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Trafalgar Power Inc. v. Aetna Life Insurance Co.

September 25, 2009

TRAFALGAR POWER INC. AND CHRISTINE FALLS CORPORATION, PLAINTIFFS,
v.
AETNA LIFE INSURANCE COMPANY; ALGONQUIN POWER CORPORATION, INC.; ALGONQUIN POWER INCOME FUND; AND ALGONQUIN POWER FUND (CANADA) INC.; DEFENDANTS.
ALGONQUIN POWER CORPORATION, INC.; ALGONQUIN POWER INCOME FUND; AND FRANKLIN INDUSTRIAL COMPLEX, INC.; PLAINTIFFS,
v.
TRAFALGAR POWER, INC.; CHRISTINE FALLS CORPORATION; AND PINE RUN OF VIRGINIA, INC.; DEFENDANTS.
IN RE: MARINA DEVELOPMENT, INC.; FRANKLIN INDUSTRIAL COMPLEX, INC.; CHRISTINE FALLS OF NEW YORK, INC.; TRAFALGAR POWER, INC.; PINE RUN OF VIRGINIA, INC.; DEBTORS
MARINA DEVELOPMENT, INC.; TRAFALGAR POWER, INC.; CHRISTINE FALLS OF NEW YORK, INC.; FRANKLIN INDUSTRIAL COMPLEX, INC.; AND PINE RUN OF VIRGINIA, INC.; PLAINTIFFS, V ALGONQUIN POWER CORPORATION, INC.; ALGONQUIN POWER SYSTEMS, INC.; ALGONQUIN POWER FUND (CANADA), INC.; ALGONQUIN POWER INCOME FUND; ALGONQUIN POWER SYSTEMS NEW HAMPSHIRE, INC.; ALGONQUIN POWER (U.S.) HOLDINGS, INC.; AETNA LIFE INSURANCE COMPANY; CIT CREDIT GROUP, INC., FKA NEWCOURT CREDIT GROUP, INC.; CANADIAN INCOME PARTNERS I LIMITED PARTNERSHIP; DEFENDANTS.



The opinion of the court was delivered by: David N. Hurd United States District Judge

ADV. PRO. NO. 02-80005

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

On November 6, 2008, a Memorandum-Decision and Order was entered granting the Algonquin parties' (collectively "Algonquin") motion for summary judgment and dismissing all claims by Trafalgar Power, Inc. ("TPI") and Christine Falls Corporation ("CFC") (collectively "Trafalgar") and denying Trafalgar's motion to amend the complaint. Further, all of Algonquin's counterclaims were dismissed and the action was dismissed in its entirety. A judgment was entered accordingly.

Trafalgar moves for relief from the judgment pursuant to Fed. R. Civ. P. 60(b)(2). Aetna Life Insurance Company ("Aetna") and Algonquin separately oppose. The motion was taken on submission without oral argument.

II. BACKGROUND

Detailed factual background and procedural history may be found in prior decisions in this case, the engineering malpractice case, and the bankruptcy proceedings. See Trafalgar Power Inc. v. Aetna Life Ins. Co., 396 B.R. 584 (N.D.N.Y. 2008); Algonquin Power Income Fund v. Christine Falls of N.Y., Inc., 396 B.R. 106 (N.D.N.Y. 2008); Trafalgar Power, Inc. v. Aetna Life Ins. Co., 427 F. Supp. 2d 202 (N.D.N.Y. Apr. 12, 2006); Trafalgar Power, Inc. v. Aetna Life Ins. Co., Nos. 99-CV-1238, 00-CV-1246, 2001 WL 640908 (N.D.N.Y. May 23, 2001); Trafalgar Power, Inc. v. Aetna Life Ins. Co., 146 F. Supp. 2d 155 (N.D.N.Y. Apr. 23, 2001) (McCurn, J.); Trafalgar Power, Inc. v. Aetna Life Ins. Co., 131 F. Supp. 2d 341 (N.D.N.Y. Jan. 16, 2001) (McCurn, J.) (adopting the Report Recommendation found at Algonquin Power Corp., Inc. v. Trafalgar Power, Inc., No. 00-CV-1246, 2000 WL 33963085 (N.D.N.Y. Nov. 8, 2000) (Peebles, M.J.)); Hydro Investors, Inc. v. Trafalgar Power, Inc., 63 F. Supp. 2d 225 (N.D.N.Y. 1999) (denying post-trial motions), aff'd in part, vacated & remanded in part, 227 F.3d 8 (2d Cir. 2000) (vacating denial of prejudgment interest and remanding for calculation of such interest); see also In re Franklin Indus. Complex, Inc., Nos. 01-67459, 01-67458, 01-67457, 2008 WL 3992233 (Bankr. N.D.N.Y. Aug. 21, 2008); In re Franklin Indus. Complex, Inc., Nos. 01-67459, 01-67458, 01-67457, 2008 WL 3200244 (Bankr. N.D.N.Y. Aug. 5, 2008); In re Franklin Indus. Complex, Inc., 386 B.R. 5 (Bankr. N.D.N.Y. Apr. 8, 2008); In re Franklin Indus. Complex, Inc., 377 B.R. 32 (Bankr. N.D.N.Y. Oct. 30, 2007); In re Franklin Indus. Complex, Inc., Nos. 01-67459, 06-80254, 01-67458, 01-67457, 2007 WL 2509709 (Bankr. N.D.N.Y. Aug. 30, 2007). The facts are set forth only in sufficient detail to provide context for the analysis.

Algonquin Power Corporation, Inc. ("Algonquin Power") is the manager of hydroelectric power plants owned by Trafalgar. The management arrangement between them was governed by a Management Agreement that became effective January 15, 1996. As part of Trafalgar's restructured debt, State Street Bank became the Security Trustee to receive revenues and disburse operating funds, including Algonquin Power's management fee, for the plants at Algonquin's direction.

The restructured debt consisted of A and B Notes and a Line of Credit, the terms of which were set forth in an Indenture Agreement. TPI's parent company Marina Development, Inc. ("Marina"), pledged all of the stock of TPI, and TPI pledged all of the stock of CFC, to secure the Notes. Thus, Trafalgar (TPI and CFC collectively) was the security for the restructured debt.

Algonquin purchased the B Note from Aetna in 1997. At least a couple of Algonquin entities had ownership of the B Note, however, those transfers of ownership are irrelevant here except to the extent that it is acknowledged that they occurred.

Algonquin purchased the A Note after its purchase of the B Note. The A Note has since been paid off.

Although challenged by Trafalgar, Aetna's sale of the B Note to Algonquin was upheld in prior proceedings. See 427 F. Supp. 2d at 212. The effect of Algonquin's ownership of the B Note is that Trafalgar cannot terminate Algonquin Power as the manager of the hydroelectric projects.

Additional facts or background that Trafalgar raises as relevant to the current motion will be set ...


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