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Smoky Hills Wind Project II, LLC v. City of Independence, Missouri

United States District Court, W.D. Missouri, Kansas City Division

July 13, 2015

SMOKY HILLS WIND PROJECT II, LLC, Plaintiff/Counterclaim Defendant
CITY OF INDEPENDENCE, MISSOURI, Defendant/Counterclaimant.


NANETTE K. LAUGHREY United States District Judge

Plaintiff/Counterclaim Defendant Smoky Hills Wind Project II, LLC and Defendant/Counterclaimant City of Independence, Missouri entered into a Renewable Energy Purchase Agreement, and now dispute their respective rights and obligations under that agreement. Smoky Hills moves for summary judgment on Count I of its Complaint-for breach of a contractual provision regarding prepayment of amounts in dispute, and asks the Court to enter an order for specific performance. [Doc. 32.] Smoky Hills’ motion is denied.

I. Background[1]

A. The Purchase Agreement

Pursuant to the purchase agreement, Smoky Hills built and operates a Renewable Energy Facility, consisting of wind turbines and associated equipment, in Kansas. Energy generated by the Facility is transmitted through Midwest Energy, Inc.’s interconnection facilities, and Southwest Power Pool, Inc. (SPP) controls and operates the transmission system. Smoky Hills began selling energy to Independence under the purchase agreement in 2008. The purchase agreement provides that Smoky Hills sells to Independence the “Entire Facility Output, ” meaning “the aggregate amount of renewable energy generated exclusively by the Facility, including any and all associated Environmental and Renewable Energy Credits, and delivered to the Point of Delivery[.]” [Doc. 33-2, p. 9, Sec. 1.3(V).]

As provided in Article 8 and 9, the purchase agreement allocates the risk of loss relating to the curtailment, or reduction, of Smoky Hills’ delivery of energy to Independence, and establishes a prepayment and refund procedure. Essentially, Smoky Hills invoices Independence for energy Smoky Hills would have delivered but for an Emergency or Economic Curtailment. The parties are to use reasonable efforts to determine the quantity of Renewable Energy that would have been produced by the Facility had its generation not been subject to Emergency Curtailment or an Economic Curtailment. Independence pays the amounts invoiced, and in the case of an Emergency Curtailment, may then receive a refund, if it provides reasonably satisfactory documentation to Smoky Hills evidencing the date and duration of the Emergency Curtailment. The purchase agreement does not expressly provide a time limit for invoicing for curtailments.

In addition to the billing dispute provision found in Section 9.4 relating to curtailments, the purchase agreement includes a general Dispute Notice and Resolution process designed to precede a party’s pursuit of available legal remedies. [Id., pp. 35-36, Sec. 12.10.]

Smoky Hills and Independence agree that their purchase agreement is a valid, enforceable contract.

B. The parties’ dispute

As relevant here, the SPP ordered a series of curtailments beginning in March 2012. Mark McGrail, a representative of Smoky Hills, wrote to Independence’s Power and Light Director on March 12, 2013, explaining Smoky Hills had been reviewing SPP’s 2012 curtailment directives. [Doc. 35-1, p. 7.] McGrail stated Smoky Hills had “determined such curtailments were not the result of an ‘Emergency’ and as a result, [Independence] is obligated to pay [Smoky Hills] for such energy that would otherwise have been delivered and for the Tax Benefits which [Smoky Hills] did not receive during the Curtailment Events.” [Id.] Smoky Hills then sent an invoice to Independence, dated March 26, 2013, reflecting charges of $331, 990.91 for the 2012 curtailments. Throughout 2013 and 2014, Smoky Hills sent additional invoices to Independence, reflecting charges for curtailments Smoky Hills had similarly determined were not Emergency Curtailments, but Economic ones.[2] The grand total invoiced by Smoky Hills was $563, 201.26.

Independence refused to pay the invoices and the parties undertook the dispute resolution process provided under Section 12.10 of the purchase agreement. Independence made a payment of $18, 648.16 for the invoiced amounts for curtailments for the periods April 2013 and May 2013, reserving its right to dispute the nature of the curtailments.

As relevant to Smoky Hills’ motion for partial summary judgment, Smoky Hills claims it is entitled to an order requiring Independence’s specific performance, that is, an order requiring Independence to immediately pay the disputed balance of the invoiced amount, or $544, 553.10, to Smoky Hills “to hold…pending proof from Independence that the Curtailments were Emergency Curtailments[, ]” per the purchase agreement prepayment provision. [Doc. 36, p. 10.]

II. Discussion

Specific performance is an equitable remedy, and is not available if there is an adequate remedy at law. Hochard v. Deiter, 549 P.2d 970, 973-74 (Kan. 1976) (citing 71 Am. Jur. 2d, Specific Performance, § 7); and Miller v. Alexander, 775 P.2d 198, 204 (Kan. App. 1989).[3] An adequate remedy must “be as plain, adequate, complete and efficient as the remedy of specific performance, and not circuitous or doubtful.” Miller, 775 P.2d at 204. “[T]hat a party can avail himself of some relief at law does not defeat jurisdiction of equity to decree specific performance.” Finkenbinder v. Dreese, 363 P.2d 465, 466 (Kan. 1961) (emphasis added). But compensatory damages will ...

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