Veolia Energy North America Holdings, Inc. v. Enwave West Coast Holdings, LLC

Summary

The Appellate Division, First Department unanimously affirmed dismissal of breach-of-contract and declaratory-judgment claims arising from a purchase and sale agreement. The court held that the purchaser defendants satisfied the agreement's commercially reasonable efforts requirement by offering a renewal on terms comparable to the existing operations and maintenance agreement, and that they were independently permitted to reject the proposed renewal under another contractual provision. The court also upheld dismissal of the claim seeking to hold guarantor defendants jointly and severally liable for the contingent payment.

Holdings

1. The purchaser defendants did not breach the PSA because their offer of a 10-year renewal matched the term of the Venetian O&M Agreement existing when the PSA was negotiated and therefore satisfied the objective benchmark supplied by section 5.13(a).
2. A commercially reasonable efforts issue need not invariably be treated as fact-specific; it may be decided on a motion to dismiss when the contract provides a clear objective benchmark.
3. The purchaser defendants satisfied the applicable conditions precedent, and section 5.13(d) independently permitted them to reject Venetian's proposed five-year renewal terms as commercially unacceptable.
4. The declaratory-judgment cause of action seeking to hold the guarantor defendants jointly and severally liable for the End Date Contingent Payment was properly dismissed with prejudice.
5. The court declined to consider plaintiff's argument that the PSA had a full 20-year term because plaintiff failed to preserve the argument.

Questions Presented

1. Whether the purchaser defendants breached the PSA's requirement to use commercially reasonable efforts to obtain renewal of the Venetian O&M Agreement by offering a 10-year renewal rather than the five-year term preferred by Venetian.
2. Whether the purchaser defendants satisfied the PSA's conditions precedent permitting them to reject renewal terms they deemed commercially unacceptable after consultation and reasonable mitigation efforts.
3. Whether the declaratory-judgment claim seeking joint and several liability of guarantor defendants for the End Date Contingent Payment was properly dismissed.
4. Whether plaintiff preserved its argument that the PSA had a full 20-year term.

Disposition

affirmed