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November 2, 1995


The opinion of the court was delivered by: LARIMER


 This is an antitrust action brought by plaintiff, Kamine/Besicorp Allegany L.P. ("Kamine"), against defendant Rochester Gas & Electric Corporation ("RG&E"). Kamine, which seeks both damages and injunctive relief, asserts causes of action under Section 2 of the Sherman Act, 15 U.S.C. § 2, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26.

 The facts of this case have been set out at some length in a prior decision of this court, *fn1" and will be repeated here only as necessary. In short, the case arises from RG&E's unwillingness to purchase power from Kamine at the price set in a Power Purchase Agreement ("PPA") that Kamine and RG&E entered into in 1990 with the approval of the New York State Public Service Commission ("PSC"). Kamine alleges that RG&E is trying to drive Kamine out of business so that RG&E can maintain its monopoly as a producer and seller of electricity within RG&E's service area.

 The current price that RG&E must pay for power under the PPA is $ .06 per kilowatt hour ("kwh"). RG&E claims that the contract price is far above RG&E's "avoided cost," which is what it would cost RG&E to buy or produce the same power at current market rates or under the current tariff (known as the "SC5") filed by RG&E and approved by the PSC. RG&E contends that its avoided cost is now about $ .02 per kwh. RG&E asserts that the PPA price is so much higher than its avoided cost that the contract should be rescinded or reformed. RG&E is currently prosecuting an action against Kamine in New York State Supreme Court seeking such relief.

 Shortly after this case was commenced, Kamine moved for a temporary restraining order ("TRO") and preliminary injunction ordering RG&E to comply with the terms of the PPA. On March 20, 1995, I granted the motion for a TRO, and directed RG&E to accept electric power from Kamine under the terms of the PPA, and, in accordance with the PPA, to pay Kamine no less than six cents per kilowatt hour for that power.

 As stated in the March 20 decision, the purpose of the TRO was to preserve the situation "long enough for the court to decide the motion for a preliminary injunction." Decision and Order, March 20, 1995, at 15. The parties then engaged in discovery relating to the preliminary injunction motion.

 Both sides have submitted substantial additional written materials in support of their respective positions, and the court heard extensive oral argument on the injunction motion. At oral argument, counsel for both sides agreed that no factual hearing was necessary, and that the written and documentary materials that had been submitted were adequate for the court to render a decision. By stipulation of the parties, the TRO has been extended throughout this period, pending issuance of the court's decision on the preliminary injunction motion.


 I. Standards For Granting A Preliminary Injunction

 In the Second Circuit a court may issue a preliminary injunction upon a showing of irreparable harm and either (1) a likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation with a balance of the hardships tipping decidedly toward the party requesting the injunction. Acquaire v. Canada Dry Bottling Co. of New York, 24 F.3d 401, 409 (2d Cir. 1994); Consolidated Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 256 (2d Cir.), cert. dismissed, 492 U.S. 939 (1989). The applicant for an injunction must show "injury for which a monetary award cannot be adequate compensation . . . [because] where money damages is adequate compensation a preliminary injunction will not issue." Jackson Dairy, Inc. v. H.P. Hood & Sons, 596 F.2d 70, 72 (2d Cir. 1979).

 With respect to irreparable harm, "doubts as to whether an injunction sought is necessary to safeguard the public interest ... should be resolved in favor of granting the injunction." Gulf & Western Indus., Inc. v. Great A.& P. Tea Co., Inc., 476 F.2d 687, 699 (1973). It is clear, however, that "possible irreparable injury" is a requirement of all preliminary injunctions. S.E.C. v. Unifund SAL, 910 F.2d 1028, 1039 (2d Cir. 1990); Gulf & Western, 476 F.2d at 692.

 Whether a particular harm is irreparable turns on its imminence and the lack of an adequate remedy at law. "Irreparable harm must be shown by the moving party to be imminent, not remote or speculative, and the alleged injury must be one incapable of being fully remedied by monetary damages." Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir. 1990) (citations omitted). "An applicant for a preliminary injunction 'must show that it is likely to suffer irreparable harm if equitable relief is denied.' Thus, a mere possibility of irreparable harm is insufficient to justify the drastic remedy of a preliminary injunction." Borey v. National Union Fire Ins. Co., 934 F.2d 30, 34 (2d Cir. 1991) (quoting JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79 (2d Cir. 1990)). Finally, "in making the determination of irreparable harm, both harm to the parties and to the public may be considered." Long Island R.R. Co. v. International Assoc. of Machinists, 874 F.2d 901, 910 (2d Cir. 1989), cert. denied, 493 U.S. 1042 (1990).

 II. Irreparable Harm

 Kamine contends that if an injunction does not issue, Kamine will be forced to default on certain financial obligations to its lender, General Electric Capital Corporation ("GECC"), and GECC may foreclose on its loans to Kamine, driving Kamine into bankruptcy. In support of this allegation, Kamine alleges that RG&E's prior refusal to purchase power at the PPA price prevented Kamine from repaying a $ 90 million construction loan on time, which in turn has made it impossible for Kamine to obtain permanent financing. As a result of these difficulties, GECC has exercised some of its rights under its contract with Kamine, including the imposition of a default interest rate on Kamine's loans. In addition, GECC has elected to exercise its right to apply RG&E's payments to Kamine's obligation to GECC. In other words, the payments from RG&E are now going directly to GECC, not to Kamine. GECC can then advance funds to Kamine upon Kamine's request, if GECC chooses to. Without an injunction, Kamine contends, that source of revenue would dry up, and GECC might foreclose on the loan.

 GECC, however, has not demonstrated any particular desire to pursue its remedies under the agreement to the fullest extent. On September 13, 1994, for example, GECC sent to Kamine what GECC described as a "draft of GECC's forbearance letter for your [i.e. Kamine's] review & comments." Defendant's Exhibit Book in Opposition to Motion for Preliminary Injunction ("Def. Ex.") Ex. L. This letter stated that GECC had reviewed a default notice sent by Kamine to its planned "thermal host," the greenhouse which was supposed to buy the steam produced by Kamine's plant. Kamine had sent a default notice to the greenhouse operator because the greenhouse was not prepared to purchase the steam as planned. The problems between Kamine and the greenhouse operator were never resolved, and the deal was never consummated.

 The presence of a thermal host was a precondition to Kamine's obtaining status as a qualifying facility ("QF") under the Public Utility Regulatory Policies Act ("PURPA"), 16 U.S.C. §§ 796(18)(B). QF status in turn was a condition that Kamine was obligated to achieve and maintain under its agreement with GECC. That is what prompted GECC to send the forbearance letter to Kamine.

 In the draft letter, GECC stated that it "agreed to forebear [sic] from exercising any remedies" available to it under its agreement with Kamine for thirty days. The letter stated that GECC reserved all of its rights to exercise such remedies at the end of that period. However, it does not appear that GECC did pursue any further remedies regarding this matter.

 In another letter, dated January 31, 1995, GECC "reiterated its previously stated concern with respect to [Kamine's] ability to satisfy the conditions precedent to funding of further construction loan draws and the conditions precedent to permanent financing as set forth in the operative documents." It also noted that "RG&E has now purported to terminaate [sic] the Power Purchase Agreement," which "would constitute a Special Event of an Event of Default." Def. Ex. N. Although again reserving all its rights and remedies in the event of a default, however, GECC stated that it had elected to fund Kamine's requested construction loan draw. Id.

 A similar letter is dated February 27, 1995. Again, GECC recited that it reserved all its rights in the event of a default, but stated that it had elected to fund the February construction loan draw. Def. Ex. O.

 On April 13, 1995, GECC sent a letter to Kamine stating that Kamine was in default on its construction mortgage bond payment that had come due on March 31, 1995. GECC stated that it was "terminating its obligation (but not its right)" to make further project loans, and that it was exercising its right to have RG&E's future payments applied directly to Kamine's obligations to GECC. Def. Ex. P.

 Notably, however, GECC added that it was not at that time electing to exercise certain more drastic rights, "including the acceleration of any obligation not already due, the remedy to take possession of or title to all or any material part of the assets of [Kamine], or seek to cause repayment by [Kamine] of moneys not otherwise already due (other than through capture of moneys otherwise available to [Kamine]." Id.

 Although GECC has exercised some of its rights under the agreement with Kamine, then, it has also displayed a certain hesitation about pursuing its rights to the fullest at the earliest opportunity. The relatively modest steps taken by GECC do not support Kamine's previous assertions at the time of the TRO application, which depicted GECC eagerly waiting to lower the boom on Kamine at a moment's notice.

 At the time that the TRO decision was entered, the purportedly threatened foreclosure was, according to Kamine, only about two weeks away from becoming a reality. That allegedly imminent foreclosure, and Kamine's ensuing bankruptcy, were the basis for my finding that Kamine had demonstrated a serious enough threat of imminent irreparable harm to justify granting the TRO in order to preserve the status quo long enough to decide the motion for a preliminary injunction. Now that additional facts about GECC's actions and intentions have been obtained in discovery and submitted to the court, however, it appears that the threat of foreclosure is less imminent than Kamine alleged previously.

 It is understandable why GECC would not want to foreclose while litigation is still pending between Kamine and RG&E, both here and in state court. According to Kamine, foreclosure would drive Kamine out of business, leaving GECC in possession of the power plant. There seems to be little incentive at this stage for GECC to want that to happen, however. For one thing, Kamine is a party to the PPA, the continued effectiveness of which represents its (and therefore GECC's) best hope of obtaining at least $ .06 per ("kwh") for the energy produced by the plant.

 Without Kamine, then, GECC would be left in the position of taking over the plant faced with the prospect of either running it itself, or attempting to find a new buyer for the plant. The former option would be less attractive than simply allowing Kamine to continue running the plant in the hopes that Kamine would ultimately prevail on its bid to enforce the PPA, especially since RG&E's payments are already going directly to Kamine. By foreclosing and taking over the plant, GECC might accomplish little other than disrupting the plant's operations.

 Assuming control of the plant might also make things considerably worse for GECC at this point. In its motion for leave to intervene in a pending FERC proceeding concerning the retroactive waiver of Kamine's QF requirement, GECC states that upon a default by Kamine, GECC has the right to step into Kamine's shoes under the PPA. See Def. Ex. BB at 12. If the reason for Kamine's default were RG&E's refusal to pay the prices set in the PPA, however, GECC might well also find itself stepping into Kamine's shoes in the current litigation with RG&E. Presumably, GECC would prefer to have the brunt (and the cost) of the legal battles with RG&E borne by Kamine. Indeed, GECC's statement in the motion to intervene that GECC had not decided what course it would take if RG&E's interpretation of the PPA prevails suggests that GECC, for the time being at least, is content to let the litigation between Kamine and RG&E play itself out completely before GECC takes any decisive steps.

 Furthermore, even if Kamine fails in its attempts to enforce the PPA, Kamine would still be able to get the same price for its power that GECC would get if GECC were running the plant itself. Regardless of who runs the plant, then, the price of power is going to be the same. By foreclosing and taking possession of the plant, then, GECC would gain little, and in fact might be worse off.

 Of course, if a prospective buyer were willing to sell power at RG&E's avoided cost in order to avoid the costs of litigation, that would also lessen the plant's market value compared to what it was when Kamine entered into its agreement with GECC. Instead of expecting a long-term contract with rates of at least $ .06 per kwh, the buyer might have to settle for shorter-term contracts at a much lower price. Even a newly-negotiated PPA would probably have a lower contract price than Kamine's PPA, since the rates ...

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