United States District Court, D. Maine
RECOMMENDED DECISION ON DEFENDANTS' MOTION FOR
JUDGMENT ON THE PLEADINGS
H. Rich III United States Magistrate Judge.
VGBLADS, LLC (“VGBLADS”) and Village Green
Brunswick Landing, LLC (“Village Green”)
(together, “Village Green Defendants”) and
defendant Androscoggin Savings Bank (“ASB”)
jointly move pursuant to Federal Rule of Civil Procedure
12(c) for judgment on the pleadings in this breach of
contract action alleging default under a promissory note.
See Defendants' Joint Motion for Judgment on the
Pleadings Under Federal Rule of Civil Procedure 12(c)
(“Motion”) (ECF No. 28) at 1-2. For the reasons
that follow, I recommend that the court deny the Motion.
Applicable Legal Standards
motion for judgment on the pleadings pursuant to Rule 12(c)
“is treated much like a Rule 12(b)(6) motion to
dismiss.” Pérez-Acevedo v.
Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008) (citation
omitted). “Because such a motion calls for an
assessment of the merits of the case at an embryonic stage,
the court must view the facts contained in the pleadings in
the light most favorable to the nonmovant and draw all
reasonable inferences therefrom to the nonmovant's
behoof.” R.G. Fin. Corp. v.
Vergara-Nuñez, 446 F.3d 178, 182 (1st Cir. 2006)
(citations omitted). In assessing a Rule 12(c) motion a
“court may supplement the facts contained in the
pleadings by considering documents fairly incorporated
therein and facts susceptible to judicial notice.”
Id. There is no resolution of contested facts in
connection with a Rule 12(c) motion: a court may enter
judgment on the pleadings only if the properly considered
facts conclusively establish the movant's point.”
Id. (citation omitted).
withstand a Rule 12(c) motion, “a complaint must
contain factual allegations that ‘raise a right to
relief above the speculative level, on the assumption that
all the allegations in the complaint are true[.]'”
Pérez-Acevedo, 520 F.3d at 29 (quoting
Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)).
In sum, “to survive a motion for judgment on the
pleadings, the complaint must state a claim that is plausible
on its face.” Pineiro v. Gemme, 937 F.Supp.2d
161, 168-69 (D. Mass. 2013) (citation omitted). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
operative complaint, and documents fairly incorporated
therein, reveal the following, relevant to resolution of the
quasar energy group, LLC (“Quasar”), a
corporation with a principal place of business in Ohio,
designs and manufactures anaerobic digestion technology that
recycles organic wastes and transforms them into biogas,
reusable energy, fertilizer, and organic soil amendments.
Plaintiff Quasar Energy Group, LLC's First Amended
Complaint (“First Amended Complaint”) (ECF No.
21) ¶¶ 1, 7. The Village Green Defendants are Maine
corporations with principal places of business in Cumberland
County, Maine. Id. ¶¶ 2-3.
about April 30, 2015, Quasar entered into an Engineering,
Procurement, and Construction contract (“EPC
Contract”) with the Village Green Defendants whereby it
agreed, among other things, to design, engineer, and
construct an anaerobic digester system on property located at
170 Orion Street in Brunswick, Maine, the former site of the
United States Naval Station Brunswick Branch. Id.
¶ 8. At all relevant times, Quasar and the Village Green
Defendants agreed that, in satisfaction of a portion of the
purchase price, the Village Green Defendants would enter into
a Subordinate Secured Promissory Note (“Quasar
Note”) in the amount of $640, 000. Id. ¶
9. Quasar provided the Village Green Defendants a loan
commitment letter dated December 5, 2014 (“Quasar
Commitment Letter”), the provisions of which the
Village Green Defendants indicated were satisfactory to them.
Quasar Commitment Letter, Exh. 1 (ECF No. 33-1) to Plaintiff
quasar energy group, llc's Memorandum in Opposition to
Defendants' Joint Motion for Judgment on the Pleadings
(“Opposition”) (ECF No. 33).
about April 30, 2015, ASB, Quasar, and Coastal Enterprises,
Inc. (“CEI”) entered into an Intercreditor
Agreement. Intercreditor Agreement, Exh. 2 (ECF No. 27-2) to
Defendants VGBLADS, LLC and Village Green Brunswick Landing,
LLC's Answer to Quasar's First Amended Complaint
(“Village Green Defendants' Answer”) (ECF No.
27). The Village Green Defendants were named as parties to
the agreement, although they did not sign it. Id. at
1, 11-13. The Intercreditor Agreement provided that, whereas
(i) ASB had made a permanent loan of $3.2 million and an
interim loan of $1.92 million to VGBLADS in connection with
the Brunswick anaerobic digestion facility project
(“Project”), (ii) the ASB $1.92 million loan was
“to be paid off following completion of construction of
the Project with the proceeds of an SBA [Small Business
Administration] 504 Loan” by Granite State Economic
Development Corporation (“GSEDC”) in the amount
of $1.971 million, (iii) CEI had made a loan of $1.825
million to VGBLADS in connection with the Project, and (iv)
Quasar had “committed to make a loan in the principal
amount of up to $640, 000” (“Quasar Loan”)
to VGBLADS in connection with the Project, evidenced,
inter alia, by the “QUASAR Loan
Documents” of even or near date therewith, defined in
Exhibit F as the “$640, 000 Subordinate Secured
Promissory Note, ” the parties had “agreed to
enter into this Agreement to establish the relative
priorities and rights of their respective loans, liens and
encumbrances with respect to the Project.” Id.
at 1-2 & 19, Exh. F.
warranted, inter alia, that the Quasar Loan would be
evidenced and secured by the promissory note described in
“Exhibit E” and would “be made upon
completion of construction by conversion of retainage due
Quasar in the amount of $640, 000 to the Quasar Loan.”
Id. at 3, § 5. It further stated that the
Quasar Commitment Letter referenced in “Exhibit
E” had been accepted by VGBLADS and that all conditions
capable of being satisfied by the borrower as of the date of
the Intercreditor Agreement had been satisfied. Id.
at 4, § 9.
Intercreditor Agreement specified that, during construction
of the Project, the ASB $3.2 million loan had first priority,
the ASB $1.92 million loan had second priority, the CEI loan
had third priority, and Quasar “with respect to the
QUASAR Loan Documents” had fourth priority.
Id. at 5, § 11(a). It specified that
“[f]rom and after the completion of construction of the
Project and the SBA Take-Out, ” the ASB $3.2 million
loan had first priority, the GSEDC loan had second priority,
the CEI loan had third priority, and Quasar “with
respect to the QUASAR Loan Documents” had fourth
priority. Id. at 5, § 11(b).
section 13, the Intercreditor Agreement addressed notice of
default and the opportunity to cure during two periods:
“[d]uring construction of the Project and prior to SBA
Take-Out, ” and “[f]rom and after SBA
Take-Out[.]” Id. at 6-7, § 13(a)-(c).
to section 13(a), during the first period, ASB and CEI agreed
“to give written notice of any default under their
respective loan documents to each other and to Quasar”
and the Village Green Defendants. Id. at 6, §
13(a). Section 13(a) also provided that “[a]ny lender
shall have the right, but not the obligation, to cure all
defaults identified in the notice within thirty (30) days
after receipt of any such notice of default[.]”
to section 13(b), during the first period, Quasar agreed
“to give written notice of any default under the Quasar
Commitment Letter to the other Lenders” and the Village
Green Defendants and to give written notice of any default
under the EPC Contract. Id. at 7, § 13(b).
Section 13(b) provided that, following notice, “[s]uch
other lenders shall have the right, but not the obligation,
to cure all defaults identified in the notice under the
Quasar Commitment Letter and under the EPC Contract within
sixty (60) days after receipt of any such notice of
default[.]” Id. The Village Green Defendants
were to “have the same time periods to cure defaults
under the Quasar Commitment Letter.” Id.
Section 13(b) further stated:
Quasar further agrees that so long as [the Village Green
Defendants] are not in default under the EPC Contract, or
provided that such defaults have been cured, and provided
that any defaults under the Quasar Commitment Letter have
been cured, it will make the Quasar Loan at the time of
completion of construction of the Project, and will consent
to the assignment of the Quasar Commitment Letter and Quasar
Loans to any subsequent owner of the Project . . . .
respect to the second period, “[f]rom and after SBA
Take-Out, ” section 13(c) provided that “the
Lenders agree to give written notice of any default under
their respective loan documents to each other” and to
the Village Green Defendants, with “[a]ll
lenders” having the right but not the obligation to
cure all defaults identified in the notice within 60 days.
Id. at 7, § 13(c).
section 13(d) provided, “The Lenders agree to accept
all curative acts of each ...