Enxco Development Corp. v. Northern States Power Co.

758 F.3d 940 (8th Cir. 2014)

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Nature of the Case

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Facts

P and D entered into two contracts in October 2008 for a wind energy generation. The first contract was called PSA. Under the PSA, P agreed to develop the Project site, which included obtaining the requisite permits. Under the PSA, P owned the Project's real estate and assets. Upon closing of the PSA, D would purchase the Project's real estate and assets for $15 million. The second contract was called the EPCA, and D agreed to pay P over $350 million for engineering, procurement of infrastructure, construction, commissioning, start-up, and testing of the Project. Neither party had an obligation to proceed with the EPCA until the parties closed the PSA, which would not occur unless the Project developed according to their expectations. The PSA included various conditions precedent that each party had to satisfy prior to the March 31, 2011, a date with P selected. A condition precedent required P to obtain a Certificate of Site Compatibility (CSC) from the North Dakota Public Service Commission (NDPSC). issues that must be obtained before the parties could begin construction on the Project. See N.D. Cent. Code § 49-22-02. The PSA included a provision that stated: 'that in no event shall the Closing occur later than the March 31, 2011 date.' The contract also provided that termination could occur without any liability accruing to the terminating party. the EPCA provided that the parties could terminate the EPCA should they fail to close the PSA. P had approximately 29 months to obtain the CSC. After an applicant like NSP submits a notice letter, it must wait one year before submitting its CSC application. P could have submitted its application as early as January 2009. Almost two years expired before P submitted the CSC application in October 2010. North Dakota law, however, allowed the NDPSC to consider the completed CSC application for up to six months after its receipt. A snowstorm delayed the hearing, and then the government realized it held the February hearing in the wrong county. As a result, a new hearing had to be scheduled, but North Dakota law also required a 20-day public notice. On April 1, 2011, D terminated the PSA. P nonetheless obtained the CSC on June 8, 2011. D stood to lose significant amounts of money should it proceed with the Project. The market for wind turbines dried up significantly during this time. D had the economic incentive to avoid the contract. The wind turbines that P purchased were already outdated and P could not resell them on the secondary market. The turbines diminished in value between $93 million and $141 million. P sued D for breach. P argued that the doctrines of temporary impracticability and disproportionate forfeiture should apply to prevent strict enforcement of the condition precedent. The court determined that D did not breach and granted D summary judgment.