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Quasar Energy Group, LLC v. VGBLADS, LLC

United States District Court, D. Maine

July 28, 2017

QUASAR ENERGY GROUP, LLC, Plaintiff
v.
VGBLADS, LLC, et al., Defendants

          RECOMMENDED DECISION ON DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

          John H. Rich III United States Magistrate Judge.

         Defendants 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.

         I. Applicable Legal Standards

         A 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).

         To 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 (2009).

         II. Factual Background

         The operative complaint, and documents fairly incorporated therein, reveal the following, relevant to resolution of the Motion.[1]

         Plaintiff 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.[2] The Village Green Defendants are Maine corporations with principal places of business in Cumberland County, Maine. Id. ¶¶ 2-3.

         On or 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).

         On or 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.

         Quasar 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.[3]

         The 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).

         In 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).

         Pursuant 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[.]” Id.

         Pursuant 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 . . . .

Id.

         With 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).

         Finally, section 13(d) provided, “The Lenders agree to accept all curative acts of each ...


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