Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-01276/USCOURTS-cand-4_16-cv-01276-11/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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United States District Court 

Northern District of Californi

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

 

GEC US 1 LLC, et al., 

Plaintiffs, 

 v. 

FRONTIER RENEWABLES, LLC, et al., 

 Defendants. 

FRONTIER RENEWABLES, LLC,

 Counterclaim Plaintiff, 

 v. 

ACTIV SOLAR GMBH, et al.,

 Counterclaim Defendants. 

Case No.: 16-cv-1276 YGR

ORDER ON CROSS-MOTIONS FOR SUMMARY 

JUDGMENT

Re: Dkt. Nos. 154, 176

TO PARTIES AND COUNSEL OF RECORD:

In an Order of this date, the Court provides a synopsis of the parties and claims which it 

adopts here. Presently pending before the Court is defendant Frontier’s motion for partial 

summary judgment (Dkt. No. 154) and plaintiff AS (Wright)’s cross-motion for partial summary 

judgment (Dkt. No. 176). 

Defendant Frontier moves for partial summary judgment as to its fifth cause of action, 

which seeks a judicial declaration that Frontier is the 100% owner of Wright Solar pursuant to the 

contractual default and remedy provisions contained in Section 11.3(b) of the Wright Solar Park 

LLC Amended & Restated Limited Liability Company Agreement (the “LLC Agreement,” Dkt. 

No. 138-2). 

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Plaintiff AS (Wright) cross-moves for partial summary judgment that Section 11.3(b) of 

the LLC Agreement does not apply and that, even if it does, AS (Wright) improperly interprets the 

provision to provide a forfeiture remedy such that Frontier owns 100% of Wright Solar. Plaintiff 

also raises waiver, estoppel, and ratification defenses. 

Having carefully considered the papers submitted, the pleadings in this action, and oral 

argument held January 31, 2017, and for the reasons discussed below, the Court DENIES both 

motions for partial summary judgment. 

I. APPLICABLE LAW ON SUMMARY JUDGMENT

Summary judgment is proper if the pleadings and evidence in the record “show that there 

is no genuine issue as to any material fact” and the moving party is entitled to judgment as a 

matter of law. Fed. R. Civ. P. 56(c). Any party seeking summary judgment bears the initial burden 

of identifying those portions of the pleadings and discovery responses that demonstrate the 

absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

Material facts are those that might affect the outcome of the case. Anderson v. Liberty Lobby. Inc.,

477 U.S. 242, 248 (1986). An issue is “genuine” only if there is a sufficient evidentiary basis on 

which a reasonable fact finder could find for the nonmoving party, and a dispute is “material” only 

if it could affect the outcome of the suit under governing law. Id. at 248–49. 

Once the moving party meets its burden, the non-moving party may defeat summary 

judgment by showing, through admissible evidence, that a material factual dispute exists. 

California v. Campbell. 138 F.3d 772, 780 (9th Cir. 1998). When deciding a summary judgment 

motion, courts must view the evidence in the light most favorable to the non-moving party and 

draw all justifiable inferences in its favor. Anderson, 477 U.S. at 255; Hunt v. City of Los Angeles,

638 F.3d 703, 709 (9th Cir. 2011). 

II. DISCUSSION

A. Background 

On April 4, 2012, AS (Wright) and Frontier entered into a Membership Interest Purchase 

and Contribution Agreement (the “MIPCA,” Dkt. No. 138-3), pursuant to which AS (Wright) 

obtained a 75% “Membership Interest” in, and became a “Member” of, Wright Solar, with 

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Frontier maintaining a 25% Membership Interest in Wright Solar. (Frontier’s Separate Statement 

In Support of Motion for Partial Summary Judgment, Dkt. No. 156, Undisputed Material Fact 

(“UMF”) 11-12.) 

On April 6, 2012, and in conjunction with the MIPCA, AS (Wright) and Frontier entered 

into the LLC Agreement. (UMF 13.) The MIPCA incorporates the LLC Agreement by reference, 

and attaches a copy of the LLC Agreement as Exhibit B. (UMF 14.) 

According to Frontier, AS (Wright) became a “Defaulting Member” under the LLC 

Agreement as a result of an “Insolvency Event,” pursuant to Section 11.1(b) of the LLC 

Agreement. Section 11.1, entitled “Default,” provides: 

A Member (a “Defaulting Member”) shall be in default of its obligations under 

this Agreement (a “Default”) if: 

(a) it (or its Affiliate, as applicable) fails to make an Committed Capital 

Contribution within the time periods set forth in Section 6.2(b); or 

(b) an Insolvency Event occurs in respect of such Member or any Affiliate that 

Controls the Member or its ultimate parent entity. 

(Dkt. No. 138-2 at Section 11.1 (emphasis in original)). 

Frontier argues that AS (Wright) became a Defaulting Member as a result of certain 

insolvency events experienced by Activ GmbH. Once AS (Wright) became a Defaulting Member, 

Frontier argues it was entitled to all of AS (Wright)’s share of Wright Solar pursuant to Section 

11.3(b) such that it now owns 100% of Wright Solar. Section 11.3, entitled “Remedies,” states: 

(a) The provisions of Article XVII [governing “Deadlock Resolution Procedures”] 

shall apply in the event of any Default pursuant to Section 11.1(a) that is not cured 

pursuant to the terms of this Agreement and the Parties shall have any remedies 

available at law. 

(b) If an Insolvency Event in respect of a Member in Default under this Agreement 

(a “Defaulting Member”) has occurred, then the Defaulting Member 

unconditionally and irrevocably agrees that the other Member shall immediately be 

entitled to relief from any stay (including the so-called “automatic stay” arising 

under 11.U.S.C. §362) to allow the non-Defaulting Member to, among other things, 

take possession of and Dispose of the Membership Interests of the Defaulting 

Member and receive all Distributions in respect of the Membership Interests of the 

Defaulting Member pursuant to this Section 11.3. 

(Dkt. No. 138-2 at Section 11.3 (emphasis in original)). 

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Frontier hinges its claim on the notion that Section 11.3 allows it to “take possession of 

and Dispose of the Membership Interests of the Defaulting Member and receive all Distributions 

in respect of the Membership Interests of the Defaulting Member.” Plaintiff AS (Wright) counters 

with two arguments. First, it disputes that it became a Defaulting Member under Section 11.1(b). 

Second, even assuming that it became a Defaulting Member under Section 11.1(b), AS (Wright) 

argues that Section 11.3(b) does not, as a matter of law, require forfeiture of a Defaulting 

Member’s interest such that Frontier now owns 100% of Wright Solar. 

B. Analysis 

The Court finds that it cannot interpret Section 11.3(b) of the LLC Agreement to require 

forfeiture of AS (Wright)’s interest in Wright Solar as a matter of law. Instead, both parties have 

proffered evidence that creates disputed issues of material fact relating to the interpretation of 

Section 11.3(b)’s remedy. The provision is poorly drafted and consequently ambiguous.1

Further, the Court notes that Delaware law disfavors forfeiture. See, e.g., Hillman v. 

Hillman, 910 A.2d 262, 270 (Del. Ch. 2006); see also Garrett v. Brown, No. CIV.A. 8423, 1986 

WL 6708, at *8 (Del. Ch. June 13, 1986), aff’d, 511 A.2d 1044 (Del. 1986) (“Forfeitures are not 

favored and contracts will be construed to avoid such a result.” (citations omitted)); Clements v. 

Castle Mortg. Serv. Co., 382 A.2d 1367, 1370 (Del. Ch. 1977) (observing that forfeiture “is highly 

disfavored by the courts, including those of Delaware” (citations omitted)).Thus, the condition 

effecting a forfeiture “must be unambiguous.” Martin v. Hopkins, No. CIV.A. 05C-04-027, 2006 

WL 1915555, at *6 (Del. Super. Ct. June 27, 2006) (citation omitted). 

Here, given the language of the LLC Agreement, the Court cannot find that Section 

11.3(b)’s remedy is unambiguously forfeiture. For example, plaintiff argues that Section 11.3(b) is 

actually a prepetition waiver, which would merely require that a petitioning party be allowed to 

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 Accordingly, the Court declines to address the parties’ arguments with respect to whether 

AS (Wright) became a Defaulting Member pursuant to Section 11.1(b). The Court finds that, even 

if AS (Wright) did become a Defaulting Member, Frontier would still not be entitled to summary 

judgment because, for the reasons stated above, Section 11.3(b)’s remedy is ambiguous and 

therefore does not, on this record and as a matter of law, entitle Frontier to AS (Wright)’s share of 

Wright Solar. 

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seek relief from the applicable bankruptcy stay with the Defaulting Member having agreed in 

advance not to oppose this request. Plaintiff argues that these are not self-executing but, rather, 

require the approval of the bankruptcy court.2 (Dkt. No. 183-2 at 13-14.) As such, the Defaulting 

Member is not committing to an immediate relief from the stay—since this is something the 

Defaulting Member cannot provide—but rather is agreeing not to oppose the petition for relief 

from the stay. 3 (Id. at 15.) 

Similarly, the Court also cannot find that Section 11.3(b)’s remedy is unambiguously not

forfeiture. For example, plaintiff’s argument that 11.3(b) should be construed as a prepetition 

waiver, discussed above, only makes sense if the Court also finds that 11.3(b) is only triggered by 

a Member’s own Insolvency Event, rather than the Insolvency Event of “any Affiliate that 

Controls the Member or its ultimate parent entity.” Such an interpretation appears to directly 

contradict the plain language of Section 11.1(b) of the LLC Agreement, which clearly defines 

Defaulting Member to include a “Default” resulting from an Insolvency Event that “occurs in 

respect of such Member or any Affiliate that Controls the Member or its ultimate parent entity.” 

Thus, the Court finds that, on this summary judgment record, Section 11.3(b)’s remedy is 

ambiguous. Further factual development is needed to interpret the relevance and application, if 

any, of Section 11.3(b). Judgment as a matter of law is therefore inappropriate. 

 2 See, e.g., In re Triple A & R Capital Inv., Inc., 519 B.R. 581, 583–84 (Bankr. D.P.R. 

2014), aff’d sub nom. In re Triple A&R Capital Inv. Inc., No. BR 14-4744 BKT11, 2015 WL 

1133190 (D.P.R. Mar. 12, 2015) (collecting and analyzing cases nationwide that interpret the 

enforceability of prepetition waivers, noting that bankruptcy courts have “used different 

approaches with conflicting results,” but that “the courts are in agreement that a prepetition waiver 

of the automatic stay, even if enforceable, does not enable the secured creditor to enforce its lien 

without first obtaining stay relief from the bankruptcy court”). 

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 The Court has not done, nor has AS (Wright) provided, a thorough review of case law 

demonstrating typical language constituting a prepetition waiver. Moreover, for the reasons stated 

above, interpreting that provision as a prepetition waiver also contributes to the ambiguity in the 

agreement. 

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III. CONCLUSION

For the foregoing reasons, the Court hereby ORDERS as follows: 

Defendant Frontier’s motion for partial summary judgment (Dkt. No. 154) and plaintiff AS 

(Wright)’s cross-motion for partial summary judgment (Dkt. No. 176) are both DENIED. 

This Order terminates Dkt. Nos. 154 and 176. 

IT IS SO ORDERED. 

Dated: February 15, 2017 

______________________________________ 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

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