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Xpress Natural Gas, LLC v. Cate Street Capital Inc.

Supreme Court of Maine

July 14, 2016

XPRESS NATURAL GAS, LLC
v.
CATE STREET CAPITAL, INC., et al.

          Argued: April 7, 2016

         On the briefs:

          Brian L. Champion, Esq., and Tyler J. Smith, Esq., Libby O’Brien Kingsley & Champion, LLC, Kennebunk, for appellants Cate Street Capital, Inc., and GNP Parent, LLC

          Jennifer A. Archer, Esq., and Timothy H. Norton, Esq., Kelly Remmel & Zimmerman, Portland, for appellee Xpress Natural Gas, LLC

         At oral argument:

          Brian L. Champion, Esq., for appellants Cate Street Capital, Inc., and GNP Parent, LLC

          Timothy H. Norton, Esq., for appellee Xpress Natural Gas, LLC

          PANEL: SAUFLEY, C.J., AND ALEXANDER, MEAD, GORMAN, JABAR, HJELM, AND HUMPHREY, JJ.

          SAUFLEY, C.J.

         [¶1] Cate Street Capital, Inc., appeals from a judgment in which the Superior Court (Cumberland County, Warren, J.) granted an application to confirm an arbitration award and denied a competing motion to vacate that award. In the award that Cate Street challenges on appeal, the arbitrator determined that Cate Street was responsible on its agreement to guarantee $1, 500, 000 in payments owed to Xpress Natural Gas, LLC, by Cate Street's subsidiary, GNP Parent, LLC- formerly known as Great Northern Paper Company, LLC-for the installation of equipment and the delivery of compressed natural gas to the Great Northern Paper Mill in East Millinocket. Because the arbitrator's interpretation "was rationally derived from the agreement, " Dep't of Corr. v. AFSCME, Council 93, 2000 ME 51, ¶ 9, 747 A.2d 592 (quotation marks omitted), we affirm the judgment confirming the arbitration award.

         I. BACKGROUND

         [¶2] Although the arbitrator did not make extensive findings of fact and additional findings were not requested, the sequence of events in this case is not in dispute. GNP, the owner of the Great Northern Paper Mill, entered into a sales agreement[1] on September 18, 2012, to purchase compressed natural gas from Xpress as fuel for the mill. By the sales agreement's terms, the conversion of equipment to use natural gas at the mill was to occur in time for gas delivery to commence on March 31, 2013.

         [¶3] Also on September 18, 2012, Cate Street, the corporate owner of GNP, executed a guarantee of the amounts payable by GNP on transactions provided for in the sales agreement, up to $1, 500, 000. The guarantee contains the following provision relevant to the issue in this appeal:

1. Guarantee. In consideration of [Xpress Natural Gas, LLC] from time to time entering into natural gas transactions under that certain Contract for the Sale of Compressed Natural Gas (the "Agreement"), with Great Northern Paper Company LLC . . ., an wholly owned subsidiary of [Cate Street Capital, Inc.], [Cate Street] irrevocably and unconditionally guarantees to [Xpress], its successors and assigns, the prompt payment when due, subject to any applicable grace period under the Agreement, of all present and future amounts payable by [GNP] to [Xpress] under the Agreement (even if such payments are deemed to be damages) not to exceed ONE MILLION FIVE HUNDRED THOUSAND U.S. dollars ($1, 500, 000.00) (the "Obligations"). [Xpress] may make written demand of [Cate Street] for any Obligation not paid by [GNP] when due, subject to applicable grace periods, and [Cate Street] shall pay such Obligations within five (5) business days of receipt of such demand. Notwithstanding any other provision hereof to the contrary, (a) [Cate Street] may terminate its obligations hereunder upon 30 days' prior written notice to [Xpress] with respect to transactions as defined in the Agreement (the "Transaction") entered into after the expiration of such 30 day period, and (b) to the extent not earlier terminated pursuant to clause (a), this Guarantee shall ...

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