MERRIMACK, SS SUPERIOR COURT

Cate Street Capital, Inc.

v.

DG Whitefield, LLC d/b/a Whitefield Power and Light Company, et al. No. 218-2013-CV-734

ORDER

The Plaintiff, Cate Street Capital, Inc. (“Cate Street”), brought a declaratory

judgment action against the Defendants, DG Whitefield, LLC d/b/a Whitefield Power

and Light Company (“Whitefield”) and Indeck Energy-Alexandria, LLC (“Indeck”)

(collectively “the Defendants”),1 in 2013, alleging price support and sales option

agreements, intertwined with a global settlement and release agreement (“Settlement

Agreement”) the parties executed in 2011, were void and seeking to set aside the

agreements. The Complaint was amended in 2014 to allege the following claims:

declaratory judgment (Count I); abuse of process (Count II); tortious interference with

contract and prospective economic advantage (Count III); civil conspiracy (Count IV);

and unfair competition (Count V).

The Defendants moved to dismiss, which the Court denied by Order of August 27,

2014. The Defendants asserted the parties had entered into a mutual release of claims in

2011 as part of the Settlement Agreement, which would bar this action. The Plaintiff,

1 Three other entities, Indeck Energy Services, Korea East-West Power Co., and EWP Renewable Corporation, were originally defendants, but the claims against them have been dismissed. The Defendants are referred to, at times, as Wood Independent Power Plants or “Wood IPPs.”

- 2 -

however, argued the release was procured through economic duress and was, therefore,

voidable. The Court ordered the Plaintiff to amend its Complaint to specifically assert

that the release, which the Plaintiff admitted would otherwise bar the claims in this case,

was void as a result of economic duress, and the Plaintiff did so, filing a Second

Amended Complaint. In December 2014, the Plaintiff moved for leave to amend a third

time to add NewCo Energy, LLC (“NewCo”) as a party plaintiff. However, after a hearing

on the Motion to Amend, the Plaintiff determined the Third Amended Complaint was

unnecessary and withdrew it.

Before the Court are various motions for summary judgment. First, the

Defendants have filed a Motion for Summary Judgment on all claims the Plaintiff

purports to bring on behalf of NewCo, arguing those claims were never assigned to the

Plaintiff. Second, the Defendants move for summary judgment on all the Plaintiff’s

claims based on the theory that the claims are barred by the mutual release the parties

executed in 2011. The Plaintiff objects to both Motions and has brought a Motion for

Partial Summary Judgment on Count II of its Complaint, seeking damages for abuse of

process, to which the Defendants object.

For the reasons stated in this Order, the Plaintiff’s Motion for Partial Summary

Judgment on its abuse of process claim is DENIED and the Defendants’ Cross-Motion

for Summary Judgment is GRANTED and the Defendants’ Motion for Summary

Judgment on all claims based on the release is GRANTED. Because the Defendants’

Motion for Summary Judgment based on the release is dispositive of all of the Plaintiff’s

claims, the Court does not address Defendant’s Motion alleging NewCo’s claims were

never assigned to Cate Street .

- 3 -

I

In ruling on cross-motions for summary judgment, the Court “consider[s] the

evidence in the light most favorable to each party in its capacity as the nonmoving party

and, if no genuine issue of material fact exists, [the court] determine[s] whether the

moving party is entitled to judgment as a matter of law.” N.H. Ass’n of Counties v. State,

158 N.H. 284, 287–88 (2009) (citation omitted). In order to defeat summary judgment,

the non-moving party “must put forth contradictory evidence under oath, sufficient . . .

to indicate that a genuine issue of fact exists so that the party should have the

opportunity to prove the fact at trial . . . .” Phillips v. Verax, 138 N.H. 240, 243 (1994)

(citation and quotations omitted). A fact is material if it affects the outcome of the case

under the applicable substantive law. Palmer v. Nan King Rest., Inc., 147 N.H. 681, 683

(2002). In considering a party’s motion for summary judgment, the Court considers the

evidence, and all inferences properly drawn from it, in the light most favorable to the

nonmoving party. Sintros v. Hamon, 148 N.H. 478, 480 (2002). Mindful of this

standard, the Court sets forth the undisputed facts below.

Cate Street is a developer of a 75 megawatt wood biomass fueled power plant

known as Berlin Station, which is located in Berlin, New Hampshire. The Defendants

operate other biopower plants and compete with Berlin Station. (McLaughlin Aff. ¶ 7,

Nov. 20, 2015.) Cate Street, and its affiliated companies and predecessors, needed to

negotiate a long-term power purchase agreement (“PPA”) with Public Service Company

of New Hampshire (“PSNH”) in order for the Berlin Station project to be viable. On

June 8, 2010, PSNH and Laidlaw Berlin BioPower, LLC (“LBB”) executed a twenty-year,

$2 billion PPA for renewable energy certificates (“RECs”) and electricity. (McLaughlin

- 4 -

Aff. ¶ 8.) LLB, an affiliate of Cate Street, was the entity negotiating the PPA on behalf of

the other entities that would build Berlin Station.

On July 26, 2010, PSNH filed a petition with the New Hampshire Public Utilities

Commission (“PUC”) to approve the PPA under RSA 362-F:9. On August 17, 2010, LBB

filed a petition to intervene in the PUC proceeding. On September 24, 2010, the

Defendants petitioned to intervene, to which PSNH and LBB objected. Following a

hearing, the PUC granted the Defendants’ petition to intervene, stating the proposed

intervenors are all existing or potential competitors of the proposed Berlin Station

project and, thus, have interests affected by the proceeding. (PUC DE 10-195, Order No.

25,158, Oct. 15, 2010.) The PUC also required PSNH to provide the PPA and supporting

testimony, which PSNH initially filed as confidential documents, to the Defendants.

(Id.) LBB subsequently withdrew from the PUC proceeding. (PUC DE 10-195, Order No.

25,171, Nov. 17, 2010.)

After reviewing the PPA, the Defendants moved to dismiss the petition to approve

the PPA, arguing the PUC lacked the authority to approve it. In particular, the

Defendants argued RSA 362-F:3 only permitted the PUC to approve the PPA through

2025, but the PPA’s timeframe was from 2014 through 2034. On January 14, 2011, the

PUC denied the motion to dismiss. (PUC DE 10-195, Order No. 25,192, Jan. 14, 2011.)

On April 18, 2011, following six-days of evidentiary hearings, the PUC

conditionally approved the PPA in a two-to-one vote, but reduced its value to $1.3

billion. (PUC DE 10-195, Order No. 25,213, Apr. 18, 2011.) Following the PUC’s denial of

their rehearing request, the Defendants appealed to the New Hampshire Supreme Court.

PSNH then moved for summary dismissal of the appeal, arguing the Defendants lacked

- 5 -

standing. Cate Street was not a party to the appeal. However, both PSNH and Cate

Street engaged in negotiations with the Defendants and other Wood IPPs, with the

assistance of the Governor’s office and experienced counsel for all parties, to reach some

resolution that would allow the project to go forward. (McLaughlin Aff. ¶ 20.) The

negotiations extended from May 17, 2011 through August 19, 2011. ( McLaughlin Aff. ¶

20, Def.’s Hearing Ex. 16). On August 18, 2011, the Supreme Court denied PSNH’s

motion for summary dismissal and scheduled the Defendants’ appeal for oral argument.

(Hamilton Aff. Ex. 5, Dec. 21, 2015.) On the following day, August 19, 2011, Cate Street,

PSNH, the Defendants, and other Wood IPPs entered into the Settlement Agreement at

issue here. (McLaughlin Aff. ¶ 19.)

As part of the Settlement Agreement, the Defendants and other Wood IPPs

agreed to withdraw from the PUC proceedings and the Supreme Court appeal.

(McLaughlin Aff. Ex. P, at 2.) In exchange for dismissing their appeal, some of the Wood

IPPs, including Indeck, secured PPAs with PSNH, the approximate worth of which is

disputed. All the parties to the Settlement Agreement also agreed to a mutual release,

which stated, in part, as follows:

[E]ach party, for itself and for its Related Persons, hereby releases, remises, discharges, holds harmless and covenants not to sue each of the other Parties and its respective Related Persons, from or with respect to any and all claims . . . that arise under or are related to the NHPUC Docket . . . the Pending Appeal . . . the Amended PPA . . . [and] the IPP Power Purchase Agreements. . . .

(Id. at 2–3.)

Intertwined with the Settlement Agreement were several other agreements,

including price support and sales option agreements. Under the REC Price Support

Agreement between Cate Street and Whitefield, Cate Street was required to pay price

- 6 -

support so that Whitefield would receive at least $30 per environmental credit, subject

to an 80,000 credit maximum. (Def.’s Mot. Dismiss First Amend. Compl., Ex. 6, at 3–4.)

Cate Street was also required to place a cash collateral amount of $1.2 million into a

third-party escrow. (Id. at 8.) Under the REC Price Support Agreement between Cate

Street and Indeck, Cate Street was required to pay price support so that Indeck would

receive at least $31 per credit, subject to a 210,833 credit maximum. (Def.’s Mot.

Dismiss First Amend. Compl., Ex. 7, at 3–4.) Cate Street was also required to place a

cash collateral amount of $2.5 million into a third-party escrow. (Id. at 9.) Under the

Facility Sales Option Agreement between Cate Street and Whitefield, Cate Street was

required to purchase Whitefield’s electric generation facility for $3 million, at

Whitefield’s option. (Def.’s Mot. Dismiss First Amend. Compl., Ex. 8, at 1.) As part of the

agreement, Cate Street was also required to place $1 million cash into a third-party

escrow. (Id. at 2.) In total, therefore, Cate Street was required to deposit $4.7 million

into escrow. (Hamilton Aff. Ex.V, Dec. 15, 2015.)

The Settlement Agreement was filed with the PUC, which approved it, as well as

the Wood IPPs’ PPAs, on December 20, 2011. (PUC DE 11-184, Order No. 25,305, Dec.

20, 2011.) Following the signing of the Settlement Agreement, the Supreme Court

appeal was withdrawn. On September 2, 2011, Cate Street closed on the financing for the

Berlin Station project and construction began a short time later. (Id.) It was not until

July 8, 2013 that the Plaintiff filed the instant action and sought to set aside the

agreements.

II

The Plaintiff has moved for Partial Summary Judgment on its abuse of process

- 7 -

claim, and the Defendants have filed a Cross-Motion for Summary Judgment. The thrust

of the Plaintiff’s motion is that the Defendants used the appellate process in order to

“extract economic concessions from PSNH and Cate Street.” (Pl.’s Mem. Supp. Supp.

Partial Summ. J. 1, 6.) The Plaintiff further argues the Defendants lacked standing to

bring their appeal and that the PUC’s approval of the PPA was proper. The Defendants

argue the Plaintiff cannot pursue its claims until it sets aside the release, the Defendants’

conduct does not constitute an abuse of process, and Cate Street was not a party to the

allegedly abusive proceedings.

In order to maintain an abuse of process claim, a party must prove the following:

“(1) a person used (2) legal process, whether criminal or civil, (3) against a party (4)

primarily to accomplish a purpose for which it is not designed and (5) caused harm to

the party (6) by the abuse of process.” Long v. Long, 136 N.H. 25, 29 (1992) (adopting

the definition of abuse of process from the Restatement (Second) of Torts § 682).

The tort consists of two essential elements: “an ulterior purpose and a willful act

in the use of the process not proper in the regular conduct of the proceeding.” Cabletron

Sys., Inc. v. Miller, 140 N.H. 55, 57 (1995) (quotation omitted). “The improper purpose

usually takes the form of coercion to obtain a collateral advantage, not properly involved

in the proceeding itself, such as the surrender of property or the payment of money, by

the use of the process as a threat or a club.” Id. at 57–58 (quotation omitted).

The New Hampshire Supreme Court has emphasized the following:

The gravamen of the misconduct for which the liability stated in this Section is imposed is not the wrongful procurement of legal process or the wrongful initiation of criminal or civil proceedings; it is the misuse of process, no matter how properly obtained, for any purpose other than that which it was designed to accomplish. Therefore, it is immaterial that the process was properly issued, that it was obtained in the course of

- 8 -

proceedings that were brought with probable cause and for a proper purpose, or even that the proceedings terminated in favor of the person instituting or initiating them. The subsequent misuse of the process, though properly obtained, constitutes the misconduct for which the liability is imposed under the rule stated in this Section.

Long, 136 N.H. at 29–30 (quoting Restatement (Second) of Torts § 682 comment a).

Here, the Defendants and other biomass power plants intervened in the PUC

proceedings involving PSNH’s request for approval of their PPA with LBB. Following the

PUC’s approval of the PPA, the Defendants appealed to the New Hampshire Supreme

Court. After the Supreme Court denied PSNH’s motion for summary dismissal of the

Defendants’ appeal, and following three months of negotiation, Cate Street, PSNH, the

Defendants, and other Wood IPPs executed a settlement and release agreement and

price support and sales option agreements, among other agreements. Under the

agreements, the Defendants and other Wood IPPs agreed to withdraw from the PUC

proceedings and the Supreme Court appeal; several Wood IPPs secured PPAs with

PSNH; Cate Street was required to pay price support to ensure Whitefield would receive

at least $30 per REC it generated and Indeck would receive at least $31 per REC; and

Cate Street was required to purchase Whitefield’s facility for $3 million, at Whitefield’s

option. The parties also agreed to a mutual release with respect to any and all claims

relating to the PUC proceedings, the Supreme Court appeal, and the Wood IPPs’ PPAs,

among others.

In order to secure these obligations, Cate Street was required to deposit $4.7

million into escrow. Cate Street has “received some of the money back that was placed in

escrow” as of November 3, 2015 and the Defendants do not appear to have received any

of the funds. (Hamilton Aff. Ex.V, Dec. 15, 2015.) According to Cate Street, the Wood

- 9 -

IPPs demanded that the agreements be signed and the funds placed in escrow before

they would dismiss their appeals. However, because of a rising market, Cate Street was

never obligated to make any payments under the agreements for the price the

Defendants would receive for their RECs. Whitefield never exercised its option to

require Cate Street to purchase its facility. The PUC approved the PPAs between the

Defendants and PSNH, and Cate Street was never required to make any payments as a

result of non-approval. Moreover, at oral argument, counsel for Cate Street conceded

that it never made any payments to the Defendants as a result of the Settlement

Agreement.

On December 2, 2011, Cate Street, by its president John Hallé, sent a letter to the

Defendants stating Cate Street considered the price support and sales option agreements

unenforceable. (Hamilton Aff. Ex. 7, Dec. 21, 2015.) Counsel confirmed Cate Street’s

position in writing in a February 2012 letter, stating, “Cate Street repudiates the Price

Support Agreement insofar as it was the product of the economic duress engineered by

DG Whitefield and others.” (Id. at Ex. 8.) The letter went on to state Cate Street’s

position that Whitefield and the other Wood IPPs “manipulate[d] the administrative

and judicial processes to exact unwarranted economic advantage over and improperly to

inflict economic harm upon Cate Street and its Berlin project.” (Id.) However, no

performance appears to have ever been called for under the agreements.

Cate Street was neither a party to the PPA, nor to the PUC proceedings.

Moreover, Cate Street was not a party to the appeal and did not seek to intervene. The

Defendants, therefore, argue that no process was issued against Cate Street to which it

was forced to respond, and that this fact is fatal to the abuse of process claim.

- 10 -

There is plainly a genuine issue of material fact about the Defendants’ motivation

for intervening in the PUC proceedings. According to the Plaintiff, the Defendants acted

in bad faith, merely to stop potential competition. In particular, the Plaintiff argues the

following:

Wood-fueled power plants depend upon the subsidies they receive from REC sales for their financial existence, and there is no reason to believe that will change by 2025 . . . The PUC ruling, according to the Wood IPPs, affirmed that they would be entitled to sell their RECs beyond 2025. Apart from their desire to leverage Cate Street, therefore, the Wood IPPs should have embraced this ruling, not appealed it.

(Pl.’s Mem. Supp. Partial Summ. J. 1, 9.) According to the Defendants, however, their

motive was entirely legitimate. Indeck, for example, argued that the PPA was a

“‘sweetheart contract’ that extended the purchase of RECs ‘past the statutory date when

the renewable energy credits even exist,’” which would force it to “compet[e] against an

unlawful contract,” which basically put it “on an unlevel playing field.” (Def.’s Mem. Obj.

Partial Summ. J. 1, 6.)

However, the issue of motive is irrelevant to the determination to be made by the

Court because Cate Street was never subject to any process as a result of the appeal.

Indeed, it was not even a party to the appeal. The “essence” of an abuse of process claim

“lies in the misuse of the power of the court; it is an act done in the name of the court

and under its authority for the purpose of perpetuating an injustice.” Long, 136 N.H. at

30–31 (quotation omitted). “An essential element of the tort of abuse of process is some

form of compulsory process forcing the performance or forbearance of some prescribed

act.” Id. at 31 (quotation omitted).

In Long, the defendant filed a fraudulent claim for alimony and a motion for

contempt, but withdrew it after the plaintiff exposed the fraud, and the Superior Court

- 11 -

did not take any action on the motion. Id. at 27. Thus, the plaintiff’s abuse of process

claim could not be maintained because the Superior Court did not exercise any of its

powers over the plaintiff in connection with the fraudulent motion. Id. at 31. The

Superior Court neither issued orders of notice nor granted the motion for contempt and,

therefore, the defendant never used the court’s authority to compel the plaintiff to do or

forbear from doing anything. Id. at 31–32.

Similarly, in Tessier v. Rockefeller, 162 N.H. 324, 334 (2011), the plaintiff

brought a claim for abuse of process, alleging the defendant threatened professional

disciplinary proceedings and criminal action, and promised not to take such action if the

plaintiff paid money she did not owe. The Court held the plaintiff did not state a cause of

action because she could not allege a legal process was actually used against her at the

time the criminal and disciplinary proceedings had commenced because she already

performed by making the payment demanded. Id. at 335–36.

Here, Cate Street was never a party to the PUC proceedings. It is true that its

interests were affected as a result of the proceedings, and it alleges that it was forced to

make a choice it would not otherwise have made because of the action taken by the

Defendants. However, because it was not a party to any claim brought against it, it was

never forced to do or forbear from doing any act by order of a court, and the abuse of

process claim cannot be maintained. Accordingly, the Plaintiff’s Motion for Partial

Summary Judgment must be DENIED, and the Defendants’ Cross-Motion for Summary

Judgment must be GRANTED.

III

The Defendants have filed a Motion for Summary Judgment based on the release,

- 12 -

in which they allege all of the Plaintiff’s claims are barred by the release contained in the

2011 Settlement Agreement. The Plaintiff does not dispute that the Settlement

Agreement, by its terms, would bar all of its causes of action and require judgment for

the Defendants, but asserts that the release is void because it was signed under duress.

Duress due to physical compulsion prevents the formation of a contract, and any

agreement produced by physical compulsion is void. Restatement (Second) of Contracts

§ 174. Contracts executed under duress from a wrongful threat that leaves the victim no

reasonable alternative are voidable. Id. at § 175. Modern cases accept the view “that any

wrongful act or threat which overcomes the free will of a party constitutes duress.” 7 J.

Perillo, Corbin on Contracts § 28.2, at 40 (Rev. Ed. 2002).

A

New Hampshire recognizes the general rule that contracts signed under economic

duress are voidable. Abbadessa v. Moore Bus. Forms, Inc., 987 F.2d 18, 22 (1st Cir.

1993); see also Tessier, 162 N.H. at 331. Accordingly, “the payment of money or the

making of a contract might be under such circumstances of business necessity or

compulsion as will render the same involuntary and entitle the party so coerced to

recover the money paid or excuse him from performing the contract.” Cheshire Oil Co. v.

Springfield Realty Corp., 118 N.H. 232, 236 (1978) (citations omitted).

A party relying on a claim of economic duress must demonstrate four elements.2

First, the party relying on economic duress “must have involuntarily accepted the terms

of another.” Id. at 236–37. “It must appear that the consent was actually induced by the

pressure applied and would not have been given otherwise.” Id. at 237 (quotation

2 The party seeking to set aside a release on the grounds of duress has the burden of proof. See generally

- 13 -

omitted). “Second, the coercive circumstances must have been the result of the acts of

the opposite party.” Id. “Third, the pressure must have been wrongful.” Id. Under this

third factor, an act may be wrongful even if “the act or threat is not criminal or tortious

or in violation of a contractual duty.” Id. Fourth, “[c]ircumstances must have permitted

no other alternative but to accept the terms of another.” Id.; see also Trefethen v. Liberty

Mut. Group, Inc., No. 11-cv-225-SM, 2013 WL 2403314, at *5 (D.N.H. May 31, 2013).

“The elements to a finding of duress are questions of law” and “whether the facts

exist to establish those elements in a particular case” is an issue of fact. Cheshire Oil Co.,

118 N.H. at 238. The burden is on the party seeking to set aside an agreement to

establish duress. A number of cases suggest that evidence sufficient to void a release

must be established by clear and convincing evidence. Maltais v. National Grange Ins.

Co., 118 N.H. 318, 320 (1978); McIsaac v. McMurray, 77 N.H. 466, 472 (1915); see

generally Nationwide Mut. Fire Ins. v. Watson, 120 Wash. 2d, 178, 189 (1982);

Helmstrom v. North Slope Borough, 797 P.2d 1192, 1197 (Alaska 1990). However, in this

case the burden of proof is not critical to the Court’s decision, and the Court reaches the

same result on either a preponderance of the evidence or clear and convincing evidence

standard.

Where the parties entering into an agreement are sophisticated and represented

by competent counsel in negotiating a contract to govern their commercial relationship

or to settle their differences, courts “will strictly construe the requirements of economic

duress against the party asserting it, so as not to undercut the well-established public

policy favoring the private settlement of disputes.” Cabot Corp. v. AVX Corp., 863

Cabot Corp v. AVX Corp., 863 N.E.2d 503, 512 (Mass. 2007).

- 14 -

N.E.2d 503, 512 (Mass. 2007); see also Ismert & Assocs., Inc. v. New England Mut. Life

Ins. Co., 801 F.2d 536, 545–46 (1st Cir. 1986). It is not infrequent that “when two

commercial parties enter into an agreement, one of them has a decided economic

advantage over the other” and that “[t]he weaker party often must enter into the bargain

because of his economic circumstances, a disparity in bargaining power to his

disadvantage, or some combination of the two.” VKK Corp. v. National Football League,

244 F.3d 114, 123 (2d Cir. 2001). “Because an element of economic duress is thus

present when many contracts are formed or releases given, the ability of a party to

disown his obligations under a contract or release on that basis is reserved for extreme

and extraordinary cases.” Id. As the Massachusetts Supreme Judicial Court noted in

Cabot Corporation, “[h]ard bargaining is not unlawful; it is not only acceptable, but

indeed, desirable, in our economic system, and should not be discouraged by the

courts.” 863 N.E.2d at 512 (quotation omitted).

B

Cate Street cannot satisfy the second element of an economic duress claim, that

the coercive circumstances were the result of the acts of the opposing party. A party

relying on the claim of economic duress to set aside an agreement cannot prove that the

coercive circumstances were “the result of the acts of the opposite party” when the party

seeking relief itself knowingly assumed the risk of proceeding into the allegedly coercive

circumstances. Cheshire Oil Co., 118 N.H. at 237; see also Resolution Trust Corp. v.

Ruggiero, 977 F.2d 309, 314 (7th Cir. 1992) (“A borrower cannot charge a lender with

economic duress where the pressures on the borrower are the result of his own business

decisions and economic conditions.”) (citation omitted).

- 15 -

Here the undisputed record establishes that Cate Street, a sophisticated plaintiff,

intended to put together a transaction that would require timely regulatory approval in

order to obtain success. Indeed, Cate Street’s claim is that because of the extraordinary

demands in putting together financing for a transaction of this magnitude, prompt

approval from the PUC was essential. The Second Amended Complaint explicitly so

states:3

42. In 2009, CSC began to secure the financing necessary to construct Berlin Station. That financing required CSC to assemble tax credits that could be sold or otherwise used to fund over $60 million of the cost of the plant, with the balance of the almost $300 million price to be primarily paid by private institutional investors.

*** 43. One of the facilities for raising tax motivated investment in the project was the New Market Tax Credit program. Under that program, the United States Treasury, acting through the Community Development Financial Institutions Fund, allocates tax credit authority to Community Development Entities (“CDEs” or “allocatees”) through a competitive application process.

*** 45. The CDE is obligated to use the equity raised through a New Market Tax Credits allocation within twelve months, meaning the credits approved in a calendar year must be used to fund projects that achieve financial close in the year of issue. 46. In 2010, CSC secured the project approvals so that Berlin Station would qualify for New Market Tax Credits. 47. While the New Market Tax Credit program allowed CSC to raise an important portion of the capital needed for the project, CSC first had to line up the balance of its financing so they could represent to the CDEs/allocatees that it could reach financial close in the year of the credits’ issuance, thereby allowing the CDEs/allocatees to commit their credits. 48. Toward that end, in 2010, CSC succeeded in negotiating a PPA with PSNH that CSC could then use to attract institutional investors to finance the construction and other related costs not covered by the capital raised through tax based financing.

3 In the complaint, Cate Street is referred to as “CSC.”

- 16 -

49. The PPA with PSNH allowed CSC to demonstrate that it could sell its power and RECs for the twenty years it would take to repay institutional investors in the Berlin Station Project. Thus, by the end of 2010, CSC was able to represent to the CDEs/allocatees that it would be likely to achieve financial close in 2011. 50. Given the requirement that the 2011 New Market Tax Credits be applied to projects sent to reach financial close by the end of the year, the time pressure from the CDE’s/allocatee’s perspective is obvious. If a CDE/allocatee commits to a project that does not come to fruition in the year of issuance, and it cannot otherwise invest its allocation of credits in the year they are issued, its investors are likely to then invest elsewhere. Similarly, the CDE/allocatee’s ability to acquire New Market Tax Credit allocations in the future will be impaired. (Emphasis added).

*** 51. In late 2010, CSC also identified another $93 million of tax incentives for the construction of Berlin Station under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (“Section 1603”).

*** 54. Notably, in order for the eligible energy property to receive the Section 1603 payments, it must have been operational and generating power by no later than December 31, 2013. If the property fell short of the deadline, it would be ineligible to receive the reimbursement for its costs. 55. The mere future right to receive $93 million would not, in itself, allow CSC to cover the cost of construction to build the plant. CSC therefore sought to sell the Section 1603 payments associated with the Berlin Station at a discount, accounting for: 1. The time value of money; and, 2. The risk the power plant would not be operational by December 31, 2013, as required by Section 1603. 56. Because the 1603 grant would only mature if the plant was operational by December 31, 2013, investors required assurance that any construction would be completed before that deadline. Simply put, if an investor loaned or otherwise invested money with CSC predicated on the purchase of the Section 1603 payments and the plant were not completed on time, the investor could lose their investment. (sic) (Emphasis added).

*** 60. In summary, any delay threatened the premature end of Berlin Station. Delay could, for instance, cause the New Market Tax Credit allocatees to decide to invest in a different project that was more likely to achieve financial close in 2011 (e.g., before the

- 17 -

credits expired for the year and the New Market Tax Credit process had to be started all over again). (Emphasis added). 61. Likewise, delay risked the Project not being completed by the end of 2013, meaning the loss of the Section 1603 payments. With the loss of either of these tax motivated investment strategies, the project would have failed for lack of sufficient funds. (Emphasis added).

*** 62. While the over $60 million in capital generated by the New Market credits and Section 1603 payments was essential to the project’s funding, it was not sufficient to cover the $300 million total cost. CSC therefore had to look to private institutional investors for the balance. 63. The prospective private institutional investors evaluated the risk of the investment as a function of the likelihood that the revenue generated by the plant would exceed its costs of operation, with the difference allowing Berlin Station to repay the proposed investment in addition to a return thereon.

*** 65. Berlin Station’s potential investors therefore demanded that a PPA be in place as a condition precedent to investment. Absent such an agreement, there would be no assurance that Berlin Station’s output would provide an attractive return. As a result, a long-term power purchase agreement became a necessary precondition to the financing and construction of the Station. (Emphasis added). 66. PSNH was willing to enter into a long-term power purchase agreement with Berlin Station so long as it had the PUC’s final determination “approving and allowing for full cost recovery of the rates, terms and conditions.” Absent this final approval, PSNH, as a regulated utility, could not expect to recover the cost of power purchased from Berlin Station. (Emphasis added).

Cate Street’s claim is that Defendants extorted it by appealing the PUC decision

approving the PPA. The appeal would have been irrelevant to the timing of the financial

close of the project if PSNH had agreed to waive the condition requiring the PUC order

approving the PPA to be final and non-appealable. Cate Street requested PSNH to waive

this condition in June and July 2011, and a meeting was held at Northeast Utilities,

PSNH’s parent company, to request a waiver. However, the request was denied because

- 18 -

PSNH and Northeast Utilities “weren’t willing to take the risk.” (McLaughlin Aff.¶ 56.)

Cate Street and PSNH knew the Defendants had filed a Motion to Intervene in the PUC

proceedings, that the PUC conditionally approved the PPA with only a two-to-one vote,

and that Defendants had appealed that ruling to the New Hampshire Supreme Court.

Its own allegations establish that Cate Street embarked upon a multimillion

dollar project to build a power plant knowing that the very existence of the project was

contingent upon prompt regulatory approval. Like the defendants in Cheshire Oil Co.,

Cate Street assumed significant risk, apparent to any reasonable business person, by

proceeding as it did: risking that the approvals required by the PUC would not be

obtained as expeditiously as it hoped, or perhaps, not obtained at all. A party cannot

charge another party for the pressures caused by that party’s own business decisions.

Johnson, Drake & Piper, Inc. v. United States, 531 F.2d 1037, 1042–43 (Ct. Cl. 1976).

The mere fact that one is in a difficult bargaining position due to desperate financial

circumstances does not support a defense of economic duress. Herget Nat’l Bank of

Pekin v. Theede, 537 N.E.2d 1109, 1112 (Ill. App. 1989). Cate Street not only knew that

obtaining PUC approval was critical to the entire transaction going forward, it knew or

should have known that other parties, acting in their own interest, might oppose the

transaction and potentially delay PUC approval. Sophisticated business persons

recognize that regulatory approvals are not always promptly obtained and must plan

accordingly. When the circumstances are viewed objectively, 7 J. Perillo, Corbin on

Contracts § 28.2, at 41 (Rev. Ed. 2002), no reasonable trier of fact could find that the

alleged coercive circumstances were caused by the conduct of the opposing party; rather,

they were the result of Cate Street’s own decisions in proceeding as it did.

- 19 -

C

Similarly, no reasonable trier of fact could find that Cate Street could satisfy the

fourth requirement of an economic duress claim, that it had no reasonable alternative

available to it but to enter into the release pursuant to which the Defendants withdrew

their appeal to the New Hampshire Supreme Court and the PUC proceedings. Economic

duress does not exist merely because a party must make a difficult choice, and has little

bargaining power. Illustrative is Trefethen, in which the plaintiff, facing termination

from employment, was offered the opportunity to resign and obtain a severance

agreement or be fired, in which case she would receive no severance agreement nor be

eligible for unemployment benefits. 2013 WL 2403314, at *2.

Courts have consistently held “that the presence of an adequate legal remedy

undermines claims of economic duress.” Ismert & Assocs., Inc., 801 F.2d at 546; see also

Cabot Corp., 863 N.E.2d at 514; Borbely v. Nationwide Mut. Ins. Co., 547 F. Supp. 959,

979 (D.N.J. 1981). The New Hampshire Supreme Court has stated:

Circumstances must have permitted no other alternative but to accept the terms of another if there is to be a finding of business compulsion. Thus if the aggrieved party had a legal remedy adequate to redress or compensate for the injury threatened, the threat will not amount to duress.

Cheshire Oil Co., 118 N.H. at 238 (emphasis added) (internal citations omitted).

In some circumstances, the issue of whether or not the free will of a party has

been overborne is subject to a subjective test. 7 J. Perillo, Corbin on Contracts § 28.2, at

40 (Rev. Ed. 2002) at 40. But this is not always the case:

Still, an objective test governs certain situations. When the coercion involves economic pressure rather than threat of physical injury, courts continue to apply an objective element. In the face of a threat of “either . . . or,” did the person threatened have some reasonable third alternative? For

- 20 -

example, was there a judicial proceeding that could have produced prompt and adequate relief? If so, a case for duress would not be made out. Clearly, economic interests receive a different level of protection than interests of personality.

Id. at 41.

Furthermore, in the context of businesses dealing with one another, courts have

strictly construed the requirement that there be no real alternative to executing a

contract. For example, in Ismert & Associates, Inc., the First Circuit held that the

plaintiff’s claim that it had no alternative but to execute a release because, in the absence

of settlement, the defendant would have demanded that it repay its loan on schedule,

which would have forced it into bankruptcy, was insufficient to establish duress. 801

F.2d at 543. Justice Breyer,4 concurring, noted that in order to enforce the loan, the

defendant would have had to bring a legal action, and the plaintiff, who alleged duress,

would then have raised its claims against the defendant in defense. Id. at 549 (Breyer, J.,

concurring).

Such a strict interpretation of settlement agreements and of the notions of “no

real choice” and “no feasible alternative,” are particularly necessary in the “commercial

context where two businesses have dealt at arm’s length through counsel.” Id. at 550

(Breyer, J., concurring). Justice Breyer has noted:

Consider, for example, a prospective plaintiff who has settled a substantive claim for a moderate amount of money. He might reason that, if a jury would attach a significantly higher value to his substantive claim, it might also be receptive to the argument that the settlement embodied a ‘disproportionate exchange of values’ forced upon him through economic coercion. Since an unfavorable jury verdict (on either the substantive claim or the duress argument) would still leave him with his settlement, the would-be plaintiff may well think, ‘Heads I win, tails you lose.’ And potential defendants, fearful of this thinking, might hesitate to settle. This

4 Then on the United States Court of Appeals for the First Circuit.

- 21 -

scenario, of course, does not argue for rejecting ‘economic duress’ arguments wholesale. But it does argue for a fairly strict reading of the notion of ‘no real choice’. . . .

Id. at 550–51 (Breyer, J., concurring); see also VKK Corp., 244 F.3d at 123 (“The

requirement that the party claiming duress disclaim the contract or release about which

he is complaining promptly or be held to have forfeited his right to do so protects the

stability and reliability of such agreements by denying the weaker party the ‘heads I win,

tails you lose’ option of waiting to see how the arrangement works out and then deciding

whether to seek to undo it.”).

Cate Street was negotiating through able and sophisticated counsel from the

McLane Middleton law firm, one of the largest in the State. The settlement negotiations

were even brokered by the New Hampshire Governor’s office, which asked Thomas

Frantz, a PUC staff member, to facilitate the negotiations. (PUC DE 11-184, Testimony of

T. Franz, Aug. 22, 2011.) Other individuals were also involved in the negotiations,

including Hallé, members of the Department of Resources and Economic Development,

members of the New Hampshire legislative and executive branches, and attorneys for

the Defendants, among numerous others. (McLaughlin Aff. ¶ 20; Def.’s Hearing Ex. 16.)

The negotiations lasted for over three months, from May 17, 2011 to August 19, 2011,

when the Settlement Agreement was ultimately executed. (McLaughlin Aff. ¶ 20.)

If Cate Street truly believed that it was being extorted—that it was being forced to

enter into an agreement wrongfully—it had the ability to make that claim, through able

counsel, during that three-month period. If Cate Street believed the Defendants were

interfering with its contractually protected rights, it could have gone immediately to the

Superior Court and sought preliminary injunctive relief, making the same arguments it

- 22 -

is making now. See Superior Ct. Civ. R. 48; see also Cabot Corp., 863 N.E.2d at 514. It

could have sought to intervene in the proceedings before the PUC or the New

Hampshire Supreme Court. It did neither of those things.

The Defendants are entitled to summary judgment because even taking all the

evidence in the light most favorable to Cate Street, with all reasonable inferences

therefrom, Cate Street could not prove on the undisputed facts, that the release it signed

was the product of economic duress.

D

Moreover, even if the release was the product of economic duress, it is voidable

not void, because a claim of economic, rather than physical, duress has been made.

Restatement (Second) of Contracts §§ 174–75. Where a contract is voidable, “it is well

settled that a party cannot treat [a] contract as binding and as rescinded at the same

time.” Keshishian v. CMC Radiologists, 142 N.H. 168, 173 (1997) (quotations omitted).

“A contract made under duress will be deemed ratified if the aggrieved party fails to

repudiate the agreement within a reasonable time after the duress has dissipated.” Id. “A

party cannot treat the contract as binding and as rescinded at the same time, and after

he has elected to stand by the contract and receive the benefits it confers on him, and

has thus ratified and confirmed it, he cannot thus rescind and repudiate it.” Abbadessa,

987 F.2d at 24 (quotation omitted).

When a voidable contract is ratified, it is fully enforceable. Keshishian, 142 N.H at

173.

A party may ratify an agreement entered into under duress in a number of different ways: first, by intentionally accepting benefits under the contract; second, by remaining silent or acquiescing in the contract for a period of time after he has the opportunity to avoid it; and third, by recognizing its

- 23 -

validity . . . by acting upon it, performing under it, or affirmatively acknowledging it.

In re Boston Shipyard Corp., 886 F.2d 451, 455 (1st Cir. 1989) (quotations omitted).

Here, no lawsuit was brought seeking rescission of the agreements for almost two

years after the agreements in question were executed. The burden of avoiding a

contractual obligation on the ground of duress “necessarily increases proportionately

with the delay in initiating suit or otherwise repudiating the contract in question.” Int’l

Halliwell Mines, Ltd. v. Cont’l Copper & Steel Indus., Inc., 544 F.2d 105, 108 (2d Cir.

1976); see also Ismert & Assocs., Inc., 801 F.2d at 550 (Breyer, J., concurring). As the

court noted in Cabot Corporation, “[e]ighteen months is an exceptionally long time for a

sophisticated party . . . represented by counsel, to wait before voicing a claim of duress.”

863 N.E.2d at 516; see also Abbadessa, 987 F.2d at 25 (holding summary judgment

appropriate where allegedly coerced individuals waited for seven months to assert

claims of duress and accepted benefits under the agreement); In re Boston Shipyard

Corp., 886 F.2d at 455 (holding allegation of duress over eighteen months after signing

modification not a reasonable time where purported victim worked with the pressuring

party for nearly three months).

The first notice Cate Street gave to the Defendants that it would not honor one of

the agreements was a letter dated December 2, 2011, in which it stated, “it is our position

that the referenced agreements are unenforceable.” (Hamilton Aff. Ex. 7, Dec. 21, 2015.)

On February 17, 2012, six months after the Settlement Agreement was executed, Cate

Street, in a letter from its attorney, first used the words “economic duress.” (Id. at Ex. 8.)

Critically, neither letter referenced the actual Settlement Agreement or its mutual

release clause, but expressed the Plaintiff’s view of the merits of the price support and

- 24 -

sales option agreements. The February 2012 letter concluded by requesting the

Defendants preserve any and all evidence relating to “Whitefield’s ability to extract

‘price support’ from Cate Street in the context of the proposal.” (Id.) Such a request is

obviously made because litigation is anticipated, to prevent spoliation. Yet no litigation

was brought until July 2013 and it was not until September 2014, when the Plaintiff

filed its Second Amended Complaint, that it made clear, at the Court’s instruction, that it

was seeking to set aside the Settlement Agreement and its mutual release based on

economic duress. Moreover, a mere protestation is not a repudiation of the agreement.

See Hammond v. T.J. Litle & Co., 82 F.3d 1166, 1178 (1st Cir. 1996) (noting that

repudiation “must be a definite and unequivocal manifestation of intention not to

render performance.”) (citation and quotations omitted).

As the court noted in Cabot Corporation, “[e]ighteen months is an exceptionally

long time for a sophisticated party . . . represented by counsel, to wait before voicing a

claim of duress.” 863 N.E.2d at 516. Cate Street’s attorney told the Defendants in

February 2012 it believed the Settlement Agreement was the product of duress, but took

no action to formally set it aside until July 2013, 23 months after the settlement

agreement was signed. Even if the agreement were found to be the product of duress, the

undisputed facts compel a conclusion that Cate Street ratified it. The rule of law requires

that when a sophisticated party, represented by able counsel, having had ample time to

carefully assess and consider its options, contracts to release its claims, that decision

must be enforced. Were this not so, parties could cynically settle cases and then launch

litigation to determine if they could get a better deal with their settlement in hand.

Ismert & Associates, Inc. 801 F.2d at 550-51. Based upon the undisputed facts, Cate

- 25 -

Street’s tergiversation cannot be justified by a claim of economic duress. The Defendants

are entitled to summary judgment on all of Cate Street’s claims because they had been

released. Accordingly, the Defendants’ Motion for Summary Judgment based on the

release is GRANTED5.

IV

For the reasons stated in this Order, the Plaintiff’s Motion for Partial Summary

Judgment on its abuse of process claim is DENIED, the Defendants’ Cross-Motion for

Summary Judgment is GRANTED and the Defendants’ Motion for Summary Judgment

on all claims based on the release is GRANTED6. Because the Defendants’ Motion for

Summary Judgment based on the release is dispositive of all of the Plaintiff’s claims, the

Court does not address Defendant’s Motion alleging NewCo’s claims were never

assigned to Cate Street.

SO ORDERED

4/5/16 Richard B. McNamara __________________ _________________________ DATE Richard B. McNamara, Presiding Justice

5 The Defendants have also filed a Motion for Summary Judgment on all claims the Plaintiff purports to

bring on behalf of NewCo. In their motion, the Defendants argue NewCo’s claims were released and, even if NewCo had any viable claims, they were never assigned to the Plaintiff. Even assuming the validity of the Plaintiff’s assertion that NewCo’s claims were validly assigned to it, the Defendants’ Motion for Summary Judgment based on the release is dispositive. Accordingly, the Defendants’ Motion for Summary Judgment on all claims the Plaintiff purports to bring on behalf of NewCo need not be decided.

6 Cate Street has brought identical claims against Indeck Energy Services ("IES") and EWP

Renewable Corporation ("EWP") (Docket No. 218-2015-CV-937). For the reasons stated in this

Order, summary judgement is entered in favor of Defendants.

- 26 -

RBM/