Trireme Energy Holdings, Inc. v. RWE Renewables Americas, LLC

Background

Trireme Energy Holdings, Inc. and Trireme Energy Development, LLC sued RWE Renewables Americas, LLC and RWE Renewables Services, LLC for breach of contract. The dispute concerns a 2017 merger agreement under which Innogy Renewables US LLC agreed to pay Trireme $50 million upfront and potentially up to $112 million in milestone payments.

Section 7.6(c) of the agreement said that the purchaser could not sell, assign, transfer, or otherwise dispose of certain project assets or ownership interests before December 31, 2020 without Trireme’s consent, unless it paid the applicable milestone amount. Trireme alleges that, in 2020, the defendants transferred energy-development companies to other subsidiaries without obtaining consent or making milestone payments.

Trireme also alleges that the transfers were concealed. According to the complaint, company representatives, written information, and an organizational chart led Trireme to believe that Innogy Renewables US would continue to own the development companies. Trireme alleges that it learned about the transfers through discovery in an earlier related proceeding in November and December 2021.

Arguments and analysis

RWE moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. RWE argued that the action improperly split claims that should have been brought in the earlier related proceeding. RWE also argued that Section 7.6(c) applied only to sales or transfers to unrelated third parties, not to internal corporate transfers.

The court agreed that the current claim and the claims in the earlier related proceeding involved the same merger agreement, overlapping facts, and potentially overlapping damages. It also noted that the alleged breach occurred before the operative complaint was filed in the earlier proceeding. But the court held that Trireme plausibly alleged an exception to the rule against claim splitting because the transfers may have been concealed or may not have been discoverable through reasonable diligence. The court emphasized that, at the motion-to-dismiss stage, it had to accept well-pleaded allegations as true and draw reasonable inferences for Trireme.

The court also declined to dismiss based on RWE’s interpretation of Section 7.6(c). The words “assign,” “transfer,” and “otherwise dispose of” did not clearly limit the provision to transactions with unrelated third parties. Because the agreement was at least ambiguous on that issue, the court could not dismiss the claim at this stage. The court did not decide whether RWE actually breached the agreement.

Ruling

Judge Jennifer L. Rochon denied RWE’s motion to dismiss. The court ordered RWE to file an answer no later than 21 days after the opinion’s date and directed the parties to submit a proposed case-management plan within 14 days after service of the answer.