Nexamp, Inc. v. Consolidated Edison, Inc.

Background

Nexamp sued Consolidated Edison, Inc. and Orange and Rockland Utilities, Inc. over a proposed stand-alone battery project. O&R had issued a request for proposals, and Nexamp submitted a response. Defendants repeatedly told Nexamp that obtaining a particular parcel of land was important, and Nexamp eventually entered into a lease requiring a non-refundable $600,000 payment.

Defendants orally told Nexamp in early April 2023 that they had approved awarding the project to Nexamp. On April 18, 2023, Defendants sent an email stating that the project would be awarded to Nexamp and that the related purchase agreement would have a 10-year term. The parties later exchanged drafts of a term sheet, but they never signed one. Defendants canceled the project in July 2023 and later refused to reimburse Nexamp’s third-party costs, including the lease payment.

Nexamp’s amended complaint asserted breach of contract and, alternatively, promissory estoppel. Defendants moved to dismiss for failure to state a claim and also asked the court to seal certain exhibits.

Documents Considered on the Motion

The court held that the request for proposals and Nexamp’s response were incorporated by reference into the amended complaint and could be considered when deciding the dismissal motion. Nexamp relied on its response as part of the alleged contract, and the response stated that Nexamp agreed to all provisions of the request for proposals.

The request for proposals said that it did not create an obligation for O&R to enter a contract, could be withdrawn or canceled, and would not support a claim for reimbursement of costs. Nexamp’s response also stated that, after selection, Nexamp and O&R would negotiate and execute a contract. The court did not consider the draft term sheet because the complaint did not rely on its terms or effects.

Breach-of-Contract Claim

Applying New York law, the court explained that a breach-of-contract claim requires an agreement, the plaintiff’s adequate performance, the defendant’s breach, and damages. The key issue was whether the parties had formed an agreement.

The court concluded that Nexamp had not adequately alleged a contract. The request for proposals expressly reserved O&R’s decision whether to enter a contract, and Nexamp’s response accepted those provisions while providing for later negotiation and execution of a contract. The court found that the project-award email and oral communication were, at most, agreements to continue negotiating rather than a completed contract.

The court also noted that Nexamp had not alleged that the parties agreed on important details such as payment, performance timing, or other key contract terms when Nexamp leased the land. Although Defendants’ communications emphasized the importance of securing the land, those communications did not eliminate the written reservation that Defendants would not be bound before a contract was executed. The court therefore dismissed the breach-of-contract claim.

Promissory-Estoppel Claim

Promissory estoppel can provide relief when there is no enforceable contract but one party reasonably relies on another party’s promise. Under New York law, the claim requires a clear and definite promise, reasonable and foreseeable reliance, and injury caused by that reliance.

The court found that Nexamp had not identified a clear and definite promise to complete the project or reimburse its lease payment if the project was canceled. The request for proposals expressly stated that it could be canceled and would not support reimbursement claims. The court also found that any promise implied by the award communications was only a promise to negotiate a contract. Because Nexamp alleged that negotiations did occur, it had not alleged that Defendants broke that promise. The court therefore dismissed the promissory-estoppel claim.

Sealing Request and Disposition

The court granted Defendants’ motion to seal the request-for-proposals response and the term sheet because they contained sensitive business and financial information. The court stated that the technical contents of those documents did not affect its analysis of whether Nexamp had adequately alleged a contract or promise.

The court granted Defendants’ motion to dismiss, dismissed the claims with prejudice, granted the motion to seal, ordered that the temporarily sealed documents remain sealed, and directed the Clerk of Court to close the case.