United States District Court, N.D. Illinois
March 19, 2004.
NEG MICON USA, INC., Plaintiff
NORTHERN ALTERNATIVE ENERGY and NAVITAS ENERGY, INC., Defendants
The opinion of the court was delivered by: RONALD GUZMAN, District Judge
MEMORANDUM OPINION AND ORDER
In this diversity case, NEG Micon USA, Inc. ("MEG Micon") has sued
Northern Alternative Energy ("NAE") for breach of contract and injunctive
relief and Navitas Energy, Inc. ("Navitas") for breach of contract,
injunctive relief, tortious interference with contract, and tortious
interference with prospective economic advantage. Before the Court is
Navitas' motion to dismiss Counts I, III,*fn1 IV, and V and NAE's motion
to dismiss Counts I, II, and III for failure to state a claim upon which
relief can be granted pursuant to Federal Rule of Civil Procedure
("Rule") 12(b)(6). For the reasons provided in this Memorandum Opinion
and Order, the Court grants in part and denies in part the motions.
On October 21, 1999, NEG Micon entered into an Agreement with NAE
entitled "Memorandum of Understanding" ("Agreement"). The Agreement
related to the development
of a wind power plant in northern Illinois. NAE is in the business
of developing wind power plants, while NEG Micon is in the business of
selling wind turbines for use at such plants. The one-page Agreement
(see Compl., Ex. A) specifically stated the following:
1. Pre-development Investigation. NEG Micon and NAE
have agreed to jointly participate in a
pre-development investigation of a wind power plant in
northern Illinois. NEG Micon and NAE have retained the
services of Tom Factor of the Iowa Wind Energy
Institute to investigate candidate sites in northern
Illinois. Tom Factor's services will begin in October
of 1999. NEG Micon will provide an in-kind
contribution of one fully equipment [sic] 50 meter met
station and the labor to install and decommission the
station at one candidate site. NAE will supply the
equipment for one additional monitoring station on an
existing communication tower at another candidate
site. NAE will determine, control and compensate all
activities of Tom Factor with regard to these
pre-development activities. It is anticipated that
this pre-development work will result in providing
sufficient data necessary to substantiate wind power
project proposal early in 2000.
2. Project Proposal. It is the intent of NEG Micon and
NAE to jointly propose a 31.5 megawatt wind power
project consisting of 35 NEG Micon 900/52 wind
turbines at the best candidate site in northern
Illinois. The proposal would be presented to the newly
established board of the $250 million Illinois Clean
Energy Trust sometime within the first quarter of
2000. Under this agreement NAE would be the project
developer and owner and NEG Micon would be the
exclusive supplier of the wind turbines for any
project at both of above-mentioned candidate sites
resulting out of the pre-development investigation.
3. Confidentiality. Under this agreement NEG Micon and
NAE will have joint access to all pre-development data
provided by the [sic] Tom Factor and both wind
monitoring stations. Both NEG Micon and NAE will be
allowed to share all information associated with these
pre-development activities with other parties.
Pursuant to the Agreement, Plaintiff established a meteorological
monitoring station ("met station") near Princeton, Illinois on November
16, 1999. NAE established a met station in Compton, Illinois on May 18,
Subsequent to the execution of the Agreement, and after the first phase
of the Agreement had been completed, NAE's officers formed Navitas. In
September 2002, Navitas was sold to Gamesa, a supplier of wind turbines
and direct competitor of NEG Micon.
Navitas is moving forward with developing a wind power plant in Mendota
Hills, Illinois, which is located adjacent to, or in the same area as,
the Compton met station that NEC Micon helped to develop and oversee in
the pre-development stage. Gamesa will supply wind turbines for the
project. NEG Micon alleges Navitas has used information gathered by the
Princeton met station and Compton met station to develop the Mendota
Hills site. NEG Micon further alleges that Navitas was the alter ego of
NAE at all times relevant to this lawsuit and that NAE and Navitas are
breaching NEG Micon's exclusive contract to supply turbines.
Alternatively, NEG Micon alleges that Navitas is tortiously interfering
with NEG Micon's economic interest. Navitas now moves to dismiss all NEG
Micon's claims for failure to state a claim upon which relief can be
granted pursuant to Rule 12(b)(6).
Complaints are to be read liberally, and district court may grant a
motion to dismiss for failure to state claim only if it is beyond doubt
that nonmovant can plead no facts that would support nonmovant's claim
for relief. Palda v. Gen. Dynamics Corp., 47 F.3d 872, 874 (7th Cir.
1995). To withstand a motion to dismiss, a complaint must allege facts
sufficiently setting forth the essential elements of the cause of
action. Gray v. County of Dane, 854 F.2d 179, 182 (7th Cir. 1988). The
court must accept all well-pleaded factual allegations in the light most
favorable to the plaintiff. Colfax Corp. v. Ill. State Toll Highway
Auth., 79 F.3d 631, 632 (7th Cir. 1996).
I. Count I: Breach of Contract Against Navitas and NAE
Navitas and NAE argue that Count I fails to state a claim for two
reasons: (1) nothing on the face of the Agreement indicates any present
intent to develop a wind power project; and (2) the Agreement lacks all
of the essential terms necessary to create an exclusive supply contract.
Both of these reasons are insufficient to dismiss count I for failure to
state a claim.
When determining the substantive nature of the contract at issue, this
Court applies Illinois law. See Erie R.R. v. Tompkins, 304 U.S. 64, 77-80
(1938). In Quake Construction Inc. v. American Airlines, the Illinois
Supreme Court laid out a clear test for determining whether a contract
poses a question of law that can be determined in a motion to dismiss or
poses a question of fact that cannot be determined in such a motion.
565 N.E.2d 990, 994 (Ill. 1990). Under this test, a trial court must
initially determine as a matter of law whether the language of a
purported contract is ambiguous as to the parties' intent. Id. If no
ambiguity exists in the writing, the parties' intent must be derived by
the trial court, as a matter of law, solely from the writing itself. Id.
If the terms of an alleged contract are ambiguous or capable of more than
one interpretation, however, parole evidence is admissible to ascertain
the parties' intent. Id. If the language of an alleged contract is
ambiguous regarding the parties' intent, the interpretation of the
language is a question of fact which a trial court cannot properly
determine on a motion to dismiss. Id.
At issue is whether the parties intended to form a contract whereby NEG
Micon would be the exclusive supplier of wind turbines for any wind power
project at candidate sites in northern Illinois resulting from
pre-development investigation as stated in the Memorandum of
Understanding. (See Compl. Ex. A.) Navitas argues the language in
paragraph 2 of the Agreement constitutes an unenforceable "agreement to
agree," as the parties speak only of a
future intent to present a proposal to build a wind power plant. NEG
Micon's Complaint alleges the language of paragraph 2 formed a binding
contract, relying on the sentence "Under this agreement NAE would be the
project developer and owner and NEG Micon would be the exclusive suppler
of the wind turbines for any project at both of the above-mentioned
candidate sites resulting out of the pre-development investigation."
(Compl. ¶ 13.) NEG Micon further alleges that Navitas was either held
out to be the equivalent, or otherwise was the alter ego, of NAE for
purposes of the Agreement. (Id. ¶¶ 14-18.)
Both NEG Micon and Navitas offer reasonable interpretations of
paragraph 2 of the Agreement, and therefore ambiguity exists as to the
parties' intent. A reasonable reading of NEG Micon's Complaint is that
Navitas, which was held out to be the same entity as or is the alter-ego
of NAE, breached its obligation to use NEG Micon turbines after NEG Micon
contributed significant resources to the pre-development investigation at
a site that was located within or adjacent to the candidate site in
Mendota Hills. Because paragraph 2 of the Agreement is ambiguous
regarding the parties' intent, the meaning of the Agreement cannot be
properly determined on a motion to dismiss.
Navitas also argues that the Agreement cannot be considered a binding
contract because it lacks material terms such as price, warranty,
delivery, etc. Illinois law dictates that in a requirements contract, the
court can supply all terms except the quantity term. See Indus. Specialty
Chems., Inc. v. Cummins Engine Co., Inc., 902 F. Supp. 805, 810 (N.D.
Ill. 1995). Paragraph 2 of the Agreement contains the quantity term "35
NEG Micon 900/52 wind turbines." Therefore, Navitas argument that the
Agreement lacks material terms fails.
In sum, taking NEG Micon's well-pleaded allegations as true and reading
the complaint liberally, as the Court must when considering a motion to
dismiss, the Court determines
ambiguity exists as to the parties intent under the Agreement.
Therefore, the Court denies Navitas and NAE's motions to dismiss as to
II. Count II: Breach of Contract Against NAE
In Count II, NEG Micon brings a separate breach of contract claim
solely against NAE, alleging NAE breached the covenant of good faith and
fair dealing concerning the Agreement. Illinois courts have stated that
every contract implies good faith and fair dealing between the parties to
it. Snap-on Inc. v. Ortiz, No. 96 C 2138, 1999 WL 592194, at *13 (N.D.
Ill. Aug. 3, 1999). Breach of the duty of good faith and fair dealing is
simply a breach of the underlying contract. Id. NEG Micon has already
pleaded a breach of contract claim against NAE in Count I. Count II relies
on the same written Agreement and makes identical factual allegations as
those in Count I. Count II is duplicative of Count I and is therefore
stricken. The Court grants NAE's motion to dismiss as to Count II.
III. Count IV: Tortious Interference with Contract Against Navitas
A claim for tortious interference with contract requires: "(1) the
existence of a valid and enforceable contract between the plaintiff and
another; (2) the defendant's awareness of this contractual relation; (3)
the defendant's intentional and unjustified inducement of a breach of the
contract; (4) a subsequent breach by the other, caused by the defendant's
wrongful conduct; and (5) damages." Int'l Marketing, Ltd, v.
Archer-Daniels Midland Co., Inc., 192 F.3d 724, 731 (7th Cir. 1999).
NEG Micon sufficiently alleges these elements in Count IV of the
complaint. First, NEG Micon alleges the existence of a valid and
enforceable contract between NEG Micon and NAE.
(Compl. ¶ 43.) Second, NEG Micon alleges Navitas was aware of the
Agreement between NEG Micon and NAE. (Id. ¶ 45.) Third, NEG Micon
alleges Navitas intentionally and unjustifiably induced NAE to breach its
exclusive supply agreement with NEG Micon. (Id. ¶ 46.) Fourth, NEG Micon
alleges subsequent breach by NAE due to Navitas' inducement. (Id. ¶¶ 46,
47.) Fifth, NEG Micon alleges it incurred damages due to NAE's breach of
the Agreement. (Id. ¶ 48.) Taking NEG Micon's well pleaded allegations
as true, Count IV sufficiently states a claim for tortious interference
with contract. Accordingly, Navitas' motion to dismiss Count IV is
IV. Count V: Tortious Interference with Prospective Economic Advantage
To state a claim for tortious interference with prospective economic
advantage, a plaintiff must allege: "1) the plaintiffs reasonable
expectation of entering into a valid business relationship; 2) the
defendant's knowledge of the plaintiff's expectancy; 3) purposeful
interference by the defendant that prevents the plaintiff's legitimate
expectancy from being fulfilled; and 4) damages to the plaintiff resulting
from the defendant's interference." Delloma v. Consol. Coal Co.,
996 F.2d 168, 171 (7th Cir. 1993).
NEG Micon sufficiently alleges these elements in Count V of the
Complaint. First, NEG Micon alleges a reasonable expectation of entering
into a valid business relationship in connection with the development of
a wind power project in northern Illinois. (Compl. ¶ 50.) Second, NEG
Micon alleges Navitas was aware of this expectation. (Id.) Third, NEG
Micon alleges Navitas unjustifiably interfered with NEG Micon's
expectation by taking over the development of the wind power project in
northern Illinois from NAE. (Id. ¶ 51.) Fourth, NEG
Micon alleges damages resulting from Navitas' interference. (Id.) Again,
taking NEG Micon's well pleaded allegations as true, Count V sufficiently
states a claim for tortious interference with prospective economic
advantage. Thus, Navitas' motion to dismiss Count V is denied.
For the forgoing reasons, the Court grants in part and denies in part
Navitas and NAE's motions to dismiss brought pursuant to Fed.R.Civ.P.
12(b)(6). The Court grants the motions to dismiss as to Count II, and
denies the motions as to Counts I, IV, and V. Plaintiff is granted leave
to file an amended complaint that comports with this opinion.