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EUA COGENEX CORP. v. NORTH ROCKLAND CENT. SCHL. DIST.

December 20, 2000

EUA COGENEX
V.
NORTH ROCKLAND CENTRAL SCHOOL DISTRICT, DEFENDANT



The opinion of the court was delivered by: McMAHON, Judge

MEMORANDUM DECISION AND ORDER GRANTING AND DENYING IN PART PLAINTIFF AND DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

EUA Cogenex ("EUA") asserts three causes of action against the North Rockland Central School District ("the District") arising from the District's failure to pay EUA under an energy savings performance contract: (1) breach of contract; (2) breach of an implied covenant of good faith and fair dealing; and (3) unjust enrichment. Plaintiff moves for summary judgment on those claims. Defendant cross moves for summary judgment on plaintiffs claims of breach of the covenant of good faith and fair dealing and unjust enrichment. Defendant counterclaims, alleging violation of N.Y.Gen.Bus.L. § 349, and plaintiff moves for summary judgment on that claim.

PROCEDURAL HISTORY

At the outset of this litigation, the District moved to dismiss this action on the ground that EUA had not served a notice of claim as required by New York Education Law. EUA cross-moved for leave to file a late notice, pursuant to N.Y.Educ.L. § 3813(2-a). This Court granted such leave, and EUA served the required notice of claim.

The District now moves to dismiss the action, claiming that the notice of claim was defective because only state courts have jurisdiction to grant leave to serve a late notice. Defendant is incorrect.

There is no such requirement for a contract action brought under the New York Education Law. This Court is empowered to grant leave to file a late notice of claim by Education Law § 3813(2-a). Unlike § 50-e of the General Municipal Law, the Education Law sets no jurisdictional requirements for applying for a late notice of claim. It simply states that "[u]pon application, the court, in its discretion, may extend the time to serve a notice of claim." N YEduc.L. § 3813(2-a). If a formal application is made by a Plaintiff, as was done in this case, a federal court can give it proper consideration. See Courtemanche v. Enlarged City Sch. Dist. of the City of Middletown, 686 F. Supp. 1025, 1033 (S.D.N.Y. 1988); Hilow v. Rome City Sch. Dist., 1994 WL 328625, *7 (N.D.N Y June 29, 1994) ("a plaintiff who has not filed a timely notice of claim [under § 3813] may move to extend the time in which to serve such a notice"). While notices of claim for tort actions brought under § 3813 against a school district are to be governed by Section 50-e, similar applications for a contract action may be considered by a federal court. See Courtemanche, 686 F. Supp. at 1032-33.

Defendant's motion to dismiss is denied.

FACTS PERTINENT TO THE MOTION

1. Proposal For The Energy Services Lease Agreement

EUA and the District signed an Energy Services Lease Agreement ("ESLA") as part of an energy conservation program sponsored by Orange and Rockland Utilities ("ORU") on August 28, 1991. The ESLA is an energy performance contract, under which a contractor such as EUA agrees to install and maintain energy savings equipment on the owner's premises and then is paid a portion of the energy savings in consideration for installation of the equipment. ORU hired EUA under a bidding program to install such equipment throughout Rockland County.

EUA undertook a review of the District's then-existing lighting fixtures and estimated the savings that the District would expect to receive based on EUA's installation of energy-saving equipment. Plaintiff then forwarded a proposal letter to the District, dated June 6, 1991, that summarized the savings that the District could expect to receive as a result of the contract. (Hammel Aff. at Exh. 10; Lennon Dep. at 50-53.) In the letter, EUA stated:

The enclosed reflects installation of Demand Side Management measures which will reduce your electrical energy cost for installed lighting measures by approximately $213,018 for the first year and representing a total over the fifteen years term of $2,117,394. These savings are provided to you at no cost for installation of measures. EUA will pay for all engineering, design, installation, and supervision of work to be performed.

(Hammel Aff. at Exh. 10.) (emphasis added). The proposal letter was signed on the same day as the original ESLA and was incorporated by reference in the ESLA. The Proposal also offered a $30,000 "signing bonus" for the District for agreeing to the terms of ESLA. The ESLA was signed by William H. Sullivan, Assistant Superintendent of the District, and Arthur P. Lennon, Vice President of EUA.

The ESLA required Cogenex to install high efficiency lighting and other energy conservation measures (the "Equipment") at the Thiells Elementary School, Gerald Neary Elementary School, North Gernerville Elementary School, BOCES Elementary School, West Haverstraw Elementary School, Haverstraw Middle School Annex, Maintenance Building, North Rockland High School, Haverstraw Middle School, James A. Farley Middle School, and Tompkins Cove Warehouse. The ESLA provided that Cogenex would lease the Equipment to the Defendant for a fifteen-year term.

2. Savings and Measurement Terms Under ESLA

William Sullivan led all ESLA negotiations with EUA. Under the ESLA, the District and EUA agreed to the following two-part procedure to measure savings (the "Measurement Terms"):

(a) Prior to installing the Equipment, [EUA] would determine the energy demand, measured in kilowatts ("kw"), of the Premises' existing lighting system.
(b) After the Equipment was installed, [EUA] would determine the Premises' post-installment energy demand for the lighting system, again measured in kw. By comparing this figure to the pre-installation kw demand, [EUA] would determine the reduction in kw resulting from the Equipment.

(Hammel Aff. Exh. 2 (ESLA, Append.II.)) EUA performed a room by room survey of lighting fixtures before and after the installation of the Equipment. The survey included the type and number of lighting fixtures, and tested a sample of each type of fixture with a wattmeter to determine average energy demand required by each fixture type. To determine total kilowatt demand, EUA multiplied the average kilowatt demand for each type of fixture, as measured by a sampling process, by the total number of fixtures of that type. (Id.) EUA then added the total kilowatt demand determined through this process for each type of fixture to determine the total energy demand for lighting equipment. (Id.)

EUA discussed the ESLA Measurement terms with the District both before the ESLA was signed and again before significant work pertaining to the ESLA was performed. (ESLA; Lennon Dep. at 55, 58, 79.) The parties agreed to the ESLA Measurement terms by signing Appendix II. (ESLA Append. II; Hammel Aff. at Exh. 4 (Sullivan Dep.) at 43.)

The ESLA also provided terms for the District's payment obligation. The District's payments were to equal a percentage of energy cost savings attributable to the Equipment, as measured by the method described in ESLA. It provided that "[t]he amount of payment made by [the District] for energy savings shall be equal to 0% for year 1, 60% for years 2 through 4, 55% for years 5 through 10 and 50% for years 11 through 15 of the savings as shown on the ECR each month for a term of 15 years." (Id.) To determine energy cost savings effected by the Equipment, the parties agreed that they would multiply the kilowatt and kilowatt hour reduction determined in the manner agreed to in the ESLA by ORU's published kilowatt and kilowatt hour charges. (Id. at Append. II, subpart d.) The ESLA also provided that if the District failed to operate its lighting system for at least 95% of the hours set forth in the Proposal, Cogenex could invoice the District as if the District were in fact operating at full capacity, notwithstanding the lower hours of operation, to preserve EUA's income level from the project.

3. Post-Installation Audits

After execution of the ESLA, EUA began installation of the energy saving lighting at the District's premises. According to EUA, post-installation audits performed by EUA confirmed that kilowatt savings attributable to the Equipment was 905.23 kilowatts, an amount higher than the 639 kilowatts which was estimated in the Proposal. (Aronson Aff. at Exh. 8.) Plaintiff alleges that these audits were confirmed by ORU. Defendant disputes that fact, claiming that the verification was done by ANC Enercom, a contractor unaffiliated with ORU. (Hammel Aff. at Exh. 1 (Thorpe Dep.) at 128.).

By letters dated May 18, 1992, August 12, 1992 and October 2, 1992, ORU informed EUA that it approved all of EUA's post-installation reports. (Hammel Aff. at Exh. 12.) As approved by the ORU-sponsored energy conservation program of which ESLA was a part, ORU paid EUA installments of $196,622.73, $119,121.04 and $37,415.79 for achieving the verified kilowatt reduction. (Hammel Aff. at Exh. 13; Thorpe Dep. at 85.)

The term of the ESLA began in March 1992 upon certification that the installation of the Equipment was "substantially complete." In accordance with the ESLA, no payment was due from the District for the one-year period after installation of the equipment — March 1992 to March 1993. (ESLA, Hammel Aff. at Exh. 2.) In March 1993, EUA began invoicing the District for monthly payments under the ESLA, and the District began paying EUA for its share of energy savings.

These invoices were based upon EUA's calculation that the installation of its equipment ultimately resulted in a reduction of the District's overall electrical demand by a total of 879.7 KW and 2,573,319 KWH based on the District's hours of operation of the lighting equipment. (Aronson Dep. at 187-190; Porter Dep. at 151-155.) The District paid ...


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