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Conex Energy-Canada, LLC v. Mann Engineering, Ltd.

United States District Court, D. South Dakota, Southern Division

July 25, 2014

CONEX ENERGY-CANADA, LLC; and CONEX ENERGY, INC., Plaintiffs,
v.
MANN ENGINEERING, LTD.; EFFISOLAR ENERGY CORPORATION; ALGONQUIN POWER TRUST; ALGONQUIN POWER & UTILITIES CORPORATION; and ALGONQUIN POWER COMPANY, Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS

KAREN E. SCHREIER, District Judge.

Defendants, Mann Engineering, Ltd., Effisolar Energy Corporation, Algonquin Power Trust (Algonquin PT), Algonquin Power & Utilities Corporation (Algonquin PUC) and Algonquin Power Company (Algonquin PC), move to dismiss the claims against them for lack of personal jurisdiction or alternatively under the basis of forum non conveniens. Plaintiffs, Conex Energy-Canada, LLC, and Conex Energy, Inc., resist defendants' motions. For the following reasons, defendants' motions are granted.

BACKGROUND

Conex Energy-Canada, LLC is a limited liability company with its principal place of business in Sioux Falls, South Dakota. Conex Energy, Inc., is incorporated with its principal place of business in South Dakota also. Michael J. Young is the indirect sole owner of Conex Energy-Canada, LLC and Conex Energy, Inc., and the president and general counsel for both. Docket 25. Conex Energy-Canada, LLC and Conex Energy, Inc. are both wholly owned subsidiaries of Certus Energy Group, LLC, which is also a South Dakota limited liability company. Conex Energy-Canada, LLC and Conex Energy, Inc. are collectively referred to hereafter as Conex.

Effisolar is incorporated and its principal place of business is in Vancouver, British Columbia. William Xu is the president of Effisolar. Docket 36. Algonquin PT, Algonquin PUC, and Algonquin PC are incorporated under the laws of Ontario, Canada, with their principal place of business in Toronto, Ontario. Algonquin PUC is the parent company of subsidiaries Algonquin PT and Algonquin PC. Mann Engineering is incorporated and its principal place of business is in Toronto, Ontario.

Cornwall Solar Project is located in Ontario, Canada, and is owned by Effisolar. In April 2010, Cornwall obtained a Feed-in Tariff (FIT) contract. A FIT contract provides above-market rates for generation of clean energy. On Aug. 24, 2010, Conex approached Mann Engineering, a facilitator for companies interested in selling FIT contracts, about purchasing a FIT contract. The same day, Mann Engineering and Conex entered into a confidentiality and nondisclosure agreement about a potential joint development of solar facilities in Ontario and "certain locations in the U.S." Docket 36-2. This agreement was sent by email and signed by each party in its respective province or state. Docket 11. The agreement specified that it would be governed by the laws of Ontario. Id.

On September 7, 2010, Mann Engineering and Conex entered into a binding letter agreement that was sent via email. The agreement involved two solar energy business transactions within Canada and provided that it was governed by the laws of Ontario. Docket 11. On October 12, 2010, Mann Engineering and Conex entered into an Engineering, Procurement, and Construction agreement (EPC) sent via email. The EPC was related to the contemplation of using Mann Engineering's service for two solar panel projects located in Canada. The EPC also specified that it was governed by the laws of Ontario. Docket 11. All communication at this point was limited to phone and email contacts between Toronto, Ontario, and South Dakota. Between the two projects, in total, Conex alleges that there were 700 emails, 150 phone calls, and 10 packages sent or received between Mann Engineering and Conex. Docket 22.

Ultimately, Mann Engineering connected Conex with Effisolar. The parties agreed that Conex would acquire Cornwall directly through Effisolar by way of a Letter Agreement dated September 7, 2010. The Letter Agreement was sent via email and Effisolar signed the agreement in Canada. Docket 33.

After the agreement was signed, Conex approached Algonquin PT to determine its interest in co-developing the Cornwall Project. Prior to discussions, Algonquin PT signed a confidentiality and nondisclosure agreement on February 22, 2011. The agreement was signed by Algonquin PT in Canada and, according to the terms of the agreement, it was governed by the laws of Ontario. Docket 9. After holding a meeting in Toronto on February 23, 2011, to discuss co-development, Conex emailed Algonquin PT additional requested information from South Dakota to Canada. Additionally, following the meeting there were telephone communications and "numerous e-mail messages" between financial representatives from Conex and agents of Algonquin. Docket 17. Ultimately, Algonquin PT rejected Conex's offer.

Conex, still interested in acquiring Cornwall, continued to negotiate with Effisolar. Correspondence between Conex and Effisolar was limited to telephone, email, and letter communication. Effisolar sent over 800 emails to Conex and Conex sent over 400 emails to Effisolar from the fall of 2010 through September 2011. Docket 36. Effisolar, acting through William Xu, sent at least two overnight packages to Conex in Sioux Falls, South Dakota. Conex, acting through Michael Young, sent at least three packages to Effisolar in Canada. Id. Additionally, there were over 100 telephone conversations between Conex and Effisolar. Id.

Eventually, Conex and Effisolar entered into a Stock Purchase Agreement (SPA) on June 1, 2011, to transfer controlling interest in Cornwall to Conex. Effisolar signed the agreement in Canada. Docket 33. As required by the SPA, Conex paid $500, 000 as a down payment on its purchase. The SPA stated that it was governed by Ontario law. Docket 36-6.

Under Ontario law, as a condition precedent to obtaining a controlling interest in a company holding a FIT contract, the Ontario Power Company (OPA) must approve the acquisition. On August 11, 2011, OPA gave notice of its denial of Conex's first attempt to get approval. On August 15, 2011, during the period of time that Conex was still trying to obtain OPA approval, the OPA waived its unilateral Pre-Notice to Proceed Termination Right with respect to the Cornwall FIT contract. As a result, Effisolar's FIT contract value increased significantly.

On September 5, 2011, nearly a month after the OPA's first denial, Conex agreed to accept a notice of termination by Effisolar of the SPA provided that Effisolar represent that it had used its best efforts and failed to obtain OPA approval. Subsequently, OPA approval was received, and ultimately Cornwall was sold to Algonquin PC via a share purchase agreement with Effisolar on or before November 27, 2011.

Conex alleges that Effisolar conspired with Mann Engineering and other agents to search for other purchasers, and that Algonquin PT shared confidential information about Cornwall with Algonquin PUC and Algonquin PC, resulting in Algonquin PC's acquisition of Cornwall. Conex alleges that Effisolar did not use its best efforts to obtain OPA approval during its course of dealings ...


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