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Combustion Products Management, Inc. v. AES Corp.

June 27, 2006

COMBUSTION PRODUCTS MANAGEMENT, INC., PLAINTIFF,
v.
AES CORPORATION AND AES-PUERTO RICO,L.P., DEFENDANTS.



The opinion of the court was delivered by: Hon. Norman A. Mordue, Chief Judge

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Presently before the Court are two motions in this breach of contract action. Defendants AES Corporation ("AES") and AES-Puerto Rico L.P ("AES-PR ") move (Dkt. No. 15) to dismiss the amended complaint. Plaintiff Combustion Products Management, Inc. ("CPM") cross-moves (Dkt. No. 17) for leave to file a second amended complaint.

BACKGROUND

By Memorandum-Decision and Order dated March 3, 2006 (Dkt. No. 13), this Court granted defendants' motion to dismiss the initial complaint on the ground that it failed to state a claim upon which relief can be granted, Fed. R. Civ. P. 12(b)(6), and gave leave to replead. CPM filed an amended complaint on March 19, 2006 (Dkt. No. 14).

Defendants move to dismiss the amended complaint. In its cross motion for leave to file a second amended complaint, CPM does not oppose dismissal of the following causes of action in the amended complaint: first cause of action (for relief against AES), fourth cause of action (for an injunction against AES-PR), and fifth cause of action (for declaratory relief against AES-PR). This results in the abandonment of all claims against AES and some against AES-PR. In the second amended complaint, CPM repleads two causes of action and adds two more.

To avoid confusion, the Court deems the amended complaint to have been abandoned and replaced by the second amended complaint, thus effectively granting the cross motion. The Court treats defendants' dismissal motion as a motion directed to the second amended complaint. The parties have had ample opportunity to brief all issues.

SECOND AMENDED COMPLAINT

The following paragraphs set forth the allegations in the second amended complaint.

They do not constitute factual findings by the Court.

CPM manages coal combustion by-products generated by coal-fired power plants. AES is an independent power producer located in Virginia. AES-PR, a subsidiary of AES located in Puerto Rico, operates a coal-fired power plant in Guayama, Puerto Rico.

Paragraphs 6-24 of the second amended complaint describe a transaction occurring in winter 1998-1999, when CPM performed work for AES at the request of David Sundstrum, an AES employee. CPM performed with the expectation that CPM and AES would enter into a contract. Before a contract was finalized, however, Sundstrum was reassigned to another plant, and his replacement refused to sign a contract with CPM or to reimburse it for its costs.

CPM had no further contact with AES or AES-PR until May 2004, when David Stone (apparently a representative of AES-PR) contacted CPM's president, Neil Wallace, and requested that CPM help him develop off-shore ash utilization options. Stone said that AES-PR was "desperate." When Wallace told him about CPM's previous experience with AES, Stone "pledged that AES-PR would treat CPM fairly."

The second amended complaint states as follows:

32. Mr. Wallace then asked Mr. Stone how he wanted to proceed. Mr. Stone asked CPM to develop options at its own expense and present them to AES-PR. If the options were environmentally permittable and less than $12.50 per ton, Mr. Stone stated that AES-PR would provide CPM a maximum of 100,000 tons per year for five years. The parties agreed that the $12.50 would be the cost after loaded [sic] in a barge.

33. Mr. Stone then said that given the time pressures, the promise to provide 100,000 tons per year for options that met the criteria would expire six months after AES-PR was notified of each option.

Thereafter, Wallace met with Stone and Al Dyer, President of AES-PR. The second amended complaint further alleges:

35. Mr. Dyer stressed that he was not involved in the prior dealing and if CPM could find options for them, he would pay CPM the $35,000 it spent in reliance on David Sundstrum's representations. Mr. Dyer also said that time was of the essence and he begged CPM to do whatever it could to help AES-PR. He iterated Mr. Stone's promise that if CPM could develop options in less than one year that met the criteria, AES-PR would provide CPM with a maximum of 100,000 tons per year for a minimum of five years.

36. Both Mr. Dyer and Mr. Stone stated that they understood CPM would be developing these options at its own expense in reliance on their representations regarding the provision of ash to CPM. Both again begged CPM to help them as quickly as possible. Mr. Wallace agreed, but explained to Mr. Dyer and Mr. Stone that CPM could not guarantee anything and that it might only develop one option that would last for three months. Mr. Dyer replied that anything would help.

On June 17, 2004, Dyer (on behalf of AES-PR) and Wallace (on behalf of CPM) signed a written contract entitled "Confidentiality Agreement," which provides in part:

WHEREAS, CPM agrees as follows...:

* CPM agrees to make available to AES-PR certain Confidential Information, and

* CPM at its own expense, shall evaluate and qualify potential sites and marketing opportunities in the Caribbean, outside of Puerto Rico, which are environmentally and economically viable to accept ashrock, and

* CPM shall provide these particular sites and opportunities and all relevant information to AES-PR, and

* In the event AES-PR and CPM are unable to reach a reasonable agreement after good faith negotiations within six (6) months of the date the particular option is presented, AES-PR retains the right to pursue direct agreements with any of the parties presented by CPM, and

* Nothing herein will limit each Party's right to pursue any project, opportunity, request for proposal, joint venture, strategy or other business arrangement, and neither party will assert that the other is prohibited from pursuing any project, opportunity, request for proposal, joint venture, strategy or other business ...


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