MERRIMACK, SS SUPERIOR COURT

North American Dismantling Corporation

v.

Cate Street Capital, Inc., CSC Group Holdings, LLC., NewCo Energy, LLC, Berlin Station, LLC, and Burgess BioPower, LLC

No. 218-2017-CV-00545

ORDER The Plaintiff, North American Dismantling Corporation (“NADC”), moves to

amend its Complaint — which the Court earlier characterized as a Petition for Discovery —

in order to make substantive claims. The First Amended Complaint asserts a breach of

contract claim against Berlin Station, LLC (“Berlin Station”). (First Amend. Compl. ¶ 1.) It

asserts a claim for declaratory judgment against Cate Street Capital, Inc. (“Cate Street”),

CSC Group Holdings, LLC (“CSC”), NewCo Energy, LLC (“NewCo”), and Burgess

BioPower, LLC (“Burgess”). (Id. ¶ 2.) It asserts a claim of equitable estoppel against Cate

Street, CSC, NewCo, Berlin Station and Burgess. (Id. ¶ 3.) Finally, it asserts a cause of

action against Cate Street, CSC, NewCo and Burgess for tortious interference with

contractual relations and civil conspiracy to tortiously interfere with contractual relations.

(Id. ¶ 4.)

The Defendants object and also move for summary judgment, alleging in substance

that any amendment would be futile. On summary judgment the parties have briefed only

one issue-whether a so-called Earn-Out obligation in an agreement between NADC and

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Laidlaw was transferred to any of the Defendants.

For the following reasons, NADC's Motion to Amend is GRANTED and the

Defendants’ Joint Motion for Summary Judgment is DENIED as genuine issues of

material fact exist on the issue of whether Berlin Station is obligated to NADC under a so-

called Earn-Out obligation.

I

These claims arise from the construction of a biomass power plant in Berlin, New

Hampshire. This case’s procedural history is unusual. In 2017, NADC brought a

declaratory judgment action against Cate Street, CSC, NewCo, Berlin Station and Burgess

seeking an order permitting NADC to review documents identified in Exhibit B to its

Complaint to determine whether the Defendants were complying with the terms of a

certain Asset Purchase Agreement entered into by NADC and Laidlaw Berlin PioPower,

LLC (“Laidlaw”) in May 2008 (the “NADC/Laidlaw APA”). NADC alleged that the

NADC/Laidlaw APA entitled NADC to five percent (5%) of the cash flow of a “Biomass

Project”1 from companies that Cate Street manages. The Defendants moved to dismiss

because NADC could not identify any entity actually obligated to NADC under the

NADC/Laidlaw APA.

On October 17, 2017, the Court denied the Defendant’s Motion to Dismiss,

construing NADC’s claim as a Petition for Equitable Discovery in accordance with RSA

498:1. Discovery has since proceeded and NADC has determined that it has been provided

with sufficient information to seek leave to amend and bring the claims set forth in the

First Amended Complaint. (Pl.’s Mot. for Leave to File First Amend. Compl. at 4.) The

1 As defined in the NADC/Laidlaw APA. (See Compl., Ex. A at 3.)

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Defendants have filed an Objection on the ground of futility. They purport to demonstrate

futility in their Motion for Summary Judgment.

II

NADC first argues that the Motion for Summary Judgment is procedurally

improper and must be denied because it seeks to dispose of the First Amended Complaint

on a summary judgment standard before the case has reached the pleading stage. (Pl.’s

Obj. to Joint Mot. for Summ. J. [hereinafter “Pl.’s Obj.”] at 1.) Nonetheless, it has

responded to the merits of the Defendants’ motion.

Superior Court Rule 12 (g) provides in relevant part that “[m]otions for summary

judgment shall be filed, defended and disposed of in accordance with the provisions of

RSA 491:8-a.” The statute specifically states that “[a] party against whom a claim,

counterclaim, or crossclaim is asserted or a declaratory judgment is sought, may, at any

time, move for a summary judgment in his favor as to all or any part thereof.” RSA 491-A:

8-a, I (emphasis added). Although NADC only recently filed the First Amended

Complaint, this case has been pending since 2017 solely for the purpose of allowing NADC

to pursue discovery. The parties have indeed engaged in significant discovery. During the

pendency of the action, the Court has conducted a number of discovery conferences, in

accordance with Standing Order 10 of the Business and Commercial Dispute Docket.

NADC even concedes it has in fact obtained the information it sought in its original

complaint against the Defendants.

Moreover, responding to a Complaint by a Motion to Dismiss instead of an answer

is specifically authorized by Superior Court Rule 9(b). On a Motion to Dismiss, the trial

court may consider any documents whose authenticity is not disputed or documents

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sufficiently referred to in the Complaint. Beane v. Beane, 160 N.H. 708, 711 (2010).In this

case, the issue that must be decided is essentially whether a so-called “Earn-Out” provision

in the NADC/Laidlaw APA was transferred to any of the Defendants via transactions

memorialized in various writings. NADC has responded to the Motion for Summary

Judgment on the merits and, while both parties have filed affidavits in support of their

memoranda, the ultimate determination of the rights and liabilities of the parties must be

made based upon the language of documents to which both parties have access. Under

these circumstances, the Court GRANTS the Motion to Amend and will address the merits

of the summary judgment motion.

III

Although the Court’s decision must be based upon the precise language of the

documents , the gist of the transactions can be set forth in summary form. NADC is

attempting to recover from the Defendants the benefit of a contract that NADC entered

into with Laidlaw. In May 2008, NADC entered into the NADC/Laidlaw APA with Laidlaw

by which NADC agreed to sell land and other assets it owned in Berlin, New Hampshire, to

Laidlaw with the expectation that Laidlaw would use the land and other assets to develop

and operate a biomass power plant. Laidlaw did not have the capital to build such a plant

itself and so the parties contemplated at the time that Laidlaw would later enter into a sale

and leaseback with an entity which could provide the capital for the power plant whereby

Laidlaw would transfer the land to the entity, which would then lease the site back to

Laidlaw to build and operate the power plant.

Laidlaw was required to pay NADC $5 million for the assets. It also agreed to a so-

called “Earn-Out,” which is the central issue in this lawsuit. Under the Earn Out, Laidlaw

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agreed that it would provide NADC part of the profit it made from operating the biomass

plant it intended to build and operate after the plant was constructed.

In December 2008, Laidlaw, NADC, and an entity called PJPD2 entered into a so-

called Development Closing (the “PJPD Assignment and Amendment”) pursuant to which

Laidlaw assigned all of its right and title in the NADC/Laidlaw APA to PJPD. NADC then

conveyed its real estate to PJPD at this time. The PJPD Assignment and Amendment

specifically referenced an October 2008 “Letter Agreement” that Laidlaw and NewCo had

entered into, which provided in substance that PJPD would capitalize and Laidlaw would

build and operate a power plant pursuant to a sale and leaseback.

Laidlaw, however, was not ultimately able to complete the agreement it entered

into and essentially withdrew from the project. NewCo, or its wholly-owned subsidiaries,

eventually entered into an agreement with a different entity, Berlin Station, to build a new

power plant, which was larger and much more expensive than the power plant referenced

in the Letter Agreement, the NADC/Laidlaw APA, and the PJPD Assignment and

Amendment.

As is often the case, the Court must determine from the documents what the parties

intended when a transaction does not go as planned. The critical dispute between the

parties is whether the Earn-Out obligation Laidlaw assumed in the NADC/Laidlaw APA

survived Laidlaw’s withdrawal from the project and transferred to another entity.

The intent of the parties can be determined by analysis of the language of 5

transactions referenced in the pleadings.

A. The May 9, 2008 NADC/Laidlaw APA between NADC and Laidlaw

2 NewCo essentially created PJPD to provide the capital to build the plant.

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On May 9, 2008, NADC and Laidlaw entered into the NADC/Laidlaw APA that

gave Laidlaw the right to purchase a portion of the former Frazier Mill Site in Berlin (the

“Project Site”) from NADC for the development of a power plant. (Aff. Of Robert J.

Desrosiers in Supp. of Defs.’ Joint Mot. for Summ. J. [hereinafter “Desrosiers Aff.”] ¶ 4.)

The documents establish that NADC and Laidlaw contemplated that Laidlaw would enter

into a sale and leaseback arrangement with a third party which had sufficient capital to

finance a biomass power plant (the “Biomass Project”).3 (See, e.g., Compl., Ex. A

[hereinafter “NADC/Laidlaw APA”] § 1.7(a).) The “Biomass Project” was defined as “an

approximately 65 megawatt biomass project.” (NADC/Laidlaw APA § 1.2.)

Although Laidlaw acquired the right to buy the Project Site in May, 2008, Laidlaw

did not acquire title to it at that time. Under the terms of the NADC/Laidlaw APA, title

would be transferred later after Laidlaw arranged a sale-leaseback with an investor to

finance the construction of the power plant. At the time the NADC/Laidlaw APA was

signed, no investor had been identified. (Desrosiers Aff. ¶ 7.)

As part of the NADC/Laidlaw APA, Laidlaw agreed to an “Earn-Out” provision.

(NADC/Laidlaw APA § 1.7.) If the project were built, and if Laidlaw became the

tenant/operator, then Laidlaw agreed that a specific formula would determine whether

NADC would be entitled to further compensation, which would be based on Laidlaw’s net

cash flow. (Id.; Desrosiers Aff. ¶ 8.) Thus, in substance, the Earn-Out provision was

additional compensation to NADC for its sale of the Project Site.

The NADC/Laidlaw APA identified NADC and a Delaware limited liability company

3 A sale and leaseback is a common method for financing large capital projects such as power plants and

involves both a developer and owner. Generally, a developer manages construction of the project on behalf of the owner. Then, when the project is completed the owner leases the completed facility back to the developer

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called White Mountain Energy, LLC4 as the “Seller.” (NADC/Laidlaw APA at 2.) Laidlaw

was identified as the “Purchaser.” (Id.) The Earn-Out provision provides, in relevant part:

1.7 Earn-Out. In addition to the Purchase Price, the Seller [NADC] shall have the opportunity to earn additional consideration based on the net cash flow generated from the operation of the Business by the Purchaser [Laidlaw] in accordance with, and subject to, the following terms: (a) For a period of ten (10) years from the commencement of commercial operations of the Biomass Project that the Purchaser [Laidlaw] intends to develop (the “Earn-Out Period”), the Seller [NADC] shall be entitled to five percent (5%) of the net cash flow earned by the Purchaser [Laidlaw] from the operation of the business (the “Earn-Out”). For purposes hereof, net cash flow shall be defined as after tax income, calculated on an annual basis, determined in accordance with generally accepted accounting principles, after debt service to unrelated parties, fixed rent payments in accordance with the contemplated sale-leaseback financing transaction (excluding any participation in net profits by landlord, i.e., percentage rent), and a management fee of $750,000 per annum (subject to an annual 3% increase) . . . .

(NADC/Laidlaw APA §1.7(a) (parties’ names added for clarity).) Therefore, under the

Earn-Out formula, Laidlaw would owe a periodic payment to NADC if net revenues

received by Laidlaw as the tenant/operator exceeded all of Laidlaw’s defined operating

expenses including the “fixed rents payments” to the owner/landlord. The NADC/Laidlaw

APA also contained detailed financial projections. (See NADC/Laidlaw APA, Ex. F.)

However, it also provided:

The Seller [NADC] acknowledges that such projections are merely the Purchaser’s [Laidlaw’s] good faith estimate as of the date of their creation of the potential financial performance of the Biomass Project and are not a representation or warranty by the Purchaser [Laidlaw] of the actual financial performance of the Biomass Project in the future. The Seller [NADC] acknowledges that no assurance can be provided as to the successful development of the Biomass Project and if the Biomass Project is successfully developed the actual financial performance of the Biomass

who operates the facility pursuant to a long-term lease with the owner. (Desrosiers Aff. ¶ 7.) 4 The parties do not discuss White Mountain Energy, LLC in their papers, and the Court assumes that its existence, vel non, is irrelevant to the issues before the Court.

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Project may differ materially from the projections provided to the Seller [NADC]. No assurance can be provided that the Biomass Project or any other project on the Premises can be successfully developed, and if developed that it will perform as projected.

(NADC/Laidlaw APA, § 1.7(a) (parties’ names added for clarity and emphasis added).)

B. The October 2008 Laidlaw/NewCo Letter Agreement

NewCo was formed by a group of investors in late 2008. (Desrosiers Aff.¶ 10.) In

October 2008, Laidlaw and NewCo entered into a sale-leaseback agreement confirmed by

a “Letter Agreement.” (Id. ¶ 11; Desrosiers Aff., Ex. 3 [hereinafter the “Letter

Agreement”].) Under the sale-leaseback agreement, an entity to be formed by NewCo

would be the owner and Laidlaw would be the developer/tenant. (Letter Agreement at 1.)

The Letter Agreement specifically called for Laidlaw to purchase the Project Site and then

convey it to an entity to be formed by NewCo. (Id. at 3.) The Letter Agreement also

provided that the “total purchase price to be paid by the Buyer [NewCo] to the Seller

[Laidlaw] for the Land pursuant to the Development Closing shall be the cost associated

with the acquisition of the Land as set forth in the Asset Purchase Agreement between the

Seller [Laidlaw] and NADC and the funds allocated in the Development Closing Budget.”

(Id.)

The Letter Agreement specifically provided that the Buyer, i.e. NewCo, could freely

assign the agreement including, without limitation, to one or more special purpose entities

formed solely in connection with the proposed “Facility.” (Letter Agreement at 1 n. 1). The

“Facility” was defined by the Letter Agreement in a similar way that the “Biomass Project”

was defined in the NADA/Laidlaw APA:

The Facility will consist of both new and/or converted upgraded existing buildings and equipment to operate as a biomass-fueled power plant capable of producing electricity at a gross rate of approximately 65 megawatts

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(MW), not inclusive of the parasitic load and any transformer losses (the Facility).

(Letter Agreement at 2.)

C. The December 23, 2008, PJPD Assignment and Amendment

On December 23, 2008, a “Development Closing” was held between Laidlaw,

NADC, and a special purpose entity that NewCo formed called PJPD Holdings, LLC

(“PJPD”), at which NADC ultimately conveyed title to the Project Site to PJPD via a

quitclaim deed. (Desrosier Aff. ¶ 11; Desrosier Aff., Ex 4 [hereinafter the “PJPD

Assignment and Amendment”]; Desrosier Aff., Ex. 5.)

Under the PJPD Assignment and Amendment, Laidlaw was the “Assignor” and

PJPD was the “Assignee.” Laidlaw assigned “all of the Assignor’s right, title and interest in

and to the [NADC/Laidlaw] APA, heretofore held by Assignor, subject to the terms and

conditions set forth therein and herein.” (PJPD Assignment and Amendment § 1.) The

Assignment and Amendment also provided in relevant part that:

The [NADC/Laidlaw] APA is hereby amended, and the undersigned hereby agree, as follows:

(a) The undersigned acknowledge that Assignee [PJPD] will be leasing all of the assets conveyed pursuant to the [NADC/Laidlaw] APA to Assignor [Laidlaw] or another entity [NADC] and WME agree Section 3.6 of the [NADC/Laidlaw] APA shall not apply or be binding upon Assignee [PJPD], its principals and affiliates. (Sic). (b) The Earn-Out described in Section 1.7 of the [NADC/Laidlaw] APA shall be subordinate to the Fixed Rent payable to Assignee [PJPD] pursuant to the Lease. With respect to [NADC] and WME the term Fixed Rent shall be interpreted consistent with the [NADC/Laidlaw] APA in that the subordination granted herein shall not apply to and shall exclude any participation in net profits.

(PJPD Assignment and Amendment § 3 (parties’ names added for clarity and emphasis

added).)

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There is an obvious grammatical error in § 3 (a); there should be a period after the

word “entity” so that the first part of § 3(a) should read “the undersigned acknowledge

that Assignee [PJPD] will be leasing all of the assets conveyed pursuant to the

[NADC/Laidlaw] APA to Laidlaw or another entity[.]” This provision establishes that

Laidlaw, PJPD and NADC all understood that the leaseback could be made to Laidlaw or

another entity, which is in fact what occurred.

The PJPD Assignment and Amendment specifically provided that Laidlaw was

conveying all of its “right title and interest in and to the [NADC/Laidlaw] APA, hereto for

held by[Laidlaw], subject to the terms and conditions set forth therein and herein.” (PJPD

Assignment and Amendment § 1.) Critically, the PJPD Assignment and Amendment

specifically provided that § 3.6 of the NADC/Laidlaw would not be binding on PJPD but

would remain binding on Laidlaw. It contained no such provision with respect to the

Earn-Out. In fact, immediately following the provision providing that PJPD Assignment

and Amendment, the PJPD Assignment and Amendment provided that the Earn-Out

specified in § 1.7 of the NADC/Laidlaw APA “shall be subordinate to the Fixed Rent

payable to [PJPD].” If the parties intended the Earn-Out obligation to remain with

Laidlaw, they could have drafted language identical to that relating to § 3.6 of the

NADC/Laidlaw APA.

D. The September 2, 2011, Assignment and Assumption agreement between Laidlaw and Berlin Station, LLC (The “Laidlaw/Berlin Station Assignment”)

Following the December 2008 Development Closing, Laidlaw failed to meet a

number of deadlines and eventually withdrew from the Project in 2010. (Desrosiers Aff. ¶

14.) NewCo (which controlled PJPD) subsequently acquired all of Laidlaw’s stock and

Laidlaw ceased all operations. (Id.) When Laidlaw withdrew from the project, NewCo set

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about finding a solvent developer/tenant to develop/operate the power station. (Id.¶ 15.)

Berlin Station became that entity. In September 2011, the new developers obtained

approximately $275 million in financing to construct a 75 megawatt facility and acquired

the necessary permits and approvals for the project without Laidlaw’s help. (Id.) Notably,

Laidlaw had committed to build a 65 megawatt facility costing approximately $108 million

under the Laidlaw/NewCo Letter Agreement.

On September 2, 2011, Laidlaw entered into an “Assignment and Assumption

Agreement” with Berlin Station through which Laidlaw “irrevocably assign[ed],

transfer[ed], deliver[ed] . . . to [Berlin Station] all right, title, and interest in and to the

Assets, subject to all liabilities, obligations, and all encumbrances upon such Assets.”

(Desrosiers Aff., Ex. 6 [hereinafter “Berlin Station Assignment and Assumption”] § 1.)

These “Assets” were defined as:

All assets, tangible and intangible personal property, contracts, and permits owned by [Laidlaw] of every kind and nature, wherever located, including the following:

Biomass Fuel Supply Agreement dated March 1, 2011, by and between [Laidlaw] and Richard Carrier Trucking, Inc.

(Berlin Station Assignment and Assumption, Ex. A.)

IV

NADC claims the Earn-Out obligation in the NADC/Laidlaw APA that ran from

Laidlaw to NADC was transferred in the PJPD Assignment and Amendment and

subsequently to the developer/tenant that succeeded Laidlaw, i.e. Berlin Station.

A

NADC argues that the language of § 1 of the PJPD Assignment and Amendment

supports its position because it provides that Laidlaw “unconditionally and irrevocably

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grants, bargains, transfers, sells, assigns and conveys to Assignee [PJPD] all of Assignor’s

[Laidlaw] right, title and interest in and to the [NADC/Laidlaw] APA, heretofore held by

Assignor, subject to the terms and conditions set forth therein and herein.” NADC

contends that:

The Assignment and Amendment transferred the entire [NADC/Laidlaw APA] for the sale of the Frazier Pulp Mill . . . from Laidlaw to PJPD. It also amended the [NADC/Laidlaw] APA in five ways to account for the transfer; none of which “expressly agreed” that the Earn-Out provision remained with Laidlaw.

(Pl.’s Obj. at 2 (emphasis in original).) The Defendants argue that the Earn-Out stayed with Laidlaw and was not conveyed

for reasons that they claim are obvious from the documents and the circumstances under

which they were executed. Essentially, they argue that the Earn-Out could not be conveyed

to the owner in a proposed sale and leaseback because the owner, i.e. PJPD, could not pay

itself rent in the contemplated transaction. The Defendants point to the language of page

one of the PJPD Assignment and Amendment stipulating that PJPD “intends to lease

some or all of the assets conveyed pursuant to the [NADC/Laidlaw] APA to [Laidlaw]” and

to the language in § 3(b) explaining that “[t]he Earn-Out described in Section 1.7 of the

[NADC/Laidlaw] APA shall be subordinate to the Fixed Rent payable to [PJPD]” to show

that, although Laidlaw as indeed conveying the assets and real estate it had acquired from

NADC to PJPD pursuant to the PJPD Assignment and Amendment so that PJPD could

finance the project, the Earn-Out obligation remained with Laidlaw because the owner

under the contemplated sale and leaseback, i.e. PJPD, could not pay itself rent. The

Defendants therefore take the position that when Laidlaw — which they alleged retained

the Earn-Out obligation — withdrew from the Project in 2010 any possibility of an Earn-

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Out payment to NADC ended. (See Defs.’ Mem. of Law in Supp. of Joint Mot. for Summ.

J. [hereinafter “Mot. Summ. J.”] at 10.)

B The fundamental principle regarding interpretation of a contract is to determine

the intent of the parties. Behrens v. S. P. Const. Co., 153 N.H. 498, 500 (2006). Intent of

the parties is determined by considering the plain meaning of the language of the contract.

Ryan James Realty v. Villages at Chester Condo. Association, 153 N.H. 194, 197 (2006). In

interpreting a contract, a court will give the language used by the parties its reasonable

meaning, considering the circumstances and the context in which the agreement was

negotiated and reading the document as a whole. Birch Broadcasting, Inc. v. Capitol

Broadcasting Co., Inc., 161 N.H. 192, 196 (2010). The New Hampshire Supreme Court has

recently stated:

It is axiomatic that we give an agreement the meaning intended by the parties when they wrote it. When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and context in which the agreement was negotiated, when reading the document as a whole. Absent ambiguity, the parties’ intent will be determined from the plain meaning of the language used. Only when the parties reasonably disagree as to its meaning will the agreement’s language be deemed ambiguous.

Signal Aviation Services v. City of Lebanon, 169 N.H. 162, 166 (2016) (quotation omitted). Neither party claims that there is an ambiguity in the contract terms. NADC simply

claims that the language in the PJPD Assignment and Amendment means that the Earn-

Out was transferred to PJPD and subsequently to Laidlaw’s replacement, Berlin Station,

when Laidlaw abandoned the project and PJPD or its related successors leased the

property to a new tenant.

If the transaction occurred as planned, Laidlaw, as operator of the plant pursuant

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to the sale and leaseback and not the owner, PJPD, would have been responsible to pay the

Earn-Out. But the PJPD Assignment and Amendment, to which Laidlaw, PJPD, and

NADC were all parties, specifically contemplated that PJPD would be leasing the facility to

Laidlaw “or another entity.” (PJPD Assignment and Amendment at 1.) There is nothing in

the agreement to suggest that the Earn-Out obligation would be void if the power plant

were leased to another entity. Although NADC agreed in the NADC/Laidlaw APA that the

projections for the Earn-Out from a 65 megawatt biomass power plant were illustrative,

and that the plant might not be built at all, it was also a party to the later executed PJPD

Assignment and Amendment, which contemplated that the power plant could be operated

by an entity other than Laidlaw. It is not reasonable to believe that the parties

contemplated that NADC would lose all rights to an Earn-Out if the entity that was to

operate the power plant was substituted with another.

On the other hand, the Earn-Out was tied to the specific 65 megawatt proposal that

the parties were negotiating in the NADC/Laidlaw APA and the Letter Agreement.

Specifically, Exhibit F to the NADC/Laidlaw APA contained detailed financial projections

of the “additional consideration based on the net cash flow generated from the operation

of the Business by the Purchaser.” (NADC/Laidlaw APA § 1.7 (emphasis supplied).)

Although the plain language of the PJPD Assignment and Agreement suggests

PJPD assumed “all” of Laidlaw’s “interest in and to the [NADC/Laidlaw] APA . . . subject

to the terms and conditions set forth therein” except for § 3.6 of the NADC/Laidlaw

APA, a court must consider all the circumstances of the transaction and need not rely

solely on the agreement, even if that agreement is an integrated agreement. “The

interpretation of an integrated agreement is directed to the meaning of the terms of the

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writing or writings in the light of the circumstances, in accordance with the rules stated

in this Chapter.” Restatement (Second) Contracts § 212(1) (1981). Comment (b) to this

chapter elaborates:

Plain meaning and extrinsic evidence. It is sometimes said that extrinsic evidence cannot change the plain meaning of a writing, but meaning can almost never be plain except in a context. Accordingly, the rule stated in Subsection (1) is not limited to cases where it is determined that the language used is ambiguous. Any determination of meaning or ambiguity should only be made in the light of the relevant evidence of the situation and relations of the parties, the subject matter of the transaction, preliminary negotiations and statements made therein, usages of trade, and the course of dealing between the parties. See §§ 202, 219–23. But after the transaction has been shown in all its length and breath, the words of an integrated agreement remain the most important evidence of intention.

Moreover, “[a]greements and negotiations prior to or contemporaneous with the

adoption of a writing are admissible in evidence to establish . . . that the integrated

agreement, if any, is completely or partially integrated [or] the meaning of the writing,

whether or not integrated.” Id. § 214(b) & (c).

An examination of the circumstances surrounding the PJPD Assignment and

Amendment do not, however, undermine the Court’s conclusion that the agreement acted

to transfer the Earn-Out obligation to PJPD. It is doubtless true that the PJPD Assignment

and Amendment did not explicitly provide that the Earn-Out was transferred to PJPD; but

it conversely did not provide that it was to remain with Laidlaw. Nonetheless, the

construction urged by the Defendants would be inconsistent with the obvious intent of the

parties at the time of the PJPD Assignment and Amendment.

All of the parties expected that the transaction would occur as they had planned;

NACD would convey the real estate to PJPD and PJPD would lease the property to

Laidlaw so that Laidlaw could operate the power station, and presumably make a profit.

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The profit that Laidlaw would earn as the operator of the power plant was what NADC and

Laidlaw both contemplated the Earn-Out would be paid from if the sale and leaseback

proposal came to fruition. The argument that the Earn-Out could not be conveyed to PJPD

because it could not pay itself rent is irrelevant because the parties did not contemplate

that rent would begin until the plant was constructed and a lease was entered into in

which Laidlaw would be the tenant subject to whatever obligations the parties agreed

upon, which conceivably would have included the Earn-Out obligation.

Moreover, the PJPD Assignment and Amendment demonstrates that the parties

anticipated the possibility that “another entity” other than Laidlaw may become the tenant

that operated the power plant. It would be consistent with this possibility for PJPD to

temporarily assume the Earn-Out obligation, considering PJPD — neither NADC nor

Laidlaw — would ultimately be in position to effectuate the contemplated leaseback

portion of the parties’ plan and thereby convey the Earn-Out to whatever entity became

the tenant.

C

In the alternative, NADC claims that even if the Earn-Out obligation was not

transferred as part of the PJPD Assignment and Amendment it was transferred by the

September 2011 Laidlaw/Berlin Station Assignment. This document was executed after

Laidlaw fell behind on its obligations and withdrew from the Project in 2010, NewCo

acquired the stock of Laidlaw, and Laidlaw ceased all operations. (Desrosiers Aff.¶ 10.) As

indicated previously, the Court believes that the Earn-Out was transferred to PJPD as a

result of December 23, 2008, PJPD Assignment and Amendment. Thus, in 2011, Laidlaw

had no Earn-Out obligation to transfer. But assuming that it was not transferred by the

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PJPD Assignment and Amendment, and remained with Laidlaw, it was plainly transferred

by the plain language of the Laidlaw/Berlin Station Assignment.

The Laidlaw/Berlin Station Assignment is a very brief document that begins by

reciting the ownership of the corporate entities. The document states in relevant part that:

1. Assignment. Effective as of the date of this Agreement (the “Effective Date”), Assignor [Laidlaw], to the extent that it may do so pursuant to the terms of the Assets, hereby irrevocably assigns, transfers, and deliver (collectively, the “Assignment”) to Assignee[Berlin Station] all right, title, and interest in and to the Assets, subject to all liabilities, obligations, and all encumbrances upon such Assets

2. Assumption. Effective as of the Effective Date, Assignee[Berlin Station] hereby accepts the Assignment and assumes and agrees to observe and perform all of the duties, obligations, terms, and covenants of the Assets.

(Laidlaw/Berlin Station Assignment ¶¶ 1–2 (parties’ names added for clarity and emphasis added).) NADC argues that the language of the agreement is broad and clear and, by its

terms, means that Berlin Station specifically agreed to accept Laidlaw’s “liabilities,

obligations, and all encumbrances,” which includes the Earn-Out obligation. NADC argues

that the term “Assets” is defined in the Laidlaw/Berlin Assignment as “[a]ll assets, tangible

and intangible personal property, contracts, and permits owned by [Laidlaw] of every kind

and nature, wherever located.” (Laidlaw/Berlin Station Assignment, Ex. A.)

The Defendants argue that the stated purpose of the Laidlaw/Berlin Assignment is

inconsistent with NADC’s interpretation. The Laidlaw/Berlin Assignment is a part of a

series of documents. It provides in relevant part:

WHEREAS, the Assignment (as defined below) shall be deemed to have been made through a series of transfers as follows: Assignor [Laidlaw] contributes the Assets to NewCo Energy; NewCo Energy contributes the assets the PJPD; PJPD contributes the assets to NewCo Holdings; NewCo Holdings contributes the assets to BBP #1; and BBP#1 contributes the assets to Berlin Station.

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WHEREAS, Assignor [Laidlaw] desires to assign to Assignee [Berlin], and Assignee [Berlin] desires to accept from Assignor [Laidlaw], all of the assets identified on Exhibit A (the “Assets”).

(Laidlaw/Berlin Station Assignment at 1 (parties’ names added for clarity).) The Assets,

are defined in Exhibit A as:

All assets, tangible and intangible personal property, contracts, and permits owned by Assignor[Laidlaw] of every kind and nature, wherever located, including the following:

Biomass Fuel Supply Agreement dated March 1, 2011, by and

between Laidlaw Berlin Biopower, LLC and Richard Carrier Trucking, Inc.

(Laidlaw/Berlin Station Assignment, Ex. A.) The Defendants argue that this document “reflects a housekeeping transaction

which merely cleans up a loose end related to Laidlaw’s withdrawal from the project.”

(Mot. Summ. J. at 12; Desrosiers Aff. ¶ 19.) They argue that, “[s]pecifically, at the time

Laidlaw withdrew in 2010, it had acquired a few contracts in its own name in anticipation

of later operating a power plant, including the Fuel Supply Agreement referenced in the

Assignment. The only effect of the Assignment is to transfer of the Fuel Supply Agreement

to Berlin Station, LLC so that Berlin Station would not need to start over and negotiate

that agreement from scratch.” (Mot. Summ. J. at 12; Desrosiers Aff. ¶ 19.)

In support of their argument that the Laidlaw/Berlin Station Assignment is merely

“a housekeeping transaction,” the Defendants point out that a virtually identical document

was executed on the same day, September 2, 2011, whereby PJPD Holdings, LLC, assigned

all of its assets to Berlin Station (the “PJPD/Berlin Station Assignment”). Both

assignments contained broad and expansive language. Like the Laidlaw/Berlin Station

Assignment, the PJPD/Berlin Station Assignment described the “Assets” as:

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All assets, tangible and intangible personal property, contracts, and permits owned PJPD (sic) of every kind and nature, wherever located, including the following: Independent Engineering Services Agreement by and between PJPD and Black & Veatch Corporation, dated effective August 6, 2010[.]

(Desrosiers Aff., Ex. 7 [hereinafter the “PJBD/Berlin Station Assignment”], Ex. A.) The Court must consider the “circumstance and context in which the agreement

was negotiated, when reading the document as a whole.” Atronix v. Morris, 171 N.H. 429,

431 (2018) (quotation omitted). Where language is clear and unambiguous, as it is here, a

court must give it effect. Signal Aviation Services, 169 N.H. at 166. Thus, whatever assets

Laidlaw had after the December 2008 PJPD Assignment and Amendment were assigned

to Berlin station.

V

This analysis does not, however, end the Court’s inquiry. The PJPD Assignment

and Amendment did not specifically define the power plant the parties intended to erect

on NACD’s real estate nor did the document reference the prior Letter Agreement

between Laidlaw and PJPD. That agreement did specifically define the “Facility” to be

built:

The Facility will consist of both new and/or converted upgraded existing buildings and equipment to operate as a biomass-fueled power plant capable of producing electricity at a gross rate of approximately 65 megawatts (MW), not inclusive of the parasitic load and any transformer losses . . . .

(Letter Agreement at 2.) The PJPD Assignment and Amendment did, however,

specifically reference the NADC/Laidlaw APA, which in turn referred to the project to be

built in decidedly nonspecific terms:

The Seller acknowledges that no assurance can be provided as to the successful development of the Biomass Project and if the Biomass Project is successfully

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developed the actual financial performance of the Biomass Project may differ materially from the projections provided to the Seller. No assurance can be provided that the Biomass Project or any other project on the Premises can be successfully developed, and if developed that it will perform as projected.

(NADC/Laidlaw APA § 1.7 (a) (emphasis added).) Moreover, the term “Biomass Project”

is defined in the agreement as “the operation of an approximately 65 megawatt biomass

project.”

Again, neither party claims that there is an ambiguity in any of the agreements

between the parties. But the Defendants argue that the project that was actually built

was different from that contemplated by the parties, so that the Earn-Out is not

applicable:

In September 2011, the new developers obtained approximately $275 million in funding for the construction project (the “Construction Financing Closing”), and construction began shortly thereafter. The power plant that was built was different than what Laidlaw had committed to build under the Letter Agreement: the Letter Agreement contemplated a 65 megawatt facility at a cost of approximately $108 million, while the power plant that was built is a 75 megawatt facility at a cost of approximately $275 million.

(Mot. Summ. J. at 5 (citing Letter Agreement at 2, 6; Desrosiers Aff. ¶ 15).) The language of a contract is ambiguous if the parties to the contract could

reasonably disagree as to the meaning of the language. Seacoast Health v. Hospital

Corporation of America, et al., 165 N.H. 168, 172 (2013). Here, although NADC does not

articulate the reasons for its disagreement, the parties plainly disagree on whether the

$108 million 65 megawatt power plant defined as the “Biomass Project” and the

“Facility” in the NADC/Laidlaw APA and Letter Agreement, respectively, is materially

equivalent to the $275 million, 75 megawatt power plant Berlin Station eventually

brought to fruition.

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Based upon the record, the Court cannot find as a matter of law that a 75

megawatt biomass plant costing $275 million is the same as an “approximately 65

megawatt” biomass power plant estimated to cost $108 million. While it may be

reasonable to interpret the phrase “ an approximately 65 MW biomass plant” as

encompassing a 75 MW biomass power plant, it is equally reasonable to interpret the

phrase as not encompassing a 75 MW biomass power plant, particularly since the

undisputed evidence discloses that the 75 MW biomass power plant which was built cost

more than twice as much as the original power plant.

The contracting parties could reasonably disagree about the meaning of

“approximately 65 MW biomass plant”. The phrase is therefore ambiguous. Appeal of

Town of Durham, 149 N.H. 46, 47 (2003). If an agreement’s language is ambiguous, it

must be determined, under an objective standard, what the parties as reasonable people

mutually understood the ambiguous language to mean. Behrens v. S.P.. Construction

Co., 153 N.H. at 503. Such a determination cannot be made on the record before the

Court.

Since there is a genuine issue of material fact as to whether the power plant that

was actually constructed is encompassed within the terms of the agreements entered

into by the parties, the Defendants are not entitled to summary judgment based upon

the language of the NADC/Laidlaw APA, the Letter Agreement, and that PJPD

Assignment and Amendment.

VI

Finally, NADC argues that the Defendants have conceded their liability in a number

of documents, which have been produced as Exhibits A through H to the Marecki

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Affidavit. Many of the documents are the subject of a pending Motion to Strike. The

Defendants assert that they are privileged and/or were produced in other litigation and are

subject to protective order. Even assuming that the parol evidence rule and protective

orders do not bar the documents NACD relies upon, they have little probative value.

Exhibit C to the Marecki Affidavit contains a number of e-mails dated between

June 27, 2011, and July 6, 2011, between Charles Grecco (Cate Street’s executive vice

president) and Attorney Chris Branson. Grecco apparently wrote to Attorney Chris

Branson and stated, in relevant, “per our conversation this is the NADC Earn Out that was

part of the original purchase of the property. When we purchased [Laidlaw] we acquired

this responsibility.” (Marcicki Aff., Ex. C at 2.) Attorney Branson responded “I think the

obligation to NADC will be preserved even if we allow the Development Agreement to be

terminated so long as the Letter Agreement and the underlying P& S between Laidlaw and

NADC are preserved and assigned to Berlin Station.” (Id.) The Defendants assert that this

exchange is in admissible as a privileged attorney-client communication and is the subject

of a Pending Motion to Strike. NADC has provided no reason why the Court should

consider communications that are plainly privileged and the Court will not do so. In any

event, the issue before the Court is what the documents mean, and not what an attorney

for one of the parties may have told his clients about the documents. Birch Broadcasting,

161 N.H. at 196.

NADC also claims that in February 2014 the Defendant’s counsel acknowledged to

Attorney Jack Crisp, who was then representing NADC, that “my client acknowledges the

earn-out set forth in Section 1.7 of the Asset Purchase Agreement. They will comply with

the terms and provisions of the Agreement.” (Pl.’s Obj. at 6 (citing Marcicki Aff. ¶ 9.)

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NADC also claims at three other occasions, in March, June, and December 2015, the

Defendants, by their counsel, acknowledged NADC’s right to financial information in

order to determine the amount it was owed under the Earn-Out. (Pl.’s Obj. at 6–7.)

The Defendants vigorously object to the Court considering any of these alleged

communications. They assert that these emails were produced in other litigation, pursuant

to a confidentiality order and they are presently the subject of a claw back motion and

were in furtherance of settlement negotiations and are the subject of a pending Motion to

Strike. (Defs.’ Reply Mem. in Supp. of Joint Mot. for Summ. J. at 6.) The Court has

reviewed the Motion to Strike and believes it has merit. However, the Court need not

decide the motion because the documents NADC seeks to have the Court consider are

plainly inadmissible as offers in compromise pursuant to New Hampshire Rule of

Evidence 408. The New Hampshire Supreme Court has broadly interpreted the rule and it

plainly would bar consideration of the documents proper. See generally Axenics, Inc., v.

Turner Construction Co., 164 N.H. 659, 674 (2013) (holding that even internal

memoranda evincing an offer to compromise which has not been disclosed to the opposing

party is protected under Rule 408).

For the reasons set forth in this order, NADC’s Motion to Amend is GRANTED and

Defendants’ Joint Motion for Summary Judgment is DENIED.

SO ORDERED

4/25/19 s/Richard B. McNamara __________________ _________________________ DATE Richard B. McNamara, Presiding Justice

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RBM/