the

plans.



                                      CONCLUSION

         We will therefore affirm the District Court’s Order denying Clean Jersey’s Motion

for Summary Judgment in part and granting Effisolar’s Motion to Dismiss in part.3



3
  The motions also addressed Clean Jersey’s claim that it was owed an additional $50,000
for Effisolar’s separate breach of the Amendment. The District Court awarded summary
judgment for Clean Jersey on this claim. That ruling is not before us on appeal.
                                              5

Source:  CourtListener

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